1) The assessee-company, manufacturing and selling vehicles, was charging customers for services in nature of repair and maintenance of vehicles to be undertaken on reaching different milestones.
2) Under manufacturer-dealer contract, assessee's authorised dealers were obliged to provide such services to vehicles that satisfied conditions of warranty (qua services), against service coupons issued by assessee to customers.
3) The assessee allowed payment/credit to authorised dealers on presentation of service coupons received by them from vehicle owners on providing services. The Assessing Officer disallowed such payments made to dealers for non-deduction of tax at source under section 194C.
The ITAT held as under:
1) The assessee-company was the person responsible for making the payment to the dealer (contractor). For deduction of tax at source under Section 194C it is not necessary that the payer or the specified person should also be the recipient of the services.
2) It was also not incorrect to say that the vehicle manufacturer was the beneficiary of the services in-as-much as the same discharged its' liability or obligation under the contract of sale.
3) It could be termed as a product warranty; the obligation for undertaking repairs being independent of the sale of vehicle, though incurred at the time of or as a part of the contract of sale, and was ,accordingly, to be honored.
4) The assessee-company, was the beneficiary of the value of these services in-as-much as the consideration for the same was already received by it in advance, making it is a part of the sale arrangement (of the vehicle). Such payments by vehicle manufacturer to dealers were liable to TDS under Section 194C. -  70 taxmann.com 191 (Mumbai - Trib.)