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TMI Blog2017 (11) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by the exception in section 194A and the same is not tenable. Payment to the bank was a reimbursement of bank interest in which case also the provisions of TDS 194A is not applicable - Held that:- Since the assessee has taken the wind mills from M/s. Uniply Industries Ltd., it is obligation on the part of the assessee to make the payments since the ownership vests with the assessee-company by the memorandum of understanding. The SEPC has entered into the memorandum of understanding dated July 10, 2008 with M/s. Uniply Industries Ltd. for purchase of wind mills on behalf of its associates concern M/s. Clarion Wind Farm Pvt. Ltd. Though the memorandum of understanding entered with M/s. SEPCL and M/s. Uniply Industries Ltd., there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chennai, in I.T.A. No. 349/11-12/A-I for the assessment year 2009-10. 2. All the grounds of the appeal are related to the disallowance of ₹ 1,47,66,760 under section 40(a)(i) of the Income-tax Act (in short the Act ). The assessee filed the return of income declaring a total loss of ₹ 14,77,46,128 on September 30, 2009. The assessment was completed on a total loss of ₹ 13,28,79,368. In the assessment proceedings the Assessing Officer made the addition of ₹ 1,47,66,716 under section 40(a)(i) of the Act for non-deduction of tax at source. 3. Aggrieved by the order of the Assessing Officer, the assessee went on appeal before the Commissioner of Income-tax and argued that the interest payment was made to the bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the assessee, the two banks had also accepted the proposal for sale of wind mills of Uniply to the assessee-company. The payment was made by the assessee to the banks on the due dates of the term loan instalments to discharge the obligations of the Uniply and as part of purchase consideration. In a nutshell, it is submitted by the learned authorised representative that the assessee-company has made the payment to the bank on behalf of the Uniply Industries towards settlement of the term loan installments and the interest debited by the bank on the term loans granted to M/s. Uniply industries. Since the payment was made to the banks, the assessee contended that no TDS provisions are applicable. 4.1 The first argument of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Corporation Act, 1956 (31 of 1956), or (d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or (e) any company or co-operative society carrying on the busi ness of insurance, or (f) such other institution, association or body or class of insti tutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Offi cial Gazette ; In the assessee's case, as on the date of payment there was no loan out standing against the assessee in Corporation Bank and Bank of India. The term loans were outstanding in the name of M/s. Uniply Industries Ltd., and the assessee has made the payments in either to the bank direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the bank loans and the assets were transferred to the assessee-company. The assessee contended that even if it is presumed that there was no liability to the assessee to make the payment to the bank on due dates of term loans, the supplier of the machinery who has mortgaged the wind mills required to pay instalments which includes the interest. Since the assessee has taken the wind mills from M/s. Uniply Industries Ltd., it is obligation on the part of the assessee to make the payments since the ownership vests with the assessee-company by the memorandum of understanding. The SEPC has entered into the memorandum of understanding dated July 10, 2008 with M/s. Uniply Industries Ltd. for purchase of wind mills on behalf of its associates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e orders of the lower authorities and remit the matter back to the file of the Assessing Officer with a direction to verify whether the formalities relating to transfer of the wind mills to the assessee-company have been completed or not between the bank and the assessee and whether the assets have been transferred in the name of the assessee-company or not and whether the assessee furnished the evidence with regard to purchase of wind mills, etc. In case, the assessee has completed all the formalities relating to the transfer of assets, the assessee is under obligation to reimburse the amount paid by the M/s. Uniply Industries Ltd., and in such event, the TDS is not applicable for reimbursement of expenses. However care should be taken to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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