tds u/s 194I

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CA Abhash (Querist)
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19 December 2007 one of our client has taken photostat machine on rental basis from photostat shop, kept at place of client. the only consideration being paid is in the form of a fixed charge, say 0.25 piase per copy for photostat and the material being paper sheets is being fed in the macine by the client. my question is

1) does this attract tds under 194I as rent for equipments or u/s 194C as tds on contract.

2) if we fall in definition of rent u/s 194I, then if our liabilty does not arise due to payment does not exceeding 120000, then are we covered u/s 194C as residual section or there does not arise any tds liabilty in that case.

CA. O.P. Agarwalla

CA. O.P. Agarwalla (Expert)
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20 December 2007 Mr. Abhash,
Your query is interesting one. Section 194C applies in case of works contract. Now, in your case, is there any work is being carried out by the machine owner? Or, he has simply transfered the right to use to you on rent which is based on the basis of utilisation?
In other words, if the machine is operated by your client, this case is out of the ambit of section 194C. And if it is so, section 194I will be applicable.
I am of the view that for section 194C, execution of work is must, whereas for section 194I transfer of right to use is must.

SANDEEP AGGARWAL

SANDEEP AGGARWAL (Expert)
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21 January 2008 Hi Abhish,
it is a clearcut case of Sec 194 (i) i.e rent lease or under any other simillar nature for machine. Since it is covered u/s 194 (i), there is no question for applying 194 (C). Sec 194(c) is residual section but when it is covered under rent than sec 194 (c) will not apply. If payment is less than Rs 120000/- than certainly no tds liablity.
Regards
Sandeep

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