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2016 (4) TMI 1132 - DELHI HIGH COURT

2016 (4) TMI 1132 - DELHI HIGH COURT - TMI - TDS u/s 194A - Non deduction of tds - factoring/discounting charges - disallowance under Section 40(a) (ia) - Held that:- No factual basis for the AO to have disbelieved the Assessee's explanation and simply treat the entire amount as interest. The question of disallowing the entire amount under Section 40(a) (ia) on the ground that the TDS was not deducted in terms of Section 194A of the Act did not arise.

The Court is unable to find any l .....

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( ITAT ) in ITA No. 5419/Del/2012 for the Assessment Year ( AY ) 2009-10. 2. The question sought to be urged by the Revenue is whether the ITAT was justified in holding that the sum of ₹ 93,68,870 debited to the Profit & Loss ( P&L ) account towards factoring/discounting charges ought not have been disallowed by the Assessing Officer ( AO ) under Section 40(a) (ia) of the Income Tax Act, 1961 ('Act'). 3. The Assessee is a private limited company engaged in the business of m .....

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essee had not deducted TDS on the factoring charges as it was not an interest amount. 4. In the assessment proceedings, the AO examined the agreement entered into between the GTFL and the Assessee. The AO disbelieved the Assessee s contention that the aforementioned amount constituted factoring charges. According to the AO as per the agreement, GTFL would advance a loan to the Assessee on which the Assessee was liable to pay interest @13%. This was separate from the factoring charges. The AO pro .....

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dated 12th August 2014 of the Calcutta High Court in ITA No. 74 of 2014 (CIT v. M/s MKJ Enterprises Ltd.) to the effect that the factoring charges on sales cannot be termed as interest. The ITAT also noted the submission of the Assessee that this Court in CIT v. Cargill Global Trading (P) Ltd. 335 ITR 94 (Del.) also held likewise. 6. Mr. Kapil Goel, learned counsel for the Assessee, points out that the Revenue's Special Leave Petition against the judgment of this Court in Cargill Global Tra .....

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