COMMISSIONER OF INCOME TAX vs.KOHINOOR IMPEX P. LTD. Business Expenditure—Payment made to foreign seller—Interest expenditure vis-à-vis purchase price—Taxability—Assessee imported brush less motors and payment was claimed as expenditure—AO determined net total income but did not disturb or disallow expenditure—CIT passed order u/s 263 and directed AO to make fresh assessment after deciding whether assessee had failed to deduct tax at source u/s 195—He also referred to Section 9(1)(v) and observed that AO’s order was erroneous as he had not examined whether amount paid to K was interest paid on delayed payments, attracting Section 195—AO held that payment constituted interest—AO invoked Section 9(1)(i) and held that income was taxable in India in India—As tax at source was not deducted, Section 40(a)(i) was attracted—CIT(A) held that paymentwas a part and parcel of purchase price for goods and was not interest—Tribunal dismissed revenue’s appeal—Held, interest payments by a resident to a non-resident, if covered by Section 9(1)(v) is deemed to be income of non-resident in India—Deputy Commissioner of Income Tax recorded finding that amount paid represented purchase price finally settled for material/goods imported and it did not represent interest—Revenue had not placed relevant documents under which the payments were made or relating to settlement—Full particulars and details regarding purchase price, whether there was specific stipulation regarding delayed payment, consequences thereof, when did title in goods pass to assessee etc. were not on record and not discussed in assessment order—Section 9(1)(v) was not specifically invoked by Assessing Officer—No liability would have arisen under Section 9(1)(i) read with Section 195 in terms of Circular No. 23 of 1969—Assessment order is silent as to whether sale transaction was not on principal-to-principal basis or sale contract was made in India and not outside India—Appeal disposed of
Posted on: Tue, 02 Sep 2014 12:52:34 +0000
Trending Topics
Recently Viewed Topics
© 2015