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2015 (7) TMI 689 - HC - Income TaxLiability for deduction of TDS under the provisions of Section 194A - whether the chit dividend paid by the assessee to its customer, would not amount to interest as defined under the provisions of Section 2(28A)? - Appellate Authorities deleted TDS liability - Held that:- The Division Bench of the Delhi High Court had an occasion to consider the said issue in the case of CIT v. Sahib Chits (Delhi) (P.). Ltd. [2009 (7) TMI 75 - DELHI HIGH COURT ]. After setting out the statutory provisions viz., Sections 2(28A) and 194A of the Act and the provisions of the Interest Act, 1974 and relying on the various judgments of the Apex Court, held that in the first place the amount paid by way of dividend cannot be construed as interest. It was further held that the dividend/discount cannot be mistaken for interest income in the hands of the subscribers and therefore, there has been no default under the provisions of Section 194A of the Act. Further Section 194A of the Act has no application to such dividends and therefore, it held that there is no obligation on the part of the assessee to make any deductions under Section 194A of the Act before such dividend is paid to its subscribers of the chit. The aforesaid Division Bench decision of the Delhi High Court squarely applies to the facts of the present case. Hence, we do not see any merit in the present appeal. Decided in favour of the assessee.
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