2014 (4) TMI 234

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....case, the Tribunal was right in law in deleting the addition of Rs. 2,57,36,253 made under section 40(a)(ia) of the Act being the amount paid to sub-contractors without deducting the tax at source as required under section 194C(2) of the Income-tax Act, 1961 ?" The assessment year is 2005-2006 and the relevant accounting period is the year that ended on March 31, 2005. The respondent-assessee is a cooperative society. For the assessment year under consideration, it declared total income at nil. By an order dated October 29, 2007, the Assessing Officer framed assessment under section 143(3) of the Act whereby he disallowed a sum of Rs. 2,57,36,253 by invoking the provisions of section 40(a)(ia) of the Act on the following grounds : "(i....

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....llant, assailed the impugned order of the Tribunal by submitting that the Tribunal had ignored certain fundamental issues and aspects and had rendered its decision on totally extraneous factors like problems faced by the individual vehicle owners and the ONGC and non-profit motive of the society. The impugned order passed by the Tribunal is, therefore, perverse as being contrary to the facts on record and, as such, deserves to be quashed and set aside. The facts as emerging from the record indicate that the ONGC Ltd. had found crude oil and natural gas in the areas of Ankleshwar, Hansot taluka and nearby talukas of Bharuch District. Such lands belonged to many small illiterate farmers. The ONGC formulated a scheme to acquire the said oil....

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....unt to respective members after deducting the administrative expenses depending on actual usage. During the year under consideration, the assessee-society received Rs. 2,57,62,253 and the entire amount was distributed to the farmers. The Assessing Officer was of the view that the society is functioning as a sub-contractor and that it ought to have deducted TDS on payments made to each of the farmers as per the provisions of section 40(a)(ia) and section 194C. According to the Assessing Officer, the assessee was hiring cabs from farmers and renting them to the ONGC. Since in respect of jeep rental income of Rs. 2,57,36,253 no TDS was deducted the entire expenditure was not allowable under section 40(a)(ia) of the Act. Since the entire amount....