ADDL.CIT, SPECIAL RANGE-2, NEW DELHI vs. BEUMER TECHNOLOGY INDIA P.LTD, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘A’ NEW DELHI

BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER

ITA No.5980/Del/2017 Assessment Year: 2013-14

Addl. CIT, Vs. M/s. Beumer Technology India Special Range-2, P. Ltd. (Earlier know as M/S. New Delhi Enexco Technologies India Ltd.) 1, Prabhat Bhawan, 2nd Floor, 96, LBS Marg, Vikhroli (West), Mumbai PAN :AACCB3959N (Appellant) (Respondent)

Appellant by None Respondent by Sh. Satpal Gulati, CIT (DR)

Date of hearing 20.01.2022 Date of pronouncement 16.02.2022 ORDER PER SAKTIJIT DEY, JM:

This is an appeal by the Revenue against the order dated

30.05.2017 of learned Commissioner of Income Tax (Appeals)-3,

Delhi, for the assessment year 2013-14. The grounds raised by

the Revenue are as under:

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TDS on guarantee/fee commission paid to bank relying upon the notification no 56/2012 (F. No 275/53/202-IT(B) dated 31.12.2012 as the provisions of the same are not applicable to the prior period of notification. 3. The Id. CIT(A) has erred, when the AO himself gave effect to the said notification vide order u/s 154 of the IT Act dated 06.05.2016 on the request of the assessee itself, for the period falling under the purview of the notification and reduced the addition u/s 40(a)(ia) to the tune of Rs. 95,68,829/-. 4. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 2. Briefly the facts are, the assessee is a resident company.

Assessment in case of the assessee was completed under section

143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the

Act’) on 17.03.2016 determining the total income of

Rs.21,02,47,264/-. While completing the assessment, the

Assessing Officer made disallowance of Rs.1,61,52,564/- under

section 40(a)(ia) of the Act towards alleged non-deduction of tax at

source on guarantee commission paid to the bank.

first appellate authority. Additionally, the assessee filed an

application under Section 154 of the Act before the Assessing

Officer seeking rectification on the ground that as against the

addition of Rs.1,61,52,564/-, the actual guarantee commission

paid to the bank was Rs.95,68,829/-. Having found assessee’s

claim correct, the Assessing Officer passed an order on

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06.05.2016 under Section 154 of the Act restricting the

disallowance under Section 40(a)(ia) to Rs.95,68,829/-. However,

while computing the income in the aforesaid order, the Assessing

Officer actually disallowed Rs.65,83,735/-.

issue, learned Commissioner (Appeals) found that as per Circular

No. 56 of 2012, dated 31.12.2012 issued by Central Board of

Direct Taxes (CBDT), 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, relying upon certain judicial precedents,

including, the decision of the Tribunal in case of Kotak Securities

Ltd. Vs. DCIT, [2012] 18 taxmann.com 48 (Mum.), learned

Commissioner (Appeals) ultimately held that there is no

requirement to deduct tax at source on payment of bank

guarantee commission to a Bank listed in the second schedule of

Reserve Bank of India, 1934 excluding a foreign bank. Thus, he

deleted the disallowance made by the Assessing Officer.

on behalf of the assessee. Accordingly, we proceed to dispose of

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the appeal ex parte qua the assessee after hearing learned

Departmental Representative.

by us in forgoing paragraphs, while disposing of the rectification

application filed by the assessee, the Assessing Officer himself

has stated that the payment actually made to the bank towards

guarantee commission in the previous year relating to the

assessment year under dispute is only to the extent of

Rs.95,68,829/-. Hence, according to him, the disallowance under

section 40(a)(ai) of the Act should be restricted to that amount. Of

course, while computing the income, he actually made

disallowance to Rs.65,83,732/-. Thus, as per the Assessing

Officer’s own admission, in the worst case scenario, the

disallowance which could have been made under section 40(a)(ia)

of the Act is to the tune of Rs.95,68,829/- and no more. In view of

the aforesaid undisputed factual position emerging on record, the

tax effect on the amount which ultimately survived after the order

passed under Section 154 of the Act and which can be the subject

matter of dispute between the Revenue and assessee would be

less than Rs. 50 lakhs as per CBDT Circular No. 17/2019, dated

08th August, 2019.

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the first place, not being maintainable, has to be dismissed.

concerned, we do not find any error in the decision of learned first

appellate authority. Admittedly, the payment which is the subject

matter of disallowance under Section 40(a)(ia) of the Act is bank

guarantee commission paid to a schedule Indian bank. As rightly

held by learned Commissioner (Appeals) by placing reliance on

certain judicial precedents, there is no element of agency between

the assessee and the bank, insofar as, it relates to payment of

guarantee commission. We are also of the view that learned

Commissioner (Appeals) has correctly applied the extant Circular

of CBDT as it is clarificatory in nature. In view of the aforesaid,

we uphold the decision of learned Commissioner (Appeals) by

dismissing the grounds raised.

Order pronounced in the open court on 16th February, 2022

Sd/- Sd/- (B.R.R. KUMAR) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: 16th February, 2022. RK/- Copy forwarded to:

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