TDS under sec. 194H & 194C

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This query is : Resolved

gargi (Querist)

23 December 2007 hi!!!
where, one company/agency which carries on the task of unloading of shipped goods/imported goods on indian port for other company (assessee co.) and provides other related services to that particular co., then under which sec. the co. is required to deduct and pay TDS.
will this be considered as contract and liability to deduct TDS u/s 194C or whether as commission & brokerage as per sec.194H and liability to deduct tax u/s 194H.
if this considered as contract and tds is deducted and paid u/s 194C then what will be implications if the amount is shown in the bill of shipping agency co. as 'Agency fees' separately.

Please reply asap.

thanks,
gargi.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)

23 December 2007 If a company carries out the task of unloading of imported goods belonging to another company in pursuance of a contract entrusted with them by the said another company, it is a contract of work only and 194C is the applicable section.

CA. Kirti S. Ganatra

CA. Kirti S. Ganatra (Expert)

25 December 2007 Sec 194 C apply

gargi

gargi (Querist)

25 December 2007 Thanks for the reply.

But can you please clarify why sec.194C will be applicable. if there is no specific contract between the co. providing service to the assessee co. As per Sec. 194H the definition of commission and brokerage includes any direct/indirect income or payment on behalf of any person. Now if a co. does any work like shipping/loading/unloading for other co.(assessee) then whether this transaction will come under sec. 194C or 194H. If the answer is sec.194C then which kind of transaction will be taxed under sec.194H. Is it necessary to have an agency contract as per Indian Contract Act between two persons to apply sec 194H.

Awaiting reply,
thanks.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)

25 December 2007 The term services is of a wider meaning. In the absence of a specific work contract provision under sectio 194C any service other than professional services, (separately covered)would have been included.

Section 194C enables to make use of if the contract (not necessarily an umbrella contract, but a mere letter or action to entrust also included) involves usage of some execution of a job or work involving labour (with or without material).