TMI Blog2022 (1) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... ) qua such payment was available to the assessee, therefore, no obligation on the said count too was cast upon the assessee to deduct tax at source on the said amount. Backed by its aforesaid observations, the Tribunal had vacated the disallowance u/s 40(a)(ia) that was made by the department by holding the assessee as being in default for not having deducted tax at source on the amount of bank guarantee fee u/s 194H. Also see KOTAK SECURITIES LIMITED VERSUS DEPUTY COMMISSIONER OF INCOME-TAX, TDS CIRCLE 2(1), MUMBAI [ 2012 (2) TMI 77 - ITAT MUMBAI] Both the lower authorities had erred in treating the assessee as being in default for not having deducted tax at source on the amount of bank guarantee fee u/s 194H of the Act. Accordingly, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant craves leave to add, alter, amend or vary the above grounds of appeal before or at the time of hearing. 2. Briefly stated, the assessee company which is engaged in the business of manufacturing of energy meters and meter parts had e-filed its return of income for A.Y 2013-14 on 25.09.2013, declaring a loss of (₹ 9,65,84,777/-). The return of income filed by the assessee was processed as such U/s 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Section 143(2) of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee company had paid bank guarantee fee of ₹ 59,96,294/-. Observing, that the assessee which was obliga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 40(a)(ia) of the Act. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). Observing, that the bank guarantee fee paid by the assessee company was exigible for deduction of tax at source u/s 194H of the Act, the Ld. CIT(A) was of the view that as the assessee had failed to comply with the said statutory obligation, therefore, no infirmity did emerge from the order of the A.O who had rightly disallowed the assessee s claim for deduction of the said amount u/s 40(a)(ia) of the Act. Accordingly, the Ld. CIT(A) finding favor with the view taken by the A.O dismissed the appeal. 5. The assessee being aggrieved with the order of the Ld. CIT(A) has carried the matter in appeal before us. At the very outset of the hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the fees charged by a bank for rendering banking services had been deliberated upon by the Hon ble Jurisdictional High Court in the case of CIT vs. JDS Appraisal Pvt. Ltd. (2015) 370 ITR 454 (Del). In the case before the Hon ble High Court, the department had held the assessee in default for not having deducted tax at source on the fee that was charged by the bank for providing card swiping machine to the assessee before them. After exhaustive deliberations, it was observed by the Hon ble High Court that as the amount retained by the Bank in the case before them was in the nature of a fee that was charged for having rendered the banking services and, the same could not be treated as a commission or brokerage paid in course of use of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable to the assessee, therefore, no obligation on the said count too was cast upon the assessee to deduct tax at source on the said amount. Backed by its aforesaid observations, the Tribunal had vacated the disallowance u/s 40(a)(ia) that was made by the department by holding the assessee as being in default for not having deducted tax at source on the amount of bank guarantee fee u/s 194H of the Act. Also, we find that a similar view was way back taken by the ITAT, Mumbai in the case of Kotak Securities Ltd. Vs. DCIT, TDS Circle 2(1), Mumbai (2012) 14 ITR (T) 495 (Mum). It was observed by the tribunal that the scope of the expression commission was to be confined to an allowance, recompense or reward made to agents, factors and broker ..... X X X X Extracts X X X X X X X X Extracts X X X X
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