Tds on society maintenance charges

This query is : Resolved

CA.Xialdin (Querist)
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09 November 2013 Hi,
One of my clients bought an Office Premises in Mumbai where the Society Maintenance Charges comes to Around 21,120.00 per Month. In my opinion the Maintenance is Subject to TDS U/s. 194 C. The Society (Which by the way is Not a Registered Society) claims that its not subject to TDS provision at all. The Cheques are issued in the name of the Construction Company/The Builder (A Partnership Firm) who had built the whole building.
There is a Contract by which they are charging the Maintenance of the premises like the Security, Elevators use, Share in Electricity for the Building etc..
What do you say. Is the Maintenance Charges liable to TDS.
Thank You.
Xialdin

CA Ashish Lodha

CA Ashish Lodha (Expert)
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09 November 2013 An Individuals or an H.U.F. is not liable to deduct TDS on such payment except where the individual or H.U.F. is carrying on a business/profession where accounts are required to be audited u/s 44AB, in the immediately preceding financial year.

A person is liable to get its accounts audited u/s 44AB if during the relevant financial year its gross sales, turnover or gross receipts exceeds Rs. 1 Crore (Rs.60 lacs for A.Y.2012-13) in case of a business, or Rs. 25 lacs (Rs. 15 lacs for A.Y. 2012-2013) in case of a profession.

- See more at: http://www.lessmytax.com/persons-liable-to-deduct-tax-at-source-tds/#sthash.DwMWV5OA.dpuf

CA.Xialdin

CA.Xialdin (Querist)
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12 November 2013 Thanks Ashish for your Reply. The Fact is that the client is liable for Tax Audit and Payment of Maintenance Charges are to A Partnership firm engaged in Construction Business. The Cheques are issued in the Name of the Builder Firm. This Maintenance charges are as per the pre existing Contract.
My personal opinion is that its clearly within the ambit of 194 C. Before I issue my advisory to my client I want a confirmation from you experts in this regards

Regards.

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CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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15 November 2013 @ CA XIALDIN.

Here we can see from another angle also. Whether the said payment is going to be part of the income of the payee ? The reply is yes. (Though it would have been different when the said payment would have been made to a registered service society-) Here in your case there is no such mutuality aspect also. This aspect also reaffirms your view to deduct tax at source.