|DATE:||(Date of pronouncement)|
|DATE:||May 6, 2011 (Date of publication)|
|Click here to download the judgement (3_judgements_194C_194_I_car_hire.pdf)|
Even fixed charges for hire of vehicles not “rent” for s. 194-I TDS
The assessee hired cars on fixed rent payment and deducted TDS u/s 194C at 2% on the basis that it was a “works contract”. The AO & CIT (A) held that since cars were “plant”, tax ought to have been deducted u/s 194-I at 10%. The assessee was held liable for the short-fall of 8% in TDS u/s 201. On appeal by the assessee, HELD allowing the appeal:
S. 194C defines “work” to include “carriage of goods and passengers by any mode of transport other than railways” while s. 194-I defines “rent” to mean payment for use of “plant” (which is defined in s. 43 to include vehicles). As the cars were owned and maintained by the contractor and all expenditure was borne by the contractor, the contract was for “carriage of passengers” for which the assessee paid a fixed amount. Therefore, the payment of vehicle hire charges fell within the scope of s. 194C and was not “rent” for s. 194-I.