a) The assessee-company was engaged in providing outdoor media advertising services to leading Indian and multinational brands. During the course of assessment, the AO observed that assessee had debited certain processing fees without deducting tax at source. The AO rejected the claim of the assessee as he was of the view that such payment was made for rendering managerial services and liable to TDS under Section 194J.
b) The assessee submitted that no tax was deductible under Section 194J on processing fee as it would fall within the exclusion provided in section 194A(3). The Commissioner (Appeals) decided the appeal in favour of the assessee. The aggrieved-revenue filed the instant appeal.
The Tribunal held in favour of assessee as under:
1) The definition of interest will include any service fee or any other charge in respect of money borrowed. Here, processing fee definitely falls within such definition and, therefore, it could not be reckoned as payment for rendering of any managerial services by the bank.
2) Despite such a payment to the Nationalized Bank falls within the ambit of 'interest' under section 2(28A), the TDS provisions under section 194A would not be applicable, because it falls within the exclusionary provisions as laid down in sub-section (3) of section 194A. Thus assessee was not required to deduct tax at source on such processing fee paid. – DY. CIT (TDS) v. Laqshya Media (P.) Ltd.  72 taxmann.com 119 (Mumbai - Trib.)