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2011 (2) TMI 209 - HC - Income TaxDeduction of tax at source - Discount allowed or interest paid - During the assessment proceedings, the Assessing Officer (AO) noticed that the assessee had paid a sum of Rs. 3.97 crores to its associate concern, on account of discounted charges for getting the export sale bills discounted - The Assessing Officer was of the view that the discounting charges were nothing but the interest within the ambit of section 2(28A) of the Income-tax Act - Since the assessee had not deducted tax at source under section 195 of the Act, he invoked the provisions of section 40(a)(i) of the Act and disallowed the sum of Rs. 3.97 crores claimed by the assessee u/s 37(1) of the Act - Held that:- before any amount paid is construed as interest, it has to be established that the same is payable in respect of any money borrowed or debt incurred. In the present case, on the aforesaid facts appearing on record, in our opinion, the Tribunal rightly held that the discount charges paid were not in respect of any debt incurred or money borrowed. Instead, the assessee had merely discounted the sale consideration respectively on sale of goods. - Decided in favor of assessee.
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