ITO (OSD) TDS 3(3), MUMBAI V. SPECIALITY RESTAURANTS LTD, MUMBAI

ITA 259/MUM/2014

• Counselvise Citation: 25919914 RSA 2014
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2015
• Appeal Filed By: Department
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 09-01-2014
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Section: 201(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA NO . 25 9 / MUM/20 1 4 ( / ASSESSMENT YEAR : 20 11 - 12 ) ITO (TDS) - 3(3), MUMBAI VS. M/S SPECIALITY RESTAURANTS LTD., B - 16, 3 RD FLOOR, HARIOM CHAMBERS, OFF LINK ROAD, ANDHERI(W), MUMBAI - 400053 ./ ./ PAN/GIR NO. : AA ECS 6802 M ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI NEIL PHILIP /ASSESSEE BY : SHRI HARIDAS BHATT / DATE OF HEARING : 16/06 / 2015 / DATE OF PRONOUNCEMENT 16 /06 / 2015 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE REVENUE AGAIN ST THE ORDER OF CIT(A) - 13 , MUMBAI , DATED 25 - 10 - 2013 , FOR THE ASSESSMENT YEAR 20 1 1 - 201 2 IN THE MATTER ORDER PASSED U/S. 201AND 201A OF THE ACT, WHEREIN FOLLOWING GROU NDS HAVE BEEN TAKEN BY THE REVENUE : - I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT NO TDS WAS DEDUCTIBLE U/S.194H BY THE ASSESSEE COMPANY ON THE AMOUNT HELD BY THE BANKS/CREDIT CARD AGENCIES AS SERVICE CHARGES IN RESPECT OF CREDIT CARD SERVICES PROVIDED AND BY FURTHER HOLDING THAT THE BANK/CREDIT CARD AGENCIES ARE NOT AGENCIES OF THE ASSESSEE AND THEREBY CLEARLY IGNORING THE FACT THAT IN THE ENTIRE PROCESS OF FACILITATION OF CREDIT CARD, THE BANK IS NOTHING BUT A CONSTRUCTION AGENT FOR THE ASSESSEE COMPANY AND N OTHING ELSE. ITA NO. 25 9 /1 4 2 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. IN THIS CASE, THE AO TREATED THE ASSESSEE IN DEFAULT FOR NON - DEDUCTING TAX ON THE CREDIT CARD COMMISSION CHARGED BY THE BANK. ACCORDI NGLY, THE AO LEVIED TAX U/S.201 AND ALSO CHARGED INTEREST U/S.201(1A) OF THE ACT. 3. BY THE IMPUGNED ORDER, THE CIT(A) DELETED THE AMOUNT CHARGED BY THE AO U/S.201 & 201(1A) OF THE ACT AFTER HAVING THE FOLLOWING OBSERVATION: - 4. I HAVE GONE THROUGH THE OR DER PASSED BY THE AO CHARGING TAX U/S.201(1) AND INTEREST U/S.201(1A) AS WELL AS SUBMISSION MADE BY THE APPELLANT. I HAVE ALSO GONE THROUGH THE NOTIFICATION AND FOUND THAT SAME HAS EXEMPTED CREDIT CARD OR DEBIT CARD COMMISSION FOR TRANSACTIONS BETWEEN MERC HANT ESTABLISHMENT AND ACQUIRING BANK. APPELLANT HAS FURTHER CITED DECISIONS IN THE CASE OF VAH MAGNA RETAIL (P) LTD. AND TATA TELE SERVICES LTD., DECIDED BY THE ITAT, HYDERABAD AND ITAT, BANGALORE RESPECTIVELY. I HAVE GONE THROUGH THE SAME AND NOTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF APPELLANT BY THE DECISION GIVEN IN THE CASE OF TATA TELE SERVICES LTD. ON SIMILAR LINES DECISION IN THE CASE OF VAH MAGNA IS A L SO IN FAVOUR OF APPELLANT. NOW, THIS HAS BEEN ALREADY NOTIFIED BY CBDT VIDE NOTIFICAT ION NO. 56/2012. THE ONLY REASON THAT THE ASSESSMENT YEAR IS INVOLVED 2011 - 12 I.E. PRIOR TO NOTIFICATION DOES NOT CHANGE THE STATUS WHICH IS ALSO SUPPORTED BY DECISION IN FAVOUR OF APPELLANT. IN VIEW OF THIS, TDS ON COMMISSION PAID OF RS. 13,11,518/ - AND INT EREST LEVIED U/S.201(1) AND 201(1A) TOTALING TO RS.15,51,072/ - IS DELETED HEREWITH. 4. AGAINST THIS ORDER OF CIT(A), REVENUE IS IN APPEAL BEFORE US. 5 . WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW . THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF JET AIRWAYS, 147 ITD 133, WHEREIN IT WAS HELD THAT PROVISIONS OF SECTION 194H OF THE ACT ARE NOT APPLICABLE TO THE COMMISSION CHARGED BY THE BANK, AS THE BAN K MAKES PAYMENT TO THE ASSESSEE AFTER DEDUCTING CERTAIN FEES AS PER THE TERMS AND CONDITIONS OF THE CREDIT CARD AND IT IS NOT A COMMISSION, ITA NO. 25 9 /1 4 3 BUT A FEE DEDUCTED BY THE BANKS. WE FIND THAT SIMILAR ISSUE AS TO THE NATURE OF THE AMOUNTS WITH HELD BY THE ACQUIRI NG BANK I.E. HDFC BANK LTD. AND ITS DEDUCTION WHILE COMPUTING THE INCOME IN THE HANDS OF THE RETAIL MERCHANT AROSE BEFORE THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JDS APPARELS PVT. LTD. REPORTED IN (2015) 370 ITR 454 (DEL) . PRECISE OBSERVATIONS OF HONBLE DELHI HIGH COURT ARE AS UNDER : - 14. CONTENTION COULD BE RAISED THAT PAYMENT RECEIVED OR RECEIVABLE DIRECTLY OR INDIRECTLY FOR ANY SERVICES IN COURSE OF BUYING OR SELLING OF GOODS NEED NOT ARISE OUT OF A CONTRACT OF AGENCY OR FROM A RELATIONSHIP OF A PRINCIPAL AND AN AGENT. THE SAID CONTENTION HAS TO BE REJECTED IN VIEW OF THE AFORESAID JUDGMENTS, WHICH POSITIVELY HOLD THAT THE THREE SEPARATE CONDITIONS WHEN TAX AT SOURCE IS REQUIRED TO BE DEDUCTED WOULD ONLY APPLY PROVIDED THE RECIPIENT IS ACTIN G ON BEHALF OF ANOTHER, I.E. RELATIONSHIP OF A PRINCIPAL AND AN AGENT EXISTS AND NOT OTHERWISE. THIS INTERPRETATION HAS BEEN CONSISTENT AND UNIFORMLY APPLIED WHILE INTERPRETING CLAUSE (I) OF THE EXPLANATION TO SECTION 194H OF THE ACT. APPROPRIATE IN THIS R EGARD WOULD BE TO REFER TO THE DECISION OF THE HIGH COURT OF DELHI IN COMMISSIONER OF INCOME TAX VERSUS IDEA CELLULAR LIMITED, (2010) 325 ITR 148 (DELHI) WHEREIN EXPLANATION CLAUSE (I) TO SECTION 194H OF THE ACT HAD COME UP FOR CONSIDERATION AND ON INTERPR ETATION IT WAS HELD THAT IT WOULD APPLY ONLY IF PAYMENT WAS RECEIVED OR RECEIVABLE DIRECTLY OR INDIRECTLY BY A PERSON ACTING ON BEHALF OF ANOTHER PERSON FOR (I) SERVICES RENDERED (NOT BEING PROFESSIONAL) AND (II) FOR ANY SERVICES IN THE COURSE OF BUYING OR SELLING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO AN ASSET, VALUABLE ARTICLE OR THING. THE JUDGMENT RECORDS THAT THE COUNSEL FOR BOTH THE PARTIES, I.E. THE REVENUE AND THE ASSESSEE, HAD AGREED THAT THE ELEMENT OF AGENCY WAS TO BE ESTABLISHED IN ALL THE AFORESAID CIRCUMSTANCES (SEE PAGE 156 PLACITUM 9 OF THE ITR CITATION). THUS, THIS CONTENTION IF RAISED WOULD NOT STAND JUDICIAL SCRUTINY ON THE PRINCIPLES OF CONSISTENCY AND CERTAINTY. EVEN OTHERWISE, THE VIEW EXPOUNDED AND ACCEPTED IS PLAUSIBLE , BESIDES BEING REASONABLE. 15. APPLYING THE ABOVE CITED CASE LAW TO THE FACTUAL MATRIX OF THE PRESENT CASE, WE FEEL THAT SECTION 194H OF THE ACT WOULD NOT BE ATTRACTED. HDFC WAS NOT ACTING AS AN AGENT OF THE RESPONDENT - ASSESSEE. ONCE THE PAYMENT WAS MAD E BY HDFC, IT WAS RECEIVED AND CREDITED TO THE ACCOUNT OF THE RESPONDENT - ASSESSEE. 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 ITA NO. 25 9 /1 4 4 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 RESPONDENT - ASSESSEE. THE RELATIONSHIP BETWEEN HDFC AND THE RESPONDENT - ASSESSEE WAS NOT OF AN AGENCY BUT THAT OF TWO INDEPENDENT PARTIES ON PRINCIPAL TO PRINCIPAL BASIS. HDFC WAS ALSO ACTING AND EQUALLY PROTECTING THE I NTEREST OF THE CUSTOMER WHOSE CREDIT CARD WAS USED IN THE SWIPING MACHINES. IT IS NOTICEABLE THAT THE BANK IN QUESTION OR THEIR EMPLOYEES WERE NOT PRESENT AT THE SPOT AND WERE NOT ASSOCIATED WITH BUYING OR SELLING OF GOODS AS SUCH. UPON SWIPING THE CARD, T HE BANK MADE PAYMENT OF THE BILL AMOUNT TO THE RESPONDENT - ASSESSEE. THUS, THE RESPONDENT ASSESSEE RECEIVED THE SALE CONSIDERATION. IN TURN, THE BANK IN QUESTION HAD TO COLLECT THE AMOUNT FROM THE BANKERS OF THE CREDIT CARD HOLDER. THE BANK HAD TAKEN THE RI SK AND ALSO REMAINED OUT OF POCKET FOR SOMETIME AS THERE WOULD BE A TIME GAP BETWEEN THE DATE OF PAYMENT AND RECOVERY OF THE AMOUNT PAID. 16. THE AMOUNT RETAINED BY THE BANK IS A FEE CHARGED BY THEM FOR HAVING RENDERED THE BANKING SERVICES AND CANNOT BE TREATED AS A COMMISSION OR BROKERAGE PAID IN COURSE OF USE OF ANY SERVICES BY A PERSON ACTING ON BEHALF OF ANOTHER FOR BUYING OR SELLING OF GOODS. THE INTENTION OF THE LEGISLATURE IS TO INCLUDE AND TREAT COMMISSION OR BROKERAGE PAID WHEN A THIRD PERSON INT ERACTS BETWEEN THE SELLER AND THE BUYER AS AN AGENT AND THEREBY RENDERS SERVICES IN THE COURSE OF BUYING AND/OR SELLING OF GOODS. THIS HAPPENS WHEN THERE IS A MIDDLEMAN OR AN AGENT WHO INTERACTS ON BEHALF OF ONE OF THE PARTIES, HELPS THE BUYER/SELLER TO ME ET, OR PARTICIPATES IN THE NEGOTIATIONS OR TRANSACTIONS RESULTING IN THE CONTRACT FOR BUYING AND SELLING OF GOODS. THUS, THE REQUIREMENT OF AN AGENT AND PRINCIPAL RELATIONSHIP. THIS IS THE EXACT PURPORT AND THE RATIONALE BEHIND THE PROVISION. THE BANK IN Q UESTION 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 THE GOODS BOUGHT/SOLD. THE BANK MERELY PROVIDES BANKI NG 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 THE IR 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 AGENCY. 6 . FURTHER THE MUMBAI BENC H OF TRIBUNAL IN ITO (TDS) VS. JET AIRWAYS (INDIA) LTD. HAD LAID DOWN SIMILAR PROPOSITION OBSERVING AS UNDER: - 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. REPRESENTATIVE FOR THE PARTIES AND THE ORDER OF THE OF THE AUTHORITIES BELOW. WE HAVE ALSO CAREFULLY CONSIDERED THE PROVISION OF SECTION 194H OF THE ACT. WE OBSERVE THAT THE SIMILAR ISSUE HAS BEEN CONSIDERED BY THE JAIPUR BENCH OF THE TRIBUNAL IN THE A E OF GEMS PARADISE (SUPRA) AND THE TRIBUNAL HELD VIDE PARAGRAPH 27 OF ITA NO. 25 9 /1 4 5 THE SAID ORDER TH AT THE PROVISIONS OF SECTION 194H OF THE ACT ARE NOT APPLICABLE AS THE BANKS MAKE PAYMENTS TO THE ASSESSEE AFTER DEDUCTING CERTAIN FEES AS PER THE TERMS AND CONDITIONS IN THE CREDIT CARD AND IT IS NOT A COMMISSION BUT A FEE DEDUCTED BY THE BANKS. THE SAID PARAGRAPH 27 OF THE ORDER IS REPRODUCED BELOW: '27. AFTER CONSIDERING THE ORDERS OF THE AO AND ID. CIT (A), WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THIS REGARD. SECTION 194H IS APPLICABLE WHERE ANY COMMISSION HAS BEEN PAID BY THE PRINCIPAL TO THE CO MMISSION AGENT. THIS IS NOT A CASE OF COMMISSION AGENT AS ASSESSEE SOLD ITS GOOD 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 C ASE OF CREDIT CARD. THIS IS NOT A COMMISSION PAYMENT BUT A FEES DEDUCTED BY THE BANK. IF THERE IS AN AGREEMENT. THAT I AGREEMENT BETWEEN THE CREDIT CARDHOLDER AND THE BANK. BANK IS A PRINCIPAL AND TO SPREAD OVER IT 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 CONDITION . ON F THE MAJOR CONDITION IS THAT IF CREDIT CARD HOLDER DOES NOT MAKE PAYMENT WITHIN THE PRESCRIBED IN LIM IT 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 G THROUGH CREDIT CARD. ONLY IN THOSE CASES WHERE GOODS ARE FOUND DAMAGED AND CREDIT CARD HOLDER INFORM THE BANK THAT THE MATERIAL PURCHASED BY THEM IS DAMAGED OR DEFECTIVE AND REQUEST THE NOT TO MAKE THE PAYMENT, IN SUCH CASES ONLY BANK CAN WITHHOLD THE PAYMENT, OTHERWISE THE BANK HAS TO MAKE THE PAYMENT TO THE SHOP KE EPER. THEREFORE, IN OUR CONSIDERED VIEW, THERE IS NO SUCH RELATION BETWEEN THE BANK AND THE SHOP KEEPER WHICH ESTABLISHES THE RELATIONSHIP OF A PRINCIPAL COMMISSION AGENT. TECHNICALLY IT MAY BE WRITTEN THAT BANK WILL CHARGE CERTAIN PERCENTAGE COMMISSION BU T THIS IS NOT A COMMISSION BECAUSE ASSESSEE SELLS ITS GOODS AGAINST CREDIT CARD. ON PRESENTATION OF BILLS, THE BANK HAS TO MAKE THE PAYMENT. IT IS NOT THE CASE THAT BANK HAS ADVISED IS THE ASSESSEE TO SELL THEIR GOODS TO ITS CUSTOMERS THEN HE WILL PAY THE COMMISSION. IT IS REVERSED IN A SITUATION AS BANK ISSUED CREDIT CARDS TO THE CREDIT CARD HOLDERS ON CERTAIN FEES OR WHATEVER THE CASE MAY BE AND THE CARD HOLDER PURCHASES MATERIAL FROM THE MARKET THROUGH HIS CREDIT CARD WITHOUT MAKING ANY PAYMENT AND THA T SHOP KEEPER PRESENTS THE BILL TO THE BANK AGAINST WHOSE CREDIT CARD GOODS WERE SOLD AND ON PRESENTATION OF BILL AS STATED ABOVE THE BANK MAKES THE PAYMENT. THEREFORE IN OUR CONSIDERED VIEW, PROVISIONS OF SECTION 194H ARE NOT ATTRACTED IN THIS TYPE OF TRA NSACTION THEREFORE, WE HOLD THAT ADDITION MADE AND CONFIRMED BY LD. CIT (A) WAS NOT JUSTIFIED. ACCORDINGLY, THE ADDITION MADE AND CONFIRMED BY LD. CIT (A) IS DELETED.' ITA NO. 25 9 /1 4 6 10. WE OBSERVE THAT THE SAID ISSUE WAS AGAIN CONSIDERED BY THE JAIPUR BENCH OF THE TRIB UNAL IN THE CASE OF BHANDARI JEWELLERS (SUPRA) AND FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, THE TRIBUNAL PARAGRAPH 7 OF THE SAID ORDER AGAIN HELD THAT THE PROVISIONS OF SECTION 194H OF THE ACT ARE NOT ATTRACTED IN THIS TYPE OF TRANSACTIONS. IT WAS HEL D THAT NO TDS IS REQUIRED TO BE DEDUCTED ON THE FEES CHARGED BANK ON CREDIT CARD TRANSACTIONS. WE ALSO OBSERVE THAT THE SIMILAR ISSUE AGAIN COME UP BEFORE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF VAH MAGNA RETAIL (P.) LTD. (SUPRA) AND THE TRI VIDE P ARAGRAPH 4 OF THE SAID ORDER DISMISSED THE APPEAL OF THE DEPARTMENT BY HOLDING THAT THE RETAINED BY THE PRINCIPAL CONTRACTOR FROM THE PAYMENTS MADE TO THE CONTRACTING PERSONS AND THERE WAS NO REQUIREMENT FOR MAKING TDS ON THE AMOUNT. THE SAID PARAGRAPH 4 O F THE DAIS ORDER DISMISSED THE APPEAL OF THE DEPARTMENT BY HOLDING THAT THE AMOUNT RETAINED BY THE PRINCIPAL CONTRACTOR FROM THE PAYMENTS MADE TO THE CONTRACTING PERSONS AND THERE WAS NO REQUIREMENT FOR MAKING TDS ON THE AMOUNT. THE SAID PARAGRAPH 4 OF THE ORDER READS AS UNDER: - 4. WE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE 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 CLA IMED 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 THU S, 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 T HE 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 COMPA NIES CANNOT BE CONSIDERED AS FALLING WITH IN 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 ARIS ES ONLY WHEN A PERSON ACTS ON 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 BEHALF OF THE MERCHANT ESTABLISHMENT OR THAT EVEN THE MERCHANT ESTABLISHMENT CONDUCTS T HE TRANSACTION FOR THE BANK. THE SALE MADE ON THE BASIS OF A CREDIT CARD IS CLEARLY A ITA NO. 25 9 /1 4 7 TRANSACTION OF THE MERCHANTS ESTABLISHMENT ONLY AND THE CREDIT CARD COMPANY ONLY FACILITATES THE ELECTRONIC PAYMENT, FOR A CERTAIN CHARGE. THE COMMISSION RETAINED BY THE CREDIT CARD COMPANY IS THEREFORE IN THE NATURE OF NORMAL BANK CHARGES AND NOT IN THE NATURE OF COMMISSION/BROKERAGE FOR ACTING ON BEHALF OF THE MERCHANT ESTABLISHMENT. ACCORDINGLY, CONCLUDING THAT THERE WAS NO REQUIREMENT FOR MAKING TDS ON THE 'COMMISSION RETAINED BY THE CREDIT CARD COMPANIES, THE DISALLOWANCE OF RS.16,34,000/ - IS DELETED .... ' WE FIND NO INFIRMITY IN THE ABOVE REASONING GIVEN BY THE CIT(A). WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A) AND REJECT THE GROUNDS OF THE REVENUE WHICH ARE DE VOID OF MERIT.' WE ALSO OBSERVE THAT THE BANGALORE BENCH OF THE TRIBUNAL BY FOLLOWING THE SAID DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL HAS HELD THAT THE PAYMENTS MADE TO THE BANKS ON ACCOUNT OF UTILIZATION OF CREDIT CARD FACILITIES WOULD BE IN TH E NATURE OF BANK CHARGES AND NOT IN THE NATURE OF COMMISSION WITHIN THE MEANING OF SECTION 194H OF THE ACT AND HENCE NO TDS IS REQUIRED TO BE DEDUCTED U/S 194 H OF THE ACT. IN VIEW OF THE ABOVE WE HOLD THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE AS SESSEE. RESPECTFULLY FOLLOWING THE DECISIONS OF THE CO - ORDINATE BENCHES OF THE TRIBUNAL WE UPHOLD THE ORDER OF THE ID. CIT(A) AND REJECT THE GROUNDS 0.1 TO 3 TAKEN BY THE DEPARTMENT FOR ALL THE THREE ASSESSMENT YEARS UNDER CONSIDERATION. 7 . THE ISSUE ARI SING BEFORE US IS IDENTICAL TO THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN CIT VS. JDS APPARELS PVT. LTD., WHEREIN THE ISSUE WAS THOUGH IN RESPECT OF ALLOWABILITY OF EXPENSES, WHICH WAS DISALLOWED FOR NOT COMPLYING WITH THE PROVISION OF SECTION 194H OF THE ACT AND CONSEQUENTLY DISALLOWED BY INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT. FURTHER THE MUMBAI BENCH OF TRIBUNAL IN ITO (TDS) VS. JET AIRWAYS (INDIA) LTD. (SUPRA) HAS LAID DOWN IDENTICAL PROPOSITION AND FOLLOWING THE SAME PARITY OF REASONING WE HOLD THAT THE ASSESSEE IS NOT LIABLE TO DEDUCTION OF TAX AT SOURCE OUT OF THE BANK CHARGES/SERVICES CHARGES WITH HELD BY THE ACQUIRING BANK I.E. HDFC BANK LTD AND CONSEQUENTLY FOR SUCH NON DEDUCTION OF TAXES AT SOURCE, NO DEMAND CAN ITA NO. 25 9 /1 4 8 BE RAIS ED UNDER SECTION 201(1) OF THE ACT AND NO INTEREST CAN BE CHARGED UNDER SECTION 201(1A) OF THE ACT FOR SUCH DEFAULT. UPHOLDING THE ORDER OF THE CIT(A) , WE DISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE . 8 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMI SSED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 16 /06 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 16 /06 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//