SMC AMBIKA JV, MUMBAI v. ITO WD 3(3), MUMBAI

ITA 7698/MUM/2010 | 2007-2008
Pronouncement Date: 29-07-2011 | Result: Allowed

Appeal Details

RSA Number 769819914 RSA 2010
Assessee PAN ABEFS1515P
Bench Mumbai
Appeal Number ITA 7698/MUM/2010
Duration Of Justice 8 month(s) 19 day(s)
Appellant SMC AMBIKA JV, MUMBAI
Respondent ITO WD 3(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 29-07-2011
Date Of Final Hearing 30-05-2011
Next Hearing Date 30-05-2011
Assessment Year 2007-2008
Appeal Filed On 09-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUMBAI BEFORE SHRI P.M. JAGTAP (AM) AND SHRI V. DURGA RAO (JM) ITA NO.7698/M/2010 ASSESSMENT YEAR 2007-08 M/S. SMC AMBIKA JV . APPELLANT 1 ST FLOOR SASTRA NIWAS STATION ROAD THANE-(W). PAN : ABEFS1515P THE INCOME TAX OFFIER 3(3) RESPONDENT THANE. APPELLENT BY : SHRI HARI S. RAHEJA RESPONDENT BY : SHRI B. JAYA KUMAR DATE OF HEARING : 30-05-2011 DATE OF PRONOUNCEMENT : O R D E R PER V. DURGA RAO JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 30- 07-2010 OF CIT(A)-I THANE FOR THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE IS AN AOP (ASSOCIATION OF PERSONS). THE AOP HAS TWO PARTNERS NAMELY M/S SMC INFRASTRUCTURE PVT LTD. A COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956 AND M/S AMBIKA ENTERPRISES A PROPRIETARY FIRM. THE PARTNERS OF THE AOP FOR TH E PURPOSE OF CONTRACT FROM THE THANE MUNICIPAL CORPORATION ENTERED AN AGR EEMENT DATED 16 TH NOVEMBER 2004. ACCORDING TO THAT AGREEMENT THE PU RPOSE OF THE JOINT VENTURE (JV) SHOWN JOINTLY PREPARED AND SUBMIT THE TENDER DOCUMENTS IN THE NAME OF ASSESSEE (AOP) WHICH SHALL BE IN SUCH A FIRM AND SHALL CONTAIN SUCH ITEMS AND CONDITIONS AS THE EMPLOYER REQUIRED . AFTER ITS PREPARATION AND SUBMISSION AS AFORESAID THE JOINT VENTURE SHALL BE JOINTLY AND SEVERELY BOUND BY THE PROVISIONS OF THE TENDER OR TENDERS KN OWN TO THE PARTY OF THE JOINT VENTURE CAN VARY OR SEEK TO VARY THE SAME WIT HOUT PREVIOUS WRITTEN CONSENT OF THE OTHER. ITA 7698/M/2011 A.Y. 2007-08 2 3. ANY BOND GUARANTEES OR INDEMNITIES REQUIRED BY OR ARISING OUT OF THE TERMS AND CONDITIONS OF THE TENDER OR CONTRACT SHAL L BE PROCURED BY THE PARTIES OF THE SECOND PARTY NAMELY M/S AMBIKA ENTER PRISES. 4. EACH MEMBER OF THE JOINT VENTURE AGREES IN PLACE AT THE DISPOSAL OF THE JOINT VENTURE AT THE BENEFICIAL OF ALL ITS EXP ERIENCE TECHNICAL KNOWLEDGE AND SKILL AND SHALL IN RESPECT BARE ITS S HARE OF RESPONSIBILITY AND BURDEN OF COMPLETING THE CONTRACT. THE PARTIES SHALL BE RESPONSIBLE FOR PHYSICAL AND FINANCIAL DISTRIBUTION OF WORK I.E . M/S SMC INFRASTRUCTURE PVT LTD. UNDERTAKEN THE RESPONSIBILITY OF 51% OF T HE ENTIRE WORK M/S AMBIKA ENTERPRISES 49% TO THE PROPORTIONATE WORKS. BOTH THE PARTNERS I.E. M/S SMC INFRASTRUCTURE PVT LTD. AND M/S AMBI KA ENTERPRISES FILED TENDERS IN THE NAME OF AOP AND COMPLETED THE WORK A CCORDING TO TENDERS AND RECEIVED PAYMENTS. DURING THE COURSE OF THE AS SESSMENT PROCEEDINGS THE ASSESSING OFFICER HAD OBSERVED THAT ON GOING TH ROUGH THE PROFIT AND LOSS ACCOUNT IT IS SEEN THAT THE AOP HAD CREDITED T HE CONTRACT RECEIPT RECEIVED FROM THANE MUNICIPAL CORPORATION (TMC) TO THE TUNE OF RS. 20 097 075/- TOWARDS THE SUB-CONTRACT TO JV PARTNER S DECLARED NET PROFIT AT RS. NIL. SINCE THE SUB-CONTRACT WAS GIVEN TO TH E JV PARTNERS I.E. M/S SMC INFRASTRUCTURE PVT LTD. AND M/S AMBIKA ENTERPR ISES NO TDS WAS DEDUCTED AND CALLED FOR THE EXPLANATION FROM THE AS SESSEE. IN RESPONSE TO THE ABOVE SHOW CAUSE THE ASSESSEE HAD MADE HIS SUB MISSIONS DATED 25 TH NOVEMBER 2009 AND SUBMITTED THAT THE ASSESSEE STAT US WAS A AOP (ASSOCIATION OF PERSONS) AND IS IN THE BUSINESS OF CIVIL CONSTRUCTION. AS PER THE TERMS OF THE JOINT VENTURE AGREEMENT THE JOINT VENTURE PARTNERS HAVE TO EXECUTE THE WORK IN PROPORTION TO THE AGREED RATIO I.E. M/S SMT INFRASTRUCTURE PVT LTD. 51% AND M/S AMBIKA ENTERPR ISES 49%. THE JOINT VENTURE PARTNERS HAVE EXECUTED THE WORK AS PER THE AGREED PROPORTION AND IT WAS SUBMITTED THAT THERE IS NO CONTRACT OR SUB-C ONTRACT BETWEEN THE ASSESSEE AND ITS JOINT VENTURE PARTINERS AND SEC. 1 94C HAS NO APPLICATION TO THE ASSESSEE AND AOP IS NOT LIABLE TO DEDUCT TDS ON PAYMENT TO THE JOINT VENTURE PARTNERS. 5. HOWEVER THE ASSESSING OFFICE HAD NOT AGREED WIT H THE SUBMISSIONS OF THE ASSESSEE AND OBSERVED THAT THE AOP WAS A CON TRACTOR AND SUB- CONTRACTED THE WORK TO THE JOINT VENTURE PARTNERS M ADE PAYMENT TO THEM. ITA 7698/M/2011 A.Y. 2007-08 3 AS PER SECTION 194(C)(2) THE ASSESSEE HAS TO DEDUC T TDS AND NO SUCH TDS HAS BEEN DEDUCTED ACCORDINGLY BY INVOKING SEC. 4 0(A)(IV) OF INCOME TAX ACT 1961 THE AO DISALLOWED THE EXPENSES TO THE EXTENT OF RS. 2 00 097 075/-. 6. ON BEING AGGRIEVED THE ASSESSEE CARRIED MATTER IN APPEAL BEFORE THE LD. CIT (A) AND IT WAS SUBMITTED BEFORE THE LD. CIT (A) THAT THE JV PARTNERS NAMELY M/S SMC INFRASTRUCTURE PVT LTD. AND M/S AMBI KA ENTERPRISES ENTERED INTO A JOINT VENTURE FOR THE PURPOSE OF WOR K FROM TMC BOTH THE PARTIES CAME TOGETHER AND CREATED A AOP I.E. SMC AMBIKA JV THE ASSESSEE SUBMIT TENDERS ON BEHALF OF AOP AND WORK WAS ALLOTTED IN THE NAME OF THE AOP AND FINALLY THE PAYMENTS WERE RECEI VED IN THE NAME OF THE AOP. THE AOP WAS CREATED FOR THE PURPOSE OF GETTIN G THE CONTRACT AND IT WAS SUBMITTED FURTHER THAT THERE IS NO CONTRACT OR SUB-CONTRACT RELATIONSHIP AS EXISTED IN BETWEEN THE ASSESSEE AMB IKA JV AND SMC INFRASTRUCTURE PVT LTD. THEREFORE SEC. 194C HAS NO APPLICATION. THE LD. CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE AS SESSEE HAD OBSERVED THAT THE ASSESSEE HAS TAKEN A CONTRACT WORK FROM TH ANE MUNICIPAL CORPORATION AND SUB-CONTRACTED THE WORK TO THE JV P ARTNERS. AS PER SECTION 194C THE PERSON MAKING ANY PAYMENT TO THE SPECIFIED PERSONS INCLUDING AOP AFTER 1 ST APRIL 2008 IS REQUIRED TO DEDUCT THE TDS WHEREAS THE CASE OF THE ASSESSEE IS THAT THE CONTRACT WORK TAKEN FROM TMC HAS BEEN SUB-CONTRACTED TO MEMBERS OF AOP AND THEREFORE THE CASE OF THE ASSESSEE WAS SQUARELY COVERED BY SUB-SECTION 2 OF S EC. 194C AND THE ASSESSEE FAILED TO DEDUCT THE TAX ON SUB-CONTRACT PAYMENT TO THE MEMBERS AT 1% AND COMMITTED DEFAULT WITHIN THE MEANING OF 4 0(A)(IA) AND THEREFORE REJECTED THE GROUND OF APPEAL RAISED BY THE ASSESSEE. ON BEING AGGRIEVED ASSESSEE CARRIED MATTER IN APPEAL BEFORE THE TRIBUNAL. 7. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED THAT THE ASSESSEE AOP WAS ONLY COLLECTIVE NAME FOR ITS MEMBERS AND TH E CONTRACT ENTERED INTO BY THE AOP WAS ONLY FOR THE BENEFIT OF ITS MEM BERS. THERE WAS NO CONTRACT WHATSOEVER BETWEEN THE AOP AND ITS JV PART NERS. IT IS FURTHER SUBMITTED THAT THE MEMBERS OF THE AOP I.E. M/S SMC INFRASTRUCTURE PVT LTD AND M/S AMBIKA ENTERPRISES JOINED TOGETHER AS A AOP FOR THE PURPOSE OF PROCURING THE CONTRACT. THE ASSESSEE AOP NEITHE R RETAINED ANY ITA 7698/M/2011 A.Y. 2007-08 4 COMMISSION NOR GAINED ANY PROFIT THEREFORE SEC. 19 4C HAS NO APPLICATION TO THE ASSESSEES CASE. THE LEARNED COUNSEL FOR TH E ASSESSEE HAS SUBMITTED THAT THE CASE UNDER CONSIDERATION IS SQUARELY COVER ED BY THE DECISION OF HONBLE IN THE CASE OF CIT VS. ESS KAY CONSTRUCTION CO. (267 ITR 618) AND HE ALSO RELIED ON THE DECISION OF HONBLE HIGH COUR T OF HIMACHAL PRADESH IN THE CASE OF CIT VS. AMBUJA DARLA KASHLOG MANGU T RANSPORT CO-OP. SOCIETY [2010] 188 TAXMAN 134 (HP). HE FURTHER RE LIED ON THE DECISION OF ITAT PUNE BENCH IN THE CASE OF DATTA DIGAMBER SAHAK ARI KAMGAR SANSTHA LTD. VS. ACIT (83 ITD 148). 8. ON THE OTHER HAND THE LEARNED DR SUBMITTED THA T THE ASSESSEE AOP AND ITS JV PARTNERS NAMELY M/S SMT INFRASTRUCTURE A ND M/S AMBIKA ENTERPRISES ARE TWO DIFFERENT ENTITIES THEREFORE THE ASSESSEE HAS SUB- CONTRACTED THE WORK TO THE TWO JV PARTNERS AND SEC. 194C(2) SQUARELY APPLIES TO THE ASSESSEES CASE. THE CASES RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE IS DISTINGUISHABLE ON THE FACTS. 9. WE HAVE HEARD BOTH THE SIDES PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE IS A AOP (ASSOCIATION OF PERSONS) M/S SMC INFRASTRUCTURE PVT LTD. AND M/S A MBUJA ENTERPRISES ARE MEMBERS OF THE AOP. AS PER THE AGREEMENT BETWE EN THE MEMBERS OF THE AOP THE AOP WILL BID FOR RATES FOR THANE MUNIC IPAL CORPORATION. THE MEMBERS WILL SHARE THE EXPENSES AS WELL AS THE RECE IPTS ON EXECUTION OF THE PROJECT AT 51% AND 49% RESPECTIVELY. THE YEAR UNDE R CONSIDERATION THE ASSESSEE FILED NIL RETURN OF INCOME. IN THE PROFIT AND LOSS ACCOUNT THE ASSESSEE HAS FILED THE CONTRACT RECEIPT FROM THANE MUNICIPAL CORPORATION FOR RS. 2 00 097 075/- AND DEBITED THE SAME TOWAR DS EXPENSES OF JV PARTNERS DECLARING THE PROFIT AT RS. NIL. THE AOP DID NOT CARRY ANY WORK ITSELF. THE WORK CARRIED BY THE AOP JV PARTNERS M /S SMC INFRASTRUCTURE PVT LTD. AND M/S AMBIKA ENTERPRISES. AFTER COMPLET ING THE WORK THE AOP RECEIVED THE RECEIPTS FROM TMC AND HANDED OVER THE RECEIPTS TO ITS MEMBERS ENABLE TO EXECUTE THE CONTRACT. THE AOP HA S NEITHER KEPT ANY COMMISSION FOR ITS OWN NOR ANY PROFIT. IT IS A FAC T THAT THE AOP CONSISTING TWO PARTNERS NAMELY M/S SMC INFRASTRUCTURE PVT LTD. AND M/S AMBIKA ENTERPRISES JOINED TOGETHER FOR THE PURPOSE OF THE EXECUTING THE PROJECT. IN FACT THE PROJECT WAS EXECUTED BY THE AOP PARTNERS M /S SMC INFRASTRUCTURE ITA 7698/M/2011 A.Y. 2007-08 5 PVT LTD. AND M/S AMBIKA ENTERPRISES AND THE ONLY DU TY WAS ENTRUSTED TO THE AOP WAS FILING OF TENDER AND AFTER GETTING THE CONTRACT THE AOP PARTNERS EXECUTED THE CONTRACT ACCORDINGLY THE AM OUNT RECEIVED WAS SHARED BY THEM. THEREFORE IN OUR HUMBLE OPINION THERE IS NO CONTRACT OR SUB-CONTRACT RELATIONSHIP EXISTED IN BETWEEN THE A SSESSEE AND ITS JV PARTNERS NAMELY M/S SMC INFRASTRUCTURE CREATIONS & AMBIKA ENTERPRISES THEREFORE SECTION 194C(2) HAS NO APPLICATION IN TH E FACTS OF THE ASSESSEES CASE. 10. IN SO FAR AS CASE LAWS RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE IS CONCERNED IN THE CASE OF ESS KAY CONSTR UCTION CO. (SUPRA) THE HONBLE PUNJAB AND HARYANA HIGH COURTS CATCH NOTE IS EXTRACTED AS UNDER: THE ASSESSEE WAS A FIRM AND HAD ENTERED INTO A CON TRACT WITH MES CONSTRUCTION OF CERTAIN BUILDINGS. IT ALLOTTED WHOLLY/PARTLY THE CONSTRUCTION WORK TO THREE CONCER NS WHICH WERE STATED TO HAVE COMPLETED CONSTRUCTION AND RECE IVED PAYMENTS IN LIEU THEREOF. THE ASSESSEE BEING THE C ONTRACTOR RECEIVED THE CONTRACT AMOUNT FROM MES FROM WHICH T HE TAX WAS DEDUCTED BY THE FORMER. THE ASSESSEE DID NOT D EDUCT ANY TAX FROM THE PAYMENTS MADE TO THE THREE CONCERNS AS IS REQUIRED BY THE PROVISIONS OF SECTION 194C(2) OF TH E INCOME TAX ACT 1961. THE INCOME TAX OFFICER HELD THE ASSESSE E TO BE A DEFAULTER UNDER SECTION 201(A) OF THE ACT AND LEVIE D PENALTY UNDER SECTION 221. THE TRIBUNAL FOUND THAT NONE OF THE UNITS HAD ANY CONTRACT WITH THE ASSESSEE I.E. THE MAIN FIRM. IT WAS ONLY BY WAY OF MUTUAL ARRANGEMENTS THAT THESE CONCE RNS EXECUTED SOME WORKS AND RECEIVED PAYMENT IN LIEU TH EREOF. A FURTHER FINDING OF THE FACT HAD BEEN RECORDED THAT THE ASSESSEE DID NOT CHARGE ANY COMMISSION FROM ITS ALLEGED SUB- CONTRACTORS AND WHATEVER TAX WAS PAYABLE HAD SINCE BEEN PAID THE MAIN CONCERN I.E. THE ASSESSEE UNDER SE CTION 194C(1). THE TRIBUNAL DELETED THE PENALTY. ON AN A PPLICATION TO DIRECT REFERENCE: HELD DISMISSING THE APPLICATI ON THAT ONCE A FINDING HAD BEEN RECORDED THAT THERE WAS NO CONTR ACT BETWEEN THE ASSESSEE AD ITS SISTER CONCERNS THERE WOULD BE NO APPLICABILITY OF SECTION 194C(2). 11. WE FIND THAT THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE ABOVE CASE AND IN THE ABOVE CASE THE HONBLE P&H COURT H ELD THAT THERE IS NO CONTRACT BETWEEN THE ASSESSEE AND ITS SISTER CONCER N AND SEC. 194C(2) HAS NO APPLICATION. THE CASE IN THE HAND ALSO NO CONTRA CT OR SUB-CONTRACT RELATIONSHIP AS EXISTED BETWEEN THE ASSESSEE ITS JV PARTNERS THEREFORE SECTION 194C(2) HAS NO APPLICATION. ITA 7698/M/2011 A.Y. 2007-08 6 12. IN THE CASE OF AMBUJA DARLA KASHLOG MANGU TRANSPORT CO-OP. SOCIETY (SUPRA) THE RELEVANT PORTION FROM THE ORDER OF THE HONBLE HIMACHAL PRADESH HIGH COURT IS EXTRACTED HEREUNDER: THE MAIN CONTENTION OF THE REVENUE IS THAT THE SIN CE THE ASSESSEE HAS A SEPARATE JURISTIC IDENTITY AND EACH OF THE TRUCK OPERATORS WHO ARE MEMBERS OF THE ASSESSEE HAVE SEPA RATE JURISTIC IDENTITY THEY ARE COVERED WITHIN THE SUM T O THE MEANING OF SEC. 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 ARGU MENT DOES NOT TAKE INTO CONSIDERATION THE HEADING OF THE SECT ION NOTED HEREINABOVE AND THE ENTIRE LANGUAGE OF SEC. 194C(2) WHICH CLEARLY INDICATES THAT THE PAYMENT SHOULD BE MADE T O THE RESIDENT WHO IS A SUB-CONTRACTOR. THE CONCEPT OF S UB-CONTRACT IS INTRINSICALLY LINKED WITH SEC. 194C(2). IF THERE IS NO SUB- CONTRACT THEN THE PERSON IS NOT LIABLE TO DEDUCT TA X AT SOURCE EVEN IF PAYMENT IS BEING MADE TO A RESIDENT. TO UNDERSTAND THE NATURE OF THE CONTRACT IT WOULD BE RELEVANT TO MENTION THAT IN THE PRESENT CASES THE A SSESSEE SOCIETIES WERE CREATED BY [THE TRANSPORTERS THEMSEL VES. THE TRANSPORTERS FORMED THE SOCIETIES OR UNIONS WITH A VIEW TO ENTER INTO A CONTRACT WITH THE COMPANIES. THE COMPA NIES ENTER INTO CONTRACT FOR TRANSPORTATION OF GOODS AND MATER IAL FIFTH THE SOCIETY. HOWEVER THE SOCIETY IS NOTHING MORE THAN A CONGLOMERATION OF THE TRUCK OPERATORS THEMSELVES. THE ASSESSEE SOCIETIES HAVE BEEN CREATED ONLY WITH A VI EW TO MAKE IT EASY TO ENTER INTO A CONTRACT WITH THE COMPANIES AS ALSO TO ENSURE THAT THE WORK TO THE INDIVIDUAL TRUCK OPERAT ORS IS GIVEN STRICTLY IN TURN SO THAT EVERY TRUCK OPERATOR HAS A N EQUAL 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 THAT FACT REMAINS THAT THE REASON FOR CREATION OF THE SOCIETY WAS ONLY TO ENSURE THAT WORK OF PROVIDED TO ALL THE TRUCK OPERA TORS ON EQUITABLE BASIS. A FINDING OF THE FACT; HAS BEEN R ENDERED BY THE AUTHORITIES THAT THE SOCIETIES WERE FORMED WITH A VIEW TO OBTAIN THE WORK OF CARNAGE FROM THE COMPANY SINCE T HE COMPANIES WERE NOT READY TO ENTER INTO A CONTRACT W ITH THE INDIVIDUAL TRUCK OPERATORS BUT HAD ASKED THEM TO FO RM A SOCIETY. ADMITTEDLY THE SOCIETY DOES NOT RETAIN ANY PROFITS . IT ONLY RETAIN NOMINAL AMOUNT AS PARCHI CHARGES WHIC H IS USED FOR MEETING THE ADMINISTRATIVE EXPENSES OF THE SOCI ETY. THERE IS NO DISPUTE WITH THE SUBMISSION THAT THE SOCIETY HAS AN INDEPENDENT LEGAL STATUS AND IS AM CONTRACTOR WITHI N THE MEANING OF SEC.194C. IT IS ALSO NOT DISPUTED THAT THE MEMBERS HAS A SEPARATE STATUS BUT THERE IS NO SUB-CONTRACT BETWEEN THE SOCIETY AND THE MEMBERS. IN FACT IF THE ENTIRE WOR KING OF THE SOCIETY SEEN IT IS APPARENT THAT THE SOCIETIES HAVE ENTERED INTO ITA 7698/M/2011 A.Y. 2007-08 7 A CONTRACT BEHALF OF THE MEMBERS. THE SOCIETY IS N OTHING BUT A COLLECTIVE NAME FOR THE MEMBERS AND THE CONTRACT EN TERED BY THE SOCIETY IS FOR THE BENEFIT THE CONSTITUENT MEMB ERS AND THERE IS NO CONTRACT BETWEEN THE SOCIETY AND THE ME MBERS. FOR THE FOREGOING REASONS WE ARE OF THE CONSIDERED VIEW THAT SEC. 194C(2) OF THE ACT IS NOT ATTRACTED AND T HE ASSESSEE SOCIETY(S) IS NOT LIABLE TO DEDUCT TAX AT SOURCE ON ACCOUNT OF PAYMENTS MADE TO THE TRUCK OWNERS WHO ARE ALSO MEMB ERS OF THE SOCIETY. 13. IN THE ABOVE CASE THE HONBLE HIMACHAL PRADESH HIGH COURT HAS HELD THAT THE SOCIETY IS NOTHING BUT COLLECTIVE NAME FOR THE MEMBERS. THE CONTRACT ENTERED BY THE SOCIETY IS FOR THE BENEFIT OF THE CONSTITUENT MEMBERS AND THERE IS NO CONTRACT BETWEEN ITS MEMBE RS AND SOCIETY HENCE SEC. 194C(2) HAS NO APPLICATION. IN THE PR ESENT CASE THE ASSESSEE IS A AOP OF ITS PARTNERS M/S SMC INFRASTRUCTURE PVT LTD. AND M/S AMBIKA ENTERPRISES AND THE ROLE OF THE AOP IS ONLY TO SECU RE THE CONTRACT FOR THE BENEFIT OF THE MEMBERS. THERE WAS NO CONTRACT OR SU B-CONTRACT IN BETWEEN THEM. 14. IN THE CASE OF DATTA DIGAMBER SAHAKARI KAMGAR SANSTHA LTD. (SUPRA) THE ASSESSEE SOCIETY WAS A TRANSPORT CONTRACTOR AN D IT ENTERED ITS ACTIVITIES IN TRANSPORTING VARIOUS MILK SCHEMES TO CARRY OUT TRANSPORT WORK AND IT USED TO HIRE VEHICLES OF ITS MEMBERS. ASSES SING OFFICER HELD THAT ASSESSEE WAS A CONTRACTOR AND TANKER OWNERS WERE SU B-CONTRACTORS SINCE IT WAS NOT DEDUCTED TAX AT SOURCE FROM THE PAYMENT MAD E TO TANK OWNERS AS PER SEC. 194C(2) IT WAS LIABLE TO BE PENAL INTERES T U/S 201(1A). THE HONBLE PUNE BENCH HAS HELD THAT THERE WAS NO SUB-C ONTRACT BETWEEN ASSESSEE-SOCIETY AND ITS MEMBERS (TANKER OWNERS) AN D IN FACT IT WAS THUS A COLLECTIVE ENTITY OF ITS MEMBERS THAT HAD TAKEN A CONTRACT AND THERE WAS NO QUESTION OF GIVING ANY FURTHER SUB-CONTRACT TO T HESE CONSTITUENT MEMBERS. THEREFORE PROVISIONS OF SEC. 194C(2) WER E NOT APPLICABLE AND ASSESSEE WAS NOT REQUIRED TO DEDUCT ANY TDS U/S 194 C(2) OF THE ACT. 15. IN VIEW OF OUR SPECIFIC FINDING THAT THERE IS N O CONTRACT OR SUB- CONTRACT HAS EXISTED IN BETWEEN THE ASSESSEE AND IT S JV PARTNERS AND FOLLOWING THE ABOVE JUDICIAL PRECEDENTS THE LEARNE D CIT(A) WAS NOT JUSTIFIED ITA 7698/M/2011 A.Y. 2007-08 8 IN INVOKING SECTION 194C(2) TO THE ASSESSEES CASE. WE THEREFORE SET ASIDE THE ORDER PASSED BY THE CIT(A) AND APPEAL FILED BY THE ASSESSEE IS ALLOWED. 16. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF JULY 2011. SD/- SD/- (P.M. JAGTAP) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE : 29.07.2011 MUMBAI OKK* COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) MUMBAI CONCERNED 4. THE CIT MUMBAI CITY CONCERNED 5. THE DR E BENCH ITAT MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI