TMI Blog2017 (8) TMI 1292X X X X Extracts X X X X X X X X Extracts X X X X ..... over 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 sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. Description Amount (Rs.) Rate at which TDS ought to have been deducted Amount of TDS to be deducted (Rs.) TDS Made (Rs.) Short Deduction/dem and u/s 201 (Rs.) Interest demand u/s 201(1A) (Rs.) 1. Bank Guarantee Charges 8,33,59,262/- 10% 83,35,926/- Nil 83,35,926/- 25,84,137/- 2. Internet Charges 15,96,662/- 10% 1,59,662/- Nil 1,59,662/- 49,494/- 84,95,588/- Nil 84,95,588/- 26,33,631/- 3.1 Facts qua bank guarantee charges are that during assessment proceedings, it was noted that the assessee paid bank guarantee charges to certain Indian foreign Banks. The assessee explained that bank guarantee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 3.6 However, as already stated, it is noted that the CBDT circular do not cover payment to foreign banks and further, the provisions of Section 194H apply only to payment made to residents. The lower authorities have failed to examine the issue from correct perspective by appreciating the relevant facts, statutory provisions, Treaty provisions, relationship between parties, nature of services availed / payment made etc. Since the AY involved is 2012-13 and therefore, at this stage, we are not inclined to afford another opportunity to revenue to improve upon their case. Consequently, the impugned payments, being not covered within the ambit of Section 194H, the resultant demand raised a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he judgment of Hon ble Madras High Court rendered in Skycell Communications Ltd. Vs DCIT 251 ITR 53. However, not convinced, Ld. AO opined that the said expenditure resulted into up gradation of skills of the business as well as employees and up gradation of technology has resulted into technical services being available at the desktop and hence covered within the meaning of technical services as defined in explanation (2) to Section 9(1)(vii). The Ld. AO further opined that the same also constituted royalty within the meaning of explanation 2(iva) and 2(vi) of Section 9(1)(vi). Reliance was placed on the judgment of this Tribunal rendered in ACIT Vs Sanskar Info T.V.P. Ltd. [2008 24 SOT 87] where it was held that service fees for use of transponder and up linking facility in a satellite is covered under the provisions of Section 9(1)(vi). With these observations, impugned demand against payment so made for ₹ 15,96,662/- was raised against the assessee for non-deduction of tax u/s 194J. 4.2 Aggrieved, the assessee assailed the same without any success before Ld. CIT(A) vide impugned order dated 13/04/2015 where the assessee reiterated that the impugned payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses, it was contended that the demand has been confirmed merely on the suspicion that the same involved profit element and hence required TDS without calling for any information from the assessee whereas the same, in fact, were mere reimbursement requiring no deduction at all. 5.2 Per contra, Ld. DR placed reliance on the findings of the Ld. CIT(A) and contended that the same constituted fees for technical services as well as royalty as use of satellite was made to avail the said services. 5.3 We have heard the rival contentions. So far as Ground No. 3, is concerned, 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 . 5.4 Regarding, internet charges, we find that the lower authorities have failed to appreciate the true ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch for a more effective basis, therefore, must be made. 8. A reading of the very elaborate order of the Assessing Officer containing a lengthy discourse on the services made available by the Stock Exchange would go to show that apart from facilities of a faceless screen based transaction, a constant upgradation of the services made available and surveillance of the essential parameters connected with the trade including those of a particular/single transaction that would lead credence to its authenticity is provided for by the Stock Exchange. All such services, fully automated, are available to all members of the stock exchange in respect of every transaction that is entered into. There is nothing special, exclusive or customised service that is rendered by the Stock Exchange. Technical services like Managerial and Consultancy service would denote seeking of services to cater to the special needs of the consumer/user as may be felt necessary and the making of the same available by the service provider. It is the above feature that would distinguish/identify a service provided from a facility offered. While the former is special and exclusive to the seeker of the ser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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