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TDS on storage charges (urgent)

Dilip (Working) (408 Points)

27 May 2011

We are taking a service from Microsoft to store our total companies data on their server. All out mails and data are saved on their server and it is accesable to us through internet. Here i am confused that tds to be deducted u/s 194C Contract or 194J (Technical service).

Kindly help

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10 Replies

CA. Rajesh P. Ahir (In Service @ PSU) (687 Points)
Replied 27 May 2011

IN THE PRESENT CASE BOTH THE SECTIONES ARE APPLICABLE i.e.194J AND 194C,

BUT 194J IS MORE SPECIFIC AND IN THE YOUR CASE 194J IS MORE APPROPRIATE.

SO 194J(IN MY OPINION)

valji (Accounts manager-MBA) (2150 Points)
Replied 27 May 2011

since it is contract with microsoft to store data it is may be one year or two year section 194C is applicable

Mukesh Kumar Gupta (Accountant ) (66 Points)
Replied 27 May 2011

since it is contract with microsoft to store data it is may be one year or two year section 194C is applicable. AMC CHARGEGES IS ALSO UNDER 194C. I WILL GO WITH 194 C.

CA NITUL MEHTA (KPMG-Senior Consultant-International Tax ) (236 Points)
Replied 27 May 2011

IN A RECENT CASE LAW OF CIT VS IDEA CELLULAR 2010,. TECHNICAL SERVICES PROVIDED ONLY BY HUMAN BEINGS ARE TO BE TAKEN IN 194J AND NOT THE SERVICES PROVIDED BY MACHINES THEMSELVES EVEN THOUGH THEY ARE TECHNICAL IN NATURE . RENT 194 I IS ALSO NOT APPLICALBLE AS YOU ARE NOT OCCUPYING ANY PREMISES OF MICROSOFT. SO THE ONLY SECTION APPROPRIATE LEFT IS 194 C

HOPE YOU GOT YOUR ANSER GO THRU THE CASE LAW OF CIT VS IDEA CELLULAR, VODAFONE INTERNATIONA, MTNL LTD.ALL HAVE COME IN 2010 ONLY ON SAME MATTER YOU WILL BE CLEAR ONCE YOU READ THEM

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CA NITUL MEHTA (KPMG-Senior Consultant-International Tax ) (236 Points)
Replied 27 May 2011

THE CASE WAS DECIDED IN APEX COURT SO THERE IS NO CHANCE OF AMBIGUITY IN IT AND DEFINATLY IT IS 194C

Jagdish Trivedi (Practicing CA) (41 Points)
Replied 28 May 2011

Dear Dilip,

As per the judicial rulling pronounced by the Hon'ble Delhi High Court in the case of CIT vs. Bharti Cellular Ltd. repored in 319 ITR 139, it has been discussed as under:

The Assessee's were Companies providing mobile phone facility to their customers i.e. subscriber's under licences granted by DOT. They had set up their own networks. Where subscribers had to make call from one network to another network these were routed through MTNL, providing interconnection at paints, described as "ports". For this facility the assessee's paid to MTNL or BSNL interconnection or port access charges. The facility of interconnection was provided by equipment without any human interface. The payments were not fees for technical services. S.194J was not applicable.

Further, you may take a reference of Circular No.1 of 2008 dated 10.01.2008

The CBDT clarified that s.194-I of the Income Tax Act 1961 would not be applicable for Cooling charges paid to the cold storage owners as the cold storage preserved perishable goods by means of a mechanical process, and storage of such goods was only incidental in nature and the customer had no right to use any demarcated space/place or the machinery of the cold. Further, since the arrangements between the customers and cold storage owners were contractual in nature, the provision of s.194-C of the Act would be applicable to the amounts paid as cooling charges by the customers of the cold storage.

Thus, in view of above discussions, TDS is applicable u/s.194 C, being service contract, and not u/s. 194J or 194 I.

(Guest)

yes tds shall be deductible u/s 194C

technical service u/s 194J only where service is provided by human Beings

since there is microsoft is using machine for providing service though service is technocal in nature

CA PuRvI M!$rA (-) (2260 Points)
Replied 29 May 2011

in my opinion TDS will b deducted u/s 194C...!!!

CA EKTA SHAH (OTHERS) (224 Points)
Replied 13 January 2016

Dear Sir,

This is very useful explanation.

I have futher in line with above question.

Does TDS u/s 194C still apply even if there is no contract with the party say payment made to google drive for storage. This storage is being offered to anyone by google drive who makes the payment.

Thanks in advance