194H

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

23 October 2010 The Assessee is a real estate broker. He receives commission/ brokerage on the properties that he sells. Also, as a part of the real estate business, sometimes he has to pay a certain amount from the brokerage/ commission that he receives to the ultimate seller, so that the seller benefits in terms of discount (i.e. the amount given by the broker from his commission). AO holds that the discount given to seller is a diversion of commission and therefore, TDS is to be deducted. Is the AO justified in doing soor not? Are there any pertinent case laws similar to this situation?

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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23 October 2010 One thing , I am not clear whether broker is reciving commission from both seller and purchaser. If he is getting from both of them and again he is returning , where is the question of diversion.

Yes , If he is reciving only from purcahser and giving some amount to seller, it is diversion , that will be covered under 194H.

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