Case Law Details
RELEVANT PARAGRAPH
11. Having said so, we are still of the considered view that s. 194C(2) is not attracted in the present case. The heading of s. 194C reads thus :
“Payments to contractors and sub-contractors”
Sec. 194CU) deals with payments made to the contractor which in this case would mean the payment made by companies which entered into contract of transportation with the assessees. Admittedly the companies deducted tax at source in terms of s. 194C(1). The entire amount received by the assessee from the companies after deductions was paid to the members of the truck operators who had carried the goods after deducting a nominal sum as “Parchi charges”. The question which arises is whether the members are sub-contractors or not.
12. The main contention of the Revenue is that since the assessee has a separate juristic identity and each of the truck operators who are members of the assessees have separate juristic identity they are covered with in the meaning of s. 194C(2). It is urged on behalf of the Revenue that since the assessee being a person is paying a sum to the member truck operator who is a resident within the meaning of the Act, TDS is required to be deducted. This argument does not take into consideration the heading of the section noted herein above and the entire language of s. 194C(2) which clearly indicates that the payment should be made to the resident who is a sub-contractor. The concept of sub-contract is intrinsically linked with s. 194C(2). If there is no sub-contract then the person is not liable to deduct tax at source even if payment is being made to a resident.
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