2015 (12) TMI 1121 - AT - Income Tax

Bank charges not subject to TDS under Section 194H - ITAT Jaipur decision

Deputy Commissioner of Income Tax (TDS), Jaipur Versus M/s Samarth Lifestyle retailing Pvt. Ltd.

The ITAT Jaipur dismissed the revenue's appeal, affirming the CIT(A)'s decision that the assessee was not liable to make TDS under Section 194H on credit ... TDS u/s 194H on the credit and swap charges paid to the bankers - CIT(A) deleted the addition - Held that:- In assessee’s case, the assessee had sold the goods to the customer and payment received through credit care and swap charges at the time of crediting the sale amount in the account of the assessee and service charges were charges by the banks for providing the facility of credit card. The findings given by the ld CIT(A) are not controverted by the ld DR. Therefore, we uphold the order of the ld CIT(A). See Dy. Commissioner of Income tax Versus M/s. Vah Magna Retail (P) Ltd. [2013 (8) TMI 299 - ITAT HYDERABAD] - Decided against revenue Issues:1. Whether the assessee is liable to make TDS under Section 194H on credit and swap charges paid to the bankers.Analysis:1. The appeal filed by the revenue against the order dated 17/04/2013 passed by the CIT(A)-III, Jaipur for A.Y. 2011-12 raised the issue of the assessee's liability to make TDS under Section 194H on credit and swap charges paid to the bankers.2. The DCIT (TDS), Jaipur found that the assessee had deducted TDS but had not deposited it in the government exchequer, leading to a demand for the same. The DCIT established a relationship between the assessee and the bank as principal and agent based on various reasons, concluding that the assessee was liable to deduct tax.3. The CIT(A) allowed the appeal by citing the decision in the case of M/s Gems Paradise, where it was held that the provisions of Section 194H were not attracted in transactions involving credit card payments. The CIT(A) directed the deletion of the demand raised under Section 201(1)/201(1A) for the payments in question.4. The revenue appealed the CIT(A)'s decision, arguing that the order of the DCIT(TDS) should be confirmed. The ITAT considered the arguments of both parties and noted that the case laws cited by the CIT(A) were applicable to the payment of swap charges to banks. The ITAT upheld the CIT(A)'s order based on the nature of the transactions involving credit card payments.5. The ITAT ultimately dismissed the revenue's appeal, affirming the CIT(A)'s decision regarding the assessee's liability to make TDS under Section 194H on credit and swap charges paid to the bankers.This detailed analysis of the legal judgment provides a comprehensive understanding of the issues involved and the reasoning behind the decision rendered by the ITAT Jaipur.