Law:

Section:

Section 194C of the Income-tax Act, 1961 - Deduction of tax at source - Contractors/sub-contractors, payments to - Whether word 'work' in section 194C has to be understood in a limited sense and would extend only to service contracts specifically included in said section by way of Explanation III - Held, yes - Whether services rendered by a hotel to its customers by providing certain facilities/amenities do not constitute 'work' within meaning of section 194C and, therefore, CBDT Circular No. 681, dated 8-3-1994, to extent it holds that services made available by a hotel to its customers are covered under section 194C, is bad in law and is liable to be quashed - Held, yes Words and Phrases : 'Work' as occurring in section 194C of the Income-tax Act, 1961 Circulars and Notifications : CBDT Circular No. 681, dated 8-3-1994 FACTS The petitioner-company operated a number of five star deluxe hotels all over India. It, as a chain of hoteliers, offered various facilities, apart from boarding and lodging, to its guests like house-keeping of highest standard, selected restaurants, bank counter, beauty saloon, etc. It filed the instant writ petition challenging the validity of the CBDT Circular No. 681, dated 8-3-1994, as a result whereof every customer of the petitioner-hotel, while making payment to the hotel for occupying its room and availing other facilities provided by the hotel, was required to deduct income-tax at the rate specified in section 194C. HELD From the decision of the Apex Court in the case of Birla Cement Works v. CBDT [2001] 248 ITR 216/ 115 Taxman 359 , it is clear that the words 'carrying out any work' in section 194C are limited to any work which on being carried out culminates into a product or result. In other words, the word 'work' in section 194C is limited to doing something with a view to achieve the task undertaken or carry out an operation which produces some results. [Para 16] As illustrated in the Circular No. 86, dated 29-5-1972 section 194C would apply to payments for carrying out the work such as constructing buildings or dams or laying of roads and air fields or railway lines or erection or installation of plant and machinery, etc.…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492