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TMI Blog2011 (3) TMI 1620X X X X Extracts X X X X X X X X Extracts X X X X ..... of buses, ignoring the fact of the case that the deductor company is liable to deduct the tax u/s 194I at the rate of 10% for hiring of buses in view of amendment made u/s 194I w.e.f. 01.06.2007. 1.2 In directing so, CIT(A) has failed to appreciate the following:- i) The payment was made essentially for hiring of buses which were given in exclusive possession and use of the assessee for a fixed tenure. The name of the assessee and route printed on buses, clearly establish above fact. ii) The assessee, being the hirer was not only in exclusive possession of the vehicle, but could also use them in the manner it wanted and no other person could use them during the tenancy period. iii) Section 194I(a) (introduced w.e.f. 01.06.2007) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts are that the assessee is an educational institution and for the purpose of commutation of its students, it hired services of bus operators. The services include manpower and wear and tear involved. The assessee a school for the purpose of TDS considered since payments towards a contract and deducted tax at the rate prescribed u/s 194C. The AO, however, held that the nature of transaction amounted to payment of rent and therefore, TDS should have been deducted at the rate prescribed u/s 194I and accordingly raised the demand (for short TDS) and interest u/s 201(1)/201(1A). 3. In first appeal, CIT(A) accepted the assessee s contention and held that the relationship amounted to a contract which was covered u/s 194C by following observat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (dated 28.3.1990) is not applicable as it was issued prior to the introduction of section 194I. (iv) Hon'ble Supreme Court in the case of Associated Hotels India Limited Vs. R.N.Kapoor AIR 1959 S .L 262 has prescribed the test for determination of tenancy and the assessee s case falls therein. 5. Learned counsel for the assessee, on the other hand, vehemently argues that the payment in question was consideration for a contract executed between the assessee and bus operators for transportation of its students and the amount payable cannot be considered as payment of rent u/s 194I(ii). The assessee made RTI application which clearly reveals that Income-tax Department itself was deducting tax u/s 194C at the rate of 2% from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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