Calcutta High Court
Kamal Mookerjee & Co. (Shipping) Pvt. ... vs Commissioner Of Income Tax Cal-Iii ... on 3 April, 2024
Author: Rajarshi Bharadwaj
Bench: Rajarshi Bharadwaj
A.F.R.
ORDER OD - 1 & 2
IN THE HIGH COURT AT CALCUTTA
SPECIAL JURISDICTION (INCOME TAX)
ORIGINAL SIDE
ITA/72/2012
KAMAL MOOKERJEE & CO. (SHIPPING) PVT. LTD.
VERSUS
COMMISSIONER OF INCOME TAX CAL-III COMMISSIONERATE KOLKATA
WITH
ITA/73/2012
KAMAL MOOKERJEE & CO. (SHIPPING) PVT. LTD.
VERSUS
COMMISSIONER OF INCOME TAX CAL-III COMMISSIONERATE KOLKATA
BEFORE :
THE HON'BLE JUSTICE SURYA PRAKASH KESARWANI
AND
THE HON'BLE JUSTICE RAJARSHI BHARADWAJ
Date : 3rd April 2024.
Appearance:
Dr. Samir Chakraborty, Senior Advocate
Mr. Abhijit Biswas, Advocate
Mr. Bhaskar Sengupta, Advocate
... for the appellant.
Mr. Soumen Bhattacharjee, Advocate
Mr. Ankan Das, Advocate
Ms. Doyel Dey, Advocate
... for the respondent.
1. Heard Dr. Samir Chakraborty, learned senior advocate assisted by Sri
Abhijit Biswas and Sri Bhaskar Sengupta, learned counsel for the
appellant assessee and Sri Soumen Bhattacharjee, learned junior
standing counsel for the respondent department.
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2. This appeal was admitted by order dated 10th January 2012, on the
following substantial questions of law:-
i) Whether in the facts and circumstances of the case the Tribunal
was right in holding that in respect of payments made to Calcutta
Dock Labour Board by the appellant in terms of provisions of
clauses 41(5) and 56(1) of the Dock Workers (Regulation of
Employment) Scheme, 1970, framed under the Dock Workers
(Regulation of Employment) Act, 1948, the provisions of Section
194C of the Income Tax Act, 1961 are attracted?
ii) Whether in the facts and circumstances of the instant case the
Tribunal was right in holding that the relief granted to the appellant
by the Commissioner of Income Tax (Appeals) was devoid of legally
sustainable merits?
Facts
3. Briefly stated, facts of the present case are that the appellant assessee is
a registered employer under the Dock Workers (Regulation of
Employment) Act, 1948 (hereinafter referred to as 'the Act 1948') read
with the provisions of the Calcutta Dock Workers (Regulation of
Employment) Scheme, 1970 (hereinafter referred to as 'the Regulation
Scheme 1970'). The appellant is engaged in the business of stevedoring
and container freight services. In order to regulate the employment of
dock workers as well as the dock workers registered employer, the
3
aforesaid Act 1948 and the Regulation Scheme 1970 have been enacted.
During the assessment years in question i.e. assessment year 2005-07
and assessment year 2007-08, the appellant herein deposited a sum of
Rs.2,22,58,795/- and Rs.1,56,31,495/- respectively with the Calcutta
Dock Labour Board (hereinafter referred to as 'the Board') in discharge of
its obligations under the Act 1948 and the Regulation Scheme 1970 for
the purposes of disbursement of wages of its employees through the
Board.
4. By assessment order dated 04.08.2008 under Section 143(3) of the
Income Tax Act, 1961 (hereinafter referred to as 'the Act 1961) for the
assessment year 2006-07 and by assessment order dated 21.12.2009
under Section 143(3) of the Act 1961 for the assessment year 2007-08,
the assessing officer held that the main function of the Board is to
provide labour to the stevedore i.e. the appellant herein and, thus, while
making payment to the Board, the appellant assessee was bound to
deduct tax at source under Section 194C of the Act 1961 but it failed to
do so, therefore, Section 40(a)(ia) of the Act 1961 will be applicable.
Consequently, he disallowed the aforesaid a sum of Rs.2,22,58,795/- for
the assessment year 2006-07 and Rs.1,56,31,495/- for the assessment
year 2007-08 representing the deposits made by the appellant assessee
to the Board without deduction of tax at source under Section 194C.
Thus, the amounts so disallowed became part of the total income of the
appellant assessee and accordingly it was subjected to tax.
4
5. Aggrieved with the aforesaid assessment orders, the appellant assessee
filed separate appeals against the assessment orders for the above-noted
assessment years before the Commissioner of Income Tax (Appeals)
which both were allowed. Aggrieved with the orders of the CIT(A), the
revenue filed ITA No.199/Kol/2010 [assessment year 2006-07] and ITA
No.1545/Kol/2010 [assessment year 2007-08] which both were allowed
and the orders of the CIT(A) were set aside by the Tribunal returning a
specific finding that the payments made by the appellant assessee to the
Board were for supply of labour and thus Section 194C of the Act 1961 is
clearly attracted. However, However, by the aforesaid two orders both
dated 17th February, 2012, the ITAT has remanded back to the CIT(A) for
statistical purposes.
6. Aggrieved with the aforesaid two orders of the ITAT both dated 17th
February, 2012, the appellant/assessee has filed the present two appeals
which both were admitted on the afore-noted substantial question of law.
Submission
7. Learned Counsel for the appellant/assessee has referred to and carried
us to various provisions of the Act 1948 and the Regulation Scheme
1970 and the provisions of Section 194C of the Act 1961. He also
referred to the law laid down by Hon'ble Supreme Court in Vizagapatnam
Dock Labour Board Vs. Stevadores Association reported at (1969) 2 SCC
801 (paras 19 to 24), a judgment of this Court in Calcutta Dock Labour
Board Vs. Payment of Wages Authority, reported at 1981-82 (86) CWN
5
113 and a judgment of the Hon'ble Supeme Court in Tarseem Singh Vs.
Sukhminder Singh JT, reported at (1998) 3 SCC 471 (para 12). He also
placed before us a judgment of Hon'ble Supreme Court in the case of
Associated Cement Company Ltd. Vs. Commissioner of Income Tax &
Anr. 1993 (201) ITR 435 (SC) and contended that this judgment has no
application to the facts of the present case. He also carried us to the
order passed by the CIT(A) and reiterated the findings recorded by the
CIT(A) as a part of his submission. He concluded his argument by
submitting that there is a contract between the appellant/assessee and
the dock workers to whom the appellant employed and the role of the
Board is to regulate the dock workers employment as per the statutory
mandate contained in the Act 1948 and the Regulation Scheme 1970. He
further submits that the Board merely allocates dock workers as a part
of its statutory obligation under the Act 1948 read with the Regulation
Scheme 1970. The deposits towards wages of the dock workers made by
the appellant/assessee are on account of statutory mandate under the
Act 1948 read with the Regulation Scheme 1970 for disbursement of
wages of the dock workers. There is no element of either supply of labour
by the Board to the appellant or any contract between the Board and the
appellant for supply of labour/dock workers. He submits that in the
absence of any contract for supply of labour and the dock workers being
the employee of the appellant/assessee, Section 194C of the Act, 1961 is
not attracted merely because the payments to the dock workers towards
6
wages have been made by the appellant through the Board because of
statutory requirement. He submits that the orders passed by the ITAT
which are impugned in both the above-noted appeals deserve to be set
aside and both the present appeals deserve to be allowed.
8. Learned Counsel for the respondent has supported the impugned orders
of the ITAT.
Discussion and findings
9. We have heard and carefully considered the submissions of learned
counsels for the parties, perused the paper book and the provisions of
the Act 1948, Regulation Scheme 1970, Section 194C of the Act 1961
and the judgments relied upon by the learned Counsel for the
appellant/assessee.
10. It is undisputed that the appellant/assessee is a registered employer
under the Act 1948 read with the Regulation Scheme 1970. It is also
undisputed that the allocation of dock workers to the appellant/assessee
is made by the Board in terms of the provisions of the Act 1948 read with
Regulation Scheme 1970. The main point of controversy involved in
the present two appeals is as to whether the Board is a supplier of
dock workers to the appellant/assessee and consequently, the
payments made by the appellant/assessee to the dock workers
through the Board shall attract the provisions of Section 194C of
the Act 1961?
7
11. The Dock Workers (Regulation of Employment) Act, 1948 (9 of 1948) was
enacted by Parliament for regulating the employment of the dock workers
by the Board. Section 2(b)/(c)/(d)/(e) and Section 3 of the Act 1948
provides as under :
2.(b) "Dock worker" means a person employed or to be employed in,
or in the vicinity of, any port on work in connection with the loading,
unloading, movement or storage of cargoes, or work in connection
with the preparation of ships or other vessels for the receipt or
discharge of cargoes or leaving port:
(c)"employer", in relation to a dock workers, means the person by
whom he is employed or to be employed as aforesaid:
(d) Government" means. in relation to any major port, the Central
Government and, in relation to any other port, the State Government;
(e) "scheme" means a scheme made under this Act.
3. Scheme for ensuring regular employment of workers-(1)
provision may be made by a scheme lor the registration of dock
workers and employers with a view to ensuring greater regularity of
employment and for regulating the employment of dock workers,
whether registered or not, in a port.
(2) In particular, a scheme may provide
(a) for the application of the scheme to such classes of dock workers
and employers as may be specified therein:
(b) for defining the obligations of dock workers and employers
subject to the fulfillment of which the scheme may apply to
them and the circumstances in which the scheme shall cease
to apply to any dock workers or employers;
(c) for regulating the recruitment and entry into the scheme of
dock workers, and the registration of dock workers and employers,
8
including the maintenance of registers, the removal ether temporarily
or permanently, of names from the registers and the imposition of fees
for registration:
(d) for regulation the employment of dock workers whether
registered or not, and the terms and conditions of such employment,
including rates of remuneration, hours of work and conditions as to
holidays and pay in respect thereof:
(e) for securing that. In respect of periods during which employment,
or full employment, is not available for work, such workers will,
subject to the conditions of the scheme, receive a minimum pay:
(f) for prohibiting restricting or otherwise controlling the
employment/of dock workers to whom the scheme does not apply
and the employment of dock workers by employers to whom the
scheme does not apply:
(ii) for creating such fund or funds as maybe necessary or expedient
for the purposes of the scheme and for the administration of such
fund or funds:
Note: Every fund created or purporting to have been created and
every provisions with respect thereto made or purporting to have been
made under the principal Act before the commencement of this Act
shall, for all purposes, be deemed to be, and to have always been, as
validity and effectively created or made as if the provisions of section
3 of the principal Act, as amended by this Act, had been in force at all
material times and accordingly, notwithstanding any Judgment,
decree or order of any court. -
(a) all contributions to any such fund received or collected before the
commencement of this Act shall be deemed to be and shall be deemed
always to have been as validly received or collected as if the
provisions of section 3 of the principal Act, as amended by this Act
were in force at all material times;
9
(c) recoveries shall be made of all contributions to any such funds
which have not been received or collected but which would have been
received or collected if the provisions of section 3 of the principal Act.
as amended by this Act, had been in force at all material times.
Explanation:- For the removal of doubts it is hereby declared that no
act or omission on the part of any person, before the commencement
of this Act shall be punishable as an offence which would not have
been so punishable, If this Act had not come into force.
(g) for the training and welfare of dock workers. In so far as
satisfactory provision therefore does not exist apart from the scheme:
(gg) for welfare of the officers and other staff of the board;
(h) for health and safety measures in places where dock worker are
employed. In so far as satisfactory provision therefore does not exist
apart from the scheme:
(i) for the manner in which, and the persons by whom, the cost of
operating the scheme is to be defrayed:
(j) for constituting 14 the authority to be responsible for the
administration of the scheme:
(k) for such incidental and supplementary matters as may be
necessary or expedient for the purposes of the scheme.
(3) A scheme may further provide that a contravention of any
provision thereof shall be punishable with Imprisonment for such term
as may be specified but in no case exceeding three months in respect
of a first contravention or six months in respect of any subsequent
contravention, or with fine which may extend to such amount as may
be specified but in no case exceeding five hundred rupees in respect
of a first contravention or one thousand rupees in respect of any
10
subsequent contravention, or with both Imprisonment and fine as
aforesaid."
12. Section 4 of the Act 1948 provides for making variation and revocation of
Scheme. Section 5 provides for constitution of Advisory Committee.
Section 5B provides that the Board shall be responsible for administering
the scheme for the port or group for which it has been established and
shall exercise such powers and perform such functions as may be
conferred on it by the scheme. In exercise of its powers and the discharge
of its functions, the Board shall be bound by such directions as the
Government may, for reasons to be stated in writing, give to it from time
to time. Section 5C provides for accounts and audit. Section 5E provides
for submission of annual report and audited accounts of the Board
together with auditor's report within time bound period and to lay it
before each House of Parliament. Section 6 provides for appointment of
inspectors for the purposes of the Act. Section 6A provides for power to
order inquiry to investigate or enquire into working of a Board. Section
6B provides for power to supersede a Board. Section 6C provides for
circumstances in which acts or processing of the Board and Advisory
Committee shall not be invalidated. Section 8 provides for power to make
rules. Section 9 is the saving clause. The Regulation Scheme 1970 has
been framed by the Government of India in exercise of powers conferred
under the Act 1948 and more particularly Section 3 thereof which has
been reproduced above.
11
13. The object of the Act as well as the provisions of the Act and more
particularly those afore-noted leaves no manner of doubt that the Act
1948 provides for regulation of employment of dock workers.
14. The Regulation Scheme 1970 has been enacted with the object of greater
regularity of employment of dock workers by maintaining adequate
number of dock workers and achievement of efficiency of performance in
dock work and attainment of satisfactory levels of productivity by the
dock workers. The aforesaid scheme relates to Port of Kolkata and
applies to registered dock workers and their registered employers.
15. The words 'dock employer' and 'registered employer' both have been
defined under clause 3(g) and (q) of the Regulation Scheme 1970 as
under :
(g) "dock employer" means the person by whom a dock worker is
employed or is to be employed.
...
(q) "registered employer" means an employer whose name is, for the
time being entered in the employers' register"
16. Clause 17 of the Regulation Scheme 1970 provides for maintenance of
employers register and workers register. It is specifically provides that
persons who have been licensed to function as stevedores by the
competent authority of Calcutta Port Trust shall be deemed to have been
registered under the scheme during the currency of the license. Clause
18 provides for classification of workers in registers. Clause 19 provides
for fixation of number of workers on the register. Clause 20 provides for
registration of the existing and new workers on payment of fees and
subject to certain conditions. Clause 21 provides for age of retirement of
58 years of any worker. Clause 23 provides for medical examination of
workers. Clause 25 provides that registration fee of Rs.2 shall be payable
to the Board for by each worker at the time of registration under the
Scheme provided that those workers who had already been registered
under the Calcutta Dock Workers (Regulation of Employment) Scheme,
1958, shall be exempted from payment of such fee. Clause 27 provides
for service record for registered workers to be maintained by the
administrative body in a form to be prescribed by the Board. Clause 28
provides for "records sheet" for registered employers to be maintained by
the personnel officer in respect of each registered employer in a form
prescribed by the Board. Clause 32 provides for employment in shifts.
Clause 34 provides for guaranteed minimum wages in a month to any
reserve pool workers as may be fixed by the Board for each year. Clause
40 provides for obligation of registered dock workers. Clauses 41, 42, 45
and 56 have direct bearing on the controversy involved in the
present two appeals, which are reproduced below :
"41. Obligations of Registered Employers
(1) Every registered employer shall accept the obligations of
the Scheme.
(2) Subject to the provisions of Clause 31 and the relaxation given in
Sub-Clause (2) of Clause 20, a registered employer shall not
employ a worker other than a dock worker who has been
allocated to him by the Administrative Body in accordance
with the provisions of item (g) of Clause 12.
(3) A registered employer shall in accordance with the
arrangement made by the Administrative Body submit all
available information of his current and future labour
requirements.
(4) A registered employer shall lodge with the Administrative Body
unless otherwise directed, particular of the tonnage handled by
worker on piece-rate and such other statistical data as may be
required in respect of the registered dock workers engaged by
him.
(5) (i) A registered employer shall pay to the Administrative
Body in such manner and at such times as the Board may direct
the levy payable under Sub-Clause (1) of Clause 56 and the
gross wages due to pool workers;
(ii) A registered employer shall make payments as
contributions to the Dock Workers Welfare Fund under
Clause 59;
(iii) A registered employer shall pay to the Board the
monthly Provident Fund subscriptions recovered form
the wages of the workers and the contribution by the
registered employers thereon, repayment of Provident
Fund loan and interest on Provident Fund loan within 15
days from the date of each recovery.
(6) A registered employer shall keep such records as the Board may
require, and shall produce to the Board or to such persons as may
be designated by the Board upon reasonable notice all such
records and any other documents of any kind relating to
registered dock workers and to the work upon which they have
been employed and furnish such information relating thereto as
may be set out in any notice or directions issued by or on behalf of
the Board.
(7) Every registered employer shall maintain such gears, supervisory
staff and other personnel and carry out such gears, supervisory
staff and other personnel and carry out such minimum business
per annum as may be specified in the licence for stevedoring to be
issued by the Port authorities.
(8) A registered employer is permitted to use registered workers for
the descriptions of stevedoring work specified in the Scheme only
under a direct stevedoring appointment with the Shipowners,
Shipping Companies, Steamer Agents, Charters of vessels,
Shippers, Consignees or Masters of ships. The Board may at any
time demand production of such appointment documents
pertaining to work on any ship from any registered employer for
the purpose of verification.
(9) Omitted.
(10) A registered employer shall not pay a registered dock
worker anything in cash or otherwise in excess of the wages
normally and actually due to the worker.
42. Restriction on Employment
(1) No person other than a registered employer shall employ
any worker on dock work nor shall a registered employer
engage, subject to the relaxation given in sub clause (4) (e) of
Clause 20, for employment or employ a worker on dock work
unless that worker is a registered dock worker.
(2) Notwithstanding the foregoing provisions of this clause -
(a) where the Administrative Body is satisfied that -
(i) dock work is emergently required to be done ; and
(ii) It is not reasonably practicable to obtain a registered dock
worker for that work: title Administrative Body may, subject to any
limitations Imposed by the Board, allocate to a registered employer a
person who is not a registered dock worker. In selecting such workers
the local Employment Exchange Organization shall, as far as
possible, be consulted;
Provided that, whenever unregistered workers have to be employed,
the Administrative Body shall obtain, if possible, the prior approval of
the Chairman to the employment of such workers and where this is
not possible, shall report to the Chairman within 24 hours the full
circumstances under which such workers were employed and the
Chairman shall duly inform the Board of such employment at its next
meeting :
(b) In the case referred to in Item (a), the person so employed as
aforesaid by a registered employer shall, for the purposes of Sub-
clauses (4), (5) and (6) or Clause 41 and Clauses 44 and 45 be
treated In respect of that dock worker as if he was a dally worker.
(3) A registered worker in the reserve pool may provided he fulfils
fully his obligations under Clause 40, take up occasional employment
under employers other than those registered under the Scheme on
those days on which he is not allocated for work by the
Administrative Body.
45. Wages, Allowance and other conditions of Service of
Workers in categories in Schedule-I
(1) Unless otherwise specifically provided for in the Scheme, it shall
be an implied condition of the contract between a registered
dock worker in the categories in Schedule-I and a registered
employer that the rates of wages, allowances and overtime, hours of
work, rest intervals, holidays and pay in respect thereof and other
conditions of service shall be such as may be prescribed by the
Board for each category of workers subject to the provisions of Sub-
Clauses (2) to (6).
(2) The Board shall accept and implement the provisions in Schedule
VI or any other Scheme that may hereafter be framed and approved
by the Central Government.
(3) With regard to future Scheme, the Board shall appoint a Committee
consisting of representatives of registered employers, Shipping
Companies, workers and the Port authority and a nominee of the
Central Government to determine the norms for output in respect of
cargoes of different kinds, and/or Lines and/ or Zones. If the
Committee is not able to prescribe agreed norms within a period of
two months of having been asked to do so, the Chairman of the Board
may determine such norms and submit them to the Central
Government for approval. These norms shall be adopted as standard
output required of workers. The same procedure shall be followed if
and when a revision of the norms considered necessary by the Board.
(4) The Board shall by regulations relate the wages earned to the
actual output of workers as specified in Schedule VI. The regulations
for any future Scheme shall be submitted to the Central Government
for approval before implementation
(5) Omitted.
(6) The fixation of wage periods, time for payment of wages and
deductions from wages shall be In accordance with the provisions of
the Payment of Wages Act, 1936 (4 of 1936).
(7) The provisions contained in Sub-clause 3, the Central
Notwithstanding Government may, If it so decides, set up such body
as it may deem n t for reviewing the Scheme for any part thereof. The
decision of the Central Government on the recommendations of the
said body shall be final and binding.
56. Cost of Operating the Scheme
(1) The cost of operating the Scheme shall be defrayed by
payments made to the Board by registered employers or their
authorised agents as approved by the Board. Every registered
employer shall pay to the Board such amount by the way of
levy in respect of reserve pool workers together with and at
the same time as or earlier than the payment of gross wages
due from him under item (1) of Sub-Clause (5) of Clause 41, as
the Board may, from time to time, prescribe by a written notice to
registered employers and the amount payable by way of such levy
shall not be less than such amount as the Board may fix at the
minimum payable by every registered employer.
Provided that, where wages are payable to workers at an interval of
less than a month, the Board may at its discretion allow the amounts,
other than gross wages, payable under this sub-clause to be paid
monthly by such time as the Board may prescribe in this behalf.
(2) In determining what payments are to be made by registered
employers under Sub-clause (1), the Board may fix different rates of
levy for different categories of work or workers, provided that the levy
shall be so fixed that the same rate of levy will apply to all dock
employers who are in the like circumstances.
(3) The Board shall not sanction any levy exceeding hundred per cent
of the estimated total wage bill calculated on the basis of the dally
time rate wage and allowances without the prior approval of the
Central Government.
(4) A registered employer shall on-demand make a payment to the
Board by way of deposit, or provide such other security for the due
payment of the amount referred to in sub-clause (1), as the Board
may consider necessary.
(5) The Administrative Body shall furnish, from time to time, to the
Board such statistics and other information as may reasonably be
required in connection with the operation and financing of the
Scheme.
(6) If a registered employer fails to make the payment due from him
under sub- clause (1) or under item (iii) of sub-clause (5) of Clause 41
or any other amount due and payable to the Board in any other
capacity or account within the time prescribed by the Administrative
Body, the Admn. Body shall serve a notice on the employer to the
effect that unless he pays his dues within three days from the date of
receipt of the notice, the supply of registered dock workers to him
shall be suspended. On the expiry of the notice period, the
Administrative Body shall suspend the supply of registered dock
workers to a defaulting employer and charge Interest on the amounts
due at such rate and from such date as ite Board may decide until he
pays his dues. If the employer falls to pay his dues within 45 days of
the date of issue of the notice, his name shall be liable o be removed
from the employers' register without prejudice to other rights of the
Board for the recovery of the defaulted amount from such employer."
17. A conjoint reading of various provisions of the Act 1948 and the
Regulation Scheme, 1970 and more particularly clauses 41, 42 and 45
thereof leads to an irresistible conclusion that under the Act and the
Regulation Scheme 1970, the registered employer is bound to accept the
obligation of the Scheme, he shall not employ any worker other than
dock workers which has been allocated to him by the administrative
body. Clause 42 completely prohibits employment of any worker on
dock other than the registered employer. Thus, the registered employer
can only employ dock workers and the conditions of service including
payment of their wages have been regulated by various provisions of the
Act 1948 and the Regulation Scheme, 1970. Clause 45 of the Regulation
Scheme 1970, as afore-quoted, clearly stipulates a contract of
employment between registered employer and dock workers. Rates of
wages, allowances and overtime, hours of work, rest intervals, holidays
and pay in respect thereof and other conditions of service as have been
prescribed by the Board for each category of workers subject to the
provisions of sub-clauses (2) to (6). Thus, clause 45 leaves no manner of
doubt that the contract of employment of dock workers is between a
registered employer and the registered dock workers. It is statutory
obligation incorporated under the contract that the registered employer
has to pay wages etc. to the dock workers by remitting the amount to the
administrative body for disbursement of his (employer's) own dock
workers/employees. Thus, neither the Board nor its administrative
committee supplies any dock workers to the registered employer but it is
as per the Act and the Regulation so as to protect the interest of the dock
workers and employer that the registered employer furnishes his
requirement and the administrative committee allocates from amongst
registered dock workers to a particular registered employer and they
become employee on such terms and conditions as have been stipulated
in the Regulation Scheme, 1970. Therefore, the findings recorded by the
ITAT in paragraphs 8, 9 and 10 of the impugned order, is patently
incorrect, perverse and contrary to the provisions of the Act, 1948 and
the Regulation Scheme 1970. Consequently, the finding deserves to be
set aside.
18. The dock works employed by the appellant/assessee are his employees
as per scheme of the Act and Regulation Scheme 1970 and it is merely
allocation of workers which have been made by the administrative
committee of the Board as a part of their statutory obligation under the
Act, 1948 and the Regulation Scheme, 1970. The provision of section
194C of the Act 1948 is not attracted at all.
19. In the case of Vizagapatnam Dock Labour Board (supra) (para 19 to 24)
the Hon'ble Supreme Court considered similar regulation scheme framed
under the Act, 1948 and held that the Board is a statutory body charged
with the duty of administering scheme, the object of which is to ensure
grater regularity of employment for dock workers and to ensure that an
adequate number of dock workers are available for the efficient
performance of dock work. The Board is an autonomous body, competent
to determine and prescribe the wages, allowances and other conditions
of service of the dock workers. The purport of the Scheme is that the
entire body of workers should be under the control and supervision of
the Board. The registered employers are allocated workers by the
Administrative Committee. The workmen who were allotted to the
registered employers are to do the work under the control and
supervision of the registered employers and to act under their directions.
The registered employers desposit the wages due to the workers to the
administrative body which in turn, as an agent of the registered
employers, disburses the wages to the concerned workmen. The
regulation scheme clearly shows that the registered employer to whom
the labour force is allotted by the Board is the employer whose work of
loading or unloading of ships is done by the dock workers allotted.
20. In Tarseem Singh Vs. Sukhminder Singh JT, reported at (1998) 3 SCC
471 (para 12) Hon'ble Supreme Court referred to the provisions of the
India Indian Contract Act explained as under :
12. "Contract" is a bilateral transaction between two or more than two
parties. Every contract has to pass through several stages beginning
with the stage of negotiation during which the parties discuss and
negotiate proposals and counter-proposals as also the consideration
resulting finally in the acceptance of the proposal. The proposal when
accepted gives rise to an agreement. It is at this stage that the
agreement is reduced into writing and a formal document is executed
on which parties affix their signatures or thumb b impression so as to
be bound by the terms of the agreement set out in that document.
Such an agreement has to be lawful as the definition of contract, as
set out in Section 2(1) provides that "an agreement enforceable by law
is a contract". Section 2(g) sets out that "an agreement not enforceable
by law is said to be void".
21. Applying the principles as laid down by Hon'ble Supreme Court, as afore-
noted, as well as specific provisions of the Act, 1948 and the Regulation
Scheme, 1970, we are of the firm view that the contract of employment is
between the appellant and the dock workers and not between the
appellant and the Board. The Board has merely discharged its statutory
obligation with regard to regulation of dock workers.
22. For all the reasons afore-stated, we find that Section 194C of the Act,
1961 has no application on facts of the present case with regard to
payment of wages by the appellant/assessee to the dock workers through
the Administrative Committee/Board. There is no contract of supply of
labour between the Board/Administrative Committee and the
appellant/assessee i.e., the registered employer. The appellant/assessee
was not liable to deduct tax at source under Section 194C while making
payment of wages to its employees i.e. the dock workers through the
Administrative Committee/Board constituted under the Act, 1948 read
with Regulation Scheme, 1970. Consequently, the provisions of Section
40(a)(ia) of the Act, 1961 would also not come into play. The impugned
order of the Tribunal deserves to be set aside.
23. For all the reasons afore-stated, the appeals (ITA/72/2012 and
ITA/73/2012) are allowed. The impugned order dated 17.2.2012 in ITA
No.199/Kol/2010 (A.Y. 2006-07) and the order dated 17.2.2012 in ITA
No.1545/Kol/2010 (A.Y. 2007-08) passed by the Income Tax Appellate
Tribunal, Kolkata, "A" Bench, Kolkata are hereby set aside. The
substantial question of law as framed above are answered in favour of
the assessee and against the revenue.
(SURYA PRAKASH KESARWANI, J.)
(RAJARSHI BHARADWAJ, J.)
S. Kumar/S. Das/As
A.F.R.
