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Deduction fo tds

fakrudheen (Audit Assistant) (341 Points)

31 October 2015

advocate bill issued to our comapny professional fees Rs 15,000, Stamp duty35,000, other stationery exp Rs 5000 Total Rs 55,000, we are giving Cheque Rs 15,000 balance given in cash

all amount charged in one bill

how is accounted & what are the TDS Implication

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5 Replies

Mahesh Kumar (Student CA Final ) (39 Points)
Replied 31 October 2015

Under Section 194J of the Act, TDS will be deducted on the Invoice Value ie on Rs. 55000/-. As the section says"Any sum paid/Credited". As per ITO vs Dr Villiam Schwabe India (P) Ltd. [2005] Tribunal held that Reimbursement of expenses for which sepearatly bill raised didi not attract the provision of section 194J. But in your case, the said judicial dicision is not applicable.

Please not that Rs. 40000/- paid by cash, the 20% of Rs. 40000/- is disallowed for Computing Income Tax liability of the Firm under section 40A(3) of the Income Tax Act.

Regards,

Mahesh Kumar

NAVEESH DHAR (ADVOCATE- TAXATION ADVISOR) (427 Points)
Replied 31 October 2015

In my opinion TDS liability will not be applicable as such Rs 35000/-for stamp duty bourned by advocate on behalf of client and balance of total amount is not exceeding with Rs 30000/-.

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 01 November 2015

If advocate has billed all as legal services then tds on whole amount but where as stamp duty is seperately mentioned in invoice then tds only on legal services excluding stamp duty paid.

Mahesh Kumar (Student CA Final ) (39 Points)
Replied 02 November 2015

As per my opinion, your contention is right but for this seperate bill requiered. but in this case, seperate bill is not raised.

for more clarification you may refer the judicial decesion for the reimbursement of expenses. Inthe said decision both section 194C and 194J are examine in the similar case and the decision are given.

in the said dicision the outcome is " if a accumulated bill is given by a professional/consultant for his fees as well as out of pocket expeases and or reimbursement of expenses, then the entire amount is subject to TDS. if a seperate bill is given for reimbursement of out of expenditure, the reimbursement of expenses is not subject to Tax Deduction."

Hope matter is now clarify.

Regards,

Mahesh Kumar