Contract awarded by
assessee-school to transporter for carrying students would be covered by
sec. 194C and by not sec. 194I if bus remained in possession of
transporter and all running and maintenance costs were incurred by him
In
the instant case the assessee-school awarded contracts to various
transporters for carrying its students from their homes to school and
from school back to homes. It had deducted tax under section 194C for
making payments to bus owners. The AO held that the assessee
should have deducted tax under section 194I on such payments. On appeal,
the CIT(A) reversed the order of AO. Aggrieved revenue filed the
instant appeal.
The Tribunal held in favour of assessee as under:
1)
The object of the assessee to enter into such agreement was a simple
activity of carrying its students from their homes to the school and
similarly from school back to their homes;
2)
The assessee had no responsibility whatsoever regarding the buses to be
utilized for that purpose which was the sole responsibility of the
transport contractor;
3)
The transport contractor only was liable to keep and maintain the
required number of buses for such activity at its own expenses with the
specified standards;
4)
Therefore, the said contract was purely in the
nature of services rendered by the transport contractor to the assessee.
The assessee was not having any responsibility whatsoever regarding the
transport vehicles used in such activity;
5)
The assessee itself had not utilized the buses but they were used by
the transport contractor for fulfilling the obligations set out in the
contract. Thus, the aforesaid payments were not covered in the
definition of 'rent' which was defined in Explanation to section 194-I,;
6)
Therefore, the provisions of section 194-I could not be applied in the
instant case. The assessee had rightly deducted tax at source under the
section 194C on the aforesaid payments – ACIT (TDS) V. DELHI PUBLIC
SCHOOL (2013) 37 taxmann.com 211 (Delhi - Trib.)
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