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TMI Blog2013 (1) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... was not open to the ITO (TDS) to treat that interest paid were debenture interest and pass an order under Section 201(1) /201(1A) on the ground that the assessee has failed to deduct tax at source while paying the debenture interest to the assessee. No fault with the decision of the ITAT in setting aside the order passed by ITO (TDS) under Section 201(1) / 201(1A) - in favour of assessee. - I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of GLFL the debentures were issued prior to due date of credit of interest in view of the MoU dated 29.9.1997 and the interest on such debentures was credited to the account of GLFL in the assessee's books of account and it was mandatory for the assessee to deduct and pay tax in view of Section 193 of the Act? 2. The assessment year involved herein is AY 1998-1999. 3. From the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he terms of contract, the assessee was required to repay the same with interest. Sometime in March 1997 the assessee expressed its inability to pay the interest on account of financial difficulties. Thereupon, the banks and financial institutions including M/s.Gujarat Lease Financing Limited insisted that their advances be converted into debentures so as to create a charge on the assets of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebentures and interest was credited as debenture interest, in fact, no debentures were issued as the necessary formalities required by the Registrar of Companies for issuance of debentures could not be complied with. Accordingly, in the return of income filed for the assessment year in question, the assessee had treated the amount of interest paid or provided to the banks / financial institutions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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