Case Law Details
Addl CIT Vs Jaypee Agra Vikas Ltd (ITAT Delhi)
“‘Commission or brokerage’ includes any payment received or receivable, 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”.
Thus, it is sine qua non that there has to be a principal – agent relationship for a payment to be treated as commission or brokerage. The recipient of the income must act on behalf of the principal. Here the banker does not act on behalf of the assessee for rendering any kind of service. The contract of guarantee does not give any rise to principal – agent relationship between the assessee and the bank and, therefore, the consideration received by the bank on account of guarantee commission cannot be reckoned as commission as contemplated under section 194H and accordingly, there was no requirement to deduct TDS on this payment. Thus, on this score also, the order of the Ld. CIT(A) is affirmed. Before us, the Ld. Counsel had also brought to our notice a CBDT Circular No. 56 of 2012 (sic) wherein it has been clarified that ‘guarantee fee’ paid to a nationalized bank will not be subject to withholding tax.
Full Text of the ITAT Order is as follows:-
1. These are the appeals filed by the Assessing Officer against the order of the ld CIT(A)-I, Noida dated 14.05.2015 for the Assessment Year 2011-12, 2012-13 and 2013-14 cancelling the penalty u/s 271C of the Act levied for non deduction of tax/ short deduction of tax on account of bank guarantee commission to various banks as per provisions of section 194H of the Act.
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