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| The Tax Publishers2019 TaxPub(DT) 8228 (Mad-HC) : (2020) 422 ITR 0229 : (2020) 312 CTR 0272 : (2020) 271 TAXMAN 0188 INCOME TAX ACT, 1961
Section 40A
Where assessee had specific exemption from Ministry of Finance and was entitled not to deduct any tax at source from the interest payment made by it from which assessee took Foreign Currency Loan in question, therefore, addition with reference to Section 40(a) made in the name of assessee was rightly deleted by Tribunal.
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Business disallowance under section 40A - Payment made to a party residing outside India towards interest, etc. - Allowability -
Tribunal dismissed appeal of Revenue by holding that section 40(a) was not attracted, because assessee had obtained, a specific exemption from the concerned Department of Economic Affairs, Ministry of Finance, Government of India with respect of foreign currency loan taken by assessee from M/s. L, in which, it was clearly stipulated that assessee need not withhold tax or deduct any tax at source on the payment of interest on such Foreign Currency loan. Therefore, the said interest payment could not be added back to declared income of assessee under section 40(a). Held: Assessee had specific exemption from Ministry of Finance and therefore, was entitled not to deduct any tax at source from interest payment made by it from which assessee took Foreign Currency Loan in question. Since assessee was entitled to exemption and was under no obligation to deduct any tax at source on such interest payment made on Foreign Currency Loan, therefore, addition with reference to Section 40(a) made in the name of assessee was rightly deleted by Tribunal.
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
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