TaxTMI 
TaxTMI 
2011 (5) TMI 666
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.... provisions of section 40a(ia) of the Act of the IT Act, 1961. The AO gave the following reasons for disallowance: i) The ONGC has deducted "TDS on payment to contractor" and periodically payment were made to the assessee only and ONGC has not stated that these payment has made to the society on behalf of its members; ii) As per section 199 of the IT Act, credit shall be given to the assessee for the TDS for AY for which such income is assessable. The assessee has claimed the credit for the entire TDS and therefore the entire income is assessable in the hands of the assessee. In view of this, the stand taken by the assessee that the society is only distributing income does not have any merit; iii) The assessee is a person as per section 2(31) and the status of the assessee is AOP. Assessee is carrying on the business of Traveling Agency as per the tax audit report. Annual accounts of the assessee are audited. iv) The assessee itself has stated that the service tax paid is allowable as per section 43B of the Act and has claimed credit for TDS as per section 199 of the IT Act. The assessee cannot take a stand that only those sections which suit the assessee are applicable to....
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....rs were given job or services as per their qualifications and many other illiterate farmers were provided one jeep each (transport vehicle) which was in turn rented out to ONGC so that means of livelihood In terms of jeep rentals accrued to the farmers. ONGC had entered into an agreement with these individual farmers. This arrangement continued for a few years. However subsequently ONGC round it difficult to deal with each of the individual farmers and it was decided that a cooperative society be formed which can maintain the individual account of each of the farmers and would be one stop entity coordinating all matters with ONGC Limited on behalf of farmers. The cooperative society was formed on 29.8.1 988. The society is o nonprofit making organization maintaining vehicle-wise accounts comprising of details of expenses and receipts. All these vehicles were hired by ONGC and the lumpsum receipt was paid by ONGC after deducting the TDS to the society who thereafter allocated the amount to respective members after deducting the administrative expenses depending on actual usage. The vehicles are In the name of the individual farmers. During the year under consideration the society re....
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....ving the jeep rental income on behalf of the illiterate farmers. This mechanism helps both ONGC and the farmers as it precludes the Individual interaction and smoothens the entire operation. The society prepares the Individual logbook for the farmers and on the basis of such log books the ONGC releases the payment which is distributed to the' farmers. The original agreement always remained between the ONGC and the individual farmers. The ONGC is mandated to pay the hire charges even If any vehicle is not utilized. Further the society is debarred from hiring the vehicles of the farmers to other clients. The society as an Intermediary did the liaison job without undertaking risks or responsibility. Had it been a subcontractor some risk and responsibility would have passed on to the society for which it should have been compensated. But the fact remains that there was no such transfer of risk & responsibility and the activity of the society is merely a pass-through and to facilitate the distribution of the income to the members. The society did not hire vehicles from outside other than from land losing farmers or hire out these vehicles to any other agency other than ONGC, neither did....
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....inted out that this decision was rightly quoted by the AO and the learned CIT(A) is not justified in holding that this is not applicable to the facts of the assessee's case, because the assessee has not performed the service of tour operator. He further pointed out that even in case of the service provided to the members of the society, in that event also ratio of the decision of the Madras High Court is squarely applicable. 7. On the other hand, the learned counsel for the assessee strongly supported the order of the learned CIT (A). He pointed out that the decision of the ITAT, Pune Bench in the case of Datta Digamber Saha. Kamgar Sanstha Ltd. (supra) is more relevant and identical to the facts of the assessee on hand. Therefore, disallowance of Rs.2,57,36,253/- deleted by the learned CIT(A) may be upheld. 8. In rejoinder, the learned DR raised alternate plea that in case the view taken by the learned CIT(A) deleting the disallowance of Rs.2,57,62,253/- is upheld, in that event, the disallowance of Rs.5 1,47,250/- under Section 40A(3) of the Act made by the AO be restored. Elaborating this plea, the learned DR pointed out that in para 4.3.5 on page no.10 of the impugned ord....