Grossingup of tda u/s 195

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Deepak Tapse

Accounts Manager - Taxation

1316 Points Posted on 15 May 2015

We have paid Professional Fees to foreign company during last FY ie 2013-14 duly grossing up (Say 100+11) Less TDS 11/- as per DTAA

After submission of return, Income Tax Department has demanded difference of 10% due to not availability of PAN. During FY 2014-15 we have paid the difference and claimed expenditure in said year.

In this regards the above expenditure is allowble exp. as per IT Act?. Pl explain in brief

Replies (2)

CA Parth Rajendra Almaula

Chartered Accountant

67 Points Posted on 15 May 2015

Dear Deepak,

Can you elaborate the details which were mentioned in the notice issued by Govt. As i doubt that how can government demand the difference 10% of TDS where it has been deducted as per DTAA.

And secondly, please clarify that regarding which expense you are asking to claim as expenditure...

Thanks in advance

Deepak Tapse

Accounts Manager - Taxation

1316 Points Posted on 15 May 2015

ITD Demanded balance 10% due to non availabity of PAN.

Supplier given 100/- as his fees. We have paid full 100/- to them and TDS is paid from our pocket. The grossuped amount, we merged in respective expenses i.e. Professional Fees. Now the difference 10% paid to ITD debited to Professional Fees in FY 2014-15.

Supplier Bill 100/-

Grossed Up 111/-

TDS 10% 11/-

Net Paid to supplier 100/-