Tds on late payment charges

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Maunik (Querist)
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06 February 2015 My proprietorship firm is under audit u/s 44AB. I have paid late payment charges on purchases over 10000. Will I liable to deduct TDS on this amount or not?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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06 February 2015 No. Because such payment will not fall with in the category of interest [section 2(28A)].

Citation:- ITO vs. Parag Mahasukhlal Shah [2011] 46 SOT 302.

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Rupesh Jain

Rupesh Jain (Expert)
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06 February 2015 IF IT IS INTT. THEN YOU HAVE TO DEDUCT THE TDS U.S 44AB OTHERWISE NOT APPLICABLE.

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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06 February 2015 Agree with the view of Warrier Sir.

Also in Sri Venkatesh Paper Agencies (Hyd.) (P.) Ltd. vs Deputy Commissioner of Incometax, Circle3(1), Hyderabad it was held that TDS not required to be deducted on interest paid to creditors as it formed part of purchase consideration.

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