TaxTMI 
TaxTMI 
2014 (7) TMI 57
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....he tune of Rs. 32,04,140/-. 1 Whether reporters of Local Papers may be allowed to see the Judgment ?Yes The assessee had, in turn, got the transportation of LPG done through 3 persons, namely Bimla Devi, Sanjay Kumar and Ajay to whom he made the freight payment amounting to Rs.20,97,689/-. The A.O. observed that the assessee had made a sub-contract with the given three persons within the meaning of section 194C of the Act, and, therefore, he was liable to deduct tax at source from the payment of Rs. 20,97,689/-. On account of his failure to do so, the said freight expenses were disallowed by the A.O. as per the provisions of Section 40 (a) (ia) of the Act. 3. Against the order of A.O., the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), Shimla, H.P., (hereinafter referred to as 'CIT'), who vide its order dated 17.8.2012 upheld the order dated 30.11.2011. The matter thereafter came up in appeal before the ITAT which too met with the same fate. 4. It is in this background that the appellant is now before us and has challenged the order passed by the A.O., CIT and ITAT as being against the facts and circumstances of the case besides being based merely....
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....arrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of section 200: Provided that where in respect of any such sum, tax has been deducted in any subsequent year or, has been deducted in the previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. Explanation.- For the purposes of this sub-clause,- (i) "commission or brokerage" shall have the same meaning as in clause (i) of the Explanation to section 194H; (ii) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9; (iii) "professional services" shall have the same meaning as in clause (a) of the Explanation to section 194J; (iv) "work" shall have the same meaning as in Explanation III to section 194C". 7.....
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....ax on income comprised therein. [Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum is credited or paid to the account of the sub-contractor, shall be liable to deduct income tax under this sub-section.] [Explanation I. - For the purposes of sub-section (2), the expression "contractor" shall also include a contractor who is carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and the Government of a foreign State or a foreign enterprise or any association or body established outside India.] [Explanation II]. - For the purposes of this section, where any sum referred to in sub-section (1) or sub-section (2) is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and....
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....s, having PANs and have duly declared truck income in their return of income. There was no loss of revenue by not deducting the tax". In fact, the appellant also admitted that the three persons to whom the freight was paid were none other than his family members with Bimla Devi, being his wife and Sanjay and Ajay being his sons. 11. The plea of the appellant that his case does not fall within the ambit of Section 194C (2) of the Act or that he had not got the transportation work carried out as a sub-contract through his family members in respect of the tender for carriage of LPG in his name was not taken before the Assessing Officer. It was during the course of the appellate proceedings that this plea was raised before the CIT. Therein the main thrust of the appellant was that his case did not fall within the purview of Section 194C (2) but fell within the purview of Section 194C (1). Thus, the sum and substance of the appellant's case now was that the freight payments made by him were under an independent contract between him and the truck owners/ transporters and thus covered under Section 194C (1) and not under Section 194C (2). 12. The CIT as also the ITAT found this submissi....
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....arla case (supra) related to a co-operative society created by the transporters themselves with a view to enter into contract with the Companies. The Companies then entered into contract for transportation of the goods and material with the Society. The Society there was nothing more than a conglomeration of the truck owners themselves and had been created for the benefit of the truck operators, while the society itself did not do the work of transportation. It is in such circumstances that the provisions of Section 194C (2) were held to be not attracted to the fact situation obtaining in that case which would be clear from the following observations of this Court: 11. Section 194C(1) deals with payments made to the Contractor which in this case would mean the payment made by Companies which entered into contract of transportation with the assessees. Admittedly the Companies deducted tax at source in terms of Section 194C(1). The entire amount received by the assessee from the Companies after deductions was paid to the members of the truck operators who had carried the goods after deducting a nominal sum as "parchi charges". The question which arises is whether the members are sub....
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....harges" which is used for meeting the administrative expenses of the society. There is no dispute with the submission that the Society has an independent legal status and is also contractor within the meaning of Section 194C. It is also not disputed that the members have a separate status but there is no sub-contract between the society and the members. In fact if the entire working of the society is seen it is apparent that the societies have entered into a contract on behalf of the members. The society is nothing but a collective name for all the members and the contract entered by the society is for the benefit of the constituent members and there is no contract between the society and the members. 15. For the foregoing reasons we are of the considered view that Section 194C(2) of the Act is not attracted and the assessee Society(s) is not liable to deduct tax at source on account of payments made to the truck owners who are also members of the society. The questions of law accordingly decided in favour of the assessees and against the Revenue." Therefore, the reliance placed by the learned counsel for the appellant on judgment of this Court on M/s Ambuja Darla's case (supra) ....