IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.865 of 2010 Date of decision: 23.3.2011 Commissioner of Income Tax. -----Appellant. Vs. Truck Operators’ Union. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. T.K. Joshi, Standing Counsel for the appellant. --- ADARSH KUMAR GOEL, J. 1. This order will dispose of I.T.A. Nos.865 and 866 of 2010 which are said to involve the same issue. 2. I.T.A. No.865 of 2010 has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, Chandigarh dated 31.3.2010 in ITA No.866/CHD/2009 claiming following substantial question of law:- “(i) Whether on the facts and in the circumstances of the case, the ITAT was justified in confirming the order of the CIT(A) deleting the addition of Rs.6,30,32,453/- on a/c of disallowance made u/s 40(a)(ia) of the Income Tax Act, 1961, without appreciating that payments by the Truck I.T.A. No.865 of 2010 Operators’ Union to the truck operator members were covered within the meaning of Section 194C of the Act, being payment to a sub- contractor. (ii) Whether on the facts and in the circumstances of the case, the ITAT was justified in confirming the order of the CIT(A) deleting the addition of Rs.6,30,32,453/- by relying on the decision of the Hon’ble High Court of Himachal Pradesh at Shimla in the case of CIT vs Ambuja Darla Kashlog Mangu Transport Co-op. Society (2009) 31 DTR 49, when the said decision has not attained finality and filing of a Special Leave Petition (SLP) challenging the said order has already been approved by the Central Board of Director Taxes (CBDT) in consultation with the Ministry of Law (MOL).” 2. The assessee is a truck operators union for procuring contracts for its members. During the assessment of its income, the Assessing Officer made addition after disallowance under Section 40(a)(ia) of the Act on the ground that it failed to deduct tax at source as required under Section 194C(2) of the Act. On appeal, the CIT(A) set aside the said addition holding that there was no violation as held by the Assessing Officer. The finding recorded in this respect is as under:- 3.5 Considering the facts of the case as explained in details by the assessee’s counsel and after going through the relevant records of the Assessing Officer, I am convinced that the arguments of the counsel of 2 I.T.A. No.865 of 2010 assessee have force and are duly supported by the decisions of the jurisdictional Bench of ITAT, Chandigarh. I have, therefore, the least hesitation in holding that the assessee union has been formed by truck operators as its members in order to obtain bigger contracts through it. It is, of course, entitled to booking charges received which constitute its main income and the main function of the assessee was to arrange contracts from different agencies for its member truck operators which were factually and collectively performed by such members. The freight received from the parties concerned belonged to the member truck operators by whose trucks the contracts were performed and as such, the same was disbursed to none else but them. The assessee union did not give any sub-contract to its members as alleged by the Assessing Officer. Therefore, by no stretch of imagination the member truck operators can be said to be the sub-contractors of the assessee within the meaning of section 194-C(2) and as such the assessee was not liable to deduct any tax out of freight belonging and disbursed to them. Hence the provisions of section 40(a)(ia) were not at all attracted in this case and no disallowance could be made under that section.” The appeal of the revenue against order of the CIT(A) was dismissed. 3. We have heard learned counsel for the appellant. 4. Learned counsel for the revenue fairly states and we are also of the same view that Section 194C(2) of the Act had no 3 I.T.A. No.865 of 2010 application in the circumstances of the case when the union was merely acting in representative capacity and there was no separate contract between the union and its members for performance of the work as required for applicability of Section 194C(2) of the Act. In such circumstances, Section 40(a)(ia) of the Act was not applicable, as rightly held by the CIT(A) and the Tribunal. Learned counsel for the revenue also points out that same view has been taken by the High Court of Himachal Pradesh in its order dated 20.10.2009 in I.T.A. No.30 of 2005 CIT v. M/sAmbuja Darla Kashlog Mangu Transport Co. Op. Society & ors. against which SLP was dismissed by the Hon’ble Supreme Court on 17.1.2011 being SLP(Civil)……/2011 CC 259/2011 CIT Shimla v. M/s Ambuja D. ManguTransp. Coop. Society. 5. In view of above, no substantial question of law arises. The appeals are dismissed. A photocopy of this order be placed on the file of other connected case. (ADARSH KUMAR GOEL) JUDGE March 23, 2011 ( AJAY KUMAR MITTAL ) ashwani JUDGE 4