2015 (7) TMI 406

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....CIT(A). The Cross-objections filed by the Assessee are only supportive of the order of the CIT(A). 2. The appeals by the revenue and cross-objection by the Assessee arise out of an order of the ACIT (TDS), Circle 18(2), Bangalore, (AO) passed u/s.201(1) and 201(1A) of the Income Tax Act, 1961 (Act) treating the Assessee as an Assessee in default for not deducting tax at source. The Assessee is a dealer in purchase and sale of cars. The Assessee has credit card/debit card accepting facility with HDFC Bank, who has provided credit card swiping machine/instrument to the Assessee. Customers of the Assessee when they make payment to the Assessee for availing services or effecting purchases from the Assessee when they pay by credit card, the c....

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....the plea of the Assessee holding that the Assessee entered into an agreement with HDFC Bank for installation of swiping machine at its premises and the agreement provides that the consideration to be paid by the Assessee to HDFC Bank was commission and therefore the provisions of Sec.194-H of the Act were attracted. 6. On appeal by the Assessee, the CIT(A) following the decision of the Hon'ble ITAT Hyderabad Bench in the case of DCIT Vs. Van Magna Retain (P) Ltd. ITA No.905/Hyd/2011 order dated 10.4.2012 held that the payment in question was in the nature of bank charges and hence the provisions of Sec.194-H of the Act were not attracted. The order u/s.201(1) & 201(1A) of the Act was cancelled by the CIT(A). Aggrieved by the order of the....

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....h income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person referred to in sub-section (1) to the account of, or to, the payee, does not exceed two thousand five hundred rupees. Explanation : For the purposes of this section, - (i) "Commission or brokerage" includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing;  (ii) "Professional services" means services render....

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..... Considering these submission of the assessee, the CIT(A) accepted the claim of the assessee for deduction of the amount of Rs. 16,34,000 on the following reasoning- '9.8 On going through the nature of transactions, I find considerable merit in the contention of the appellant that commission paid to the credit card companies cannot be considered as falling within the purview of S.194H. Even though the definition of the term "commission or brokerage" used in the said section is an inclusive definition, it is clear that the liability to make TDS under the said section arises only when a person acts behalf of another person. In the case of commission retained by the credit card companies however, it cannot be said that the bank acts on beh....