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TMI Blog2017 (11) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... - Shri Amit Shukla, Judicial Member And Shri Prashant Maharishi, Accountant Member Revenue by : Smt Paramita Tripathy, CIT DR Assessee by : None ORDER Per Prashant Maharishi, A. M. 1. This appeal is filed by revenue against the order of the Ld. CIT (A) 7, New Delhi dated 25/07/2016 for assessment year 2011-12, wherein the disallowance of ₹ 3198246 made by the Ld. assessing officer for non-deduction of tax at source on bank guarantee commission was deleted. 2. The revenue has raised the solitary ground of appeal as under:- On the facts and under the circumstances of the case, the Ld. CIT (A) has and in law in deleting the addition of ₹ 3198246/ made by the AO without appreciating the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax was deductible on bank guarantee commission. The assessee stated that notification has come into force from 1st day of January 2013, however, the principle remains the same and though the assessment year involved is 2011-12 therefore the same applies to the facts of the case for this year also. However, the Ld. assessing officer rejecting the contention of the assessee disallowed the above sum. The Ld. CIT (A) allowed the claim of the assessee vide para No. 5 of his order for the reason that that the above notification issued by the CBDT is clarificatory notification. He relied upon the decision of the coordinate bench in case of Kotak securities Ltd Vs. DCIT and also on the decision of the Hon ble Delhi High Court in case of CIT versus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 ) has held that bank is not acting as an agent of the assessee. Further on identical issue has been considered by the coordinate benches in DCIT Vs. Laqshya Media Pvt. Ltd 72 Taxmann.com 119 wherein, for AY 2010-11 in para no. 6 the coordinate bench has held that above circular is retrospective in nature as it held for Assessment Year 2010-11 as under :- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus in view of the CDBT Circular also the ground raised by the revenue cannot be sustained and accordingly, the same is dismissed. 9. Further in Kotak Securities 18 Taxxmann. Com 48 it has been held as under:- 9. In the light of the above discussions, and when we look at the connotations of expression 'commission or brokerage' in its cognate sense, as in the light of the principle of noscitur a sociis as we are obliged to, in our considered view, scope of expression 'commission', for this purpose, will be confined to 'an allowance, recompense or reward made to agents, factors and brokers and others for effecting sales and carrying out business transactions' and shall not extend to the payments, such as &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, valuable article or thing, not being securities is includible in the scope of meaning of 'commission or brokerage'. Therefore, what the inclusive definition really contains is nothing but normal meaning of the expression 'commission or brokerage'. In the case of South Gujarat Roofing Tiles Manufacturers Association v. State of Gujarat [1976] 4 SCC 601, Hon'ble Supreme Court were in seisin of a situation in which an expression, namely 'processing', was given an inclusive definition, but Their Lordships were 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the assessee, all it does is to accept the commitment of making payment of a specified amount to, on demand, the beneficiary, and it is in consideration of this commitment, the bank charges a fees which is customarily termed as 'bank guarantee commission'. While it is termed as 'guarantee commission', it is not in the nature of 'commission' as it is understood in common business parlance and in the context of the section 194H. This transaction, in our considered view, is not a transaction between principal and agent so as to attract the tax deduction requirements under section 194H. We are, therefore, of the considered view that the CIT(A) indeed erred in holding that the assessee was indeed under an oblig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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