TMI Blog2019 (10) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption provided u/s 194A(3)(iii) is available to the assessee qua such payment. So, we are of the considered view that the CIT (A) has erred in not following the decision of Kotak Securities Ltd. [ 2012 (2) TMI 77 - ITAT MUMBAI] on the ground that it is not applicable having been pronounced before the issue of Notification No.56/2012 dated 31.12.2012 because ordinarily any provision of the statute has to be read having prospective effect and not having retrospective effect unless it is specifically provided. So, when there is no principal-agent relationship between the bank and the assessee, deduction of tax at source on commission or brokerage is not required for. Consequently, addition made by the AO and confirmed by the ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has grossly failed to consider the object behind the notification which was to reduce the hardship and compliance burden to the deductee. 5. That on the fact and circumstances of the case and in law the Ld. CIT(A) has failed to followed the judgment of the Mumbai ITAT in Kotak Securities Ltd. v. DCIT, [2012] 18 taxmann.com 48 (Mum.) which squarely covers the issue holding that Bank guarantee commission is not liable to TDS under section 194H. 6. That on the fact and circumstances of the case and in law, the Ld. CIT(A) failed to consider that a beneficial circular and/or interpretation should be applied retrospectively. 2. Briefly stated the facts necessary for adjudication of the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such, addition is not liable to be sustained. However, on the other hand, ld. DR for the Revenue relied upon the order passed by the ld. CIT (A) but has not controverted the decision rendered by the coordinate Bench of the Tribunal by bringing on record any other decision contrary to it. 6. Coordinate Bench of the Tribunal decided the identical issue in favour of the assessee by returning following findings :- 9. In the light of the above discussions, and when we look at the connotations of expression commission or brokerage in its cognate sense, as in the light of the principle of noscitur a sociis as we are obliged to, in our considered view, scope of expression commission , for this purpose, will be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities is includible in the scope of meaning of commission or brokerage . Therefore, what the inclusive definition really contains is nothing but normal meaning of the expression commission or brokerage . In the case of South Gujarat Roofing Tiles Manufacturers Association Vs State of Gujarat [(1976) 4 SCC 601], Hon ble Supreme Court were in seisin of a situation in which an expression, namely processing , was given an inclusive definition, but Their Lordships were of the view that there could be no other meaning of processing besi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k guarantee and the assessee. When bank issues the bank guarantee, on behalf of the assessee, all it does is to accept the commitment of making payment of a specified amount to, on demand, the beneficiary, and it is in consideration of this commitment, the bank charges a fees which is customarily termed as bank guarantee commission . While it is termed as guarantee commission , it is not in the nature of commission as it is understood in common business parlance and in the context of the section 194H. This transaction, in our considered view, is not a transaction between principal and agent so as to attract the tax deduction requirements under section 194H. We are, therefore, of the considered view that the CIT(A) indeed erred in holdin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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