Section 40(a) of Income Tax Act, 1961— In the present case, the assessee had the specific exemption from the Ministry of Finance and therefore, was entitled not to deduct any tax at source from the interest payment made by it to M/s. London Forfaiting Asia Ltd., from which assessee took the Foreign Currency Loan in question and therefore, Section 40(a) of the Act could not attract to the present case at all. We are further of the view that even though the foreign currency loan in question was utilised by the assessee to repay the loan of one M/s.Raghava Enterprises P. Limited, which was admittedly taken from M/s. Raghava Enterprises Limited towards its working capital requirement, the purpose of Section 10(15)(f) of the Act, for the industrial development stood satisfied in the present case.

Held that— the assessee was entitled to exemption and was under no obligation to deduct any tax at source on such interest payment made on Foreign Currency Loan to M/s. London Forfaiting Asia Ltd., Therefore, the additions with reference to Section 40(a) of the Act made in the name of the Assessee, were rightly deleted by the two appellate authorities in the present case.[COMMISSIONER OF INCOME TAX CHENNAI - III. VERSUS M/S. SEVEN SEAS DISTILLERY (PVT.) LTD.,][2019] 20 ITCD Online (2) [MADRAS HIGH COURT]