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2015 (7) TMI 360 - ITAT DELHI

2015 (7) TMI 360 - ITAT DELHI - TMI - Short deduction on account of interest - @194I or section 194C - CIT(A) deleted disallowance - Held that:- Having regard to the agreement entered into by the assessee, the contents of which have been summarized by ld. CIT(A) in his order, it is evident that assessee had not acquired any right of possession of the buses i.e. vehicles, which is an essential ingredient of hiring. The assessee had no interest i.e. as a lessee or sub-lessee or tenant in respect o .....

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Mehrotra, AM And H. S. Sidhu, JM,JJ. For the Appellant : Shri Mohinder Rajpal (Manager Taxation) For the Respondent : Shri B R R Kumar Sr. DR ORDER Per S V Mehrotra, AM. These are cross appeals, preferred by the revenue as well as by the assessee, against separate orders passed by the ld. CIT(A), Noida relating to A.Y. 2008-09 & 2009-10. ITA no. 5267 /Del/2013 (Revenue's appeal): 2. Following grounds are raised: "1. The CIT(A) has erred in law and on facts in deleting the addition o .....

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377; 3,49,793/- on account of short deduction and ₹ 1,46,913/- on account of interest thereon without appreciating the fact that the hired vehicles were covered under the definition of plant and machinery as per provisions of section 43(3) and accordingly the TDS was deductible as per provision of section 194 I at the prescribed rate, instead of section 194C, as held by Ld. CIT(A) after the insertion of amended provisions in the section 194 I w.e.f. 13-07-2006." 3. Brief facts of the .....

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see had deducted tax u/s 194C of the I.T. Act @ 2%. The AO was of the opinion that in view of the amended provision of section 194I of the I.T. Act w.e.f. 1-4-2008 to 31-03-2009 tax was to be deducted @ 10%. It was found in course of proceedings that assessee had made payments for vehicle hiring charges for the FY 2007-08 and 2008-09. The assessee in its reply, inter alia, submitted that for the transportation of the employees of the company, the company had entered into contracts with various c .....

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e of any machinery or plant or equipment; Further as per section 43(3) of the Income tax Act, the plant includes vehicles, the section reads as under:- Section 43 of the Income Tax Act. (3) "Plant" includes ships, vehicles, books, used for the purpose of the business or profession [but does not include tea bushes or livestock] (l)' [or buildings or furniture and fittings]. As the section 1941 has been substituted by the Finance Act, 2007 after the date of insertion i.e. 1.7.1995 of .....

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s for determination for tenancy. The third test therein states that if under the documents, a party gets exclusive possession of the property, prima facie he will be considered as tenant. In the instant case, exclusive possession of the buses vehicle hired were given to the assessee and hence section 194-I is applicable on the entire payments. Besides, it is also pertinent to mention here that the assessee, being the hirer was not only in exclusive possession of the vehicle, but could also use t .....

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-I 10.3% Short Deduction u/s 194-I Defaults in months w.e.f. Oct. 2007 till date Interest u/s 201(1A) @ 1% Total Amount due 4435116 145820 662817 516997 30 155099 672096 FY Short deduction u/s 194I Interest on hiring charges Total amount payable 2007-08 349793 146913 496706 2008-09 516997 155099 672096 Total 866790 302012 1168802 5. Ld. CIT(A) held that the payments made to the transport service provider fall within the ambit of the provision of section 194C of the Act and provisions of section .....

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section 194C of the Act defines "work" to include "carriage of goods and passengers by any mode of transport other than by railways". The activity of transport contractors was a simple activity of carriage of its employee by way of mode of transport other than by railways, as per the contract. (d) The definition of plant & machinery in section 43(3) is relevant for the purpose of sections 28 to 41 and is not applicable to the present context. (e) The issue is squarely co .....

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o by the assessee, the contents of which have been summarized by ld. CIT(A) in his order, it is evident that assessee had not acquired any right of possession of the buses i.e. vehicles, which is an essential ingredient of hiring. The assessee had no interest i.e. as a lessee or sub-lessee or tenant in respect of the buses which were being used for transportation of the employees. The existence of landlord/ tenant relation or licensor/licensee is a must before the payment in question can be term .....

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d in section 194C is applicable on the payment made by assessee for hiring of buses, ignoring the fact of the case that the deductor company is liable to deduct the tax u/s 194 I at the rate of 10% for hiring of buses in view of amendment made u/s 194 I w.e.f. 01-06-2007. "2. The CIT(A) has erred in law and on facts in deleting the addition of ₹ 5,16,997/- on account of short deduction and ₹ 1,55,099/- on account of interest thereon without appreciating the fact that the hired v .....

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parties. Therefore, for the reasons given by us in revenue's appeal for AY 2008-09, we uphold the order of CIT(A) and dismiss the grounds taken by the revenue. Assessee's appeal - (ITA no. 4933/Del/2013 AY 2008-09): 9. Sole effective ground raised is as under: That on the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals)-Noida, erred in confirming the interest for ₹ 36,443/- (Rupees thirty six thousand for hundred forty three only) .....

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d like to inform you that we are deducting tax at source (TDS) as per the Act on the basis of the earnings available in a particular month. The total earnings vary due to various payments being made in between during the financial year, such as - Regular increment in the month of July for the employees who have joined in the months of April to June. Special increment being given to the employees time to time. Leave encashment Full and final settlement New joining." 11. The AO computed the i .....

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