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2011 (8) TMI 319 - AT - Income TaxAddition - interest on share capital - Failure to deduct tax at source under section 194A - The assessee is a co-operative society registered under Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995 - It is carrying on banking business - the interest paid on share capital, the ratio laid down by Hon'ble jurisdictional A.P. High Court in the case of CIT v. T.T.D. Co-operative Stores Ltd. [1998 (3) TMI 114 - ANDHRA PRADESH High Court], squarely apply to the facts of the instant issue - In the case of T.T.D. Co-operative Stores Ltd. , the members were sold goods at a particular rate and at the time of finalizing the accounts, a rebate was given to the members as a special incentive for increasing societies business - The claim of the revenue that the said rebate is only appropriation of profit was rejected by the Hon'ble High Court. The amount of rebate was treated as a reduction in the sales figure - that the Income-tax is to be levied on the "real income", i.e. the profit arrived at on commercial principles subject to the provisions of the Income-tax Act. Accordingly it was held that the rebate given to the members is not a part of profit at all. In the instant case also, it has to be held that the amount paid by the assessee as "interest on share capital", in the instant year, goes to reduce the gross interest collected by it from its members and it would not form part of profit at all - the appeal of the assessee is allowed.
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