TDS Appg the applicable u/s 194 C

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Querist : Anonymous

Querist : Anonymous (Querist)

01 June 2011 My client is in a hotel industry. i want to ask question regarding the TDS on laundry bill are applicable? there is a no cotract between the parties and the monthly billing is above Rs 30000/-.

So Please suggest me whether TDS applicable on that type of service? and as per my view the laundry service is a normal kind of expenses in hotel industry,

CA Ankit Gulgulia (Jain)

CA Ankit Gulgulia (Jain) (Expert)

01 June 2011 No TDS is to be Deducted

Support : East India Hotels Ltd. v. CBDT (2010) 320 ITR 0526 (Bom.)

Question Before Hon'ble HC : Can services rendered by a hotel to its customers in providing hotel room with various facilities / amenities (like house keeping, bank counter, beauty saloon,
car rental, health club etc.) amount to “carrying out any work” to attract the
provisions of section 194C?

Decision by HC :

On this issue, the High Court observed that the words “carrying out any work” in
section 194C are limited to any work which on being carried out culminates in a product or result. “Work” in the context of this section, has to be understood in a limited sense and would extend only to the service contracts specifically included in section 194C by way of clause (iv) of the Explanation below sub-section(7).
The provisions of tax deduction at source under section 194C would be attracted in
respect of payments for carrying out the work like construction of dams, laying of
roads and air fields, erection or installation of plant and machinery etc. In these
contracts, the execution of the contract by a contractor or sub-contractor results in
production of the desired object or accomplishing the task under the contract.

I Think this Case Law is Apt in your Case.

CA KRISHNA KUMAR DARUKA

CA KRISHNA KUMAR DARUKA (Expert)

01 June 2011 I think here the querist is asking about the laundry bill of hotel(Expense of hotel) being paid to outsiders. If this is the case it will clearly attract TDS whether there is any written contract or not. Any payment for laundry bill which exceeds threshold mentioned in 194C requires TDS deduction.

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