“TDS on contract payments”

The phrase 'any work' in Section 194C(1) of the Income Tax Act includes the supply of labour to carry out work, and is not confined to traditional works contracts.

A clearing and forwarding agent is an intermediary who books cargo and facilitates the contract for carrying goods. Therefore, such an agent is not liable to withhold tax under section 194C from payments made towards air freight on behalf of its customers.

Section 194C is attracted when payments are made for carrying out work in pursuance of a contract with a specified person. If vehicles are hired on an 'as and when needed' basis, Section 194C may not apply.

An intermediary or agent acting on behalf of its clients is not a person responsible for deducting tax at source (TDS) if it is merely facilitating a transaction and is not a party to the contract for payment.

A written contract is not a prerequisite for invoking the provisions of Section 194C, as even an oral agreement is sufficient for the purpose of Tax Deducted at Source (TDS). Payments made towards hiring charges for vehicles create a presumption of a contract for hiring.

A contract for the supply of materials is considered a sale and not a contract for work, meaning Section 194C (TDS on payments for work) is not applicable. The Gujarat High Court upheld this, dismissing revenue's appeal based on an explanatory circular.