10 September 2010
If some indian co. buys raw material from korea and the vendor charges interest on the bill for late payment and discloses interest on the bill itself as payable by indian co then whether interest is deductible u/s 195 ??????
10 September 2010
As per sec 195, any interest or any other sum chargeable under provision of this act ( other than salary ),credited or paid ( which ever is earlier ) to non-resident- TDS is to be deducted.
payment of interest due to late payment as per term of purchase order - sec. 195 will be applicable.
10 September 2010
In CIT Vs. Vijay Ship Breaking Corpn 261 ITR 113 Gujarat High court said, the assessee being responsible for paying to a non resident usance interest ( credit purchase from overseas through bank) is liable to deduct tax on that interest under section 195(1) of the Income tax Act,1961. Same analogy applies to the cited issue.
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