DCIT, BANGALORE vs. M/S ADISHWAR INDIA LIMITED, BANGALORE

ITA 527/BANG/2015Status: DisposedITAT Bangalore30 July 2015AY 2011-127 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that card swiping charges are not in the nature of commission or brokerage as contemplated under Section 194H. Therefore, there was no obligation to deduct tax at source, and the disallowance under Section 40(a)(ia) was not justified.

What were the facts?

The assessee claimed card swiping charges as an expenditure. The Assessing Officer disallowed this amount under Section 40(a)(ia) for failure to deduct tax at source under Section 194H, treating the charges as commission paid to the bank. The CIT(Appeals) deleted the disallowance.

What were the issues?

Whether card swiping charges paid to banks for processing credit card transactions are in the nature of commission requiring TDS under Section 194H, and if not, whether disallowance under Section 40(a)(ia) is valid.

Which sections of the Income-tax Act were involved?

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

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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE

Before: SHRI N.V. VASUDEVAN & SHRI ABRAHAM P. GEORGE

For Appellant: Shri Sunil Kumar Agarwal, Jt. CIT(DR)
For Respondent: Shri Sunder Hegde, K., CA
Hearing: 27.07.2015Pronounced: 30.07.2015

Per N.V. Vasudevan, Judicial Member

This appeal by the Revenue is against the order dated 12.1.2015 of the CIT(Appeals)-I, Bangalore relating to assessment year 2011-12. 2. The only issue for consideration in this appeal is as to whether the CIT(Appeals) was justified in deleting the disallowance made by the AO

u/s. 40(a)(ia) of the Act.

3.

The assessee is a company engaged in the business of direct marketing and chain stores of consumables and household articles &

electronic goods. While scrutinizing the P&L account of the assessee, the AO noticed that there was an expenditure of Rs.1,18,43,146

The order continues below.

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