Tds deduction

Hi..

Our company purchase the furniture from the party of Rs. 1.60 Lac.

Before purchase we provide them the descripttion of furniture, and we raised a PO to them. They manufacture the furniture as per descripttion and deliver to us.

At the time of payment should we deduct the TDS on that amount....?

Replies (1)
Originally posted by : Deepak
Hi..
Our company purchase the furniture from the party of Rs. 1.60 Lac.
Before purchase we provide them the descriptttion of furniture, and we raised a PO to them. They manufacture the furniture as per descriptttion and deliver to us.
At the time of payment should we deduct the TDS on that amount....?

TDS is not applicable on such contracts.
.
The provisions of sec. 194C would apply in respect of a contract for supply of any article or thing as per prescribed specifications only if it is a contract for work and not a contract for sale as per the princi­ples in this regard laid down in para 7(vi) of Circular No. 681, dated 8-3-1994.
- Circular
No. 13/2006, dated 13-12-2006.
.

Circular No. 681, dated 8-3-1994 of the Board clarifies in para 7(vi) that the provisions of sec. 194C would not apply to contracts for sale of goods and further clarifies that where the property in the article or thing so fabricated passes from the fabricator-contractor to the assessee only after such article or thing is delivered to the assessee, such contract would be a contract for sale and so outside the purview of section 194C.
.
Here, the contractor undertakes to supply furniture fabricated/manufactured according to the specifications given by the assessee and the property in such furniture passes to the assessee only after such furniture is delivered. Hence, the contract will be a contract for sale and as such outside the purview of sec. 194C.

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