Tds on Room Rent
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
16 December 2010
Employee of the company has stay in a hotel for 2 days for Rs 10000/- and payment is to be done by company
Now company has to deduct the tds on 10000 or not and in which i.e rent,contract or other
Plz reply soon
Now company has to deduct the tds on 10000 or not and in which i.e rent,contract or other
Plz reply soon
16 December 2010
no, limit is upto 180000/-
16 December 2010
No...
TDS should not be deducted on hotel charges.
Only if its on rent for a regular period & annual payout exceeds Rs. 180000/- then only TDS would apply.
TDS should not be deducted on hotel charges.
Only if its on rent for a regular period & annual payout exceeds Rs. 180000/- then only TDS would apply.
16 December 2010
no because if limit exceed of rs. 180000/- then tds to be deducted.
16 December 2010
i think hotel rent cover 194c
but not sure
but not sure
16 December 2010
Hotel rent is covered u/s 194 c only. So limits of single payment exceeding Rs. 30000/- and 75000 in aggreaate is to be considered. In this case TDS is not applicable.
16 December 2010
CASE LAW DETAILS
Decided by: HIGH COURT OF BOMBAY
In The case of: The East India Hotels Ltd. v. CBDT
Appeal No. : Writ Petition No. 2104 of 1994
Decided on: March 6, 2009
SUMMARY OF CASE LAW
The facilities/amenitie s made available by a hotel to its customers do not constitute “work” within the meaning of section 194C; consequently, the Circular No. 681 dated 8-3-1994 to the extent it holds that the services made available by a hotel to its customers are covered under section 194C must be held to be bad in law
RELEVENT PARAGRAPH
18. The services rendered by a hotel to its customers by making available certain facilities / amenities like providing multilingual staff, 24 hour service for reception, telephones, select restaurants, bank counter, beauty saloon, barber shop, car rental, shopping centre, laundry / valet, health club, business centre services, etc. do not involve carrying out any work which results into production of the desired object and, therefore, would be outside the purview of section 194C of the Act.
19. The fact that the contracts for supply of labour to carry out any work has been specifically brought within the purview of section 194C and the fact that four categories of service contracts have been specifically brought within the purview of section 194C by inserting Explanation III to section 194C, it cannot be inferred that the services rendered by a hotel to its customers are also covered under section 194C of the Act. In other words, as the services rendered by a hotel to its customers by providing certain facilities / amenities do not constitute `work’ within the meaning of section 194C, the impugned circular No.681 issued by the CBDT to the extent it applies to a customer availing the services rendered by the hotel must be held to be contrary to section 194C of the Act.
20. It is true that the word ‘work’ in section 194C is not restricted to ‘works contract’ only as held by the Apex Court in the case of Associated Cement Co. Ltd. (supra). However, as held by the Apex Court in the case of Birla Cement Works (supra) the word ‘work’ in section 194C has to be understood in a limited sense and would extend only to the service contracts specifically included in the said section by way of Explanation III. Therefore, the argument of the revenue that the service contracts between the petitioner No.1 hotel and its customers is covered under section 194C of the Act cannot be accepted because, neither such a contract constitutes ‘work’ within the meaning of section 194C of the Act nor those contracts are covered under service contracts specifically included by way of Explanation III to section 194C of the Act.
21. If the contention of the revenue that the word ‘any work’ in section 194C is very wide enough to include all types of work is accepted, then it would mean that even the hair cutting work done by a barber would be a ‘work’ covered under section 194C and the person making payment to the barber would be covered under section 194C. Such a wider interpretation is uncalled for, especially when the revenue itself had considered since inception that section 194C is restricted to the works done by contractors / sub-contractors. Apart from the above, the CBDT by its circular No.715 dated 8/8/1995 has clarified that the payments made by persons other than individuals and HUF’s for hotel accommodation taken on regular basis will be in the nature of ‘rent’ subject to TDS under section 194I of the Act. Thus, there is inconsistency in the stand of the CBDT as to whether the services rendered by a hotel to its customers is covered under section 194C or under section 194I of the Act.
22. In the present case, we are concerned with the question as to whether the services rendered by the petitioner hotel to its customers is covered under section 194C of the Act ?
23. As noticed above, the facilities / amenities made available by the petitioner No.1 hotel to its customers do not constitute ‘work’ within the meaning of section 194C of the Act. Consequently, the circular No.681 dated 8/3/1994 to the extent it holds that the services made available by a hotel to its customers are covered under section 194C of the Act must be held to be bad in law.
Decided by: HIGH COURT OF BOMBAY
In The case of: The East India Hotels Ltd. v. CBDT
Appeal No. : Writ Petition No. 2104 of 1994
Decided on: March 6, 2009
SUMMARY OF CASE LAW
The facilities/amenitie s made available by a hotel to its customers do not constitute “work” within the meaning of section 194C; consequently, the Circular No. 681 dated 8-3-1994 to the extent it holds that the services made available by a hotel to its customers are covered under section 194C must be held to be bad in law
RELEVENT PARAGRAPH
18. The services rendered by a hotel to its customers by making available certain facilities / amenities like providing multilingual staff, 24 hour service for reception, telephones, select restaurants, bank counter, beauty saloon, barber shop, car rental, shopping centre, laundry / valet, health club, business centre services, etc. do not involve carrying out any work which results into production of the desired object and, therefore, would be outside the purview of section 194C of the Act.
19. The fact that the contracts for supply of labour to carry out any work has been specifically brought within the purview of section 194C and the fact that four categories of service contracts have been specifically brought within the purview of section 194C by inserting Explanation III to section 194C, it cannot be inferred that the services rendered by a hotel to its customers are also covered under section 194C of the Act. In other words, as the services rendered by a hotel to its customers by providing certain facilities / amenities do not constitute `work’ within the meaning of section 194C, the impugned circular No.681 issued by the CBDT to the extent it applies to a customer availing the services rendered by the hotel must be held to be contrary to section 194C of the Act.
20. It is true that the word ‘work’ in section 194C is not restricted to ‘works contract’ only as held by the Apex Court in the case of Associated Cement Co. Ltd. (supra). However, as held by the Apex Court in the case of Birla Cement Works (supra) the word ‘work’ in section 194C has to be understood in a limited sense and would extend only to the service contracts specifically included in the said section by way of Explanation III. Therefore, the argument of the revenue that the service contracts between the petitioner No.1 hotel and its customers is covered under section 194C of the Act cannot be accepted because, neither such a contract constitutes ‘work’ within the meaning of section 194C of the Act nor those contracts are covered under service contracts specifically included by way of Explanation III to section 194C of the Act.
21. If the contention of the revenue that the word ‘any work’ in section 194C is very wide enough to include all types of work is accepted, then it would mean that even the hair cutting work done by a barber would be a ‘work’ covered under section 194C and the person making payment to the barber would be covered under section 194C. Such a wider interpretation is uncalled for, especially when the revenue itself had considered since inception that section 194C is restricted to the works done by contractors / sub-contractors. Apart from the above, the CBDT by its circular No.715 dated 8/8/1995 has clarified that the payments made by persons other than individuals and HUF’s for hotel accommodation taken on regular basis will be in the nature of ‘rent’ subject to TDS under section 194I of the Act. Thus, there is inconsistency in the stand of the CBDT as to whether the services rendered by a hotel to its customers is covered under section 194C or under section 194I of the Act.
22. In the present case, we are concerned with the question as to whether the services rendered by the petitioner hotel to its customers is covered under section 194C of the Act ?
23. As noticed above, the facilities / amenities made available by the petitioner No.1 hotel to its customers do not constitute ‘work’ within the meaning of section 194C of the Act. Consequently, the circular No.681 dated 8/3/1994 to the extent it holds that the services made available by a hotel to its customers are covered under section 194C of the Act must be held to be bad in law.
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