2011 (11) TMI 787 - AT - Income Tax

Deduction of tax at source on carriage of goods and passengers by any mode of transport - Assessee was liable to deduct tax on the payments made to various contractors u/s. 194C only, and that the provision contained in section 194-I is not applicable.

Summary

Issues Involved:
Interpretation of Sections 194C and 194I of the Income Tax Act regarding tax deduction on payments made for hiring buses.

Analysis:

Issue 1: Interpretation of Section 194C and Section 194I
The dispute revolved around whether the provisions of Section 194C or Section 194I of the Income Tax Act were applicable to the payments made for hiring buses. The Revenue contended that Section 194I should apply, while the assessee argued for the applicability of Section 194C. The key point of contention was whether the hiring of transport vehicles fell under the purview of Section 194C, which covers carriage of goods and passengers by any mode of transport, or Section 194I, which pertains to the use of machinery, plant, or equipment for rent. The Tribunal analyzed the relevant legal provisions and previous judgments to determine the correct interpretation.

Issue 2: Application of Precedent
The Tribunal considered a previous decision by the same Bench in the assessee's own case, where it was held that the hiring of buses for carriage of passengers should be covered under Section 194C and not Section 194I. The Tribunal emphasized the principle of judicial discipline to follow precedents set by co-ordinate Benches. By applying the reasoning and findings from the earlier decision, the Tribunal concluded that the issue in dispute had already been adjudicated and decided in favor of the assessee.

Conclusion:
Based on the interpretation of Sections 194C and 194I, along with the precedent set in the assessee's own case, the Tribunal dismissed the appeals filed by the Revenue. The Tribunal upheld that the assessee was liable to deduct tax on the payments made to various contractors under Section 194C only, and that the provision contained in Section 194I was not applicable in this context. The decision reaffirmed the importance of consistency in legal interpretation and the adherence to established precedents in tax matters.