TMI Blog2009 (10) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... Gupta, Mr. Justice V.K.Ahuja, JJ. For the Appellant(s).: Mr.Vinay Kuthiala, Advocate. For the Respondents: Mr.M.M. Khanna, Mr.Goverdhan Sharma, Ms.Jyotsna Rewal Dua, Deepak Gupta, J. These appeals are being disposed of by a single judgment as the questions of law involved in all the appeals are virtually the same and reads as follows: "1.Whether the freight payments made by the assessee Society to the truck owners who were also the members of the society, were subject to deduction at source in view of section 194C(2), being payments made to the truck owners in their capacity as Sub-Contractors." 1 Whether the reporters of the local papers may be allowed to see the Judgment? yes In ITA Nos.25, 45, 46 50 of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is liable to deduct TDS @ 1% from the amount paid to the members/truck operators in terms of Section 194C(2), relevant portion of which reads as follows: "194C. (1)xxxxxxxxxxx (2)Any person (being a contractor and not being an individual or a Hindu undivided family) responsible for paying any sum to any resident (hereafter in this section referred to as the sub-contractor) in pursuance of a contract with the sub-contractor for carrying out, or for the supply of labour for carrying out, the whole or any part of the work undertaken by the contractor or for supplying whether wholly or partly any labour which the contractor has undertaken to supply shall, at the time of credit of such sum to the account of the sub-contractor or at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of the Income Tax Act and the Truck Operators are residents of India and therefore in terms of Section 194C(2) since the assessee is making payment to a resident it is liable to deduct the tax at source. In support of his contention Sh.Kuthiala has relied upon Associated Cement Co. Ltd. vs. Commissioner of Income Tax and another, (1993) 201 ITR 435, Central Board of Direct Taxes vs. Cochin Goods Transport Association, (1999) 236 ITR 993 and Birla Cement Works vs. Central Board of Direct Taxes and others, (2001) 248 ITR 216. In our considered view these judgments have no relevance to the present case because in these cases the only question involved was the interpretation of the word 'work' in Section 194C. In the present case the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attracted in the present case. The heading of Section 194C reads thus: "Payments to Contractors and Sub Contractors" 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-contractors or not. The main contention of the Revenue is that since the assessee has a separate juristic ide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual opportunity to carry the goods and earn income. The society itself does not do the work of transportation. The members of the Society are virtually the owners of the society. It may be true that they both have separate juristic entities but the fact remains that the reason for creation of the Society was only to ensure that work is provided to all the truck operators on an equitable basis. A finding of fact has been rendered by the authorities that the societies were formed with a view to obtain the work of carriage from the Company since the Companies were not ready to enter into a contract with the individual truck operators but had asked them to form a society. Admittedly, the society does not retain any profits. It only retain as no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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