TMI Blog2010 (9) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no contract between the society and the members. - 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. - 52 of 2006. - - - Dated:- 10-9-2010 - Mr. Justice Deepak Gupta, Mr. Justice Sanjay Karol, JJ. For the Appellant(s).: Mr.Vinay Kuthiala, Advocate. For the Respondents: Ms.Jyotsna Rewal Dua, counsel for respondent. Deepak Gupta, J.(oral) The following question of law is involved in this appeal: 1.Whether on the facts and in the circumstances of the case freight payments made by the assessee AOP to the truck owners who were also the members of the AOP, were subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eads 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 time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 question which arises before us is whether the owners of the trucks who were members of the society would fall within the purview and ambit of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith 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 identity and each of the truck operators who are members of the assessees have separate juristic identity they are covered with the meani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 nominal amount as parchi charges which is used for meeting the administrative expenses of the society. There is no dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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