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2016 (7) TMI 1356 - AT - Income TaxTDS u/s 194H - tds on Bank Guarantee Commission and Miscellaneous Bank charges - interest u/s 201(1A) - Held that:- DR did not bring any material on record to reverse the well reasoned findings of the ld.CIT(A) that there is no principal agent relationship between the bank issuing the bank guarantee and the assessee. When bank issues the bank guarantee, on behalf of-the assessee. When bank issues the bank guarantee, on behalf of the assessee, all it does 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 fees which is customarily termed as Bank Guarantee Commission'. While it is termed as "guarantee commission" it is not the nature of 'commission' as it is understood in common business parlance and in the context of the section 194H. This transaction, in our considered view, is not a transaction between principal and agent so as to attract the tax deduction requirements u/s.194H. See M/s. Kotak Securities Ltd case [2012 (2) TMI 77 - ITAT MUMBAI] CIT(A) correctly held that the assessee was not required to deduct TDS u/s 194H the question of levy of interest u/s 201(1A) does not arise - Decided in favour of assessee.
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