tax query

yes you need to deduct even it is a captail asset

No need to deduct TDS because Sec 40(a) specifies for interst, Royalty, fees for technical services...

more over as the payment is made for the shipping charges which is not specified in the above section no need to deduct TDS...

And coming to allowability it is not allowable if we are claiming as expenditure....

as we are capitalising, the question of TDS doesnot arise.. 

One of my client paid foreigner the export commission of  400000/- in U.S $  during the financial year 2009-10. Whether TDS should have been deducted on the payment? 

Palaniappan

Dear Mr.Palaniappan sir,

commission paid to a NRI in this case ur client need not deduct TDS on commission paid u/s 194H of the income tax act,1961.  

Originally posted by : narasimhan
	Dear Mr.Palaniappan sir, commission paid to a NRI in this case ur client need not deduct TDS on commission paid u/s 194H of the income tax act,1961.

i also agree with him...

Mr.Palaniappan:

Payments to foreign agents of Indian exporters -  where a non residents agent operates outside the country, no part of the income arises in India. Further, since the payment is usually remitted directly abroad, it cannot be held to have been received by or on behalf of the agent in India. Such payments are, therefor, not taxable in India.Consequently, no TDS U/s 195 in such case.

To support this view, pl refer Circular No.786, dated 07/02/2000 &

CIT v.George Williamson (Assam) Ltd2008 305 ITR(AT)422 (Gauhati)

Arunashree :

The provision of TDS would apply only when the payment made are claimed as revenue expenditure.

Even incase of International transaction, IF & ONLY IF the payment made to foreign vendor are deemed to accrue or arise in India, then only TDS with holding tax is applicable.