28 May 2009
My client has paid rent of Rs 200000/- in advance for 2 years to a person amouting to Rs 100000/-p.a {Rs 100000/-(08-09) + Rs 100000/-(09-10)}
1.Should he deduct TDS on this rent paid as it does not amount to Rs 120000/- p.a
2.But will he be liable to TDS on payment basis as it definetly crosses Rs 120000/-
28 May 2009
Any advance paid to the landlord, if not refundable shall be treated as rent paid, In this case since the advance paid exceed the Minimum threshold limit for non deduction of TDS, you are liable to deduct tax on this u/s 194I irrespective of the fact that the same would be adjusted in the two financial years and in each FY the rent paid would be less then 120K.
28 May 2009
Mr Rajesh Dua's view is correct in view of circular 718 dated 22/08/1995 and Delhi high Court decision in CIT V REEBOK INDIA COMPANY (2007) TIOL 124.
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