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2015 (10) TMI 2241 - AT - Income TaxNon deduction of TDS on the payments made for hiring the cars u/s 194 (C) - disallowance u/s. 40(a)(ia) - Held that:- In the present case, only condition (a) is satisfied, i.e. the assessee is a contractor. So far as the conditions mentioned in (b), (c) and (d) are concerned, none of the conditions apply in the present case. Thus, the provisions of section 194C are not attracted and thus, the assessee is clearly outside its preview. Whether the payments made by the assessee are in the nature of rent under the provisions of section 194-I? - Held that:- From conjoint reading of provisions of section 194-I and the provisions of section 43(3), we can safely conclude that any payment made under lease agreement for use of vehicles partake the character of rent on which tax has to be deducted under the provisions of section 194-I. In the present case the assessee has furnished lease agreement for hiring cars. The assessee was liable to deduct tax at source on the payments made to the owners/lessor for hiring of cars. It is an admitted fact that the assessee has not deducted any TDS on the payments so made. As the assessee is liable for not deducting TDS under the provisions of section 194-I on the payments made after 13-07-2006. Since, the assessee has defaulted in not complying the provisions of section 194-I, the disallowance u/s. 40(a)(ia) has to be made for non-deduction of tax at source on the payments made in the assessment years 2008-09 and 2009-10. Similarly, the assessee is also liable for the demand raised u/s. 201(1) and 201(1A) for not complying with the TDS provisions. - Decided against assessee.
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