Applicability of the provisions of section 194C of the Income-tax Act, 1961--Deduction of tax at source from the hire charges paid to the bus owners for the hire of buses--Clarifications--Regarding

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....s for the hire of buses--Clarifications--Regarding Circular No. 558 Dated 28/3/1990 According to the provisions of section 194C of the Income- tax Act, 1961, any person responsible for paying any sum to any resident for carrying out any work in pursuance of a contract between the contractor and the bodies specified therein shall, at the time of credit of such sum to the account of the contracto....

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....uestion has arisen whether the provisions of section 194C are applicable to the payments made by a State Road Transport Corporation to private bus owners, form whom buses are hired for plying on specified routes. Placing reliance on the answer given to question No.5 in Board's Circular No.98, dated 26th September, 1972 (See [1972] 86 ITR (St.) 30, wherein it was clarified that a transport contract....

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....) The owner of the bus shall give his bus on hire to the corporation for plying on notified routes. (ii) The owner shall provide a driver, with a valid licence and P.S. Badge for the vehicle supplied by him, who shall follow the instructions of the authorised officials of the corporation. (iii) The owner shall make available the bus for 14 hours a day and complete the schedules given to him for ....

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....t, etc., etc. On the basis of these terms and conditions, the Board have been advised that although the contract may appear to be a simple hire contract, it is actually a service contract (for carrying out any work) entered into between the State Road Transport Corporation and the owner of the bus for plying certain buses on certain routes and subject to certain conditions. In such cases, the pro....