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2018 (11) TMI 1717 - ITAT DELHITDS u/s 194H - disallowance deeming Bank guarantee commission incurred as Commission - addition u/s 40[a][ia] - HELD THAT:- These issues were considered by the co-ordinate bench in [2018 (4) TMI 1664 - ITAT DELHI] wherein 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. It was 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, the Ld. Commissioner of Income Tax (A) was not justified in upholding the disallowance u/s 40(a)(ia) in respect of bank guarantee commission. - Appeal of the assessee is allowed.
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