The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the disallowance of deduction claimed on account of payment of guarantee commission to associate enterprise.
The assessee, Lease Plan India P. Ltd is a resident corporate entity engaged in the business of leasing of motor vehicles, financial services and fleet management. During the course of assessment proceedings AO , while verifying Form 3CEB report, noticed that the assessee has paid an amount of Rs.1,33,54,268/- to its Associated Enterprise (AE) for provision of guarantee services.
It was also noted that the assessee did not deducted tax at source and concluded that the payment made is in the nature of fee for technical services under Section 9(1)(vii) of the Income Tax Act, 1961 and liable to tax in India. Therefore the Assessing Officer disallowed the deduction claimed by the assessee.
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeal) (CIT(A)) who upheld the disallowance. Against the order, the assessee filed an appeal before the tribunal.
During the course of appeal proceedings, the tribunal observed that the issue is squarely covered by the decision of the Tribunal in assessee’s own case in assessment years 2011-12 and 2012-13.
After reviewing the facts and submissions, the two member bench of the tribunal comprising N.K. Billaiya (Accountant Member) and Saktijit Dey (Judicial Member) the bench concluded that issue was already covered in favour of assessee.
Thus, the bench deletes disallowance deduction claimed under Section 40(a)(i) of the Income Tax Act on account of payment of guarantee commission to Associate Enterprise.
Hemant Gupta, appeared for the revenue and Nikhil Gupta counsel appeared for the assessee
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