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TMI Blog2019 (10) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... to the file of the AO with the direction to examine this issue afresh TDS u/s 194H - Non-deduction of tax at source from the Commission payment made to NPCI - HELD THAT:- As decided in M/S CORPORATION BANK [ 2015 (3) TMI 1360 - ITAT] the payment made to NFS could not be considered as commission or brokerage liable for deduction at source. BANGALORE] - The assessee is not liable to deduct tax at source from the payments made NCPI towards NFS charges. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and delete the demand raised on this payment. - ITA No.2886/Bang/2017 - - - Dated:- 1-10-2019 - Shri B.R Baskaran, Accountant Member And Smt. Beena Pillai, Judicial Member For the Appellant : Shri Ananthan, C.A For the Respondent : Shri R.N Siddappapji, Addl. CIT (DR) ORDER PER B.R. BASKARAN, ACCOUNTANT MEMBER The assessee has filed this appeal challenging the order dated 31-10-2017 passed by Ld CIT(A), Gulbarga and it relates to the assessment year 2010-11. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the demand raised upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Improvement Trust vs. Ujagar Singh Ors (2010-TIOL-46-SC-LMT) and submitted that the Ld CIT(A) was not justified in refusing to condone the delay. He submitted that the assessee bank was constrained to complete the audit as soon as possible after the closure of the financial year. Hence the officials and auditors were busy in audit works, which has resulted in a delay of about two months in filing appeal before Ld CIT(A). He submitted that there was reasonable cause for the assessee in filing the appeal belatedly and accordingly prayed that the delay may be condoned. 7. The Ld D.R, on the contrary, submitted that the assessee did not furnish proper reasons for the delay in filing appeal before Ld CIT(A). 8. We have heard the parties on this preliminary issue. We notice that the assessee is a bank and its accounts are required to be audited immediately after the closure of the financial year. Accordingly it was stated that the delay has occurred on account of audit works, since the assessee/auditor was busy in audit. In our view, the reason furnished by the assessee for the delay constitutes reasonable cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons could contribute to some short deduction of TDS in some earlier months of the financial year but the fact remains that at the end of financial year there was no short deduction of TDS. Before learned CIT(A) the assessee had relied upon the case law decided by Hon'ble Delhi High Court in the case of CIT vs. Marubeni India (Pvt.) Ltd., in which it was held that when under certain circumstances there is short deduction of tax the assessee cannot be held to be in default u/s 201(1) of the Income Tax Act, 1961. The assessee had also filed the copy of the judgment, however, the learned CIT(A) though observed that issue has been decided in favour of assessee in a number of cases, but he did not adjudicate on the issue holding that assessee had not raised the issue before him. However, we find that the non deduction of TDS on monthly average basis was due to technical reasons and moreover, the issue for non deduction on monthly average basis is decided in favour of assessee in the decision of Hon'ble Delhi High Court in the case of CIT vs. Marubeni India (Pvt.) Ltd.. We find that though assessee before learned CIT(A) had not raised specifically this ground of appeal, but ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such payments is placed at (PB page 1 to 2). Therefore, the PAN Nos. of such deductees was available at the time of deduction of TDS, and therefore, the mentioning of the same on the declarations was only a technical breach. The Hon'ble ITAT, Vishakhapatnam Bench in the case of DOlT Circle-3(1), (TDS) Vijayawada vs. M/s Vijaya Bank, Kothagudem under similar facts and circumstances has decided the issue vide para7 which is reproduced below. 7. We have heard the submissions of the parties, perused the orders of the revenue authorities as well as other materials on record. It is the claim of the department that the assessee has not been able to submit declarations in form 15G in all the cases at the time of survey. Whereas, the assessee has asserted that during the proceeding before the assessing officer, declarations of the depositors in prescribed manner was filed in cases where tax has not been deducted. On a perusal of facts and materials on record, it is clear that even assuming that at the time of survey, all the declarations could not be brought to the notice of the department for whatever may be the reasons, but fact remains that durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se also. In the instant case, the assessee has furnished a statement showing the details of interest paid on terms deposits. A perusal of the same would show that the assessee has furnished PAN number of most of the depositors. Accordingly we are of the view that this issue requires reexamination in the light of principles discussed above. Accordingly we set aside the order passed by Ld CIT(A) and restore this issue to the file of the AO with the direction to examine this issue afresh by following the discussions made supra. 11. The next issue relates to non-deduction of tax at source from the Commission payment made to NPCI. The Ld A.R placed his reliance on the decision rendered by co-ordinate bench in the case of The ACIT vs. M/s Corporation Bank (ITA No.1264 (Bang)2013 and 1352 (Bang) 2013 dated 11.03.2015), wherein it was held that the payment made to NFS could not be considered as commission or brokerage liable for deduction at source. For the sake of convenience, we extract below the relevant discussions made by the co-ordinate bench in the above said case:- 24. We have perused the orders and heard the rival contentions. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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; ( ) 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; (ii) 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) ; (iii) 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. 7. Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or on the profit of the principal. It is a fee paid to an agent or an employee for generating a piece of business or performing a service. In such cases, normally, there exists a fiduciary duty, which has to be discharged by the person to whom commission is paid. The following excerpt from the decision of the Bombay High in Harihar Cotton Processing Factory versus CIT, (1960) 391 ITR 594 (Bom.) was referred to with approval:- The expression commission has no technical meaning but both in legal and commercial acceptation of the term it has definite signification and is understood as an allowance for service or labour in discharging certain duties such as for instance of an agent, factor, broker or any other person who manages the affairs or undertakes to do some work or renders some service to another. Mostly it is a percentage on price or value of upon the amount of money involved in a transaction. It can be for a variety of services and is of the nature of recompense or reward for such services. Rebate , on the other hand, is a remission or a payment back and of the nature of a deduction from the gross amount. It is sometimes spoken of as a discount or a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imarily is a contract of employment to bring about a legal relationship with a third party and the agent either actually or by law is held to be authorized or employed by the first i.e. the principal, whom he represents. Representative character and derivative authority are distinguishing features of an agent. It was accordingly held that provisions of Sections 194H of the Act were not attracted in the case of stamp vendors. 12. The expressions commission or brokerage are words of general and common parlance used both commercially and by the common man on the street. Clause (i) expressly seeks to define the expression commission or brokerage but states that it will include payments received or receivable, directly or indirectly by a person acting on behalf of another if they fall in the three categories. A definition may be exhaustive or restrictive of its common meaning or may be an extensive one. Indeed, there are decisions which observe that use of the word includes in the clause can show legislative intent to enlarge the meaning of the words or phrases occurring so as to not only mean and comprehend such things as they signify according to their nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited, (2010) 325 ITR 148 (Delhi) wherein Explanation clause (i) to Section 194H of the Act had come up for consideration and on interpretation it was held that it would apply only if payment was received or receivable directly or indirectly by a person acting on behalf of another person for (i) services rendered (not being professional) and (ii) for any services in the course of buying or selling of goods or in relation to any transaction relating to an asset, valuable article or thing. The judgment records that the counsel for both the parties, i.e. the Revenue and the assessee, had agreed that the element of agency was to be established in all the aforesaid circumstances (see page 156 placitum 9 of the ITR citation). Thus, this contention if raised would not stand judicial scrutiny on the principles of consistency and certainty. Even otherwise, the view expounded and accepted is plausible, besides being reasonable. 15. Applying the above cited case law to the factual matrix of the present case, we feel that Section 194H of the Act would not be attracted. HDFC was not acting as an agent of the respondent-assessee. Once the payment was made by HDFC, it was rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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