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TMI Blog2018 (1) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... essee - ITA No. 774/Del/2016 - - - Dated:- 12-1-2018 - SHRI N.K.SAINI, ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER For The Appellant : Sh. MK Agarwal, C.A. For The Respondent : Shri Kaushlendra Tiwari, Sr.D.R. ORDER PER BEENA A PILLAI, JUDICIAL MEMBER Present appeal has been filed by assessee against order dated 10/12/15 passed by Ld.CIT(A)-6, Delhi for assessment year 2011-12 on the following grounds of appeal: 1. The disallowance of Bank Charges and Bank Guarantee commission is wrong and untenable in view of Section 2(28A) of the Income Tax Act, 1961 as the same are covered under the definition of Interest. 2. The NOTIFICATION NO. 56/2012 [F. NO. 275/53/2012-IT(B)], issued by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the head Administrative overheads ) filed by assessee with the return of income, the Ld.AO noticed that assessee had claimed ₹ 11,20,060/- under the sub head bank charges and interest income as deductible expenditure. This amount had been paid by assessee to Bank of Baroda. For A.Y. under consideration, assessee was asked to explain why bank charges paid may not be disallowed as no TDS has been deducted on the same. The Ld. AO was of the opinion that CBDT Notification no.56/2012 covers the matter only from 31.12.2012 onwards. 2.2. In its reply dated 21.02.2014, assessee submitted that : As per Schedule 7 of the balance sheet bank charges and interest amounts to ₹ 11.20 lakhs, the break-up of which is as follows. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 16.11.2017 of ITAT Delhi Bench A , New Delhi ii. Addl.CIT(TDS) vs. Jaypee Agra Vikas Limited, ITA no.5454, 5455 to 5456/Del/2015 order dated 31.10.2017 of ITAT Delhi Bench A , New Delhi iii. M/s Efftronics Systems P.Ltd. vs. ACIT, ITA no.188/Vizag/2015 order dated 21.10.2016 of ITAT Visakhapatnam. iv. DCIT vs. M/s Laqshya Media P.Ltd. ITA no.4390/Mum/2015 order dated 07.07.2016 of ITAT SMC Bench, Mumbai v. Kotak Securities Limited vs. DCIT, ITA no.6657/Mum/2011 order dated 03.02.2012 of ITAT Bench A Mumbai. 2.6. Ld. DR has been supporting the order passed by authorities below. 3. We have heard the rival submissions and perused the materials placed on record. The only issue involved in this app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vi) clearing charges (MICR charges); ( vii) credit card or debit card commission for transaction between the merchant establishment and acquirer bank. 2. This notification shall come into force from the 1st day of January, 2013. 3.2. It is observed that the above circular has been considered in the decisions of Coordinate Benches which has held the circular to be clarificatory in nature and therefore though issued w.e.f. 01/01/13, applies retrospectively and hence no deduction of tax is required on payment of bank guarantee commission and bank charges to the banks. We find that the decision of Kotak securities Ltd versus DCIT (supra) squarely covers the issue wherein this Tribunal observed as under: 23. The n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand, 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 s.194H. This transaction, is not a transaction between principal and agent so as to attract the tax deduction requirements under s.194H. CIT(A) indeed erred in holding that the assessee was indeed under an obligation to deduct tax at source under s. 194H from payments made by the assessee to various banks. Assessee was not required to deduct tax at source u/s 194H, the question of levy of interest u/s 201(1A) cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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