Case Law Details
NKC Projects (P) Ltd. Vs DCIT (ITAT Delhi)
It could be seen from the assessment order that while dealing with the issue of allowability of the bank guarantee commission, learned Assessing Officer held that on identical facts in assessee’s own case for the assessment year 2011-12 an addition under section 40(a)(ia) of the Act was made and the same was confirmed by the Ld. CIT(A) in appeal. However the order dated 28/11/2018 in ITA No. 1517/del/2015 for the assessment year 2011-12 clearly shows that after following the orders of the Mumbai, Pune and Visakhapatnam benches of the Tribunal, a conclusion was reached by the Tribunal that in the absence of any principal agent relationship between the bank issuing bank guarantee and the assessee, the transaction between them is not transaction between the principal and agent so as to attract the tax deduction under section 194H of the Act.
FULL TEXT OF THE ITAT JUDGEMENT
Aggrieved by the Order dated 27.04.2017 in Appeal No. 14/16-17 passed by the Ld. Commissioner of Income Tax (Appeals)-6, Delhi (“Ld. CIT(A)”), M/s. NKC Projects (P) Ltd., (“the assessee”) preferred this is an appeal.
2. Brief facts of the case are that the assessee is a contractor and is engaged in the business of constructing highways, roads and commercial buildings for corporate sector etc. For the assessment year 2013-14 they have filed their return of income on 30/9/2013 declaring a total income of Rs. 10,51,41,070/-. During the course of assessment proceedings, learned Assessing Officer noticed that the assessee paid a bank guarantee commission amounting to Rs. 1,50,59,660/- till 31/12/2012, such payments were in the nature of those mentioned in Notification No. 56/2012 dt. 31/12/2012, not covered within the definition of interest under section 2 (28 A) of the Income Tax Act, 1961 (for short “the Act”) and therefore exemption provided under section 194A (3 (iii) (a) of the Act is not applicable to such payments, since payment for such services can be made without deduction of TDS to scheduled banks.
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