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TMI Blog2013 (12) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... mechanised manufacturing and sale of granites. It has engaged the services of the contractor for loading and unloading and transportation of granites, both crushed and uncrushed within its mining area and outside. During the year, the appellant deducted tax at 2.24 per cent. According to the learned counsel for the appellant, the finding of the tribunal that Section 194C does not apply, is not correct. He would also contend that there was no need for the tribunal to remand the matter relating to Section 40(a) (ia). He relies on the following case law: (i) In CIT v. Hindustan Lever Ltd. (2012 (12) TMI 846), the Delhi High Court was dealing with a case where the assessee was a well known manufacturer of consumer goods. It hired godowns on rent and also engaged C & F agents. The Court affirmed the findings of the tribunal that Section 194-1 could only be applied when the immovable properties are let out and none of the heads of payments made to C & F agents by the assessee is a head of payment by way of rent in favour of assessees. (ii) In an unreported Judgment in Tax Case Appeal Nos. 15 to 20 of 2006 (Commissioner of Income-tax v. Singapore Airlines Ltd.) rendered by the High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods. The sub contractor took the dumpers on rent. Payment was made by the assessee to the sub contractor. The Court agreed with the tribunal in finding that the payment made by the assessee was towards the contract and not for renting machinery and hence Section 194-I was not applicable and instead, Section 194C was applicable. (iv) In Commissioner of Income Tax (TDS) v. Swayam Shipping Services (P) Ltd. [(2011) 339 ITR 647 (Guj)], the assessee carried out freight and transportation works contracts with three transporters who transported the goods belonging to the assessee and its clients to various places through their vehicles. The assessee had given sub contracts for transportation. It was held that Section 194C is applicable. (v) The appellant also drew our attention to the Judgment of a Division Bench of this Court in Central Board of Direct Taxes v. Cochin Goods Transport Association [(1999) 236 ITR 993). That was a case where the question which was posed was whether a transport contract for mere carriage of goods without loading and unloading facility would amount to "any work" within the meaning of Section 194C(1). The contention of the assessee was that a mere cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d "labour contracts" and would not cover a contract for the sale of goods. Another Circular No.93, dated September 26, 1972, was issued clarifying that section 194C would not apply to transport contracts. Right from April 1, 1972, according to the understanding of the Department, Section 194C was not applicable to payments made in respect of transport contracts, till the issue of a fresh Circular No.681, dated March 8, 1994, withdrawing the earlier circulars and issuing fresh guidelines directing that section 194C would apply to all types of contracts for carrying out work including transport contracts, because of certain observations of the Supreme Court in Associated Cement Co. Ltd. v. CIT [(1993) 201 ITR 435)]. The question whether the expression "carrying out any work" would include therein the carrying of goods or not was not in issue in that case and that decision has not been correctly understood by the Central Board of Direct Taxes. Circular No.681 dated March 8, 1994, which was made applicable with effect from April 1, 1994, to the extent that it related to transport contracts is invalid." 3. Per contra, the learned counsel for the Revenue would submit that the contract h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excavators : R.400 per hour of use; b. Hitachi Excavator with Backhoe : Rs.650 per hour of use; c. L & T Excavator : Rs.250 per hour of use; d. Tata tipper : Rs.500 per day of use not exceeding 18 hours e. Tata tipper : Rs.750 per day of use not exceeding 18 hours. f. Leland tipper : Rs.1,250 per day of use not exceeding 18 hours. g. Leyland taurus : Rs.1750 per day of use not exceeding 18 hours; h. Nissan : Rs.400 per day of use not exceeding 18 hours. i. Mazda : Rs.750 per day of use not exceeding 18 hours. j. Mahindra Jeep : Rs.2563.35 per day of use not exceeding 18 hours." 5. Thus, under the agreement, it was stated to be a composite agreement for hire of vehicles and to be used for loading and unloading and transport of the products. The party of the first part (the owner of the vehicles) was to retain the custody, ownership and possession of the vehicles. The vehicles were to be driven and operated by the persons who were to be paid by the owner. Further, clause (17) provides for the hire charges. As correctly found by the tribunal, the agreement does not require the owner of the vehicle to do any work at all. It is the assessee who makes use of the vehicles and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bring it within the definition of rent under Section 194-I, even if it is for the use of machinery. He would submit that even it is machinery, in other words, unless it be that machinery assumes the character of immovable property under the Transfer of Property Act, the payment of any rent in respect of machinery which is not immovable property would not bring it within the meaning of "rent" under the Explanation. 7. We are of the view that there is no merit at all. Section 194-I specifically contemplates liability with any person paying rent to deduct in come tax at the rate of ten per cent for the use of any machinery or plant or equipment. (As far as the assessment year in question is concerned, the rate of tax was increased to ten per cent). 8. We are of the view that there is no basis for confining the effect of the words "other agreement or arrangement for the use of" "either separately or together" in regard to the machinery, only if it is part of immovable property. The Legislative intent is clear, in that, it intends liability to deduct tax in respect of "any machinery or plant or equipment". The machinery need not be the machinery annexed or immovable property otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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