TMI Blog2016 (4) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... r any professional services as has been mentioned in the explanation to section 194J(1). We further find from the memorandum explaining to provisions of the Finance Bill 2012 that as per clause No.71 it was specifically mentioned that there was no specific provision for deduction of tax on the remuneration paid to a director which is not in the nature of salary. We find the provisions of section 194J(1)(ba) speaks of any remuneration or fees or commission by whatever name called other than those on which tax is deductible u/s.192 to a director of a company on which tax has to be deducted at the applicable rate and the above provision has been inserted by the Finance Act, 2012 w.e.f., 01- 07-2012. We, therefore, find force in the submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 23-11-2007. During the course of survey, it transpired that the assessee had not deducted tax at source on the payments made to the non-executive Directors in the impugned assessment years. The Assessing Officer vide order passed u/s. 201(1) and 201(1A) held that the payments made to the nonexecutive Directors fall within the definition of commission or brokerage as defined in Explanation (i) to section 194H. The assessee should have deducted tax at source u/s. 194H on the payments made to non-executive Directors. The Assessing Officer further levied interest for non-deduction of tax at source u/s. 201(1A) of the Act. Aggrieved by the orders passed u/s. 201(1) and 201(1A) in the respective assessment years, the assessee preferred ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 194J of the Act. The ld. AR submitted that a perusal of the term commission as defined in Explanation (i) to section 194H would clearly indicate that the payments made to the nonexecutive Directors do not fall within the ambit of the term commission . 5. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The Department has assailed the findings of Commissioner of Income Tax (Appeals) by raising following grounds: 1) The Learned Commissioner of Income tax (Appeals) erred on facts and in law in not holding the assessee as assessee in default with the meaning of section 201)(1) of the Act. 2) The Learned Commissioner of Income tax (Appeals) err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h includes payments made directly or indirectly for services rendered in the course of buying or selling goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities. The services rendered do not include professional services. The non-executive Directors appointed on the Board of Directors of the company do not render any of the services referred to in the definition of commission or brokerage . A role of non-executive Director is to provide constructive suggestion for the better performance of the company and to protect the interest of the organization/shareholders by whom he has been nominated on the Board. Thus, by no stretch of imagination the payments made to the non-executive Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the assessment years under appeal. 9. The Co-ordinate Bench of the Tribunal in the case of Bharat Forge Ltd. Vs. Additional Commissioner of Income Tax (supra) had occasion to deal with this issue. The Tribunal held that no tax at source was required to be deducted u/s. 194J from the payments made towards the Director s sitting fees prior to 01-07-2012. The relevant extract of the findings of the Tribunal are reproduced here-in-below: 8. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions relied on by the learned counsel for the assessee. The only dispute in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the explanation to section 194J(1). We further find from the memorandum explaining to provisions of the Finance Bill 2012 that as per clause No.71 it was specifically mentioned that there was no specific provision for deduction of tax on the remuneration paid to a director which is not in the nature of salary. We find the provisions of section 194J(1)(ba) speaks of any remuneration or fees or commission by whatever name called other than those on which tax is deductible u/s.192 to a director of a company on which tax has to be deducted at the applicable rate and the above provision has been inserted by the Finance Act, 2012 w.e.f., 01- 07-2012. We, therefore, find force in the submission of the learned counsel for the assessee that no ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
