Withholding tax under section 153/151

Question

If a company buys goods from a vendor under the agreement that if company does not make payment on time, Late payment surcharge (LPS) @11% will be charged by the vendor for the delayed days of payment. In this situation when company delays the payment of goods and the vendor actually charged the LPS and issued the separate invoice arises against LPS, the company wants to make the payments of both original goods supplied and mark-up. Company will deduct withholding tax under section 153 or 151 (for LPS)?

Answer 1

Company being a withholding agent under section 153 of the ITO, 2001 have to withheld tax under section 153 on gross amount.

Further, section 151 is of 'profit on debt' and such LPS / Markup cannot be treated as covered in section 151.

I hope it is cleared.

Standard Caveat Apply.