Case Law Details
Pr. CIT Vs Hotel Leela Venture Ltd. (Bombay High Court)
Conclusion: Bank guarantee commission was not in the nature of commission paid to an agent but it was in the nature of bank charges for providing one of the banking service, therefore, the charge collected by bank for such service did not amount to commission within the meaning of section 194H and such commission could not be disallowed under section 40(a)(ia).
Held: Assessee was a company, engaged in the business of setting up of and operating of Deluxe Hotels. AO noticed that assessee had not deducted tax at source in terms of Section 194H in relation to commission paid to the banks on processing of credit card transactions. AO disallowed the corresponding expenditure by invoking section 40(a)(ia). It was held bank guarantee commission was not in the nature of commission paid to an agent but it was in the nature of bank charges for providing one of the banking service. The charge collected by bank for such service did not amount to commission within the meaning of section 194H and consequently, such commission could not be disallowed under section 40(a)(ia).
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
These Appeals arise from common background. We may, therefore, record facts from the Income Tax Appeal No.847 of 2016. Appeal is filed by the Revenue, challenging Judgment of the Income Tax Appellate Tribunal (for short “the Tribunal”), dated 19th August, 2015. Following question was argued before us:-
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