TaxTMI 
TaxTMI 
2017 (2) TMI 801
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....cted at source. While passing the order u/s. 201(1)/201(1A) of the Act, on 21/03/2013, the AO dealt with two payments made under the heads i. )Processing Fees and Guarantee Commission ii. )Holding/ Display Rights. 2. With regard to Processing Fees (Rs. 9. 85 lakhs) and Guarantee Commission paid the Banks (Rs. 14. 48 lakhs), the AO held that assessee had not deducted tax at source, that it should have deducted tax as per the provisions of section 194H of the Act. It was brought over notice that identical issue had arisen in assessee's own case in ITA No. 1297/Mum/2014 for the AY. 2010- 11, that vide its order dated 27/05/2016, the Tribunal had dealt the issue at length and had decided the same as under: "2. Brief facts of the cas....
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....ture of upfront interest and falls within the exclusion provided in section 194A(3); secondly, no tax is deductible under section 194J on such processing charges; thirdly, the 'guarantee fees' do not fall within the ambit of "commission" or "brokerage" as to entail TDS; and lastly, on the payment for advertising and hoardings the assessee had deducted TDS on some of the items but most of the items have been capitalized therefore, there is no requirement for TDS to be deducted on such capitalized expenses. The Ld. CIT(A) after considering the submission and material on record decided the first three payments in the favour of the assessee and for the last he directed the AO to delete the payment on items of expenditure which are capitalized a....
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....agerial services. On the other hand, Ld. DR supported the order of the AO. 5. As regards the payment of "processing fee" paid to Nationalized Bank, we agree with the contention of Ld. Counsel that, "loan processing fee" is charged by the banks for processing the application when a borrower approached the bank for a loan. Such a service fee or charge it has been included in the definition of "interest", as given in section 2(28A) which reads as under:- "'interest' means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect ....
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....be liable for TDS under section 194H by the AO, we are unable to accept the contention of the AO, because the assessee has sought its banks like HDFC Bank, Dena Bank and Yes Bank to issue guarantee in its favour for which bank has charged certain amount as 'guarantee fee'. To fall within the ambit and scope of section 194H, the payment has to be in the nature of "commission or brokerage". The Explanation to section 194H defines the phrase 'commission and brokerage' in the following manner:- "'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....
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.... had dealt the issue as under: "7. Lastly, coming to the issue of payment on hoarding and display expenses, first of all, from the impugned order it is seen that the Ld. CIT(A) has directed the AO to remove the expenditure which has been capitalized by the assessee in its books of accounts. Once an item of expenditure has been capitalized then there is no requirement for deducting the TDS. Thus, to this extent, there cannot be any infirmity in the order of the CIT(A) and the same is affirmed. For the balance amount the Ld. Counsel submitted that, assessee has filed a breakup of expenditure before the AO and it was explained that these payments were in the nature of:- (a) Ground level and beatification; (b) Materia....