TMI Blog2016 (11) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... n be said to have accrued or arisen in India to the VTB bank u/s 4, 5 and 9 of the Act. So, in the given circumstances, Assessee Company was not liable to deduct the tax at source on the bank guarantee commission paid to a foreign bank. - Decided in favour of assessee - ITA No. 2221/Del/2014 - - - Dated:- 5-9-2016 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER For The Department : Sh. FR MEENA, Sr. DR For The Assessee : S h . MANOJ GUPTA, CA ORDER PER H.S. SIDHU : JM The Revenue has filed the present appeal against the impugned order dated 7/1/2014 passed by the Ld. Commissioner of Income Tax (Appeals)-XVII, Delhi on the following grounds:- 1. On the fact and circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d filed the necessary details. AO held that the assessee company was liable to deduct tax on the payment of ₹ 4,85,24,202/- to VTB Bank, but it failed to do so. Therefore, as per the provision of Section 40(a)(i), the amount of ₹ 4,85,24,202/- was disallowed and added to the total income of the assessee by completing the assessment at ₹ 9,01,75,635/- u/s. 143(3) of the I.T. Act, 1961 vide his order dated 15.2.2013. 3. Aggrieved with the aforesaid order, assessee preferred an appeal before the Ld. CIT(A), who vide his impugned order dated 7.1.2014 has deleted the addition in dispute by partly allowing the appeal of the assessee. 4. Now the Revenue is aggrieved against the impugned order and filed the present appeal be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 007-08 and 2008-09. Therefore, with a view to maintain consistency, the issue decided in favour of the appellant. The addition on account of disallowance of ₹ 4,85,24,202/- made u/s. 40(a)(i) is deleted. This ground of appeal is ruled in favour of the appellant. 7.1 We also find that ITAT vide its order dated 5.2.2016 in Revenue s Appeals being ITA No. 3834/Del/2009 (AY 2006-07); ITA No. 53/Del/2011 (AY 2007-08) and ITA No. 1815/Del/2011 (AY 2008-09) has adjudicated the issue in dispute vide para no. 8 to 8.6 vide page no. 10 to 13 and decided the similar issue in against the Revenue by upholding the order of the Ld. CIT(A). The relevant portion of the ITAT order is reproduced as under:- 8. Ground No.3 of I.T.A.No. 3834/Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses for determination is, as to whether the assessee company was liable to deduct the tax at source (TDS) on bank guarantee commission paid in India to VTB Bank, a foreign bank. Since, the Assessing Officer by invoking provisions contained u/s 40(a)(1) of the Act, disallowed the amount paid by the assessee company as bank guarantee commission to a foreign bank treating the same as interest, we would have to decide first, as to whether the bank guarantee commission paid by the assessee company to a foreign bank can be treated as interest under the Act making it obligatory for the assessee company to deduct the tax at source (TDS)? For finding out the answer to the aforesaid question, we are required to decide first, as to whether the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer. 8.5 Now, the next question arises for determination is, as to whether assessee company was liable to deduct the tax at source on the bank guarantee commission paid to VTB bank u/s 195 of the Act . 8.6 In order to find out the answer to the aforesaid question, first of all, it is required to be decided, as to whether sum payable on account of bank guarantee commission by the assessee company to VTB bank is chargeable to tax under the Act? When the Revenue authorities have failed to lay hands on any cogent material that the bank guarantee commission paid by the assessee company paid on account of business transaction between assessee company and VTB bank particularly in the face of the fact that VTB bank ..... X X X X Extracts X X X X X X X X Extracts X X X X
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