Hello !!
Please explain me the tax implications on the following case :
There is a company in UK which is incorporated in UK as Ben Inc, it has two subsidiaries, one in India (Ten Pvt Ltd)& the other in Bangladesh (Len Pvt Ltd).
Len Pvt Ltd of Bangladesh avails services from a small Indian company named "ABC Pvt Ltd" and wants to pay them for the services rendered by them. But there are lots and lots of regulations to be followed for remitting payment from Bangladesh to the small vendor in India.
Len Pvt Ltd of Bangladesh requests its related party Ten Pvt Ltd of India to pay the "ABC Pvt Ltd" on behalf of "Len Pvt Ltd".
So in the above situation please answer me the following questions :
1) Can Ten Pvt Ltd of India pay the small vendor of India "ABC Pvt Ltd" on behalf of its Related Party from Bangladesh (Len Pvt Ltd)since the vendor is from India and also the Related Party is also in India and there will not be any regulatory issues for making payment in India by an Indian Company to an Indian Company ?
2) If the Indian Subsidiary Ten Pvt Ltd pays on behalf of Len Pvt Ltd then it will be disallowed as expense, since it is the expense of Len Pvt Ltd, so how can Len Pvt Ltd claim it as expense in this circumstance ?
3) Advice the best solution for this case and also please provide the sources for getting the conclusion.
Thank You !!
CAclubindia
