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TMI Blog2014 (12) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... ractors was on the mileage basis. 2. The order of Ld Assessing Officer is against the Principles of Natural Justice as before declaring the appellant as "assessee in default" u/s 201 of the IT Act 1961, Ld Assessing Officer did not tried to verified whether the contractors/deductees have duly paid the taxes on their income. In fact the Ld Assessing Order did not pass any order U/S 201 of the I T Act 1961. 3. That it seems while passing an order the Ld Assessing Officer, ignored a fact that appellant is a state owned corporation and its main motive is not profit but a public utility and therefore it has no malafide intention in deducting the tax at source on lower rates." 3. Apropos these grounds, we have heard arguments of both the sides and carefully perused the relevant material placed on record. Ld. Counsel of the assessee submitted that the AO erred in treating the hiring of buses as hiring of machinery u/s 194 I of the I. T. Act 1961 by completely ignoring the fact that all the hired buses were governed under the contracts and "carrying out a work" as explained in section 194C of the I T Act 1961. Ld. Counsel further explained that in fact no fixed rental was paid but the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the AO rightly observed that the same were covered under the term of commercial vehicles. Ld. DR further contended that the assessee made payment on account of use of machinery/equipment/plant which is covered u/s 194I of the Act and included in the rent, hence, TDS on such payment was required to be deducted @10% and, therefore, the assessee wrongly took shelter of section 194C of the Act for making TDS at the lower rate and, thus, the AO was very well within his jurisdiction in passing order u/s 201(1A) of the Act. 7. On careful consideration of above rival submissions and contentions and careful perusal of the orders/decisions as relied by the ld. Counsel of the assessee, at the outset, we observe that ITAT 'F' Bench Delhi in the case of ITO vs Regional Manager, UPSRTC, Saharanpur (supra) dealing with the same issue has held as under:- "5.1 We have heard both the parties and gone through the material available on record. In the case before us the assessee had taken the buses on hire on payment made on kilometer running basis. The owner was responsible for running cost, maintenance, driver cost and other incidental charges like accident etc. Therefore, the assessee has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned under definition clause of Section 2 of the Act, which is general definition clause under the Income Tax Act. 9. In the present case, the word' rent' has not been defined in Section 2 of the Act. The definition of the word' plant' under sub section (3) of Section 43, falls in Chapter IV - Computation of Total Income, which is neither relatable nor applicable to the Chapter XVII, relating to collection and recovery of tax. Even otherwise, it is difficult to believe that the word' plant' defined in Chapter IV - computation of total income, falling under Section 43 of the Act, includes buses hired by the educational institutions. The definition of' plant' in sub section (3) of Section 43 of the Act clearly states that 'plant' includes ships, vehicles, books, scientific apparatus and surgical equipment used for the purposes of the business or profession. A plain and general interpretation of ' plant' in Chapter-IV of sub section (3) of Section 43 of the Act would show that it has included the use of ships, vehicles, books, scientific apparatus and surgical equipment for the purposes of Section 28 to 41. We are not permitted to add or sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etre running basis without having any responsibility for running cost, maintenance cost, driver cost and other identical charges and liabilities, therefore, it can safely be presumed that assessee has not taken the plant or machinery on rent but assessee is making payment towards hiring charges paid to the transporter for carriage of goods and passengers by any mode of road transport. Accordingly, ground no. 1, 2 and 3 in both the appeals are allowed. ITA 51 & 52/Del/2012 of the Revenue 10. These appeals have been filed by the revenue against common orders of the CIT, Ghaziabad dated 17.10.2011 in Appeal No. 179 and 180/2010-11/GZB for AY 2008-09 and 2009-10 by which the CIT(A) deleted the penalty imposed by the AO u/s 271(1)(c) of the Act. The Revenue has raised similar grounds in both the appeals which read as under:- "1. That the Ld. CIT (A) has erred on facts and in law in cancelling the penalty order u/s 271C dated 11.08.2010 passed by the Addl.CIT(TDS),Ghaziabad and in holding that the defaulting the short deduction of tax by The Regional Manager UPSRTC, Ghaziabad Depot, 26, Navyug market, Distt. Ghaziabad is bonafide one and there is reasonable cause for the same, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s correctly deducted TDS using provisions of Section 194C to such payment. 5.2 In the wake of such favourable views, penalty u/s 271C has also been cancelled in some of these cases; for example, in case of M/s Lotus Valley Educational Society for A.Y. 2008-09 & 2009-10, Appeal No. 299 & 300 of 2010-11. 5.3 In the present case although my predecessor CIT (A) has confirmed the AO's view of applying Section 194J and the appellate order of ITAT, Delhi is awaited; I am satisfied that this is a case of difference in legal interoperation, tilting heavy in favour of appellant. In any case, no angle of concealment or concealing any material facts arises. 5.4 Thus, following my own decision in the cases mentioned above, I hold that this is not a fit case for levy of penalty u/s 271 C and, hence, the same is cancelled." 14. In view of above, since by the earlier part of this order, we have allowed appeal of the assessee for the same assessment years which are under consideration in these appeals, we have taken a view that the payment made by the assessee to the transporters for carrying of passengers by road transport falls within the ambit of section 194C of the Act and the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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