TDS on Interest on Loan on Hire Purchase Basis

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

09 December 2009 Where machineries purchased by loan on hire purchase from NBFC repaid on EMI basis and the finance charges/ interest are debited to Interest Account at the year end, whether this interest/finance charges are subject to TDS u/s 194 A

Deduction u/s 80 IB (10)
If the land acquired by Banakhat and on the basis of development agreement, scheme developed and sold out to members by developer, deduction u/s 80IB(10) is questioned by the I.T.Deptt.as the land was not transferred in the name of the developer.
Kindly quote the judgement if any

Shyam Lal Naik

Shyam Lal Naik (Expert)
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09 December 2009 First part of the query is ambiguous.

Loan and hire purchase are different transaction.

If it is a loan transaction, sec 194A gets attracted. If it is a hire purchase transaction, sec 194 I is attracted, since, what you pay is bascically hire charges for the machinary.

In any case TDS gets attracted, albeit under different sections.