31 October 2007
DEAR SIR, GAIL INDIA OR GSPL IS SUPPLYING GAS THUROGH ITS PIPELINES TO VARIOUS BUYERS AND HE CHARGES FOR TRANSMISSION OF GAS THROUGH ITS PIPELINES. WHEATHER IT IS TRANSPORTATION U/S 194(C) OR IT IS USE OF EQUIPMENT U/S 194(I)I.E. RENT. REGARDS SANDEEPAGGARWAL
CBDT relying on the decision of Supreme Court [ACC v. CIT 1993] 201 ITR 435 (SC) has clarified (Circular No. 666 8th Octobr 1993) that the term any work in Section 194 C has to be understood in its naturl meaning, i.e. any work means any and not only a works contract which has a special connotation in the tax law. Thus, the provisions of Section 194 C are applicable to all types of contracts for carrying out any work, such as transport contracts, material contracts as well as works contracts. Hence, it will come under Works Contract. But Section 194 I will not apply.
01 November 2007
Dear Sir, After decision of suprime court now section 194 C has been amended to include transportation charges under the preview of section 194 c. But after recent amendment under sec 194-I to include usem of equipment under the scope of Rent wheather it can be treated as rent by tax authority Regards, Sandeep Aggarwal
Works contract includes transportation contracts. It has been clarified by CBDT that contract for transportation of goods and passangers are covered under 194C.
Now, if a work is covered specifically u/s 194C, it can not be covered under section like 194I, which is of more general nature.
There is no scope for application of 194I, in my humble opinion. More over, it is a sattled law that, when two construction is possible, the one more beneficial to the assessee is to be applied.
Based on the question, it is dobutful, whether the transaction is at all covered under tds provisions.
1) GAIL is supplying gas through its own pipeline, hence there is no hiring of the pipeline.
2) It is to be seen from the contract between GAIL and buyers. If GAIL has agreed to provide the gas to buyers at buyer's door step, the transportation charges, by whatever name called, is part of the sale/purchase consideration. Sale/Purchase transactions are not covered under tds provisions.
05 November 2007
Dear Sandeep, As per the other professionals also, your transaction will not come under the purview of Section 194 I. Please do inform if any further query is there. Sorry for the delay. Happy Diwali.
CAclubindia
