Bank guarantee commission not subject to TDS under section 194H. ITAT Mumbai upholds CIT(A) decision.

The ITAT Mumbai upheld the CIT(A)'s decision that the assessee was not required to deduct tax at source on bank guarantee commission under section 194H of the Income Tax Act. The ITAT relied on a previous decision in the assessee's favor for A.Y. 2011-12, establishing that no TDS was payable on such charges. The Revenue's appeal for A.Y. 2012-13 was dismissed, affirming the CIT(A)'s order.

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Issues Involved:
- Whether the assessee is liable to deduct tax at source on bank guarantee commission under section 194H of the Income Tax Act, 1961Rs.

Analysis:
The appeal by Revenue was against the order of the CIT(A)-59, Mumbai for A.Y. 2012-13. The Assessing Officer required the assessee to explain the failure to deduct tax at source on expenses like bank guarantee commission and technical/professional services. The AO treated the assessee as 'an assessee in default' under section 201(1) of the Act due to non-deduction of tax, leading to a substantial demand. The CIT(A) disposed off the appeal following a decision of a Coordinate Bench, holding that the assessee is not required to deduct tax at source under section 194H of the Act on bank guarantee commission.

The Revenue challenged the CIT(A) order, arguing that tax should have been deducted on bank guarantee commission under section 194H. The ITAT Mumbai considered a previous decision in the assessee's own case for A.Y. 2011-12, where it was held that no TDS is payable on bank guarantee commission charges under section 194H. The ITAT upheld this decision, stating that the relationship between the assessee and banks did not necessitate TDS under section 194H. The ITAT dismissed the Revenue's appeal for A.Y. 2012-13 based on the precedent set in the earlier case and found no merit in the Revenue's grounds for appeal.

In conclusion, the ITAT Mumbai upheld the decision of the CIT(A) regarding the non-requirement of TDS on bank guarantee commission under section 194H of the Act. The ITAT's judgment was based on the principle established in the assessee's previous case for A.Y. 2011-12, where it was held that no TDS was payable on such charges. The Revenue's appeal for A.Y. 2012-13 was dismissed, affirming the CIT(A)'s order.

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