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TMI Blog2014 (9) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... eeping in mind the findings of fact recorded by the Tribunal, it is difficult to answer the questions and issues - the provision was not specifically invoked by the AO - taxability would depend on whether the income was exempt u/s 10(15)(iv)(c) of the Act - The assessment order is woefully silent and quiet on the material aspects - the amount paid was in settlement of delayed payment for the goods purchased and was not paid in respect of any borrowing made from the Kashpo International Ltd. – Decided against Revenue. - ITA No. 179/2001 - - - Dated:- 28-8-2014 - Sanjiv Khanna And V. Kameswar Rao,JJ. For the Appellant : Mr. Balbir Singh, Sr. Standing Counsel with Mr. Abhishek Singh Baghel, Adv. For the Respondent : Through Non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act were attracted. He observed that the said aspect has not been examined by the Assessing Officer. He also referred to Section 9(1)(v) of the Act, which refers to the interest payment and observed that the Assessing Officer s order was erroneous as he had not examined whether the amount paid to Kashpo International Ltd., U.K. was interest paid on delayed payments, attracting Section 195 and in default under Section 40(a)(i) of the Act. It was observed that the amount had been shown to be interest by the respondent assessee. Assessing Officer was required to hear the respondent assessee before adjudication and taking the final decision. 4. In the assessment order passed under Section 143(3) read with Section 263 of the Act, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remise that the U.K. based company had business connection in India. He held that ₹ 19,94,704/- was a part and parcel of the purchase price for the goods supplied by the U.K. company and, therefore, was not interest. Before CIT (Appeals), in view of the written submissions made, comments of the Deputy Commissioner of Income Tax were called and he had submitted a report. Report of the Deputy Commissioner accepted that the assessee had not paid interest in respect of borrowing made from U.K. based party. He also accepted that the amount paid was not interest but it was paid in settlement of claim of interest. No percentage of interest had been quoted and, therefore, the assessee was justified in stating that the amount paid was towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of the Explanation 2 to Section 10(15)(iv)(c) of the Act applicable to ship breaking industry, to the effect that usance interest payable outside India by the company engaged in business of ship breaking was treated as debt incurred in foreign country in respect of purchase outside India. We also have a decision of the Delhi High Court in J.K. Synthetics Ltd. Vs. ACIT [1990] 185 ITR 540, in which reference was made to Section 9(1)(v) and it was held that payment of interest made to the foreign supplier would be covered under the said Section. However, in the facts of the present case, the finding recorded by the Tribunal on the basis of the report of the Deputy Commissioner of Income Tax is that the amount paid represented the purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and documents and keeping in mind the findings of fact recorded by the Tribunal, it is difficult for us to answer the questions and issues. In these circumstances, we do not think that it will be appropriate to answer the questions of law against the respondent assessee, if we accept the factual finding given by the Tribunal that amount paid was part of the purchase price which was payable. Decision of the Tribunal may not be correct, if the amount paid represented interest payment as possibly the amount would then be covered under Section 9(1)(v) of the Act. But the said provision was not specifically invoked by the Assessing Officer. Further taxability would depend on whether the said income was exempt under Section 10(15)(iv)(c) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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