M/s Surya World Educational Research and Charitable Initiative, Chandigarh V. DCIT (TDS), Chandigarh

ITA 300/CHANDI/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5180 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 13-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Section: 133A; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.300/CHD/2017 (ASSESSMENT YEAR : 2011-12) M/S SURYA WORLD EDUCATIONAL VS. THE D.C.I.T.(TDS), RESEARCH AND CHARITABLE INITIATIVE, CHANDIGARH. SCO 141-143, SECTOR 43B, CHANDIGARH. PAN: AADAS4869H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ALOK KRISHAN RESPONDENT BY : SHRI RAVI SARANGAL, CIT DR DATE OF HEARING : 12.04.2017 DATE OF PRONOUNCEMENT : 21.04.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF CIT(APPEALS)-II, GURGAON DATED 24.11.2 016 RELATING TO ASSESSMENT YEAR 2011-12. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: 1. THAT THE LD. ASSESSING OFFICER HAS RAISED A DEM AND ON ACCOUNT OF INTEREST OF RS.5,197/- UNDER SECTION 201(1) & 201(1 A) OF INCOME TAX ACT, 1961 FOR ASSESSMENT YEAR 2011-12, WHICH ORDER HAS BEEN PASSED WITHOUT JURISDICTION, IS BAD IN LAW AND DESER VES TO BE SET ASIDE. 2. THAT LD. CIT(A) HAS ERRED IN DISMISSING THE APPEAL OF THE APPELLANT WITHOUT HAVING AFFORDED AN ADEQUATE OPPORTUNITY TO APPELLANT TO PROVIDE EXPLANATION ON ISSUES RELIED UPON BY THE LEARNED CIT(A) IN FORMING 2 THE DECISION, WHICH IS AGAINST THE PRINCIPAL OF NAT URAL JUSTICE AND HAVE BEEN DELETED IN HASTE, AND THAT FO R SUCH REASONS THE IMPUGNED ORDER IS BAD IN LAW AND DESERVES TO BE SET ASIDE.. 3. THAT THE APPELLANT RESERVES THE RIGHT TO ADVANCE S UCH OTHER GROUNDS BEFORE OR AT THE HEARING, WHICH IT MA Y CONSIDER FIT AND APPROPRIATE, FOR WHICH IT CARVE LE AVE TO AMEND, ALTER OR OTHERWISE MODIFY THE GROUND(S) APPEARING HEREINBEFORE. 3. THE ONLY ISSUE IN THE PRESENT APPEAL IS AGAINST THE ACTION OF THE LD. CIT (APPEALS) IN UPHOLDING TH E ORDER OF THE ASSESSING OFFICER LEVYING INTEREST U/S 201(1A) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FOR NON D EDUCTION OF TAX AT SOURCE ON COMMISSION PAID TO BANKS. 4. BRIEFLY STATED, THE FACTS RELEVANT TO THE CASE ARE THAT A SURVEY/TDS INSPECTION U/S 133A OF THE ACT WA S CARRIED OUT AT THE BUSINESS PREMISES OF STATE BANK OF INDIA, SPECIALIZED COMMERCIAL BRANCH, SCO 103 TO 106, SECT OR 17B, CHANDIGARH ON 10.7.2012. DURING THE COURSE OF PROCEEDINGS AND SUBSEQUENT INQUIRIES, IT CAME TO TH E NOTICE OF THE ASSESSING OFFICER THAT DURING THE IMPUGNED F INANCIAL YEAR THE ASSESSEE HAD MADE CERTAIN PAYMENTS ON ACCO UNT OF COMMISSION ON LETTER OF CREDITS, EXPORT/IMPORT GUAR ANTEES TO STATE BANK OF INDIA, SPECIALIZED COMMERCIAL BRAN CH, SCO 103 TO 106, SECTOR 17B, CHANDIGARH AND NO TDS HAS B EEN DEDUCTED ON THE SAME. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD PAID INLAND BANK GUARANTEE COMMISSION AMOUNTING TO RS.2,16,538/- DURING THE IMPUGNED YEAR TO 3 THE STATE BANK OF INDIA WITHOUT DEDUCTING TAX AT SO URCE. ACCORDINGLY, EXPLANATION WAS CALLED FOR FROM THE AS SESSEE WHO SUBMITTED THAT THE BANK GUARANTEE COMMISSION IS NOT COVERED U/S 194H OF THE ACT SINCE THERE WAS NO PRIN CIPAL AGENT RELATIONSHIP BETWEEN THE BANK AND THE ASSESSE E. THE ASSESSEE PLACED RELIANCE IN THIS REGARD ON THE JUDG MENT OF I.T.A.T. MUMBAI BENCH IN THE CASE OF KOTAK SECURIT IES LTD. VS. DCIT (TDS), CIRCLE 2(1), MUMBAI (2012) 18 TAXMANN.COM 48 (MUM). THE ASSESSING OFFICER DID NO T AGREE WITH THE ASSESSEES CONTENTION FOR THE REASON THAT THE PAYMENTS HAD BEEN MADE IN THE FORM OF COMMISSION SINCE IT WAS BOOKED AS SUCH IN THE BOOKS OF ACCOUNT OF TH E ASSESSEE, THE PROVISIONS OF SECTION 194H OF THE ACT REQUIRES TAX DEDUCTION AT SOURCE ON COMMISSION AND THE BANK HAD ACTED AS AN AGENT ON BEHALF OF THE ASSESSEE DEDUCTO R AND THE PAYMENTS THUS MADE BY THE ASSESSEE WERE COMMISS ION WITHIN THE MEANING OF SECTION 194H OF THE ACT. THE ASSESSING OFFICER FURTHER HELD THAT THE JUDGMENT RE LIED UPON BY THE ASSESSEE WAS NOT APPLICABLE IN ITS CASE AND ALSO NOTIFICATION NO.56/2012[F.NO.275/53/2012-IT(B) ], DATED 31.12.2012 ISSUED BY CBDT EXCLUDING BANK COMMISSION FROM THE PURVIEW OF SECTION 194H WAS NOT APPLICABLE SINCE IT WAS ISSUED BY THE CBDT FROM 1.1 .2013 AND, THEREFORE, DID NOT APPLY IN THE PRESENT CASE. THE ASSESSING OFFICER, THEREFORE, HELD HAT THE ASSESSEE IS LIABLE UNDER SECTION 201(1) FOR NOT DEDUCTING TAX AT SOURC E ON THE COMMISSION PAID BUT FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF M/S HINDUSTAN COCACOLA 4 BEVERAGE (P) LTD. VS. CIT, 293 ITR 226 DID NOT HELD THE ASSESSEE AS AN ASSESSEE IN DEFAULT UNDER SECTION 20 1(1) OF THE ACT BUT AT THE SAME TIME HELD THAT THE ASSESSEE IS LIABLE TO PAY A SUM OF RS.5197/- AS INTEREST UNDER SECTION 201(1A) OF THE ACT. 5. THE MATTER WAS CARRIED IN APPEAL BEFORE THE CIT (APPEALS) WHO DECIDED THE MATTER EX-PARTE SINCE THE ASSESSEE FAILED TO COMPLY WITH VARIOUS NOTICES SERV ED UPON IT AS OUTLINED IN PARA 2 OF THE ORDER OF THE CIT (A PPEALS). THE LEARNED CIT (APPEALS) DECIDED THE CASE ON MERIT S ON THE BASIS OF FACTS BEFORE IT AND UPHELD THE ORDER OF TH E ASSESSING OFFICER DISMISSING ASSESSEES APPEAL. 6. AGGRIEVED BY THE SAME THE ASSESSEE HAS NOW COME UP IN APPEAL BEFORE US. 7. DURING THE COURSE OF HEARING BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND STATED THAT THE CO MMISSION PAID TO THE BANK ON ACCOUNT OF LC, EXPORT IMPORT GUARANTEES WAS NOT IN THE NATURE OF COMMISSION AS ENVISAGED UNDER SECTION 194H FOR THE PURPOSE OF TAX DEDUCTION AT SOURCE. THE LD. COUNSEL FOR THE ASSES SEE STATED THAT FOR THE PURPOSE OF ATTRACTING SECTION 1 94H, THE EXISTENCE OF PRINCIPAL AGENT RELATIONSHIP BETWEEN P AYER AND PAYEE WAS ESSENTIAL WHICH WAS ABSENT IN THE CASE OF GUARANTEE COMMISSION PAID TO BANKS AND THUS NO TDS WAS TO BE DEDUCTED ON SUCH PAYMENTS UNDER SECTION 194H OF THE 5 ACT. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF THE I.T.A.T. MUMBAI BENCH IN THE CASE O F KOTAK SECURITIES LIMITED VS. DCIT IN ITA NO.6657/MUM/2011 DATED 3.2.2017 IN THIS REGARD. 8. THE LEARNED D.R., ON THE OTHER HAND RELIED UPON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT (AP PEALS). 9. WE HAVE HEARD CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE ORDERS OF AUTHORITIES BELOW AND ALS O GONE THROUGH THE DOCUMENTS PLACED BEFORE US. THE ISSUE BEFORE US PERTAINS TO CHARGING OF INTEREST U/S 201(1A) OF THE ACT FOR NON DEDUCTION OF TAX AT SOURCE ON BANK GUARANTE E COMMISSION UNDER THE PROVISIONS OF SECTION 194H OF THE ACT, WHICH CALLS FOR TAX TO BE DEDUCTED AT SOURCE ON COM MISSION AND BROKERAGE PAID. IDENTICAL ISSUE, WE FIND, HAS BEEN DEALT WITH BY THE I.T.A.T. MUMBAI BENCH IN THE CASE OF KOTAK SECURITIES LIMITED (SUPRA) RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE. ON GOING THROUGH THE SAI D ORDER WE FIND THAT THE I.T.A.T. IN THE SAID CASE INTERPRE TED THE MEANING OF THE TERM COMMISSION USED IN SECTION 19 4H TAKING INTO CONSIDERATION THE FACT THAT IT WAS USED ALONGWITH THE TERM BROKERAGE IN THE SAID SECTION AND IN THE LIGHT OF THE PRINCIPLE OF NOSCITUR A SOCIIS HEL D THAT THE SCOPE OF EXPRESSION COMMISSION USED IN SECTION WA S TO BE CONFINED TO AN ALLOWANCE OR RECOMPENSE OR REWARD MA DE TO AGENTS, FACTORS AND BROKERS AND OTHERS FOR EFFECTIN G SALES AND CARRYING OUT BUSINESS TRANSACTIONS AND FURTHER HELD THAT IT WOULD NOT EXTEND TO THE PAYMENTS SUCH AS BA NK 6 GUARANTEE COMMISSION WHICH ARE IN THE NATURE OF FEE S FOR SERVICES RENDERED OR PRODUCT OFFERED BY THE RECIPIE NT OF SUCH PAYMENTS ON PRINCIPAL TO PRINCIPAL BASIS. THE I.T.A.T. HELD THAT FOR INVOKING PROVISIONS OF SECTION 194H T HE PRINCIPAL AGENT RELATIONSHIP WAS A SINE-QUA-NON. I T FURTHER HELD THAT IN THE CASE OF BANK GUARANTEES ISSUED THE RE WAS NO PRINCIPAL AGENT RELATIONSHIP BETWEEN THE BANK IS SUING THE SAME AND THE ASSESSEE. THE I.T.A.T. ELABORATED AND STATED THAT WHEN THE BANK ISSUES BANK GUARANTEE ON BEHALF OF THE ASSESSEE, ALL IT DOES IS TO ACCEPT THE COMM ITMENT OF MAKING PAYMENT OF A SPECIFIED AMOUNT ON DEMAND TO T HE BENEFICIARY AND IT IS IN CONSIDERATION OF THIS COMM ITMENT THAT THE BANK CHARGES A FEE, WHICH IS CUSTOMARILY T ERMED AS BANK GUARANTEE. THUS THOUGH THE SAME WAS TERMED AS A GUARANTEE COMMISSION, THE I.T.A.T. HELD THAT IT WAS NOT IN THE NATURE OF COMMISSION AS UNDERSTOOD IN COMMON BUSINESS PARLANCE AND IN THE CONTEXT OF SECTION 194 H OF THE ACT. THE I.T.A.T. THEREAFTER HELD THAT ON PAYMENT OF GUARANTEE COMMISSION TO BANKS, THERE WAS NO REQUIRE MENT TO DEDUCT TAX AT SOURCE UNDER SECTION 194H OF THE A CT. THE RELEVANT FINDINGS OF THE ITAT AT PARA 3 -10 OF THE ORDER IS AS UNDER: 3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THIS C ASE AS ALSO THE APPLICABLE LEGAL POSITION. 4. LET US FIRST TAKE A LOOK AT SECTION 194H, WHICH IS REPRODUCED AS FOLLOWS: COMMISSION OR BROKERAGE 194H. ANY PERSON, NOT BEING AN INDIVIDUAL OR A HIND U UNDIVIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING, ON OR AFTER THE 1ST DAY OF JUNE, 2001, TO A RESIDENT, ANY INCOME BY WAY OF COMMISSION (NOT BE ING INSURANCE 7 COMMISSION REFERRED TO IN SECTION 194(D) OR BROKERA GE, SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT OF SUCH INCOME IN CASH OR BY THE IS SUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, D EDUCT INCOMETAX THEREON AT THE RATE OF TEN PER CENT : PROVIDED THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION IN A CASE WHERE THE AMOUNT OF SUCH INCOME OR, AS THE CASE MAY BE, THE AGGREGATE OF THE AMOUNTS OF SUCH INCOME CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCIAL YEAR TO TH E ACCOUNT OF, OR TO, THE PAYEE, DOES NOT EXCEED FIVE THOUSAND RUPEES : PROVIDED FURTHER THAT AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY, WHOSE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BU SINESS OR PROFESSION CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIF IED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANC IAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH SUCH COMMISSI ON OR BROKERAGE IS CREDITED OR PAID, SHALL BE LIABLE TO DEDUCT INCOME TAX UNDER THIS SECTION: PROVIDED ALSO THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION ON ANY COMMISSION OR BROKERAGE PAYABLE BY BHARAT SANCH AR NIGAM LIMITED OR MAHANAGAR TELEPHONE NIGAM LIMITED TO THEI R PUBLIC CALL OFFICE FRANCHISEES. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (I) 'COMMISSION OR BROKERAGE' INCLUDES ANY PAYMENT RECEIVED OR RECEIVABLE, DIRECTLY OR INDIRECTLY, BY A PERSON ACT ING ON BEHALF OF ANOTHER PERSON FOR SERVICES RENDERED (NOT BEING PRO FESSIONAL SERVICES) OR FOR ANY SERVICES IN THE COURSE OF BUYING OR SELL ING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING, NOT BEING SECURITIES ; (II) THE EXPRESSION 'PROFESSIONAL SERVICES' MEANS S ERVICES RENDERED BY A PERSON IN THE COURSE OF CARRYING ON A LEGAL, MEDI CAL, ENGINEERING OR ARCHITECTURAL PROFESSION OR THE PROFESSION OF ACCOU NTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR SUCH OTHER PR OFESSION AS IS NOTIFIED BY THE BOARD FOR THE PURPOSES OF SECTION 4 4AA; (III) THE EXPRESSION ' SECURITIES ' SHALL HAVE THE MEANING ASSIGNED TO IT IN CLAUSE (H) OF SECTION 2 OF THE SECURITIES CONTRACTS (REGULATION) ACT, 1956 (42 OF 1956) ; (IV) WHERE ANY INCOME IS CREDITED TO ANY ACCOUNT, W HETHER CALLED 'SUSPENSE ACCOUNT' OR BY ANY OTHER NAME, IN THE BOO KS OF ACCOUNT OF THE PERSON LIABLE TO PAY SUCH INCOME, SUCH CREDITIN G SHALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE P AYEE AND THE PROVISIONS OF THIS SECTION SHALL APPLY ACCORDINGLY. 6. A PLAIN READING OF THE ABOVE PROVISION INDICATES THAT TAX WITHHOLDING REQUIREMENTS UNDER SECTION 194H APPLY IN RESPECT OF 'COMMISSION OR BROKERAGE', WHICH, IN TURN, IS DEFINED BY EXPLANATI ON TO SECTION 194H. NO DOUBT, THIS DEFINITION IS INCLUSIVE BUT THE FUND AMENTAL QUESTION THAT WE REALLY NEED TO CONSIDER IN THE FIRST PLACE IS AS TO WHAT ARE THE CONNOTATIONS OF EXPRESSION 'COMMISSION OR BROKERAGE ' IN COMMON PARLANCE, AND THEN PROCEED TO DEAL WITH THE INCLUSI ONS THERETO BY THE VIRTUE OF SPECIFIC PROVISION OF LAW. 7. WE FIND THAT THE EXPRESSION 'COMMISSION' AND 'BR OKERAGE' HAVE BEEN USED TOGETHER IN THE STATUTE. IT IS WELL SETTLED, A S NOTED BY MAXWELL IN INTERPRETATION OF STATUTES AND WHILE ELABORATING ON THE PRINCIPLE OF NOSCITUR A SOCIIS, THAT WHEN TWO OR MORE WORDS WHIC H ARE SUSCEPTIBLE 8 TO ANALOGOUS MEANING ARE USED TOGETHER THEY ARE DEE MED TO BE USED IN THEIR COGNATE SENSE. THEY TAKE, AS IT WERE, THEI R COLOURS FROM EACH OTHER, THE MEANING OF MORE GENERAL BEING RESTRICTED TO A SENSE ANALOGOUS TO THAT OF LESS GENERAL. EXPLAINING THIS PRINCIPLE IN GENERAL TERMS, HON'BLE SHRI M.K. CHATURVEDI, THE THEN VICE PRESIDENT (MZ) HAS, IN INTERPRETATION OF TAXING STATUTES (AIFTP JOURNAL : VOL. 4, NO. 7, JULY, 2002, AT P. 7), IN HIS INIMITABLE WORDS OBSER VED: LAW IS NOT A BROODING OMNIPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL ORDER. THE TENETS OF LAW BEING ENACTED O N THE BASIS OF PRAGMATISM. SIMILARLY, THE RULES RELATING TO INTERP RETATION ARE ALSO BASED ON COMMONSENSE APPROACH. SUPPOSE A MAN TELLS HIS WIFE TO GO OUT AND BUY BREAD, MILK OR ANYTHING ELSE SHE NEEDS, HE WILL NOT NORMALLY BE UNDERSTOOD TO INCLUDE IN THE TERMS 'ANY THING ELSE SHE NEEDS' A NEW CAR OR AN ITEM OF JEWELLERY. THE DICTU M OF EJUSDEM GENERIS REFERS TO SIMILAR SITUATION. IT MEANS OF THE SAME KIND, CLASS OR NATURE. THE RULE IS THAT WHEN GENERAL WORDS FOLLOW PARTICULAR AND SPECIFIC WORDS OF THE SAME NATURE, THE GENERAL WORD S MUST BE CONFINED TO THE THINGS OF SAME KIND AS SPECIFIED. NOSCITUR A SOCIIS IS A BROADER VERSION OF THE MAXIM EJUSDEM GENERIS . A MAN MAY BE KNOWN BY THE COMPANY HE KEEPS AND A WORD MAY BE INTERPRETED WITH REFERENCE TO BE ACCOMPANYING WORDS. WORDS DERIVE COLOUR FROM THE SU RROUNDING WORDS. 8. BROOM'S LEGAL MAXIMS (10TH EDN.) OBSERVES THAT 'I T IS A RULE LAID DOWN BY LORD BACON, THAT COPULATIO VERBORUM INDICAT ACCEPTATIONEM IN EODEM SENSU THE COUPLING OF WORDS TOGETHER SHOWS TH AT THEY ARE TO BE UNDERSTOOD IN THE SAME SENSE.' LET US NOW DEAL WITH LEGAL CONNOTATIONS OF THESE TW O EXPRESSIONS, NAMELY 'COMMISSION' AND 'BROKERAGE'. THE LAW LEXICO N (EDITED BY JUSTICE Y.V. CHANDRACHUD; 1997 EDN.) OBSERVES THAT 'IN COMMERCIAL LAW, COMMISSION IS A COMPENSATION TO A FACTOR OR OT HER AGENT FOR SERVICES TO BE RENDERED IN MAKING A SALE OR OTHERWI SE; A SUM ALLOWED AS COMPENSATION TO A SERVANT, FACTOR OR AGENT WHO M ANAGES THE AFFAIRS OF OTHERS, IN RECOMPENSE FOR HIS SERVICES.' ACCORDI NG TO THE GIVEN DEFINITION, 'IT IS AN ALLOWANCE, RECOMPENSE OR REWA RD MADE TO AGENTS, FACTORS AND BROKERS AND OTHERS FOR EFFECTING SALES AND CARRYING OUT BUSINESS TRANSACTIONS. IT IS GENERALLY CALCULATED A S A CERTAIN PERCENTAGE ON THE AMOUNT OF THE TRANSACTIONS ON THE PROFITS TO THE PRINCIPAL.' THE EXPRESSION 'BROKERAGE' IS DEFINED A S 'FEES OR COMMISSION GIVEN TO OR CHARGED BY A BROKER'. IN TURN A BROKER IS DEFINED AS 'A MIDDLEMAN OR AGENT WHO, FOR A COMMISSION ON THE VAL UE OF TRANSACTION, NEGOTIATES FOR OTHERS THE PURCHASE OR SALE OF BOOKS, BONDS OR COMMODITIES, OR PROPERTY OF ANY KIND, OR WHO ATT ENDS TO THE DOING OF SOMETHING FOR ANOTHER'. 9. IN THE LIGHT OF THE ABOVE DISCUSSIONS, AND WHEN WE LOOK AT THE CONNOTATIONS OF EXPRESSION 'COMMISSION OR BROKERAGE ' IN ITS COGNATE SENSE, AS IN THE LIGHT OF THE PRINCIPLE OF NOSCITUR A SOCIIS AS WE ARE OBLIGED TO, IN OUR CONSIDERED VIEW, SCOPE OF EXPRES SION 'COMMISSION', FOR THIS PURPOSE, WILL BE CONFINED TO 'AN ALLOWANCE , RECOMPENSE OR REWARD MADE TO AGENTS, FACTORS AND BROKERS AND OTHE RS FOR EFFECTING SALES AND CARRYING OUT BUSINESS TRANSACTIONS' AND S HALL NOT EXTEND TO THE PAYMENTS, SUCH AS 'BANK GUARANTEE COMMISSION', WHICH ARE IN THE NATURE OF FEES FOR SERVICES RENDERED OR PRODUCT OFF ERED BY THE RECIPIENT OF SUCH PAYMENTS ON PRINCIPAL TO PRINCIPAL BASIS. E VEN WHEN AN EXPRESSION IS STATUTORILY DEFINED UNDER SECTION 2, IT STILL HAS TO MEET THE TEST OF CONTEXTUAL RELEVANCE AS SECTION 2 ITSEL F STARTS WITH THE WORDS 'IN THIS ACT (I.E. INCOME TAX ACT), UNLESS CO NTEXT OTHERWISE REQUIRES...', AND, THEREFORE, CONTEXTUAL MEANING AS SUMES SIGNIFICANCE. EVERY DEFINITION IN THE INCOME TAX ACT MUST DEPEND ON THE CONTEXT IN WHICH THE EXPRESSION IN SET OUT, AND THE CONTEXT IN WHICH EXPRESSION 9 'COMMISSION' APPEARS IN SECTION 194H, I.E. ALONGWIT H THE EXPRESSION 'BROKERAGE', SIGNIFICANTLY RESTRICTS ITS CONNOTATIO NS. THE COMMON PARLANCE MEANING OF THE EXPRESSION 'COMMISSION' THU S DOES NOT EXTEND TO A PAYMENT WHICH IS IN THE NATURE OF FEES FOR A P RODUCT OR SERVICE; IT MUST REMAIN RESTRICTED TO, AS HAS BEEN ELABORATED A BOVE, A PAYMENT IN THE NATURE OF REWARD FOR EFFECTING SALES OR BUSINES S TRANSACTIONS ETC. THE INCLUSIVE DEFINITION OF THE EXPRESSION 'COMMISS ION OR BROKERAGE' IN EXPLANATION TO SECTION 194H IS QUITE IN HARMONY WIT H THIS APPROACH AS IT ONLY PROVIDES THAT 'ANY PAYMENT RECEIVED OR RECE IVABLE, DIRECTLY OR INDIRECTLY, BY A PERSON ACTING ON BEHALF OF ANOTHER PERSON FOR SERVICES RENDERED (NOT BEING PROFESSIONAL SERVICES) OR FOR A NY SERVICES IN THE COURSE OF BUYING OR SELLING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING, N OT BEING SECURITIES ' IS INCLUDIBLE IN THE SCOPE OF MEANING OF 'COMMISSION O R BROKERAGE'. THEREFORE, WHAT THE INCLUSIVE DEFINITION REALLY CON TAINS IS NOTHING BUT NORMAL MEANING OF THE EXPRESSION 'COMMISSION OR BRO KERAGE'. IN THE CASE OF SOUTH GUJARAT ROOFING TILES MANUFACTURERS AS SOCIATION VS. STATE OF GUJARAT [(1976) 4 SCC 601], HON'BLE SUPREM E COURT WERE IN SEISIN OF A SITUATION IN WHICH AN EXPRESSION, NAMEL Y 'PROCESSING', WAS GIVEN AN INCLUSIVE DEFINITION, BUT THEIR LORDSHIPS WERE OF THE VIEW THAT 'THERE COULD BE NO OTHER MEANING OF 'PROCESSING' BE SIDES WHAT IS STATED AS INCLUDED IN THAT EXPRESSION' AND THAT 'TH OUGH 'INCLUDE' IS GENERALLY USED IN INTERPRETATION CLAUSE AS A WORD O F ENLARGEMENT, IN SOME CASES CONTEXT MIGHT SUGGEST A DIFFERENT INTENT ION'. THEIR LORDSHIPS THEN CONCLUDED THAT THOUGH THE EXPRESSION USED IN THE DEFINITION CLAUSE IS 'INCLUDES', 'IT SEEMS TO US TH AT THE WORD 'INCLUDES' HAS BEEN USED HERE IN THE SAME SENSE OF 'MEANS'; TH IS IS THE ONLY CONSTRUCTION THAT THE WORD CAN BEAR IN THIS CONTEXT '. IN OTHER WORDS, AN INCLUSIVE DEFINITION, AS THEIR LORDSHIPS NOTED, DOES NOT NECESSARILY ALWAYS EXTEND THE MEANING OF AN EXPRESSION. WHEN IN CLUSIVE DEFINITION CONTAINS ORDINARY NORMAL CONNOTATIONS OF AN EXPRESS ION, IN OUR CONSIDERED VIEW, EVEN AN INCLUSIVE DEFINITION HAS T O BE TREATED AS EXHAUSTIVE. THAT IS THE SITUATION IN THE CASE BEFOR E US AS WELL. EVEN AS DEFINITION OF EXPRESSION 'COMMISSION OR BROKERAGE', IN EXPLANATION TO SECTION 194H, IS STATED TO BE EXCLUSIVE, IT DOES NO T REALLY MEAN ANYTHING OTHER THAN WHAT HAS BEEN SPECIFICALLY STAT ED IN THE SAID DEFINITION. THEREFORE, AS HELD BY THE COORDINATE BE NCHES IN A NUMBER OF CASES INCLUDING SRL RANBAXY LTD VS ACIT (ITA NO. 43 4/DEL/11; ORDER DATED 16.12.2011), FOSTERS INDIA LTD VS ITO (117 TT J 346), AND AJMER ZILA DUGDH UTPADAK SANGH LTD VS ITO, PRINCIPAL AGEN T RELATIONSHIP IS A SINE QUA NON FOR INVOKING THE PROVISIONS OF SECTION 194H. IN THE CASE BEFORE US, THERE IS NO PRINCIPAL AGENT RELATIONSHIP BETWEEN THE BANK ISSUING THE BANK GUARANTEE AND THE ASSESSEE. WHEN B ANK ISSUES THE BANK GUARANTEE, ON BEHALF OF THE ASSESSEE, ALL IT D OES IS TO ACCEPT THE COMMITMENT OF MAKING PAYMENT OF A SPECIFIED AMOUNT TO, ON DEMAND, THE BENEFICIARY, AND IT IS IN CONSIDERATION OF THIS COMMITMENT, THE BANK CHARGES A FEES WHICH IS CUSTOMARILY TERMED AS 'BANK GUARANTEE COMMISSION' . WHILE IT IS TERMED AS 'GUARANTEE COMM ISSION', IT IS NOT IN THE NATURE OF 'COMMISSION' AS IT IS UNDERSTOOD IN C OMMON BUSINESS PARLANCE AND IN THE CONTEXT OF THE SECTION 194H. TH IS TRANSACTION, IN OUR CONSIDERED VIEW, IS NOT A TRANSACTION BETWEEN P RINCIPAL AND AGENT SO AS TO ATTRACT THE TAX DEDUCTION REQUIREMENTS UND ER SECTION 194H. WE ARE, THEREFORE, OF THE CONSIDERED VIEW THAT THE CIT(A) INDEED ERRED IN HOLDING THAT THE ASSESSEE WAS INDEED UNDER AN OB LIGATION TO DEDUCT TAX AT SOURCE UNDER SECTION 194H FROM PAYMENTS MADE BY THE ASSESSEE TO VARIOUS BANKS. AS WE HAVE HELD THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE UNDER SECTION 194H , THE QUESTION OF LEVY OF INTEREST UNDER SECTION 201(1A) CANNOT ARISE . 10. IN VIEW OF THE ABOVE DISCUSSIONS, WE QUASH THE IMPUGNED DEMANDS UNDER SECTION 201(1) AND 201(1A) R.W.S. 194 H. WE, THEREFORE, ALSO SEE NO NEED TO DEAL WITH OTHER PERI PHERAL LEGAL ISSUES RAISED BY THE ASSESSEE. 10 10. FURTHER WE FIND THAT THIS POSITION HAS BEEN AL SO CLARIFIED BY THE CBDT IN NOTIFICATION NO.56/2012[F.NO.275/53/2012-IT(B ISSUED ON 31.12.20 12 WHEREIN IT HAS BEEN STATED THAT NO TAX IS TO BE DED UCTED UNDER CHAPTER-XVII OF THE ACT ON BANK GUARANTEE COMMISSION. 11. IN VIEW OF THE DECISION OF THE I.T.A.T. MUMBAI BENCH IN THE CASE OF KOTAK SECURITIES LIMITED (SUPR A) READ ALONGWITH CBDT NOTIFICATION REFERRED TO ABOVE, WE H OLD THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOUR CE ON ACCOUNT OF BANK GUARANTEE COMMISSION PAID TO STATE BANK OF INDIA AND THE INTEREST LEVIED UNDER SECTION 201( 1A) OF THE ACT OF RS.5197/- IS, THEREFORE, DIRECTED TO BE DELE TED. IN VIEW OF THE ABOVE, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED AND THE APPEAL OF THE ASSESSEE IS ALLOWED IN THE ABOVE TERMS. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21 ST APRIL, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH 11