TDS not applicable on payment of bank guarantee commission to bank listed in second schedule to RBI Act as there is no element of agency
ABCAUS Case Law Citation
ABCAUS 3580 (2022) (02) ITAT
Important case law relied referred:
Kotak Securities Ltd. Vs. DCIT [2012] 18 taxmann.com 48 (Mum.)
TDS not applicable on payment of bank guarantee commission
In the instant case, the Revenue had challenged the order passed by the CIT(A) in deleting the disallowance u/s 40(a)(ia) of the Income Tax Act, 1961 (the Act) made by Assessing Officer (AO) towards non-deduction of tax at source (TDS) on guarantee commission paid to the bank.
Commissioner (Appeals) found that as per CBDT Circular No. 56 of 2012, TDS provisions are not applicable on debit/ credit/ commission/ bank guarantee commission on the transactions made by a person with the bank listed in the second schedule to the Reserve Bank of India Act, 1934 excluding a foreign bank.
Further, the CIT(A) relied upon judicial precedents and held that there was no requirement to deduct tax at source on payment of bank guarantee commission to the Bank.
The Tribunal said there was no error in the decision of first appellate authority. Admittedly, the payment subject matter of disallowance u/s 40(a)(ia) of the Act was bank guarantee commission paid to a schedule Indian bank.
The Tribunal opined that as rightly held by Commissioner (Appeals) there is no element of agency between the assessee and the bank, insofar as, it relates to payment of guarantee commission.
Download Full Judgment Click Here >>
- Changes in ITR form V and Acknowledgement for A.Y 2024 25 as per Finance Act 2023
- HC grants bail as arrest order only stated assessee was master mind of fake GST ITC racket
- Disallowance u/s 40A(3) for bearer cheque Payments. CBDT 1977 Circular not applicable
- ITAT remands assessment order passed ex-parte as assessee was illiterate housewife and widow
- No automatic release of seized assets u/s 132B If no order is passed within 120 days – High Court