2012 (5) TMI 502 - SCH - Income Tax

Discounting charges vs Interest - assessee paid a sum of Rs. 3.97 crores to its associate concern in Singapore on account of discounted charges for getting the export sale bills discounted - AO contended the same to be interest within the ambit of section 2(28A) and disallowed the expenditure u/s 40(a)(ia) on ground of non-deduction of tax at source u/s 195 - High Court relying on Circular No.65 dated 2.09.1971 Circular No.674 dated 22.03.1993 & Vijay Ship Breaking (2008 (10) TMI 6 (SC)) held that as the discounting charges were not in respect of any debt incurred or money borrowed and were merely discount of the sale consideration on sale of goods it was not interest u/s 2(28A) and there was no obligation to deduct TDS thereon - Held that - Special Leave Petition against the order of High Court stand dismissed - Decided in favor of assessee.

Summary

The Supreme Court of India in 2012 dismissed the special leave petitions after condoning the delay. Justices A.K. Patnaik and Swatanter Kumar were presiding. Key legal representatives included Mr. Gaurab Banerji for the petitioner and Mr. Salil Kapoor for the respondent.