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TMI Blog2019 (10) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... to some of the depositors who have not furnished PAN No., in which case, the TDS is required to be deducted @ 20%. The assessee submitted that it had obtained Form No.15G and Form No.15H from the depositors and on the strength of the same, it had not deducted tax at source. It was noticed that the assessee bank has not furnished one copy of Form No.15G and Form No.15H to the jurisdictional Commissioner of Income tax as required under the Act. Further, as mentioned earlier, some of the Form No.15G and Form No.15H did not contain PAN number of the depositors. Accordingly, the AO took the view that the Form No.15G and Form No.15H are not valid. 3. The tax authorities also noticed that the assessee has paid Commission (both financial & non-financial) to the National Financial Switch (NFS), which is maintained by the National Payments Corporation of India (NPCI) without deducting tax at source from the above said Commission payment. It was submitted that the NPCI is registered u/s 12AA of the Act and hence its income was exempt. The AO did not agree with the said submissions. 4. In respect of payment made towards ATM security, the assessee had deducted tax at source at the end of year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the above cited cases, it has been held that the provisions of sec. 197A(1A) merely requires a declaration to be filed by the payee of interest and once it is filed, the payer of the interest has not choice except to desist from deducting tax at source from the interest paid. In the case of Punjab National Bank (supra), it has been held that non-mentioning of PAN in Form No.15G and Form No.15H is only a technical breach, when the payees were having PAN. For the sake of convenience, we extract below the decision rendered by Amritsar bench of Tribunal in the case of Punjab National Bank (supra):- 9. We have heard the rival parties and have gone through the material placed on record. As regards the first issue of non deduction of TDS on monthly average basis, we find that the contention of the assessee that at the end of financial year there was no short deduction of TDS on payment of salary to various employees has not been controverted by the authorities below. Further, we find that the TDS on salary was deducted on the monthly average basis by Circle Office of persons responsible and it was automatic and there is no interference by the Brach. We further find that deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whom the interest of 10,000/- or more was paid and TDS was not deducted along with PAN No. of all deductees. This is mentioned by Assessing Officer at page 4 of his order and therefore, the non mentioning of TDS was only a technical error. We further find that the same submissions were made before learned CIT(A) and it was submitted as under: "There is no persons whose PAN No. is not available or in valid with the Bank on the date of payment of interest there will be no requirement of deduction of TDS u/s 194A of the Act. The requirements of Section 206AA is also fulfilled on the date of submission as the PAN No. of all deductees are available with the Bank on the date of submissions of declaration in Form No. 15G/15H, on the date when payment is made." It was also submitted to learned CIT(A) that the list of persons to whom interest of 10,000/- or more was paid and TDS was not deducted along with PAN of all deductees was submitted to Assessing Officer and this fact is noted by learned CIT at page-4 of his order. The finding of learned CIT(A) that AR of the appellant has failed to furnish any evidence in support of the contention that the PAN were available with the persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory obligation not to deduct tax. Therefore, the assessee cannot be penalized or saddled with liability u/s 201(1) or 201(1A) of the Act when the depositors to whom interest has been paid/credited have furnished declarations in the prescribed manner requesting not to deduct tax. In these circumstances, we agree with the conclusion of the Ld. CIT that merely because there are some technical defects in the declaration or they have been received after the date of credit of interest to the account of the payee they cannot be rejected. It is also a fact that the view taken by the Ld. CIT(A) is in consonance with the decision of ITAT Jodhpur Bench in the case of Income Tax Officer Vs. Pearl Organic Coating, reported in (2004) 84 TTJ (Jd) 802 and that of the Hon'ble Madras High Court in case of Vijay Hemanth Finance and Estate Limited Vs. /TO and another, reported in (1999) 238 ITR 282 (Mad). The Ld. D.R. has not brought to our notice any contrary decision. In aforesaid view of the matter, we do not find any infirmity in the order of the Ld. CIT(A) in deleting the demand raised by the assessing officer. Accordingly, we uphold the order of the CIT(A) by dismissing the grounds raised." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent : Provided that no deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee, does not exceed five thousand rupees : Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such commission or brokerage is credited or paid, shall be liable to deduct income-tax under this section: Provided also that no deduction shall be made under this section on any commission or brokerage payable by Bharat Sanchar Nigam Limited or Mahanagar Telephone Nigam Limited to their public call office franchisees. Explanation.--For the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treasury and sell them to the public. The Gujarat High Court drew a distinction between a contract of sale and a contract of agency by which an agent is authorized to buy or sell on behalf of the principal. In a case of agency, the agent is not the owner of the property and does not sell the same of his own accord but as per the directions and instructions of the principal, who is the owner of the property. The profit and loss is that of the principal, and what is paid to the agent is the commission or brokerage. The expressions "commission" and "discount" were distinguished after making reference to the definitions in the Black's Law Dictionary. The expression "discount", it was observed, is an allowance or deduction made from the gross sale on any account whatsoever. A "deduction" normally represents a reduction in the original price or a debt such as in case of securities (e.g. treasury bills), which are issued below the face value and are redeemed at the face value. Commission, it was held, is a reward paid to an agent as well as to a salesman, executor, trustee, broker or bailee and is calculated as a percentage of the amount of the transaction or on the profit of the princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Stamp Vendors Association versus Office of the Accountant General and Others (2006) 282 ITR 7 (Kerala), wherein it held:- "No doubt, payment of commission or brokerage in relation to sale or purchase of goods also would attract deduction of tax at source under section 194H of the Act. However, such situation arises only when there is involvement of services of a third party on payment other than the seller and the purchaser of goods or when the recipient of the benefit markets goods as "agent" of the owner and not as independent dealer." 11. Allahabad High Court in Chief Treasury Officer versus Union of India (2013) 355 ITR 484 has held that the words "by a person acting on behalf of another person" imply element of agency and must be present in all such services or transactions in order to fall within the expression "commission" and "brokerage". Reference was made to definition of the term "agent" in the Indian Contract Act and the implication thereof and it was observed that the contract between a principal and an agent primarily is a contract of employment to bring about a legal relationship with a third party and the agent either actually or by law is held to be authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dors, who render service during the course of buying and selling of goods, i.e. the stamp papers. 14.Contention could be raised that payment received or receivable directly for indirectly for any services in course of buying or selling of goods need not arise out of a contract of agency or from a relationship of a principal and an agent. The said contention has to be rejected in view of the aforesaid judgments, which positively hold that the three separate conditions when tax at source is required to be deducted would only apply provided the recipient is acting on behalf of another, i.e. relationship of a principal and an agent exists and not otherwise. This interpretation has been consistent and uniformly applied while interpreting clause (i) of the Explanation to Section 194H of the Act. Appropriate in this regard would be to refer to the decision of the High Court of Delhi in Commissioner of Income Tax versus Idea Cellular Limited, (2010) 325 ITR 148 (Delhi) wherein Explanation clause (i) to Section 194H of the Act had come up for consideration and on interpretation it was held that it would apply only if payment was received or receivable directly or indirectly by a perso ..... X X X X Extracts X X X X X X X X Extracts X X X X
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