2017 (11) TMI 203 - HC - Income Tax

TDS u/s 194C OR 194I - payment for for hiring of buses - Held that - We are in respectful agreement of the decision of this Court in Commissioner Of Income Tax (TDS) Versus UPSRTC 2014 (8) TMI 462 - ALLAHABAD HIGH COURT and therefore held that the provision of Section 194(C) would apply.

Summary

Issues:
1. Interpretation of Section 194-I of the Income Tax Act
2. Application of Section 194-C in the present case
3. Consideration of the amendment under Section 194-I
4. Interpretation of the definition of plant under Section 43(3)
5. Applicability of Section 194-I based on the AO's order

Interpretation of Section 194-I:
The main issue in this case was whether the provisions of Section 194-I of the Income Tax Act were applicable despite the satisfaction of the ingredients for its applicability. The Tribunal confirmed the order of the CIT(A) directing the deduction of tax at source under Section 194-C instead of Section 194-I. The Tribunal referred to previous judgments, including one by the Allahabad High Court, to support its decision. The High Court, in agreement with the Tribunal's interpretation of Section 194(C), held that the provision of Section 194(C) would apply in this case, thereby rejecting the applicability of Section 194-I.

Application of Section 194-C:
The Tribunal upheld the deduction of tax at source under Section 194-C in this case, which deals with contracts and sub-contracts. The Tribunal considered the factual aspects where the assessee paid for hiring buses and made deductions at source under Section 194-C. The Assessing Officer initially treated the payment as 'Rent' and directed to deduct tax at source under Section 194-I at 10%, but this action was overturned in the first appeal. The Tribunal's decision was supported by previous judgments and the High Court concurred with the Tribunal's interpretation of Section 194-C.

Consideration of Amendment under Section 194-I:
One of the questions raised was whether the Tribunal should have considered the amendment made under Section 194-I, which included income paid on account of machinery/plant and equipment under the definition of 'Rent'. The Tribunal's decision to apply Section 194-C was based on the factual aspects and previous judgments, and the High Court did not find any error in this interpretation.

Interpretation of Definition of Plant under Section 43(3):
Another issue raised was whether the Tribunal was justified in interpreting the definition of 'plant' under Section 43(3) of the Act. While the Tribunal did not delve into this aspect in detail, the High Court did not find it necessary to address this issue separately in its judgment.

Applicability of Section 194-I based on AO's Order:
The Tribunal also considered the AO's order regarding the applicability of Section 194-I of the Act. The AO had initially directed to deduct tax at source under Section 194-I at 10%, but this decision was overturned in the first appeal. The High Court, in line with the Tribunal's decision, held that the provision of Section 194(C) would apply in this case, thereby dismissing the appeal.

In conclusion, the High Court upheld the Tribunal's decision, confirming the applicability of Section 194-C instead of Section 194-I in the present case. The judgment was based on the interpretation of relevant provisions, factual aspects, and previous judgments, including those by the Allahabad High Court.