Carriage contracts by road transport fall under section 194-C, not rent under section 194-I, in tax deduction treatment.

Contracts for carriage of goods and passengers by road transport other than railways were treated as "work" within section 194-C of the Income-tax Act, because the arrangement concerned transportation by trailers, utility vans, water tankers, sumos and similar vehicles. The payment was not "rent" under section 194-I, as that provision applies to use of land, building, machinery, plant, equipment or similar assets, not a carriage contract. The provisions were read as operating in distinct fields, and the interpretation favourable to the assessee was preferred where two views were possible. On that basis, deduction under section 194-C was correct and the demand under section 201(1) was unsustainable.

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Issues: Whether payments made under contracts for carriage of goods and passengers by vehicles other than railways fell within the scope of section 194-C of the Income-tax Act, 1961, or were liable to deduction as rent under section 194-I of the Income-tax Act, 1961, and whether the Tribunal was justified in deleting the demand and interest raised under section 201(1) of the Income-tax Act, 1961.

Analysis: The contract was for transportation of goods and passengers by trailers, utility vans, water tankers, sumos and similar vehicles, which squarely fell within the expanded meaning of "work" under section 194-C, including carriage of goods and passengers by any mode of transport other than railways. The definition of "rent" under section 194-I covers payment for use of land, building, machinery, plant, equipment and similar assets, but the arrangement in question was a carriage contract and not an agreement for use of machinery or equipment. The two provisions were construed as operating in their respective fields, and where two views were possible, the interpretation favourable to the assessee was applied. The earlier decision cited on transportation contracts supported the view that such carriage arrangements are covered by section 194-C.

Conclusion: The deduction made under section 194-C was held to be correct, the demand raised under section 201(1) was not sustainable, and the Revenue's appeal was dismissed.

Ratio Decidendi: A contract for carriage of goods and passengers by road transport other than railways is covered by section 194-C of the Income-tax Act, 1961 and does not amount to rent under section 194-I of the Income-tax Act, 1961.

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