TDS on Liquidated/Contractual damages, Income Tax

[ROHIT GOEL]

Dear Sir,

As per facts of our client's case, they had entered into agreement with a power company for supply of solar power. The client had assured the power co. that whatever surplus power would be generated by the plant, the client would ensure that the power co. could supply same to the Grid and earn incomes.

However, the client could not obtain necessary approvals as a result of which the power co. suffered losses. Now as per the contract, the client has to pay compensation to the power co. My question is whether TDS would be deductible on this compensation/liquidated damages?

Posts / Replies

[Ganeshan Kalyani]

In my view, TDS is not applicable.

[YAGAY andSUN]

There are plehthora of judgment on this matter.

Income Tax Appellate Tribunal - Kolkata

Eros Fashion Pvt Ltd., Kolkata vs Assessee on 20 November, 2015 = 2015 (11) TMI 1820 - ITAT KOLKATA