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Income Tax Appellate Tribunal, MUMBAI BENCH “I”, MUMBAI
The ACIT 2(2)(1), Room No.545, 5th Floor, Aaykar Bhavan,M.K.Road, Mumbai 400 020 ...... Appellant Vs. M/s.Infinity Retail Ltd., Bombay House, 24, Homi Modi Street,Fort, Mumbai 400 001 PAN:AACCV 1726H .... Respondent Appellant by : Shri A.K.Kardam Respondent by : Shri Nitesh Joshi Date of hearing : 19/07/2016 Date of pronouncement : 10 /08/2016 ORDER PER G.S.PANNU,A.M:
The captioned appeal filed by the Revenue pertaining to assessment year 2010-11 is directed against an order passed by CIT(A)- 5, Mumbai dated 23/03/2015, which in turn arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) dated 28/03/2013.
In this appeal, Revenue has raised the following Ground of appeal:-
On the facts and in the circumstances of the case and in law, the Ld. CIT(A) “erred in allowing the payment of commission on credit cards to various banks, without appreciating the fact that the provisions of sec. 40(a)(ia) r.w.s. 194H will be applicable to the facts of the case.
3. In brief, the relevant facts are that the respondent assessee is a company incorporated under the provisions of the Companies Act, 1956 and is, inter-alia, engaged in the business of running electronic goods retail network in the name of “CROMA”. During the course of assessment proceedings, the Assessing Officer noticed that assessee had also made sales through credit cards and for such transactions assessee had paid commission of Rs.8,25,00,000/- to the concerned banks. The Assessing Officer noted that on such commission payments, the assessee had not deducted tax at source, which was required to be deducted in terms of section 194H of the Act. Therefore, he invoked the provisions of section 40(a)(ia) of the Act and disallowed such expenditure. The CIT(A) noticed that similar issue had come up before his predecessor in assessee’s own case for assessment year 2009-10 against the quantum proceedings under section 143(3) of the Act and for assessment year 2011-12 in an order passed under section 201 of the Act and the issues were decided in favour of the assessee in both the proceedings. The CIT(A) also noticed that his predecessor had decided the issue in favour of the assessee following the decision of the Mumbai Tribunal in the case of Jet Airways Ltd. in 7440 & 7441/Mum/2010 dated 17/7/2013 pertaining to assessment years 2007-08 to 2009-10. On this basis, the CIT(A) concluded that the provisions of section 194H of the Act are not applicable in respect of commission payments made to credit card companies and banks and, therefore, the disallowance made by the Assessing Officer by invoking section 40(a)(ia) was not warranted. Accordingly, the disallowance, of Rs.8,25,00,000/- was deleted.
4. Before us, it was a common point between the parties that the order of the CIT(A) for assessment year 2009-10, which has been relied upon in the instant case had come up before the Tribunal and vide order in the issue has been decided in favour of assessee. In particular, the following discussion in the order of the Tribunal dated 1/5/2015(supra) has been referred to:
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 29/09/2009. The Id. Assessing Officer during 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 194 H 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 essence, it is in the nature of bank charges, stop payment charges, cheque book request charges, etc. The Id. Assessing Officer 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) xx] s 40(A)(ia) of the Act. According to the ld. Assessing Officer, tax should have been deducted at source under section. 194 of the Act. On appeal, the ld. Commissioner of Income
Tax (Appeals) examined the facts and by 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 Id. Commissioner of Income Tax (Appeals) under the facts available on record . His stand is affirmed.”
Apart therefrom, our attention was also invited to the decision of the Tribunal in the assessee’s own case vide dated 13/04/2016, wherein even in the context of proceedings under section 201(1) of the Act, it has been held that section 194H of the Act is not applicable on the payments of commission to the credit card companies/banks.
In view of the aforesaid precedents, which continue to hold the field as they are not being altered by any higher authority, we find that the CIT(A) did not make any mistake in deleting the impugned disallowance. The said action of the CIT(A) is hereby affirmed and accordingly Revenue fails in its appeal.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 10/08/2016