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.
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