Case Law Details
The assessee in the case on hand has claimed an expense of Rs.21,62,634/- under the head interest on finance. The assessee incurred such expense without deducting TDS u/s 194A r.w.s. 40(a)(ia) of the Act. Therefore, the disallowance was made by the AO on account of non-deduction of TDS. However, the assessee before the learned CIT(A) among other things claimed that L&T Finance Ltd. had included the bill discounting charges in its income tax return. Therefore, no disallowance on account of non-deduction of TDS can be made. However, the learned CIT(A) disregarded the contention of the assessee on the ground that the assessee was liable to deduct the TDS u/s 194A r.w.s. 40(a)(ia) of the Act.
Similarly, the learned CIT(A) also observed that the amendment brought u/s 40(a)(ia) of the Act is prospective and not applicable for the year under consideration. Thus, the view taken by the AO was confirmed by the learned CIT(A).
At this juncture we find important and relevant to reproduce the provision of Section 2(28A) of the Act, which reads as under:
(28A) “interest” means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised;)
From the above provisions, it is revealed that discounting charges are outside the purview of interest expenses, therefore, in our considered view, the question of making any disallowance on account of non-deduction of TDS on such discounting charges does not arise. In holding so, we find support and guidance from the judgment of Hon’ble Delhi High Court in the case of PCIT vs. M. Sons Gems N. Jewellery Pvt. Ltd. reported in 69 Taxmann.com 373 (Delhi). The relevant extract of the order is reproduced as under:
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Please confirm whether GST is applicable on Stamping Charges if we affix on bill of exchange and claim from customer by raising dr.note. pls clear the same.
regards
Baleshwar