TDS U/S 194I applicability

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Shyam Sarda (Querist)
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05 April 2008 XYZ PVT. LTD. HAS ENTERED INTO AN LEASE AGREEMENT WITH ABC.LEASE PERIOD 60MONTHS(2lacs*60).EVEN IF THE LESSEE WANTS TO TERMINATE IN BETWEEN CO HAS TO PAY RENT FOR BAL LEASE PERIOD. AFTER 12 MONTHS XYZ LTD WISHES TO TERMINATE THE AGREEMNT.THUS WAS BINDING TO PAY THE LEASE RENT FOR BAL PERIOD OF 48 MONTHS(2lacs * 48).AFTER NEGOTIATING THE LESSOR AGREED TO TERMINATE THE AGREEMENT WITHOUT CHARGING ANY PENAL RENT FOR BAL LEASE PERIOD PROVIDED THE CO. WILL NOT BE COMPENSATED FOR THE FURNITURE WORK DONE(60 lacs) AND THE DEPOSIT(5lacs) WILL NOT BE REFUNDED.
QUERRY:-
1.UNDER WHICH PROV OF THE IT ACT THE ASSET CAN BE DELETED FROM THE BLOCK?THERE ARE OTHER ASSETS IN THE BLOCK.
2.IS THE TRANSACTION LIABLE FOR TDS?IF YES, A) What should be the amount?(penal rent or book value + depoit)B) Under which section 194I or 194C?

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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08 April 2008 1.What is the nature of Furniture work? Is it removable like chairs etc.?

2.TDS on what you are asking? when there is no payment where is the TDS question arising?

Shyam Sarda

Shyam Sarda (Querist)
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09 April 2008 1.COmponent is partly removeble and partly affixed. However irrespective of that part the company has to leave the entire furniture as it is, without being compensated for it.

2.TDS on rent. If I have to pass a book entry for recording the entire penal rent(48*2lacs) and credit the rent exp account to the extent of book value of furniture and deposit surrendered/given up. Thus rental should attract 194I prov..

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Shyam Sarda

Shyam Sarda (Querist)
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