THE COMMISSIONER OF INCOME TAX vs. M/S. ADISHWAR INDIA LTD

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ITA/96/2015HC KarnatakaKAHC01024745201503 August 2015Bench: B.MANOHAR,VINEET SARAN3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court agreed with the ITAT, holding that the fee charged by the bank for credit card usage is a service fee and not commission or brokerage under Section 194H. Therefore, no TDS was required.

What were the facts?

The revenue appealed against an ITAT order that treated credit card fees charged by a bank not as commission, but as a fee for banking services. The assessee had not deducted TDS on these fees, leading to a disallowance under Section 40(a)(ia).

What were the issues?

Whether credit card fees charged by a bank constitute commission or brokerage attracting TDS provisions under Section 194H, and consequently, disallowance under Section 40(a)(ia).

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194H

AI-generated summary — verify with the full judgment below

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 3RD DAY OF AUGUST, 2015

PRESENT

THE HON'BLE MR. JUSTICE VINEET SARAN

AND

THE HON’BLE MR. JUSTICE B. MANOHAR

ITA NO.96/2015

BETWEEN

1.

THE COMMISSIONER OF INCOME-TAX, C.R.BUILDING, QUEENS ROAD, BANGALORE.

2.

THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-11(1) RASHTROTHANA BHAVAN,

NRUPATHUNGA ROAD, BANGALORE-560 001. ….APPELLANTS

(BY SRI K.V.ARAVIND, ADV.,)

AND

M/S.ADISHWAR INDIA LTD. NO.140, 11TH CROSS, I MAIN, 2ND STAGE, WEST OF CHORD ROAD BANGALORE-560 086 PAN:AABCA 4663P …RESPONDENT

THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:21.11.2014 PASSED IN

ITA NO.1506/BANG/2013, FOR THE ASSESSMENT YEAR 2010-2011 PRAYING TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE; II. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BANGALORE, IN ITA NO.1506/BANG/2013 DATED 21.11.2014 CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(1), BANGALORE.

THIS ITA COMING ON FOR ADMISSION THIS DAY, VINEET SARAN J. DELIVERED THE FOLLOWING:

JUDGMENT

This is an appeal filed by the revenue challenging the order of the ITAT whereby the fee charged by the Bank for use of credit cards has been treated as a commission paid by the assessee on which TDS was not deducted by the assessee and hence the disallowance of expenditure under Section 40(a)(ia) of the Income Tax Act, 1961 (for short ‘the Act’) was made.

2.

We have heard the learned counsel for the appellants and are in conformity with the order of the Tribunal that the fee charged by the assessee would not be a commission or brokerage that would attract the provisions of Section 194H of the Act.

The Division Bench of Delhi High Court also in the case of Commissioner of Income Tax –vs- JDS Apparels Private Limited (2015) 370 ITR 454 held that the amount retained by the bank is a fee charged by them for having rendered the banking services and cannot be treated as a commission or brokerage paid in course of use of any services by a person acting on behalf of another for buying or selling of goods.

As such, we are of the opinion that no substantial question of law arises for determination by this Court. The appeal is accordingly dismissed.

Sd/-

JUDGE

Sd/-

JUDGE

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