TaxTMI 
TaxTMI 
2026 (9) TMI 251
X X X X Extracts X X X X
X X X X Extracts X X X X
....le National Company Law Tribunal, New Delhi Bench, vide order dated 12.01.2023. Consequent to the amalgamation, all the assets, liabilities and operations of Inox Leisure Limited stood vested in PVR INOX Limited. The present appeal has, accordingly, been prosecuted by PVR INOX Limited as the successor entity. In ground no. 1, the assessee has challenged the impugned order on the ground of violation of principles of natural justice and denial of an opportunity of personal hearing through video conference. However, at the time of hearing, the learned counsel submitted that the assessee does not wish to press the said ground. Accordingly, ground no. 1 is dismissed as not pressed. 3. The substantive dispute raised in ground no. 2 relates to the applicability of section 194H to the amount of convenience fee collected from customers and retained by Big Tree Entertainment Private Limited, which operates the online ticketing platform under the brand name "BookMyShow". The essential issue which falls for our consideration is whether, having regard to the terms of the agreement and the actual manner in which the transactions were undertaken, BookMyShow acted as an agent of the assessee in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r No. 619 dated 04.12.1991, the decision of the Hon'ble Supreme Court in J.B. Boda & Co. (P.) Ltd. v. CBDT [1997] 223 ITR 271 (SC), and certain clauses of the agreement which, according to him, indicated that the assessee exercised control over BookMyShow, particularly in relation to the amount of convenience fee chargeable from the customers. 6. Since the assessee had furnished a certificate of an accountant in Form No. 26A in accordance with the first proviso to section 201(1), certifying that BookMyShow had filed its return of income, had taken the amount of Rs.5,08,58,545 into account while computing its income and had paid the tax due on its returned income, the Assessing Officer did not ultimately treat the assessee as an assessee in default under section 201(1) in respect of the principal tax. He, however, held that interest under section 201(1A) remained leviable. Since month-wise details of the convenience fee retained by BookMyShow were stated not to have been furnished, the Assessing Officer calculated interest on the entire amount of tax allegedly deductible from April 2012 up to 28.09.2013, being the date on which BookMyShow filed its return of income, resulting in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce fee collected and retained by BookMyShow was examined and section 194H was held to be inapplicable. Reliance was also placed upon CBDT Circular No. 5 of 2016 dated 29.02.2016, issued after considering the decisions in Jagran Prakashan Ltd. and Living Media Ltd., clarifying that where the relationship between the parties is on a principal-to-principal basis, the amount retained by an intermediary does not become liable for deduction under section 194H merely because it is described as a discount, margin or retention. The learned DR, on the other hand, strongly relied upon the orders of the authorities below and submitted that BookMyShow was authorised to sell the tickets of the assessee, collected the ticket price from the customers and remitted the collections to the assessee after retaining a part of the convenience fee. The stipulation regarding the maximum convenience fee and the requirement of approval of the assessee for any change therein were stated to be indicative of the control exercised by the assessee. It was, therefore, contended that BookMyShow was rendering services on behalf of the assessee and the amount retained by it represented commission within the inclusive....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m the entirety of the agreement and not from the nomenclature employed in a particular clause. 11. Examined on these principles, the agreement contains several stipulations which militate against the inference drawn by the authorities below. Clause 1(a) identifies persons using the digital platform as customers of BookMyShow. Clause 6 provides that the customer data collected by BookMyShow through the facility would remain its sole and exclusive property, subject to the specified restriction concerning disclosure of data relating to the ticket sales of the assessee. Clause 3.4 provides that marketing expenditure would be shared only where the promotional activity was mutually agreed upon; if the assessee declined to participate and BookMyShow nevertheless proceeded with the promotion, the entire expenditure was to be borne by BookMyShow. These provisions do not indicate that BookMyShow was merely executing the directions of the assessee as its marketing or ticketing agent. On the contrary, they recognise that BookMyShow operated an independent digital platform, dealt with users of that platform as its customers, owned the customer data generated through the platform and could un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ties arising from the operation of its electronic platforms or from non-compliance attributable to it. The assessee and its directors, employees and authorised representatives were to remain indemnified against risks and liabilities arising from the business activities of BookMyShow. Clause 12 similarly protects the separate intellectual-property rights of both parties and restricts either party from commercially exploiting the intellectual property of the other except for the limited purposes contemplated under the agreement. The cumulative effect of these provisions is that the parties retained their independent commercial identity, dealt with their respective customers and stakeholders in their own capacity, and bore the risks and liabilities arising within their respective spheres of operation. These are not merely incidental or formal stipulations; they constitute the substantive architecture of the commercial arrangement and cannot be disregarded while determining whether BookMyShow acted in a representative capacity for the assessee. 15. The circumstance that BookMyShow collected the face value of the ticket and remitted it to the assessee does not, in isolation, establis....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... were expressly acting for securing advertisements for Doordarshan; the tariff was prescribed by Doordarshan; the parties understood the arrangement as one of agency; and there was a specific contractual stipulation concerning deduction of tax at source from the commission. The Hon'ble Supreme Court recognised that the true nature of the relationship must be determined from the terms of the agreement and the facts of each case. The present agreement does not contain comparable stipulations. On the contrary, the provisions concerning customer ownership, customer data, pricing within an agreed range, fixed remittance, credit risk, promotional expenditure, consumer and third-party liabilities and separate intellectual-property rights point towards an independent commercial arrangement rather than one party acting as a representative of the other. 18. The Hon'ble Bombay High Court in CIT v. Super Religare Laboratories Ltd. (supra) held that where the assessee did not pay any amount to the collection centres but only received from them the charges collected from patients after the collection centres had retained their margin, section 194H could not be invoked in the absence of an act....
X X X X Extracts X X X X
X X X X Extracts X X X X
....services. The agreement before us, read in its entirety, does not establish either of these requirements. The convenience fee was collected by BookMyShow from users of its digital platform for the facility provided through that platform; the assessee neither credited nor paid that fee to BookMyShow; the amount payable by BookMyShow to the assessee was independently fixed; and BookMyShow bore the commercial risks and liabilities associated with its digital operations. The existence of commercial coordination between the parties was indispensable for the functioning of the online booking arrangement, but commercial coordination is not synonymous with legal agency. 21. We, therefore, hold that the amount of Rs.5,08,58,545 collected and retained by BookMyShow did not constitute commission paid or constructively paid by the assessee within the meaning of section 194H. BookMyShow was not acting on behalf of the assessee while charging the convenience fee from users of its online platform; rather, it was rendering an independent digital booking facility to such users and receiving the convenience fee in consideration thereof. Consequently, the assessee was under no obligation to deduct....