Vinay (Consultancy) (39 Points)
22 September 2010Company makes payment everymonth to is service provider. Service provider raises its bill stating the service charges for material handling. The agreement between company and service provider also says that the nature of service is material handling. Actually the company has taken the warehouse on rent and pays for teh usage of space.
Please advise whether tds will be applicable u/s 194C of 194I?
Aditya Maheshwari
(CA in Practice)
(35867 Points)
Replied 22 September 2010
- Warehousing charges will be subject to deduction of tax under section 194-I.
- The definition of the term ‘any land’ or ‘any building’ would include a part or a portion of such land or building, and hence section 194-I would apply to rent paid for the use of only a part or a portion of any land or building.
CA Prashant Gupta
(DGM (F & A))
(14068 Points)
Replied 23 September 2010
whatever your agreement is saying it is warehousing charges which are covered u/s 194-I.
So deduct TDS u/s 194-I not in 194C.
Kannan Iyappan
(Company Secretary)
(1496 Points)
Replied 23 September 2010
Contract is designed such a way to evade TDS from 194 I to 194c . Dont take risk will be difficult if any scruitny comes. Deduct safer side 194 I.
Kannan
Manoj BG
(Tax Professional and in Service)
(1795 Points)
Replied 23 September 2010
DEAR VINAY,
IT IS WELL SETTLED PRINCIPAL THAT WHENEVER THERE IS CONFICT BETWEEN THE NATURE OF SERVICE AS PER BILL AND ACTUAL, ACTUAL SERVICE RENDERED WOULD ALWAYS PREVAILS. THE ESSENCE OF THE TRANSACTION IS MOST IMPORTANT FOR DETERMINING TDS DEDUCTION. IT IS ALSO CLARIFIED BY THE CIRCULAR DATED 8-8-1995 NO. 715 THAT THE INCIDENCE OF TDS DOESN'T DEPEND UPON THE NOMENCLATURE, BUT ON THE CONTENTS OF THE AGREEMENTS MENTIONED IN CLAUSE (i) OF EXPLANATION TO SEC 194I. THUS, IN YOUR GIVEN CASE, THE ESSENSE OF TRANSACTION IS COVERED UNDER THE RENT AS DEFINED UNDER SEC 194I AND ONLY THE NAME GIVEN TO SERVICES AS MATERIAL HANDLING WOULD NOT CHANGE THE INCIDENCE OF TDS UNDER OTHER SECTIONS RATHER THAN IN SEC 194I.
REGARDS,
MANOJ
Santosh
(Student ( Final Year - New ))
(348 Points)
Replied 23 September 2010
| Originally posted by : Manoj B. Gavali | ||
 |
DEAR VINAY, IT IS WELL SETTLED PRINCIPAL THAT WHENEVER THERE IS CONFICT BETWEEN THE NATURE OF SERVICE AS PER BILL AND ACTUAL, ACTUAL SERVICE RENDERED WOULD ALWAYS PREVAILS. THE ESSENCE OF THE TRANSACTION IS MOST IMPORTANT FOR DETERMINING TDS DEDUCTION. IT IS ALSO CLARIFIED BY THE CIRCULAR DATED 8-8-1995 NO. 715 THAT THE INCIDENCE OF TDS DOESN'T DEPEND UPON THE NOMENCLATURE, BUT ON THE CONTENTS OF THE AGREEMENTS MENTIONED IN CLAUSE (i) OF EXPLANATION TO SEC 194I. THUS, IN YOUR GIVEN CASE, THE ESSENSE OF TRANSACTION IS COVERED UNDER THE RENT AS DEFINED UNDER SEC 194I AND ONLY THE NAME GIVEN TO SERVICES AS MATERIAL HANDLING WOULD NOT CHANGE THE INCIDENCE OF TDS UNDER OTHER SECTIONS RATHER THAN IN SEC 194I. REGARDS, MANOJ |
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