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2017 (9) TMI 567 - ITAT HYDERABADTDS u/s 194H - Addition u/s 40(a)(ia) - liability to deduct tax at source on the bank guarantee commission payable - transaction between ‘principal and agent’ - Held that:- On the same issue the CBDT has issued Notification which exempts from deduction of tax. Though the Notification speaks of applicability of the clarification from 4.1.2013 the fact remains that there are number of decisions of various Benches of ITAT in favour of the assessee, even prior to the Notification and thus the Notification merely clarifies the issue and thus applicable retrospectively. At any rate, in the light of the following decisions, the only view possible in this matter is the provisions of section 194H is not applicable to the payments made to bank since it is not in the nature of “commission”, as it is understood in common business parlance and in the context of provisions of section 194H of the Act. In other words, it is not a transaction between ‘principal and agent’ so as to invoke the provisions of section 194H of the Act. A.O. as well as the Ld. CIT(A) were not justified in invoking the provisions of section 194H of the Act in the instant case in order to hold that the assessee is a defaulter. In other words, the assessee is not liable to deduct tax at source and consequently the disallowance in the instant case is not warranted. - Decided in favour of assessee.
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