2014 (7) TMI 247

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....ax Act, 1961 @ 2% while making the payment for hiring these buses. The Assessing Officer held that the assessee should have deducted tax u/s 194I of the Act @ 10% and made an order u/s 201(1)/201(1A) of the Act. The assessee went in appeal and the CIT (A) granted the relief to the assessee relying on the decisions of ITAT in the cases of ACIT (TDS), Noida vs. M/s. Apeejay School, Noida in ITA No.5887/Del/2010 & 5888/Del/2010 dated 01.03.2011 and M/s. Lotus Valley Education Society vs. ACIT (TDS) in ITA No.3254/Del/2010 & 3255/Del/2010 dated 14.01.2011. Now, the revenue has filed the appeals before us. The grounds of appeal in both the Assessment Years are same except the difference in amount. The grounds are reproduced as under :- "1. Th....

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....ul perusal of terms of sample contracts between the appellant and the transport service providers and the affidavit as furnished by the appellant during the appellate proceeding, it is found that the contract/agreement with the transport service provider, is primarily in the nature of "transportation contract" for the transportation of its school children. The agreement also makes the transport service provider responsible for the salaries of drivers, conductor & cleaner, running and maintenance of vehicles (fuel), insurance, license, permit and to provide road worthy and comfortable buses to the school. All other expenses were also payable by the contractors and not by the school. The Drivers work under the supervision and control of the t....

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....ransport contracts entered into by the appellant, the activity of transport contractor will be a simple activity of carriage of its school children by any mode of transport other than by railways. Thus such transport contracts would be covered by Sec. 194C and not Sec. 194I. Further, the reliance placed by the Assessing Officer on the definition of the term plant and machinery in Sec 43(3) of the Income Tax Act is misplaced since the said definition is only relevant for the purposes of Sec. 28 to 41. In the course of appellate proceeding the ld. A.R of the assessee relying upon assessee was squarely covered by the judgment in the case of ACIT Vs. Idea Cellular Limited (ITA No.4913/Del/2011- AY 2008-09) wherein it was held by Delhi Bench of ....

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....0 & 5888/0el/2010 dated 1/3/2011 and M/s. Lotus Valley Education Society VS. Asstt. Commissioner of Income Tax (TDS), No.3254/Del/2010 & 3255/Del/2010 dated 14/1/2011, in which similar issues were involved, the ITAT, Delhi has on facts similar to the instant case, held that hiring of cars, taxies, buses i.e. passenger transport vehicles amount to contract and the amount paid towards hiring of such vehicles is liable for TDS U/s 194C. Thus, in view of the above, I agree with the contention of the appellant and hold that the payments made to the transport service provider fall within the ambit of the provisions of section 194C of the Act. Since the appellant has rightly deducted the tax at source as per the provisions of section 194C of th....