tds on hotel room under 194c

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siva kumar (Querist)
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08 June 2010 a company is paying hotel room rent on various period during the year amounting to rs.75,000/- whether tds to be deducted under 194c? If yes give me relevant circular / notification?

Shyam Lal Naik

Shyam Lal Naik (Expert)
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08 June 2010 Section 194C is not applicable for payment made to hotels.

Authority:

HIGH COURT OF BOMBAY

In The case of: The East India Hotels Ltd. v. CBDT

Appeal No. : Writ Petition No. 2104 of 1994

Decided on: March 6, 2009

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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08 June 2010 Where the assessee-hotel received payments from corporate customers under an agreement for use of the rooms in the hotel by such customers on regular basis, such payments would squarely fall within the term ‘rent’ as defined under the Explanation to section 194-I, and would hence attract deduction of tax at source. If such deduction results in any hardship or financial burden to the assessee, the proper remedy is to apply to the Assessing Officer under section 197 for the issue of certificate for deduction at lower rate or nil rate - Krishna Oberoi v. Union of India [2002] 257 ITR 105/123 Taxman 709 (AP.).

The CBDT have clarified that, while section 194-I would be attracted to payments received for providing hotel accommodation on a regular basis under lease/licence agreements, the said provision would not apply to cases where only ‘rate contract’ agreements are entered into, under which only room tariffs are fixed, because, where an agreement is merely in the nature of a rate contract, it cannot be said to be accommodation ‘taken on regular basis’ - Circular No. 5/2002, dated 30-7-2002.

siva kumar

siva kumar (Querist)
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08 June 2010 thank you for ur reply sir

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