Assessee-company was manufacturing automobile vehicles, tractors, etc.  At time of sale of vehicle value of service coupons were factored into sale price of vehicles. It entered into back-up contract with its dealers, as per which dealers were obliged to provide free services to vehicles. Assessee made payment to dealers for discharging its obligation by providing such free services. Tribunal held that  since payment made by assessee in lieu of service coupons was not reimbursement of expenditure but was payment pursuant to contract, assessee was obligated to deduct tax at source under section 194C at time of making such payment . The assesse demonstrated compliance of conditions envisaged in second proviso of S.40(a)(ia) and S.201(1) i.e. payees have filed the return and taken in to account sum for computing income  and paid the tax. Accordingly it could not be held to be an assessee in–default thus no disallowance can be made .Matter remanded  for verification.  (AY. 2007-08)