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TMI Blog2012 (2) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... luding Section 194H; (b) The Bank Guarantee is provided by Bank on principal to principal basis and there is no agency relationship between the bank and the appellant in bank guarantee transaction. 3. The appellant prays that it be held that bank guarantee commission fees are not liable to TDS under section 194H and AO be directed to delete the tax demand of Rs 4,57,929 under section 201. Ground No. II 1. The CIT(A) erred in confirming the order of the Assessing Officer charging interest under section 201(1A) amounting to Rs 3,97,164 on TDS of Rs 4,57,929. 2. The appellant prays that the appellant is not liable to deduct TDS on bank guarantee commission fees and, therefore, not liable to interest under section 201(1A) and AO be directed to delete the interest under section 201(1A) of Rs 3,97,164. 2. To adjudicate on this appeal, only a few material facts need to be taken note of. The assessee is a company engaged in stock broking business and is a Member of the Bombay Stock Exchange and National Stock Exchange. During the course of business carried on by the assessee, assessee furnishes bank guarantees, mainly in lieu of margin deposits, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and fulfillment of obligations by the assessee. The bank guarantee commission paid by the assessee for these bank guarantees, according to the Assessing Officer, was liable for deduction at source under section 194 H. The assessee's failure to deduct the tax source was, accordingly, visited with demands raised under section 201(1) r.w.s. 194H, to make good the shortfall in tax deduction at source, and under section 201(1A) r.w.s. 194 H, to compensate interest for delay in realizing the tax deduction at source revenues. Aggrieved by the stand so taken by the Assessing Officer, assessee carried the matter in appeal before the CIT(A) but without any success. Learned CIT(A) held that the definition of 'commission or brokerage', as given in Explanation to Section 194 H, is not exhaustive but only inclusive, which, in effect, implies that any payment for commission or brokerage, as understood in common parlance, will also be covered by the said provision. He inter alia observed that "it is evident that the Explanation seeks to include even those payments (besides normal commission or brokerage) which otherwise may not be called 'commission or brokerage' and which are in the nature of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t received or receivable, directly or indirectly, by a person acting on behalf of another person for services 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; (ii) the expression "professional services" means services rendered by a person in the course of carrying on a legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or such other profession as is notified by the Board for the purposes of section 44AA; (iii) the expression "securities" shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) ; (iv) where any income is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. 5. A plain reading of the above provision indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same sense." 8. Let us now deal with legal connotations of these two expressions, namely 'commission' and 'brokerage'. The Law Lexicon (Edited by Justice Y.V. Chandrachud; 1997 Edn.) observes that "in commercial law, commission is a compensation to a factor or other agent for services to be rendered in making a sale or otherwise; a sum allowed as compensation to a servant, factor or agent who manages the affairs of others, in recompense for his services." According to the given definition, "It is an allowance, recompense or reward made to agents, factors and brokers and others for effecting sales and carrying out business transactions. It is generally calculated as a certain percentage on the amount of the transactions on the profits to the principal." The expression 'brokerage' is defined as 'fees or commission given to or charged by a broker'. In turn a broker is defined as "a middleman or agent who, for a commission on the value of transaction, negotiates for others the purchase or sale of books, bonds or commodities, or property of any kind, or who attends to the doing of something for another". 9. In the light of the above discussions, and when we look at the connotations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere of the view that "there could be no other meaning of 'processing' besides what is stated as included in that expression" and that "Though 'include' is generally used in interpretation clause as a word of enlargement, in some cases context might suggest a different intention'. Their Lordships then concluded that though the expression used in the definition clause is 'includes', "it seems to us that the word 'includes' has been used here in the same sense of 'means'; this is the only construction that the word can bear in this context". In other words, an inclusive definition, as Their Lordships noted, does not necessarily always extend the meaning of an expression. When inclusive definition contains ordinary normal connotations of an expression, in our considered view, even an inclusive definition has to be treated as exhaustive. That is the situation in the case before us as well. Even as definition of expression 'commission or brokerage', in Explanation to Section 194 H, is stated to be exclusive, it does not really mean anything other than what has been specifically stated in the said definition. Therefore, as held by the coordinate benches in a number of cases including SRL ..... X X X X Extracts X X X X X X X X Extracts X X X X
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