Query regarding TDS and service tax

Jitendra Jhanwar (Officer) (129 Points)

13 January 2010  

Dear All

I have query regarding TDS which is below:

Problem :X company have land of 200 crores [Market value] .X company
is interested to give legal paper of land to Y company. X and Y
company both are same group company.X Company has charged 1% charges to y company for land documents. Y company has mortgage this paper to bank and acquired loan as per requirement. X company raised a bill to Y company for this charges. The language of this bill is below:

“Being Charges for providing collateral securities by depositing title
deed of Land”

[1% of 200 Crores it means amount of charges comes 2,00,00,000 [Two Crores]

Query: 1.Can Y company deduct TDS on this charges when payment to X,
if no then Why?& if yes then which section can we deduct TDS and which
head like rent, professional fees,contract,commission….

Query:2.Can this charges cover Service tax, if yes then please clarify
that Which Service covers it.

So request to clarify this matter as soon as possible.

Tks in Advance