LIVE GST Audit Course by CA Sachin Jain. Register Now!!

TDS APPLICABILITY

Shyam Sarda (Chartered Accountants) (30 Points)

05 April 2008

XYZ PVT. LTD. HAS ENTERED INTO AN LEASE AGREEMENT WITH ABC.LEASE PERIOD 60MONTHS(2lacs*60).EVEN IF THE LESSEE WANTS TO TERMINATE IN BETWEEN CO HAS TO PAY RENT FOR BAL LEASE PERIOD. AFTER 12 MONTHS XYZ LTD WISHES TO TERMINATE THE AGREEMNT.THUS WAS BINDING TO PAY THE LEASE RENT FOR BAL PERIOD OF 48 MONTHS(2lacs * 48).AFTER NEGOTIATING THE LESSOR AGREED TO TERMINATE THE AGREEMENT WITHOUT CHARGING ANY PENAL RENT FOR BAL LEASE PERIOD PROVIDED THE CO. WILL NOT BE COMPENSATED FOR THE FURNITURE WORK DONE(60 lacs) AND THE DEPOSIT(5lacs) WILL NOT BE REFUNDED.
QUERRY:-
1.UNDER WHICH PROV OF THE IT ACT THE ASSET CAN BE DELETED FROM THE BLOCK?THERE ARE OTHER ASSETS IN THE BLOCK.
2.IS THE TRANSACTION LIABLE FOR TDS?IF YES, A) What should be the amount?(penal rent or book value + depoit)B) Under which section 194I or 194C?

Reply
Follow
Share

2 Replies

(Guest)

Why we are not geeting set -off Cst? similarly why CST.consider as cost & why Vat is not consider as cost

CA. Atindra A. Prabhu Bhatikar (practising CA) (68 Points)
Replied 08 April 2008

There should be no confusion regarding the deletion from the block of furniture. An amount has to be fixed by both the contracting parties in consultation with a valuer and the same has to either added or subtracted by either parties. This will happen in the normal sale/deletions style. Regarding the question of TDS, I feel no tax should be deducted as it is a capital receipt for the lessor for which there is no specific TDS provision. But I admit it is a tricky situation.