TaxTMI 
TaxTMI 
2010 (12) TMI 745
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....abour charges excluding the value of material used by the contractee for carrying out the repairing of transformer. There was one consolidated contract for repairing of transformer and there were no two separate and distinct contract for repair and supply of material. Therefore, the ratio of decision given by Hon'ble Supreme Court on state of Madras vs. Gannon Dunkerley and Co. (Madras) Ltd. (1958) AIR 560, (1959) SCR 379 (1958) 9 STC 353 has been wrongly relied upon by the Ld.CIT(A). 1.2 The order of Ld. CIT(A) is not acceptable as the amount of tax at source is deductible on the gross amount of payment without excluding the cost of material or reimbursement of expenses incurred by the contractee as clarified by CBDT in their circu....
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....abour charges. The assessee submitted that in respect of a composite work contract, deduction u/s 194C of the Act would have to be related to gross payments excluding cost of material supplied by the specified persons, as is clear from the contract lett4r issued by UPPCL, Meerut to M/s Perfect Electrical Pvt. Ltd., Meerut; that the contract letter also mentioned the details of items to be used as per specification given in the letter dated 20.10.2009, of the Executive Engineer; that therefore, the contract was a composite work contract; that the contract work done was of a technical nature and fell within "professional or technical services" as defined in the Explanation to section 194J of the Act; that section 194C of the Act was not appli....
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....amount of payment without excluding the cost of material or reimbursement of expenses incurred by the contractee, as clarified in CBDT circular 715 dated 08.08.1995; that the CIT(A) has erred in relying on the provisions of section 194C(3) of the Act, as substituted by the Finance (No.2) Act, 2009 w.e.f. 1.10.2009; that these provisions were applicable for the work of manufacturing and supplying of product according to the requirement or specification of a customer and did not include a contract in the nature of repair of transformer not being working in the nature of manufacturing and supplying of product. 7. Ld.Counsel for the assessee, on the other hand, has placed strong reliance on the observation of the CIT(A) made while allow....
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....isputedly, the contract had 4 different components including the supply of material. Hence, the CIT(A) was correct in holding that TDS was liable to be deducted only with reference to the labour charges as mentioned in the contract. The TDS was, therefore, rightly deduction only with reference to the labour charges involved and there was no short deduction. The interest was, therefore, not chargeable. 9. Apropos, CBDT circular No.715 dated 08.08.95, this circular reads as follows: Q.30-Whether the deduction of tax at source u/s 194C and 194J has to be made out of the gross amount of the Act including reimbursement or excluding reimbursement for actual expenses? A.30-Section 194C and 194J refer to any sum paid. Obviou....