TMI Blog2016 (6) TMI 1394X X X X Extracts X X X X X X X X Extracts X X X X ..... r an additional commission to sell only to persons for whom he can stand guarantee. His position is thus that of a surety who is liable to his principal should the vendee make default. The agreement between him and his principal need not be reduced to or evidenced by writing, for is undertaking is a guarantee. A Del Credere Agent is an agent who not only establishes a privity of contract between his principal and the third party, but who also guarantees to his principal the due performance of the contract by the third party. He is liable, however, only when the third party fails to carry out his contract, e.g., by insolvency. He is not liable to his principal if the third party refuses to carry out his contract, for example, if the buyer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;d Departmental Representative appeared on behalf of Revenue 3. The facts in brief are that the assessee in the present case is a Private Limited Company and engaged in trading business of goods and merchandise dealing in securities. The assessee, during the year paid a sum of ₹ 58,12,733/- on account of bill discounting charges and without deducting TDS. According to the AO, this bill/discounting charges are interest expenses as per the provision of section 2(28A) of the Act and therefore the assessee was liable to deduct TDS u/s 194A of the Act. As the assessee failed to deduct TDS, the AO has made the addition of ₹ 58,12,733/- to the total income of the assessee. 4. Aggrieved, assessee preferred an appeal before L' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges of Bill of Exchange or. factoring charges of sale cannot be termed as interest. The assessee in the present case is acting as an agent. Now what is this is to be seen. According to us, a Del Credere is an agent, who, selling goods for his principal on credit, undertakes for an additional commission to sell only to persons for whom he can stand guarantee. His position is thus that of a surety who is liable to his principal should the vendee make default. The agreement between him and his principal need not be reduced to or evidenced by writing, for is undertaking is a guarantee. A Del Credere Agent is an agent who not only establishes a privity of contract between his principal and the third party, but who also guarantees to his princip ..... X X X X Extracts X X X X X X X X Extracts X X X X
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