Urgent : Income Tax & Service Tax & TDS & ITR

TDS 987 views 6 replies

CA CHETAN GUPTA

588 Points Joined September 2009

Hello Everyone,

One of My Client owns School Bus and runs them on hire in Schools. It is his Business.

So the BUS RENT received is his Business Income.

The School has deducted TDS under section 194IA & 194IB @ 2%. As per my knowledge it is wrong. Kindly Comment Your Views. Please mention the SECTION & RATE of TDS.

And if the Sections are wrong then what will happen, Can I Claim the TDS or not ?

Also, while preparing his PROFIT & LOSS A/C, will he get any deduction of EXPENSES (Direct & Indirect) from the TOTAL RENT RECEIVED ? just like we do it in other Proprietorship Shops and others. viz. Salary, Fuel, Depreciation, etc.etc.

Also, Do he have any Service Tax Liability and Service Tax Registration & Return filing obligation.

In 1 School, he has No tie up with the school and receives RENT individually from Students directly.

And in other School, the School pays the Rent to him under an agreement and Students are not concerned with the Bus Owner.

My View:-

So the Former one is Business Income & the Later one is SERVICE RENDERED to EDUCATIONAL INSTITUTION. Thus Exemption under Mega Exemption notification.

Kindly Reply Soon. I have to file the return before 31st March.

Thank You.

Replies (6)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

208868 Points Joined July 2016

" The School has deducted TDS under section 194IA & 194IB @ 2%. As per my knowledge it is wrong. Kindly Comment Your Views. Please mention the SECTION & RATE of TDS. And if the Sections are wrong then what will happen, Can I Claim the TDS or not ?"

The hiring of transport vehicles get specifically covered u/s. 194-C as far as Tax Deduction at source is concerned. Even though case-laws in favour of TDS u/s.194I(b) are also there.

Unless nexus between TDS and income are not provided in ITR it will be difficult to get it processed..

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

208868 Points Joined July 2016

INCOME TAX APPELLATE TRIBUNAL, DELHI

ITA No. 4913/Del/2011 – A.Y. : 2008-09 Asstt. Commissioner of Income Tax(TDS), vs. M/s Idea Cellular Limited

Refer at: https://ta xguru.in/income-tax/tds-transport-charges-deductible-194c-194i.H T M L

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

208868 Points Joined July 2016

CBEC has issued detailed clarification vide Circular No. 172/7/2013-ST dated 19th September, 2013 in which CBEC has clarified that “all services relating to education are exempted from Service Tax”.

Read: /articles/service-tax-on-transportation-by-education-institutions--25583.asp

With amedment wide notification 06/2014, dated 11/07/2014 as follows:

The term “auxiliary educational services” has been dispensed with and replaced by an exhaustive list of following four services provided to an educational institution which shall be out of service tax net.

(i) transportation of students, faculty and staff;

(ii) catering, including any mid-day meals scheme sponsored by the Government;

(iii) security or cleaning or house-keeping services performed in such educational institution;

(iv) services relating to admission to, or conduct of examination by, such institution.

Piyush Tanwar

Assistant Manager - Accounts

1432 Points Joined October 2009

*** TDS deducted by the school on the bus rent @ 2% is right.... refer to the case law as follows:-

Case Name : ACIT (TDS) Vs Delhi Public School (ITAT delhi)

Appeal Number : ITA Nos.4878 & 4879/DEL/2012

Date of Judgement/Order : 24/05/2013

**** You can claim the credit of TDS without any hesitation as the deduction of TDS is correct and as per law.

*** Yes, he can claim the deduction of expenses incurred like salary to drivers, depreciation, repair & maintenance of the buses, depreciation, etc if they are in the nature of business.

**** there is no service tax liability on the transporter due to mega exemption allowed to the service provider who are providing transportation service to the school to carry students.

**** but the income he is collecting directly from the students will taxable in his hands.

Thanks & Regards

Piyush Tanwar

CA Finalist & Internal Auditor

Mobile - 9717468521

Sanjay S

Chartered Accountant

1375 Points Joined August 2012

My post on this thread was not showing. Maybe due to some technical glitch.

I am attaching my post as a pdf. file. By the way, Tds should be made u/s 194C @ 2% based on a case mentioned in this file.

Manoj BG

Tax Professional and in Service

1795 Points Joined June 2009

Hi,

Question : The School has deducted TDS under section 194IA & 194IB @ 2%. As per my knowledge it is wrong. Kindly Comment Your Views. Please mention the SECTION & RATE of TDS.

Answer : TDS required to be deducted u/s 194C liable for 2% TDS as this is not only hiring of bus but also of provision of driver. If that would be the hiring of bus alone without provision of driver (i.e. driver arranged by school), then it would be covered u/s 194I @ 2%.

Question : And if the Sections are wrong then what will happen, Can I Claim the TDS or not ?

Answer : You ar eligible to claim credit of TDS irrespective of section under which TDS has been deducted and TDS rate. There is no express provision in the act which restrict assessee to claim TDS credit just because TDS deducted by payer under wrong section/wrong rate.

Question :Also, while preparing his PROFIT & LOSS A/C, will he get any deduction of EXPENSES (Direct & Indirect) from the TOTAL RENT RECEIVED ? just like we do it in other Proprietorship Shops and others. viz. Salary, Fuel, Depreciation, etc.etc.

Answer : Assessee is eligible to claim all business related expenditure unless the same is disallowed expressly under any of the provisions of act.

Question : Do he have any Service Tax Liability and Service Tax Registration & Return filing obligation. In 1 School, he has No tie up with the school and receives RENT individually from Students directly. And in other School, the School pays the Rent to him under an agreement and Students are not concerned with the Bus Owner.

Answer : As rightly mentioned by Mr Dhirajlal in the earlier replies, you are eligible to claim exemption from service tax with regard to arrangements/agreement made with school for student's transportation.

With regard to individual collection from students, you are liable to pay service tax. However, you can claim service tax abatement to reduce total price that going to charge to individual student. Please also check turnover based SSI exemption eligibility for registration and service tax liability.

Thanks and Regards,

Manoj