TDS on Professional Charges Reimbursed

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Vivek (Querist)
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11 November 2010 Dear Experts

we are a public limited company and we are members in different associations in the industry

In one of the cases, an association in which we are a member conducted a market study by appointing a professional firm and had paid them a fees.

The issue is that the association has raised debit note on all the members in the association for a precentage of the total fees that they paid to the professional firm. Whether we should deduct TDS on Such reimbursement of professional expenses.

The association claims that TDS is not applicable for us since they have deducted TDS on payment made to professional firm

Kindly clarify our position in this regard.

Regards

Vivek

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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12 November 2010 In my opinion, If the Association has Deducted Tax on Professional Charges and raised debit notes upon the members then the nature of payment which is being reimbursed by the members to the AOP constitutes a contribution to the AOP only.
You may show the expenditure under the head Membership & Contribution in spite of showing it under the head of Professional Fee. You may request your AOP also to suitably amend the debit note or redraft the debit note by mentioning the phrase " contribution towards market study expenses.....".

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