TDS on purchases

This query is : Resolved

RAMESH BABU (Querist)
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18 December 2008 Sir,

Our organisation purchesed material from open tender as per our specification the same material will be utilised at other similar type of organisations and the same supplier supplied the same material to the other ultilisers also) further ownership of such material not transfered till to receipt of material at our premises.

there is no work involvement at all.

now the income tax authorities issued a notice for personal hearing on "why you are not making of TDS on your purchases"

kindly clarify whether these purchases are attact the TDS provisions and also request to name the any circular in favour of our argument.

yours faithfully

G Ramesh babu

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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19 December 2008 As per my understanding of your case is that as you are inviting tender for purchase of material, so it will be a contract between you and supplier to supply goods as per your specification. As there is a contract so section 194C applies and you are required to deduct TDS.

In my opinion IT authoritirs are right and you should deduct TDS u/s 194C.