Query-TDS on Accounting charges

[CA Paresh Bagrecha,FCA,Nashik]

Dear All,

 

A private limited company is paying accounting charges of Rs. 60,000 p.a. to an individual for accounting work of the company.He is not an employee of the company.He is  a B.Com graduate. Whether this payment is liable for TDS? If yes, under which section- u/s 194J or 194C.
 

-CA.Paresh Bagrecha

 CA.Vivek Rathi

 Bagrecha Rathi and Co.

 Chartered Accountants

 Nashik

 Tel:0253-2319176

[CA Pravin Kulkarni]

Dear Paresh & Vivek

 

The payment is liable to be deducted u/s 194 C

 

Regards

 

CA Pravin Kulkarni…

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[amol mishra]

Dear Sir,
Section 194J is applicable in case payment is made to any resident for rendering professional service. As per Explanation to Section 194J,3rd proviso, professional services means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advt., or such other profession as is notified by the Board for the purpose of section 44AA or of this section.
As explained in above para, criteria for applicability of section 194J is "Nature of service" and not "Class of Person rendering service".In my opinion, in case referred by you, TDS U/s 194J will be applicable, since even though accountant is B.COM, nature of service rendered is professional service.

On Wed, 26 May 2010 18:36:16 +0530 wrote
>
Dear All,

A private limited company is paying accounting charges of Rs. 60,000 p.a. to an individual for accounting work of the company.He is not an employee of the company.He is a B.Com graduate. Whetherthis payment is liable for TDS? If yes, under which section-u/s 194J or 194C.

>
-CA.Paresh Bagrecha
CA.Vivek Rathi
Bagrecha Rathi and Co.
Chartered Accountants
Nashik
Tel:0253-2319176

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Thanx n Regards,

Ca.Amol Mishra
+919850647262

[CA Nitin Kadbhane]

Sir,

In my opinion this payment is liable for TDS u/s 194J. The reasons for the same is as under :-

 

 

1.) Meaning of Professional Services

    Professional services means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the         profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the             purposes of section 44AA or of this section.

 

2.) Also refer following gist of the HC decision

 Though, originally and historically, the word “profession” was applied only to law, medicine and theology or divinity and these were known as the three “learned professions”, and even in modern usage and in a restricted sense, the word “profession” is still sometimes applied only to learned professions and to the persons engaged therein, there has been a growing tendency to enlarge and extend the scope and meaning of this term, and this has resulted in the word “profession” becoming more elastic and its denotation more liberalised so that it has ceased to be connected only with, and restricted exclusively to, the so-called learned professions. The word “profession” now has a broader and more comprehensive meaning than formerly was accorded to it, and its signification now extends far beyond the well-known classical professions of earlier days as the application of science and learning is extended to other department of affairs, other vocations also receive the name. The various other activities which have also now come to be termed professions are enumerated in the Corpus Juris Secundum (volume 72, page 1219). These include, accountants, architects, chemists, editors, engineers, etc. The above enumeration is followed by a list of persons who have been held not to be engaged in the practice of a profession. This list includes beauty culturists, brokers, insurance agents, undertakers and embalmers and various others. (CIT vs. Lallubhai Nagardas and Sons [1993] 204 ITR 93 (BOM.)

 

Also find attached herewith the text of above refered judegement.

 

With regards

CA. Nitin Kadbhane

A K N S and Associates

Chartered Accountants

 

 

 

 

 

 

 

 

----- Original Message -----

From: CA Paresh Bagrecha,FCA,Nashik

To: nash...@googlegroups.com

Sent: Wednesday, May 26, 2010 1:34 PM

Subject: NashiCAs Query-TDS on Accounting charges

[CA Anand Mutha]

In my view section 194J - payment of fees for professional services will be applicable because of followings reasons. 

1) The expression "professional services" is defined to include accounting consultancy.

2) section 194C is only applicable where contract is work contract or contract for supply of labour. 

3) The rule of Ejusdem Generis is applicable. that to mean , when there is an apparent conflict between two independent provisions of the law, the specific provision must prevail. Union of India V. Indian Fisheries (P) Ltd. 1965 57 ITR 331 SC.

Regards

A R Mutha

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A. R. Mutha & Co.
Chartered Accountants
A3, First Floor, Parashuram Apartment,
College Road, Nashik - 422005
Tel:  0253 - 2314254
Mobile: 9923485623

[swapnaja prabhune]

In my view Job of account writing will be covered under "Profession" and not under the defenition of "Business". 

Income of a person , providing services will be his professional income. In case of account writing, the person, "Accountant" is providing services by using his skills / education .

Hence Rs. 60000/- paid for accounting writing charges ( and the person is not an employee ) , it will be liable for TDS and TDs is to be deducted as per rates of SEction 194 J.
 

Swapnaja Santosh Prabhune
Chartered Accountants
29, A, Umiyashakti Apartment,
Kathe Galli, Dwaraka,
Nasik - 422011.
Mo. 98501 90881 Ph. 0253- 6517243

---

From: "CA Paresh Bagrecha,FCA,Nashik" <br...@yahoo.co.in>
To: nash...@googlegroups.com
Sent: Wed, 26 May, 2010 1:34:09 PM

Subject: NashiCAs Query-TDS on Accounting charges

[Pankaj Warke]

Dear Sir,

As per my opinion, Accounting charges are definitely professional fees irrespective of the qualification of the person performing the work. THerefore, Tax needs to be deducated at the rate applicable for Professionals u/S 194J i.e. @10%

On 26 May 2010 13:34, CA Paresh Bagrecha,FCA,Nashik <br...@yahoo.co.in> wrote:

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With Regards,
CA Pankaj Warke
@ 9158 006 110
(B.Com, A.C.A., D.I.S.A.)

[CA. SONALI GUJARATHI]

Dear Pareshji,

 

In my opinion, it will be liable to TDS u/s. 194J.

Section 194J applies to TDS on fees for professional or technical services, which includes profession of accountancy. Section 194J does not say anything about degree, whether the payee is B.Com or Chartered Accountant. Thus, what is necessary, is that the payee should have provided that particular service.

Section 194C, says TDS on “contract” either a “work contract” or a “contract for supply of labour for works contract”. A “contractor” is one who makes an agreement with another to do a piece of work. Under “contract” it is very important that no party have the right to terminate the contract at will. Moreover explanation to section 194C says the expression “work” shall also include advertising, broadcasting, carriage of goods and passengers, catering. No where does it include profession of accountancy.

 

CA. Randhir D. Gujarathi

Nasik.

Mob. No. 9823121209

 

 

 

---

From: nash...@googlegroups.com [mailto:nash...@googlegroups.com] On Behalf Of CA Paresh Bagrecha,FCA,Nashik

Sent: Wednesday, May 26, 2010 1:34 PM

To: nash...@googlegroups.com
Subject: NashiCAs Query-TDS on Accounting charges

 

Dear All,

 

--

[sunil agiwal]

THE PAYMENT IS LIABLE FOR TDS UNDER SECTION 194 C ----AGIWAL
On Wed, 26 May 2010 19:17:35 +0530 wrote
>
Dear All,

A private limited company is paying accounting charges of Rs. 60,000 p.a. to an individual for accounting work of the company.He is not an employee of the company.He is a B.Com graduate. Whetherthis payment is liable for TDS? If yes, under which section-u/s 194J or 194C.

>
-CA.Paresh Bagrecha
CA.Vivek Rathi
Bagrecha Rathi and Co.
Chartered Accountants
Nashik
Tel:0253-2319176

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