2014 (3) TMI 184

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....ing the decision of the CIT(A), deleting the addition of Rs.2,13,99,519/- made u/s.40A(3) of the IT Act being payment made in contravention with the provisions of sec.40A(3) of the I.T.Act?" Brief facts are that the respondent-assesee is a society of landlosers who had lost their land in a particular area due to the acquisition undertaken by the ONGC. For the assessment year 2009-10, the Assessing Officer disallowed 20% of sum of Rs.3.79 crores (rounded off) on the ground that such sum was expended and payments in excess of Rs.20,000/- each were made to individuals without following the requirements of section 40A(3) of the Act. The assessee contended that it was only a cooperative society enabling the land losing farmers to survive b....

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....e not eligible for any job, to compensate such farmers ONGC decided to give a special right to each land losing farmer, for this purpose it was decided that each such farmer would be provided with one jeep each (transport vehicle) which would be taken on rent by ONGC so that each farmer was provided with a means of livelihood. To begin with, ONGC had entered into an agreement with these individual farmers which continued for a few years. However, the number of such farmers was increasing day by day and it became difficult for ONGC to maintain accounts of each individual farmer for releasing payments. With a view to obviate such difficulties in September, 1988 ONGC decided that a cooperative society be formed consisting of farmers whose land....

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....ive and were more in the nature of a welfare activity performed by it. The context in which the society was formed was essentially to facilitate receipts and distribution of income and accounting for the expenses. The society acted as an interface between the farmers and ONGC for this limited purpose was receiving the jeep rental income on behalf of the illiterate farmers. This mechanism helps both ONGC and the farmers as it precludes 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 Co....