Case Law Details
East India Hotels Ltd. & Jaswant Singh Bhatia Vs. CBDT and UOI – Bombay High Court
The word ‘carrying out any work’ in section 194C is limited to any work which on being carried out culminates into a product or result. The word ‘work’ in s.194C is limited to doing something with a view to achieving the task undertaken or carry out an operation which produces some result. The facilities/amenities made available by a hotel to its customers is not covered under any of the categories specified in the term ‘work’ in Explanation III to section 194C; consequently, the Circular No.681, dated 08-03-1994 to the extent it holds that the services made available by a hotel to its customers are covered u/s 194C must be held to be bad in law.
TDS on the charges you pay to a Barber?
The argument of the revenue that the service contracts between the petitioner hotel and its customers is covered under section 194C of the Act cannot be accepted because, neither such a contract constitutes ’work’ within the meaning of section 194C of the Act nor those contracts are covered under service contracts specifically included by way of Explanation III to section 194C of the Act. If the contention of the revenue that the word ’any work’ in section 194C is very wide enough to include all types of work is accepted, then it would mean that even the hair cutting work done by a barber would be a ’work’ covered under section 194C and the person making payment to the barber would be covered under section 194C. Such a wider interpretation is uncalled for, especially when the revenue itself had considered since inception that section 194C is restricted to the works done by contractors / sub-contractors. Apart from the above, the CBDT by its circular No.715 dated 8/8/1995 has clarified that the payments made by persons other than individuals and HUF’s for hotel accommodation taken on regular basis will be in the nature of ’rent’ subject to TDS under section 194I of the Act. Thus, there is inconsistency in the stand of the CBDT as to whether the services rendered by a hotel to its customers is covered under section 194C or under section 194I of the Act.
IN THE HIGH COURT OF BOMBAY
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