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Q. > Please Help: TDS on rent for use of Factory
One of my client has taken sugar factory on rent for the period of 10 years for which rent will be paid lump-sum in first year. Lessee will amortize the rent paid in 10 annual equal installments. Whether TDS will be deducted on entire amount in first year itself or it will be deducted over 10 years when it will be amortized against the profits and so only on amortized amount?
One of my client has taken sugar factory on rent for the period of 10 years for which rent will be paid lump-sum in first year. Lessee will amortize the rent paid in 10 annual equal installments. Whether TDS will be deducted on entire amount in first year itself or it will be deducted over 10 years when it will be amortized against the profits and so only on amortized amount?
answered Apr 10, 2014 by SUBHASH KUMAR JHA , Darbhanga
TDS will be deducted in first year itself @ 10 %
Reebok India Company[291 ITR 455](Del).
Experts Panelist
Comments
sandeep Kaushik
05-Apr-2014 , 01:36:23 pmTDS Should be deducted U/s 194I at the time of Payment i.e at the time of Advance payment (Bcz credit or payment whichever is Earlier) & Receiver of Rent can take Benefit ( Credit of Tds as and when he offers the amount for Tax i.e over 10year period on the basis of Sinngle TDS Certificate.
SARTHAK JAIN
06-Apr-2014 , 12:18:44 amI agree with Sandeep. Amortization of lease rent is just an accounting procedure which has no bearing whatsoever on the applicability and extent of tax deduction at source under Income tax. Therefore, entire TDS will be deducted on payment, as provided u/s 194 I, of lumpsum rent in advance and the deductee will get benefit in accordance with section 199 read with rule 37 BA. Regards