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Question ID : 11138
TDS ON GENERATOR RENT

RESPECTED DEARS, PLEASE LET ME KNOW THAT UNDER WHAT SECTION THE TDS ON GENERATOR RENT PAID BY BANKS TO PERSON BE DEDUCTED AND IF THE BANK ALSO PAY EXP FOR DIESEL THAN ON WAHT AMOUNTBIT TO BE DEDUCTED EITHER ONLY ON RENT OR ON TOTAL. FURTHER CAN THERE BE A CONTRACT OF SUPPLY OF POWER TO FACILIATE THE LOWR TDS RATE U,S 194 C. REGARDS '
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posted by CA. N. GARG on Jun 28, 2009

filed under DIRECT TAXES

Answer ID : 15198
Member's Comment
I am of the opinion it will be under Section 194I @ 10% only on rental charges.

posted by Ashok Poojari on Jun 29, 2009

Answer ID : 15199
Member's Comment
Regarding your second query i.e treating it as contract of supply of power - please read the following CARRYING OUT ANY WORK - SUB-SECTION (1) OF SECTION 194C The expression ‘carrying out any work’ is the soul of section 194C and the applicability of the section depends upon the interpretation of this expression. The word ‘any’ is a word which excludes the limitation and qualification and can mean ‘all’, ‘each’ and ‘every’. The meaning of this word given in the statute depends upon the context and the subject-matter of the statute and its generality can be restricted by the context in which it has been used. It has been used as a prefix to the word ‘work’ which means engagement in the performance of a task, duty or the likes. The term ‘work’ covers all forms of physical and mental exertions or both combined for the attainment of some object other than recreation or amusement. The dictionary meaning of the words ‘carrying on’ implies a repetition of acts - Birla Cement Works v. CBDT [1997] 95 Taxman 377 (Raj.)

posted by Ashok Poojari on Jun 29, 2009

Answer ID : 15208
Member's Comment
It should be 10% u/s 194I of the Act.

posted by Mahendra Kumar Bagrecha on Jun 29, 2009

Answer ID : 15237
Member's Comment
I presume that the possession of generator set is fully given to the bank and if it is so Sec 194-I is attracted since it is payment for use of plant or equipment. If diesel exp is also paid it would appear that the person is entrusted with the responsibility to actually run the generator also. In such a scenerio the situation may fall within the perview of Sec 194C. according to me the word "work" is used in a very wide sense under Sec 194C.

posted by SIVADAS CHETTOOR on Jun 29, 2009

Answer ID : 15243
Member's Comment
wef asseessment year 2007-08, tds on rent @10 percent on plant and machinery was fist included under section 194-I.The TDS has to be deducted on rent only and on reimbursement of diesel no tds shall be made provided the desel and the amount of rent are seperately fixed and given and not paid as a combined and or consolidated figure of rent inclusive of diesel.

posted by CA. G L SINGHAL on Jun 29, 2009

Answer ID : 15251
Member's Comment
The provision of Section 194-I will be attracted in this case. Treatment U/s 194-c is not posiible and is well answered Mr. Ashok. See, here the essence lies in the fact that two inflows are moving with different nomenculture to the same person. Viewing the basic essence of "compsite agreement" TDS will be attracted on the total inflow (rent as well as payments for fuel etc).

posted by CA. JITARWAL JITENDRA on Jun 30, 2009

Answer ID : 15255
Member's Comment
Since Generator comes under Plant and Machinery tds would be deducted u/s 194 i @ 10%

posted by nitin gupta on Jun 30, 2009

Answer ID : 15271
Member's Comment
It is equipment and is liable u/s.194I @10%.If payee has got lesser income he can approach the Assessing Officer and apply for lower deduction of tax. Assessing officer will issue appropriate TDS certificate after verifying the fact.The certificate will be in the name of leasee and amount and time limit is required to be strictly observed as per certificate. if fuel is not part of the contract of lease rent then TDS is not required to be paid on such fuel expenses

posted by vyas Bhalchandra Hiralal on Jul 01, 2009

 

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