DEDUCTION OF TDS

[S.C. WADHWA]

34	A Pvt. Ltd. Co. is in course of taking loan from a
	finance company named B. As per sanction letter
	B will charge 2% of loan amount as processing fees.
	When I required the mangement to deduct tds
	on payment of such processing fees, it claimed
	that they were making full payment to B without
	deduction of tds since B will make repayment of
	same.
	Whether it is permitted in law to make payment
	to B without deduction of tds on saying that B will
	make repayment of same to A.
	Please clarify on which ground it is permissible.
	If B will make repayment of same, then why it
	is mentioned in sanction letter that it will charge
	loan processing fee @ 2%.
	If you are of opinion that tds should not be deducted,
	please clarify in which head payment should be
	booked in books of A at time of making payment.

AI Summary

Company A's Loan Processing Fee: Legal Query on TDS Deduction and Accounting Treatment for Payments to Finance Company B A private limited company, A, is taking a loan from finance company B, which charges a 2% processing fee as per the sanction letter. The management of A is questioned about not deducting TDS on the processing fee, arguing that B will repay the amount. The query seeks clarification on the legality of making such payments without TDS deduction and the appropriate accounting treatment if TDS is not deducted. The response inquires if the issue has been resolved, indicating a need for further clarification.