TMI Blog2011 (1) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... taining the horses - CIT(A) has rightly upheld the action of AO for applying rate of deduction of tax for such an activity and claim of the assessee dismissed - assessee liable for deduction of tax u/s 194I/194J of the Act - ITA NOS. 3254 & 3255/DEL/2010 - - - Dated:- 14-1-2011 - ORDER I.P. Bansal, JM : - Both these appeals are filed by the assessee. They are directed against two separate orders passed by CIT(A) dated 5.4.2010 in respect of FYs 2007-08 2008-09 relevant to AYs 2008-09 2009-10. Grounds of appeal in both the appeals are as under:- 1. The order of the learned CIT(Appeal), Ghaziabad is bad in law and on facts of the case. 2. That learned CIT(A) is not justified in confirming the order passed by ACIT(TD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into transport contract with two parties namely M/s Ruby Transport Corporation and M/s Ruby Deluxe Bus Co. for both the years for picking up and dropping children and staff of school to and from school to their homes. Copies of these agreements are also filed by the assessee in the paper book relating to both the years from pages 1 to 12 of the paper book. According to those agreements, the transporters were responsible for running and maintaining the buses which includes fuel, salary of the drivers, cleaners etc. and all expenses incurred for that purpose were to be borne by the transporter including any penalties imposed by the Government authorities. The school was not responsible for any damages or claim arising out of any liability pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst that, it is the case of the Revenue that amendment in section 194I brought by the Finance Act, 2007 w.e.f. 1st June, 2007 vide which under explanation rent has been defined being any payment, by whatever name called, under any lease, sub-lease, tenancy of any other agreement or arrangement for the use of (either separately or together), any land, building (including factory building) or land appurtenant to a building (including factory building) or machinery or plant or equipment or furniture or fittings, whether or not any or all of the above are owned by the payee. Reading from such explanation given in section 194I, the AO is of the opinion that the payment made by the assessee to transport contractor is rent within the meaning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the light of material placed before us. A careful consideration of the assessment order would reveal that AO while holding that assessee is liable for deduction of tax at source under the provisions of section 194I of the Act has mainly rested his case on the ground that it is the rent as defined in Explanation under section 194I and the assessee has paid rent in respect of buses utilized by him being in the nature of plant. In our opinion, simply for the reason that rent being explained under Explanation given u/s 194I in respect of a plant will not make the relevant payments liable for deduction u/s 194I. The sum and substance of the transaction has to be seen and it has to be decided that under which section the case of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the present case, assessee itself has not utilized the buses being plants but they were used by the transport contractor for fulfilling the obligations set out in the contract agreement. Therefore, the provisions of section 194I could not be applied to the facts of the present case and it has to be held that assessee has rightly deducted tax at source under the provisions of section 194C of the Act. Ground Nos. 2 3 raised in both the appeals are allowed. 7. In ground No. 4 of both the appeals, the assessee is objecting to the action of the AO vide which the payments made by the assessee to the coaches provided for coaching of horse riding, tennis and golf services which have been held by the AO to be liable for deduction of tax at sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and CIT(A) has rightly upheld the same. 10. We have carefully considered the rival submissions in the light of material placed before us. It has already been observed that section 194C is applicable where the assessee is responsible for paying any sum to any resident in pursuance of a contract between the contractors and specified person and that payment should be in respect of some work. Now, in the present case, what is obtained by the assessee from M/s Mustang Riding School is a technical service in the shape of horse riding education. It is not a simple contract of providing the horses to the assessee. M/s Mustang Riding School was to provide qualified and experienced instructors to teach the students of the assessee regarding hors ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
