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2018 (4) TMI 1664 - ITAT DELHITDS u/s 194H - disallowance u/s 40(a)(ia) with respect to bank guarantee commission for non-deduction of tax - HELD THAT:- There is no principal and agent relationship between the bank issuing the bank guarantee and the assessee and, further, that when the bank issues the bank guarantee on behalf of the assessee, all it does is to accept the commitment to make the payment of a specified amount to, on demand, to beneficiary and it is in consideration of this commitment that the bank charges a fee termed as bank guarantee commission. Followed KOTAK SECURITIES LIMITED [2012 (2) TMI 77 - ITAT MUMBAI]. As further held that although it is termed as guarantee commission, it is not in the nature of commission as is understood in the common business parlance and in context of section 194F of the Act. Respectfully following the order of the Coordinate Benches, we hold that since principal-agent relationship is a sine qua non for invoking provisions of section 194H, CIT (A) was not justified in upholding the disallowance u/s 40(a)(ia) in respect of bank guarantee commission. Accordingly, we allow ground of the assessee’s appeal and order the deletion of this disallowance. Expenses incurred towards corporate social responsibility - allowable expenditure u/s 37(1) - expenditure was not mandatory in nature -HELD THAT:- Disallowance under Explanation (2) to section 37(1) will not come into play and there is no such disabling provision even if the expenses in discharge of corporate social responsibility are incurred on voluntary basis. Explanation (2) to section 37(1) comes into play only w.e.f. 1.4.2015 and accordingly, expenses incurred towards corporate social responsibility incurred prior to this date will necessarily be allowable as revenue expenditure. We set aside the order of the CIT (A) on this issue and direct the AO to allow the expenses incurred towards corporate social responsibility. Provision for long service award made on actuarial basis -ascertained liability - MAT computation - HELD THAT:- As decided in assessee’s own case for assessment years 2008-09 and 2009-10 liability determined on the basis of provision was not a contingent liability but was definite and ascertained liability even though exact quantification had not happened and, therefore, the same was allowable under the provisions of the Act as relying on Bharat Heavy Electricals [2012 (9) TMI 515 - DELHI HIGH COURT]. We also hold that since this provision is allowable under normal provisions of the Act, the deduction as relying on will be allowable under the provisions of MAT also. Disallowance of additional depreciation on electricity - electricity is not an article or thing - ‘electricity’ would fall under the definition of goods - Held that:- We find that this issue is also covered in favour of the assessee by order of the ITAT Delhi Bench in the case of NTPC Ltd. vs. DCIT [2012 (5) TMI 127 - ITAT DELHI] wherein as placing reliance on the judgment of Andhra Pradesh vs. NTPC [2002 (4) TMI 694 - SUPREME COURT OF INDIA] and had held that ‘electricity’ would fall under the definition of goods as given in Article 366 (12) of the Constitution of India. In this case, had observed that ‘goods’ means all kinds of moveable properties and merely because electrical energy was not tangible or cannot be moved or touched, it cannot cease to be moveable property. The Coordinate Bench of ITAT went on to hold that additional depreciation cannot be denied to the assessee merely on the ground that electricity is not an article or thing. Commissioner of Income Tax (A) had rightly directed the deletion of disallowance with respect to additional depreciation - Decided in favour of assessee.
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