Tds on vehicle rent

TDS is to deducted u/s 194C.

It is not covered in 194I since neither vehicles are immovable property nor P&M

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Three Star Granite Pvt. Ltd, vs. ACIT, Circle 1(1) in ITA No.11/ Coch/2011
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Whether hiring of vehicles would attract provisions of section 194C or 194I of the I.T. Act 1961, was an issue before Hon’ble Cochin Bench of ITAT.
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Assessee relied on the function of loading and unloading of goods into such vehicles as activity to be considered as contract u/s 194C and applied 2% TDS against the payments made.
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However, Revenue argued that hiring of vehicles cannot be treated as a contract of loading and unloading of goods and applied the then existing rates u/s 194I for the assessment year 2006-07 @ 10%.
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Hon’ble ITAT endorsed arguments of the revenue and held that hiring vehicles would not obligate contractee to involve in the activity of loading and unloading which may be incidental. The dominant purpose of hiring of vehicles constitutes hiring of 'Plant & Machinery' in the hands of owner of vehicles, so as to be covered by provisions of Sec. 194-I.
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It may, however, to be noted that section 194I has been amended by Finance Act 2009, w.e.f. 01.10.2009 to provide for lower TDS rate of 2% on hire of Plant & Machinery including vehicles.