Hi guys...
In one of my audits, i came across this situation: My client company had paid payments under the name "Accounting Charges" to another company which does the work of Accounting and maintaining the books of accounts of my client company.
My client company (Say X) have deducted Tax under 194C at 2%, but i argue that it should be 194J (10%). X's arguments are as follows:
1. None of the people who manage the accounting company (Lets say "Y") is a qualified professional, which goes to corrobate the fact that they aren't rendering any "Professional services".
2. Only the accounts have been outsourced and no advanced works like auditing are rendered by Y.
3. There exists a Contract between X and Y for this service.
Pls advice me as to whether X's argument is correct. I know that 194C talks only about 5 category of "work" to be taxable under that section, but i am not sure whether the above mentioned service can be included under that too.
Thanks.
CAclubindia
