JUDGMENT

VENKATACHALA, J.:—The short question which needs our decision in this appeal by special leave is whether a person who credits to the account of or pays to a contractor any sum payable by any of the organisations specified in S. 194C(1) of Income-tax Act, 1961 -the Act for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and the specified organisation is liable to deduct two per cent of such sum as income-tax as required under that sub-section.

2. The facts which have led to the need for our decision on the said question are briefly these: The Associated Cement Company Ltd., the appellant issued a letter dt. 5th Nov., 1973 to Mr. S. P. Nag, contractor, Jhinakpani containing the terms and conditions of a contract of loading packed cement bags from its Packing Plants Nos, 1 and 2 into wagons or trucks. Under clause 12 of those terms and conditions, there was a stipulation that the contractor shall be paid a sum for his work at a flat rate of 41 paise for each tonne of cement handled in Packing Plant No. 1 and 30 paise for each tonne of cement handled in Packing Plant No. 2. Clause 13 thereof, which c