TaxTMI 
TaxTMI 
2022 (11) TMI 965
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....sessee are as below:- "1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the Assessing Officer u/s 40(a)(ia) of the Act without appreciating the facts that factoring charges debited by the assessee-company are of the nature of interest only and TDS is liable to be deducted under section 40(a)(ia) of the Act." 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in relying upon the certificate by accountant under section 201(1) of the Act when the second proviso to section 40(a)(ia) was inserted by Finance Act, 2012 with effect from 01.04.2013.." 3. The brief facts of the case are that the assessee is engaged in the business of outsou....
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.... assessee in default under section 201(1) of the Act and that the Second Proviso to section 40(a)(ia) was inserted by the Finance Act, 2012 with effect from 01/04/2013. The Ld.DR relied on the order of the Assessing Officer. 5. The Ld.AR, on the other hand, contended that the assessee company has entered into a factoring agreement with M/s SBI Global Factors Ltd thereby incurring factoring expenses of Rs.1,56,10,554/-. The Ld.AR further stated that the factoring charges incurred are not in the nature of interest and that section 194A is not applicable in assessee's case. The Ld.AR further stated that the certificate of Chartered Accountant in Form 26A certifies that the impugned amount of factoring charges paid by the assessee company has ....
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.... SBI Global Factors Ltd. The amount paid to the assessee by M/s SBI Global Factors Ltd as bill discounting is akin to a sale proceeds pertaining to debts purchased by M/s SBI Global Factors Ltd from the assessee. The assessee has differentiated the factoring charges with that of the definition of ''interest on securities'' under section 2(28A). The assessee further stated that it is only in the nature of discounted sale consideration which is receivable on sale of goods and there is no borrowal of money resulting in debt or credit facility. It is further submitted that since the expenses incurred are only of factoring charges and not as interest, the assessee is not under the obligation to deduct and pay TDS as per provisions of section 194....
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....rovisions of section 40(a)(ia) of the I.T. Act. For this, we would like to place our reliance on the decision of Hon'ble Supreme Court in the case of Bombay Steam Navigation Co. P. Ltd vs CIT (1963) 56 ITR 52 (SC) which held that interest on unpaid purchase price is not in the nature of interest on loan and for any amount which is to be categorised as "interest" it is essential that the same is payable in respect of money borrowed or debt incurred. Upon perusal of the definition of 'interest' as per section 2(28A) which is extracted below section 2(28A):- " interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any ser....