TDS & expenses Claim

This query is : Resolved

Vinod Kumar Mathuria (Querist)
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29 June 2010 My client have group companies XYZ & ABC

R company Ltd. is a consultant to our group and company is billing to ABC of Rs.20 lacs per year for concultancy provided to both the companies. on our mutual understanding XYZ & ABC companies are sharing 50% -50% of share of expneses and also booking expnes in thier accounts XYZ is booking on the basis of debit note from ABC company.

My query is that
1. either both tha compay is eligible to claim expenses 50%-50% even R Company limited is billing to ABC company.
2. TDs has been deducted by the ABC company.
3.how the XYZ compnay will be able to claim expeses.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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29 June 2010 Both the companies will be eliglible to claim equal expenses if an agreement has been made between both that expenses paid on behalf of XYZ will be paid by ABC i. e. a cross charge agreement will be entered between both of the companies.

While transferring the expenses TDS & service Tax provisions will be applicable.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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29 June 2010 ABC LTD WILL BOOKED EXPENSE 100% IN ITS BOOKS AND DEDUCT TDS.
IF ABC LTD ARE ISSUING DEBIT NOTE FOR THESE EXPENSE, IT IS NOT VALID. ABC LTD HAS TO ISSUE INVOICE FOR IT BY CHARGING SERVICE TAX.
EXPENSE WILL BE BOOKED BY XYZ LTD BY CREDITING ABC LTD A/C AND TDS WILL BE DEDUCTED OF ABC LTD BY XYZ LTD.

Vinod Kumar Mathuria

Vinod Kumar Mathuria (Querist)
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01 July 2010 Mr. Maheswari, Mr. Bansal

My Seniors are saying that XYZ comapany can claim expeses on the basis of debit note and without charge of service tax & TDS liability.
Pls. explain with certain good information.
Thanks

Aditya Maheshwari

Aditya Maheshwari (Expert)
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01 July 2010 At the end which company is booking the expenses? XYZ.

So it has to deduct TDS on the expenses which it is claiming. SO TDS is deductible.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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01 July 2010 XYZ LTD WILL BOOK EXPESNES ON THE BASIC OF DEBIT NOTE/ BILL OF ABC LTD.
HENCE XYZ WILL DEDUCT TDS ON IT.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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01 July 2010 Controverial reply by Ramesh Krishnan on this link
https://www.caclubindia.com/experts/tds-421335.asp

So there is confusion.

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