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2018 (9) TMI 114 - HC - Income TaxTDS liability - Payment of interest on delayed delivery of plot - nature of interest as defined in Section 2(28A) - provision of Section 40(a)(ia) applicability - Held that:- The payment made by the assessee to the allottee was in terms of the agreement entered between them where the liability of the assessee would arise only if it failed to make the plots available within the stipulated time. Hence, the payment made under the relevant clause was purely contractual and as rightly held by the Tribunal, in the nature of compensation or damages for the loss caused to the allottee in the interregnum for being unable to utilise or possess the flat. The flavor of compensation becomes evident from the words used in the particular clause. The expression ‘interest’ used in Clause 7 may be seen merely as a quantification of the liability of the assessee in terms of the percentage of interest payable by the State Bank of India. Since there is neither any borrowing of money nor incurring of debt on the part of the assessee, in the present factual scenario, interest as defined under section 2 (28A) of the Act can have no application to such payments. There was no obligation on the part of the assessee to deduct tax at source and consequently no disallowance could have been made under section 40(a)(ia) of the Act. - decided in favour of assessee
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