ACIT CIR -2(2)(1), MUMBAI V. INFINITI RETAIL LTD., MUMBAI

ITA 3786/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3811 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 18-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 3786/MUM/2015 (ASSESSMENT YEAR : 2010-11) THE ACIT 2(2)(1), ROOM NO.545, 5 TH FLOOR, AAYKAR BHAVAN,M.K.ROAD, MUMBAI 400 020 ...... APPELLANT VS. M/S.INFINITY RETAIL LTD., BOMBAY HOUSE, 24, HOMI MODI STREET,FORT, MUMBAI 400 001 PAN:AACCV 1726H .... RESPONDENT APPELLANT BY : SHRI A.K.KARDAM RESPONDENT BY : SHRI NITESH JOSHI DATE OF HEARING : 19/07/2016 DATE OF PRONOUNCEMENT : 10 /08/2016 ORDER PER G.S.PANNU,A.M: THE CAPTIONED APPEAL FILED BY THE REVENUE PERTAININ G TO ASSESSMENT YEAR 2010-11 IS DIRECTED AGAINST AN ORD ER PASSED BY CIT(A)- 5, MUMBAI DATED 23/03/2015, WHICH IN TURN ARISES OU T OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3 ) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 28/03/2013. 2 ITA NO. 3129/MUM/2015 (ASSESSMENT YEAR : 2010-11) 2. IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE PAYMENT OF COMMISSION ON CRE DIT CARDS TO VARIOUS BANKS, WITHOUT APPRECIATING THE FACT THAT THE PROVI SIONS OF SEC. 40(A)(IA) R.W.S. 194H WILL BE APPLICABLE TO THE FACTS OF THE CASE. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE RESPON DENT ASSESSEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE CO MPANIES ACT, 1956 AND IS, INTER-ALIA, ENGAGED IN THE BUSINESS OF RUNN ING ELECTRONIC GOODS RETAIL NETWORK IN THE NAME OF CROMA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT ASSESSEE HAD ALSO MADE SALES THROUGH CREDIT CARDS AND FOR SUCH TRANSACTIONS ASSESSEE HAD PAID COMMISSION OF RS.8,25,00,000/- TO THE CONCERNED BANKS. THE ASSESSING OFFICER NOTED THAT ON SUCH CO MMISSION PAYMENTS, THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE, WHICH WAS REQUIRED TO BE DEDUCTED IN TERMS OF SECTION 194H OF THE ACT. THER EFORE, HE INVOKED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND DISALLOWED SUCH EXPENDITURE. THE CIT(A) NOTICED THAT SIMILAR ISSUE HAD COME UP BEFORE HIS PREDECESSOR IN ASSESSEES OWN CASE FOR ASSESSME NT YEAR 2009-10 AGAINST THE QUANTUM PROCEEDINGS UNDER SECTION 143(3 ) OF THE ACT AND FOR ASSESSMENT YEAR 2011-12 IN AN ORDER PASSED UNDE R SECTION 201 OF THE ACT AND THE ISSUES WERE DECIDED IN FAVOUR OF TH E ASSESSEE IN BOTH THE PROCEEDINGS. THE CIT(A) ALSO NOTICED THAT HIS PREDECESSOR HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWI NG THE DECISION OF THE MUMBAI TRIBUNAL IN THE CASE OF JET AIRWAYS LTD. IN ITA NOS.7439, 7440 & 7441/MUM/2010 DATED 17/7/2013 PERTAINING TO ASSESSM ENT YEARS 2007-08 TO 2009-10. ON THIS BASIS, THE CIT(A) CONC LUDED THAT THE 3 ITA NO. 3129/MUM/2015 (ASSESSMENT YEAR : 2010-11) PROVISIONS OF SECTION 194H OF THE ACT ARE NOT APPLI CABLE IN RESPECT OF COMMISSION PAYMENTS MADE TO CREDIT CARD COMPANIES A ND BANKS AND, THEREFORE, THE DISALLOWANCE MADE BY THE ASSESSING O FFICER BY INVOKING SECTION 40(A)(IA) WAS NOT WARRANTED. ACCORDINGLY, THE DISALLOWANCE, OF RS.8,25,00,000/- WAS DELETED. 4. BEFORE US, IT WAS A COMMON POINT BETWEEN THE PAR TIES THAT THE ORDER OF THE CIT(A) FOR ASSESSMENT YEAR 2009-10, WH ICH HAS BEEN RELIED UPON IN THE INSTANT CASE HAD COME UP BEFORE THE TRI BUNAL AND VIDE ORDER IN ITA NO.4461/MUM/1/5/2015, THE ISSUE HAS BE EN DECIDED IN FAVOUR OF ASSESSEE. IN PARTICULAR, THE FOLLOWING D ISCUSSION IN THE ORDER OF THE TRIBUNAL DATED 1/5/2015(SUPRA) HAS BEEN REFE RRED TO: 2.1 WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF , ARE THAT THE ASSESSEE IS IN THE BUSINESS OF RETAILS IN ELECTRON IC GOODS, KITCHEN APPLIANCES, COMPUTERS, LAPTOPS AND RELATED ACCESSOR IES THROUGH DEDICATED OUTLETS CALLED 'CROMA'. THE ASSESSEE DECL ARED LOSS OF RS.85,33,61,594/ IN ITS RETURN FILED ON 29/09/2009 . THE ID. ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS ASKED THE ASS ESSEE TO SHOW CAUSE AS TO WHY THE PAYMENTS OF CHARGES TO BANKS IN RESPECT OF SALES EFFECTED THROUGH CARD MECHANISM SHOULD NOT BE SUBJECTED TO TDS U/S 194H OF THE ACT. THE ASSESSEE VIDE COMMUNIC ATION DATED 15/ 12/2011 EXPLAINED THAT THE PROVISIONS OF SECTIO N 194 H OF THE ACT WILL BE ATTRACTED ONLY WHEN ONE PERSON ACTS ON BEHALF OF ANOTHER, THEREBY, CREATING A PRINCIPLE AND AGENT RE LATIONSHIP AND FURTHER IN THE INSTANT CASE, THE SALE IS CONDUCTED BY THE ASSESSEE ON ITS OWN AND NOT THROUGH THE BANK AND FURTHER THE TR ANSACTION MAY TERMED AS CREDIT CARD MSF CHARGES BUT IN ESSENCE, I T IS IN THE NATURE OF BANK CHARGES, STOP PAYMENT CHARGES, CHEQUE BOOK REQUEST CHARGES, ETC. THE ID. ASSESSING OFFICER COMPLETED T HE ASSESSMENT DISALLOWING THE EXPENDITURE OF RS.5,02,36,000 / I NCURRED ON ACCOUNT OF PAYMENT OF PROCESSING CHARGES TO HDFC BA NK ON TOTAL AMOUNT SWIPED THROUGH CUSTOMER CREDIT CARD AND EXPE NDITURE OF RS.49,02,000/ ON ACCOUNT OF VARIOUS OTHER BANK CHA RGES (CASH MANAGEMENT SERVICES) XX] S 40(A)(IA) OF THE ACT. A CCORDING TO THE LD. ASSESSING OFFICER, TAX SHOULD HAVE BEEN DEDUCTE D AT SOURCE UNDER SECTION. 194 OF THE ACT. ON APPEAL, THE LD. COMMIS SIONER OF INCOME 4 ITA NO. 3129/MUM/2015 (ASSESSMENT YEAR : 2010-11) TAX (APPEALS) EXAMINED THE FACTS AND BY FOLLOWING T HE DECISION IN THE CASE OF AHMEDABAD STAMP VENDORS ASSOCIATION VS UOI (257 ITR 202) AND TATA TELE SERVICES LTD. VS DCIT (TDS) A DE CISION FROM BANGALORE BENCH (ITA NOS.308 TO 310 AND 393 TO 396) ORDER DATED 27/11/2012, WHEREIN, IT WAS HELD THAT THERE IS NO R EQUIREMENT OF MAKING TDS ON THE COMMISSION RETAINED BY CARD COMPA NIES, OPINED THAT THE PROVISIONS OF SECTION 40(A)(IA) R.W.S 194H OF THE ACT ARE NOT APPLICABLE, DELETED THE ADDITION. WE FIND NO INFIRM ITY IN THE CONCLUSION OF THE ID. COMMISSIONER OF INCOME TAX (A PPEALS) UNDER THE FACTS AVAILABLE ON RECORD . HIS STAND IS AFFIRM ED. 5. APART THEREFROM, OUR ATTENTION WAS ALSO INVITED TO THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE VIDE ITA NO .5408/MUM/2014 DATED 13/04/2016, WHEREIN EVEN IN THE CONTEXT OF P ROCEEDINGS UNDER SECTION 201(1) OF THE ACT, IT HAS BEEN HELD THAT SE CTION 194H OF THE ACT IS NOT APPLICABLE ON THE PAYMENTS OF COMMISSION TO THE CREDIT CARD COMPANIES/BANKS. 6. IN VIEW OF THE AFORESAID PRECEDENTS, WHICH CONTI NUE TO HOLD THE FIELD AS THEY ARE NOT BEING ALTERED BY ANY HIGHER A UTHORITY, WE FIND THAT THE CIT(A) DID NOT MAKE ANY MISTAKE IN DELETING THE IMPUGNED DISALLOWANCE. THE SAID ACTION OF THE CIT(A) IS HER EBY AFFIRMED AND ACCORDINGLY REVENUE FAILS IN ITS APPEAL. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/08/2016 SD/- SD/- (AMARJIT SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 10/08/2016 VM , SR. PS 5 ITA NO. 3129/MUM/2015 (ASSESSMENT YEAR : 2010-11) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI