A pvt Ltd company has a huge land bank & has divided its land bank into small plots of land.Now it is taking deposits from public against its small plots of land on the condition that it will repay the loan at the end of 3 years at the then market value of land or the lender can take the land after 3 years. Whether provision for TDS u/s 194A of IT Act will be made by the borrower company on the notional interest(for the difference between loan amount & the market value of land after 3 years)? what are its other liabilities?
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TDS u/s 194A on notional interest
Replies (1)
Dear Saurabh,
In the absence of confirm agreement(whether oral or written) to get back the land after 3 years, the above transanction will be treated as "CAPITAL GAIN"
REMEMBER DEFINATION OF TRANFER COVERS "EVEN ENJOYMENT OF POSSESSION"
No point of Sec 194 A.
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