Opinion Of Eminent Legal Luminaries On Controversial Issues

Whether On Reimbursement Of Expenses TDS Is Required?

QUERY: ABC Pvt. Ltd., is engaged in the business of manufacturing of coke. The company purchases raw material from another company XYZ Ltd. As per agreed terms, ABC Pvt. Ltd., had reimbursed certain expenses incurred by XYZ Ltd., towards ground rent, wharfage charges, stevedoring charges, etc. The reimbursement does not contain any mark up and bills of actual services provided on XYZ Ltd., along with debit note for reimbursement of expenses. These expenses are accounted in the books of ABC Pvt. Ltd., and profit and loss account reflects each such expenses separately.

(a) Whether ABC Pvt. Ltd., is liable to deduct TDS on reimbursement of expenses to XYZ Ltd.
ANSWER: On reimbursement of expenses no TDS is required to be deducted as per judgment of the Supreme Court in GE India Technology Centre Pvt. Ltd., v. CIT [327 ITR 456].
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