2011 (5) TMI 892 - AT - Income Tax

Summary

Issues involved: The judgment involves the deduction of tax at source under section 194-C or 194I of the Income Tax Act, 1961.

Summary:

1. The appeals by the Revenue for assessment years 2008-09 and 2009-10 were consolidated and heard together. The main issue in both appeals was the deduction of tax at source under section 194-C or 194I of the Act based on the hiring of buses for commercial purposes.

2. The assessing officer observed that TDS on payment of hired buses should be deducted at 10% under section 194I instead of 2% under section 194-C. The ld. CIT (Appeals) held that TDS should be made under section 194-C based on specific provisions and circulars, not u/s 194I.

3. The assessee argued that the buses were hired on a kilometer running basis, making them fall under section 194-C, not 194I. The ITAT, Ahmedabad Bench decision supported this interpretation.

4. The ITAT found that the payment for hiring buses on a kilometer running basis was covered under section 194-C, as the owner was responsible for running costs and maintenance. Therefore, the ld. CIT (Appeals) decision in favor of the assessee was upheld.

5. The ITAT concluded that the payments for hiring buses on a kilometer basis were covered under section 194-C, not 194I. Therefore, the appeals filed by the Revenue were dismissed.

In conclusion, the ITAT upheld the decision that the deduction of tax at source for hiring buses on a kilometer running basis should be made under section 194-C, not 194I, as per the specific provisions and interpretations of the Income Tax Act.