TaxTMI 
TaxTMI 
2017 (11) TMI 120
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.... the circumstances of the case, the Ld. CIT (A) has and in law in deleting the addition of Rs. 3198246/- made by the AO without appreciating the fact that according to CBDT notification No. 56/2012 dated 31st. December 2012 the assessee company as to deduct TDS from bank guarantee commission paid on or before 31st. December 2012." 3. The assessee is a company which is engaged in the business of manufacturing and installing of wind electric generators for harnessing power from wind at different location in India. It filed its return of income on 30/09/2011 declaring nil income. The assessment under section 143 (3) of the Act was passed on 21/03/2014 determining the total loss of the assessee of Rs. 9708812/-. Against the order of the Ld. as....
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....f the coordinate bench in case of Kotak securities Ltd Vs. DCIT and also on the decision of the Hon'ble Delhi High Court in case of CIT versus JDS Apparel (P.) Ltd. wherein it has been held that such commission is outside the purview of the section 194H of the income tax act. Therefore, he held that the disallowance of Rs. 3198246/- made by the Ld. assessing officer is not sustainable. 5. The Ld. departmental representative vehemently contested that the CBDT has issued a notification wherein it is been stated that the tax is not required to be deducted on bank guarantee commission paid to the banks other than foreign banks from 01.01.2013. Prior to the issue of the notification she submitted that the tax is required to be deducted. Therefo....
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....n 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 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 princ....
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....hers for effecting sales and carrying out business transactions' and shall not extend to the payments, such as 'bank guarantee commission', which are in the nature of fees for services rendered or product offered by the recipient of such payments on principal to principal basis. Even when an expression is statutorily defined under section 2, it still has to meet the test of contextual relevance as section 2 itself starts with the words "In this Act (i.e. Income Tax Act), unless context otherwise requires...", and, therefore, contextual meaning assumes significance. Every definition in the Income Tax Act must depend on the context in which the expression in set out, and the context in which expression 'commission' appears....
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.... stated as included in that expression" and that "Though 'include' is generally used in interpretation clause as a word of enlargement, in some cases context might suggest a different intention'. Their Lordships then concluded that though the expression used in the definition clause is 'includes', "it seems to us that the word 'includes' has been used here in the same sense of 'means'; this is the only construction that the word can bear in this context". In other words, an inclusive definition, as Their Lordships noted, does not necessarily always extend the meaning of an expression. When inclusive definition contains ordinary normal connotations of an expression, in our considered view, even an inclusiv....