Case Law Details
M/s. Navnirman Highway Project Pvt. Ltd. Vs DCIT (ITAT Delhi)
The issue under consideration is whether TDS under section 194H is applicable from payment of bank guarantee commission to the bank?
ITAT states that when the bank has issued bank guarantee on behalf of the assessee there is no principal – agent relationship between the bank and the assessee which is a mandatory condition for invoking the provisions contained u/s 194H and in these circumstances, the assessee was not liable to deduct tax at source u/s 194H from payment of bank guarantee commission to the bank. Moreover, bank guarantee commission also partakes the character of interest u/s 2(28A) of the Act and as such, exemption provided u/s 194A(3)(iii) is available to the assessee qua such payment. Consequently, addition made by the AO and confirmed by the ld. CIT (A) is ordered to be deleted, thus the appeal filed by the assessee is hereby allowed.
FULL TEXT OF THE ITAT JUDGEMENT
Appellant, M/s. Navnirman Highway Project Pvt. Ltd., (hereinafter referred to as the ‘assessee’) by filing the present appeal sought to set aside the impugned order dated 10.10.2016 passed by the Commissioner of Income – tax (Appeals)-6, New Delhi qua the assessment year 2012-13 on the grounds inter alia that :-
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