15 July 2009
suppose If x ltd pays rent to mr Y after deducting TDS but rent paid on the behalf of z ltd. later x ltd claim full amount of rent from z ltd by issuing a debit note and entry passed in the books of z ltd Rent a/c dr to x Ltd then whether z ltd is liable to deduct TDS on x ltd or not on rent. and what will be the answer if x ltd has not deducted Tds on Mr y.
1.Since on behalf of Z ltd , X ltd paid TDS as on date of credit or payments....there is no reqt on part of Z ltd to deduct TDS on amount paid to X ltd....but you should prove the same whenever AO asked...(for this show TDS certificates reced from X ltd)
2.If X ltd not deducted then Z ltd is liable to pay TDS.....
16 July 2009
The deduction of tax at source is the obligation of the party making the payment to the payee.. Thus in this case the liability to deduct is on X Limited making payment on behalf of Z limited. At the time of reimbursement of expenditure there is no requirement of deduction TDS by Z to X. IN case of non deduction by X limited then the X limited will be treated as an assessee in default for non deduction of TDS u/s 201A of IT Act.
CAclubindia
