Loading ...
Sorry, an error occurred while loading the content.

Re: TDS on Car Repair--Amt borne by Insurance Co.

Expand Messages
  • Sanjeev Bedi
    Hi Jagdeesan and Anoop, An important word to note in Section 194C is responsible . TDS is to be made by the person who s responsible for making the payment to
    Message 1 of 6 , Jan 21, 2009
    View Source
    • 0 Attachment
      Hi Jagdeesan and Anoop,

      An important word to note in Section 194C is "responsible". TDS is
      to be made by the person who's responsible for making the payment to
      the contractor. In this case, since the company had taken out an
      insurance policy on the car, the primary responsibility to meet the
      expenses arising out of getting the car fixed up consequent to an
      accident lay on the insurance company. True, the bill was raised by
      the Repair Shop in the name of the company. But I don't think the
      insurance company acted as an agent of the assessee company whilst
      making the payment to the repair shop. It was discharging its own
      liability and therefore duly made the TDS on its part of the burden
      of expense.

      Even if the same amount being subjected to tax twice isn't a good
      enough argument here, it still doesn't seem the company can be made
      liable to make TDS on the amount it never paid and never was
      supposed to pay. The repairer should have raised a net bill of Rs
      15000 on the company after it'd got Rs 185000 from the insurance
      company. So we'll book an expense of only Rs 15000. But the repairer
      seems to have raised the entire bill of Rs 200000 in the name of the
      company without reflecting therein any adjustments on account of
      payment already realized from the insurance company. Still, I feel
      TDS, if at all it is deductible, need be deducted only on Rs 10000.
      These repair and insurance agreements these days are mostly
      tripartite in nature, the parties being the assessee, the repairer
      and the insurance company. The insurance company stepped into the
      picture the moment the car met with an accident; it didn't reimburse
      the amount to the assessee company. If the assessee had got the
      cheque for Rs 185000 from the insurance, crediting it to Car
      Expenses account, then I might have had a different opinion on this.

      Anyways, if this was a one-off payment, then the discussion we are
      having is merely academic in nature. TDS u/s 194C isn't required to
      be made if the individual payment doesn't exceed Rs 20k and the
      aggregate during the year is below Rs 50001.

      Thanks,

      CA Sanjeev Bedi


      --- In ICAI_CIRC_MEERUT_CA@yahoogroups.com, Anoop Bhatia
      <banoop@...> wrote:
      >
      > Dear Mr. Jagdeesan
      >
      > It's an interesting query. I may say if bill of Rs.50000/- is made
      in the
      > name of company and the company books an amount of Rs.50000/- in
      its books
      > as expenditure of repairs of car as well as it books the claim
      received
      > from the insurance company to the tune of Rs. 40000/- (which is
      received by
      > way of direct payment to the repair agency by the insurance
      company) the
      > TDS on the balance payment of Rs. 10000 should be applicable.
      >
      > But if bill is booked with an amount of Rs.10000/- only and no
      amount is
      > shown in the books as receivables from the Insurance company on
      account of
      > insurance claim, I may say TDS may not be applicable.
      >
      > But in TDS one may follow a golden rule, "in case of doubt deduct
      the tax
      > at source". So being on a practical side I suggest to deduct TDS
      u/s 194C.
      >
      > I know some memeber may not be agreeing to the opinion framed by
      me, their
      > valuable opinion on the issue is welcome.
      >
      > Warm regards
      >
      > Anoop Bhatia
      > Jaipur
      >
      >
      >
      >
      > Dear Esteemed Members,
      >
      > A car owned by a company met with accident and it was
      > sent for repair. The repairer sent quotation and as
      > per the quotation Rs. 1,50,000 is payable towards
      > material cost and Rs. 50,000 is payable towards
      > labour.
      >
      > Insurance company sanctioned Rs. 1,45,000 towards
      > material cost and Rs. 40,000 for labour charges
      > relating to repairing the vehicle. The insurance
      > company paid the above amount directly to repairer and
      > deducted TDS on Rs. 40,000 being the labour charges it
      > sanctioned.
      >
      > The balance amount of Rs. 15,000 is payable by the
      > company to the repairer.
      >
      > The query is while making the balance amount of Rs.
      > 15,000, whether TDS is be made on the entire labour
      > charges of Rs. 50,000 or TDS is required to be made on
      > the balance Rs. 10,000 (Rs. 50,000 - Rs.40,000 - TDS
      > made by the insurance company).
      >
      > Regards,
      >
      > V. Jagadeesan.
      >
      >
      >
      >
      >
      > Disclaimer :The information contained herein (including any
      accompanying documents) is confidential and is intended solely for
      the addressee(s). If you have erroneously received this message,
      please immediately delete it and notify the sender. Also, if you are
      not the intended recipient, you are hereby notified that any
      disclosure, copying, distribution or taking any action in reliance
      on the contents of this message or any accompanying document is
      strictly prohibited and is unlawful. The organisation is not
      responsible for any damage caused by a virus or alteration of the e-
      mail by a third party or otherwise . The contents of this message
      may not necessarily represent the views or policies of Housing
      Development Finance Corporation Limited.
      >
    • Devarajan.V
      Will this transaction be covered U/S 194C? I am giving my car for repair and getting a bill for which the payment is done. In some case even the regular
      Message 2 of 6 , Jan 21, 2009
      View Source
      • 0 Attachment
        Will this transaction be covered U/S 194C? I am giving my car for repair and getting a bill for which the payment is done. In some case even the regular service bill also exceeds Rs.20000. Just because I obtained an estimate to know the extend of dent in my  purse, I am of the opinion that it is not covered U/S 194C.
         
        CA Devarajan.V
        -------Original Message-------
         
        Date: 21/01/2009 10:01:29 PM
        Subject: {amresh's-CA's} Re: TDS on Car Repair--Amt borne by Insurance Co.
         

        Hi Jagdeesan and Anoop,

        An important word to note in Section 194C is "responsible" . TDS is
        to be made by the person who's responsible for making the payment to
        the contractor. In this case, since the company had taken out an
        insurance policy on the car, the primary responsibility to meet the
        expenses arising out of getting the car fixed up consequent to an
        accident lay on the insurance company. True, the bill was raised by
        the Repair Shop in the name of the company. But I don't think the
        insurance company acted as an agent of the assessee company whilst
        making the payment to the repair shop. It was discharging its own
        liability and therefore duly made the TDS on its part of the burden
        of expense.

        Even if the same amount being subjected to tax twice isn't a good
        enough argument here, it still doesn't seem the company can be made
        liable to make TDS on the amount it never paid and never was
        supposed to pay. The repairer should have raised a net bill of Rs
        15000 on the company after it'd got Rs 185000 from the insurance
        company. So we'll book an expense of only Rs 15000. But the repairer
        seems to have raised the entire bill of Rs 200000 in the name of the
        company without reflecting therein any adjustments on account of
        payment already realized from the insurance company. Still, I feel
        TDS, if at all it is deductible, need be deducted only on Rs 10000.
        These repair and insurance agreements these days are mostly
        tripartite in nature, the parties being the assessee, the repairer
        and the insurance company. The insurance company stepped into the
        picture the moment the car met with an accident; it didn't reimburse
        the amount to the assessee company. If the assessee had got the
        cheque for Rs 185000 from the insurance, crediting it to Car
        Expenses account, then I might have had a different opinion on this.

        Anyways, if this was a one-off payment, then the discussion we are
        having is merely academic in nature. TDS u/s 194C isn't required to
        be made if the individual payment doesn't exceed Rs 20k and the
        aggregate during the year is below Rs 50001.

        Thanks,

        CA Sanjeev Bedi

        --- In ICAI_CIRC_MEERUT_ CA@yahoogroups. com, Anoop Bhatia
        <banoop@...> wrote:

        >
        > Dear Mr. Jagdeesan
        >
        > It's an interesting query. I may say if bill of Rs.50000/- is made
        in the
        > name of company and the company books an amount of Rs.50000/- in
        its books
        > as expenditure of repairs of car as well as it books the claim
        received
        > from the insurance company to the tune of Rs. 40000/- (which is
        received by
        > way of direct payment to the repair agency by the insurance
        company) the
        > TDS on the balance payment of Rs. 10000 should be applicable.
        >
        > But if bill is booked with an amount of Rs.10000/- only and no
        amount is
        > shown in the books as receivables from the Insurance company on
        account of
        > insurance claim, I may say TDS may not be applicable.
        >
        > But in TDS one may follow a golden rule, "in case of doubt deduct
        the tax
        > at source". So being on a practical side I suggest to deduct TDS
        u/s 194C.
        >
        > I know some memeber may not be agreeing to the opinion framed by
        me, their
        > valuable opinion on the issue is welcome.
        >
        > Warm regards
        >
        > Anoop Bhatia
        > Jaipur
        >
        >
        >
        >
        > Dear Esteemed Members,
        >
        > A car owned by a company met with accident and it was
        > sent for repair. The repairer sent quotation and as
        > per the quotation Rs. 1,50,000 is payable towards
        > material cost and Rs. 50,000 is payable towards
        > labour.
        >
        > Insurance company sanctioned Rs. 1,45,000 towards
        > material cost and Rs. 40,000 for labour charges
        > relating to repairing the vehicle. The insurance
        > company paid the above amount directly to repairer and
        > deducted TDS on Rs. 40,000 being the labour charges it
        > sanctioned.
        >
        > The balance amount of Rs. 15,000 is payable by the
        > company to the repairer.
        >
        > The query is while making the balance amount of Rs.
        > 15,000, whether TDS is be made on the entire labour
        > charges of Rs. 50,000 or TDS is required to be made on
        > the balance Rs. 10,000 (Rs. 50,000 - Rs.40,000 - TDS
        > made by the insurance company).
        >
        > Regards,
        >
        > V. Jagadeesan.
        >
        >
        >
        >
        >
        > Disclaimer :The information contained herein (including any
        accompanying documents) is confidential and is intended solely for
        the addressee(s) . If you have erroneously received this message,
        please immediately delete it and notify the sender. Also, if you are
        not the intended recipient, you are hereby notified that any
        disclosure, copying, distribution or taking any action in reliance
        on the contents of this message or any accompanying document is
        strictly prohibited and is unlawful. The organisation is not
        responsible for any damage caused by a virus or alteration of the e-
        mail by a third party or otherwise . The contents of this message
        may not necessarily represent the views or policies of Housing
        Development Finance Corporation Limited.
        >

         
        FREE Animations for your email - by IncrediMail! Click Here!
      • JAGADEESAN 9568
        Dear Sanjeev Bedi, Thank you very much for the opinion. As usual your opinion is very impressive, clear and lucid. Regards, V. Jagadeesan
        Message 3 of 6 , Jan 21, 2009
        View Source
        • 0 Attachment
          Dear Sanjeev Bedi,

          Thank you very much for the opinion. As usual your
          opinion is very impressive, clear and lucid.

          Regards,

          V. Jagadeesan

          --- Sanjeev Bedi <sanjeevbedi2001@...> wrote:

          > Hi Jagdeesan and Anoop,
          >
          > An important word to note in Section 194C is
          > "responsible". TDS is
          > to be made by the person who's responsible for
          > making the payment to
          > the contractor. In this case, since the company had
          > taken out an
          > insurance policy on the car, the primary
          > responsibility to meet the
          > expenses arising out of getting the car fixed up
          > consequent to an
          > accident lay on the insurance company. True, the
          > bill was raised by
          > the Repair Shop in the name of the company. But I
          > don't think the
          > insurance company acted as an agent of the assessee
          > company whilst
          > making the payment to the repair shop. It was
          > discharging its own
          > liability and therefore duly made the TDS on its
          > part of the burden
          > of expense.
          >
          > Even if the same amount being subjected to tax twice
          > isn't a good
          > enough argument here, it still doesn't seem the
          > company can be made
          > liable to make TDS on the amount it never paid and
          > never was
          > supposed to pay. The repairer should have raised a
          > net bill of Rs
          > 15000 on the company after it'd got Rs 185000 from
          > the insurance
          > company. So we'll book an expense of only Rs 15000.
          > But the repairer
          > seems to have raised the entire bill of Rs 200000 in
          > the name of the
          > company without reflecting therein any adjustments
          > on account of
          > payment already realized from the insurance company.
          > Still, I feel
          > TDS, if at all it is deductible, need be deducted
          > only on Rs 10000.
          > These repair and insurance agreements these days are
          > mostly
          > tripartite in nature, the parties being the
          > assessee, the repairer
          > and the insurance company. The insurance company
          > stepped into the
          > picture the moment the car met with an accident; it
          > didn't reimburse
          > the amount to the assessee company. If the assessee
          > had got the
          > cheque for Rs 185000 from the insurance, crediting
          > it to Car
          > Expenses account, then I might have had a different
          > opinion on this.
          >
          > Anyways, if this was a one-off payment, then the
          > discussion we are
          > having is merely academic in nature. TDS u/s 194C
          > isn't required to
          > be made if the individual payment doesn't exceed Rs
          > 20k and the
          > aggregate during the year is below Rs 50001.
          >
          > Thanks,
          >
          > CA Sanjeev Bedi
          >
          >
          > --- In ICAI_CIRC_MEERUT_CA@yahoogroups.com, Anoop
          > Bhatia
          > <banoop@...> wrote:
          > >
          > > Dear Mr. Jagdeesan
          > >
          > > It's an interesting query. I may say if bill of
          > Rs.50000/- is made
          > in the
          > > name of company and the company books an amount of
          > Rs.50000/- in
          > its books
          > > as expenditure of repairs of car as well as it
          > books the claim
          > received
          > > from the insurance company to the tune of Rs.
          > 40000/- (which is
          > received by
          > > way of direct payment to the repair agency by the
          > insurance
          > company) the
          > > TDS on the balance payment of Rs. 10000 should be
          > applicable.
          > >
          > > But if bill is booked with an amount of Rs.10000/-
          > only and no
          > amount is
          > > shown in the books as receivables from the
          > Insurance company on
          > account of
          > > insurance claim, I may say TDS may not be
          > applicable.
          > >
          > > But in TDS one may follow a golden rule, "in case
          > of doubt deduct
          > the tax
          > > at source". So being on a practical side I suggest
          > to deduct TDS
          > u/s 194C.
          > >
          > > I know some memeber may not be agreeing to the
          > opinion framed by
          > me, their
          > > valuable opinion on the issue is welcome.
          > >
          > > Warm regards
          > >
          > > Anoop Bhatia
          > > Jaipur
          > >
          > >
          > >
          >
          > >
          > > Dear Esteemed Members,
          > >
          > > A car owned by a company met with accident and it
          > was
          > > sent for repair. The repairer sent quotation and
          > as
          > > per the quotation Rs. 1,50,000 is payable towards
          > > material cost and Rs. 50,000 is payable towards
          > > labour.
          > >
          > > Insurance company sanctioned Rs. 1,45,000 towards
          > > material cost and Rs. 40,000 for labour charges
          > > relating to repairing the vehicle. The insurance
          > > company paid the above amount directly to repairer
          > and
          > > deducted TDS on Rs. 40,000 being the labour
          > charges it
          > > sanctioned.
          > >
          > > The balance amount of Rs. 15,000 is payable by the
          > > company to the repairer.
          > >
          > > The query is while making the balance amount of
          > Rs.
          > > 15,000, whether TDS is be made on the entire
          > labour
          > > charges of Rs. 50,000 or TDS is required to be
          > made on
          > > the balance Rs. 10,000 (Rs. 50,000 - Rs.40,000 -
          > TDS
          > > made by the insurance company).
          > >
          > > Regards,
          > >
          > > V. Jagadeesan.
          > >
          > >
          > >
          > >
          > >
          > > Disclaimer :The information contained herein
          > (including any
          > accompanying documents) is confidential and is
          > intended solely for
          > the addressee(s). If you have erroneously received
          > this message,
          > please immediately delete it and notify the sender.
          > Also, if you are
          > not the intended recipient, you are hereby notified
          > that any
          > disclosure, copying, distribution or taking any
          > action in reliance
          > on the contents of this message or any accompanying
          > document is
          > strictly prohibited and is unlawful. The
          > organisation is not
          > responsible for any damage caused by a virus or
          > alteration of the e-
          > mail by a third party or otherwise . The contents of
          > this message
          > may not necessarily represent the views or policies
          > of Housing
          > Development Finance Corporation Limited.
          > >
          >
          >
          >
        Your message has been successfully submitted and would be delivered to recipients shortly.