TMI Blog2000 (9) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee Society has concentrated its activities in transporting milk of the Government Milk Schemes as also different co-operative Societies doing the business of collection of milk. The activities of the assessee Society are quite extensive. On perusal of the various Objects, the following peculiarities of the transport contract are noted: (i) The contractor is required to have adequate number of Tankers (in case of Government Milk Scheme, minimum 7 tankers). (ii) The tankers are required to be of a particular size insulated and have to conform to executing standards of hygiene so that milk is not spoined in transit. (iii) The tankers are required to reach the destination within the prescribed time to enable the concerned Milk Scheme to keep up the distribution schedule. In case of hold-up due to traffic jam, accident etc. alternate arrangements are required to be made. (iv) Sub-letting or contracting is prohibited. Thus, it is seen that the contract of transporting milk is of complex nature requiring the contractor not only to maintain the quantity and quality of milk in tact, but he has also to scrupulously observe the schedule of transport because milk being pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains to point out in subsequent para, i.e., in para 7, that it is the Society which has undertaken the contract and not the members. Then he has further pointed out that there existed between the Society on one hand and the tanker owners on the other, an agreement or contract to hire tankers. He, therefore, held that there is inseparable relation of contractor and contractee between the members of the Society and the Society. However, since the Society itself was a contractor, the members were treated as sub-contractors. The Assessing Officer, therefore, passed an order under section 201(1A) read with section 194C of the Income-tax Act, 1961 and created the following demands: ---------------------------------------------------------------------------- 1995-96 Rs. 9,46,285 1996-97 Rs. 12,61,033 ---------------- Rs. 22,07,318 ---------------- ---------------------------------------------------------------------------- 3. In appeal, the learned CIT(A) has endorsed the findings of the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to him at fixed rate for the mileage covered. From the gross amount payable to him, the assessee recovers 2.5% as its commission. It also deducts amount recovered by way of diesel, tyre, tube, spare-parts etc. This variable rate makes an equitable payment of hire charges to the tanker owners, and further this ensures that a tanker-owner member whose tanker runs more gets more freight, whereas a tanker owner whose tanker has comparatively been used for less work gets less hire charges. The tanker owner does nothing except to collect his monthly cheque of freight charges payable to him. He does not actually participate in carrying out the transport work. 5. The learned counsel drew our attention to section 194C(2) and submitted that the requirement of the section is that the sub-contractor should carry out the whole or any part of the work undertaken by the contractor. In the present case, a tanker owner owning one or two tankers cannot say that he has carried out any part of the work undertaken by the assessee Society because he has not actually participated in carrying out the work. In fact, the transport work undertaken by the Society cannot be split up into parts, as may ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that because the date of payment of TDS is unknown, interest is incapable of being calculated and, therefore, it could be said that interest under section 201(1A) was not leviable. 8. The learned counsel then relied upon the decision of the Mumbai Bench in IACv. Tata Chemicals Ltd. [1999] 68 ITD 205 where it has been held that liability of interest under section 201(1A) continues till such time tax was actually paid by the defaulter or till the Assessing Officer assessing the payee determined that no tax was payable by the assessee or orders refund to be given to that payee assessee. 9. The learned counsel then raised another alternate contention. He submitted that section 201(1) has two parts. It deals with a case of an assessee who has failed to deduct tax. It also covers a case where the assessee has deducted tax at source, but has not paid the same to the Government. In either of these cases, the concerned assessee will be deemed to be an assessee in default. But in the case of the former, i.e., person who has failed to deduct tax, there is no specified provision in the Act to recover tax which he has failed to deduct. On the other hand, in case of a person who has deducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the order of the CIT(A) may therefore be confirmed, since no valid appeal has been filed. In support of this contention, he placed reliance on the order of this Tribunal in the case of Smt. Suman Waman Chaudhari and Smt. Sushila V. Wagh v. ITO [IT Appeal No. 1601. (Pune) of 1996, dated 5-6-2000]. 11. We do not find any merit in this preliminary objection. There is no change in the identity of the Society. Before the Assessing Officer and the CIT(A) the name given was Dutta Digamber Sahakari Kamgar Sanstha Maryadit, while before the Tribunal the assessee has translated the Hindi Marathi word of 'Maryadit' into 'Limited'. So, there is no defect in the appeal filed before us and accordingly, we overrule this preliminary objection. 12. The learned senior. D.R. further submitted that the assessee has been taking shifting stands. A Co-operative Society is separate from members and the transport contract undertaken by the assessee was not signed by its 366 members, it has been taken only by the assessee Society. The liability of the assessee as a contractor has to be seen. According to the learned senior D.R., it is not correct to say that the contract could not be subdivided. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the payments it received from various contractees, it was liable for tax deduction at source at the rate of 2%. As the facts will bear out that inspite of this liability because of sub-section (4) since the assessee's income was below taxable limit it had obtained certificates of non-deduction of tax from the department (copies placed before the Assessing Officer) and accordingly, provisions of section 194C are not applicable. 16. Section 194C(2) provides that any person being a contractor and not being an individual or HUF responsible for paying any sum to any resident (referred as sub-contractor) in pursuance of a contract with the subcontractor for carrying out whole or in part of the work undertaken by the contractor is required to deduct at the time of credit or payment of such sum to the sub-contractor a tax equal to 1% of the sums paid. The ingredients of the liability under section 194C(2) are thus: (i) there should be a contractor meaning thereby a person referred to in section 194C(1) who should not be individual of HUF; (ii) he should be responsible for paying any sum to any resident; (iii) the amount payable should be in pursuance of a contract with the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its members (tanker owners) and in fact, there cannot be such a sub-contract, because of Co-operative Society is a medium or collective entity of the members themselves, they were not different from each other and what is described as the Society is nothing but collective name of the members and it is thus the collective entity of the members that had taken the contract and there was no question of giving any further sub-contract to these constituent members. This Tribunal in the case of Shivamrut Dudh Utpadak Sah. Sangh Maryadit v. Dy. CIT[1999] 71 ITD 157 (Pune) has held as under: "A co-operative society is a voluntary Association of Persons, it is an economic institution formed for social purpose and not motivated by entrepreneurial profits. In other words, it is a democratic organisation owned and controlled by those utilising the services. It is distinct from Association of Persons." Further in Para 6(c) it was held that a cooperative Society having been mainly formed on doctrine of mutuality, section 80P prescribes various exemptions or deductions in respect of income which arise applying the principles of mutuality. It is well-settled that mutual societies do not sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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