TMI Blog2011 (5) TMI 666X X X X Extracts X X X X X X X X Extracts X X X X ..... ts whose land is acquired by the ONGC. In these circumstances, the learned CIT (A) is factually and legally correct in holding that the assessee has not performed the service of tour operators. It was providing services to the members of the society only. In these circumstances, the decision of the ITAT, Pune Bench in the case of Datta Digambar Saaakari Kamgar Sanstha Ltd. (2000 -TMI - 71629 - ITAT PUNE) relied upon by the learned CIT (A) in the impugned order is more relevant and identical to the facts before us. - ITA No.2303/Ahd/2008 - - - Dated:- 20-5-2011 - O R D E R PER T.K. SHARMA, JUDICIAL MEMBER : This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-VI, Baroda dated 15.04.2008 arising out of the order of the Assessing Officer passed under Section 143(3) of the Income Tax Act, 1961. 2. The only ground raised in this appeal reads as under: 1 On the facts and in the circumstances of the case the CIT(A) has erred in the law in deleting the addition of rs.2,57,36,353/- made u/s.40(a)(ia) of the Act being amounts paid to Sub contractors without deducting the tax at source as required under section 194C(2) of the IT A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was no intention to earn profit from such activity but only to help such illiterate farmers by maintaining accounts of each member of his vehicle and then distribute amount after deduction of expenses etc. The assessee also furnished complete details of such farmer s viz. name and address of the members, details of month-wise hiring income distribution etc. It is submitted that there is no parallel to the concept of contractor and sub contractor. It was submitted that the member of the society owning a vehicle and giving out to the society to carry out the work. The society is a whole a unit consisting of its members. The hiring of the work of the society cannot be split up into parts and cannot be separated or identified because the society is media or collective body. The society s identity is with its members without which there is no existence of the society. There is no concept of contractor-contractee or contractor and sub contractor exist in the present case. Therefore, provisions of section 194C (2) and section 40A(3) of the Act were not applicable to the present case. Considering all these, the CIT (A) deleted the disallowance with the following findings: 4.3. I have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps on continuous basis. Ii is hiring the cabs from farmers and renting it out to ONGC. The Assessing Officer relied on the decision in the case of Secy. Federn. Of Bus Operators Association of T.N. vs. Union of India -134 ELT 618(Mad) wherein while holding the constitutional validity of service tax on tour operators or renting a cab scheme operator it is held that the tax on service is levied on a person if he is on the business of engaging taxies for his customers and even giving services without owning the vehicle. The Assessing Officer has further stated that the appellant is a person in terms of section 2(31) in the status of AOP and against jeep rental income of Rs.2,57,36,253/- various expenses including service taxes were debited in the profit and loss account. Since in respect of jeep rental expenditure of Rs.2,57,62,253/- no TDS was deducted under section 40(a)(ia) the entire expenditure is not allowable. In addition as the entire amount of Rs.2,57,36,253/- was paid to the farmers in cash 20% of the expenditure amounting to Rs.51,47,250/- was also added to the income under section 40A(3). 4.3.2. In the given circumstances, I am of the humble opinion that the functions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Excise Department. In my view the Assessing Officer has inappropriately quoted the decision of the Hon ble Madras High Court. The appellant has not performed the service of tour operator, if at all, any service is provided, it is provided to the members of the society. 4.3.4. Reliance on the decision in the case of Datta Digamber Saakari Kamgar Sanstha Ltd. Vs. A CIT 83 ITD 148 (Pune) by the appellant is more relevant and identical to the facts at hand. 4.3.5. In view of above the disallowance of. Rs.2,57,62,253/- under section 40(a)(i) is directed to be deleted. Further, there is no case for disallowance under section 40A (3) as no expenditure is incurred by the society in distributing the rentals to the farmers. The Assessing Officer is also directed to allow the statutory deduction under section 80P(c)(ii) of the Income Tax Act. 5. Aggrieved Revenue is in appeal before us. 6. At the time of hearing before us, the learned DR pointed out that in the assessment order the AO rightly disallowed Rs.2,57,36,253/- by invoking the provisions contained in section 40a(ia) of the Act. The AO also relied upon the decision of the Madras High Court in the case of Secretary Fed. Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h lead to formation of the society, we are convinced that the assessee has no profit motive and more of a welfare activity performed by the assessee. It was acted as an interface between farmers and the ONGC for the limited purpose of receiving the jeep rental income on behalf of the illiterate farmers. The main purpose of this mechanism is to help both ONGC and the farmers as it precluded the individual interaction and smoothen the entire operation. The Society was also debarred from hiring the vehicles of the farmers to other clients whose land is acquired by the ONGC. In these circumstances, the learned CIT (A) is factually and legally correct in holding that the assessee has not performed the service of tour operators. It was providing services to the members of the society only. In these circumstances, the decision of the ITAT, Pune Bench in the case of Datta Digamber Saha. Kamgar Sanstha Ltd. (supra) relied upon by the learned CIT (A) in the impugned order is more relevant and identical to the facts before us. In view of this, we decline to interfere with the order of the learned CIT (A). 10. Before parting with, with regard to alternate plea of the learned DR, we may point ..... X X X X Extracts X X X X X X X X Extracts X X X X
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