What the courts have decided on section 194R, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
-
Pune Municipal Corporation v ACIT (TDS), Pune
High CourtHelps taxpayerNo later treatment found
I have been held an assessee in default under s.201 for not deducting s.194C and s.194LA tax when I issued TDR certificates instead of paying money. Is there an answer where the payment is wholly in kind?
The Bombay High Court found a strong prima facie case and stayed the s.201 order, the demand and the s.271C penalty notice. Its prima facie view is that the words 'or by any other mode' in s.194C and in s.194LA must be read ejusdem generis with payment in cash or by cheque or draft, so those sections do not operate where the payment is made in kind by issuing transferable development rights. The court drew support for that reading from s.194B and s.194R, which do contain express machinery for a benefit paid wholly in kind and which is conspicuously absent from s.194C and s.194LA.
-
Contemporary Brokers Pvt Ltd v CBDT
High CourtHelps departmentNo later treatment found
The Board has rejected our representation and says we must deduct under s.194R on tea samples drawn for tasting. Can the writ court stop it in the meantime?
Not on this occasion. The Calcutta High Court held that the tea brokers' challenge to the CBDT's order of 22 December 2022 raised legal issues deserving adjudication at a final hearing after affidavits, and declined to interfere with that order at the interlocutory stage. Nothing was decided about whether a tea sample drawn for tasting and valuation is a benefit or perquisite in the broker's hands.
-
DCIT v AMD India Private Limited
ITATHelps taxpayerNo later treatment found
My associated enterprise sends me equipment free of cost for testing and I return or destroy it. Is that a benefit I have to bring to tax?
No, on these facts. The Tribunal deleted an addition of Rs.7,73,50,917 made under s.28(iv), holding that where assets are received only for testing, the recipient has no ownership, the value in the invoice is stated only for customs purposes and the assets are returned or destroyed, no specific benefit arises from their use. The Assessing Officer had made the addition on presumption without demonstrating what benefit was received.
-
Notification 67/2022 — the 194S forms
CBDT Circulars & InstructionsCuts both waysNo later treatment found
I deducted 1% under s.194S on a peer-to-peer purchase. Which challan and which certificate, and by when?
Form 26QE and Form 16E, on a thirty-day clock. A specified person deducting under s.194S pays the tax within thirty days from the end of the month of deduction, accompanied by a challan-cum-statement in Form 26QE filed electronically within the same thirty days, and issues the certificate in Form 16E to the payee within fifteen days of that due date. Form 26Q was substituted at the same time to carry ss.194R and 194S for deductors who are not specified persons.
-
CBDT Circular 12/2022
CBDT Circulars & InstructionsCuts both ways
I'm giving dealers free samples and discounts. Do I have to deduct TDS under s.194R?
Discounts, cash discounts and rebates allowed to a customer are outside s.194R; free samples and incentives such as sponsored trips and free tickets are not. And you cannot refuse to deduct on the ground that the benefit is not taxable in the recipient's hands — the Board's position is that tax must be deducted in all cases, whatever the nature of the benefit.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
