HI Mubeen, the issue goes like this, the company has rented out its commercial building and the tenant being consultancy company has incurred expenses towards servicing of transformer yard and has claimed the expenses from its owner ( being company). so will TDS come in to picture on such payment?????
Deaer Harish,
I think the above case will fall under 194 C, just because of wide defination "Any work under a contract...."
Sec.194C
As per the provision of income tax assessee is not liable to deduct TDS on reimbursement if it is seperatly claimed & proper support is available.
i am also agree with ranjan dayal provided tds has been deducted by the said consulting company while incurring expenses on servicing of the transformer.
According to me it will not come into picture as the expenses was reimbursed by the landlord. TDS deduction liability will be on account of tenant under section 194C.
It is very clear as per the provision of IT Act U/s 194C ,any payment made to contractor or subcontractor which is the nature of reimbursement there is no liability of TDS attract. TDS will be deducted on the cost of service provided by the contractor or subcontractor .
For details read as under:
Since Section 194C refers to “any sum paid”, if the bill contains reimbursement of expenses also, the TDS is applicable on the reimbursements also. [Circular No.715 dt.8-8-1995]. However, if there are separate bills for contract payments and reimbursement of expenses, then, TDS is not required to be made on reimbursement of expenditure
| Originally posted by : Ranjan Dayal | ||
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For details read as under: Since Section 194C refers to “any sum paid”, if the bill contains reimbursement of expenses also, the TDS is applicable on the reimbursements also. [Circular No.715 dt.8-8-1995]. However, if there are separate bills for contract payments and reimbursement of expenses, then, TDS is not required to be made on reimbursement of expenditure |
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Dear Ranjan,
"However, if there are separate bills for contract payments and reimbursement of expenses, then, TDS is not required to be made on reimbursement of expenditure"
This is not a part of the circular.
Dr. William Schwabe's case is applicable only for 194J.
U can find a copy of the circular at........
https://law.incometaxindia.gov.in/Directtaxlaws/act2005/Sec_194C.htm
Here rembursement claimed by tanent from landlord.
when tanent (consultancy company) made payment to contractor (3rd party), he has deduted the TDS.
But, when tanent claimed rembursement from landlord, here is no requirement of TDS, because it is not the income of tanent, he only claims the rembursement of what he has expend.
if TDS will be deducted from rembursement it will be panalty for tanent and Govt. earned double tax from single income.
correct me if i am wrong.
CAclubindia
