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2014 (12) TMI 258 - GUJARAT HIGH COURTDisallowance on work penalty expenses u/s 40(a)(ia) - Whether the work penalty expenses were actually interest expenses liable to provisions of TDS – Held that:- The Tribunal rightly upheld the decision of CIT(A) that the memorandum of understanding between the assessee and M/s. Unitech Limited did not provide for payment of any interest and as per the terms of the agreement, the entire work had to be completed by the assessee as per the terms of the contract entered into between M/s. Unitech and the main contractee and the assessee was required to indemnify M/s. Unitech Limited for any delay effect or other liability arising from non-performance or non-observance of the stipulation of the main contract - the payment to M/s. Unitech Limited was interest only because it had been debited as such in the books of account of M/s. Unitech Limited. No efforts whatsoever had been made by the AO to prove that the details filed by M/s. Unitech Limited or that the certificate that the payments made by the assessee were not interest, is wrong - the assessee had no control whatsoever over the books of account for the accounting entries passed by M/s. Unitech Limited in its books of account and in the light of the memorandum of understanding between the assessee and M/s. Unitech Limited, which did not provide for levy of any interest, the amount was not in the nature of interest, and the assessee was not required to deduct any TDS on such amount and that there was no question of applying the provisions of section 40 (a)(ia) of the Act – thus, the order of the Tribunal is upheld as no substantial question of law arises for consideration - Decided against revenue.
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