TDS u/s 194c
This query is : Resolved
03 September 2008
Sir,
we are the manufacturers of paints for MNC on job work basis.They pay job work charges on monthly basis after deducting TDS u/s 194C.It is OK.
Occassionally, we utilise our CENVAT credit on capital goods for payment of excise duty on manufacture of paints for MNC on job work basis.
They repay such amount seperately to us.But they insist to deduct TDS on such payment U/S 194C stating that Sec.194C covers any sum paid to contractor irrespct of nature of payment.
We oppose that such payment is not in perview of that section as the payment is not under contract in persuance of a contract for carrying out any work.
Please clarify whether we are correct or not.
Javahar
we are the manufacturers of paints for MNC on job work basis.They pay job work charges on monthly basis after deducting TDS u/s 194C.It is OK.
Occassionally, we utilise our CENVAT credit on capital goods for payment of excise duty on manufacture of paints for MNC on job work basis.
They repay such amount seperately to us.But they insist to deduct TDS on such payment U/S 194C stating that Sec.194C covers any sum paid to contractor irrespct of nature of payment.
We oppose that such payment is not in perview of that section as the payment is not under contract in persuance of a contract for carrying out any work.
Please clarify whether we are correct or not.
Javahar
04 September 2008
For invoking the provisions of section 194C there has to be a contract or subcontract that in volves a job work and payment has to be inrespect of it.
05 September 2008
They raised about CIRCULAR 715 dt 08.08.95 and clarification for question No.30. I replied as follows.
MY VIEW::a) Circulars are only clarificatory nature. They do not bind assessee but they bind department if assessee wants.
b) Circular can not bypass objective or spirit of original section.The power to issue circular is only for administrative guidance of the officers and not to take decisions that are in the realm of judicial or legislative functions.
Am I correct?
MY VIEW::a) Circulars are only clarificatory nature. They do not bind assessee but they bind department if assessee wants.
b) Circular can not bypass objective or spirit of original section.The power to issue circular is only for administrative guidance of the officers and not to take decisions that are in the realm of judicial or legislative functions.
Am I correct?
06 September 2008
The MNC stand is correct.TDS u/s 194C will attract on all sorts of credit made to you if your contract is with materials
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