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TMI Blog2014 (1) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... ired the transportation facilities which is akin to hiring of a taxi though on regular basis for a fixed number of hours - where a vehicle is given on hire along with provisions of a driver for use of carrying of the passengers for fixed hours than it is a service contract for carrying out the work. It will be covered under sec. 194C of the Act because the vehicle has been made available as a matter of service – thus, it is a service contract and assessee was to deduct tax under sec. 194 C of the Act - The assessee has availed the services of cranes which was operated by staff of the contractor – Thus, the Assessing Officer has erred in construing that assessee had paid rent and its case falls u/s 194I – the assessee had rightly deducted ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961. 2. The brief facts of the case are that the assessee is a public sector company and is engaged in the business of handling and transportation of goods through road and railways. During the year under consideration, the assessee paid charges to transporters for transportation of containers/wagon and loading and unloading charges and deducted the tax at source while making payments to transporters. A survey u/s 133A of the Income Tax Act, 1961 was conducted on 16.11.2009 to check the correct applicability of TDS provisions. During the course of survey proceedings, it was observed that assessee has deducted tax at source for payments for handling charges towards hiring of cranes etc. and tax was being deducted u/s 194C of the Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e crane operators. The services were rendered by the contractor through their own man using the cranes. The cranes were brought to the respective sites and they were operated by the staff of the contractor. Thus, assessee has not taken any machinery on hire for which it has paid the rent. In the case of ACIT vs. M/s. National Capital Power in ITA No.5885/Del/2010, we have considered a similar issue. In that case, the assessee had hired buses. Learned Assessing Officer construed that buses were taken on lease and such buses are to be construed as plant and machinery. 21. The discussion made by the ITAT in this case reads as under: In brief, the solitary issue is whether assessee has to deduct TDS under sec. 194C or 194I of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further contended that a similar issue in somewhat different context came up before the Hon'ble Delhi High Court in the case of CIT vs. Prasar Bharti reported in 292 ITR 580. In that case, the facts are that assessee was making certain payment to outside producer for programs under commissioned category for which the assessee had been deducting the tax at source under sec. 194C by treating them as contract payment. Assessing Officer alleged that it is fee for professional services or fee for technical service within the ambit of sec. 194J and, therefore, assessee ought to have deducted TDS under sec. 194J of the Act. Learned CIT(Appeals) dismissed the appeal of the assessee. The issue traveled to the ITAT. The ITAT has observed that E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee to the travel agency has to be construed as a rent paid for the bus. On the other hand, contention of the assessee is that it has availed the facility of transportation from the travel agency. It has not taken the bus in its possession. According to the contract, the travel agency has to ply the bus for a fixed number of hours. Thus, it is a simplicitor service contract for transportation of the passengers and it falls within the ambit of clause (c), Sr. No.(IV) of explanation appended to sec. 194C. The assessee has placed on record copy of a letter of award for hiring of busses. It has also placed on record copy of the contract entered on Ist of February 2008. On perusal of these documents, it reveals that assessee has just hired the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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