Law:

Section:

Section 2(28A), read with sections 194A and 201, of the Income-tax Act, 1961 - Interest (Excess refund of booking amount) - Assessment years 2012 -13 and 2013-14 - After entering into agreement and making certain payments to appellant-builder some purchasers of apartments expressed their inability to fulfil further obligations - Out of payments made by new purchasers, amounts paid by old purchasers together with a portion of additional amount received from new purchasers was refunded - Whether as amount refunded to purchasers represented consideration purchasers paid towards undivided shares in property and also cost of construction of apartment, which work was entrusted to builder; such a relationship did not spell out a debtor-creditor relationship; nor was payment made by appellant to purchaser one in discharge of any pre-existing obligation to be termed as interest as defined in section 2(28A) - Held, yes - Whether appellant did not have obligation to deduct tax at source as provided under section 194A nor can they be proceeded against under section 201A, treating them as an assessee-in-default - Held, yes [Paras 11, 12 and 13] [In favour of assessee] Interpretation of Statute: Rule of literal construction FACTS â–  The appellant company was a builder which had entered into construction agreements with various customers. After entering into the agreement and making certain payments, some purchasers expressed their inability to fulfil the further obligations and requested for its cancellation. On receipt of such communications, the appellant identified prospective purchasers and entered into fresh agreements with them on higher prices. It is stated that after execution of agreements with the new purchasers, out of the payments made by them, the amounts paid by the purchasers to the appellant together with a portion of the additional amount received from the new purchasers was refunded. The additional amount thus paid was shown in the P&L account of the appellant. â–  During the course of a survey it was found that appellant company had debited in P&L account amounts under the head 'indirect expenses' of an amount of Rs. 31,37,341 for the…

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