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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV & SHRI INTURI RAMA RAO
Per Sunil Kumar Yadav, Judicial Member
This appeal is preferred by the revenue against the order of CIT(Appeals) inter alia on the following grounds:-
“1. The Order of the Ld.CIT (A) is opposed to the law and facts of the case. 2. The Ld.CIT (A) has failed to appreciate that the notification No 56/2012 dated 31.12.2012 is not retrospective in nature. Hence, any payment done on credit card transaction before 31.12.2012 attracts the provision of Section 194H of the I T Act.
3. The Ld.CIT (A) ought to have appreciate that the provision of section 40(a) (ia) is applicable in this case as assessee has failed to deduct tax u/s 194H of the I T Act on the credit card commission paid to the bank, as it is in the nature of commission payment.
4. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT (A) in so far as it is relates to the above grounds may be reversed and that of the Assessing Officer may be restored.
5. The appellant craves leave to add, alter, amend and/or delete any of the grounds that may be urged.”
During the course of hearing, the ld. Counsel for the assessee has contended that the impugned issue is squarely covered by the order of the Tribunal in assessee’s own case for the AY 2010-11. Copy of the order of the Tribunal is placed on record.
The ld. DR, on the other hand, has placed reliance on the order of the AO.
Having carefully examined the orders of the authorities below in the light of rival submissions, we find that the assessee company has claimed an amount of Rs.48,46,930 as credit card commission charges paid to banks for collection of payments for sales through credit cards. Assessee was asked to explain the reasons for not making TDS on such charges. In response thereto, it was stated that charges are levied by banks at a certain percentage of the transaction value and gets automatically debited to the assessee’s bank account. The banks only collect these payments from the account of the credit card holders and pay to the account of the merchant company. It was also contended that there is no agent-principal relationship between the two and banks cannot be regarded as agent and hence the application of section 194H of the I.T. Act is not warranted. This explanation furnished by the assessee was not accepted by the AO and he made a disallowance of Rs.48,46,930 u/s. 40(a)(ia) for non-deduction of tax u/s. 194 H of the Act.
Against the disallowance, the assessee preferred an appeal before the CIT(Appeals) and the CIT(Appeals) following the order of the Tribunal in assessee’s own case for the AY 2010-11, has held that credit card commission is in the nature of bank charges and not commission for which the provisions of section 194H may be attracted. He accordingly deleted the disallowance.
The order of the Tribunal still holds the field as it has not been reversed by the appellate authorities. So long as the order of the Tribunal holds the field, the subordinate authorities are supposed to follow the same. The CIT(Appeals), following the same, has decided the issue in favour of the assessee. Therefore, we do not find any infirmity in the order of the CIT(Appeals). Accordingly, we confirm the same.
In the result, the appeal of the revenue stands dismissed.
Pronounced in the open court on this 13th day of April, 2018.
Sd/- Sd/-
( INTURI RAMA RAO ) ( SUNIL KUMAR YADAV) Accountant Member Judicial Member Bangalore, Dated, the 13th April, 2018.