whether out of pocket TDS deposit is a allowed expenditure.?

Dear Vishal,

Often in case of agreement with Non residents, TDS is borne by the indian companies by grossing up the payment made to  Non resident, in such cases the deduction is allowed in respect of (Payment to non resident + TDS deposited on their behalf)

But I feel this thing is allowed if done purposely & not merely for making up for the default of deduction.

Since an expenditure to be allowed must fulfil the requirements of sec 37(1) - i:e must be incurred "wholly" & "exclusively" for the business/profession.

"exclusively" means - Unless such motive is solely for promoting the business, the expenditure will not qualify for deduction.

Now, paying out of own pocket will not fulfill the condition of "exclusively" & hence the same will be dissalllowed.

You can pay TDS out of ur own pocket to safeguard from interest/penalties. But on payment whether the expenditure will be allowed as deduction or not is still not clear. Dont think there is any need to revise return since no mistake was there in the return filed earlier.