Do facilities provided by hotels –fall under the term “carrying out work”

East India Hotels Ltd and another v. CBDT and another (320 ITR 526)

Facts:

•        The assessee offers various facilities to its guest apart from boarding and lodging

•        The question before the Bombay High Court was whether the same should be subject to TDS u/s 1 94C

Decision:

•        The word “carrying out work” u/s 194C is limited to any work which on being carried out culminates into a product or result (reliance was placed on the decision of the SC in case of Associated Cements)

•        Circular 681 dated 3 March 1994 to the extent it applies to a customer availing the services of a hotel, should be held contrary to section 1 94C

•        The word work has to be understood in the limited sense and would extend only to the service contracts specifically included in (the then) Explanation III to section 194C.

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