Applicability of TDS for legal review by Banks , Income Tax

[Parag Shah]

Dear Members,

I request opinion of the members on the following issue:

There are several applicants who have applied for loan.

1. The Bank has appointed a legal firm / Advocate to advise on the validity of documents pre- & post sanction.
2. The Advocate raises the invoice on the Bank- A/c Applicant.
3. The fees payable to advocate is debited tot the account of the Applicant & thereinafter the fees have been to the advocate /firm.
4. The Bank states it is reimbursement / paid on behalf of the applicant & accordingly the TDS is not applicable, neither it routed through the profit / loss account.
5. Kindly advise on the above at my email id [email protected]

Thanks & Regards//

Parag Shah

+91 9869788636

Posts / Replies

[CA GOPALJI AGRAWAL]

since bank is liable to pay to the lawyer hence it would liable to deduct tax at source. It has no relevance that the payment is not debited in P/L.