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TMI Blog2016 (8) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before us. Rather it falls within the ambit of interest as defined under section 2(28A), which provides that, interest includes any service fees or other charge in respect of all monies borrowed. Thus, there was no requirement to deduct the TDS on account of rendering of managerial services. As regards the payment of “processing fee” paid to Nationalized Bank, we agree with the contention of Ld. Counsel that, “loan processing fee” is charged by the banks for processing the application when a borrower approached the bank for a loan. Such a service fee or charge it has been included in the definition of “interest”, as given in section 2(28A). The definition of interest will include any service fee or any other charge in respect of money borrowed. Here, processing fee definitely falls within such definition and, therefore, it cannot be reckoned as payment for rendering of any managerial services by the bank as held by the AO. Thus the assessee is not required to deduct TDS on such payment of income paid to any banking company. Accordingly, the finding of the CIT(A) deciding in favour that the payment of processing fee does not require deducting of TDS is upheld and revenue’s gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . With this direction, this ground of the revenue is treated as dismissed. - ITA No. : 1297/Mum/2014 - - - Dated:- 27-5-2016 - SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER For The Appellant : Shri M Murli For The Respondent : Shri S Sriram PER AMIT SHUKLA, JM: The aforesaid appeal has been filed by the revenue against impugned order dated 03.12.2013 passed by the CIT(A)-14, Mumbai in relation to the order passed under section 201(1)/201(1A) for the assessment year 2010-11. In the grounds of appeal, following grounds have been raised:- i) On the facts and circumstances of the case and in law, the learned CIT(A) has erred in allowing the appeal of the assessee on the basis of reasoning of the processing fees and bank guarantee commission are not in nature of managerial services but upfront interest and no TDS was required to be deducted on such charges paid to banks u/s 194J of the I.T. Act, 1961. ii) On the facts and circumstances of the case and in law, the learned CIT(A) has erred in holding that TDS is not to be deducted at all under any section of the I.T. Act, 1961, on expenditure on the hoardings/display rights ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ambit of commission or brokerage as to entail TDS; and lastly , on the payment for advertising and hoardings the assessee had deducted TDS on some of the items but most of the items have been capitalized therefore, there is no requirement for TDS to be deducted on such capitalized expenses. The Ld. CIT(A) after considering the submission and material on record decided the first three payments in the favour of the assessee and for the last he directed the AO to delete the payment on items of expenditure which are capitalized and for the balance payment AO should verify the deduction of TDS and recompute the demand accordingly. 4. We have heard the rival submissions and also perused the relevant material placed on record. The first payment is on account of loan processing fees paid to the Nationalized Bank. This fee is charged by the bank for, processing the application filed by the borrower and for any inspection of title deeds and documents relating to properties and to verify and creation of charge etc. on the property. The Ld. Counsel s case before us is that, such a payment does not entail deduction of tax, because it is in the nature of service fee on borrowed mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin the exclusionary provisions as laid down in sub-section (3) of section 194A, specifically subclause (iii)(a) which envisages that, the income credited or paid to any banking company to which Banking Regulation Act, 1949 applies, the provision of section 194A(1) will not apply. In other words, the assessee is not required to deduct TDS on such payment of income paid to any banking company. Accordingly, the finding of the CIT(A) deciding in favour that the payment of processing fee does not require deducting of TDS is upheld and revenue s ground on this score is dismissed. 6. As regards guarantee fees paid which has been held to be liable for TDS under section 194H by the AO, we are unable to accept the contention of the AO, because the assessee has sought its banks like HDFC Bank, Dena Bank and Yes Bank to issue guarantee in its favour for which bank has charged certain amount as guarantee fee . To fall within the ambit and scope of section 194H, the payment has to be in the nature of commission or brokerage . The Explanation to section 194H defines the phrase commission and brokerage in the following manner:- Commission or brokerage includes any payment recei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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