Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2020 (11) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (11) TMI 103 - HC - Income TaxTDS u/s 195 - Usance charges were paid or were payable to a non resident supplier - as argued appellant paid LC Charges/commission charges which are in the nature of bank charges to their own Nationalized Banks based in India towards opening of the Letter of Credit it could not be construed under the 195(1) - HELD THAT:- In this case, though Usance charges may have been paid to the Indian bankers by way of LC Charges and commission, nevertheless, such payment, is a part of the transaction involving purchase/import of raw material from non-residents. According to us, issuing bank of the assesses, merely acts as an agent of the assesses. The Usance charges is the income of the non-resident as envisaged in the provisions of Section 9(1)(v)(b) read with Section 5(2) of the IT Act. Therefore, the provisions of Section 195(1) were attracted and the assesses were obliged to deduct tax at source before making such payment. In similar circumstances in the case of Vijay Shipbreaking Corporation & Others [2003 (3) TMI 91 - GUJARAT HIGH COURT] as held that the assesses was duty bound to deduct tax at source even in respect of bank charges incurred for providing Letters of Credit to foreign sellers. Since in the present case, the assesses imported the raw material for its consumption based on a letter of credit and paid the Usance charges, the beneficiary of such charges is the foreign seller. The issuing bank of the assesses has merely acted as an agent of the assesses. The Usance charges therefore constitute income of a non-resident as envisaged in the provisions of Section 9(1)(v)(b) read with Section 5(2) of the IT Act. Therefore, the provisions of Section 195(1) of the IT Act were attracted and the assesses were obliged to deduct tax at source failing which, such expenditure, could not be exempted under Section 40(a)(i) - Decided in favour of the Revenue.
|