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2011 (6) TMI 148 - ITAT, AHMEDABADAddition - Under section 40(a)(ia) - The assessee is having a dealership of FAG Bearing (India) Ltd. and, therefore, in the business of sales of ball-bearings - This fact has also not been denied that there were certain terms and conditions agreed upon between the two parties in case of delay in payments - Whenever there was delay in payment or the payments got overdue, there was a condition to compensate the delay - The fundamental and primarily argument from the side of the respondent-assessee was that the amount paid to compensate the delay in making the payment was nothing but the added sales price of the said commodity - Hence, the issue in favour of the assessee, the Learned CIT (Appeals) has followed an order of the Jurisdictional High Court, namely, Nirma Industries Ltd. v. Dy. CIT [2006 -TMI - 9642 - GUJARAT High Court] and held that the interest received from the trade debtors for late payment of sales consideration is the amount derived from the sale proceeds - According to the judgment, purchaser pays higher sale price due to delay in payment - Thus, the impugned payment had a direct link and immediate nexus with the Trade liability being connected with the delayed purchase payment, hence, did not fall within the category of "Interest" as defined in section 2(28A) of the Income-tax Act for the purpose of deduction of Tax at Source as prescribed under section 194A of the Act - Resultantly, this assessee cannot be held a defaulter of non-deduction of tax at source under section 194A of the Act - Decided in favour of assesseee.
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