Abhishek Satam
(financial execetive )
(86 Points)
Replied 18 December 2015
TDS should be deducted u/s 194H as you are paying the amount to the broker, if the amount of brokerage is not show seperatly then deduct TDS on whole amount
Ruchi
(CA)
(1410 Points)
Replied 18 December 2015
Agreed with Mr. Abhishek. You would have to deduct tds u/s 194H @ 10% on commission paid to broker, if shown sepatately. However, if brokerage is not shown separately then you would have to deduct tds on total rent paid u/s 194 I @ 10%,it it exceeds the exemption limit.
ashish
(article)
(151 Points)
Replied 18 December 2015
Ankit Taprania
(CA FINAL )
(542 Points)
Replied 18 December 2015
WELL , if brokerage is not show seprately whole amount will be treated as rent and TDS will be deducted @ 2% u/s 194I and if brokerage is show you are only liable to deduct TDS @ 10% u/s 194H .194C has no applicability here..
Ruchi
(CA)
(1410 Points)
Replied 18 December 2015
@ ashish... Yes Sir, if brokerage is not shown separately then that means the entire payment is towards rent hence tds will be deducted u/s 194 I and 194C has no applicability.
And please may I correct myself as the tds to be deducted would be 2% u/s 194 I on rent of vehicle and not 10% as stated earlier by me. However, if brokerage is shown separately then u/s 194H @ 10%.
ashish
(article)
(151 Points)
Replied 19 December 2015
Ruchi
(CA)
(1410 Points)
Replied 20 December 2015
Dear Ashish
In my opinion, Existence of rent agreement or a specific number of items are not enough conditions to determine the nature of agreement. Agreed that there is a contract between the parties. Your contention that it is as per need of transporter is also admissible. Hence, such rate contracts may/ may not be covered in the definition of rent. My point is that If you are hiring complete motor vehicles 'on regular basis' then it will be called 'rent' covered u/s 194 I , however, if there is existence of merely a rate contract where hiring is only occassional or casual then it will be covered u/s 194 C.
ashish
(article)
(151 Points)
Replied 20 December 2015
Karthik.V.Kulkarni
(Chartered Accountant)
(594 Points)
Replied 21 December 2015
Hi Ashish , I agree with my fellow counterparts and would like to state 194C has no relevance , as per plain reading of 194c it is clear that a work should be carried on by one person to another , even if as per your contention if i agree that the broker works for you by way of providing you with vehicles , then the work as per your contract with the broker is limited to his services of making available the vehicles for you . Nothing more. His powers as a broker is limited to acting as an agent between you and owner of vehicles , he can in no way on principal to principal basis give you vehicles on rent because he has no authority to do so in the eyes of law . Thus his work is limited to only his brokering services and doesnot include rent amount , so even if you wanted to argue that he is doing his work then you have to compare between 194C or 194 H . As far as the applicablity of 194I, the terms of contract and absence of rent agreement are irrelevant it is substance over form as you are hiring vehicles the same amounts to rent and nothing else, this can be substantiated by plain reading of the sections and interpretation of the same .
Ruchi
(CA)
(1410 Points)
Replied 21 December 2015
@ ashish... I dont have any case law in my eyes right now to support my opinion but the facts of the case and interpretation of various sections form the basis of my opinion. Substance Over form principle, ad stated above, is also relevant.
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