A owner of the Commercial property has entered into leave and Licence Agreement with the Licencee for 5 years and the lock in period is 3 years and has given a refundable deposit equal to 6 months rent to the owner.
The licencee used the property only for one year and decided to terminate the agreement .
As on date the rent outstanding is 4 months and the licencee asked the owner to adjust the same against the refundable deposit and the balance two months deposit shall be treated as a compensation for early termination of the agreement before the lock in period of 3 years.
Query:
whether TDS is applicable on the compensation amount adjusted as above
13 June 2009
For the deposit adjusted towards rent, TDS is applicalbe, for the compensation it like mesne profits not taxable at all under income tax act.
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