21 March 2009
The Department is likely to take a view that provisions of section 194i (rent) apply since (a) effective possession and control is held by the person who takes on hire (b) consideration at agreed rate is payable irrespective of whether they are actually used or not and (c) consideration depends more on time factor than on actual usage basis
Till you (payer) get a clear view, safe course is to apply sec 194i. This shouldn't be viewed as "expenditure" by person who gives on hire since he would be able reduce Advance Tax to the extent of TDS
If you (payer) apply sec 194c and in the unfortunate event of Department taking a different view, you (payer) are likely get the expenditure disallowed. Better to take a safe course
22 March 2009
194C is not applicable. In fact 194I is also not applicable. Look at the meaning of rent in explanation (i) of 194I. No TDS is applicable on this payment.
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