TMI Blog2002 (11) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... re also no materials to indicate that the amount of interest paid to the Karur Vysya Bank had any connection or link with the interest debited to the profit and loss account of the assessee of a sum of Rs. 3,17,805 which the assessee owed to the collecting foreign banker. Hence, we are of the considered view that the Tribunal has committed a serious error in presuming that the Karur Vysya Bank has got reimbursement from the assessee of the bill amount along with interest due thereon for the payment which the bank made to the foreign exporter. - Hence, the question is answered in the negative against the assessee and in favour of the Revenue. - - - - - Dated:- 27-11-2002 - Judge(s) : N. V. BALASUBRAMANIAN., K. RAVIRAJA PANDIAN. JUDGMEN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , contended that as per the provision regarding deduction of tax at source stipulated under section 40(a)(i) of the Income-tax Act, tax has to be deducted only if the interest payable outside India is chargeable to tax in India and further claimed that since the money has been lent outside India, the interest also accrued outside India, and therefore the amount was not taxable in India. Therefore, the question of deduction at source on such interest payment did not arise. However, on appeal before the Commissioner of Income-tax (Appeals), the stand of the assessee was that the expenditure debited under the head of "Interest" was finance charges to Grindlays Bank, Madras at a certain percentage of supply bills received by the appellant and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material, at the request of counsel for the assessee, we granted sufficient time for production of the extract of Karur Vysya Bank so as to enable the assessee to satisfy this court as to the applicability of the said extract to the transactions of the case and correctness of the finding as arrived at by the Tribunal as there were considerable discrepancies with regard to transactions as narrated above. But unfortunately, the assessee was not able to secure anything from the bank, as assured by counsel, to strengthen his case. Hence, with the available material, we proceeded to decide the case on the merits. Learned counsel appearing for the Revenue is very much correct in pointing out the changing of stand of the assessee as to the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with interest after the due date of the bill, which is clear from the following portion of the Tribunal order. "We have duly considered the rival submissions. The clarification given by the Board is quite clear. But it is not quite clear to us whether the assessee's case falls under para. 1 or para. 2 of the clarification cited. No doubt, the extract of the Karur Vysya Bank Ltd. shows not only the bill amount but also the interest paid to the bank. Therefore, it is presumed that the bank is reimbursed with the amount already paid by it to the foreign exporter of timber and the bank is collecting the bill amount along with interest after the due date of the bill." Having regard to the above extracts, the one and only conclusion tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count a sum of Rs. 3,17,805 being the interest amount which the assessee owed to the collecting foreign banker. The assessee has not produced any material to disprove its own entry or to show that the interest was not paid to a non-resident to take it out of the ambit of section 40(a)(i) of the Income-tax Act inasmuch as the said provision provides that the interest shall not be a deductible item in the computation of total income if the tax payable has not been deducted at source under Chapter XVII-B of the Income-tax Act. It is also relevant to mention that under section 9(1)(v) of the Income-tax Act, the interest income payable by a resident is deemed to accrue or arise in India and unless the tax has been deducted at source as provided ..... X X X X Extracts X X X X X X X X Extracts X X X X
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