Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ACCOUNTING STANDARDS :: form 3cd :: TDS :: articles on VAT and GST in India :: VAT RATES :: empanelment :: list of goods taxed at 4% :: due date for vat payment :: TAX RATES - GOODS TAXABLE @ 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: cpt :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARD :: VAT Audit
 
 
News Headlines »
 Invoking Writ Jurisdiction For Income Tax Matters
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful
 Your deposit may draw income tax notice
 Accepting payment under IDS 2016
 New disclosure scheme could see 50% tax and 4-year limit on cash use for unaccounted deposits
 Pay 50% tax on unaccounted deposits, or 85% if caught, says Modi government
 Deadline to pay property tax in old currency extended
 Cabinet clears amendments to Income Tax Act
 Have you got interest on your income tax refund?

Cos should deduct TDS on director loans
August, 14th 2007
The Supreme Court has ruled that the companies have statutory obligation to deduct tax at sources (TDS) on interest payments for the loans taken in the name of its directors. The revenue department is empowered to impose interest on such a company for not deducting tax by declaring it assessee in default, the apex court said.

Allowing the appeals by income tax department, the apex court overturned the order of the Income Tax Appellate Tribunal saying that the revenue is empowered to impose interest on the assessee company for not deducting TDS on such interest payment invoking Section 201 (1A) of the Income-Tax Act.

A bench comprising Justice SH Kapadia and Justice BS Reddy, which allowed the appeal by the Income Tax department, said the material expression used in Section 194 (1) of the Income Tax Act is at the time of credit of such income to the account of the payee.

When interest is debited to the interest account, the debit is for a specific amount calculated with reference to the liability of the deductor to a particular creditor in accordance with the terms and conditions of the loan. Therefore, whenever, interest is credited to the account of the payee, the payer has to deduct the TDS, court said. The court said that the assessee companies are under statutory obligation to deduct TDS on the interest paid by it.

The income tax department had found cheque receipts and payment registers within the premises of the assessee company which was engaged in real estate and construction works. These revealed that company directors had taken loans in their individual capacity from the creditors in the name of the assessee company.

The loan amounts were received by way of bank account of the assessee and transferred to the account of the directors on the same day by issuing corresponding cheques. When the directors repaid the loan amount or interests, such payments were also routed through the assessee company.

The directors issued cheques in favour of the assessee which in turn issued cheques to the creditors/lenders of such directors. The receipt of loan amounts by the directors as also repayment of loans and interests were all reflected in books of accounts of the directors. The books of accounts of the assessee company did not reflect the loans borrowed by it.

The assessing officer found that when interest was paid by cheques issued by the company to the creditor, no TDS was deducted by the assessee on the interest payments as required under law. It then imposed interests on the assessee company. The Tribunal had accepted the plea of the assessee that as it was merely disbursing the repayments of loans along with interests, it was not liable to deduct TDS at source.
 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Integrated Software Solutions Integrated Software Development Integrated Software Services Integrated Software Solutions India Integrated Softw

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions