Law:

Section:

Section 194C, read with sections 194-I and 201, of the Income-tax Act, 1961 - Deduction of tax at source - Contractors/sub-contractors, payments to - Assessment year 2007-08 - Assessee had carried out freight and transportation works contracts with three transporters who transported goods belonging to assessee and its clients to various places through their vehicles - It deducted tax at source from such payments under section 194C - Assessing Officer held that assessee had taken cranes/trailers on rent from various transport companies and handling agents and, therefore, it was required to deduct tax at source under section 194-I and not under section 194C - Accordingly, he passed an order under section 201 read with section 194-I and raised a demand of amount which had been short deducted at source on amount of rental payment - Whether since there was nothing to indicate that assessee had taken trailers/cranes on rent so as to attract provisions of section 194-I and in fact assessee was responsible for paying amount in question for carrying out work in pursuance of contracts between assessee and transporters, transactions would fall within purview of section 194C - Held, yes - Whether, therefore, assessee was not an assessee in default within meaning of said expression as contemplated under section 201 - Held, yes M.R. Bhatt and Mrs. Mauna M. Bhatt for the Appellant. ORDER Ms. Harsha Devani, J. - The appellant-revenue in this appeal under section 260A of the Income-tax Act, 1961 (the Act) has challenged order dated 2-12-2008 made by the Income-tax Appellate Tribunal (the Tribunal) proposing the following question :- "Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) in deleting the order passed under section 201(1) read with section 194C(1) of the Income-tax Act of Rs. 6,33,353?" 2. The assessment year is 2007-08. The facts stated briefly are that during the course of TDS verification, it was found that the assessee had taken cranes/trailers on rent from various transport companies and handling agents. According to the Department, though the cranes and trailers were taken on hire, TDS under section 194C of…

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