ITO (TDS) (OSD) RG 2, MUMBAI V. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD, MUMBAI

ITA 3920/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4453 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Department
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 30-05-2014
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Assessee Lawyers: DILIP V LAKHANI
• Section: 2

Judgement Text

, , I , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI , , , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.3920/MUM/2014 ASSESSMENT YEAR: 2010-11 ITO (TDS)(OSD) - RANGE - 2, R.NO.704, 7 TH FLOOR, SMT. K.G. MITTAL AAYURVEDIC HOSPITAL BUILDING, CHARNI ROAD, MUMBAI-400002 / VS. M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD., IL & FS CENTRE, G BLOCK, C- 22, BANDRA KURLA BOMPLEX, BANDRA (E) MUMBAI- 400051 (REVENUE) (RESPONDENT) P.A. NO. AAACI0989F REVENUE BY SHRI B. YADAGIRI (DR) RESPONDENT BY SHRI DILIP V. LAKHAN I (AR) / DATE OF HEARING : 30/11/2015 / DATE OF ORDER: 6/01/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S)-14, MUMBAI {(IN SHORT CIT(A)}, DATED 12.03.2014 FOR T HE INFRASTRUCTURE LEASING & F. S. LTD. 2 ASSESSMENT YEAR 2010-11, PASSED AGAINST THE ORDER P ASSED BY THE ACIT (TDS) (IN SHORT AO) U/S 201(1)/201 (1A) OF THE ACT, ON THE FOLLOWING GROUNDS: 'I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ON THE BASIS OF REASONING THAT BANK GUARANTEE COMMISSION ARE NOT IN THE NATURE OF 'COMMISSION' AND NO TDS WAS REQUIRED TO BE DEDUCTED ON SUCH CHARGES PAID TO BANK U/S. 194H OF THE I.T. ACT, 1961. II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETIN G THE INTEREST U/S 201(IA) OF THE IT ACT, 1961, DETERMINED BY THE AO AS THE TAX DETERMINED HAS ALREADY BEEN DELETED BY HER ON THE BANK GUARANTEE COMMISSION AND INTEREST DELETION IS CONSEQUENTIAL TO THE QUANTUM DELETION FOR WHICH FURTHER APPEAL HA S BEEN RECOMMENDED VIDE GROUND NO. 1.' 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE BY SHRI DILIP V. LAKHANI, AUTHORISED REPRESENTATIVE (AR) ON BEHALF OF THE ASSESSEE AND BY SHRI B. YADAGIRI, DEPARTMENTAL REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. 3. THE ISSUE RAISED IN THIS APPEAL IS WHETHER THE AS SESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE ON THE AMOUNT OF GUA RANTEE COMMISSION PAID TO THE BANK, U/S 194H OF THE ACT. INFRASTRUCTURE LEASING & F. S. LTD. 3 3.1. DURING THE COURSE OF HEARING, IT HAS BEEN BROUGHT T O THE NOTICE OF THE BENCH BY LD. COUNSEL THAT THIS ISSUE IS COVERED WITH THE JUDGMENT OF HONBLE TRIBUNAL IN THE CASE O F M/S. KOTAK SECURITIES LTD. IN ITA NO.6657/MUM/2011 DATED 03.02.2012, WHEREIN IT HAS BEEN HELD BY THE HONBLE BENCH THAT TDS IS NOT REQUIRED TO BE DEDUCTED U/S 194H ON THE PAYMENT MADE BY THE ASSESSEE TO THE BANK ON ACCOUNT OF GUARANTEE COMMISSION CHARGES. 3.2. ON THE OTHER HAND, LD. DR HAS RELIED UPON THE ORDE R OF AO. 3.3. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH TH E CASES RELIED UPON BEFORE US. IT IS NOTED THAT HON BLE COORDINATE BENCH IN THE CASE OF M/S. KOTAK SECURITI ES LTD., (SUPRA) HAS HELD AS UNDER: 'IN THE CASE BEFORE US, THERE IS NO PRINCIPAL AGENT RELATIONSHIP BETWEEN THE BANK ISSUING BANK GUARANTEE AND THE ASSESSEE. WHEN BANK 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 WHICH IS CUSTOMARILY TERMED AS 'BANK GUARANTEE COMMISSION. WHILE IT IS TERMED AS GUARAN TEE COMMISSION IT IS NOT IN THE NATURE OF COMMISSION A S IT IS UNDERSTOOD IN COMMON BUSINESS PARLANCE AND IN THE INFRASTRUCTURE LEASING & F. S. LTD. 4 CONTEXT OF THE SECTION 194H. THIS TRANSACTION IN OU R CONSIDERED VIEW IS NOT A TRANSACTION BETWEEN PRINCI PAL AND AGENT SO AS TO ATTRACT THE TAX DEDUCTION REQUIREMEN TS U/S 194H. WE ARE THEREFORE OF THE CONSIDERED VIEW THAT THE CIT(A) INDEED ERRED IN HOLDING THAT THE ASSESSEE WA S INDEED UNDER OBLIGATION TO DEDUCT TAX AT SOURCE U/S 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 U/S 194H, THE QUESTION OF LEVY OF INTEREST U/S 201(1A) CANNOT ARISE. IN VIEW OF THE A BOVE DISCUSSION, WE QUASH THE IMPUGNED DEMANDS U/S 201(1 ) AND 201(1A) R.W.S. 194H. WE THEREFORE, ALSO SEE NO NEED TO DEAL WITH OTHER PERIPHERAL LEGAL ISSUES RAISED B Y THE ASSESSEE. IT MAY BE SEEN FROM THE ABOVE, IT IS CLEARLY HELD B Y THE HONBLE COORDINATE BENCH THAT NO TDS IS REQUIRED TO BE DEDU CTED ON THE AMOUNT OF PAYMENT MADE ON ACCOUNT OF GUARANTEE COMMISSION CHARGES TO THE BANK. NO CONTRARY DECISIO N HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. DR. THUS, THE ISSUE BEING COVERED WITH THE AFORESAID JUDGMENT, WE HOLD THAT LD. CIT(A) HAS RIGHTLY FOLLOWED THE ORDER OF M/S. KOTAK SECURITIES LTD., FOR DECIDING THAT NO TDS WAS REQUIRED TO BE D EDUCTED BY THE ASSESSEE. NO INTERFERENCE IS CALLED IN THE ORDE R OF LD. CIT(A) SAME IS UPHELD. THUS, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. INFRASTRUCTURE LEASING & F. S. LTD. 5 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH JANUARY, 2016. SD/- (SANJAY GARG ) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER MUMBAI; ' DATED : 6 /01/2016 CTX? P.S/. .. #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. $ %& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. ) ) * ( $ ) / THE CIT, MUMBAI. 4. ) ) * / CIT(A)- , MUMBAI 5. -. ' /0 , ) $ /01 , / DR, ITAT, MUMBAI 6. 2 3 / GUARD FILE. / BY ORDER, ( -$ ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI