{"id":4260,"date":"2012-02-08T08:25:29","date_gmt":"2012-02-08T08:25:29","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=4260"},"modified":"2012-02-08T08:25:29","modified_gmt":"2012-02-08T08:25:29","slug":"kotak-securities-limited-vs-dcit-itat-mumbai-s-194h-tds-in-absence-of-principal-agent-relationship-payment-though-called-commission-not-covered","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/kotak-securities-limited-vs-dcit-itat-mumbai-s-194h-tds-in-absence-of-principal-agent-relationship-payment-though-called-commission-not-covered\/","title":{"rendered":"Kotak Securities Limited vs. DCIT (ITAT Mumbai)"},"content":{"rendered":"\n\n
Click here to download the judgement (Kotak_194H_TDS_commission.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\ns. 194H TDS: In absence of principal-agent relationship, payment, though called “commission”, not covered <\/strong><\/p>\n

The assessee obtained a bank guarantee and paid \u2018bank guarantee commission<\/em>\u2019. The AO & CIT (A) took the view that since the payment was characterized as \u201ccommission<\/em>\u201d it fell within the ambit of s. 194H and the assessee ought to have deducted TDS. The assessee was held liable as assessee-in-default u\/s 201. On appeal by the assessee, HELD reversing the AO & CIT (A): <\/p>\n

S. 194H defines the expression \u201ccommission or brokerage<\/em>\u201d to include any payment received by a person acting on behalf of another person for services rendered or for any services in the course of buying or selling of goods \u2026. Applying the principle of noscitur a sociis<\/em> & ejusdem generis<\/em>, the expression \u201ccommission<\/em>\u201d has to take its colour from the expression \u201cbrokerage<\/em>\u201d. As the expression \u201cbrokerage<\/em>\u201d, in common parlance and in law, means \u2018fees or commission given to or charged by a broker<\/em>\u2019, the expression \u2018commission\u2019 must be confined to a payment made to agents etc for effecting sales and carrying out business transactions and cannot extend to payments which are for services rendered or products offered on a principal to principal basis<\/strong>. A principal-agent relationship is a sine qua non for invoking the provisions of s. 194 H<\/em><\/strong>. As there is no principal agent relationship between a bank issuing the bank guarantee and the assessee, the payment, though termed \u201ccommission\u201d, is not covered by s. 194H (SRL Ranbaxy Ltd vs ACIT<\/a><\/strong> referred). <\/p><\/blockquote>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

S. 194H defines the expression \u201ccommission or brokerage<\/em>\u201d to include any payment received by a person acting on behalf of another person for services rendered or for any services in the course of buying or selling of goods \u2026. Applying the principle of noscitur a sociis<\/em> & ejusdem generis<\/em>, the expression \u201ccommission<\/em>\u201d has to take its colour from the expression \u201cbrokerage<\/em>\u201d. As the expression \u201cbrokerage<\/em>\u201d, in common parlance and in law, means \u2018fees or commission given to or charged by a broker<\/em>\u2019, the expression \u2018commission\u2019 must be confined to a payment made to agents etc for effecting sales and carrying out business transactions and cannot extend to payments which are for services rendered or products offered on a principal to principal basis<\/strong>. A principal-agent relationship is a sine qua non for invoking the provisions of s. 194 H<\/em><\/strong>. As there is no principal agent relationship between a bank issuing the bank guarantee and the assessee, the payment, though termed \u201ccommission\u201d, is not covered by s. 194H (SRL Ranbaxy Ltd vs ACIT<\/a><\/strong> referred)<\/p>\n

Read more ›<\/a><\/div>\n

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