Law:

Section:

JUDGMENT N. Kumar, J. - These appeals are preferred by the common assessee against the common order passed by the Tribunal holding that the payment is made to group leaders, who are not employees of the company, they are outsides and therefore, the provisions of Section 194C of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') is attracted. 2. The assessee is a State Government undertaking and it is an approved Corporation of Government of Karnataka for executing civil works assigned by the various Government Authorities/Departments in the State of Karnataka. On 23.11.2011, a survey under Section 133A of the Act was conducted in the premises of the assessee to verify the applicability of TDS provisions for the financial years 2008 - 09 to 2010-11. The assessee produced sample copies of the job work bill and JE bill / voucher against the advance payments to the Engineers/Task Force Committee (TFC). The statements of the Assistant Engineer was recorded on 05.09.2011. The assessing authority on considering the material on record held that, the group leader acts as an agent between the contractor and labourers. The group leader receives the payment not only for' his own work and also on behalf of the labourers. Therefore, the group leaders are none other than the contractors. The nature and activity of the contractor are similar to that of the group leaders and therefore, the provisions of Section 194C of the Act is attracted. Aggrieved by the said order, the assessee preferred an appeal to the Commissioner of Income Tax (Appeals). The Appellate Commissioner was of the view that the advances released to its employees by the assessee for labour/wage payment cannot be formed and qualified as a sub-contractor payment in the absence of contract agreement or documentary evidence. Therefore, the Appellate Commissioner set aside the order passed by the assessing authority. Aggrieved by the said order, the Revenue preferred an appeal to the Tribunal. The Tribunal by the impugned order held that when the assessing authority in the course of proceedings before him, called upon the assessee to produce proof for the payment made towards the labour directly to…

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