Quary regarding MILK CONVERSION CHARGES in a Milk Dairy Company.

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  1. M.Ravikiran Reddy

    M.Ravikiran Reddy New Member

    One Milk Dairy company supplies the milk to other companies and the other companies convert the milk into milk powder and forward the powder to the first mentioned company.

    In assessment the ITO raised a question that it is a contract & the company has to deduct TDS u/s 194C. Is the ITO is correct…..? The company has not deducted TDS. Now what is the remedy available to the company….....
  2. ZED

    ZED Well-Known Member

    ITOs contention is correct.
    Explanation.—For the purposes of this section
    (iv) "work" shall include—
    (e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer.

    You should deduct tax, if possible.

    also read proviso to S.201

    Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident—

    (i) has furnished his return of income under section 139;

    (ii) has taken into account such sum for computing income in such return of income; and

    (iii) has paid the tax due on the income declared by him in such return of income,

    and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed
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