28 February 2013
Are TDS provisions applicable in the following cases. If yes then under which sections ?
CASE 1 : company "X" applied for loan from bank "B".As the amount is huge "B" collaborated with other banks "C","D" .The bank "B" charged "lendor agent fees". Whether TDS is to be deducted by "X" while paying the fee ?
CASE 2 : In the above case company "Y" acted as indemnifier for "X", and "y" charged fee in the name of "SECURITY FEE" to "X". Whether TDS is to be deducted by "X" while paying the security fee?
28 February 2013
in the second case TDS will be deducted u/s 194C. because when Y opted to act as idemnifier for X. it shown a contract b/w X and Y. and therfore security fee paid to Y should be paid after deducting TDS as per Sec 194C.
and as far as first case is concerned no TDS should be deducted because in my opinion it will not fall in any of the provisions of TDS chapter
B: On the basis of above circular, the Security Fee charged by Y is in the nature of/resembling very much with Guarantee Commission and TDS is applicable. Applicable Section 194H.
04 March 2013
dear chandra Kant. you are very much correct that TDS is deductible on sum paid to carry out any work. but definition of work given u/s 194C is not exhaustive is inclusive.
as the expert CA. paras bafna also agreed that such payment to Mr. Y is liable to TDS but the litigation is whether it should fall within sec 194C or 194H.
however it all about up to you how you treat the same. in the nature of contract or in the nature of commision.
04 March 2013
Commission is having various meanings which includes the act of granting certain powers or the authority to carry out a particular task or duty, the authority so granted, the matter or task so authorized, a document conferring such authorization and so on. . We just can not limit in the pure sense of "Dalali" like income. . It's the nature of activity which decides whether the contract is a works contract, or merely granting or acceptance of certain commitments in normal course or at a contingent point of time. So 194C is never applicable in such circumstances . Coming to 194J- it has got certain specific criteria for covering the transactions. . The only residual Section remains- is 194H. and I feel still correct in asserting so. . I welcome your views/re-views on this issue.
CAclubindia
