2016 (7) TMI 1356

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... b) Deletion of deduction of Bank Guarantee Commission and Miscellaneous Bank charges u/s 194H of the Income Tax Act, 1961; and c) Deletion of interest u/s 201(1A) of the Act. 4. The facts of the case are that the assessee filed e-return on 14.10.2010. The assessee is engaged in the business of providing outdoor Media Advertising Services. During the course of assessment proceedings, the AO observed that the assessee has debited an amount of Rs. 40,18,998/- towards "Processing Fees" and Rs. 8,92,665/- towards "Bank Guarantee Commission" and did not deduct TDS thereon. The AO called for an explanation from the assessee. The explanation tendered by the assessee did not find favour by the AO and by invoking the provisions of section 194 o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... 6. The ld. CIT (A), after considering the facts and case laws relied on by both the parties, deleted the addition made by the AO on this issue by observing and holding as under: "A. PROCESSING FEES: The processing fee is paid to Scheduled Bank. I agree with the submission of the appellant that processing fees are in the nature of upfront interest. This view is affirmed by the decision of Hon'ble Tribunal in the case of M/s. Aban Investments vs. DCIT 52 SOT 36 (Chennai)(URO) and Bilt Power vs. A(IT 34 (CH 334- Delhi Tribunal wherein it has been held that processing fees falls within the definition of interest provided in section 2(28A) of the IT. Act, 1961 which falls in the exclusion provided in section 194A(3) of the Act and hence....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ed in holding that the assessee was indeed under obligation to deduct tax at source u/s.194H from payments made by the assessee to various banks. As we have held that the assessee was not required to deduct tax at source u/s.194H, the question of levy of interest u/s.201 (1A) cannot arise. In view of the above discussion, we quash the impugned demands u/s 201 (1) and 201(1A) r.w.s.194H. We, therefore, also see no need to deal with other peripheral legal issues raised by the assessee." 3.4 The facts remaining the same, respectfully following the decision of the Hon'ble ITAT, cited supra, in my considered opinion the demand raised by A.O. u/s 201 (1) on non-deduction of tax at source on Bank Guarantee Commission & Miscellaneous Bank Cha....