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2016 (1) TMI 860 - AT - Income TaxTDS u/s 194H - commission expenditure incurred by the assessee company - non deduction of tds - whether the impugned expenditure towards “Authority to Guarantee charges” falls within the ambit of section 194H or not?- demand raised by the A.O. u/s 201 and 201(1A) - Held that:- It is noticeable from the definition of expression “commission or brokerage” as appearing in section 194H of the Act that (a) a payment should be received by a person for services rendered only and (b) such person should be acting on behalf of the other person to whom the services have been rendered in respect of buying and selling of goods, etc.. It is clear from the factual matrix of the case that there is no component of service rendered by the finance company to the assessee against recovery of portion of losses, if any. In our view, it is a simple business proposition whereby an arrangement has been entered into by the assessee to assist its customers to enable them ready finance of their products and simultaneously assured the finance company for recovery of losses, if any due to default in repayment by the customers. The requirement of an agent and principal relationship is found absent in this case. Also, no nexus is found between the amount of sales made by the assessee and the expenditure towards ‘authority to guarantee charges’. We find that the ratio of both the judgements below are squarely applicable to the present fact-situation also, wherein finance company is not acting on behalf of the assessee. The finance company is merely providing financial services in the form of loan and subsequently collecting the payment against the assurance for sharing a part of losses. Respectfully following the ratio laid down by the Hon’ble Jurisdictional High Court in Intervet India P. Ltd. (2014 (4) TMI 353 - BOMBAY HIGH COURT ) and also by the Hon’ble Delhi High Court in JDS Apparels Pvt. Ltd. (2014 (11) TMI 732 - DELHI HIGH COURT), we are of the considered view that section 194H is not applicable in the facts of the case - Decided in favour of assessee
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