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2017 (8) TMI 1292 - AT - Income TaxTDS u/s 194H - bank guarantee charges paid to domestic and foreign banks - Non compliance of TDS provisions - Held that:- There is no quarrel that the issue stood squarely covered in assessee’s favor by the decision of this Tribunal rendered in Kotak Securities Limited Vs. DCIT [2012 (2) TMI 77 - ITAT MUMBAI] where the Tribunal held that since the payment were on ‘principal to principal’ basis, the same was not covered within the meaning of commission and brokerage u/s 194H. The same view is fortified by CBDT notification No. 56/2012 dated 31/12/2012 which clearly says that no TDS is required against bank guarantee commission paid to bank listed in the second Schedule to RBI Act, 1934. However, foreign bank is excluded from the scope of said circular. Therefore, at the outset, we are inclined to hold that there was no requirement to deduct TDS on bank guarantee commission of ₹ 371.25 Lacs paid by assessee to domestic bank.Also it is noted that CBDT circular do not cover payment to foreign banks and further provisions of Section 194H apply only to payments made to residents. Therefore , bank gaurantee charges are not covered u/s 194H - Revenue's appeal stands dsimissed. Assessee-in-default u/s 201(1) r.w.s. 201(1A) - Held that:-Since TDS liability dosent stand in above case relating to bank gaurantee charges then consequential interest u/s 201(1A) on the same is also been dismissed. TDS on telephone expenses / data card expenses - Held that:- Since the assessee has contended that the data card expenses is akin to telephone expenses and mere reimbursement of data card expenses to employees, we restore the matter back to the file of AO for the purpose of verification of the said contention and decide accordingly as per law. Needless to say, any reimbursement of mere data card expenses to employees, which are primarily in the nature of telephone expenses do not fall within the meaning of ‘Fees for technical services’ or ‘royalty’. TDS on internet charges - TDS u/s 194I or 194J - AO opines that the same are in the nature of ‘Fees for Technical Services’ as well as ‘royalty’ - Held that:- CIT(A) went a step further in noting that the said expenditure was not only ‘fees for technical services’ but also covered u/s 194I being in the nature of rent for usage of equipment. A perusal of the sample invoice placed in the paper book, prima facie, reveals that the said expenditure is towards ‘internet services’ & ‘internet dedicated line’. Therefore, this being the case, the nature of services being availed by the assessee requires re-appreciation by lower authorities and hence, the matter is remitted back to the file of Ld. AO to re-examine the nature of services and thereafter, determine the true character of the same i.e. whether fees for technical services / royalty / rent or payment towards usage of standard internet facility and in particular, the following observation of Apex Court regarding ‘fees for technical services’ made in CIT Vs. Kotak Securities Ltd. [2016 (3) TMI 1026 - SUPREME COURT]. Resultantly, the assessee’s appeal stands partly allowed for statistical purposes.
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