TDS on consumer Contribution

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Kishore Kumar Cherukuri (Querist)
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19 May 2008 The Company is a Electricity Distribution Company (herein after referred to as “EDC”). It provides supply of Power to various categories of consumers.

In the course of the business, the EDC collects contribution from consumers for laying lines and transformers to the premises of the consumer for providing continuous supply of power to the consumers.

The EDC treats the contribution so received as capital and deducts the same from the cost of fixed assets.

The issue is that one Consumer-Company (herein after referred to as “CC”) wants to deduct TDS from the payment made to EDC towards such contribution treating the same as work contract

My question is “Whether the above payments are covered by any TDS provisions and the CC is liable to deduct TDS on such type of payments”. If so under which section it is covered under the Income Tax.

CA. Yayati Tyagi

CA. Yayati Tyagi (Expert)
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21 May 2008 in my opinion tds is applicable as it amounts to work contract. it should be covered u/s 194C.

CA UMESHKUMAR R. ACHARYA

CA UMESHKUMAR R. ACHARYA (Expert)
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24 May 2008 The Consumer Company is making payment to you for a performance of Contract & hence liable for T.D.S u/s 194C.
the Treatment of Such Receipt in your books of account has no relevance with the liablilty of payee company in matter of T.D.S.

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