TaxTMI 
TaxTMI 
2018 (12) TMI 1637
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....tances of the case and in law, the Tribunal is justified in upholding the deletion of disallowance Rs. 1,96,68,165/under section 40a(ia) by the Tribunal without appreciating that the assessee had failed to deduct tax at source from commission paid to Banks for providing credit card services, in contravention of section 194H of the Act?" 2 The RespondentAssessee is a Company, engaged in the business of setting up of and operating of Deluxe Hotels. While scrutinizing the Assessee's return of income for the Assessment Year 200910, the Assessing Officer noticed that the Assessee had not deducted tax at source in terms of Section 194H of the Income Tax Act, 1961 (for short "the Act"), in relation to commission paid to the banks on processi....
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....ited to the account of the respondentassessee. In the process, a small fee was deducted by the acquiring bank, i.e. the bank whose swiping machine was used. On swiping the credit card on the swiping machine, the customer whose credit card was used, got access to the internet gateway of the acquiring bank resulting in the realization of payment. Subsequently, the acquiring bank realized and recovered the payment from the bank which had issued the credit card. HDFC had not undertaken any act on "behalf" of the respondentassessee. The relationship between HDFC and the respondentassessee was not of an agency but that of two independent parties on principal to principal basis. HDFC was also acting and equally protecting the interest of the custo....
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....n. The bank in question is not concerned with buying or selling of goods or even with the reason and cause as to why the card was swiped. It is not bothered or concerned with the quality, price, nature, quantum etc., of goods bought/ sold. The bank merely provides banking services in the form of payment and, subsequently, collects the payment. The amount punched in the swiping machine is credited to the account of the retailer by the acquiring bank, i.e. HDFC in this case, after retaining a small portion of the same as their charges. The banking services cannot be covered and treated as services rendered by an agent for the principal during the course of buying or selling of goods as the banker does not render any service in the nature of a....