ITO (TDS) (OSD) RG 2, MUMBAI vs. INFRASTRUCTURE LEASING & FINANCIAL SERVCES LTD, MUMBAI

The brief facts of the case are that the survey operation u/s.133A of the Income Tax Act, 1961( in short “the Act”) was conducted on 16.03.2012 at the premises of assessee company M/s. Infrastructure Leasing & Financial Services Ltd. The assessee company is a holding company of all companies of IL & FS group. The Principle business comprises of investments in group companies granting of loans and advances only to group companies and managing its own business centre. During the course of survey, statement of Mr. S. Srinivas, Vice President (Taxation) was recorded u/s.131 of the Act and it was pointed out to Mr. S. Srinivas, that the expenses incurred on account of ‘Bank Guarantee Commission’ were not subjected to TDS. Mr. S. Srinivas was of the opinion that ‘Bank Guarantee Commission’ was not covered any of the TDS Provisions and accordingly not liable to TDS. Thereafter, the notice u/s.201(1) /201(1A) of the Act was issued on 12.03.2013 to the assessee. Reply filed. The assessee was find in default of non-deducting of TDS on bank guarantee commission to the tune of Rs.94,19,985/- upon which TDS to the tune of Rs.9,41,999/- was required to be deducted. Thereafter the interest u/s.201(1A) of the Act to the tune of Rs.3,39,120/- was also assessed against the assessee. The total amount was required to be payable to the tune of Rs.12,81,119/-, thereafter, the assessee challenged the said order and the learned CIT(A) allowed the appeal on the assessee in the case of M/s. Kotak Securities Ltd. in dated 03.02.2012 for the A.Y. 2011-12 A.Y.2004-05. In the said judgment it was held that no TDS was payable on the bank guarantee commission charges u/s.194H of the Act. Feeling aggrieved the revenue has filed the present appeal before us.

We have heard the arguments advanced by the learned representative of the parties and have gone through the record carefully. The Assessing Officer is of the view that TDS is required to be deducted upon the interest/commission payable on bank guarantee and accordingly the interest is also required to be payable u/s.201(1A) of the Act. In appeal the learned CIT(A) has deleted the addition in view of the case of M/s. Kotak Securities Ltd. (Supra). It is specifically held that no TDS is payable on bank guarantee charges u/s. 194H of the Act. Therefore, the same is not liable to be deducted. Accordingly, the learned CIT(A) deleted the said addition. This issue has further came into existence in the assessee’s own case for the A.Y.2010-11. The Hon’ble Income Tax Appellate Tribunal, while deciding the matter in the assessee’s own case in has also decided the issue in favour of the assessee on relying the case decided by the Hon’ble Tribunal M/s. Kotak Securities Ltd. (Supra). This issue has been squarely covered by the above said judgement, therefore honoring the judgement of the Hon’ble Tribunal mentioned above and finding nothing contrary material against the finding of the said judgement, we are of the view A.Y. 2011-12 that learned CIT(A) has decided the matter judiciously and correctly which does not required to interfere with at this appellate stage.

Accordingly, appeal of the revenue is hereby dismissed.