tds

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PradeepS

PradeepS (Querist)
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05 February 2010 can we deduct tds on supply of tea for staff..?

Zeeshan

Zeeshan (Expert)
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05 February 2010 no. Its not a work contract, it is an agreement of sale. So section 194c is not applicable. and other section also not cover the above case. hence TDS is not applicable.

PradeepS

PradeepS (Querist)
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05 February 2010 how this can be agreement for sale can you tell me clearly?

Bimal Thacker

Bimal Thacker (Expert)
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05 February 2010 To decide the contract is for Contract for sale or it is a Contract for Work Law laid down by the Honâ€™ble Supreme Court in some cases are as under:

-1- the question, but basically and primarily, whether a particular contract is one for sale of goods or for work and labour depends upon the main object of the parties gathered from the terms of the contract, the circumstances of the transaction and the custom of the trade.

-2-Where the finished product supplied to a particular customer is not a commercial commodity in the sense that it cannot be sold in the market to any other person, the transaction is only a work contract.

-3-Merely showing in the bill or invoices, it was contended on behalf of the appellant, the value of materials used in the job would not render the contract as one of sale. The nature and type of the transactions are important and determinative factors. What is necessary to find out, in our opinion, is the dominant object.

-4- Therefore, based on the law laid down by Honâ€™ble Supreme Court, what is required to be seen is the nature and type of transaction, which are determinative factors and it is necessary to find out what is the dominant object of the said contract.

-5- If the intention is to transfer for a price in which the transferee had no previous property, then the contract is a contract for sale. Ultimately, the true effect of an accretion made pursuant to a contract has to be judge not by artificial rule but from the intention of parties to the contract. In a contract of sale, the main object is the transfer of property and delivery of possession of the property, whereas the main object in a contract for work is not the transfer of the property but it is one for work and labour. Another test often to be applied is: when and how the property of the dealer in such a transaction passes to the customer: is it by transfer at the time of delivery of the finished article or by accession during the procession of work on fusion to the movable property of the customer. If it is the former, it is sale; if it is the latter, it is a works contract.

CA Prashant Gupta

CA Prashant Gupta (Expert)
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05 February 2010 NO, TDS will not be applicable.
TDS will be applicable only when you have hiring some contractor on fixed amount and he will supply tea without any quantity measurement then we can say it is u/s 194C. otherwise it is only sale you purchased tea and paid according to consumption. then no tds

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