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2023 (2) TMI 193 - AT - Income TaxTDS u/s 194A - disallowance of delayed payment charges u/s. 40(a)(ia) for failure to deduct TDS - AO has disallowed a sum towards late payment charges paid to broker on the ground that said payment is in the nature of interest as defined u/s. 2(28A) of the Act and thus, the assessee ought to have deducted TDS u/s. 194A - HELD THAT:- From the definition of interest as per section 2(28A) of the Act, it is very clear that in order to bring any payment within the ambit of the term interest, there should be lender and borrower relationship. In this case, the assessee has paid some charges for delayed payment of amount towards purchase and sale of shares to a broker, without there being any contractual obligation or other terms and conditions applicable to borrowing - said payment cannot be considered as interest for the purpose of section 194A of the Act and consequently, the question of deduction of TDS does not arise. This view is fortified by various judicial precedence, including case of PCIT vs West Bengal Housing Infrastructure Development Corporation Ltd. [2018 (9) TMI 114 - CALCUTTA HIGH COURT] where it has been clearly held that since, there is neither any borrowing of money nor incurring of debts on the part of the assessee, interest as defined u/s. 2(28A) of the Act can have no application to said payment. Also in the case of ITO vs T. Rajendran [2016 (1) TMI 635 - ITAT CHENNAI] had considered an identical issue and held that, when the impugned payment had a direct link with the trade liability, then same cannot fall within the category of interest as defined u/s. 2(28A) of the Act for the purpose of deduction of tax at source u/s. 194A of the Act. Provisions of section 194A has no application to delayed payment charges on trade liability and thus, the assessee does not require to deduct TDS u/s. 194A of the Act. Consequently, impugned payment cannot be disallowed u/s. 40(a)(ia) - we direct the AO to delete additions made towards disallowance of late payment charges u/s. 40(a)(ia) of the Act. - Decided in favour of assessee. Assessment of profit/loss derived from share trading activity under the head speculative income - HELD THAT:- In order to decide whether transactions of the assessee are come under derivatives or speculative, necessary details needs to be analyzed. In this case, the assessee could not furnish any evidences except summary of statement issued by the stock broker to verify the claim of the assessee to ascertain whether said transactions are derivatives or speculative - broker, ICICI Securities Ltd., also could not furnish any details when the AO has called for certain details from them. In absence of necessary details, the nature of transactions of the assessee cannot be ascertained. In fact, the AO never held that these transactions are speculative in nature, however arrived at a reasonable conclusion on the basis of ITR information and non-availability of information to verify the claim of the assessee. Therefore, we are of the considered view that, the issue needs to go back to the file of the AO for further verification to ascertain the nature of transactions. As regards, the arguments of assessee in light of various judicial precedence, we find that the ratios laid down by courts and tribunals cannot be read in isolation with context under which said ratio has been rendered. We are of the considered view that the issue needs to go back to the file of the AO and thus, we set aside the issue to the file of the AO and direct the AO to verify the issue in light of various evidences, including obtaining necessary evidence from broker, ICICI Securities Ltd. The assessee is also directed to furnish necessary evidence to justify her claim. Appeal filed by the assessee is treated as allowed for statistical purposes.
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