TMI Blog2011 (6) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Gujarat High Court in the case of CIT v. Vijay Ship Breaking Corporation (2003 -TMI - 11906 - GUJARAT High Court), it was held that discounting charges on the bill of exchange is not in the nature of interest - thus, the Assessing Officer was not justified in treating such discounting charges as interest for disallowing the same by invoking the provisions of section 40(a)(ai) of the Income-tax Act, 196 - Decided in favour of assessee. - IT APPEAL NO. 398 (INDORE) OF 2009 - - - Dated:- 13-6-2011 - JOGINDER SINGH, R.C. SHARMA, JJ. H.P. Verma and Girish Agarwal for the Appellant. Pradeep Kumar Mitra for the Respondent. ORDER Shri R.C. Sharma, Accountant Member. This is an appeal filed by the assessee against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and assessee is in further appeal before us. 4. We have considered the rival contentions, carefully gone through the orders of the authorities below and found that Hindustan Motors Limited was raising bill of exchange, which was discounted by HHFL after charging discounting charges thereon. Such bills were raised in respect of vehicles supplied to the assessee. Therefore, the assessee was reimbursing discounting charges to HHML. Contention of the Assessing Officer was that discounting charges so reimbursed by the assessee was in the nature of interest and since the assessee has not deducted tax thereon while making payment, the same cannot be allowed as a deduction in view of the provisions of section 40(a)(ai) of the Income-tax Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be deducted at source. Thus, it is clear from the circular that for such cases of immediate discounting the net payment made to the supplier is in the nature of price paid for the bill. Hon'ble Supreme Court in the case of Vijay Ship Breaking Corporation (supra) held that discounting charges was not in the nature of interest paid by the assessee, which was also considered by ITAT, Delhi Bench in the case of Cargill Global Trading (I)(P.) (supra). 5. Applying the proposition of law as laid down in judicial pronouncement and circular of CBDT to the facts of the instant case, where discounting charges was paid by HHML to HHFL on the bill of exchange and which was reimbursed by the assessee to HHML is not covered by the provisions of Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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