DCIT, New Delhi V. M/s. Spice Jet Ltd., Gurgaon

ITA 4226/DEL/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7990 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: misc
• Appeal Filed On: 01-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH G GG G : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, G.D. AGRAWAL, G.D. AGRAWAL, G.D. AGRAWAL, VICE VICE VICE VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT AND AND AND AND MS. SUCHITRA KAMBLE MS. SUCHITRA KAMBLE MS. SUCHITRA KAMBLE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA ITAITA ITA NO. NO. NO. NO. 4226/DEL/2014 4226/DEL/2014 4226/DEL/2014 4226/DEL/2014 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2011 2011 2011 2011 - -- - 12 1212 12 DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -51(1), 51(1), 51(1), 51(1), NEW DE NEW DE NEW DE NEW DELHI. LHI. LHI. LHI. VS. VS. VS. VS. M/S SPICE JET LIMITED, M/S SPICE JET LIMITED, M/S SPICE JET LIMITED, M/S SPICE JET LIMITED, 319, UDYOG VIHAR, 319, UDYOG VIHAR, 319, UDYOG VIHAR, 319, UDYOG VIHAR, PHASE PHASE PHASE PHASE- -- -IV, IV,IV, IV, GURGAON, GURGAON, GURGAON, GURGAON, HARYANA. HARYANA. HARYANA. HARYANA. PAN : AACCR1459F. PAN : AACCR1459F. PAN : AACCR1459F. PAN : AACCR1459F. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.S. RANA, CIT - DR. RESPONDENT BY : SHRI TARANDEEP SINGH, CA. DATE OF HEARING : 16.04.2019 16.04.2019 16.04.2019 16.04.2019 DATE OF PRONOUNCEMENT : 22.04.2019 22.04.2019 22.04.2019 22.04.2019 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, PER G.D. AGRAWAL, PER G.D. AGRAWAL, PER G.D. AGRAWAL, VICE VICE VICE VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT : :: :- -- - THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 201 1-12 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXX, NE W DELHI DATED 9 TH MAY, 2014. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS IN LAW, THE LD.CIT(A) HAS ERRED IN HOLDING TH AT PASSENGER SERVICE FEE (PSF) PAID BY THE APPELLANT ON BEHALF OF ITS CUSTOMERS DOES NOT ATTRACT THE PROVISIONS O F SECTION 194J OF THE IT ACT, 1961 WHEREAS, THE CLARIF ICATION DATED 30-06-2008 ISSUED BY THE CBDT CLEARLY STATES THAT THE RECEIPTS ON ACCOUNT OF PSF (SECURITY COMPONENT) ARE TAXABLE AS INCOME IN THE HANDS OF THE AIRPORT OPERATO RS AND IT SHALL BE THE RESPONSIBILITY OF THE AIRPORT OPER ATORS TO ITA-4226/DEL/2014 2 ACCOUNT FOR THE TAX DEDUCTED AT SOURCE, IF ANY, BY THE AIRLINES FROM THE PAYMENTS ON ACCOUNT OF PSF. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CIT(A) HAS ERRED IN HOLDING TH AT THE AMOUNTS RETAINED BY VARIOUS BANKS FOR CREDIT CARD COMMISSION DO NOT ATTRACT THE PROVISIONS OF SECTION 194 H OF THE ACT AS THE CBDT NOTIFICATION NO.56/2012 DATED 31- 12-2012 EXEMPTING DEDUCTION OF TAX FROM CREDIT CARD COMMISSION CAME INTO FORCE W.E.F. 01-01-2013 AND, THEREFORE, THE DEDUCTION OF TAX AT SOURCE WAS REQUIRE D TO BE MADE FOR THE PERIOD BEFORE 01-01-2013. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND P ERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT BOTH THE AB OVE GROUNDS ARE SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIO N OF ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2012-13 VIDE ITA NO.6103/DEL/2015. WITH REGARD TO GROUND NO.1, AFTE R DETAILED DISCUSSION, THE ITAT CONCLUDED AS UNDER :- 5.6 FROM THE ABOVE DECIDED PRECEDENTS, IT IS CLEAR THAT THE ISSUE IN DISPUTE IS NOW NO MORE RES INTEGRA. IN THE CASE OF JET AIRWAYS (SUPRA) IT WAS CLAIMED BY THE DEPARTMEN T THAT PAYMENT OF PSF ATTRACTED TDS LIABILITY U/S 194- I OF THE ACT AND IN THE INSTANT CASE IT IS HELD BY THE AO THAT PAYMENT OF PSF ATTRACTED TDS LIABILITY U/S 194J OF T HE ACT. HOWEVER, THIS TOO, IN OUR CONSIDERED VIEW WOULD NOT M AKE ANY DIFFERENCE. AS IS CLEAR FROM THE FINDINGS RECORDED BY THE COORDINATE BENCH IN THE CASE OF JET AIRWAYS (SUPRA ) WHICH HAVE BEEN UPHELD BY THE HONBLE BOMBAY HIGH COURT, PSF CANNOT BE CONSIDERED TO BE A PAYMENT MADE BY THE ASSESSEE AIRLINE. PSF IS A PAYMENT MADE BY THE PASSENGER WHICH IS ONLY ROUTED THROUGH THE ASSESSEE AIRLINE. IT IS UNDISPUTED THAT THE AMOUNT HANDED OVER BY THE ASSESSEE AIRLINE TO THE AIRPORT OPERATORS HAS ALSO NO T BEEN CLAIMED AS EXPENDITURE BY THE ASSSESEE IN ITS BOOK S OF ACCOUNT. THE HONBLE BOMBAY HIGH COURT HAS FURTH ER HELD THAT PSF IS A STATUTORY LEVY AND THE ASSESSEE AIRLIN E IS ONLY ACTING AS A CONDUIT BETWEEN THE EMBARKING PASSENGERS AND THE CENTRAL GOVERNMENT AGENCY. CLEARLY THEREFORE, EVEN THE PROVISIONS OF SECTION 194J OF THE ACT WOULD NOT APPLY. RESPECTFULLY FOLLOWING DECISION OF JET ITA-4226/DEL/2014 3 AIRWAYS (SUPRA) IT IS HELD THAT ASSESSEE WAS NOT REQUIRED T O DEDUCT TDS U/S 194J ON PAYMENT OF PSF. 4. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF ITAT IN ASSESSEES OWN CASE, WE UPHOLD THE ORDER OF LEARNED CIT(A) ON T HIS POINT AND REJECT GROUND NO.1 OF THE REVENUES APPEAL. 5. WITH REGARD TO GROUND NO.2, THE ITAT HELD AS UNDE R :- 6.4 WE HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND THE SUBMISSIONS MADE BY THE RIVAL PARTIES. WE FIND THAT THE ISSUE IN DISPUTE STANDS FULLY COVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF JDS APPAREL (SUPRA) WHEREIN THE HONBLE HIGH COUR T HAS HELD AS UNDER :- 15. APPLYING THE ABOVE CITED CASE LAW TO THE FACTUA L 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 MADE BY HDFC, IT WAS RECEIVED AND CREDITED TO THE AC COUNT 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 WA S USED, GOT ACCESS TO THE INTERNET GATEWAY OF THE ACQUIR ING BANK RESULTING IN THE REALISATION OF PAYMENT. SUBSEQUE NTLY, THE ACQUIRING BANK REALISED AND RECOVERED THE PAYMEN T 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. H DFC WAS ALSO ACTING AND EQUALLY PROTECTING THE INTEREST OF THE CUSTOMER WHOSE CREDIT CARD WAS USED IN THE SWIPING MACHINES. IT IS NOTICEABLE THAT THE BANK IN QUESTION O R THEIR EMPLOYEES WERE NOT PRESENT AT THE SPOT AND WERE NOT ASSOCIATED WITH BUYING OR SELLING OF GOODS AS SUCH. UPON SWIPING THE CARD, THE BANK MADE PAYMENT OF THE BILL AMOUNT TO THE RESPONDENT-ASSESSEE. THUS, THE RESPONDENT ASSESSEE RECEIVED THE SALE CONSIDERATION. IN TURN, THE BA NK IN QUESTION HAD TO COLLECT THE AMOUNT FROM THE BANKE RS OF ITA-4226/DEL/2014 4 THE CREDIT CARD HOLDER. THE BANK HAD TAKEN THE RISK AND ALSO REMAINED OUT OF POCKET FOR SOMETIME AS THERE WOU LD BE A TIME GAP BETWEEN THE DATE OF PAYMENT AND RECOV ERY OF THE AMOUNT PAID. 16. THE AMOUNT RETAINED BY THE BANK IS A FEE CHARGED BY THEM FOR HAVING RENDERED THE BANKING SERVICES AND CA NNOT BE TREATED AS A COMMISSION OR BROKERAGE PAID IN COURSE OF USE OF ANY SERVICES BY A PERSON ACTING ON BEHALF OF ANO THER FOR BUYING OR SELLING OF GOODS. THE INTENTION OF THE LEGISLATURE IS TO INCLUDE AND TREAT COMMISSION OR BROKE RAGE PAID WHEN A THIRD PERSON INTERACTS BETWEEN THE SELLER AND THE BUYER AS AN AGENT AND THEREBY RENDERS SERVICES IN T HE COURSE OF BUYING AND/OR SELLING OF GOODS. THIS HAPPENS WHEN THERE IS A MIDDLEMAN OR AN AGENT WHO INTERACTS O N BEHALF OF ONE OF THE PARTIES, HELPS THE BUYER/SELLER T O MEET, OR PARTICIPATES IN THE NEGOTIATIONS OR TRANSACTIONS RE SULTING 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 PROV ISION. THE BANK IN QUESTION 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 CONCER NED WITH THE QUALITY, PRICE, NATURE, QUANTUM ETC. OF TH E GOODS BOUGHT/SOLD. THE BANK MERELY PROVIDES BANKING SERVICES IN THE FORM OF PAYMENT AND SUBSEQUENTLY COLLECTS THE PAYMENT. THE AMOUNT PUNCHED IN THE SWIPING MACHINE I S CREDITED TO THE ACCOUNT OF THE RETAILER BY THE ACQU IRING BANK, I.E. HDFC IN THIS CASE, AFTER RETAINING A SMALL PORTION OF THE SAME AS THEIR CHARGES. THE BANKING SERVICES CANNO T BE COVERED AND TREATED AS SERVICES RENDERED BY AN AGE NT FOR THE PRINCIPAL DURING THE COURSE OF BUYING OR SELL ING OF GOODS AS THE BANKER DOES NOT RENDER ANY SERVICE IN THE NATURE OF AGENCY. 6.5 THE ISSUE INVOLVED IN PRESENT APPEAL BEING IDENTI CAL TO THAT DECIDED BY THE HONBLE JURISDICTIONAL HIGH C OURT, RESPECTFULLY FOLLOWING THE VERDICT OF M/S JDS APPAREL (SUPRA) IT IS HELD THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS ON CHARGES RETAINED BY BANK / CREDIT CARD AGENCIES O UT OF THE SALE CONSIDERATION OF TICKETS BOOKED THROUGH CREDI T / DEBIT CARDS. IT IS HELD THAT PROVISION OF SECTION 194H ARE NOT ATTRACTED. AS A RESULT, GROUNDS 2 TO 2.3 ARE DISMISSED. ITA-4226/DEL/2014 5 6. SINCE THE FACTS AS WELL AS THE LEGAL POSITION ARE ID ENTICAL, THE ABOVE FINDING OF THE ITAT WOULD BE SQUARELY APPLICAB LE TO THE YEAR UNDER APPEAL. WE, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, UPHOLD THE ORDER OF THE LEARNED CIT(A) ON THIS POINT AND RE JECT GROUND NO.2 OF THE REVENUES APPEAL. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . DECISION PRONOUNCED IN THE OPEN COURT ON 22.04.2019. SD/- SD/- (SUCHITRA KAMBLE (SUCHITRA KAMBLE (SUCHITRA KAMBLE (SUCHITRA KAMBLE ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE VICE VICE VICE P PP P RESIDENT RESIDENT RESIDENT RESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : DEPUTY COMMISSIONER OF INCOME TAX , DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -51(1), NEW DELHI. 51(1), NEW DELHI. 51(1), NEW DELHI. 51(1), NEW DELHI. 2. RESPONDENT : M/S SPICE JET LIMITED, M/S SPICE JET LIMITED, M/S SPICE JET LIMITED, M/S SPICE JET LIMITED, 319, UDYOG VIHAR, PHASE 319, UDYOG VIHAR, PHASE 319, UDYOG VIHAR, PHASE 319, UDYOG VIHAR, PHASE- -- -IV, GURGAON, HARYANA. IV, GURGAON, HARYANA. IV, GURGAON, HARYANA. IV, GURGAON, HARYANA. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR