Tax
Deductible under 194C on Hire charges paid for Hiring of Vehicles
There is a
controversy on whether the hire charges paid to hirers is liable to TDS under
section 194C or 194I here are some clarifications for the same
According to
section 194C the scope of the term Work shall include:
a) Advertising
b) Broadcasting and
telecasting including production of programmes for such broadcasting or
telecasting
c) Carriage of
goods or passengers by any mode of transport other than by railways
d) Catering
e) Manufacturing or
supplying a product according to the requirement or specification of a customer
by using material purchased from such customer BUT DOESNOT INCLUDE
manufacturing or supplying a product according to the requirement or
specification of a customer by using material purchased from a person other
than such customer
According to section 194I the term rent
means any payment by whatever name called under any lease, sublease, tenancy or
any other agreement or arrangement for the use of any:
a) Land
b) Building (includes
factory building)
c) Land appurtenant
d) Machinery
e) Plany
f) Equipment
g) Furniture
h) Fittings
Some
Issues:
1. Hire
Charges paid for Transportation of employees:
A company
has entered into agreement with a transport service and as per the agreement
the staff required for running bus and maintenance and repairs to it has to be done
by the transporter and in this case it was held that the provisions of 194 I
confirmed to the payment for rent on hiring of land and buildings, furniture
but not for transport vehicle and other mode of transportation so the payments
made for transport has fallen under the ambit of 194C
2. Payment
made for vehicle rent for transportation of passengers:
A transporter of passengers has
entered into agreement for taking the
passengers from different places to the institute and from there again to different places in the city and for
fulfilling the requirements of agreement the transporter has hired additional
vehicles for carrying his work and has not deducted any TDS for the payments
made by him to the person who has given the vehicles on rent and he has also
provided the drivers and staff for running the bus so it was clearly held that
the payment is covered under 194C
3. Payment of
car rent for Transportation of
employees:
If payment was made for any rent of a car for the transport
of employees it will also be covered under 194C.
4. Payment
made to bus operators for pickup and dropping of students and staff:
Here a contract was entered into with a transporter with some
conditions such as all the responsibility for running the buses has to be borne
by the transporter here the AO held that the buses used will qualify under
plant according to section 194I and has
to deduct TDS @10% but assessee is of the contention that it was a contract as
the buses were not utilized as a plant but used for fulfilling the obligation
so 194I will not be applicable and it was held that assessee has rightly
deducted TDS under 194C.
On comparision
of all the explanations it was never the intention of the legislature to
overlap any of the items mentioned in meaning of work under section 194C.Therefore
the payment made for carriage of employees school students cannot be made
liable for TDS under 194I
Kiran
Kiran
