07 June 2010
ABC LTD is a company incorporated in US having subsidiary all over the world. It has a subsidiary B LTD in INDIA. The Parent company ABC Ltd purchased Microsoft license for Microsoft products used by all its subsidiary. The license is valid for ONE year. The cost of license is apportioned between all the subsidiary based on the number of users in each subsidiary.. The INDIAN subsidiary on its part reimburses the License fee to the Parent company and charges the same as computer maintenance expense.. My question is whether TDS gets attracted on the reimbursement made by the INDIAN subsidiary to the parent company
In my view no tax will be deductible as the reimbursements which the US company is receiving is not an income chargeable to tax in India. Same view has been taken in the cases of Van Oord ACZ and Prasad Productions.
CAclubindia
