Ita/482/2009 Of Poovath Paree & Sons, Stevedores,Db Khon v. Dy.commissioner Of Income Tax Cir-Ekm

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON FRIDAY, THE 18TH DAY OF JANUARY 2019 / 28TH POUSHA, 1940 ITA. No.482 of 2009 AGAINST THE ORDER IN ITA NO.647/2008 OF THE INCOME TAX APPELLATETRIBUNAL, COCHIN BENCH DATED 30-01-2009 APPELLANT/APPELLANT: POOVATH PAREE & SONS, STEVEDORES, DB KHONA BUILDINGSSUBRAMANIAN ROAD, WILLINGDON ISLAND, KOCHI-3, REPRESENTED BY ITS MANAGING PARTNER, MR. P.H.SADIQ. BY ADVS.SRI.E.K.NANDAKUMAR (SR.)SRI.ANIL D. NAIRSRI.K.JOHN MATHAISRI.P.BENNY THOMAS RESPONDENT/RESPONDENT: *COMMISSIONER OF INCOME TAXC.R. BUILDINGS, I.S. PRESS ROADERNAKULAM, COCHIN-682 018.C.R. BUILDINGS, I.S. PRESS ROADERNAKULAM, COCHIN-682 018. *[AMENDED AS PER ORDER DATED 18.01.2019 IN I.A. NO.1898 OF 2013]BY ADVS.SRI.P.K.RAVINDRANATHA MENON (SR.)SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18.01.2019,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT K. Vinod Chandran, J. The assessee/appellant is a stevedore, who is mainly engaged in the activity of stuffingand de-stuffing containers, arriving and leavingfrom the Cochin Port. The assessee engagedmanual labour for the stuffing and de-stuffing.The assessee being a part of the Stevedores'Association, engages workers from two agencies,so as to ensure a parity of work allotted to themanual labourers who are normally engaged in thePort. 2. The manual labourers formed themselvesinto associations/firms which are the agenciessupplying them for carrying out the work in theport. The payments made to two of such entitiesare the issue raised herein. The assessee hadbeen engaging workers from an association named 'USA Pool' and a firm called 'Hash Agencies'.Payments were made to the agencies, for which nodeduction of tax was made at source as providedunder Section 194(C) of the Income Tax Act, 1961[for brevity, 'the Act']. 3. The assessee before the First AppellateAuthority and Tribunal claimed that there wasabsolutely no contract between the assessee andthe association/firm. The assessee had beenengaging workers and the payments due to theindividual workers were paid through theagencies. The amounts received by the agencieswere merely distributed among the workers wasthe contention. 4. On facts, the First Appellate Authorityfound that the payment made is far in excess ofthe wage liability to the workers employed bythe assessee. Though the First Appellate Authority also found that there could benecessarily expenses with respect to the poolingof workers, ensuring their welfare and so on andso forth, there was always a profit earned bythe agencies from the amounts collected for themanual labour carried out. 5. The assessee's contention lay moreemphasis on the absence of a written contract assuch. The First Appellate Authority correctlyfound that there is no requirement for a writtencontract. There is definitely an impliedcontract, since it is for the purpose ofmaintaining industrial peace and ensuring parityin employment of manual labour, that theAssociation of Stevedore has devised a measure,by which its members employ persons from the twoagencies, in which the different manuallabourers are enrolled. 6. There is definitely an implied contractand we cannot absolve the assessee from theliability to deduct tax at source merely on theground of there existing no written contract.We are of the opinion that the payments made bythe assessee clearly come under the rigor ofSection 194C of the Act. We do not find anyreason to interfere with the order of theTribunal and we also do not discern any questionof law as arising from the order of theTribunal. We hence reject the appeal and leavethe parties to suffer their respective costs inthe appeal. Sd/- K. VINOD CHANDRAN JUDGE sp/22/01/19 Sd/- ASHOK MENON JUDGE 6. There is definitely an implied contractand we cannot absolve the assessee from theliability to deduct tax at source merely on theground of there existing no written contract.We are of the opinion that the payments made bythe assessee clearly come under the rigor ofSection 194C of the Act. We do not find anyreason to interfere with the order of theTribunal and we also do not discern any questionof law as arising from the order of theTribunal. We hence reject the appeal and leavethe parties to suffer their respective costs inthe appeal. Sd/- K. VINOD CHANDRAN JUDGE sp/22/01/19 Sd/- ASHOK MENON JUDGE //True Copy//P.A. To Judge ITA. No.482 of 2009 PETITIONER'S EXHIBITS: APPENDIX ANNEXURE A ANNEXURE B ANNEXURE C TRUE COPY OF THE ASSESSMENT ORDER DATED 18.12.2007 ISSUED BY THE RESPONDENT FOR THEYEAR 2005-2006. TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 26.03.2008. TRUE COPY OF THE ORDER OF THE FIRST APPELLATE AUTHORITY DATED 30.01.2009.