9911796707
TMI Blog2018 (12) TMI 1462X X X X Extracts X X X X X X X X Extracts X X X X ..... The amount credited to the suppliers’ account was in the nature of reimbursement of cost incurred by the supplier towards early discounting of the LC resulting into additional cost towards purchase of goods. Thus, the assessee has not made payment of interest to the bank or to the supplier and the amount credited to the suppliers’ account is towards reimbursement of expenses incurred by the suppliers. Commissioner (Appeals), therefore, was wholly justified in holding that the provisions of section 194A would not be attracted and consequently, the question of making any disallowance under section 40(a)(ia) would not arise and in deleting the disallowance. The Appellate Tribunal has not committed any infirmity in affirming the view adopted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the nature of interest under section 2(28A) of the Act and thus, under the provisions of the Act, there was a requirement to deduct tax at source. He, accordingly, was of the view that the assessee was liable to deduct tax at source under section 195 of the Act on the amount of ₹ 1,96,33,029/-, that is, total LC interest and therefore, the total interest and LC charges of ₹ 1,96,33,029/- were required to be disallowed. 4. After considering the submissions advanced by the assessee, the Assessing Officer did not accept the contention of the assessee and held that total LC interest of ₹ 1,96,33,029/- was paid during the year and was adjusted against credit amount of ₹ 1,67,879/- and the net amount of ₹ 1,94,65, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive by holding that the LC discount charge is reimbursement of expenses to the suppliers of goods as additional costs towards purchase of goods and hence, the appeal requires consideration and deserves to be admitted on the question of law as proposed or as may be deemed fit by this court. 6. This court has considered the submissions advanced by the learned Senior Standing Counsel for the appellant and has perused the orders passed by the authorities below. 7. The assessee is engaged in the business of manufacturing of plastic products like FIBC, fabrics, woven and laminated sacks, tarpaulin, etc. In response to the notice under section 148 of the Act, it was the case of the assessee before the Assessing Officer that the amount in questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing but a reimbursement of the expenses incurred by their supplier, and, therefore, the provisions of section 194A of the Act were not attracted. 9. The Commissioner (Appeals), after appreciating the material on record, has found that the LC discount charges are in the nature of reimbursement of cost incurred by the suppliers under the agreed arrangement and it is also an additional cost for the assessee for the purchase of goods. No interest payments are made to the supplier by the assessee. The assessee is paying only the cost of goods that it has purchased from the suppliers, firstly by way of LC and secondly, by reimbursing the bank charges. It is the bank from whom the LC has been drawn which receives negotiation interests along with ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
