Whether tds threshold applicable for transporter providing
This query is : Resolved
13 October 2011
Dear member
A transporter is providing transportation service for goods carriage for this he charges freight and as per section 194C we are not deducting any tds since he has provided PAN. Now the same transporter has provided some other service like car hire charges employee transportation for which tds is applicable, we have no doubt of it, the question is whether threshold limit as fixed for section 194C include cost of transportation or it is applicable for standalone service like car hire. Incidentally both the service transportation and car hire both are falling in section 194C. Please help?
A transporter is providing transportation service for goods carriage for this he charges freight and as per section 194C we are not deducting any tds since he has provided PAN. Now the same transporter has provided some other service like car hire charges employee transportation for which tds is applicable, we have no doubt of it, the question is whether threshold limit as fixed for section 194C include cost of transportation or it is applicable for standalone service like car hire. Incidentally both the service transportation and car hire both are falling in section 194C. Please help?
13 October 2011
Respected Sir,
provision of Sec 194I is applicable on car hiring charges.
Further, if transporter having the pan no then provision of TDS is not applicable, therefore while making to any other payment to transporter then provision of tds will be applicable for standalone services.
provision of Sec 194I is applicable on car hiring charges.
Further, if transporter having the pan no then provision of TDS is not applicable, therefore while making to any other payment to transporter then provision of tds will be applicable for standalone services.
13 October 2011
Dear Mr. Jain,
there is a lot of difference in opinion whether expenses on car hire for employees would be 194I purview or 194C purview, i am not going in dispute but what we beleave
from a clear reading of Explanation III to section 194C will show that works includes carriage of goods and passengers by any mode of transport other than by railways. Section 194I relates to Rent for Plant & Machinery. However when a particular item is specifically covred under one section, a genaralisation under another section is not possible in my view. Hence Tax is to be deducted only u/s. 194C and not u/s. 194I.
if that is the case the threshold limit as applicable for section 194C would be applicable. If so my question is whether such threshold limit include payment of freight charges also or exclude payment of freight charges remember threshold limit is applicable on section but not in which you are booking the expense.
there is a lot of difference in opinion whether expenses on car hire for employees would be 194I purview or 194C purview, i am not going in dispute but what we beleave
from a clear reading of Explanation III to section 194C will show that works includes carriage of goods and passengers by any mode of transport other than by railways. Section 194I relates to Rent for Plant & Machinery. However when a particular item is specifically covred under one section, a genaralisation under another section is not possible in my view. Hence Tax is to be deducted only u/s. 194C and not u/s. 194I.
if that is the case the threshold limit as applicable for section 194C would be applicable. If so my question is whether such threshold limit include payment of freight charges also or exclude payment of freight charges remember threshold limit is applicable on section but not in which you are booking the expense.
13 October 2011
Respected sir,
in your case, threshold limit exclude the payment of freight charges.
For the definition of the hire, you can refer this judgement
CIT V/S POOMPUHAR SHIPPING CORPORATION LTD.(2006) 282 ITR 3 (MAD)
in your case, threshold limit exclude the payment of freight charges.
For the definition of the hire, you can refer this judgement
CIT V/S POOMPUHAR SHIPPING CORPORATION LTD.(2006) 282 ITR 3 (MAD)
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13 October 2011
Dear Mr. Jain
Can't it be more appropriate for us
ACIT‐vs‐Accenture Services (P) ltd 44 SOT 290 (Mum)
In this case, the assessee deducted tax at source u/s 194C against payments made for hiring of vehicles for transportation of its employees. Under the contract, it was the responsibility of the
transporter to provide the staff for running the vehicles as well as for ensuring all legal and
operational obligations. The AO treated such payment for hiring of equipment falling u/s 194I and
therefore passed an order u/s 201(1) for short deduction of tax. The CIT(A) as well as the Tribunal have held that it was a transport contract falling u/s 194C. Section 194I was held to be not applicable
since no hiring was involved.
Similar view has been taken by the tribunal in the case of Tata AIG General Insurance Co 43 SOT 215(Mum) by observing that no particular car was provided but it was merely an arrangement for transportation of its employees and therefore section 194C would apply and not section 194I.
thanks for your help.
Can't it be more appropriate for us
ACIT‐vs‐Accenture Services (P) ltd 44 SOT 290 (Mum)
In this case, the assessee deducted tax at source u/s 194C against payments made for hiring of vehicles for transportation of its employees. Under the contract, it was the responsibility of the
transporter to provide the staff for running the vehicles as well as for ensuring all legal and
operational obligations. The AO treated such payment for hiring of equipment falling u/s 194I and
therefore passed an order u/s 201(1) for short deduction of tax. The CIT(A) as well as the Tribunal have held that it was a transport contract falling u/s 194C. Section 194I was held to be not applicable
since no hiring was involved.
Similar view has been taken by the tribunal in the case of Tata AIG General Insurance Co 43 SOT 215(Mum) by observing that no particular car was provided but it was merely an arrangement for transportation of its employees and therefore section 194C would apply and not section 194I.
thanks for your help.
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13 October 2011
Thanks a lot Sir JI,
But if company hire the separate separate car for the employee then sec 194C OR 194I will be applicable.
In that case i always noticed that company deduct the tds under sec 194I.
But if company hire the separate separate car for the employee then sec 194C OR 194I will be applicable.
In that case i always noticed that company deduct the tds under sec 194I.
13 October 2011
agreed, but in our case it is shift bus (not car exactly) applicable for a group of employees used mainly to bring employees from office to residence and residence to office. the driver and all incidental expenses are borne by the transporter, company have no control for any other use or any other purpose.
13 October 2011
Yes Sir, I fully agree with you.
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