Commissioner Of Income Tax (Tds)-1 v. Larsen & Toubroltd.[1]Before Dismissal Of The Revenue's Appeal Making Followingobservations

Priya Soparkar 131 itxa 1382-16 with 36 itxa 1392-16-o IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1382 OF 2016WITH INCOME TAX APPEAL NO.1392 OF 2016 Commissioner of Income Tax-TDS-2 … Appellant V/s. Nimbus Communications Ltd. … Respondent --- Mr.Suresh Kumar for the Appellant.Mr.Rahul Hakani for the Respondent. --- CORAM : AKIL KURESHI AND M.S.SANKLECHA, JJ. DATE : JANUARY 18, 2019. P.C.:- 1.Issues being identical, we may notice facts from Income TaxAppeal No.1382 of 2016. 2.Revenue has filed this appeal against the judgment of the Income Tax Appellate Tribunal dated 6[th] November, 2015 raising following questions for our consideration: “I.Whether on the facts and in the circumstancesof the case and in law, the ITAT is correct in holdingthat the payment of Guarantee Commission paid bythe Assessee to the Banks is not covered under “Commission or brokerage' as defined u/s 194H ofth Act and the Assessee was not liable to deductTax at source u/s 194H of the Act in respect of theamount? II.Whether on the facts and in the circumstancesof the case and in law, the ITAT is correct in notconfirming the order of the AO treating the Assesseein default u/s 201(1) in respect of amount of taxwhich has not been deducted u/s 194H of the Actand levying interest u/s 201(1A) of the Act?” III.Whether on the facts and in the circumstancesof the case and in law, the ITAT is correct inholding that there does not exist Principal Agentrelationship between the Assessee and the Banksand thereby clearly ignoring the fact that in theentire process of facilitation of Guarantee Banksare nothing but a constructive agent for theAssessee?” IV.Whether on the facts and in the circumstancesof the case and in law, the ITAT is correct inignoring that the Section 194H of the Act gives aninclusive definition of “Commission or Brokerage”and has wide coverage to clearly include thepayment of Guarantee Commission paid by theAssessee to the Banks?” 3. Learned counsel for the revenue fairly pointed out thatthe similar questions were considered by this Court in case of Commissioner of Income Tax (TDS)-1 Vs. Larsen & ToubroLtd.[1]before dismissal of the revenue's appeal making followingobservations: 1(2019)101 taxmann.com 83(Bombay) Priya Soparkar “3.Learned counsel for the Revenue statedthat the Revenue had filed an appeal againstthe judgment of the Tribunal in case of KotakSecurities Ltd but that the appeal waswithdrawn on the ground of low tax effect.He has, however, made available a copy ofthe judgment of the Tribunal in the said casewhich contains a detailed discussion on theissue at hand. In the said judgment, theTribunal referred to Section 194H of the Actwhich requires an assessee responsible forpaying any income by way of commission orbrokerage to deduct tax at source. TheTribunal was of the opinion that the words“commission or brokerage” must take colourfrom each other. The Tribunal was of theopinion that the payment in question, thoughcategorized as “bank guarantee commission”isnot strictly speaking payment of commissionsince there is no principal to agentrelationship between the payer and the payee.The Tribunal, therefore, held that therequirement of deducting tax at sourceemanating from Section 194H of the Act inthe present case does not arise. 4. We are broadly in agreement with theview of the Tribunal. The so called bankguarantee commission is not in the nature ofcommission paid to an agent but it is in thenature of bank charges for providing one ofthe banking service. The requirement ofSection 194H of the Act, therefore, would notarise. No question of law arises. The IncomeTax Appeal is dismissed.” 4.In the result, the tax appeals are dismissed. (M.S.SANKLECHA,J.) (AKIL KURESHI,J.)