https://www.taxtmi.com/caselaws?id=67110 Interest on a loan from a non-resident was not disallowable under section 40(a)(i) merely because the payee was non-resident; the Revenue had to show that the interest was payable outside India and that tax was not deducted, and on the facts the interest was payable and paid in India. Section 195(1) was not triggered by a mere credit to an 'interest payable' account, because tax deduction for a non-resident arises at the time of actual payment, not by book entry. The mercantile system did not change that statutory requirement, so the interest deduction was allowed. en-us Thu, 14 Jan 1988 00:00:00 +0530 Wed, 09 Mar 2011 11:30:46 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=67110 Interest on a loan from a non-resident was not disallowable under section 40(a)(i) merely because the payee was non-resident; the Revenue had to show that the interest was payable outside India and that tax was not deducted, and on the facts the interest was payable and paid in India. Section 195(1) was not triggered by a mere credit to an 'interest payable' account, because tax deduction for a non-resident arises at the time of actual payment, not by book entry. The mercantile system did not change that statutory requirement, so the interest deduction was allowed. Case-Laws Income Tax Thu, 14 Jan 1988 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=67110