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TMI Blog2011 (8) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... he provision contained in section 194C or 194-I of the Income-tax Act, 1961 ("the Act" for short), for payments made to the contractors by way of hire charges ? 2. The facts, as mentioned in the assessment order, are that the assessee entered into contracts regarding providing and plying buses with various parties. The case of the assessee is that it entered into works contract with various contractors, who provided the buses for running in the course of business of the assessee. These contractors are being paid on per kilometer basis. The contract is works contract, as understood under Explanation III to section 194C. Therefore, the tax has to be deducted @ 2% of the amount involved in the payments. However, the findings of the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the matter. 2.1 Aggrieved by this order, the Revenue is in appeals before us and the main ground taken is that the ld. CIT(A) erred in applying the provisions of sections 194C and 194-I in directing the Assessing Officer to re-compute tax and interest u/s. 201(1) and section 201(1A) respectively instead of the correct position that whole of the amount was liable for tax deduction at source u/s. 194-I. The assessee has also filed cross-objections and the main ground is that the ld. CIT(A) erred in holding that half of the payment was liable for tax deduction at source u/s. 194-I while the correct position of law is that the whole amount was so liable u/s. 194C. 3. Before us, the ld. Counsel for the assessee mentioned at the outset that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of paragraph No. 5, which is reproduced below : "5. We have heard the rival contentions and perused the facts of the case. At the outset, we concur with the views of the ld. CIT(A). Under section 194-I, the income-tax is required to be deducted at source at the time of payment of an income by way of rent at the rate of 10% for the use of any machinery or plant or equipment, whereas under section 194C of the Act, tax is required to be deducted at the rate of 2% for carrying out any work which, inter alia, includes carriage of goods and passengers by any mode of transport other than by Railways. Though all types of machinery, plant and equipment given on hire are covered under section 194-I, but hiring of transport vehicles gets specifical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under : (i). Circular No. 681 dated 6.8.1994, (ii). Circular No. 715 dated 8.8.1994, (iii). Circular No. 1/2008 dated 10.1.2008, (iv). Circular No. 713 dated 2.8.1995, (v). Circular No.717 dated 14.8.1995, (vi). Circular No.558 dated 28.3.1990 5.3 It was also pleaded before the ld. CIT(A) that the aforesaid circulars and instructions have neither been superseded nor withdrawn and they are still in force and have to be followed by the Income-tax authorities. In view of the arguments made by the ld. Counsel for the assessee before the ld. CIT(A) and the findings of the ld. CIT(A) on the basis of the provisions contained in section 194C and 194-I and the circulars and the decisions relied hereinbefore, hiring of buses from va ..... X X X X Extracts X X X X X X X X Extracts X X X X
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