Mr. X (a non-resident) having a Sole proprietorship firm (X & CO.) in India, Mr. X is a professional artist providing services to ABC Pvt Ltd. through X & Co. like stage performances in their theater.
There is a contract between ABC Pvt Ltd. and X & CO. that on every Show ,ABC Pvt Ltd. will pay a fixed amount of Rs.2 lacs + 30% of profit* from the each Show.
*Profit is to be calculated by deducting particular expenses from the total income per show.
ABC Pvt Ltd. is deducting TDS @ 1% on such payments by saying that it is a contract which is covered under the provisions of Section 194C (TDS on Contracts).
My question is whether ABC Pvt Ltd. would deduct TDS @ 10% (TDS on Professional Services) as it is seemed that the above service is covered under the provisions of Sec194J.
Please solve my query and also quote any case law regarding this.
19 January 2011
The explanation (a) to section 194J is reproduced as below –
Explanation.—For the purposes of this section,— (a) “professional services” means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified10a by the Board for the purposes of section 44AA or of this section; From the plain reading of the above explanation it can be observed that the medical profession is specifically covered under the provision of section 194J. The bringing of material by doctor himself does not change the basic character of the profession to contract. Thus section 194J provision apply in this case.
I think ABC PVT LTD, Deducting TDS u/s 194c Is correct one!!! as it is contract between ABC Pvt Ltd. and X & CO. ,
194J will not apply,
One of my client is there, He is an interior designer & having a proprietorship , he is also taking contracts of renovation, & all the clients of these companies deducting TDS @ 1% only...as it is a contract in nature,
BUT When he only providing a Consultancy no any contract than 194j apply
CAclubindia
