LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

TDS u/s 194C or 194J

26 February 2010

Friends,

A company has given a contract for repairing of gear box and antisurge valve and polishing of interiors and exteriors of the valve to another company. Material will be provided by the contractee company to the contractor company. The contractor will work as per the specifications of the contractee company. Pls tell me whether tds will be deductible u/s 194C or 194J?

Does the act defines technical services anywhere? I know it defines 'fees for technical services" under Expl 2 to Section 9(1)(vii) but what does technical services mean? Again does just the use of technical knowledge for rendering services amounts to fees for technical services or technical knowledge has to be imparted to the payee company?

Reply
Follow
Share

9 Replies

Chintan Shah (-) (534 Points)
Replied 27 February 2010

Friends,

Cant anyone solve this???????? Pls help.... I would be really grateful... thx in advance....

Max Payne (employed) (2569 Points)
Replied 27 February 2010

"For the purposes of this clause, fees for technical services means any consideration (including any lump sum consi-deration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction , assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head Salaries."

What u r doing is only "work"....

Covered by 194C.....

2 Like

Chintan Shah (-) (534 Points)
Replied 27 February 2010

Dear friend,

The person who is repairing is using his experience and skill for repairing the machine. The machine is also quite sophisticated one used in the refining industry. So won't it be technical services. Its very confusing.... Again the fee that the repairer is receiving is quite high... Rs. 100000 for two day worth of work.... Pls do clarify...

Thx..

Max Payne (employed) (2569 Points)
Replied 27 February 2010

Hi,

Regular repairs and spares has been clarified by CBDT circular as work covered u/s 194C....

But seeing that a person is handling the situation with his technical skills (perhaps that of an engineer), u can deduct the TDS under 194J, without thinking twice....

But if it is repair done by 20 labourers in 2 days thru a contractor, my answer would point to 194C.... :)

RITESH KOTHARI (B.COM, FCA, DISA(ICAI)) (778 Points)
Replied 27 February 2010

It will be covered u/s 194C.

Coz the Contractor is doing wrk as per the specifications of the contractee. This is the modus operandi.

So, it will clearly be covered u/s 194C.

Regards,

CA RITESH KOTHARI

Chintan Shah (-) (534 Points)
Replied 27 February 2010

Dear Friends,

Thanks for the replies... But I just found one decision of tribunal in one case which I am attaching.... Its a quite similar case to the facts of my case.... It states that TDS may be deducted u/s 194C... Pls tell me whether I can take it as base and deduct TDS under contract..??? If you know about any contradicting judgement of HC or SC or a larger bench of any tribunal than also pls provide me the details of it...

Thanks once again...

Chintan

Attached File : 38 parasrampuria synthetics ltd 20 sot 248.pdf downloaded: 258 times

1 Like

Max Payne (employed) (2569 Points)
Replied 27 February 2010

Ritesh Sir,

Isnt that definition of work for the production of tangible a output as per specification?

Cos the words "manufacture" and "materials" is used.... ? It does not seem to cover services done according to customer specification?

Chinthan i thnk u got the right case... thanks...

Chintan Shah (-) (534 Points)
Replied 27 February 2010

Friends,

Dont you think that the decision attached by me above thread gives a very narrow and restrictive meaning to technical services. I think that the legislature would have intended that since technical knowledge is involved in the services rendered the same involves an income component higher than the income component in the payment made for contract and therefore the FTS is chargeable to TDS at a higher rate of 10%. Even if the technical knowledge is not vested in the payer than also the fees for services rendered using technical knowledge include an income component much higher than normal "work" under Section 194C and hence TDS must be deductible u/s 194J at 10%. Pls give your opinions on the same and tell me whether the above decision of the tribunal is sustainable??

Thanks in advance,

Chintan

VIRENDER KUMAR JAIN (CONSULTANT(ADMN.)) (21 Points)
Replied 08 January 2012

I AM RETIRED SECTION OFFICER FROM CENTRAL GOVT. AND DRAWING PENSION OF RS.11000/-PM. I RETIRED ON 31-01-08 AND AFTER THAT I AM WORKING AS CONSULTANT FOR DSOING ADMINISTRATIVE JOBS IN AUTONOMOUS BODIES IN GOVT. OF INDIA. AT PRESENTLY I AM DRAWING RS.20000/-PM FROM LRSI SINCE OCT & NOV. & DEC. 2011 AND THEY HAVE DEDUCTED 10% TDS UNDER 194J AS PROFESSIONAL SERVICES. PLEASE CLARIFY IF MY SERVICE WHICH ONLY INDIVIDUAL CAPACITY AS CLERICAL SERVICE CAN BE TEATED AS PROFESSIONAL SERVICE UNDER 194J FOR TDS @ 10%. IN MY VIEW MY SERVICE IS NOT PROFESSIONAL AS DEFINED IN 194J. AT PRESENT MY AGE IS 64 YEARS AND NO OTHER SOURCE OF INCOME.

PLEASE SEND MY REPLY IMMEDIATELY AS MY TDS MAY NOT BE DEPOSITED IN INCOME TAX. MY EMAIL ID IS vkjainrti @ yahoo.co.in & virenderjain1948 @ gmail.com.

With Regards,

Virender Kumar Jain