TDS on payment of Housing Societies monthly maintenance bill

[Prakritish Bagchi]

 

 

Hi, Professional experts,

Please express your views on TDS, whether deductible (u/s 194C), on payment of monthly/quarterly maintenance bill, paid by a company to a Housing society of the building where the company runs its’ business. It will be more easier if you can refer any case law on it.

Rgds.

P.Bagchi

 

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[Prakritish Bagchi]

Can I get any expert comment please, on the following query!  

 

From: foru...@googlegroups.com [mailto:] On Behalf Of Prakritish Bagchi
Sent: Tuesday, September 17, 2013 3:39 PM
To: foru...@googlegroups.com
Subject: [CA RUNGTA PD] TDS on payment of Housing Societies monthly maintenance bill

 

 

 

Hi, Professional experts,

Please express your views on TDS, whether deductible (u/s 194C), on payment of monthly/quarterly maintenance bill, paid by a company to a Housing society of the building where the company runs its’ own business. It will be more easier if you can refer any case law on it.

Rgds.

P.Bagchi

 

 

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DISCLAIMER AND PRIVILEGE NOTICE : This e-mail and any files transmitted with it contain confidential, copyright, proprietary and legally privileged information. It should not be used by anyone who is not the original intended recipient. Any use, distribution, copying or disclosure by any other person is strictly prohibited. If you receive this transmission in error, please notify the sender by reply email and then destroy the message. Opinions, conclusions and other information in this message that do not relate to official business of Trisys Communications Private Limited shall be understood to be neither given nor endorsed by the Trisys Communications Private Limited. Internet communications cannot be guaranteed to be timely, secure, error or virus-free. The sender does not accept liability for any errors or omissions.

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[vinod goyal]

dear mr. bagchi,

two points are relevant,

when it is housing society how office is allowed to operate?it must be for res. only.

i suppose the unit is owned by someone indv for res and letout to co for office.

in that case the co might be paying rent to the owner and maint chgs directly to society as part of the agreement or wilful bifurcation to avoid tds u/s194I from rent by keeping it below threshhold limit of 1.8 lac p.a.

if that be the case the smartness wont work.the circular issued under sec.194I clarifies that rent includes all by whatever name called and maint. chg. is included.

thus if maint chgs bill is on the unitholder name but born by the co it will form part of rent or deemed rent if the unit holder doesnt charge rent.

depending upon facts ,threshhold limit, tds will arise u/s 194I.

if maint chgs bill is on an indv,unit holder then if his accounts are not subject to tax audit,there is no tds liability under any section.

 

Vinod Kumar Goyal,F.C.A.P.G.D in A.D.R.
Senior Partner V.Goyal & Associates
Chairman:A.N.M.I.,e.i.r.c.
Chairman:D.P.A.I.,e.i.r.c.

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From: Prakritish Bagchi <bag...@trisyscom.com>
To: "foru...@googlegroups.com" <foru...@googlegroups.com>
Sent: Friday, 20 September 2013 1:56 PM
Subject: [CA RUNGTA PD] FW: TDS on payment of Housing Societies monthly maintenance bill

forum4ca is a Google Group of eServe online for the benefit of CA and other professionals. It is especially meant for written discussion & circulate information within group members. The mail may contain such research/advice/opinion/information/fact provided by any member and are subject to the accuracy and of the description of facts.The forum4ca, do not claim that contains in mail/information obtained after reading as a complete and accurate disclosure of relevant facts. Further this Group’s Owner/Moderator/Member are not liable for any damages or costs suffered due to action/transaction based on information on this Group.

[Prakritish Bagchi]

 

Dear Mr. Goyal,

Thank you for your comments.

In Kolkata frequently you will find simultaneous existence of house hold & business in the same building. We are one of them.

We (a Pvt Ltd Co.) are the owner of a full floor in a five story building, and obviously one of the members of the housing society.  Therefore no question of section 94I arising here at all.

My question is, being a member of a housing society, when we are paying the maintenance charges to the same society, shall section 194C applicable on such payment?

Rgds.

P.C.Bagchi      

[CA S K Choudhary]

Till there is no element of profit involved and the principles of mutuality can be proved – in my opinion TDS will not be liable to be deducted

 

Please stand me corrected in case of otherwise

 

CA S K Choudhary

[sanjay kumar dey]

It may please be noted both co-operative society and a society registered under socity act is a "specified person" for deduction of tax u/s 94c of the act. Further TDS is applicable on payment made whether profit is a part of the same or not.

It is a type of "work contract" within the defination of the act.

Hence it seems that in case the payment is within the threshold limit of Rs. 75000/- in a year or Rs. 30000/- single payment then tax will not be deducted. Otherewise TDS needs to be deducted unless any case law disapproves its applicability.

Regards

CA Sanjay Dey


On Wed, 25 Sep 2013 11:19:43 +0530 wrote
> Till there is no element of profit involved and the principles of mutuality can be proved – in my opinion TDS will not be liable to be deductedPlease stand me corrected in case of otherwiseCA S K ChoudharyFrom: foru...@googlegroups.com [mailto:foru...@googlegroups.com] On Behalf Of Prakritish Bagchi

Sent: Monday, September 23, 2013 3:04 PM
To: foru...@googlegroups.com; P.D.RUNGTA; CA Nitesh More

Subject: [CA RUNGTA PD] RE: TDS on payment of Housing Societies monthly maintenance bill-my expert replyDear Mr. Goyal,Thank you for your comments. In Kolkata frequently you will find simultaneous existence of house hold & business in the same building. We are one of them.We (a Pvt Ltd Co.) are the owner of a full floor in a five story building, and obviously one of the members of the housing society. Therefore no question of section 94I arising here at all.My question is, being a member of a housing society, when we are paying the maintenance charges to the same society, shall section 194C applicable on such payment?Rgds.P.C.Bagchi From: vinod goyal [mailto:vkg_a...@yahoo.com]

Sent: Saturday, September 21, 2013 4:11 PM
To: foru...@googlegroups.com; P.D.RUNGTA; CA Nitesh More
Cc: Prakritish Bagchi

Subject: TDS on payment of Housing Societies monthly maintenance bill-my expert replydear mr. bagchi,two points are relevant,when it is housing society how office is allowed to operate?it must be for res. only.i suppose the unit is owned by someone indv for res and letout to co for office.in that case the co might be paying rent to the owner and maint chgs directly to society as part of the agreement or wilful bifurcation to avoid tds u/s194I from rent by keeping it below threshhold limit of 1.8 lac p.a.if that be the case the smartness wont work.the circular issued under sec.194I clarifies that rent includes all by whatever name called and maint. chg. is included.thus if maint chgs bill is on the unitholder name but born by the co it will form part of rent or deemed rent if the unit holder doesnt charge rent.depending upon facts ,threshhold limit, tds will arise u/s 194I.if maint chgs bill is on an indv,unit holder then if his accounts are not subject to tax audit,there is no tds liability under any section.

Vinod Kumar Goyal,F.C.A.P.G.D in A.D.R.
Senior Partner V.Goyal & Associates
Chairman:A.N.M.I.,e.i.r.c.

Chairman:D.P.A.I.,e.i.r.c.From: Prakritish Bagchi
To: "foru...@googlegroups.com"

Sent: Friday, 20 September 2013 1:56 PM

Subject: [CA RUNGTA PD] FW: TDS on payment of Housing Societies monthly maintenance billCan I get any expert comment please, on the following query! From: foru...@googlegroups.com [mailto:] On Behalf Of Prakritish Bagchi

Sent: Tuesday, September 17, 2013 3:39 PM
To: foru...@googlegroups.com

Subject: [CA RUNGTA PD] TDS on payment of Housing Societies monthly maintenance billHi, Professional experts, Please express your views on TDS, whether deductible (u/s 194C), on payment of monthly/quarterly maintenance bill, paid by a company to a Housing society of the building where the company runs its’ own business. It will be more easier if you can refer any case law on it.Rgds.P.BagchiDISCLAIMER AND PRIVILEGE NOTICE : This e-mail and any files transmitted with it contain confidential, copyright, proprietary and legally privileged information. It should not be used by anyone who is not the original intended recipient. Any use, distribution, copying or disclosure by any other person is strictly prohibited. If you receive this transmission in error, please notify the sender by reply email and then destroy the message. Opinions, conclusions and other information in this message that do not relate to official business of Trisys Communications Private Limited shall be understood to be neither given nor endorsed by the Trisys Communications Private Limited. Internet communications cannot be guaranteed to be timely, secure, error or virus-free. The sender does not accept liability for any errors or omissions.--

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[Ecotech]

TDS is very much deductible.

 

JNGupta

9331022920

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[tejika...@gmail.com]

Payment made by the assessee to the society as society maintenance expenses are not covered under section 194C

Article ID 44647 | Posted In Income Tax | Judiciary | 1 Comment 

Mitsutor Shipping Agency Pvt Ltd Vs DCIT (ITAT Mumbai) – The assessee was owner of the premises in which it was carrying on business. The assessee paid maintenance charges to the society of Apartment Owners. According to the AO the assessee ought to have deducted tax at source on the payment of maintenance charges to the society as the payment by the assessee to the society was in the nature of contract and, therefore, the provisions of section 194C was applicable. Under section 40(a)(ia) of the Act where assessee has an obligation to deduct tax at source before making payment and where such tax is not deducted by an assessee the payment made without deduction of tax at source which is claimed as expenditure while computing total income is liable to be disallowed. According to the AO the payment of maintenance charges to the society by the assessee was in the nature of payment to contractor for carrying out any work attracting the provisions of section 194C of the Act. Since tax was not deducted at source while making payment, the AO invoked the provisions section 40(a)(ia) of the Act and added a sum of Rs. 1,72,455/- to the total income of the assessee.

 On appeal by the assessee the CIT(A) confirmed the order of the AO, hence, ground No.2 by the assessee before the Tribunal.

ITAT held as follows-  The payment of maintenance charges by the owner of the premises to the society can by no stretch of imagination be said to be a payment to contractor for carrying out work on behalf of the owner of the premises. These payments were made to defray common cause. There is no contract for maintenance between the society and the owner of the premises. It is a payment to common fund to be used for the benefit of the owners of the premises. The payment by the member of the society is governed by the principle of mutuality and the society does not derive any income. We are therefore, of the view that the impugned addition cannot be sustained and the same is directed to be deleted. Ground No.2 is accordingly allowed.

Disallowance can not be made u/s 14A by applying rule 8D for the A.Y. prior to the A.Y. 2008-09 when the 8D was inserted.