2017 (9) TMI 567

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ssessee is engaged in the civil construction. The assessee incurred certain expenditure under the head 'bank guarantee charges' on which tax was not deducted at source. The A.O. was of the opinion that the TDS has to be made as required u/s 194H of the Act. Consequently, provisions of section 40(a)(ia) of the Act are invoked. The case of the case of the assessee, on the other hand, was that section 194H is not applicable since there is no 'principal and agent' relationship between the assessee and the bank. Reliance was placed upon the CBDT notification dated 4.1.2013 which grants exemption from TDS on the payments made towards bank guarantee commission. It was also contended that section 40(a)(ia) of the Act is applicable only when the amo....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... to the rejection of the contention as to non-applicability of section 194H of the Act, the assessee filed Cross Objection. The only ground urged by the Revenue reads as under:- "The Ld. CIT(A) erred in holding that provisions of section 40(a)(ia) cannot be invoked in respect of payments which were actually paid during the financial year but it can be invoked only with respect to the amounts which remained payable as on 31st March, without appreciating that in the context of section 40(a0(ia) of the Act the term 'payable' would include amounts which are paid during the previous year." 7. In the Cross Objections, the assessee raised four grounds but at the time of hearing it was submitted that Ground no.2(b) is not pressed, concerning ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....order to invoke the provisions of section 40(a)(ia) it has to be shown that the payment made by the assessee is attracted by the provisions of section 194H of the Act i.e., there is liability to deduct tax at source on the bank guarantee commission payable whereas on the same issue the CBDT has issued Notification which exempts from deduction of tax. Though the Notification speaks of applicability of the clarification from 4.1.2013 the fact remains that there are number of decisions of various Benches of ITAT in favour of the assessee, even prior to the Notification and thus the Notification merely clarifies the issue and thus applicable retrospectively. At any rate, in the light of the following decisions, the only view possible in this ma....