TMI Blog2007 (3) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... e was another agreement by which the respondent agreed to pay hire for furniture and fixtures in the premises of M/s. Hewa (P.) Ltd. The furniture and fixture referred to in the agreement was a DC Set (180 KVA) and Air-conditioners. The respondent at the time of making the payment under the hire agreement for hire of DC set and Air-conditioners deducted tax at source by treating the payment as one made to a contractor for carrying out any work under section 194C of the Income-tax Act, 1961 [hereinafter referred to as the Act ] and deducted tax at 2 per cent. The Assessing Officer was of the view that the sum paid under the hire agreement was also in the nature of rent and, therefore, 20 per cent tax ought to have been deducted at source as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was drawn to clause 15 of the agreement for hire wherein it was specifically provided that in respect of the hire charges payable tax would be deducted at source under section 194C of the Act. The bona fide belief entertained by the respondent was thus pledged as a reasonable cause for the respondent s failure to deduct tax at source at the appropriate rates. 4. The Assessing Officer imposed penalty holding that there was no reasonable cause for the respondent s failure to deduct tax at the appropriate rates. In this regard he has also referred to the hiring agreement wherein it has been provided that the said agreement would be co-terminus with the lease of the factory premises. On clause 15 of the agreement for hire wherein it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances of the present case the plea of existence of reasonable cause was rightly accepted by the CIT (Appeals). Admittedly, the items in respect of which hire charges were paid by the respondent were DC Set and Air-conditioners. Explanation to section 194-I of the Act provides that for the purpose of that section, the expression Rent means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or any building (including factory building), together with furniture, fittings and land appurtenant thereto, whether or not such building is owned by the payee. As to whether the above items given on hire will form part of the expression furniture and fixt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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