TaxTMI 
TaxTMI 
2019 (10) TMI 656
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....)-6, New Delhi qua the assessment year 2012-13 on the grounds inter alia that :- "1. That the Order passed by the Id. CIT(A) is contrary to facts and bad in law. 2. That on the fact and circumstances of the case and in law, the Ld. CIT(A) was not justified in upholding the decision of the Assessing Officer to disallow the expenditure of Rs. 18,40,032, on account of bank guarantee commission. 3. That on the fact and circumstances of the case and in law, the Ld. CIT(A) has grossly misconstrued CBDT Notification No. 56/2012 dated 31.12.12 and erred in holding that the scheme presupposes that a payment notified under this notification was not exempt earlier. 4. That on the fact and circumstances of the case a....
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....nfirmed the addition by dismissing the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 5. Ld. AR for the assessee by relying upon the order passed by the coordinate Bench of the Tribunal in case cited as Kotak Securities Ltd. vs. DCIT, TDS Circle 2 (1), Mumbai - (2012) 14 ITR (T) 495 (Mumbai-Trib.) contended that bank guarantee commission partakes character of interest u/s 2(28A) of the Act and as such, addition is not liable to be sustained. However....
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....section 194H, i.e. alongwith the expression 'brokerage', significantly restricts its connotations. The common parlance meaning of the expression 'commission' thus does not extend to a payment which is in the nature of fees for a product or service; it must remain restricted to, as has been elaborated above, a payment in the nature of reward for effecting sales or business transactions etc. The inclusive definition of the expression 'commission or brokerage' in Explanation to Section 194 H is quite in harmony with this approach as it only provides that "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 c....
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..... Even as definition of expression 'commission or brokerage', in Explanation to Section 194 H, is stated to be exclusive, it does not really mean anything other than what has been specifically stated in the said definition. Therefore, as held by the coordinate benches in a number of cases including SRL Ranbaxy Ltd vs ACIT (ITA No. 434/Del/11; order dated 16.12.2011), Fosters India Ltd Vs ITO (117 TTJ 346), and Ajmer Zila Dugdh Utpadak Sangh Ltd Vs ITO (34 SOT 216), principal agent relationship is a sine qua non for invoking the provisions of Section 194 H. In the case before us, there is no principal agent relationship between the bank issuing the bank guarantee and the assessee. When bank issues the bank guarantee, on behalf of th....