Cinema Theatre Wins Appeal: No TDS Under Section 194H on Online Ticketing Convenience Fees

The ITAT Bangalore allowed the appeal of a cinema theatre assessee against orders under sections 201(1) and 201(1A) for non-deduction of TDS u/s 194H on convenience charges retained by an online ticketing platform. Relying on its earlier ruling, the Tribunal held that the convenience fee collected by the platform provider is for its own services and does not imply agency for theatre owners; thus, TDS u/s 194H is not applicable. The AO and CIT(A) failed to consider this precedent and dismissed the appeal without proper discussion. The Tribunal noted that the assessee raised invoices biweekly and no refund issue arose. Consequently, the Tribunal set aside the default notices and ruled in favour of the assessee.

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ISSUES:

Whether the assessee is liable to deduct tax at source (TDS) under section 194H on the transaction/convenience fees retained by the online ticketing platform provider.Whether the online ticketing platform acts as an agent of the theatre owners for the purpose of TDS deduction under section 194H.Whether the assessee's practice of raising biweekly invoices affects the obligation to deduct TDS or the issue of refund of ticket amounts.

RULINGS / HOLDINGS:

The transaction charges or service charges or convenience fee collected and retained by the online ticketing platform from the end user is for provision of such services and cannot lead to any inference that the platform acts on behalf of the theatre owners; therefore, section 194H is not applicable to the facts and circumstances of the case.The assessee is not liable to deduct TDS on the convenience fees retained by the online platform, as the platform is not an agent of the theatre owners for the purposes of section 194H.The practice of raising biweekly invoices by the assessee ensures that any refund issues relating to ticket cancellations are settled before payments are made, negating the need for refund claims and affecting the TDS deduction obligation.The appeal filed by the assessee is allowed, and the orders of the lower authorities are set aside due to their failure to consider relevant Tribunal precedent and facts.

RATIONALE:

The Tribunal relied on its earlier decision which held that convenience fees collected by the online platform are for services rendered and do not constitute agency relationship triggering TDS under section 194H.The Tribunal noted that both the Assessing Officer and the Commissioner of Income Tax (Appeals) failed to consider the binding precedent and dismissed the appeal by a non-speaking order.The Tribunal emphasized the significance of the assessee's invoicing practice, which precludes refund issues and supports the conclusion that no TDS deduction is warranted on the convenience fee portion.No dissenting or concurring opinions were noted; the Tribunal reaffirmed existing legal principles without doctrinal shift.

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