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TDS u/s 194C or 194J w.r.t. shifting of P&M

Kriti (Article Assitant) (106 Points)

09 October 2013

Dear All

My client has shifted his P&M from existing place to another place and for that called in services of various individuals and corporate bodies for shifting of P&M.

I am confused whether TDS will be deducted u/s 194C or under 194J for Technical Services?

Please reply ASAP

Thank You

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10 Replies

Ashok Katgi ( CA-Final) (62 Points)
Replied 09 October 2013

This is purely in the nature of technical services You should must deduct tds u/s.194J

Ankit (CA, CS) (3064 Points)
Replied 09 October 2013

Dear Kriti,

According to me, it should be 194C, since it is a full contract given which includes shifting plus assembling.

The assembling is a part of the shifting contract and as such, is not separate.

Had it been only assempbling, you could still think of 194J, but I dint think in this case it is correct to take it under 194C

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Ritesh Jain (CA, CS in Job) (675 Points)
Replied 09 October 2013

There are lot of instances where a particular service involves skill/technical knowlege as well as includes labour and is in nature of contract. Like in case of a contract of building ection or plant erection whihc is also a WCT contract the TDS provisions that is attracted is of 194C but is well knowm that building construction needs civil knowledge. So the same rule applies and thus I fell 194C would be appropriate. TY

Ashish Bansal (CA) (936 Points)
Replied 09 October 2013

Its better to take saperate invoice for dismantling and reassembling. Then it wud be covered u/s 194J. Remaining part wud qualify u/s 194c.

Kriti (Article Assitant) (106 Points)
Replied 09 October 2013

Dear all thanks for reply

As per explanation 2 to clause (vii) of sub-section (1) of section 9 of Income Tax Act, 'fee for technical services means any consideration for the rendering of any managerial, technical or consultancy services (including the provisions of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient......'

I think in this case assembly is equivalent of dismantling & erection.

Dear Ashok - The bills are received in the name of 'dismantling, erection, commissioning', can I qualify them as Techincal Service.

Dear Ankit - Please refer the top para.

Dear Ritesh - I think that is because of provision under section 194C sub-section (3)

Dear Ashish - The invoices have already been received.

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achyut mishra (student) (28 Points)
Replied 10 October 2013

Kirti : nice question. Confusing however knowledgeable.

Sekar (Student) (197 Points)
Replied 10 October 2013

I.Tax officers only look in the way of revenue loss.Hence go for higher rate(i.e) 194J, to avoid litagation. Let it be their head ache, to go for refund or adjust.

In practice, always go with practical, if your go by laws & rules, you will be caught.........:-)

venkatesh (learner) (116 Points)
Replied 10 October 2013

Section 194C applicable in this case.

Avishek Bandyopadhyay (Finance Executive) (25 Points)
Replied 10 October 2013

Dear Kriti,

Tax will be deducted u/s 194Cin this case.With reference to CIRCULAR NO. 93 DATED 26.09.1972 it is mentioned that "Composite Contract involving transport as well as loading and unloading charges, the entire contract is regarded as “works contract".Reliance in this regard can also be placed on the decision of the Hon'ble Supreme Court in the case of Associated Cement Co. Ltd. v. CIT [1993] 201 ITR 435,where it has been mentioned that section 194C would be applicable

to all types of contracts for carrying out any work including, transport contracts, service contracts, advertisement contracts, broadcast¬ing contracts, telecasting contracts, labour contracts, material contracts and works contracts;

to contracts for the construction, repair, renovation or alteration of buildings or dams or laying of roads or airfields or railway lines or erection or installation of plant and machinery are in the nature of contracts for work and labour, income-tax will have to be deducted from payments made in respect of such contracts.

Thanks & Regards,

Avishek.

1 Like