TDS u/s.194A on payment of Finance Charges

[Sathish Kamath]

One of my client has availed loan from a Finance Company, a Public Limited Company engaged in financing of vehicles, in his personal name to buy a vehicle and he has used that vehicle for the purpose of business of the Partnership Firm in which he is one of the Partner. The Firm is paying the loan instalments and also Finance Charges to the above Company. The Firm also claims Depreciation on the above vehicle. My query is whether the Firm is liable to deduct tax at source u/s.194A although the agreement is between the Partner in his individual capacity and the Company? I am told that very recently Supreme Court has given the verdict that TDS is required to be made. If someone is aware of the above judgement please furnish the citation.

AI Summary

Firms Must Deduct Tax at Source Under Section 194A When Paying Interest on Partner's Loan Used for Business A client took a loan from a finance company in their personal capacity to buy a vehicle, which is used for a partnership firm's business. The firm pays the loan installments and finance charges and claims depreciation on the vehicle. The query is whether the firm must deduct tax at source under Section 194A, given the loan agreement is with the partner individually. The response indicates that since the firm benefits from the asset and pays the interest, it is responsible for deducting tax at source under Section 194A.