A car has been used on a contract basis. Drivers salary, Diesal expenes etc has been met by the owner itself. Minimum rent has been paid for a fixed kilometer. Rates over and above that kilometer will be variable . Whether 194I or 194C is applicable??
13 Replies
Ratti Wahal
(Company Secretary)
(139 Points)
Replied 24 August 2009
Mr. Pravin,
In my opinion, the tax will not be deducted under Section 194I of the Income Tax Act, 1961. Reason being the details provided by yourgoodself doesnot satisfied the essential elements of Rent (Rent is defined in Explanation (i) to section 194I of the Income Tax Act, 1961). As per the explanation given in Section 194I the essential features of 'Rent' are: (i) Payment is made under any lease, sub-lease, tenancy or any other agreement or arrangement.(ii)Payment is made either for the use of only land and building (including factory building). TDS provisions are also applicable in respect of rent of machinery, plant, equipment, furniture or fittings.
CA Parag Jani
(BCom CA DISA Forensic Auditor)
(288 Points)
Replied 24 August 2009
ya that's true... Sec 194C applies to this case...
Atul
(Service)
(23 Points)
Replied 24 August 2009
This is a contract for hire of vehicle. It s to be decided whether the contract is hire for machinery ( 194I) or a contract for Labour ( 194C).
The test for this purpose is to ascertain whehter the contraxt is for service or contract of service. To be more explicit. Who controls the operations of vehicle. Although the driver has to obeyu the instructions but still as the control is with the owner is himself, in my opinion, 194C will apply.
Regards
CA Praveen Nair
(Business Analyst)
(99 Points)
Replied 25 August 2009
Thank U all for your valuable comments.....
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