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TMI Blog2016 (3) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... make assessee liable for TDS u/s.194A. - Decided in favour of assessee - ITA No.4010&4011/Mum/2014 - - - Dated:- 19-2-2016 - SHRI R.C.SHARMA, AM AND SHRI RAM LAL NEGI, JM For The Assessee : Dr. K.Shivram For The Revenue : Shri N.P.Singh ORDER PER R.C.SHARMA (A.M.) : These are the appeals filed by the assessee against the order of CIT, Mumbai, for the assessment years 2010-11 2011-2012, in matter of order passed u/s.263 of the I.T.Act. 2. In both these appeals common grievance of assessee relates to CIT‟s direction to subject the reimbursement of bank guarantee commission u/s.194A @10%, in place of deduction done by the AO u/s.194C @2%. 3. Rival contentions have been heard and record perused. Facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS u/s.194C and passed order accordingly. However, the CIT did not accept the provisions of Section 194C invoked by the AO and held that payment of bank guarantee commission was in the nature of interest, therefore, assessee was liable for deduction of tax at source @10% u/s.194A. As per CIT, the order passed by AO was erroneous as well as prejudicial to the interest of revenue. Against this order of CIT u/s.263, the assessee is in further appeal before us. 4. It was argued by ld. AR Dr. K.Shivram that the AO after analyzing the nature of payment had applied the relevant provisions of law and made the assessee liable for payment of TDS u/s.194C. As per ld. AR if two views are possible revision cannot be done and for this purpose he pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer u/s.263. He placed reliance on the order of Hon‟ble Madras High Court in the case of Viswapriya Financial Services, 258 ITR 496 in support of the proposition that any charges paid for services rendered is coming under the definition of the interest u/s.2(28A), accordingly CIT has correctly held that assessee was required to deduct tax on such bank guarantee commission u/s.194A. 7. We have considered rival contentions, carefully gone through the orders of authorities below and deliberated the judicial pronouncements cited by ld. AR and DR as well as relied on by the lower authorities in their respective orders. From the record we found that an agreement was entered between assessee Neo Sports Broadcast Private Limited (Neo) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was discussed and upheld by AO in the assessment order dt. 18/3/2012; TDS u/s.194A - (which the assessee does not agree with) and not sought to be taken by CIT. Revision of order u/s 263 cannot be done if two views are possible on the issue. Hon‟ble Supreme Court in the case of CIT v. Max India Limited [2007] 295 ITR 282 (SC) held as under :- The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopts one of the courses permissible in law and it has resulted in loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not obtained any services from NCL and in no circumstances it can be treated as interest within the definition of section 2(28A) of the Income Tax Act, 1961. Furthermore, the ultimate beneficiary of bank guarantee commission (name itself suggests guarantee commission paid to the banks) is Bank and it cannot be treated as BGC paid to NCL since NCL has not provided any guarantee for and on behalf of Neo to any third party or BCCI. The provisions of Section 194A are not applicable on any payment made to any baking company to which the Banking Regulation Act, 1949 applies as in the case of assessee, the payment reimbursed to NCL towards BGC is what is paid by NCL to Banks. The case law relied on by the ld. DR is not applicable to the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 202 dt. 5/7/1976 - [1976J 105 ITR (St.) 17, pg. 24 para 12.1, provides that :- Definition of interest u/s 2(28A) covers interest payable in any manner in respect of loans, debts, deposits, claims and other similar rights or obligations. This definition will be applicable for all purposes of the Income-tax Act. 11. CBDT circulars are binding on the Revenue. Therefore, Department cannot invoke provisions of sec. 194A r.w.s. 2(28A) to the impugned transaction which does not relate to loans, deposit, money etc. as held by Hon‟ble Supreme Court in the case of UCO Bank v. CIT [1999J 237 ITR 889 (SC). 12. In the instant case, there is no money borrowed or debt incurred. Therefore, provisions of sec. 2(28A) and sec. 194A do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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