P.M. Jagtap, Accountant Member. - These eight appeals, four filed by the assessee and four filed by the revenue, are cross-appeals which are directed against four separate orders passed by the ld. CIT(A) for assess-ment years 2005-06, 2006-07, 2007-08 and 2008-09. Since some common issues are involved in these appeals, the same have been heard together and are being disposed of by this single composite order.

2. The first common issue relating to the liability of the assessee to deduct tax at source from reinsurance commission is involved in ground No. 1 of the revenue’s appeal for all the four years under consideration.

3. In this case, a survey under section 133A was carried out on 27-8-2008 to verify whether the assessee company was complying with the provisions of Chapter XVII-B of the Income-tax Act, 1961 relating to the requirement of tax deduction at source. During the course of survey, it was found that the assessee had entered into an arrangement with Bajaj for facultative reinsurance. As per the said arrangement, the assessee was liable to pay certain percentage of premium ceded as reinsurance inward commission to Bajaj. The assessee was receiving only net premium on reinsurance from Bajaj and as per the arrangement, it was to bear a certain percentage of loss of the premium. The profit commission, if any, was shared between the assessee and Bajaj in certain percentage as agreed in the arrangement. According to the Assessing Officer, if the transaction between the assessee and Bajaj was a business transaction of passing risk, there was no question of paying ceding premium/commission. He held that the assessee, therefore, was liable to deduct tax on reinsurance commission paid to M/s Bajaj under section 194D of the Income-tax Act, 1961. This decision of the Assessing Officer was challenged by the assessee in the appeals filed before the ld. CIT(A) and elaborate submissions were made on its behalf before him in support of the stand that tax at source was not liable to be deducted from reinsurance commission as per the provisions of section 194D of the Act. The gist of the said submissions was that no commission was paid by the assessee to Bajaj for soliciting or broking insurance business. It was contended that there was no agency relationship between the assessee and Bajaj and the arrangement between the parties was to share the premium, risk etc. on principal-to-principal basis. It was also contended that reinsurance commission was nothing but meant to take care of the cost of procurement, cost of funding claims till recovery is made from the reinsurers and to account for any non-recovery in the event of their going insolvent. It was pointed out that a similar issue has already been decided by the Mumbai Bench of ITAT in favour of the assessee the case of General Insurance Corpn. of India v. Asstt. CIT [2009] 28 SOT 453 . On appreciation of the relevant facts involved in the case of the assessee vis a vis the facts involved in the case of General Insurance Corpn. of India (supra), the ld. CIT(A) found that a similar issue involving identical facts was decided by the Tribunal in favour of the assessee in the case of General Insurance Corpn. of India (supra). Accordingly, he followed the decision of the Tribunal and held that the provisions of section 194D were not applicable to the payment of reinsurance commission paid by the assessee to Bajaj. Accordingly, the action of the Assessing Officer in holding the assessee as in default under section 201(1) and in charging interest under section 201(1A) for its alleged failure to deduct the tax at source from the payment of reinsurance commission was held to be unjustified.

4. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that a similar issue has already been decided by the Coordinate Bench of this Tribunal in the case of General Insurance Corpn. of India (supra) wherein after taking into consideration the provisions of section 194D and discussing the meaning of relevant expression used in the context such as ‘commission’, ‘reinsurance’ etc., as explained in the various judicial pronouncements as well as in the dictionary, it was held by the Tribunal as under :

"In order to attract section 194D, the commission or any other payment covered under the section should be a remuneration or reward for soliciting or procuring the insurance business. The insurance companies do not procure business for the assessee company nor does the assessee company pay commission or other payment for soliciting the business from the insurance companies. The language of section 194D clearly indicates that ordinarily there would be three parties involved in the payment of commission or other payments as remuneration or reward for soliciting or procuring the insurance business. Firstly, there would be an insurance company and the second would be insured. If the insurance company gets business directly from the insured, no payment would be required to be made by the insurance company to the insured by way of commission or otherwise for soliciting or procuring the business for the assessee. If any discount is allowed by the insurance company to the insured that will not fall within the definition of brokerage or commission paid for soliciting for procuring insurance business. That payment, in our view would fall within the category of a discount offered to the insured for giving the business to the insurance company. Even otherwise the payment or deduction would neither be a reward nor remuneration for any services like soliciting or procuring insurance business for the assessee. The assessee-company may be said to have solicited business from the insurance companies in certain cases but the commission credited/paid is not by way of remuneration or reward for soliciting or procuring of insurance business. As noted earlier, remuneration or reward would be related to services rendered in connection with soliciting or procuring business. In this case the payment of discount is made to insurance companies but the payee companies have not solicited or procured insurance business for the assessee. For the sake of arguments, it may be accepted that the assessee company has solicited or procured insurance business from the insurance companies but the payment is not made to the solicitor or procurer of insurance business but to those from whom business has been solicited or procured. In the present case, payer would be a solicitor or procurer of insurance business but not the payee companies. For attracting section 194D, the payment has to be by way of remuneration or reward not for giving business to the assessee but for soliciting or procuring the insurance business."

5. For the reasons given above as well as for the detailed discussion made in its order dealing with the other relevant aspects of the matter, the Tribunal finally held in para No. 37 that the insurance companies have not provided any service of soliciting or procuring insurance business for the assessee company. On the other hand, the assessee company has provided reinsurance to the insurance company and if the reinsurance companies have reduced the premium directly from the premium payable by the insured, such a deduction will not attract provisions of section 194D. As the issue involved in the present case as well as all the material facts relevant thereof are similar to that of General Insurance Corpn. of India case (supra), we respectfully follow the order of the Tribunal passed in the said case and uphold the impugned order of the ld. CIT(A) allowing relief to the assessee on this issue. Ground No. 1 of the revenue’s appeals for all the four years under consideration is accordingly dismissed.

6. The next issue relating to the liability of the assessee to deduct tax at source from the payment of car hire charges is involved in ground No. 2 of the revenue’s appeal for assessment years 2007-08 and 2008-09.

7. The assessee during the years under consideration had entered into arrangements with various parties for hiring of car. The cars were hired from time to time for transportation of employees and visitors for the purpose of assessee’s business and tax at source was deducted by it from the payment of car hire charges as per the provisions of section 194C of the Act. According to the Assessing Officer, the payments made by the assessee to various parties by way of car hire charges were in the nature of rental of plant and machinery or equipment. He held that the assessee therefore was liable to deduct tax at source at higher rate as per the provisions of section 194-I.

8. Before the ld. CIT(A), it was submitted on behalf of the assessee that even as per the definition of rent as extended with effect from 30-7-2006, only the rent of machinery, plant and equipment is covered and not the rent for use of cars. It was submitted that section 194C provides that any person responsible for paying any sum to a resident for carrying out "any work" in pursuance to a contract between the contractor and any company shall at the time of payment or credit of such sums deduct income-tax at the rate of 2 per cent. It was also submitted that as per sub-section (3) of section 194C, the expression "work" also includes carriage of goods and passengers by any mode of transport other than by railway. It was contended that the carriage of passengers by any mode of transportation will also cover hiring of cars and since the assessee had not made any payment for use of particular motor cars but for the facility of transport from one place to another, tax at source was deductible from the payment of car hire charges as per the provisions of section 194C. Relying on the Board Circular No. 5, dated 30-7-2002, it was contended that the assessee had entered into an arrangement for hiring of cars which was in the nature of rate contract for providing specified types of cars at pre-determined rates and since specific cars were not made available at the disposal of the assessee as per the said arrangement, the provisions of section 194C were applicable and not the provisions of section 194-I. To further support and substantiate this stand, the assessee also filed a sample copy of invoice issued by the vendor to show that services rendered by the vendor were with respect to facility of transport of the assessee’s employees from one place to another and specific cars were not earmarked for the assessee for this purpose.

9. The ld. CIT(A) found merit in the submissions made on behalf of the assessee on this issue and accepted the stand of the assessee for the following reasons given in para Nos. 9 and 9.1 of his impugned orders which are identical for both the years under consideration i.e., 2007-08 and 2008-09.

"I have considered the above submission very carefully and have perused the order of the Assessing Officer. I have also seen the copy of bills on the basis of which payment is made. I find that the Assessing Officer held that payments made to various parties by way of car hire charges are in the nature of rental of plant and machinery/equipment and therefore liable for withholding tax under section 194-I of the Income-tax Act. On the other hand the appellant submitted that the cars were hired from time to time for transportation of employees/visitors for purpose of the business as such business meeting, local conveyance etc. The appellant also urged that even in the amended definition of rent introduced by Amendment Act of 2006 whereby the definition of rent is extended to cover machinery, plant and equipment within its scope with effect from 13-7-2006, cars are not expressly included in the definition of rent. The appellant also contended that sub-section (3) of section 194C of the Income-tax Act states that the expression ‘work’ shall also include carriage of goods and passengers by any mode of transport other than by railways. The appellant has also placed reliance on the Supreme Court judgment in the case of Associated Cement Co. Ltd. v. CIT [1993] 67 Taxman 346. From the details furnished in this regard, I find that the vehicle is not at the disposal of the appellant and the appellant has to run the vehicle as per requirement/routes only. The appellant had not made any payment for use of particular motor car but for the facility of transport from one place to another and the rates are fixed for a particular vehicle and for distance and timings. I see merit in the submission of the appellant that it had entered into an Agreement for hiring of cars which is in the nature of rate contract for providing specified types of cars at predetermined rates. The cars are not at the disposal of the appellants. The sample copy of quotations is an evidence that the services rendered by the vendors was with respect to facility of transport of the appellant’s employees from one place to another for a particular distance and timings. The contract with the vendors was for hiring of only particular category of cars and cars were not earmarked by the appellant.

Based on the above, it is amply clear that the nature of arrangements made by the appellant is in the nature of Service Contract only as the appellant does not enjoy the control over the vehicles and also the running and maintenance expenditure is borne by the car providers. Thus in view of the above facts I hold that the payment made by the appellant to the cars providers fall within the ambit of the provisions of section 194C of the Act. Accordingly, the appellant is treated assessee in default for not deducting tax at source. To this extent, the order of the Assessing Officer is confirmed."

10. The ld. D.R. submitted that the charges paid by the assessee for hiring the cars were clearly in the nature of rent paid for the cars and the provisions of section 194-IA were squarely attracted as rightly held by the Assessing Officer. He contended that the assessee thus was required to deduct tax at source at the higher rate as per the provisions of section 194-I as against tax deducted at low rate relying on the provisions of section 194C, which were not applicable.

11. The ld. counsel for the assessee invited our attention to the Explanation (iv)(c) to 194C and submitted that the contract work for carrying passenger was covered under section 194C and the tax deducted by the assessee from the payment of car hire charges which was purely a contract for carriage of passenger was in accordance with the requirements of section 194C. He submitted that the cars provided by the vendors were not specifically earmarked for the assessee and the only requirement was to provide the cars of particular category with a choice to the vendor to provide any car falling within that category. He contended that it was therefore not a case where cars could be said to be taken on rent by the assessee and since the car hire charges were paid for the contract of carriage of passengers, tax was deductible from the payment thereof as per the provisions of section 194C as rightly held by the ld. CIT(A). He, therefore, strongly supported the impugned order of the ld. CIT(A) on this issue.

12.We have considered the rival submissions and also perused the relevant material on record. It is observed that from the details and documentary evidence furnished by the assessee, it was found by the ld. CIT(A) that specific cars were not made available at the disposal of the assessee and the vendors were required to provide any cars belonging to a particular category for transportation of employees and guests of the assessee as per its requirement. As held by the ld. CIT(A), the assessee thus had not made any payment for use of a particular motor cars but the payments were made for transportation of its employees/guests as per the requirement. Based on these findings of facts recorded by him in the impugned order, the ld. CIT(A) held that it was a case of contract for carriage of passengers as envisaged in Explanation (iv)(c) to section 194C and tax at source was rightly deducted by the assessee at the rate prescribed in section 194C. At the time of hearing before us, the ld. D.R. has not been able to controvert/rebut these findings of facts recorded by the ld. CIT(A) on the basis of appreciation of evidence placed on record by the assessee. On the other hand, the ld. counsel for the assessee has taken us through the relevant contracts entered into by the assessee with the concerned vendors for hiring of cars which clearly establish that there being no specific cars identified and earmarked for the assessee and it was only the arrangement for providing cars of a particular category to facilitate transportation of the employees and guests of the assessee from one place to another, the tax at source from the payment of car hire charges was required to be made by the assessee as per the provisions of section 194C, read with Explanation (iv)(c) thereto. As held by the ld. CIT(A), the assessee thus had rightly deducted tax at source from the payment of car hire charges as per the provisions of section 194C and the Assessing Officer was not correct in holding that the tax was required to be deducted by the assessee at higher rates as per the provisions of section 194-I. We, therefore, find no infirmity in the orders of the ld. CIT(A) on this issue and upholding the same, we dismiss ground No. 2 of the revenue’s appeal for assessment years 2007-08 and 2008-09.

13. Now, we shall take up the appeals of the assessee. The first common issue relating to the liability of the assessee to deduct tax at source from bus hiring charges is involved in ground Nos. 1 and 2 of the assessee’s appeal for assessment years 2007-08 and 2008-09.

14. During the previous year relevant to assessment year 2008-09, the assessee had entered into arrangements with various parties for hiring of buses. The buses were hired for the purpose of transportation of employees from specific railway stations to the place of office and vice versa. From the payments made against bus hire charges, tax was deducted at source by the assessee as per the provisions of section 194C. According to the Assessing Officer, the bus hire charges paid by the assessee were in the nature of rental of plant and machinery/equipment. He held that the assessee, therefore, was liable to deduct tax at source from the payments made against bus hire charges at a higher rate as per the provisions of section 194-I. Before the ld. CIT(A), it was submitted on behalf of the assessee that as per the provisions of section 194C of the Act, any person responsible for paying any sum to a resident for carrying out any work in pursuance to a contract between the contractor and any company was required to deduct Income-tax at the rate of 2 per cent at the time of payment or credit of such sums. It was contended that as per the definition of the word "work" given in the section, payment in respect of carriage of goods and passengers by any mode of transport other than by railways was regarded as work. It was contended that the arrangement between the assessee and the various parties for carriage of passengers by hiring of buses thus was a work carried out in pursuance to a contract and tax at source was rightly deducted as per the provisions of section 194C. Reliance in support of this contention was placed by the assessee on the Board Circular No. 558, dated 28-3-1990 and Circular No. 715, dated 8-8-1995.

14.1 The ld. CIT(A) did not find merit in the submissions made on behalf of the assessee on this issue and proceeded to uphold the action of the Assessing Officer in treating the bus hire charges paid by the assessee as rent and in holding that tax at source from the payment thereof was liable to be deducted at higher rate as per the provisions of section 194-I for the following reasons given in para No. 11 and 11.1 of his impugned order :

"I have considered the above submission very carefully and have perused the order of the Assessing Officer. I have also analysed the copy of the Agreement entered by the appellant with bus providers. The Assessing Officer held that payments made to various parties by way of bus hire charges was in the nature of rental of plant and machinery/equipment and therefore liable for withholding tax under section 194-I of the Act. On the other hand the appellant contended that its case is covered by section 194C. The expression ‘work’ has been defined in section to include payment in respect of carriage of goods and passengers by any mode of transport. The appellant had placed reliance on CBDT Circular 558, dated 28-3-1990 and Question No. 6 of Circular 715, dated 8 August, 1995. The Agreement made between the appellant and M/s Suresh Travels transpires that the appellant agrees to pay monthly fixed rent of Rs. 23,000 to the contractor for carrying out the services to the satisfaction. The Agreement is valid for one year.

From the Agreement it is clear that the amount is paid by the appellant as a ‘rent’ to the bus owner on fixed monthly basis which is covered under section 194-I of the Income-tax Act. In this case the charges are not fixed movement-wise or per kilometer or time duration-wise. Since the buses are hired on monthly basis, it is not correct to say that there was no control of the appellant over the buses used. I agree with the reasoning of the Assessing Officer. Therefore, I hold that the appellant was liable to deduct tax as per the provisions of section 194C instead of section 194C. This ground of the appeal is dismissed."

15. The ld. Counsel for the assessee at the outset invited our attention to Explanation (iv) to section 194C wherein the expression "work" is defined to include inter alia carriage of goods or passengers by any mode of transport other than by railways. He then invited our attention to the sample copy of bus hire agreement entered into by the assessee with one of the contractors placed at page Nos. 68 to 70 of his paper book, and took us through the different clauses of the said agreement to contend that if the said agreement is read as a whole, it cannot be said that it was a case of taking buses on rent. He contended that the said agreement as specifically mentioned therein was for the services to be rendered by the contractor for carrying the passengers i.e., employees of the assessee by buses which was a mode of transport. He pointed out that as per clause 1 of the said agreement, the contractor had agreed to provide bus services to the commuting staff of the assessee between the office premises and Mulund railway station twice in a day at specific timings. He submitted that even the experience of the contractor in the field of providing such bus services was specifically indicated in the said agreement. He submitted that as per the said agreement, the contractor had undertaken to provide 23 seater bus for this purpose and there is nothing to indicate that a specific bus was made available at the disposal of the assessee. He also pointed out that as per the said agreement, contractor had agreed to provide a first party insurance cover for the employees of the assessee availing the said bus services in case of any accident/damages etc., which is a condition that cannot be there in case of taking bus on rental basis. He contended that the said agreement thus was a contract for carrying out the work of carriage of passengers by buses as a mode of transport and merely because the nomenclature used for the payment made against the said work in the agreement was "rent", the nature of arrangement would not change which was purely a contract for the work of carriage of employees of the assessee by the contractor by buses as a mode of transport. He contended that the terms and conditions of the relevant agreements clearly show that the assessee had no control whatsoever over the buses which were hired and the arrangement with the contractor was only for providing bus services to the commuting staff between office premises and specific railway station. He contended that the payment made by the assessee for bus hire charges as per the said agreement thus was not in the nature of rent but the same was for the work of carriage of passengers by buses as a mode of transport and deduction of tax was rightly made by the assessee as per the provisions of section 194C. In support of this contention, he relied on the decision of Hon’ble Supreme Court in the case of Associated Cement Co. v. CIT [1993] 201 ITR 435¹ and Board Circular No. 558, dated 28-3-1990.

16. The ld. D.R., on the other hand, submitted that the arrangement between the assessee and the concerned parties was for hiring of buses and the income arising from such arrangement from hiring was in the nature of rent as rightly held by the Assessing Officer as well as by the ld. CIT(A). He invited our attention to the copy of sample agreement placed in the paper book of the assessee and pointed out that a monthly rent of Rs. 23,000 was fixed between the assessee and concerned party which again shows that what was agreed to be paid by the assessee is rent for hiring of buses. He contended that it was thus a case of rent paid by the assessee for hiring of buses and tax at higher rate was required to be deducted there from as per the provisions of section 194-I. He contended that what is to be seen in this context is a substance of the agreement which in the present case was that the buses hired by the assessee were under his captive use.

17. We have considered the rival submissions and also perused the relevant material on record. It is observed that the bus hire charges were paid by the assessee during the years under consideration to various parties in pursuance of agreements entered into with them and from the said payments, tax was deducted at source in accordance with the provisions of section 194C(1) which are extracted below :

"194C. (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to—

(i )one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family;

(ii )two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family;

of such sum as income-tax on income comprised therein.

(2) Where any sum referred to in sub-section (1) is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

(3) Where any sum is paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source—

(i )on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or

(ii )on the whole of the invoice value, if the value of material is not mentioned separately in the invoice.

(4) No individual or Hindu undivided family shall be liable to deduct income-tax on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family.

(5) No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed twenty thousand rupees :

Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds fifty thousand rupees, the person responsible for paying such sums referred to in sub-section (1) shall be liable to deduct income-tax under this section."

18. The Assessing Officer as well as ld. CIT(A), however, held that tax at source was required to be deducted by the assessee at higher rates from the payment of bus hire charges as per the provisions of section 194-I which as applicable to the years under consideration are extracted below :

"194-I. Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of—

(a )Ten per cent for the use of any machinery or plant or equipment;

(b )Fifteen per cent for the use of any land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings where the payee is an individual or a Hindu undivided family; and

(c )Twenty per cent for the use of any land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings where the payee is a person other than an individual or a Hindu undivided family :

Provided that no deduction shall be made under this section where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee, does not exceed one hundred and twenty thousand rupees."

19. In order to ascertain whether the payment of bus hire charges made by the assessee is covered by the provisions of section 194C or 194-I, it is necessary to look into the clauses of the relevant agreement so as to ascertain the exact nature of arrangement between the assessee and the concerned parties. A copy of one such sample agreement is placed at page Nos. 68 to 70 of the assessee’s paper book and a perusal of the same shows that the concerned party namely M/s Goel & Sons with whom the said agreement was entered into by the assessee was referred to as contractor mentioning further that the contractor was in the business of providing bus services to clients and was agreeable to provide bus services to the

assessee who was referred to as client for its staff for their to and fro commutation between premises of the assessee located at Ahura Centre, Andheri (E), to Mulund railway station on certain terms and conditions. As per the said terms and conditions, the contractor had agreed to provide the bus services to the commuting staff twice in a day at specific timings. As further agreed, the assessee was to pay a total monthly fixed amount of Rs. 23,000 with Service tax & Education Cess (as applicable) to the contractor for carrying out the services to its satisfaction on the basis of invoice to be raised by the contractor in this regard. As per the said agreement, the contractor had assured the assessee that for the purpose of providing bus services, they had employed adequate and well trained staff such as drivers, cleaners and team of skilled personnel for fulfilling their agreement. The contractor had also undertaken to provide 23 seater bus for this purpose. The contractor had also agreed to provide a first party insurance cover for the employees of the assessee availing the bus services in a case of accident/damage etc. Both these parties had also agreed to increase the monthly compensation for use of bus services with a mutual consent as a result of any increase in the rates of taxes, dues and hike in diesel or oil prices. Even the formula to increase the compensation on the basis of increase in diesel or oil prices was also agreed between the assessee and the contractor. After having taken into consideration all these terms and conditions agreed between the assessee and the contractor, we find merit in the contention of the ld. counsel for the assessee that it was not a case of buses taken by the assessee on rent from the contractors as envisaged in section 194-I. The terms and conditions of the agreement nowhere indicate that any particular bus or buses were identified or earmarked for the assessee and the same were made available at its disposal. The contractor was at liberty to use any 23 seater bus for the purpose of commuting the staff of the assessee. There was also nothing in the agreement to suggest that the assessee was having any control over the buses which were to be used for commuting its staff. Rather there was no restriction on the contractor to use certain buses exclusively for providing services to the assessee as per the agreement and the said buses thus were available at his disposal during the period when they were not required for providing services to the assessee as agreed. Even the staff required for providing the bus services such as drivers/cleaners etc., was to be provided by the contractor and even running maintenance expenses such as diesel, repairs etc., were to be borne by the contractor. It was also agreed between the assessee and the contractor that the monthly compensation amount would be increased as a result of any increase in the diesel prices, rates of taxes etc. Having regard to all these terms and conditions of agreement, we are of the view that it was not a case in which it can be said that buses were taken by the assessee on rent so as to attract the provisions of section 194-I. On the other hand, it was a case where payments were made by the assessee for carrying out the work of carriage of its employees as passengers by buses as a mode of transport in pursuance of a contract with the concerned contractors. The said payments thus were clearly covered by the provisions of section 194-C read with Explanation (iv)(c) thereto and the tax at source was rightly deducted by the assessee from the said payments as per the said provisions. In that view of the matter, we set aside the orders of the authorities below on this issue for both the years under consideration i.e., 2007-08 and 2008-09 and allow ground Nos. 1 and 2 of the assessee’s appeal.

20. The other issue relating to liability of the assessee to deduct tax at source from the payment of leasehold charges is raised in ground Nos. 1 and 2 of the assessee’s appeals for assessment years 2005-06 and 2006-07 and ground Nos. 3 and 4 in its appeal for assessment years 2007-08 and 2008-09.

21. During the years under consideration, the assessee had made payments for contract of work such as carpentry, loose furniture, carpets, partitions and flooring, civil work, internal lighting and power network, light fixtures, plumbing etc., carried out at various locations taken on lease by it. Tax at source from the said payments was deducted by the assessee in accordance with the provisions of section 194C. According to the Assessing Officer, the said payments were made by the assessee for the work which was in the nature of ‘fees for professional and technical services’. He therefore held that the assessee was liable to deduct tax at source at higher rate from the said payments as per the provisions of section 194J. Before the ld. CIT(A), it was submitted on behalf of the assessee that the nature of work for which the impugned payments were made was not of ‘fees for professional and technical services’ as contemplated under section 194J. It was submitted that it was in fact a contract for work involving carpentry, loose furniture, carpets, partitions and flooring, civil work, internal lighting and power network, light fixtures, plumbing etc., and the same being in the nature of works contract, tax at source was rightly deducted from the payments thereof as per the provisions of section 194C. Reliance was placed on behalf of the assessee on the decision of Delhi Bench of ITAT in the case of Commissioner Of Income-Tax v. Japan Airlines Co. Ltd. [2005] 93 ITD 163 wherein the essential ingredients of transaction covered by section 194C were enumerated. It was held by the Tribunal in the said decision that for determining the true nature of any transaction, relevant agreements and other facts are to be examined. It was contended that ingredients enumerated by the Tribunal in the case of Japan Airlines (supra) were in existence in the case the relevant transactions made by the assessee and keeping in view of the nature of work carried out by the contractors, section 194C was applicable and not section 194J. It was contended that the intention of the assessee and the contractor was to carry out the work as particularly described in the contracts entered into with them and the same being in the nature of work contracts, the provisions of section 194C were attracted so far as deduction of tax was concerned. Relying on the Board Circular No. 720, dated 30-8-1995, it was contended on behalf of the assessee that even if the contracts were composite nature, tax at source was liable to be deducted only under section 194C keeping in view the nature of substantial work done by the contractors. Sample copies of the invoices raised by the contractors were also produced by the assessee to show the description of the service rendered by the contractors to carry out the work involved. It was submitted that fees for professional and technical services, designing etc. was paid separately to the architects and tax at source was deducted from such payments in accordance with law.

22. The ld. CIT(A) did not find the submission made on behalf of the assessee on this issue to be acceptable and proceeded to agree with the Assessing Officer that tax at source from the payments made on account of leasehold charges was liable to be deducted by the assessee as per the provisions of section 194J for the following reasons given in para No. 13 of his impugned order :

"I have considered the above submission very carefully and have perused the order of the Assessing Officer. I find that the Assessing Officer has held that amount paid for the work was in the nature of ‘fees for professional and technical services’ and therefore liable to TDS under section 194J of the Act. On the other hand the appellant has tried to establish that the payment made on account of leasehold charges are covered under section 194C of the Income-tax Act. A perusal of bills issued by the various vendors show that the work is undertaken by the interior decorators or by the architectural experts i.e., by Nivea Enterprises Interior Contractors, allies Enterprises - Interior Decorators, Designer, civil Job, Concept Interiors, Sthapati Consultants- Architects, Interior Designers Construction, Management consultants. All this clearly indicates that the payment are covered under section 194J as ‘fees for professional or technical services’. The appellant has tried to bifurcate the fees paid towards professional and technical service and payment made for execution of work. But the fact is that the entire work has been done by the experts like interior designer/decorators and architects. The appellant has made payment of substantial amount and undergone substantial work but has not furnished any copy of contract with the parties in support of its contention. In view of the facts, I agree with the Assessing Officer that the entire payment is made as fees for technical and professional services. Therefore, the tax should have been deducted as per provisions of section 194J and not as per provisions of section 194C in view of the fact, I confirm the action of the Assessing Officer. This ground of appeal is dismissed."

23. The ld. Counsel for the assessee at the outset invited our attention to the copies of bills raised by the contractors placed at page Nos. 83 to 129 of his paper book to point out that the said bills were for the expenses incurred by the assessee on repairs and renovation of the premises taken on lease. He contended that the payments made by the assessee against the said bills to the contractors thus were for the various types of work executed by him in terms of works contract and not for any professional services rendered by them. He contended that merely because the said work was done by interior decorators and designers, it cannot be said that the contract was for designing or decoration work. He contended that what is to be seen is the type of work undertaken by the contractor. He contended that if the nature and type of work undertaken by the contractors is seen from the description given in their bills, it becomes abundantly clear that it was a case of works contract executed by the contractors and not rendering of any professional services. He contended that section 194J therefore was not attracted and tax at source was rightly deducted by the assessee from the payments against the said work as per the provisions of section 194C.

24. The ld. D.R., on the other hand, submitted that the payments in question were made by the assessee to interior decorators and designers and even if the nature of work done by them as shown in the relevant bills was repairs and renovation to the premises taken by the assessee on lease, the payments made by the assessee need to be bifurcated into designing charges and works contract. He contended that tax at source from the payments of designing charges at least has to be deducted in accordance with the provisions of section 194J.

25. We have considered the rival submissions and also perused the relevant material on record. As rightly contended by the ld. Counsel for the assessee, what is to be seen in order to ascertain whether section 194C is applicable or section 194J is the exact nature of work against which payment is made and not to whom the said payment is made and even the ld. D.R. has not disputed this position. It appears from the impugned order of the ld. CIT(A) that he has decided this issue on the basis that the payments in question were made by the assessee mainly to interior decorators and designers overlooking the exact nature of work done by them. In order to ascertain the exact nature of work done by the concerned parties, we have carefully perused the copies of bills raised by them which are placed at page Nos. 83 to 129 of the assessee’s paper book. It is clearly evident from the description of work given in the said bills that the work undertaken by the concerned parties was for repairs and renovation carried out in the premises taken by the assessee on lease. The work involved was mainly for interior work done at the call centres of the assessee and it involved making of partitions, doors, carpeting and flooring, painting, electrification etc. It also involved providing of false ceiling, painting and loose furniture as well as sanitary fixtures and light fixing. Keeping in view the description given in the relevant bills issued by the concerned parties/contractors, we find that the nature of work involved was mainly of repairs and renovation of the premises taken by the assessee on lease which was carried out as works contract on which tax was rightly deducted by the assessee as per the provisions of section 194C. The ld. D.R. has submitted before us that since the said work was done by interior decorators and designers, it is bound to involve some designing charges which needs to be bifurcated and at least payment made by the assessee to that extent was covered by section 194J. However, as categorically submitted on behalf of the assessee before the ld. CIT(A), the designing charges were paid separately by the assessee and tax at source was deducted from the said payment as per the relevant provisions. As such considering all the facts of the case including especially the nature of work carried out by the concerned parties, we are of the view that the payments in question made by the assessee for the said work was in the nature of works contract as contemplated in section 194C and tax was rightly deducted by the assessee from the said payments in accordance with the said provisions. In that view of the matter, we decide this issue in favour of the assessee and allow ground Nos. 1 and 2 of the assessee’s appeals for assessment years 2005-06 and 2006-07 and ground Nos. 3 and 4 of its appeals for assessment years 2007-08 and 2008-09.

26. In the result, appeals of the assessee are allowed and revenue’s appeals are dismissed.