TMI Blog2014 (12) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 194-C of the Act which makes it clear that it includes carriage of goods or passengers by any mode of transport other than by railways - Therefore, payment made by the assessee would certainly fall under the category of carriage of goods and passengers by any mode of transport other than railways and the same does not fall under the definition of rent related to section 194I of the Act - assessee has not taken the plant or machinery on rent but assessee is making payment towards hiring charges paid to the transporter for carriage of goods and passengers by any mode of road transport – Decided in favour of assessee. Deletion of penalty u/s 271(1)(c) – Held that:- Since in the quantum appeal of the assessee for the same assessment years has been decided in favour of assessee, the payment made by the assessee to the transporters for carrying of passengers by road transport falls within the ambit of section 194C of the Act and the assessee was right in deducting the TDS u/s 194C of the Act, therefore, the penalty imposed by the AO on account of lower rate deduction of TDS is certainly not sustainable – Decided against revenue. - ITA No. 1910/DEL/2010 & ITA No. 1912/DEL/2010, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, the AO did not even try to verify the fact that whether the contractors/deductees have duly paid the taxes on their respective income. Ld. Counsel also contended that in fact the AO did not pass any order u/s 201 of the Act as per statutory provisions of the Act. Ld. Counsel finally contended that the AO ignored a very important fact that the assessee is a state owned corporation and its main motive to not to earn profit but to facilitate public at large for transportation and, therefore, it cannot be even presumed that the assessee had any malafide intention deducting the tax at source on lower rates u/s 194C of the Act. 4. Ld. Counsel has drawn our attention towards page no. 163 to 165 of the Paper Book and submitted that on similar issue, ITAT Delhi Bench F in ITA No. 5235 and 5236/Del/2010 for similar assessment years i.e. 2008-09 and 2009-10 in the case of ITO vs Regional Manager, UPSRTC, Saharanpur, has held that the payments made by the assessee would fall under the category of carriage of goods and passengers by any mode of transport other than railways and not under rent. Therefore, provisions of section 194C of the Act will be applicable. Ld. Counsel part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall at the time of credit of such sum with the account of the contractor or at the time of payment thereof in cash or by issue of cheque or draft or by any mode, whichever is earlier, deduct an amount equal to 2 per cent where such payment is being made or credit is given to a person other than individual or a HUF of such sum as Income-tax on income comprised therein. Explanation III defines the word work reads as under: Explanation III. For the purposes of this section, the expression work shall also include (a) advertising; (b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting; (c) carriage of goods and passengers by any mode of transport other than by railways; (d) catering. 5.2 From plain reading of definition of word work it is clear that it inter alia includes carriage of goods or passengers by any mode of transport other than by railways. On the other hand, section 194I is applicable to sums paid by way of rent. Explanation (i) of section 194I defines the term rent and inter-alia includes for payment in respect of machinery or plant or equipment. In the instant case, the assessee has entered i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C of the Act provides for collection and deduction of tax at source in respect of the payments made to contractors and sub contractors. 11. Any person responsible for paying any sum to any resident for carrying out any work is liable to deduct an amount equal to one percent where the payment is being made or credit is being given to an individual or a Hindu undivided family and at two percent, where the payment is be made or credit is being given to a person other than an individual or a Hindu undivided family. The definition clauses for the purpose of Section 194-C provides that the term' work' shall include (a) advertising; (b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting: (c) carriage of goods or passengers by any mode of transport other than by railways; (d) catering; (e) manufacturing or supplying a product according to the requirement or specifications of a customer by using material purchased from such customer 12. The Tribunal did not commit any error of law in invoking Section 194-C, which clearly provides under explanation-III to sub section (2) of Section 194-C that work' includes carriage of good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That the order of the Ld. CIT (A) deserves to be cancelled and the order of the AO be restored. 11. We have heard arguments of both the sides and carefully perused the material placed on record. At the outset, ld. Counsel of the assessee has drawn our attention towards various decisions of the Tribunal and Hon ble Jurisdictional High Court of Allahabad in the case of ACIT(TDS) vs Lotus Valley (supra) submitted that when section 194C of the Act is applicable to the payment made by the assessee and payments are certainly out of the ambit of section 194I and 194J of the Act, then the penalty imposed u/s 271(1)(c) of the Act is not sustainable and the same was rightly deleted by the CIT(A) by passing the impugned orders. 12. Ld. DR fairly accepted that if quantum appeal of the assessee is being allowed, then penalty on the same issue is not sustainable. However, ld. DR pressed his arguments by submitting that the assessee deducted TDS on the lower rate u/s 194C of the Act instead of section 194I of the Act, therefore, penalty was levied by the AO on justified ground which was deleted by the CIT(A) without reasonable and justified basis. 13. On careful consideration of above ..... 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