TMI Blog2016 (5) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... light of the above, we are of the view that tax is not required to be deducted from bank guarantee commission in the absence of agent/principal relation. Consequently tax is not required to be deducted from reimbursement of actual expenses by assessee as incurred by NCL under any of the provisions of the Act. - Decided in favour of assessee Short deduction of TDS on the payment made to Noida Software Technology Park Ltd. for technical and professional services - assessee has deducted tax @2% instead of @ 10% to be deducted under section 194J - Held that:- We find that the payment made to Noida Software Technology Park Ltd. is as per the agreement entered into between the assessee and the said party, the assessee has obtained services only for uplinking of two channels owned by assessee on satellite involving no technical services and hence the same is covered under section 194C of the Act and there is no shortfall in tax to be deducted. In this regard the issue of the assessee is very clear on merits also that assessee has rightly deducted tax @ 2% u/s. 194C of the Act on payments made to Noida Software Technology Park Ltd. Even otherwise in view of the decision of the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure of ₹ 21,31,28,528/- to Nimbus Communication Ltd. (NCL) without deduction of TDS u/s194C of the Act. The CIT observed that NCL has acquired telecast right from BCCI in respect of matches to be played in India and in terms of that agreement entered into between BCCI and NCL, NCL was not obliged to provide bank guarantee of Rs. Two thousand crores. Subsequently, NCL entered into an agreement with the assessee on 27.11.2007 and assessee agreed to reimburse 80% of the bank guarantee to NCL. BCCI was not a party to the agreement between the assessee and NCL. Accordingly, as per the CIT, the assessee was under obligation to deduct TDS @2% on such reimbursement of expenses but was not done by the assessee. Similarly, another issue in this revision proceeding is that the assessee has paid a sum of ₹ 45 lakhs to Noida Software Technology Park Ltd. for technical and professional services without deduction of TDS @ 10% under section 194J of the Act. According to him tax was deducted @ 2% u/s 194C of the Act. 4. In response to the SCN, the assessee replied that as per TDS assessment order under section 201(1)/(1A) of the act dated 18.03.2012 the assessee has deducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as pointed out by the CIT in respect of payment of ₹ 45 lakhs to Noida Software Technology Park Ltd. for technical and professional services, the assessee has deducted tax @ 2% as per provisions of section 194C of the Act and this payment does not fall under section 194J of the Act and this is merely a shortfall of payment and the issue is covered by the decision of the Hon'ble Calcutta High Court in the case of CIT vs. S.K. Tekriwal (2014) 361 ITR 432 (Cal). In view of the above argument learned counsel of the assessee stated that the assessment order framed by the AO is neither erroneous nor prejudicial to the interest of Revenue. 6. On the other hand, the learned CIT-DR relied on the revision order of the CIT passed under section 263 of the Act. 7. We have heard the rival contentions and gone through the facts and circumstances of the case. The above stated facts are undisputed in respect to the first issue of reimbursement of bank guarantee charges. Now the question arises whether the reimbursement of bank guarantee charges paid by assessee to NCL falls under section 194C of the Act or not. We find that bank guarantee charges paid by assessee to NCL was neither ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be debatable vide para 12 as under: - 12. In the instant case, there is no money borrowed or debt incurred. Therefore, provisions of sec. 2(28A) and sec. 194A do not apply. Payment made to NCL is not income by way of interest. The impugned receipt would be in the nature of reimbursement of expenses incurred by it. In view of the above discussion, we do not find any merit in the order passed u/s. 263 in respect of one of the possible view taken by the AO. Even on merit, we found that bank guarantee commission does not come under the purview of interest so as to make assessee liable for TDS u/s. 194A. In view of the above order of Coordinate Bench in assessee s own case, the issue is covered in favour of the assessee. 9. In regard to the second issue of short deduction of TDS on the payment made by the assessee to Noida Software Technology Park Ltd. of an amount of ₹ 45 lakhs for technical and professional services, for which assessee has deducted tax @2% instead of @ 10% to be deducted under section 194J of the Act as held by CIT in his revision order. We find that the payment made to Noida Software Technology Park Ltd. is as per the agreement entered into betw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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