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Income Tax Appellate Tribunal, DELHI BENCH ‘G’NEW DLEHI
Before: SHRI O.P.KANT & SHRI K. NARASIMHA CHARY
(Appellant) (Respondent) Appellant by: Shri S.S. Rana, CIT-DR Respondent by: Shri Tarandeep Singh, Advocate Date of hearing: 18/7/2019 Date of order : /7/2019 ORDER PER K. NARASIMHA CHARY, J.M. Aggrieved by the order dated 26.12.2016passed by the learned Commissioner of Income Tax (Appeals)-41, New Delhi(“Ld. CIT(A)”), the assessee, namely M/s Spice Jet Limitedfiled this appeal in respect of the assessment year 2012-13 2. Brief facts of the case are that the assessee company has been incorporated under the Companies Act, 1956 and has been engaged in aviation business. As a part of its business of operating airlines, the assessee accepts payments made by customers, inter alia, through credit cards and in that connection they have entered into agreements with several banks, which make payments of the ticket amount paid by the passengers through credit card, to the assessee, after retaining charges for such services, and in turn collect payments from the credit court issuing bank, through the Bill settling agency, namely, Visa/MasterCard.
By order dated 12/3/2015, the learned Assessing Officer held that such charges withheld by credit card payment collecting bank, before releasing payment to the assessee, was in the nature of “commission” defined under section 194H of the Income Tax Act, 1961 (for short “the Act”) and, therefore, the assessee was liable to withhold tax therefrom under such section; and that because of the failure on the part of the assessee to withhold tax under section 194 H of the Act, the assessee was treated as “assessee in default” under section 201(1)/(1A) of the Act, and determined the tax liability of the assessee at Rs.2,13,72,840/- for the financial year 2012-13, while simultaneously making reference to initiate penalty proceedings under section 271C of the Act.
Assessee preferred appeal before the Ld. CIT(A) and contended that there is no principal-agent relationship between the assessee and the banks, which is sine qua non for invoking the provisions under section 194H of the Act and since no payment was made by the assessee to the banks, the provisions of section 194H of the Act were not applicable.
Ld. CIT(A) considered the contentions of the assessee, and while taking note of the decisions of the Tribunal on this aspect and following the decision of the Hon’ble jurisdictional High Court in the case of CIT vs. JDS Apparels P. Ltd. (2015) 370 ITR 454, wherein the decision of Hon’ble Apex Court in the case of Ahmedabad Stamp Vendor’s Association vs. Union of India (2002) 257 ITR 202 and Allahabad High Court in the case of Chief Treasury Officer vs. Union of India (2013) 355 ITR 484 were considered, by way of impugned order, held that the customer by making payment through credit card, directs the credit card provider to make payment and the credit card provider of the bank does not render any service to the assessee, but the bank for promoting its own business merely extends a facility to its customer, as such there does not exist any relationship of service provider or service receiver between the assessee and the banks which retain their banking charges while making payments to the assessee.
Ld. CIT(A) also noted the notification of the CBDT No. 56/2012 (F No. 275/53/2012-IT (B)) dated 31.12.2012 wherein it was clarified that provisions of TDS are not applicable on debit/credit commission on transaction between merchant establishment and acquirer banks. 7. At the outset, Ld. AR submitted that the order of the Ld. CIT(A) is perfectly legal because it was rendered while following the binding precedent of the Hon’ble jurisdictional High Court in the case of JDS Apparels (supra), and as a matter of fact, while following the same, coordinate Benches of this Tribunal in assessee’s own case for the Assessment Years 2011-12 and 2012-13 in and 6103/Del/2015 by orders dated 22.4.2019 and 28.2.2019 respectively answered the issue in favour of the assessee.
We have gone through the record in the light of the submissions made on either side. It’s not the case of the Revenue that the decision of the Hon’ble jurisdictional High Court in the case of JDS Apparels (supra) has no obligation to the facts of the case. Further, this Tribunal followed the said decision in assessee’s own case for the Assessment Years 2011-12 and 2012-13 in and 6103 /Del/2015 by orders dated 22.4.2019 and 28.2.2019 respectively answered the issue in favour of the assessee.
When there is no change in the fundamental facts that permeate all through these years to disturb a consistent view taken by the Tribunal in assessee’s own case while following the binding precedent of the Hon’ble judicial High Court in the case of JDS Apparels (supra), there is no reason for this Bench also to take a different view or to deviate from the view that is consistently taken on the same set of facts and circumstances. While respectfully following the decision of the Hon’ble jurisdictional High Court and also the view taken by this Tribunal consistently over a period of time, we take a view that there is no relationship of principalbetween the assessee and the banks and the bank has no obligation to deduct TDS in respect of the amounts retained by the banks towards the service charges. We, therefore, while accepting the contention of the assessee upheld the order passed by the ld. CIT(A) and dismiss the appeal of the Revenue.
In the result, appeal of the Revenue is dismissed Pronounced in open court on this the 23rd July, 2019.