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2015 (3) TMI 545 - ITAT PANAJINon deduction of TDS on usance charges paid on import - disallowance u/s 40(a)(i) - CIT(A) deleted addition - whether usance charges are in the nature of interest as defined in section 2(28A)? - Held that:- Hon'ble Supreme Court in Vijay Ship Breaking Corpn. & Ors. Versus Commnr. of Income Tax, Ahmedabad [2008 (10) TMI 6 - SUPREME COURT ]has reversed the decision of Hon'ble Gujarat High Court [2003 (3) TMI 91 - GUJARAT High Court] not on on merit but this decision has been reversed as the Assessee was engaged in ship breaking business and the Assessee had imported the ship for breaking in respect of which the Assessee had to incur the usance charges. The Hon'ble Gujarat High Court has taken the view that the usance charges are interest within the provisions of Sec. 2(28A) of the Income Tax Act and has accrued in India, therefore Sec. 195 was clearly applicable and Assessee has committed default by not deducting TDS. When the matter went before the Hon'ble Supreme Court, Explanation (2) was inserted u/s 10(15)(iv)(c) by the Taxation Laws (Amendment) Act, 2003 with retrospective effect from 1.4.1962 explaining that it is apparent that this Explanation is applicable only in a case where an undertaking is engaged in business of ship breaking and usance charges are payable outside India by that undertaking in respect of purchase of a ship from outside India. The decision of the Hon'ble Gujarat High Court has impliedly been approved by the Hon'ble Supreme Court in respect of Assessees who are engaged in the business of ship breaking. We, therefore, set aside the order of CIT(A) and allow the appeal of the Revenue. - Decided in favour of revenue.
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