Global Healthline Pvt. Ltd., New Delhi V. ITO, Ward- 10(2), New Delhi

ITA 1289/DEL/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9761 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 22-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAM SINGLA
• Keywords: TDS
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” DELHI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.As. No.1289 & 1290/DEL/2018 Assessment Years 2013-14 & 2014-15 Global Healthline Pvt. Ltd., 119-120, 1 st Floor, Rectangle I Plot, D-4, Saket, District Centre, Kailash Colony Extn., New Delhi. ITO, Ward-10(2), New Delhi. TAN/PAN: AABCG8091R (Appellant) (Respondent) Appellant by: Shri A.K. Batra, CA Respondent by: Ms. Anupam Singla, Sr.DR Date of hearing: 30 05 2022 Date of pronouncement: 07 06 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: Th e cap tio n ed ap peal h as b een fil ed b y th e Assessee ag ain st th e o rd er o f th e C o mmiss io n er o f In co me Tax (Ap p eals)-XXXV, New Delh i (‘CIT( A)’ in sh o rt) d ate d 1 2 .1 0 .2 01 7 arisi n g fro m th e assess men t o rd er d ated 2 3 .0 3 .20 16 p assed by th e Assessin g Officer (AO) u n d er Sect io n 1 4 3(3 ) of th e In co me Tax Act, 1 9 6 1 (th e Act) co n cern in g AY 20 1 3-1 4 . 2 . Th e g ro u nd s o f ap p eal ra ised b y th e assesse e read s as u n d er: “ 1 . O n t h e f a c t s a n d c i r c u m st a n c e s o f t h e c o m m i ss io n e r (A p p e a l s ) i s w ro n g i n d i s a l l o w i n g a s u m i f R s . 2 0 , 83 , 3 4 0 / - o n a c c o u n t o f C re d i t c a r d c o m m i s si o n u n d e r s e c t i o n 4 0 (a ) (i a ) o f t h e I n c o m e T a x A c t . I.T.A. No.1289 & 1290/Del/2018 2 a ) T h e Co m m i s si o n e r (A p p e a l s ) i s w ro n g i n t re a t i n g Co m m i ss i o n e r c h a r g e d b y c r e d i t c a rd Co m p a n y u n d e r se c t i o n 1 9 4 H o f t h e I n c o m e T a x A c t . 2 . T h e Co m m i s s i o n e r (A p p e a l s ) i s wr o n g i n d i sa l l o wi n g R s. 8 3 , 7 8 7 / - o n a c c o u n t o f s t a f f re c ru i t m e n t e x p e n se s . a ) T h e C o m m i s si o n e r (A p p e a l s ) h a s f a i l e d t o t a k e i nt o a c c o u n t t h a t e v e n a f t e r i n c l u d i n g c o m m i s si o n o f e m p l o y e e s fo r r e f e r r a l f o r t h e i r sa l a ry b e l o w t h e t a x a b l e l i m i t . 3 . T h e C o m m i s si o n e r (A p p e a l s ) i s wr o n g i n d i s a l l o wi n g a su m o f R s . 1 , 5 3 , 7 5 0 / - o n a c c o u n t o f l e g a l c h a r g e s un d e r s e c t i o n 4 0 (a ) (i a ) o f t h e I n c o m e T a x A c t . a ) O n t h e f a c t s o f t h e e x p e n se s h a v e b e e n i n c u r re d f o r s t a m p p a p e r a n d re g i st ra t i o n c h a rg e s o f t h e l e a s e . ” 3 . Brie fly st at ed , th e assesse e in ter a lia in cu rred a su m o f Rs.2 0 ,8 3 ,3 4 0 /- on acco u n t o f cred it card co mmissio n wh ich was d isal lo wed b y th e Assessin g Offi cer u n d er Sectio n 40 (a)(ia) r.w.s . 1 9 4H o f th e Ac t fo r n o n d ed u ctio n o f TDS o n su ch p ay men ts . Simi larly , th e Ass essin g Offi cer a ls o d isal lo wed Rs.8 3 ,7 8 7 /- on acco u n t o f s ta ff r ecru it men t ex p en ses p aid to e mp loy ees fo r n o n d ed u ctio n o f TDS tak in g sh el ter o f Sect io n 4 0 (a)(ia) o f th e Ac t. Th e Assessin g Officer a lso d isa llo we d leg al ch arg es a mo u n tin g to Rs.1 ,5 3 ,7 5 0 /- u n d er Sect io n 4 0 (a)(ia) r.w. Sec tio n 1 9 4 J o f th e Ac t d u e to n o n d edu ctio n o f TDS in t h e assess men t fr a med u n d er Sect io n 1 4 3 (3 ) o f t h e Act. 4 . In th e firs t ap p ea l , th e CIT(A) d id n o t g ran t any rel i ef o n su ch d isal lo wan ces. 5 . Ag g riev ed , th e assesse e p referred ap p eal b efo re th e I.T.A. No.1289 & 1290/Del/2018 3 Trib u n al. 6 . We h av e co n sid ered th e riv a l su b mi ssio n s, p eru sed th e o rd ers o f th e lo wer au th o riti es, cas e law c it ed an d mat e rial p lac ed o n reco rd . 6 .1 Th e first issu e rela tes to d is allo wan ce o f su m o f Rs.2 0 ,8 3 ,3 4 0 /- o n acco u n t o f cre d it card co mmiss io n u n d er Sect io n 4 0 (a)(ia) o f th e Act. It is t h e case o f th e as sessee th a t p ro v isio n s o f Sectio n 1 9 4H are n ot at trac ted h av in g reg ard to n atu re o f su ch expen ses. It is co n ten d ed th at p rov isio n s o f Sectio n 1 9 4H castin g o b li g atio n o n th e assessee to d ed u ct tax at so u rce arises o n ly wh en a p erso n acts o n b eh al f o f o th er per so n . In the p resen t case, th e c o mmiss io n is u n ila tera lly reta ined b y th e cred it card co mp an y . It can n o t b e said th at b an k acts o n beh alf o f th e merch an t es tab l ish men t o r th at merc h an t estab l ish men t co n du cts th e tran sact io n fo r th e b an k . Th e sa l e mad e o n th e b asi s o f cred i t card is mere ly a tr an sact io n b y th e merch an t es tab lish men t an d th e cred it card co mp a n y o n ly faci l ita tes th e ele ctro n ic p a y men t fo r a certa in ch arg e. T h e co mmiss io n reta in ed b y th e c redit c ard co mp an y is th ere fo re ak in to n o rmal b an k ch arg es and n o t in th e n atu re o f co mmi ssio n /b ro k erag e on b eh alf o f th e merch an t estab l ish men t as e n v isag ed u n d er Sectio n 1 9 4 H o f the Act. Th e assesse e th u s co n ten d s th at th e so call ed co mmiss ion reta in ed by cred it card co mp an y is n o t in th e n atu re o f co mmissio n co n temp l ated u n d er Sect io n 1 9 4H of th e Act an d th e refo re th e d isal lo wan ce u n d er Sectio n 4 0 (a)(ia) is u n called for. A referen ce was mad e to th e j u d g men t ren d ered b y Ho n ’b le Delh i Hig h Co u rt in th e case o f CIT vs. JDS App a rels Pvt. Ltd . , (2 0 1 5 ) 53 ta xma n n .co m 13 9 (Del . ) wh erein th e Ho n ’b le Delh i Hig h Co u rt h eld th at co mmi ssio n to b an k on p ay men ts receiv ed fro m I.T.A. No.1289 & 1290/Del/2018 4 cu sto mers wh o h ad mad e p u rch ases th ro ug h cred it card s is n o t liab le to TDS un der Sectio n 1 9 4H of th e Act. It was n o ted th at b an k in g serv ices can n o t b e co v ered an d treated as serv ices ren d ered b y an ag en t fo r th e p rin cip al d u ring th e co urse o f b u y ing an d sell in g o f g o od s as th e b an k er do es n o t ren d er any serv ice in th e n atu re o f ag en c y . A referen ce was also mad e to th e d ecis io n o f th e Co -o rd in ate Ben ch o f Trib un al in ACIT vs. P.C . Jew ell ers Ltd . , (2 0 2 2 ) 1 3 7 ta xman n .co m 71 (Del. ) wh erein it was rei tera ted th at n o ob lig atio n aris e s u n d er Sectio n 1 94 H o f th e Act fo r t h e ch arg es in cu rred fo r fac il i tat in g p ay men t th ro u gh cred it/d eb i t card s. In v iew o f th e ju d g men t ren d ered by the Ho n ’b le Delh i Hig h Co u rt an d ap p lied b y Co -o rd in ate Ben ch , we d o n o t see an y reaso n to tak e a d iffer en t v i ew wh ile ad ju d icat in g th e issu e in fa v o u r o f th e assesse e. We also n o tice th at th e Assessin g Officer h imsel f h as accep t ed th e a fo resaid d ec isio n in su b seq u en t Assessmen t Year 2 0 14 -15 p assed u nd er Sect io n 1 4 3(3 ) o f th e Ac t v id e o rd er d ated 0 9 .1 2 .20 1 6 wh erein Assessin g Office r d id n o t d isp u te t h e p o sitio n tak en b y th e assessee fo r n o n d ed u ctio n o f TDS p ay men t o f serv ice ch arg es to b an k s situ at ed in I n d ia su ch as HDFC Ban k e tc . (ex cep t fo r th e cr ed it /d eb it card ch arg es p ertain ing t o American Ex p ress Ban k ). 6 .2 On b eh alf o f th e Rev en u e, it was co n ten d ed th at TDS is ap p licab l e o n ch arg es at trib u tab le to fo reig n b an k s in v iew o f th e p ress releas e d ated 0 4 .0 1 .2 01 3 issu ed b y Go v ern men t o f In d ia fo r allo wab i li ty o f p ay men t wi th o u t TDS o f cred it /d eb it card co mmiss io n o n tran sactio n s b etween merch an t es tab l is h men t an d acq u irer b an k s. 6 .3 In v iew o f th e ju d g men t in th e cas e JDS Ap p a rels Pvt. Ltd . (su p ra ), th e art i fi cia l d ist in ct io n b etween ch arg es attr ib utab le to I.T.A. No.1289 & 1290/Del/2018 5 fo reig n b an k s (Amer ican Ex p ress Ban k h erein ) v is-à-v is b an k situ a ted in In d ia, in ou r v iew, is n o t ju sti fied . Su ch d ifferen tia t io n mad e in th e p ress rele ase d a ted 0 4 . 0 1 .2 01 3 is n o t bo rn e o u t by ju d icia l p ro n ou n cemen ts. In co n so n an ce with th e ju dicia l p reced en ts, th e Gr o u nd No .1 is a llo wed . 7 . Gro un d No .2 con cern s d isal lo wan ce o f Rs.8 3 ,3 8 7 /- o n acco u n t o f sta ff recru it men t ex p en ses. Th e Assessing Offic er d isal lo wed th e rec ru itmen t ex p en ses o n th e g ro u nd th at n o TDS was d ed u cted fo r su ch p ay men ts. It i s th e case o f th e ass essee th a t th e a fo resaid p a y men ts o f R s.8 3 , 3 8 7 /- is an ag g reg ate su m in cu rred d u rin g th e y ear an d in d i v id u al p ay men ts t o d ifferen t p erso n s are v ery sma ll g en eral ly ran g in g b etween Rs.1 5 0 0 to Rs.7 5 0 0 /- p er p erso n . Th e relev an t d eta ils were p laced at p ag e 4 4 - 4 5 o f th e p ap er b o o k to su p p o rt su ch co n ten tio n . 7 .1 On p eru sal th ereo f, we fin d mer it in th e p le a of th e ass essee fo r n o n d ed u ctio n o f TDS o n su ch p ay men ts b e lo w th resh o ld li mi t p ro v id ed un d er Sectio n 1 9 4 C o f th e Act. 7 .2 Gro un d no .2 o f t h e assesse e’s ap p eal th u s d eserv es to b e allo wed . 8 . Gro un d No .3 co ncern s d isa llo wan c e o f Rs.1 ,5 3 ,0 0 0/- o n acco u n t o f leg a l c h arg es. In th is reg ard , it is co nten d e d o n b eh alf o f th e a ssesse e th at su ch p ay men t s are mad e p rimaril y to wards sta mp d u ty an d reg istra tio n ch arg e s o f v ario u s le ase d eed s o f sto res d u rin g th e Fin an cia l Year 2 01 2 -13 as tab u lated at p ag e n o. 4 7 o f th e p ap er b o o k . As stat ed , th e ass essee h as sh a red 5 0 % o f su ch ex p en ses wh ich stan d s a t Rs.1 ,5 3 ,7 5 0 /-. 8 .1 Th e ex p en ses in cu rred n o t b ein g in th e n atu r e of p ro fessio n al s erv ices b u t to ward s p ay men t o f g o v ernmen t I.T.A. No.1289 & 1290/Del/2018 6 d u ty /fee /d o cu men t atio n ch arg es, we see mer it in th e p lea o f th e assesse e fo r n o n ded u ctio n o f TDS u n d er Sectio n 1 9 4J. 8 .2 Gro un d No .3 is th u s al lo wed . 9 . In th e resu l t, th e a p p eal o f th e asses s ee is a l lo wed . ITA No .1 2 9 0 /Del/2 0 18 (Assessm ent Yea r 2 0 1 4-1 5) 1 0 . Th e cap tio n ed ap peal h as b een fil ed b y th e Assessee ag ain st th e o rd er o f th e C o mmiss io n er o f In co me Tax (Ap p eals)-XXXV, New Delh i (‘CIT( A)’ in sh o rt) d ate d 1 2 .1 0 .2 01 7 arisi n g fro m th e assess men t o rd er d ated 0 9 .1 2 .20 16 p assed by th e Assessin g Officer (AO) u n d er Sect io n 1 4 3(3 ) of th e In co me Tax Act, 1 9 6 1 (th e Act) co n cern in g AY 20 1 4-1 5 . 1 1 . As p er g ro u nd s o f ap p eal, th e asses see h as ch allen g e d th e d isal lo wan ce o f Rs.2 ,9 5 ,6 0 9 /- o n acco u n t o f cred it card co mmiss io n u n d er Sect io n 4 0 (a)(ia) o f th e Act . Th e i ssu e b ein g id en tic al to Gro u n d No .1 in ITA No .1 28 9 /Del/ 2 0 18 , th e co n clu sio n arriv ed th erein sh a ll ap p ly mu ta tis mu ta n d is to th e issu e ra ised in th e cap tio n ed ap p eal . 1 2 . In th e resu l t, th e a p p eal o f th e asses s ee is a llo wed . 1 3 . In th e co mb in ed r esu lt , b o th th e ap p eals o f th e ass esse e are allo wed . Order pronounced in the open Court on 07/06/2022. Sd/- Sd/- [SAKTIJIT DEY] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /06/2022 Prabhat