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tax query

Arunashree ( Finance Manager) (117 Points)

04 November 2010

Hi,

1).we have imported a machinery for which other than payment for machinery ,we paid Rs.75,000/- towards shipping charges etc without deducting TDS.if we capitalise Rs. 75000/- still do we require to deduct TDS.

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7 Replies

sudhakar ca cwa (service) (1518 Points)
Replied 04 November 2010

yes you need to deduct even it is a captail asset

CA bhargava (CA) (2017 Points)
Replied 04 November 2010

No need to deduct TDS because Sec 40(a) specifies for interst, Royalty, fees for technical services...

more over as the payment is made for the shipping charges which is not specified in the above section no need to deduct TDS...

And coming to allowability it is not allowable if we are claiming as expenditure....

as we are capitalising, the question of TDS doesnot arise..

PALANIAPPAN (CHARTERED ACCOUNTANT) (39 Points)
Replied 05 November 2010

One of my client paid foreigner the export commission of 400000/- in U.S $ during the financial year 2009-10. Whether TDS should have been deducted on the payment?

Palaniappan

Narasimhan (student) (151 Points)
Replied 05 November 2010

Dear Mr.Palaniappan sir,

commission paid to a NRI in this case ur client need not deduct TDS on commission paid u/s 194H of the income tax act,1961.

CA bhargava (CA) (2017 Points)
Replied 05 November 2010

Originally posted by : narasimhan
	Dear Mr.Palaniappan sir, commission paid to a NRI in this case ur client need not deduct TDS on commission paid u/s 194H of the income tax act,1961.

i also agree with him...

CA.Madhusudan B.P. (Chartered Accountant) (1157 Points)
Replied 07 November 2010

Mr.Palaniappan:

Payments to foreign agents of Indian exporters - where a non residents agent operates outside the country, no part of the income arises in India. Further, since the payment is usually remitted directly abroad, it cannot be held to have been received by or on behalf of the agent in India. Such payments are, therefor, not taxable in India.Consequently, no TDS U/s 195 in such case.

To support this view, pl refer Circular No.786, dated 07/02/2000 &

CIT v.George Williamson (Assam) Ltd2008 305 ITR(AT)422 (Gauhati)

CA.Madhusudan B.P. (Chartered Accountant) (1157 Points)
Replied 07 November 2010

Arunashree :

The provision of TDS would apply only when the payment made are claimed as revenue expenditure.

Even incase of International transaction, IF & ONLY IF the payment made to foreign vendor are deemed to accrue or arise in India, then only TDS with holding tax is applicable.