Discounting Charges are Not Interest – SC

Background and facts

The Taxpayer is in the export business. On exports made by the Taxpayer on credit terms, the Taxpayer draws Bill of Exchange (BEs) on the buyers for the sale value, with a maturity period of about six months. The Taxpayer discounts the BEs with its non-resident associate concern, a company that is a tax resident of Singapore (SingCo), on ‘without recourse’ basis. SingCo is engaged in the business of underwriting, acquiring, owning, selling etc., of securities, negotiable instruments, commercial papers etc., and h

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