Vehicle hire charges falls within the scope of Section 194C not under section 194I

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Section 194C defines “work” to include “carriage of goods and passengers by any mode of transport other than railways” while Section 194-I defines “rent” to mean payment for use of “plant” (which is defined in Section 43 to include vehicles). As the cars were owned and maintained by the contractor and all expenditure was borne by the contractor, the contract was for “carriage of passengers” for which the assessee paid a fixed amount. Therefore, the payment of vehicle hire charges fell within the scope of Section 194C and was not “rent” for Section 194-I.

Ahmedabad Urban Development Authority vs. ACIT (ITAT Ahmedabad)

ITA No.1 637/Ahd/2010 (A. Y.: 2009-10)