T.D.S. Problem

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arvind kapoor (Querist)
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24 May 2008 One of my clent had opened a Drug store in a hospital on a condition that the hospital will be paid 50% of the net profit as per audited P& l A/c.What is T.D.S. Liability of the client and under what section it will be deducted 194I or 194C.And also Profit can be ascertained only after 31 st March.So when to deduct the TDS -on 31st March itself and to deposit it by 31 st May or whenever some payment is made to Hospital during the year.

CA UMESHKUMAR R. ACHARYA

CA UMESHKUMAR R. ACHARYA (Expert)
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24 May 2008 the nature of transction indicates that it is in nature of partnership in which one partner is partner in profit only& accordingly no T.D.S liablilty arises.

R.V.RAO

R.V.RAO (Expert)
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24 May 2008 the UNDERSTNDING OR AGREEMENT IS NOT TO PAY RENT BUT SHARE PROFITS.
THIS IS IN THE NATURE OF CONTRACT BUT NOT RENTALS .SO SEC 194 C IS ATTRACTED AND TDS @2.266% TO BE DEDUCTED AND DEPOSITED.
THE FREQUENCY OF TDS IS WHENEVER CREDIT OR PAYMENT HAPPENS WHICHEVER IS EARLIER.
IF IT IS MARCH MONTH EVERY YEAR , PL. REFER LATEST AMENDMENT TO Sec 40 (a) (ia) ammendment retrospectively to allow deduction of expenses in case TDS of Mar month not paid in time but paid before due date of return.
R.V.RAO

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