01 June 2011
Last year in the case of Glenmark Pharmaceuticals ITA No 2256 of 2009 and others Bombay High Court had said that sale contracts will not be subject to tax deducted at source (TDS.)The court held that while "works contract" were subject to TDS under section 194C of the Income-Tax Act, "sales contract" were not.
02 June 2011
Thank u sir. Our one of the customer is deducting tax for the sales transaction where there is no works contract. He is asking a proof of document to show where it says no TDS to be deducted on sales. Please help me what document to show to customer to avoid TDS.
02 June 2011
See.. in the above case it was held : For the purposes of this section, the expression, "work" shall also include – ... (e) manufacturing or supplying a product according to the requirement or specification of a customer by using material, purchased from such customer, but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer
02 June 2011
Section 194C provides that any person responsible for paying any sum to any resident for carrying out any work has an obligation to deduct tax at source on such payment. Thus, the crux of the issue is whether the transaction amounts to work or not?
From the above clarification....this can be easily understood.
02 June 2011
Sir, we have suppplied a packaged software to the customer, where there is no manufacturing or customization from our end. In this case only sales contract is applicable and no works contract, then y customer telling that they deduct tax. Please send a document to submit to him that no need to deduct TDS against Sales transaction. Please help me.
CAclubindia
