Arranger Fee –Neither "Interest" Nor "Fee For Technical Services" So As To Attract TDS

In the case of Idea Cellular Limited vs. ADIT: ITA No. 1619/Mum/2011, order dated June 10, 2012 (Mum), the assessee had entered into a term loan agreement with the lender, Finnish Export Credit Limited. The Hong Kong Banking Corporation Limited, Hong Kong (HSBC) had arranged for the loan and the HSBC Bank PLC had acted as facility agent. The role of the arranger (HSBC) was to liaise with the lender and to procure the loan for the borrower as well as to negotiate the terms and conditions of the facility with the lender on behalf of the borrower. For the said service, HSBC was paid arranger fee by the assessee. The issue arose with respect to the nature of the said arranger fee, viz., whether such payment would be regarded as "interest" within the meaning of section 2(28A) of the Act or "fees for technical services for service" within the meaning of section 9(1) (vii) of the Act and would accordingly be subject to tax withholding or not. The Tribunal, after examining the