20 August 2011
In the case of Skycell Communications Ltd. vs. Dy. CIT (2001) 170 CTR (Mad) 238 whether the Assessee being a (Individual, HUF or Co.)is liable to deduct TDS? If yes, then under which Section 194J or 194C? Please reply
21 August 2011
In the case of Skycell Communications Ltd. vs. Dy. CIT (2001) 170 CTR (Mad) 238 it was held that In the context of mobile service providers, no tax needs to be deducted at source under Section 194J on payment to cellular service providers. .
The reasoning on which the decision was rendered is that the user does not get a technical service in the real sense though there may be an involvement of a substantial technology in providing the service from the point of view of the service provider. . This decision will also apply on payment to fixed line telephones providers , Internet Service Providers and electricity co.. . So far as TDS U/s 194C is concerned, the same will not arise since this section only requires deduction where there is a contract for any work. . In all these cases, though there is a contract, the contract is not for any work but for providing a service and, hence, Section 194C will not apply. There will, therefore, be no need to deduct tax at source on such payments. .
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