K.M. Joseph, J.

Since common substantial questions of law have been raised in both the Appeals, we dispose of the Appeals by the following common judgment.

2. Substantially, the questions of law, which arise, relate to the provision, under which, the respondent assessee is obliged to deduct tax on the payment made by it to the Carrier under the contracts for transporting the petroleum products in the business in which the respondent assessee is engaged. On the one hand, it is the case of the appellant Department that the case of the respondent assessee falls under Section 194-I of the Income Tax Act, 1961 (hereinafter referred to as the Act). On the other hand, the case of the respondent assessee is that its case falls under Section 194C of the Act.

3. The Assessing officer, on a conspectus of the terms of the contract as he understood it, came to the conclusion that the respondent assessee is obliged to deduct tax under Section 194-I of the Act. This view of the Assessing Officer did not find favour with the first Appellate Authority, who came to the conclusion, on his understanding of the contract, that the tax must be deductible under Section 194C and not under Section 194-I. The decision of the first Appellate Authority has found favour with the Appellate Tribunal and hence, the present Appeals.

4. We heard Mr. H.M. Bhatia, learned counsel for the Revenue and Mr. V.K. Kohli, learned Senior Counsel assisted by Mr. Kanti Ram, learned counsel appearing on behalf of the respondent.

5. Mr. H.M. Bhatia, learned counsel for the Revenue, who took us through the order of the Assessing Officer, would submit that the Assessing Authority has correctly appreciated the provisions in the contract and has rightly come to the conclusion that the provisions of Section 194-I would apply. He would emphasize that in this case, the contract involved exclusive use of vehicles by the respondent assessee in carrying on its business. Various provisions of the contract would, according to him, lead unerringly to the said conclusion. Since we intend to elaborately advert to the clauses in the contract, we need not say anything more.

6. On the other hand, Mr. V.K. Kohli, learned Senior Counsel for the assessee would submit that it is clear case, where what is involved in terms of the contract is only transporting of goods. It is not as if the amounts are paid for the use of the vehicles as such, and what is involved is only the transportation as per the contract.

7. First we must refer to the findings of the Assessing Officer:

“As per the first clause of the sample agreement, the carrier is required to provide a fixed number of tank trucks for the use of the contractee/assessee company who shall have the exclusive right to use the tank trucks throughout the contract period. This clause substantively proves that the tank trucks are provided against hiring and not against any specific work/specific quantity of goods to be transported. In other terms, it can be said that had there been a work contract, the deductor company could have asked to make agreement with the carrier for transporting its products of specific quantity to specific distance, whereas in the instant case, the truck tankers have been hired for transportation of the products of the company subject to availability of products. Therefore the agreement is definitely of hiring of assets or vehicle and not a work contract for carrying out specific work.

Further, in Clause No 2a, it is specifically agreed upon that the tank trucks would be attached to a particular loading location which again proves that the tank trucks have been hired to ferry the product of the company from one point to another, whereas in a work contract the carrier operator would have been asked to make arrangement for transporting the said product from one specific point to another against a specific contract amount. Here, in the instant case the truck operator is not being paid fixed amount for transporting the product