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2016 (6) TMI 842 - AT - Income TaxPenalty u/s.271C - liability to deduct tax at source u/s 194A(1) of the Income Tax Act, 1961 on payments made to non-banking financial institutions as the payments include component of interest - Held that:- We find that the assessee made payments towards hire purchase installments and not made separate payments towards interest. Therefore, the financial charges on hire purchase are not in the nature of interest. The payment made by the assessee on account of hire purchase transaction and payment of finance charges/hire charges cannot be construed as interest so as to deduct TDS u/s 194A of the IT Act. Accordingly, to that extent,section 40(a)(ia) is not applicable. Thus we do not find any infirmity in the order of the CIT(A) in cancelling the penalty levied by the AO u/s 271C and therefore, the same is hereby upheld dismissing the grounds raised by the revenue on this issue. See Commissioner of Income-tax Versus MG. Brothers Finance Ltd [2014 (1) TMI 1590 - ANDHRA PRADESH HIGH COURT] - Decided in favour of assessee
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