TaxTMI 
TaxTMI 
2000 (9) TMI 250
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....see Society has concentrated its activities in transporting milk of the Government Milk Schemes as also different co-operative Societies doing the business of collection of milk. The activities of the assessee Society are quite extensive. On perusal of the various Objects, the following peculiarities of the transport contract are noted: (i) The contractor is required to have adequate number of Tankers (in case of Government Milk Scheme, minimum 7 tankers). (ii) The tankers are required to be of a particular size insulated and have to conform to executing standards of hygiene so that milk is not spoined in transit. (iii) The tankers are required to reach the destination within the prescribed time to enable the concerned Milk Scheme to keep up the distribution schedule. In case of hold-up due to traffic jam, accident etc. alternate arrangements are required to be made. (iv) Sub-letting or contracting is prohibited. Thus, it is seen that the contract of transporting milk is of complex nature requiring the contractor not only to maintain the quantity and quality of milk in tact, but he has also to scrupulously observe the schedule of transport because milk being perishable, loss o....
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.... in subsequent para, i.e., in para 7, that it is the Society which has undertaken the contract and not the members. Then he has further pointed out that there existed between the Society on one hand and the tanker owners on the other, an agreement or contract to hire tankers. He, therefore, held that there is inseparable relation of contractor and contractee between the members of the Society and the Society. However, since the Society itself was a contractor, the members were treated as sub-contractors. The Assessing Officer, therefore, passed an order under section 201(1A) read with section 194C of the Income-tax Act, 1961 and created the following demands: ---------------------------------------------------------------------------- 1995-96 Rs. 9,46,285 1996-97 Rs. 12,61,033 &nbs....
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....mitted that the transport work undertaken by the assessee Society is so complex that no individual tanker owner can be said to carry out any part thereof on his own. In reality, what has happened is that a tanker owner has entrusted his tanker to the assessee Society. Thereafter, it is the Society who undertakes all the work relating to execution of the transport contract. The arrangement of the assessee Society with the tanker owner is for the purpose of hiring tankers of the members. Instead of paying them fixed monthly rent for the hire of the tanker, it was thought by the assessee Society that more equitable way of paying them rent would be to pay according to the trips undertaken by each tanker. Therefore, to determine the amount payable to each tanker-owner, the number of mileage covered by each tanker of the member is noted and freight is paid to him at fixed rate for the mileage covered. From the gross amount payable to him, the assessee recovers 2.5% as its commission. It also deducts amount recovered by way of diesel, tyre, tube, spare-parts etc. This variable rate makes an equitable payment of hire charges to the tanker owners, and further this ensures that a tanker-owne....
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....embers year-wise placed on pages 99 to 101 of the paper book. There are 5 members who have not paid taxes in Financial years 1995-96 and 1996-97. The order under section 201, therefore, should have been limited only to the tax payable in respect of these members. He relied upon the following decisions to the effect that if tax is collected from the payee assessees, the Assessing Officer has no jurisdiction to demand tax from the employer: (1) CIT v. Manager, Madhya Pradesh State Co-operative Development Bank Ltd. [1982] 137 ITR 230 (MP), (2) CIT v. Divisional Manager, New India Assurance Co. Ltd. [1983] 140 ITR 818 (MP), (3) CITv. Shri Synthetics Ltd. [1985] 151 ITR 634 (MP). 7. The learned counsel thereafter relied upon the decision of the Chandigarh Bench in Munak Investment (P.) Ltd. v. ITO [1995] 55 ITD 429 wherein it has been held that because the date of payment of TDS is unknown, interest is incapable of being calculated and, therefore, it could be said that interest under section 201(1A) was not leviable. 8. The learned counsel then relied upon the decision of the Mumbai Bench in IACv. Tata Chemicals Ltd. [1999] 68 ITD 205 where it has been held that liability of inte....
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....essing Officer has sought to recover tax from the assessee. If the assessee was in default in deducting tax, he was of course liable to pay interest and that liability would depend on the view the Tribunal takes in this behalf in regard to the liability of the assessee under section 194C. 10. Shri Naresh Kumar, the learned senior D.R. strongly supported the orders of the authorities below. His preliminary objection was that the order under section 201(1A) in this case was passed in the case of Datta Digamber Sahakari Kamgar Sanstha Maryadit. The CIT(A) has passed order in the same name. However, the appeal has been filed in the case of Datta Digamber Sahakari Kamgar Sanstha Ltd. which "appears to be a different entity". Therefore, against the order of the CIT(A), there is no appeal filed and hence the appeal of the assessee be dismissed and the order of the CIT(A) may therefore be confirmed, since no valid appeal has been filed. In support of this contention, he placed reliance on the order of this Tribunal in the case of Smt. Suman Waman Chaudhari and Smt. Sushila V. Wagh v. ITO [IT Appeal No. 1601. (Pune) of 1996, dated 5-6-2000]. 11. We do not find any merit in this preliminar....
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....payees were not having taxable income, no declaration of exemption was filed as was required under the Act. 15. We have considered the rival submissions and perused the facts on record. Section 194C(1) provides that any person responsible for paying any sum to any resident for carrying out any work in pursuance of a contract between the contractor and several entities mentioned therein, shall at the time of credit of such amount to the account of the contractor or at the time of payment thereof in cash or by cheque deduct an amount equal to 2% of such sum. Explanation III provides that the 'work' referred to in section includes a transport contract, i.e., carriage of goods and passengers by any mode of transport other than by railways. It is not disputed that the assessee was a contractor under section 194C(1) and that, therefore, from the payments it received from various contractees, it was liable for tax deduction at source at the rate of 2%. As the facts will bear out that inspite of this liability because of sub-section (4) since the assessee's income was below taxable limit it had obtained certificates of non-deduction of tax from the department (copies placed before the Ass....
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....ntractor should carry out the whole or any part of the work undertaken by the contractor. In the present case, a tanker owner owning one or two tankers cannot say that he has carried out any part of the work undertaken by the assessee Society because he has not actually participated in carrying out the work. In fact, the transport work undertaken by the Society cannot be split up into parts, as may happen in case of a construction contract, where a part of the work can be not only separately identified, but it can be executed also by a sub-contractor on his own. A sub-contractor carrying out civil work himself performs part of the main contract. This is not so here and a tanker owner individually puts in no efforts except to hand over his tanker and get the charges. Thus, there was no sub-contract between the assessee Society and its members (tanker owners) and in fact, there cannot be such a sub-contract, because of Co-operative Society is a medium or collective entity of the members themselves, they were not different from each other and what is described as the Society is nothing but collective name of the members and it is thus the collective entity of the members that had take....