Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (1) TMI 356 - AT - Income TaxTDS u/s 195 - Discount allowed on sales in the nature of payment of interest or not – Invocation of section 195 r.w section 40(a)(ia) or not – payment to non-residents towards advance payment – Held that:- As per purchase contract dated 16th May, 2006, it has been specified that the seller shall cause the issuance of a banker's guarantee or SBLC by Punjab National Bank, Kanpur (seller's bank) for an amount equal to the provisional price plus interest in the form acceptable to buyer that will be informed in separate message - within two business days from the date buyer's bank receives the guarantee in format acceptable to buyer's bank, buyer shall pay to seller the prepayment amount - The provisional price as per this contract has been fixed at (JPY)24,200 lac - there is no mention in the agreement i.e. the purchase contract that any prepayment discount will be allowed by the assessee. The payment was to be made by the buyer to the tune of provisional price as per the agreement after furnishing of bank guarantee by the assessee seller but as per the invoice, it is seen that in all these invoices, pre-payment discount were allowed by the assessee and these invoices are of the current year i.e. April, 2007 and the assessee asked the buyer to make payment of the balance amount against the invoiced price after adjusting the advance received by the assessee and pre-payment discount - Asking the buyer to pay lesser amount after adjusting discount or making payment of discount to the buyer is equivalent because in both the cases, the buyer receives the benefit - the benefit allowed by the assessee to its buyers under the name of discount is in fact in the nature of interest because the same is in consideration of receiving advance payment - on receiving advance payment, one may compensate the maker of advance payment by way of allowing interest or the same benefit can be given the name of discount but merely because a different nomenclature has been given, it does not change its character - TDS was deductible u/s 195 of the Act and therefore, the disallowance made by the AO is justified – thus, the order of the CIT(A) is set aside – Decided in favour of revenue.
|