DCIT (OSD) 8(1), MUMBAI V. FUTURE VALUE RETAIL LTD, MUMBAI

ITA 2612/MUM/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3304 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 17-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Non-deduction of tax
• Section: 143(3)

Judgement Text

F BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 2612 /MUM/2014 ( / ASSESSMENT YEAR : 2010-11) DY. COMMISSIONER OF INCOME TAX (OSD), RANGE 8(1), ROOM NO. 260A, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / V. M/S FUTURE VALUE RETAIL LTD., KNOWLEDGE HOUSE, SHYAM NAGAR, OFF JVLR, JOGESHWARI (E), MUMBAI- 400 072. ./ PAN : AAECP3041P ( / APPELLANT ) .. ( / RESPONDENT ) REVENUE BY SHRI G.M. DOSS ASSESSEE BY : SHRI VIPUL JOSHI / DATE OF HEARING : 12-01-2016 / DATE OF PRONOUNCEMENT : 29-01-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE REVENUE, BEING ITA NO. 2 612/MUM/2014, IS DIRECTED AGAINST THE ORDER DATED 29-01-2014 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 16, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2010-11. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN T HE MEMO OF APPEAL FILED WITH THE TRIBUNAL READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED THE DISALLOWANCE U/S 40(A)(IA) OF CREDIT CARD CHARGES RS.5,30,13,348/- WITHOUT APPRECIATING THAT THE SAID CHA RGES ARE IN THE NATURE OF 'COMMISSION OR BROKERAGE' AND PAYMENT/CREDIT THEREOF IS LIABLE FOR TDS U/S.194-H OF THE IT ACT.' ITA 2612/MUM/2014 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) ERRED THE DISALLOWANCE 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 ITA T 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 A BOVE GROUND ABOVE SET ASIDE AND THAT OF THE ITO/AO/DCIT BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF READYMADE GARMENTS AND OTHER PRODUC TS. ON PERUSAL OF THE P&L ACCOUNT OF THE ASSESSEE COMPANY, IT WAS OBSERVE D 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/- UN DER THE HEAD OTHER EXPENSES AGAINST WHICH TDS AS PER PROVISIONS OF SE CTION 194H OF THE ACT WERE NOT DEDUCTED. THE ASSESSEE COMPANY WAS SHOW C AUSED AS TO WHY THE DISALLOWANCE U/S 40(1)(IA) OF THE ACT SHOULD NOT BE MADE IF TDS IS NOT DEDUCTED AS PER PROVISIONS OF SECTION 194H OF THE A CT. IN REPLY, THE ASSESSEE COMPANY SUBMITTED THAT THE BANK ENTERS INTO A MERCH ANT ESTABLISHMENT (ME) AGREEMENT WITH VARIOUS MERCHANTS, FOR APPROVING TH E MERCHANT'S ESTABLISHMENT FOR THE PURPOSES OF PROCESSING OF TR ANSACTIONS MADE BY CREDIT/ DEBIT CARDS AT THE MERCHANT'S ESTABLISHMENT. IN CON SIDERATION OF THE BANK AGREEING TO RENDER THE PAYMENT PROCESSING SERVICES, THE MERCHANT SHALL PAY THE BANK, THE ME COMMISSION AT THE RATE AS SPECIFIE D IN THE AGREEMENT. UNDER THE AGREEMENT, THE MERCHANT EXPRESSLY AGREES TO THE CONDITIONS PRESCRIBED BY THE BANK TO ENABLE THE PROCESSING OF PAYMENTS FOR TRANSACTIONS MADE BY VALID CARDS. THE ASSESSEE COMPANY SUBMITTED THAT IT IS UNDERSTOOD THAT THE BANK IS NOT ACTING AS AN AGENT OF THE MERC HANTS UNDER THE ITA 2612/MUM/2014 3 AGREEMENT. THE ASSESSEE COMPANY SUBMITTED THAT AS P ER OUR UNDERSTANDING THE ME COMMISSION IS NOT SEPARATELY PAID BY THE MER CHANT AND IS RECEIVED BY THE BANK BY WAY OF PROCESSING CHARGES OR DISCOUNTIN G CHARGES. FOR E.G., IF THE BILL AMOUNT PAID THROUGH THE CARD IS RS. 100/-, THE MERCHANT WOULD GET, SAY RS. 97/- FROM THE BANK AGAINST THE INVOICE. THE BAN K WOULD THEN COLLECT RS. 100/- FROM THE CARD HOLDER, RS. 3/- BEING THE ME CO MMISSION OF THE BANK. THE ASSESSEE COMPANY HAS RELIED UPON VARIOUS CASE L AWS TO SUPPORTS ITS CONTENTION THAT NO TDS IS APPLICABLE ON CREDIT CARD CHARGES PAID. THE A.O., HOWEVER, REJECTED THE CONTENTION OF THE ASSESSEE CO MPANY AFTER ANALYZING THE TRANSACTION PROCESS IN DETAIL AND HELD THAT THE CRE DIT CARD TRANSACTION IS IN THE NATURE OF THE COMMISSION FOR PROVIDING THE COMP LEX SERVICES BY USING THE SOPHISTICATED PROFESSIONAL SKILLS AND TECHNOLOGY UN DER AN AGREEMENT, HENCE, THE PROVISIONS OF SECTION 194-H OF THE ACT IS ATTRA CTED. THE A.O. HELD THAT THIS IS A DIFFERENT MODE OF PAYMENT IN WHICH THE ASSESSE E COMPANY IS NOT MAKING ANY PAYMENT BUT THE SERVICE PROVIDER ITSELF DEDUCT THE COMMISSION FROM THE AMOUNT PAYABLE AND THIS MODE OF PAYMENT BETWEEN THE ASSESSEE COMPANY AND THE BANKS IS CLEARLY COVERED BY THE PROVISIONS OF SECTION 194H OF THE ACT. PROVISION OF SECTION 194H OF THE ACT IS CLEARLY ATT RACTED TO THE TRANSACTIONS BETWEEN THE BANKS AND THE ASSESSEE COMPANY FOR CHAR GING COMMISSION ON PROVIDING CREDIT CARD SERVICES. THE AO HELD THAT T HE ASSESSEE COMPANY IS LIABLE TO DEDUCT THE TAX ON THE PAYMENT OF COMMISSI ON 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 B EEN DEDUCTED IS NOT ALLOWED AS DEDUCTION UNDER THE HEAD PROFITS AND GA INS 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. ITA 2612/MUM/2014 4 4. AGGRIEVED BY THE ASSESSMENT ORDERS DATED 22.02.2 013 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 PAYME NT OR CREDIT OF SUCH COMMISSION INCOME TO THE ACCOUNT OF THE PAYEE. THE ASSESSEE COMPANY SUBMITTED THAT SECTION 194H OF THE ACT WILL BE ATTR ACTED WHEN A PRINCIPAL- AGENT RELATIONSHIP BETWEEN THE PAYER AND PAYEE EXIS TS. THE ASSESSEE COMPANY SUBMITTED THAT THE BANK IS NOT ACTING ON BEHALF OF THE MERCHANT ESTABLISHMENT IN DEALING WITH THIRD PARTIES. THE B ANK CANNOT BE CONSIDERED AS AN AGENT OF THE MERCHANT ESTABLISHMENT. TO SUPP ORT THIS CONTENTION, THE ASSESSEE COMPANY RELIED UPON THE DECISION OF THE IT AT, MUMBAI BENCH DECISION IN THE CASE OF KOTAK SECURITIES LTD. V. DC IT. 5. THE CIT(A) ACCEPTED THE CONTENTIONS OF THE ASSES SEE COMPANY BY RELYING UPON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ITO V. JET AIRWAYS INDIA LTD. (2013) 37 TAXMANN.COM 379 (MUMBA I TRIBUNAL) WHEREIN THE TRIBUNAL HELD AS UNDER:- 1. SECTION 194H OF THE INCOME TAX ACT, 1961 DEDUCTI ON OF TAX AT SOURCE, COMMISSION OR BROKERAGE (CREDIT CARD CHARGES ) ASSESSMENT YEAR 2007-08 TO 2009-10 WHETHER, PAYMENTS TO BANKS ON ACCOUNT OF UTILIZATION OF CREDIT CARD FACILITIES ARE IN NATURE OF BANK CHARGES, AND NOT IN NATURE OF COMMISSION WITHIN MEANING OF SECTION 194H, AND THEREFORE, NO TAX IS REQUIRED TO BE DEDUCTED ON SAME HELD, YES (PARA 10)[IN FAVOUR OF ASSESSEE]. II. SECTION 195 OF THE INCOME TAX ACT, 1961 DEDUCT ION OF TAX AT SOURCE PAYMENT TO NONRESIDENT [CERTIFICATE FOR NON-D EDUCTION]- ASSESSMENT YEAR 2007-08 TO 2009-10 WHETHER, WHERE CE RTIFICATE UNDER SECTION 195(3) WAS ISSUED TO BANK FOR RECEIVING PAYM ENTS WITHOUT DEDUCTION OF TAX AT SOURCE FOR SPECIFIC FINANCIAL YEAR S MENTIONED THEREIN, IT COULD NOT BE HELD THAT IT WAS EFFECTIVE ONLY FROM DATE OF ISSUANCE HELD, YES [PARA 15] [IN FAVOUR OF ASSESS EE]. ITA 2612/MUM/2014 5 THE CIT(A) ALSO OBSERVED THAT SIMILAR ISSUE HAS BEE N CONSIDERED BY THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF GEMS PARADISE IN ITA NO. 746/JP/2011 FOR THE ASSESSMENT YEAR 2008-09 DATED 2-2-2012 WHER EIN THE TRIBUNAL HELD THAT THE PROVISIONS OF SECTION 194H OF THE ACT ARE NOT APPLICABLE AS THE BANKS MAKE PAYMENTS TO THE TAXPAYER AFTER DEDUCTING CERTA IN FEES AS PER THE TERMS AND CONDITIONS IN THE CREDIT CARD AND IT IS NOT A C OMMISSION BUT A FEE DEDUCTED BY THE BANKS. IN THE CASE OF COMMISSION R ETAINED 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 ES TABLISHMENT CONDUCTS THE TRANSACTION FOR THE BANK. THE CIT (A), IN NUTSH ELL, HELD THAT PAYMENTS MADE TO THE BANKS ON ACCOUNT OF UTILIZATION ON CRED IT CARD FACILITIES WOULD BE IN THE 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 194H OF THE ACT. THE CIT(A) ALSO RELIE D UPON DECISION OF JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF BHANDARI JEWEL LERS IN ITA NO. 745/JP/2011 DATED 02-02-2012 FOR ASSESSMENT YEAR 20 08-09 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 ASSESS MENT YEAR 2007-08. ACCORDINGLY, THE CIT(A) VIDE ORDERS DATED 29-01-201 4 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 C OMPANIES BY THE ASSESSEE COMPANY BY HOLDING THE SAME TO BANK CHARGES. 6. AGGRIEVED BY THE ORDERS OF THE CIT(A) DATED 29-0 1-2014, 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 MUMB AI 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 TRIBUN AL IN THE CASE OF JET ITA 2612/MUM/2014 6 AIRWAYS INDIA LTD. (SUPRA) AND ON APPEAL, THE MATTE R IS STILL PENDING BEFORE THE HONBLE BOMBAY HIGH COURT. THE LD. D.R. ALSO RE FERRED TO THE CBDT NOTIFICATION NO. 56/2012 [F. NO. 275/53/2012-IT(B)/ SO 3069(E), DATED 31.12.2012 WHEREIN IT IS STATED THAT IN EXERCISE OF THE POWERS CONFERRED BY SUB-SECTION (1F) OF SECTION 197A OF THE INCOME TAX ACT, 1961 (32 OF 1961), THE CENTRAL GOVERNMENT HEREBY NOTIFIES THAT NO DEDUCTION OF TAX UNDER CHAPTER XVI I OF THE SAID ACT SHALL BE MADE ON THE PAYMENTS OF THE NATURE SPECIFIED BEL OW, IN CASE SUCH PAYMENT IS MADE BY A PERSON TO A BANK LISTED IN THE SECOND SCHEDULE TO THE RESERVE BANK OF INDIA ACT, 1934 (2 OF 1934) EXC LUDING A FOREIGN BANK. (I). (II) (VII) CREDIT CARD OR DEBIT CARD COMMISSION FOR TRAN SACTION BETWEEN THE MERCHANT ESTABLISHMENT AND ACQUIRER BANK 2. THIS NOTIFICATION SHALL COME INTO FORCE FROM THE 1ST DAY OF JANUARTY,2013. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO PER USED THE MATERIAL AVAILABLE ON RECORD AND THE CASE LAWS RELIED UPON. IN THE INSTANT APPEAL, THE ASSESSEE COMPANY HAS INCURRED CREDIT CARD CHARGES O F RS. 5,30,13,348/- WHICH IS CLAIMED AS AN BUSINESS EXPENSES. NO TAX H AS BEEN DEDUCTED AT SOURCE U/S 194H OF THE ACT. WE HAVE OBSERVED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE COMPANY BY THE DE CISION OF CO-ORDINATE BENCH OF MUMBAI TRIBUNAL IN THE CASE OF JET AIRWAYS INDIA LTD. (SUPRA) WHEREBY IT WAS HELD THAT THE CREDIT CARD COMMISSION TO THE BANKS ARE IN THE NATURE OF NORMAL BANK CHARGES AND ARE NOT IN THE NA TURE OF COMMISSION WITHIN THE MEANING OF SECTION 194H OF THE ACT , AND THEREFORE NO TAX IS REQUIRED TO BE DEDUCTED AT SOURCE ON THE SAME U/S 1 94H OF THE ACT. THE ITA 2612/MUM/2014 7 FINDING OF THE TRIBUNAL IN JET AIRWAYS INDIA LIMITE D (SUPRA) ARE REPRODUCED HEREUNDER: 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF TH E LD. REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF TH E AUTHORITIES BELOW. WE HAVE ALSO CAREFULLY CONSIDERED THE PROVISIONS OF SE CTION 194H OF THE ACT. WE OBSERVE THAT THE SIMILAR ISSUE HAS BEEN CONSIDER ED BY THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF GEMS PARADISE (SUPRA) AND THE TRIBUNAL HELD VIDE PARAGRAPH 27 OF THE SAID ORDER T HAT THE PROVISIONS OF SECTION 194H OF THE ACT ARE NOT APPLICABLE AS THE B ANKS MAKE PAYMENTS TO THE ASSESSEE AFTER DEDUCTING CERTAIN FEES AS PER THE TERMS AND CONDITIONS IN THE CREDIT CARD AND IT IS NOT A COMMI SSION 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 LD. CIT (A), WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THIS REGARD. S ECTION 194H IS APPLICABLE WHERE ANY COMMISSION HAS BEEN PAID BY TH E PRINCIPAL TO THE COMMISSION AGENT. THIS IS NOT A CASE OF COMMISS ION AGENT AS ASSESSEE SOLD ITS GOODS THROUGH CREDIT CARD AND ON PRESENTATION OF BILL ISSUED AGAINST CREDIT CARD, THE BANK MAKES PAY MENT TO THE ASSESSEE AFTER DEDUCTING AGREED FEES AS PER TERMS A ND CONDITIONS IN CASE OF CREDIT CARD. THIS IS NOT A COMMISSION PA YMENT BUT A FEES DEDUCTED BY THE BANK. IF THERE IS AN AGREEMENT, THA T IS AGREEMENT BETWEEN THE CREDIT CARDHOLDER AND THE BANK. BANK IS A PRINCIPAL AND TO SPREAD OVER ITS BUSINESS, A SCHEME IS FLOATE D BY BANK I.E. ISSUANCE OF CREDIT CARDS. BANK ISSUES CREDIT CARD T O 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 PRESCR IBED TIME LIMIT THEN THEY CHARGE 2% PENAL AMOUNT OF BILL WHIC H IS RAISED BY ITA 2612/MUM/2014 8 THE SHOP KEEPER AGAINST SALE OF ITS ITEMS THROUGH C REDIT CARD. BANK CANNOT REFUSE THE PAYMENT TO THE SHOP KEEPER WHO SA LE THEIR GOODS THROUGH CREDIT CARD. ONLY IN THOSE CASES WHERE GOOD S ARE FOUND DAMAGED AND CREDIT CARD HOLDER INFORM THE BANK THAT THE MATERIAL PURCHASED BY THEM IS DAMAGED OR DEFECTIVE AND REQUE ST THE BANK NOT TO MAKE THE PAYMENT, IN SUCH CASES ONLY BANK CA N WITHHOLD THE PAYMENT, OTHERWISE THE BANK HAS TO MAKE THE PAY MENT TO THE SHOP KEEPER. THEREFORE, IN OUR CONSIDERED VIEW, THE RE IS NO SUCH RELATION BETWEEN THE BANK AND THE SHOP KEEPER WHICH ESTABLISHES THE RELATIONSHIP OF A PRINCIPAL AND COMMISSION AGEN T. TECHNICALLY IT MAY BE WRITTEN THAT BANK WILL CHARGE CERTAIN PERCEN TAGE OF COMMISSION BUT THIS IS NOT A COMMISSION BECAUSE ASS ESSEE SELLS ITS GOODS AGAINST CREDIT CARDS, AND ON PRESENTATION OF BILLS, THE BANK HAS TO MAKE THE PAYMENT. IT IS NOT THE CASE THAT BA NK HAS ADVISED THE ASSESSEE TO SELL THEIR GOODS TO ITS CUSTOMERS T HEN HE WILL PAY THE COMMISSION. IT IS REVERSED IN A SITUATION AS BA NK 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 P AYMENT AND THAT SHOP KEEPER PRESENTS THE BILL TO THE BANK AGAI NST WHOSE CREDIT CARD THE GOODS WERE SOLD AND ON PRESENTATION OF BIL L AS STATED ABOVE THE BANK MAKES THE PAYMENT. THEREFORE, IN OUR CONSIDERED VIEW, PROVISIONS OF SECTION 194H ARE NOT ATTRACTED IN THIS TYPE OF TRANSACTION. 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.' 10. WE OBSERVE THAT THE SAID ISSUE WAS AGAIN CONSIDERE D BY THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF BHANDARI JEWEL LERS (SUPRA) AND FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, THE T RIBUNAL VIDE PARAGRAPH ITA 2612/MUM/2014 9 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 HELD THAT NO TDS IS REQUIRED TO BE DEDUCTED ON THE FEES CHARGED BY T HE BANK ON CREDIT CARD TRANSACTIONS. WE ALSO OBSERVE THAT THE SIMILAR ISSU E AGAIN COME UP BEFORE THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF VAH MAGNA RETAIL (P.) LTD. (SUPRA) AND THE TRIBUNAL VIDE PARAGRAPH 4 OF T HE SAID ORDER DISMISSED THE APPEAL OF THE DEPARTMENT BY HOLDING T HAT THE AMOUNT RETAINED BY THE PRINCIPAL CONTRACTOR FROM THE PAYME NTS MADE TO THE CONTRACTING PERSONS AND THERE WAS NO REQUIREMENT FO R MAKING TDS ON THE AMOUNT. THE SAID PARAGRAPH 4 OF THE ORDER READS AS UNDER : '4. WE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIV E 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 O N ACCOUNT OF COMMISSION PAID TO THE CREDIT CARD COMPANIES, WHICH HAS BEEN DISALLOWED BY THE ASSESSING OFFICER IN TERMS OF S.4 0(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 AUTHORI TIES THAT THE ASSESSEE ONLY RECEIVES THE PAYMENT FORM THE BANK/CREDIT CARD COMPANIES CONCERNED, AFTER DEDUCTION OF COMMISSION THEREON, A ND THUS, THIS IS ONLY IN THE NATURE OF A POST FACTO ACCOUNTING AND DOES N OT INVOLVE ANY PAYMENT OR CREDITING OF THE ACCOUNT OF THE BANKS OR ANY OTHER ACCOUNT BEFORE SUCH PAYMENT BY THE ASSESSEE. CONSIDERING TH ESE 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 REAS ONING : '9.8 ON GOING THROUGH THE NATURE OF TRANSACTIONS, I FIND CONSIDERABLE MERIT IN THE CONTENTION OF THE APPELLA NT THAT COMMISSION PAID TO THE CREDIT CARD COMPANIES CANNOT BE CONSIDERED ITA 2612/MUM/2014 10 AS FALLING WITH IN THE PURVIEW OF S.194H. EVEN THOU GH THE DEFINITION OF THE TERM 'COMMISSION OR BROKERAGE' USED IN THE S AID SECTION IS AN INCLUSIVE DEFINITION, IT IS CLEAR THAT THE LIABI LITY TO MAKE TDS UNDER THE SAID SECTION ARISES ONLY WHEN A PERSON AC TS 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 T HE MERCHANT ESTABLISHMENT CONDUCTS THE TRANSACTION FOR THE BANK . THE SALE MADE ON THE BASIS OF A CREDIT CARD IS CLEARLY A TRA NSACTION OF THE MERCHANTS ESTABLISHMENT ONLY AND THE CREDIT CARD CO MPANY ONLY FACILITATES THE ELECTRONIC PAYMENT, FOR A CERTAIN C HARGE. THE COMMISSION RETAINED BY THE CREDIT CARD COMPANY IS T HEREFORE IN THE NATURE OF NORMAL BANK CHARGES AND NOT IN THE NATURE OF COMMISSION/BROKERAGE FOR ACTING ON BEHALF OF THE ME RCHANT ESTABLISHMENT. ACCORDINGLY, CONCLUDING THAT THERE W AS NO REQUIREMENT FOR MAKING TDS ON THE 'COMMISSION RETAI NED BY THE CREDIT CARD COMPANIES, THE DISALLOWANCE OF RS.16,34 ,000 IS DELETED....' WE FIND NO INFIRMITY IN THE ABOVE REASONING GIVEN B Y THE CIT(A). WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A) AND REJE CT THE GROUNDS OF THE REVENUE WHICH ARE DEVOID OF MERIT.' WE ALSO OBSERVE THAT THE BANGALORE BENCH OF THE TRI BUNAL BY FOLLOWING THE SAID DECISION OF THE HYDERABAD BENCH OF THE TRI BUNAL HAS HELD THAT THE PAYMENTS MADE TO THE BANKS ON ACCOUNT OF UTILIZ ATION OF CREDIT CARD FACILITIES WOULD BE IN THE NATURE OF BANK CHARGES A ND NOT IN THE NATURE OF COMMISSION WITHIN THE MEANING OF SECTION 194H OF TH E 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 FAVOU R OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISIONS OF THE CO-ORDI NATE BENCHES OF THE ITA 2612/MUM/2014 11 TRIBUNAL WE UPHOLD THE ORDER OF THE LD. CIT(A) AND REJECT THE GROUNDS NO.1 TO 3 TAKEN BY THE DEPARTMENT FOR ALL THE THREE ASSE SSMENT YEARS UNDER CONSIDERATION. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDIN ATE BENCH OF THE MUMBAI TRIBUNAL IN THE CASE OF JET AIRWAYS INDIA LTD. (SUP RA) WHICH IS LATER ON AGAIN FOLLOWED BY MUMBAI TRIBUNAL IN THE CASE OF JET AIRW AYS INDIA LIMITED FOR SUCCEEDING ASSESSMENT YEAR I.E. 2010-11 IN 40 TAXMA NN.COM 178(MUM-TRIB.), WE HEREBY UPHOLD AND SUSTAIN THE ORDERS OF THE CIT( A) DATED 29-01-2014 ORDERING DELETION OF THE ADDITION OF RS. 5,30,13,34 8/- MADE BY THE AO U/S 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TAX AT SO URCE U/S 194H OF THE ACT ON COMMISSION PAID TO CREDIT CARD COMPANIES VIDE ASSES SMENT ORDERS DATED 22.02.2013 PASSED U/S 143(3) OF THE ACT . HENCE, WE SUSTAIN THE ORDERS DATED 29-01-2014 OF THE CIT(A) IN WHICH WE HAVE FOUND NO INFIRMITIES. WE ORDER ACCORDINGLY. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I N ITA N0. 2612/MUM/2014 FOR THE ASSESSMENT YEAR 2010-11 IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY, 2016. # $% &' 29-01-2016 ( ) SD/- SD/- (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 29-01-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS ITA 2612/MUM/2014 12 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI H BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI