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2017 (5) TMI 481 - AT - Income TaxTDS u/s 194H - Default under section 201(1) - non deduction of TDS on expenses/payments incurred on account of bank guarantee commission - Held that - Following the order of the Coordinate Bench in the assessee s own case for A.Y. 2011-12 2016 (7) TMI 1284 - ITAT MUMBAI we hold that the assessee in the case on hand is not required to deduct tax at source under section 194H of the Act in respect of bank guarantee commission/charges paid to banks. Also see Kotak Securities Limited Versus Deputy Commissioner of Income-tax, TDS Circle 2(1), Mumbai 2012 (2) TMI 77 - ITAT MUMBAI - Decided in favour of assessee.
Issues Involved:
- Whether the assessee is liable to deduct tax at source on bank guarantee commission under section 194H of the Income Tax Act, 1961? Analysis: The appeal by Revenue was against the order of the CIT(A)-59, Mumbai for A.Y. 2012-13. The Assessing Officer required the assessee to explain the failure to deduct tax at source on expenses like bank guarantee commission and technical/professional services. The AO treated the assessee as 'an assessee in default' under section 201(1) of the Act due to non-deduction of tax, leading to a substantial demand. The CIT(A) disposed off the appeal following a decision of a Coordinate Bench, holding that the assessee is not required to deduct tax at source under section 194H of the Act on bank guarantee commission. The Revenue challenged the CIT(A) order, arguing that tax should have been deducted on bank guarantee commission under section 194H. The ITAT Mumbai considered a previous decision in the assessee's own case for A.Y. 2011-12, where it was held that no TDS is payable on bank guarantee commission charges under section 194H. The ITAT upheld this decision, stating that the relationship between the assessee and banks did not necessitate TDS under section 194H. The ITAT dismissed the Revenue's appeal for A.Y. 2012-13 based on the precedent set in the earlier case and found no merit in the Revenue's grounds for appeal. In conclusion, the ITAT Mumbai upheld the decision of the CIT(A) regarding the non-requirement of TDS on bank guarantee commission under section 194H of the Act. The ITAT's judgment was based on the principle established in the assessee's previous case for A.Y. 2011-12, where it was held that no TDS was payable on such charges. The Revenue's appeal for A.Y. 2012-13 was dismissed, affirming the CIT(A)'s order.
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