TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 315
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....ance u/s 40(a)(ia) of Credit Card Charges Rs. 5,30,13,348/- relying on the decision of Hon'ble ITAT, Mumbai, in the case of ITO(TDS) vs. Jet Airways (India) Ltd. (IT-Appeal Nos.7439, 7440 & 74 (Mum) of 2010 dated 17/07/2013) ignoring that the Department did not accept the decision of Hon'ble ITAT and has filed appeal against the same before the Hon'ble Bombay High Court u/s.260A of the IT Act." The appellant prays that the order of the CIT(A) on the above ground above set aside and that of the ITO/AO/DCIT be restored." 3. The brief facts of the case are that the assessee company is engaged in the business of readymade garments and other products. On perusal of the P&L account of the assessee company, it was observed by the learned assessing officer ( Hereinafter called "the A.O.") during the course of assessment proceedings u/s 143(3) read with Section 143(2) of the Income Tax Act,1961(Hereinafter called "the Act") that the assessee company has claimed credit card charges of Rs. 5,30,13,348/- under the head "other expenses" against which TDS as per provisions of section 194H of the Act were not deducted. The assessee company was show caused as to why the disallowance u....
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....he payment of commission which the assessee company did not do, hence, provisions of section 40(a)(ia) of the Act is attracted because as per the said Act any payment of commission on which no TDS has been deducted is not allowed as deduction under the head "profits and gains of business or profession". Thus, the A.O. vide assessment order dated 22.02.2013 passed u/s 143(3) of the Act disallowed the commission on credit card of Rs. 5,30,13,348/- u/s 40(a)(ia) of the Act on which no TDS was deducted u/s 194H of the Act. 4. Aggrieved by the assessment orders dated 22.02.2013 passed u/s 143(3) of the Act by the AO, the assessee company carried the matter in appeal before the CIT(A) and submitted that TDS u/s 194H will be attracted only in the case of payment of any income by way of "commission or brokerage", hence, such tax deduction is required at the time of payment or credit of such commission income to the account of the payee. The assessee company submitted that section 194H of the Act will be attracted when a principalagent relationship between the payer and payee exists. The assessee company submitted that the bank is not acting ""on behalf of" the merchant establishment in de....
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....of the Act. The CIT(A) also relied upon decision of Jaipur Bench of the Tribunal in the case of Bhandari Jewellers in ITA no. 745/JP/2011 dated 02-02-2012 for assessment year 2008-09 and decision of Hyderabad Tribunal in the case of DCIT v. Vah Magna Retail Private Limited in ITA No. 905/Hyd/2011 dated 10/04/2012 for assessment year 2007-08. Accordingly, the CIT(A) vide orders dated 29-01-2014 deleted the addition of Rs. 5,30,13,348/- made u/s 40(a)(ia) of the Act for non deduction of TDS u/s 194H of the Act on commission paid to credit card companies by the assessee company by holding the same to bank charges. 6. Aggrieved by the orders of the CIT(A) dated 29-01-2014, the Revenue is in appeal before the Tribunal. 7. The ld. D.R. fairly conceded that this issue is squarely covered in favour of the assessee company by the decision of the Mumbai Bench of the Tribunal in the case of Jet Airways India Ltd. (supra). The ld. D.R. submitted that the Revenue has not accepted the decision of the Tribunal in the case of Jet Airways India Ltd. (supra) and on appeal, the matter is still pending before the Hon'ble Bombay High Court. The ld. D.R. also referred to the CBDT Notification No. 56/2....
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....assessee deserves to succeed in this regard. Section 194H is applicable where any commission has been paid by the Principal to the commission agent. This is not a case of commission agent as assessee sold its goods through credit card and on presentation of bill issued against credit card, the bank makes payment to the assessee after deducting agreed fees as per terms and conditions in case of credit card. This is not a commission payment but a fees deducted by the bank. If there is an agreement, that is agreement between the credit cardholder and the bank. Bank is a Principal and to spread over its business, a scheme is floated by bank i.e. issuance of credit cards. Bank issues credit card to the various customers who purchase the various credit cards on the agreed terms and conditions. One of the major condition is that if credit card holder does not make payment within the prescribed time limit then they charge 2% penal amount of bill which is raised by the shop keeper against sale of its items through credit card. Bank cannot refuse the payment to the shop keeper who sale their goods through credit card. Only in those cases where goods are found damaged and credit card holder i....
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....sentative and perused the orders of the lower authorities and other material on record. Assessee is a company engaged in the business of direct retail trading in consumer goods. Assessee claimed deduction of Rs. 16,34,000 on account of commission paid to the credit card companies, which has been disallowed by the assessing officer in terms of S.40(a)(ia) on account of the failure of the assessee to deduct tax at source in terms of S.194H of the Act, while making the said commission payments. It was the contention of the assessee before the lower authorities that the assessee only receives the payment form the bank/credit card companies concerned, after deduction of commission thereon, and thus, this is only in the nature of a post facto accounting and does not involve any payment or crediting of the account of the banks or any other account before such payment by the assessee. 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 cr....