2015 (12) TMI 1714 - AT - Income Tax

Tribunal Upholds CIT(A)'s Decision on TDS for Crane Hire Charges

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision that the amended provisions of section 194I did not apply to crane hire ... TDS u/s 194C OR 194I - TDS liability on crane hire charges - Held that:- The issue arising in the present appeal is squarely covered by the order of Tribunal in Bharat Forge Ltd. Vs. Addl.CIT [2013 (11) TMI 1263 - ITAT PUNE]. The amended provisions of section 194I came into effect from 13.07.2006, under which the definition of rent was amended to include the rent on plant as defined in section 43(3) of the Act. The year under appeal is financial year 2006-07 i.e. up to 31.03.2006, hence, the amended provisions of section 194I are not attracted. The assessee was duty bound to deduct tax at source under the provisions of section 194C of the Act @ 2% out of crane hire charges. The assessee had deducted the said tax at source @ 2%, hence, there is no default attributable to the assessee in this regard. - Decided against revenue Issues:Applicability of section 194I on crane hire charges under the Income-tax Act, 1961.Analysis:The appeal pertains to a dispute regarding the applicability of section 194I of the Income-tax Act, 1961 on crane hire charges for the assessment year 2007-08. The Revenue contended that the provisions of section 194I should apply to crane hire charges, citing an amendment that brought rent on machinery, plant, or equipment under the ambit of section 194I. The CIT(A) had deleted the demand raised under section 201(1) and interest charged under section 201(1A) based on the decision in Bharat Forge Ltd. Vs. Addl.CIT, where it was held that section 194C should apply to crane services paid by the assessee, not the amended section 194I. The Tribunal upheld the CIT(A)'s decision, emphasizing that the amended provisions of section 194I were not applicable for the financial year 2006-07, and the assessee had correctly deducted tax at source at 2% under section 194C for crane hire charges. Therefore, the Tribunal dismissed the Revenue's appeal, affirming the order of the CIT(A).In summary, the key issue revolved around whether the amended provisions of section 194I applied to crane hire charges or if section 194C was the correct provision to be applied. The Tribunal's decision clarified that for the relevant financial year, the assessee had complied with the deduction requirements under section 194C, and the amended section 194I was not applicable. The decision was based on the precedent set by the Pune Bench in Bharat Forge Ltd. Vs. Addl.CIT, which established the correct interpretation of the law in this context.