INCOME TAX ACT, 1961

Section 194C Section 192

Tax deduction at source - Under section 194C or 192 - Payments to teachers when staff of Vidyalayas was claimed to be managed under payment of remuneration -

It was alleged that assessee short deducted/not deducted tax on payments to teachers/construction work. Assessee contended that staff of Vidyalayas was managed under payment of remuneration, due to which, section 194C was not applicable. AO held payments to teachers, as work of contract under section 194C.Held: Prima facie test for the determination of relationship between master and servant is the existence of the right in master to supervise and control work done by the servant. Not only in the matter of directing what work the servant is to do, but also the manner in which he shall do his work. Nature or extent of control which is requisite to establish the relationship of employer and employee must necessarily vary from business to business and is by its very nature, incapable of precise definition. Correct method of approach, therefore, would be to consider whether having regard to the nature of the work there was due control and supervision by the employer. Payment in question was not covered by provisions of section 194C rather, it came under section 192, due to which, authorities below erred in holding the deductor/assessee to be an assessee in default.

Followed:Dharangadhara Chemical Works Ltd. v. State of Saurashtra AIR 1957 SC 264; Principal Sri Sathya Sai College for Women v. ITO [ITA No. 684 to 686/JP/2018, dt. 19-8-2019] : 2019 TaxPub(DT) 5872 (Jp-Trib); ACIT v. M/s. MCM D.A.V. College for Women [ITA Nos. 512 to 514/Chd/2014, ITA Nos. 515 to 517/Chd/2014, dt. 12-8-2014]

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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