TMI Blog2009 (11) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... it is apparent that the society has 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. - Section 194C(2) of the Act is not attracted and the assessee Society is not liable to deduct tax at source on account of payments made to the truck owners who are also members of the society - 27 of 2006 - - - Dated:- 16-11-2009 - Deepak Gupta and V.K. Ahuja, JJ. Mr. Vinay Kuthiala Mrs. Vandana Kuthiala, Advocates for the Appellant. Mr. M. M. Khanna, Senior Advocate with Mr. Goverdhan Sharma, Advocate, for the Respondent. JUDGM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 per cent of such sum as income-tax on income comprised therein." The Assessing Officer decided the case in favour of the Revenue. However, the Commissioner Income Tax as well as the Tribunal have decided the matter in favour of the assessee. According to the Commissioner as well as the Income Tax Appellate Tribunal the assessee Society has not given any sub3 contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 Section 194C(2) or not. The respondent contends that in view of the law laid down by the Apex Court in Chelmsford Club vs. Commissioner of Income-tax, (2000) 243 ITR 89, the income of the society arises out of mutual transactions and the principle of mutuality is applicable and therefore the income of the assessee is not assessable to income tax. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truck operators who had carried the goods after deducting a nominal sum. 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 assessee have separate juristic identity they are covered with the meaning of Section 194C(2). It is urged on behalf of the Revenue that since the assessee being a person is paying a sum to the member truck operator who is a resident within the meaning of the Act, TDS is required to be deducted. This argument does not take into consideration the heading of the Section noted hereinabove and the entire language of Section 194C(2) which clearly in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rriage 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 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 society has entered into a contract on behalf of the members. The society is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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