The assessee entered into contracts with transporters for transporting petroleum products from the plant to various destinations. The assessee deducted TDS u/s 194C at 2% on the basis that the transportation contract was “work”. The AO held that the contract was a “hiring” of vehicles on the basis that
(i)the assessee had exclusive possession and usage,
(ii)the use was for a fixed tenure,
(iii)the tankers were customized to the assessee’s requirements
Thus TDS ought to have been u/s 194-I at 10%. The assessee was held to be in default u/s 201. On appeal, the CIT (A) reversed the AO. On appeal by the department, HELD dismissing the appeal.
(i)the assessee had exclusive possession and usage,
(ii)the use was for a fixed tenure,
(iii)the tankers were customized to the assessee’s requirements
Thus TDS ought to have been u/s 194-I at 10%. The assessee was held to be in default u/s 201. On appeal, the CIT (A) reversed the AO. On appeal by the department, HELD dismissing the appeal.
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