ADARSH KUMAR GOEL, J. - (1.) THIS order will dispose of IT Appeal Nos. 865 and 866 of 2010 which are said to involve the same issue.
(2.) IT Appeal No. 865 of 2010 has been preferred by the Revenue under S. 260A of the IT Act, 1961 (for short, "the Act") against the order of the Tribunal, Chandigarh dt. 31st March, 2010 in ITA No. 866/Chd/2009 claiming following substantial questions of law : "(i) Whether on the facts and in the circumstances of the case, the Tribunal was justified in confirming the order of the CIT(A) deleting the addition of Rs. 6,30,32,453 on account of disallowance made under S. 40 (a)(ia) of the IT Act, 1961, without appreciating that payments by the Truck Operators' Union to the truck operator members were covered within the meaning of S. 194C of the Act, being payment to a sub- contractor. (ii) Whether on the facts and in the circumstances of the case, the Tribunal 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 (HP) 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 Direct Taxes (CBDT) in consultation with the Ministry of Law (MOL)." The assessee is a truck operators union for procuring contracts for its members. During the assessment of its income, the AO made addition after disallowance under S. 40(a)(ia) of the Act on the ground that it failed to deduct tax at source as required under S. 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 AO. 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 AO, I am convinced that the arguments of the counsel of assessee have force and are duly supported by the decisions of the jurisdictional Bench of Tribunal, 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 AO. 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 S. 194C(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 S. 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.;