TDS on rent

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This query is : Resolved

Nayan (Querist)

27 May 2008 my clients sister concern(first Party) is paying the office rent for my client(second party) and first party has raised a debit note on second party for reimbursement of expenses. first party has deducted the tax at source while making payment of rent to the owner of the property. But, second party has not deducted the tax while making reimbursement of expenses to the first party.Memorandum of Understanding made between first party and second party states that "the first party has agreed to allow the second party to use and occupy the said property as per terms and conditions of the leave and license agreement entered into by the first party and the property owner on condition of reimbursement of all the expenses incurred by the first party."

Now please tell me, whether second party is required to deduct the tax at source on reimbursement of rent to first party???
its urgent.

Nilesh Damji Chheda

Nilesh Damji Chheda (Expert)

27 May 2008 as per the fact given by u, the first party i.e ur client's sister concern has entered in to leave & license agreement with the owner of property and ur client has enter MOU with its sister cocern. this is nothing but sub- lease of the property by sistern concern to ur client and payment made by ur client is in the nature of rent. hence ur client has to deduct the TDS on payment made to its sister concern

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