TDS Query

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This query is : Resolved

mark. (Querist)

30 August 2010 1. Will arbitration fees payable to arbitrator be liable for deduction of tax at source u/s 194j?

2. Whether there will be any difference (with regard to applicability of sec. 194j) if the appointed arbitrator is a professional (advocate or CA) or non professional?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)

30 August 2010 TDS to be deducted u/s 194J.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

30 August 2010 Arbitrator is a professional and TDS need to be deducted u/s.194J

mark.

mark. (Querist)

30 August 2010 Sirs,

I would further like to clarify my following doubts.

1. An arbitrator who is not a professional should not be liable for professional tax?

2. With reference to the following case laws Arbitration is considered as an occupation and not a profession.

IN THE HIGH COURT OF ALLAHABAD
Income-tax Reference No. 2 of 1958
Decided On: 20.01.1967
Appellants: B. MALICK
Vs.
Respondent: COMMISSIONER OF INCOME-TAX, UTTAR PRADESH.

IN THE HIGH COURT OF MADRAS
Case Referred No. 26 of 1946
Decided On: 02.08.1950
Appellants: Commissioner of Income-tax
Vs.
Respondent: V.P. Rao (Deceased) and Ors.

IN THE HIGH COURT OF KERALA
Income-tax Reference Nos. 111 to 120 of 1977
Decided On: 30.03.1978
Appellants: K SANKARAN
Vs.
Respondent: COMMISSIONER OF INCOME-TAX, KERALA.

Are occupations also liable to professional tax in India?

3. I would like to know if arbitration falls under technical services under Section 194J read with Section 9 (1) (vii) Explanation 2 ?

mark.

mark. (Querist)

31 August 2010 My understanding is that, An arbitrator is a person appointed to interpret a contract when there is a dispute in understanding it.
The performance of his interpretation is upon the contractor and contractee, his job ends after interpretation.
In no way he is managing any dispute.
An arbitration contract is a sub contract, and not a direct contract.
As per Sec 194j "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 notified by the Board for the purposes of section 44AA or of this section;
Now even if a lawyer is appointed as an arbitrator can we say that it is in the course of his legal profession? The whole concept of arbitration is out of court settlement of disputes, the legal profession is representing clients in the court of law, so how can we deduct tax under 194j if arbitration is not in the course of legal profession.

please clarify, Thanks

mark.

mark. (Querist)

25 September 2010 https://www.caclubindia.com/experts/tds-on-arbitration--491575.asp

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