TDS ON SERVICE TAX COMPONENT OF A BILL

CBDT had issued a Circular no. 1/2014 dated 13-01-2014 where it is clarified that wherever in terms of the agreement between the payer and payee, the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component.

Earlier Board had issued  a Circular No.4/2008 dated 28-04-2008 wherein it was clarified that tax is to be deducted at source under section 194-I of the Income-tax Act, 1961 (hereafter referred to as 'the Act'), on the amount of rent paid/payable without including the service tax component.

As per the author’s opinion on clear reading of first mentioned circular the circular is applicable to whole chapter XVII B i.e. to all the sections under which TDS is liable to be deducted. Hence TDS is not required to be deducted on service tax component of bill w.e.f 13.01.2014 provided the Service tax component is separately mentioned in Invoice and payment is made to resident.

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ENTITLEMENT OF DEPRECIATION ON VEHICLE REGISTERED IN THE DIRECTOR'S OR OTHER OFFICER

It is observed that in many instances Vehicles purchased by Companies were registered in the name of Director's or other officer's of company under the Motor Vehicles Act, 1988 (generally for ease of insurance claim settlement)

So question arise whether Companies were entitled to claim depreciation on vehicles registered in the name of its directors's or other officer of company.

In the case of SWAGAT INFRASTRUCTURES v. JCIT-2013 (Ahd.) tribunal held that claim of depreciation cannot be denied to the taxpayer as long as it is proved that the asset is under its dominion control and is being utilised for the business purpose of assesse, even though the tax payer is not registered owner of the asset.

Companies should ensure the following to use the above mentioned judgement.

1. A resolution should be passed by the Company to purchase and register these vehicle in the name of the Director or other officer of the company.

1. Proper documentation should be prepared to substantiate that the vehicles were utilized for business purposes. 

Disclaimer: The above post is only for sharing information between friends & professional colleagues. Professional consultancy must be sought before entering into any transaction related with above post.