In a recent
decision the Rajkot Income Tax Appellate Tribunal, held that payments made in
the nature of usance interest by an Indian shipping company to a non resident
would not attract withholding taxes. The underlying principle behind it being
that usance interest does not partake the same character as other interests
which arise from some debt claim.
The tribunal
upheld that usance interest so paid in fact forms part of the purchase price as
agreed between the contracting parties in their memorandum of understanding.
Source:
Economic Times, July 3, 2002