M/S Little Shop, Kolkata V. I.T.O Wd - 33(3),kolkata, Kolkata

ITA 382/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99907 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 26-02-2013
• Court: TRIBUNAL
• Department Lawyers: D LAHIRI
• Assessee Lawyers: V N PUROHIT; H B BHARDWAJ
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M. BALAGANES H, AM] I.T.A NO. 382/KOL/2013 ASSESSMENT YEAR: 2008-09 M/S. LITTLE SHOP VS. INCOME-TAX OFFICER, WD-33 (3), KOLKATA (PAN: AACFL0213E) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 09.10.2015 DATE OF PRONOUNCEMENT: 15.10.2015 FOR THE APPELLANT: S/SHRI V. N. PUROHIT, FCA & H. B . BHARDWAJ, CA FOR THE RESPONDENT: SHRI D. LAHIRI, JCIT ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XIX, KOLKATA IN APPEAL NO. 291/CIT(A)-XIX/WD-33(3)/KOL/12-13 DATED 18.01.2 013. ASSESSMENT WAS FRAMED BY ITO, WD-33(3), KOLKATA U/S. 143(3) OF THE INCOME -TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2008-09 VIDE ITS ORDER DATE D 10.11.2010. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF BANK COLLECTION CHARGES/DISCOUN TING CHARGES DEDUCTED BY THE BANKERS FROM THE PAYMENT OF CREDIT CARDS FOR THE REASON THA T THE ASSESSEE FAILED TO DEDUCT TDS U/S. 194H OF THE ACT BY INVOKING THE PROVISIONS OF SECTI ON 40(A)(IA) OF THE ACT. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS A DEALER IN READYMADE GARMENTS, TEXTILE GOODS ETC. THE AO DURING THE COU RSE OF ASSESSMENT PROCEEDINGS NOTICED FROM THE BOOKS OF ACCOUNT OF THE ASSESSEE T HAT IT HAS DEBITED COMMISSION TO BANK IN THE P & L ACCOUNT BUT HAS NOT DEDUCTED TDS U/S. 194H OF THE ACT. ACCORDINGLY, THE AO REQUIRED THE ASSESSEE TO EXPLAI N AS TO WHY THE COMMISSION PAID TO BANK BE NOT DISALLOWED BY INVOKING THE PROVISION S OF SECTION 40(A)(IA) OF THE ACT. BEFORE AO, ASSESSEE EXPLAINED THAT THESE ARE NOT CO MMISSION BUT DISCOUNTING CHARGES ON ACCOUNT OF CREDIT CARDS PAYMENTS/COLLECT ION OF CREDIT CARDS PAYMENTS BY THE BANK. BUT THE AO WAS NOT CONVINCED BY THE EXPLA NATION AND INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, DISALLO WED THIS AMOUNT OF RS.2,85,610/-. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO. AGGRIEVED, NOW ASSESSEE IS IN SECOND APPEAL BEFORE TRIBUNAL. 4. WE HAVE HEARD LD. SR. DR AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS DEBITED DISCOUNTING C HARGES OF CREDIT CARDS PAYMENTS MADE BY ASSESSEE TO THE BANK. THE ASSESSEE IS MAINTAININ G SHOPS IN DIFFERENT MARKETS FOR RETAIL SALE OF GOODS. SOME OF THE PAYMENTS ARE RECEIVED O VER THE COUNTER BY CREDIT CARDS. THE 2 ITA NO.382/KOL/2013 M/S. LITTLE SHOP AY 2008-09 ASSESSEES BANK COLLECTS THE MONEY OF THE CREDIT CA RDS OF DIFFERENT BANKS AND AMOUNT SO COLLECTED IS CREDITED TO THE ASSESSEES ACCOUNT BY THE BANK AFTER DEDUCTING COLLECTION CHARGES. IN THE ADVICES RECEIVED FROM BANK, THE BA NK USED THE WORD BANK DISCOUNT FOR SUCH DEDUCTION BUT THE ASSESSEE HAS GIVEN A NOMENCL ATURE OF COMMISSION IN ITS ACCOUNTS BUT PRACTICALLY THESE ARE DISCOUNTING CHARGES OR BA NK DISCOUNT CHARGES FOR COLLECTION OF CREDIT CARD PAYMENTS. WHETHER THE PROVISIONS OF SEC TION 194H OF THE ACT WILL APPLY TO DISCOUNTING CHARGES OR COLLECTION OF CREDIT CARD PA YMENTS BY BANK OR NOT? THIS CAN BE REPLIED BY ANSWERING THAT DISCOUNTING CHARGES OR CO LLECTION OF CREDIT CARD PAYMENTS BY BANK ARE NOT COMMISSION BUT THESE ARE DISCOUNTING C HARGES SIMPLICITER BECAUSE THESE CHARGES ARE NOT IN THE CONTROL OF THE ASSESSEE. THI S PRINCIPLE HAS BEEN LAID DOWN BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. CAR GIL GLOBAL TRADING I P LTD. ITA NOS. 331 & 204 OF 2011 JUDGMENT DATED 17.02.2011, WHEREI N IT IS HELD THAT AS THE DISCOUNTING CHARGES WERE NOT IN RESPECT OF ANY DEBT INCURRED OR MONEY BORROWED AND WERE MERELY DISCOUNT OF THE SALE CONSIDERATION ON SALE O F GOODS, IT WAS NOT INTEREST U/S 2(28A) AND THERE WAS NO OBLIGATION TO DEDUCT TDS TH EREON. HONBLE DELHI HIGH COURT RELIED ON CIRCULAR NO.65 DATED 2.09.1971, CIR CULAR NO.674 DATED 22.03.1993 & VIJAY SHIP BREAKING 219 CTR 639 (SC) FOR THIS PROPOSITION. EVEN THE R EVENUE HAS TAKEN THIS MATTER TO HONBLE SUPREME COURT THROUGH SLP, WHICH WAS EVENTUALLY DISMISSED. HENCE, FOLLOWING THIS PROPOSITION THAT DISCOUNTING CHARGES DOES NOT COME WITHIN THE PURVIEW OF TDS AND GIVEN THE FACTS OF TH E CASE, WE ALLOW THIS ISSUE OF ASSESSEES APPEAL. 5. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE ON ACCOUNT OF SUNDRY EXPENSES OF R S.6707/- FOR NON-RECONCILIATION OF ACCOUNT OF MANNA STORES. FOR THIS, ASSESSEE HAS RAI SED FOLLOWING GROUND NO.3: 3. FOR THAT THE CIT(A) ERRED IN LAW IN CONFIRMING THE DISALLOWANCE OF RS.6707/- BEING SUNDRY EXPENSES FOR ALLEGED NON RECONCILIATION OF A CCOUNT OF MANNA STORES WHEN THE ENTIRE EXPENDITURE WAS PROVED WITH VOUCHERS & BILLS. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO DISALLOWED THE SUNDRY EX PENSES CLAIMED BY ASSESSEE BEING THE DIFFERENCE IN SALES SHOWN BY MANNA STORES AT RS.1,2 7,968/- AND SHOWN BY THE ASSESSEE AT RS.1,34,675/- BEING DIFFERENCE OF RS.6,707/-. THE A SSESSEE NOW BEFORE US FILED RECONCILIATION OF PAYMENTS MADE TO MANNA STORES AT RS.1,34,675/- ALONG WITH BILLS. WE 3 ITA NO.382/KOL/2013 M/S. LITTLE SHOP AY 2008-09 FIND THAT RECONCILIATION FILED BY ASSESSEE SEEMS AL RIGHT AND THIS BEING A SMALL ISSUE, WE DELETE THE ADDITION. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . 8. ORDER IS PRONOUNCED IN THE OPEN COURT ON 15.10.2 015. SD/- SD/- (M. BALAGANESH) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 15TH OCTOBER, 2015 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. LITTLE SHOP, SHOP NO. F-14, 15 & 1 6, NEW MARKET, KOLKATA-700087. 2 RESPONDENT ITO, WD-33(3), KOLKATA 3 . THE CIT(A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .