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March 2016

TDS – Sections 194C and 194J

By K. B. Bhujle Advocate
Reading Time 2 mins
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i) Supply of material under turn key project – Section 194C would not apply in respect of payment made against the supply of materials included in composite contracts for executing turn key projects
ii) Bill management services are not professional or technical services – It is a service contract – Section 194C will apply and not 194J

CIT vs. Executive Engineer, O&M Division(GESCOM); 282 CTR 138 (Karn):

The following two questions were raised by the Revenue in the appeal filed before the Karnataka High Court:

“i) Whether the provisions of section 194C would be attracted on the payments made against the supply of materials included in composite contracts for executing turn key projects?

ii) Whether bill management services are professional or technical services? Whether section 194J would apply or section 194C?”

The High Court held as under:

“i) In respect of payments made in respect of supply of materials included in composite contracts for executing turn key projects, provisions of section 194C would not apply.
ii) Services rendered by the agencies towards bill management services are not professional services and section 194J is not attracted. The contract was rightly held to be service contract by the Tribunal. Section 194C is attracted.”

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