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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO & SHRI RAVISH SOOD
सुनवाई की तायीख / Date of Hearing : 07.09.2016 घोषणा की तायीख /Date of Pronouncement : 23.09.2016 आदेश / O R D E R
PER D. KARUNAKARA RAO, AM:
This appeal filed by the Revenue on 14.8.2014 is against the order of the CIT (A)-14, Mumbai dated 10.6.2014 for the assessment year 2011-2012. In this appeal, Revenue raised the following grounds which read as under:- “(i) On the facts and circumstances of the case and in law, the Ld CIT (A) erred in deleting the addition made u/s 201(1) / 201(1A) of the Act, holding that no TDS was deductible u/s 194H by the assessee company on the amount held by the banks / credit agencies as service charges in respect of credit card services provided ignoring the fact that in entire process of facilitation of credit card, the bank is nothing but a constructive agent for the assessee company. (ii) On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in failing to appreciate the real and true nature of the relationship between the assessee company and bank / credit card agencies. (iii) On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in failing to appreciate that in substance and in fact relationship between the assessee company and bank / credit card agencies was in the nature of principal and agents relationship and therefore, the Ld CIT (A) erred in not upholding the AO’s conclusion of bringing the charges charged to the assessee company by the bank / credit card agencies within the purview of section 194H of the Act.”
2. At the outset, Ld Counsel for the assessee brought our attention to the above grounds and mentioned that the only issue raised in the grounds relates to the requirement of making TDS on the charges relatable to the credit card payments collected by the banks of the credit card. The credit card issuing banks make TDS payment to the assessee after keeping a portion towards service charges. In this regard, Revenue is of the opinion that the TDS is required to be deducted on such charges. During the first appellate proceedings, CIT (A) granted relief to the assessee relying on the decision of the ITAT, Mumbai in the case of M/s. Jet Airways (India) Ltd in 7440 & 7441/Mum/2010, dated 17.7.2013. Finding of the CIT (A) is given in paras 4 and 4.21 of his order. Aggrieved, Revenue is in appeal before the Tribunal by raising the above grounds.
During the proceedings before us, Ld Counsel for the assessee heavily relied on the order of the CIT (A) and reiterated the submissions made before the lower authorities.
On the other hand, Ld DR for the Revenue relied on the order of the AO.
We have heard both the parties and perused the orders of the Revenue Authorities as well as the relevant material placed before us. On perusal of the facts and the issue involved in this appeal, we find, an identical issue came up for adjudication before the Tribunal vide ITA No.5408/M/2014 (2011-12), dated 13.4.2015 in the case of M/s. Infiniti Retail Limited, wherein one of us (AM) is a party to the order. In the said order, vide para 4, the Tribunal upheld the decision of CIT (A) and dismissed the Revenue Appeal. Considering the significance of the said para and for the sake of completeness of this order, the same is extracted as under:- 4. We have heard both the parties and perused the orders of the Revenue Authorities as well as the cited decision of the Tribunal and also the relevant material placed before us. On perusal of the said decision of the Tribunal (supra) dated 1.5.2015, we find, on identical issue, the Tribunal dismissed the Revenue’s appeal and upheld the decision of the CIT (A) vide para 2.1 of its order. Considering the significance of the said para 2.1 of the Tribunal’s order (supra) and for the sake of completeness of this order, the same is extracted as under: “2.1. We have considered the submissions of Ld DR and perused the material available on record. The facts, in brief are that the assessee is in the business of retails in electronic goods, kitchen appliances, computers, laptops and related accessories through dedicated outlets called “Croma”. The assessee declared loss of Rs. 85,33,61,594/- in its return filed on 29.9.2009. The Ld AO during the assessment proceedings asked the assessee to show cause as to why the payments of charges to banks in respect of sales effected through card mechanism should not be subjected to TDS u/s 194H of the Act. The assessee vide communication dated 15.12.2011 explained that the provisions of section 194H of the Act will be attracted only when one person acts on behalf of another, thereby, creating a principle and agent relationship and further in the instant case, the sale is conducted by the assessee on its own and not through the bank and further the transaction may termed as credit card MSF charges but in charges, cheque book request charges, etc. The Ld AO completed the assessment disallowing the expenditure of Rs. 5,02,36,000/- incurred on account of payment of processing charges to HDFC bank on total amount swiped through customer credit card and expenditure of Rs. 49,02,000/- on account of various other bank charges (Cash Management Services) u/s 40(a)(ia) of the Act. According to the Ld AO, tax should have been deducted at source u/s 194 of the Act. On appeal, Ld CIT (A) examined the facts and following the decision in the case of Ahmedabad Stamp Vendors Association vs. UOI (257 ITR 202) and Tata Tele Services Ltd vs. DCIT (TDS) a decision from Bangalore Bench (ITA Nos.308 to 310 and 393 to 396) order dated 27/11/2012, wherein, it was held that there is no requirement of making TDS on the commission retained by Card Companies, opined that the provisions of section 40(a)(ia) r.w.s 194H of the Act are not applicable, deleted the addition. We find no infirmity in the conclusion of the Ld CIT (A) under the facts available on record. His stand is affirmed. Finally, the appeal of the Revenue is dismissed.”