A company having engage in the business of automobiles place order to a body builder for fabrication of a dumper to be fitted on a chssis. The body builder fabricate the dumper on the chssis and send it back to the company. The body builder raise the invoice mentioning ' fabrication of dumper on the chassis no. *********'. The body builder also charged sales tax on the aforesaid amount. The company treat the chasis as well as dumper as purchase in his books of accounts and the company sold the chasis along with dumper fitted to the customer under one invoice mentioning ' chasis no. ******** alonwith dumper fitted on it'.
The AO wants to treat the transactions as contract and wants to impose non deduction of TDS penalty. Whether there is any case law/ clarification in this matter so that same can not be treated as contract.
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TDS u/s 194C
Replies (4)
DEar Friend
I think the view taken by the AO 's correct, bcos if u see the wording of sec 194C, it practically covers "any work" & those exactly are the words used by the lawmakers.
The ratio for coverage has now been clearly laid out in very famous ACC's case decided some years ago.
CA Deepak Gadgil
Solapur
I think the view taken by the AO 's correct, bcos if u see the wording of sec 194C, it practically covers "any work" & those exactly are the words used by the lawmakers.
The ratio for coverage has now been clearly laid out in very famous ACC's case decided some years ago.
CA Deepak Gadgil
Solapur
In my opinion when the sales tax is charged as per the sales tax act, there cannot be any labour contract on the goods. It is only a sale of goods. So AO is not justified in treating it as a contract
Since sales tax is levied on works contracts also, the assessing officer will be justified in insisting on deduction of tax at source. However, it is to be seen whether it is a composite contract involving supply of materials also, in which case the sales tax authorities would have levbied tax only on the material portion of the transaction. In such case, only the postion attributable to labour will be subject to deduction of tax at source.
As a practical measure, it will be advisable to obtain separate invoices for materials supplied and the labour charges, in which case only the labour charges will attract TDS
As a practical measure, it will be advisable to obtain separate invoices for materials supplied and the labour charges, in which case only the labour charges will attract TDS
yes that nature of work attracts under Section 194C
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