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| DATE: | May 29, 2012 (Date of publication) |
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| Click here to download the judgement (cargil_discounting_charges_interest_194A_TDS.pdf) |
S. 194A TDS: Discounting Charges Is Not “Interest”
The assessee paid Rs. 3.97 Crores to an associate concern in Singapore on account of discounted charges for getting the export sale bills discounted. The AO held that that the discounting charges was “interest” u/s 2(28A) and that as there was no TDS, the expenditure had to be disallowed u/s 40(a)(i). This was reversed by the CIT (A) and Tribunal. The High Court (335 ITR 94 (Del) included in file) relied on Circular No.65 dated 2.09.1971, Circular No.674 dated 22.03.1993 & Vijay Ship Breaking 219 CTR 639 (SC) held that as the discounting charges were not in respect of any debt incurred or money borrowed and were merely discount of the sale consideration on sale of goods, it was not “interest” u/s 2(28A) and there was no obligation to deduct TDS thereon. On appeal by the department to the Supreme Court, HELD
Delay condoned. The special leave petitions are dismissed.
Mr Editor
The reported SC ORDER reads- “Delay condoned. The special leave petitions are dismissed.”
As per one’s understanding, in effect, the HC’s judgment stands confirmed. However, it is unclear whether despite having condoned the delay in the filing of SLP by the Revenue, the SC has handed down no separate judgment setting out at least briefly the grounds of its decision to dismiss the SLP.
May be, one may be confused because of having no hand on experience or exposure to the SC.
Perhaps, Experts will have a ready answer so as to providing enlightenment on the point of doubt.
@vswami
No clarification has been forthcoming on the point of doubt raised. As such, one is obliged to proceed on the premise that except the reported single sentence Order, there is no separate judgment delivered by the SC.
Be that as it may, a very pertinent but perplexing, rather annoying, question, is seen to arise, albeit not for the first time, the aftermath of the reported case: The HC has , in disapproving of the Revenue’s stance, categorically held to the effect that the point of dispute stands clinched, and finally concluded, against the Revenue by, – the CBDT’s own circulars, Circular No.65 dated 2.09.1971 and Circular No.674 dated 22.03.1993; more so, by the apex court’s ruling in re. Vijay Ship Breaking (219 CTR 639). If so, the poser is, – why the dispute, being on a point not, by any reasoning, ‘referable’ or ‘appeal-able’ as envisaged by the law / within its legal meaning, came to permitted to travel beyond the stage of the Tribunal.
This is an aspect which undoubtedly calls for a sincere and devoted deliberation. And requires to be addressed on a war-footing, by everyone truly concerned; particularly, by those who have been openly crying foul against the proliferation of inherently infectious and fruitless litigation. What ought to be made a conscious note of is the reality that it is the galloping rise in the quantum of court cases that is found to adversely impact the quality of, besides alarmingly decelerating, the profound adjudication / administration of justice.