TDS on polishing of watch chains with gold water

This query is : Resolved

CA Amrish Gupta (Querist)
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02 July 2010 Our client is in the manufacturing of watches,he use to outsource the work of polishing the watch chains with gold water ( all material required is supplied by our client) to his sister concern for which our client deduct TDS on such work under section 194c.Such sister concern works only for our client (i.e no activity other than for our client is undertaken in such concern).
Recently ITO challenges our client that he has to deduct TDS u/s 194J instead of u/s 194C i.e @ 10% instead of @ 2%..............................In my opinion rate followed by our client is right i.e @ 2%...................PLZ give ur opinion on this case along with judgement of any apex court (if any)

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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03 July 2010 AGREE. YOUR CLIENT IS CORRECT IN DEDUCTING THE TDS @ 2% AS IT ATTRACTS SEC 194C AND NOT 194J. THIS WORK DOES NOT COME UNDER THE DEFINITION OF PROFESSION OR TECHNICAL SERVICE, HENCE SEC 194J WILL NOT APPLY.

http://www.incometaxindia.gov.in/acts/income%20tax%20act/194j.asp

PLEASE CHECK ABOVE LINK.

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