194J defination of Professional Fees

[madhav dasani]

Sir, I would like to submit a query which came to my notice while conducting statutory audit of an organizaton. Brief of the organization: Here the company is registered under Section 25 of the Companies Act, 1956 for promotion of Trade Organizations all over the world. Here the the company has hired many esteemed lawyers for many civil and consultaion matters on a recurring basis and being paid professional fees for the services rendered and accordingly TDS has been deducted at relevant and appropriate rate. They are also taken and sent on delegation on various foriegn tours at the discretion of the management for purpose of prmoting trade and commerce and such expense is borne by the company in totality. Query: With the purview of Section 194J, expressly inclusion of the words by cash, cheque or any other mode tantamounts to inclusion of such foriegn travel expenditure which is material in every respect in professional fees being paid and such professional fees is liable to deduction of TDS or not?

[Anuj Gupta]

There is a diffrerence between the professional charges and the incurring of traveling expenses on professionals.The sum so incurred as travelling expenses is not being paid to the concerned professionals directly and hence the same shall never be characterisd as professional fees. The same shall be booked as travelling expenses and no TSD u/s 194J is required on the same.

[madhav dasani]

A further query is they are given per day allowance, say $ 500USD for every day of their visit for which neither are any documentary evidence is provided nor any refund of any amount is returned back to the company. However it is authorised by the management sub-committee.

The daily allowance is paid directly to them foreign currency based on the country visited for which no details for available.

In the said circumstances does the daily allowance attracts deduction of TDS u/s 194J of Income Tax Act, 1961?

 

 

AI Summary

Professional fees under section 194J: whether company borne travel costs and per diem allowances attract TDS liability.
Travel costs borne directly by the company for professionals and booked as travelling expenses are treated as expense reimbursements, not professional fees, and thus, per the adviser here, do not attract deduction at source under the professional-fees provision. A separate query asks whether daily foreign currency allowances paid directly to professionals without documentary support should be characterised as professional fees for TDS purposes; no definitive ruling is recorded in the discussion.