DCIT TDS 1(1), MUMBAI V. CLEARTRIP TRAVEL SERVICES P.LTD, MUMBAI

ITA 5049/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3966 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 04-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K AGARWAL
• Assessee Lawyers: RASHMI MISHRA
• Keywords: Non-deduction of tax
• Section: 133A; 201(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.5049/MUM/2014 ASSESSMENT YEAR-2010-11 DCIT(OSD)(TDS), RANGE - 1, ROOM NO.803, K.G. MITTAL HOSPITAL BLDG. CHARNI ROAD (W), MUMBAI-400002 / VS. M/S CLEARTRIP TRAVEL SERVICES PVT. LTD. UNIT NO.1, GROUND FLOOR, DTC BUILDING, SITARAM MILLS COMPOUND, LOWER PAREL, MUMBAI-400011 PAN NO.AACCC6016B ( / REVENUE) ( /ASSESSEE) / REVENUE BY SHRI V.K. AGARWAL -DR / ASSESSEE BY MS. RASHMI MISHRA ! / DATE OF HEARING : 16/05/2016 ! / DATE OF ORDER: 16/05/2016 ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 20/05/2014 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI. 2. THE ONLY GROUND RAISED IN THE APPEAL OF THE REVENUE PERTAINS TO HOLDING THAT NO TDS WAS DEDUCTI BLE U/S 194H OF THE INCOME TAX ACT, 1961 (HEREINAFTER T HE ACT), BY THE ASSESSEE ON THE AMOUNT HELD BY THE BANKS/CRE DIT CARD AGENCIES AS SERVICE CHARGES IN RESPECT OF CRED IT CARD SERVICES PROVIDED BY THEM BY FURTHER HOLDING THAT BANK/CREDIT CARD AGENCIES ARE NOT AGENCIES OF THE A SSESSEE IGNORING THE FACT THAT ENTIRE PROCESS OF FACILITATI ON OF CREDIT CARD OF SUCH BANK/AGENCIES ARE NOTHING BUT CONSTRUC TIVE AGENTS FOR THE ASSESSEE COMPANY AND BRINGING SUCH C HARGES WITHIN THE PURVIEW OF SECTION 194H OF THE ACT. 2.1. DURING HEARING, THE LD. DR, SHRI V.K. AGARWAL , ADVANCED ARGUMENTS, WHICH IS IDENTICAL TO THE GROUN D RAISED. ON THE OTHER HAND, MS. RASHMI MISHRA, LD. COUNSEL FOR THE ASSESSEE, DEFENDED THE IMPUGNED ORD ER BY ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 3 PLACING RELIANCE UPON THE DECISION IN DCIT VS VAH M AGNA RETAIL PVT. LTD. AND KOTAK SECURITIES LTD. VS DCIT (ITA NO.6657/MUM/2011). THIS FACTUAL MATRIX OF THE ASSES SEE WAS NOT CONTROVERTED BY THE LD. DR. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S, IN BRIEF, ARE THAT A SURVEY U/S 133A OF THE ACT WAS CA RRIED OUT AT THE PREMISES OF HDFC BANK LTD, WHEREIN, PURSUANT TO THE INQUIRIES, IT WAS REVEALED THAT THE DISCOUNT IN THE NATURE OF 'COMMISSION' WITHHELD BY THE ACQUIRING BA NK, WHILE MAKING PAYMENTS TO RETAIL MERCHANT OUGHT TO B E SUBJECTED TO TDS @ 10% UNDER SECTION 194H OF THE ACT. THE A.O. OBSERVED THAT THE APPELLANT IS A COMPANY E NGAGED IN THE BUSINESS OF PROVIDING TRAVEL AGENCY SERVICES . THE A.O. OBSERVED THAT DURING THE YEAR UNDER CONSIDERAT ION, THE ACQUIRING BANK HAD WITHHELD AN AMOUNT OF RS.11,16,46,150/- AS 'TRANSACTION CHARGES' (CREDIT CARD COLLECTION CHARGES) WHILE MAKING PAYMENTS OF BILLIN G AMOUNT OF SALES CARRIED OUT THROUGH CREDIT CARDS, T O THE APPELLANT COMPANY (RETAIL MERCHANT). SINCE THIS PAY MENT OF ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 4 TRANSACTION CHARGES HAD NOT BEEN SUBJECTED TO TDS, A SHOW CAUSE NOTICE WAS ISSUED TO THE APPELLANT TO SHOW CA USE AS TO WHY IT SHOULD NOT BE TREATED AS AN 'ASSESSEE-IN- DEFAULT' U/S.201(1) OF THE ACT. THE APPELLANT FURNISHED THE WRITTEN SUBMISSION, CONTENDING INTER ALIA THAT CREDIT CARD COLLECTION CHARGES ARE IN THE NATURE OF BANK CHARGE S, WHICH ARE NOT SUBJECT TO TDS. THE A.O. CONSIDERED THE APP ELLANT'S SUBMISSION BUT DID NOT FIND IT ACCEPTABLE FOR THE R EASONING DISCUSSED IN DETAIL IN PARA 4 & 5 OF THE IMPUGNED O RDER AND ACCORDINGLY HELD THE APPELLANT AS 'ASSESSEE-IN-DEFA ULT' FOR NON-DEDUCTION OF TAX AT SOURCE U/S.194H @ 101'0 ON THE PAYMENT OF CREDIT CARD COLLECTION CHARGES OF RS.11,16,46,150/-, WHICH WORKED OUT TO RS.1,1L,64,615/-. THUS, THE A.O. RAISED THE DEMAND OF RS.1,51,83,876/- COMPRISING OF THE DEMAND OF RS.1,11,64,615/- AND IN TEREST OF RS.40,19,261/- THEREON U/S 201(1A) OF THE ACT. 2.3. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THE ASSESSEE EXPLAINED THAT WH EN A CUSTOMER BOOKS A TICKET ONLINE THROUGH A CREDIT CAR D, THE AMOUNT IS REMITTED BACK TO THE CREDIT CARD COMPANY (BANK) ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 5 TO THE APPELLANT AFTER DEDUCTING CHARGES COMMONLY K NOWN AS CREDIT CARD CHARGES, WHICH ARE INTRINSICALLY IN THE NATURE OF BANK CHARGES DIRECTLY DEDUCTED BY THE CREDIT C ARD COMPANY/BANK AND THE ASSESSEE HAS NO SCOPE FOR DEDUCTION OF TAX AT SOURCE, SINCE IT IS NOT THE ASS ESSEE, WHO MAKES THE PAYMENT BUT IT IS THE CREDIT CARD COMPANY /BANK THAT MAKES THE PAYMENT TO THE APPELLANT AFTER DEDUC TION OF SUCH CHARGES. RELIANCE WAS ALSO PLACED UPON CBDT CIRCULAR DATED 04/01/2013. THE FIRST APPELLATE AUT HORITY DELETED THE ADDITION. THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE THIS TRIBUNAL. 2.4. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT THE IMPUG NED ISSUE SQUARELY COVERED BY THE DECISION OF THE MUMBA I BENCH OF THE TRIBUNAL, IN THE CASE OF KOTAK SECURIT IES LTD. (ITA NO.6657/MUM/2011) AND FURTHER IN THE OWN CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2011-12. EVEN ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 6 OTHERWISE, IF THE DEPARTMENT HAS ALLOWED THE CLAIM OF THE ASSESSEE FOR EARLIER ASSESSMENT YEAR AND THE SAME H AS NOT BEEN REVERSED BY HIGHER AUTHORITIES, THE DEPARTMENT IS NOT EXPECTED TO TAKE U-TURN. THE TRIBUNAL IN THE CASE OF KOTAK SECURITIES LTD. VS DCIT, IDENTICALLY VIDE ORDER DAT ED 03/02/2012 HELD AS UNDER:- 2. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERI AL FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSE IS A COMPANY ENGAG ED IN STOCK BROKING BUSINESS AND IS A MEMBER OF THE BOMBAY STOC K EXCHANGE AND NATIONAL STOCK EXCHANGE. DURING THE CO URSE OF BUSINESS CARRIED ON BY THE ASSESSEE, ASSESSEE FURNI SHES BANK GUARANTEES, MAINLY IN LIEU OF MARGIN DEPOSITS, TO V ARIOUS AGENCIES, SUCH AS BSE AND NSE. IN CONSIDERATION FOR ISSUANCE OF SUCH BANK GUARANTEES, BANKS CHARGE THE FEES, WHICH IS TERMED AS, BANK GUARANTEE COMMISSION. ON 16TH NOVEMBER 2 006, THE ASSESSEE WAS SUBJECTED TO A SURVEY UNDER SECTION 13 3A. DURING THE COURSE OF THIS SURVEY, IT WAS NOTICED THAT THE ASSESSEE WAS NOT DEDUCTING ANY TAX AT SOURCE FROM THE PAYMENTS M ADE BY THE ASSESSEE TO THE BANKS IN RESPECT OF BANK GUARA NTEE COMMISSION. IN RESPONSE TO THE ASSESSING OFFICERS REQUISITION TO SHOW CAUSE AS TO WHY ACTION NOT BE TAKEN AGAINST THE ASSESSEE FOR NON-DEDUCTION OF TAX AT SOURCE FROM BA NK GUARANTEE COMMISSION PAYMENTS, IT WAS INTER ALIA SU BMITTED BY THE ASSESSEE THAT A PLAIN READING OF EXPLANATION TO SECTION 194 H, WHICH DEALS WITH DEDUCTION OF TAX SOURCE FRO M COMMISSION OR BROKERAGE PAYMENTS, INDICATES THAT TH E ELEMENT ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 7 OF AGENCY IS ESSENTIAL IN CASE OF ALL THE SERVICES OR THE TRANSACTIONS CONTEMPLATED BY EXPLANATION TO SECTION 194 H, AND THAT THE TRANSACTIONS OR SERVICES, WHICH ARE ON PRINCIPAL TO PRINCIPAL BASIS, WOULD NOT BE GOVERNED BY THE SAID PROVISION REQUIRING TAX DEDUCTION AT SOURCE. THE ASSESSEE ALS O REFERRED TO VARIOUS JUDICIAL PRECEDENTS, INCLUDING BY HONBLE G UJARAT HIGH COURT IN THE CASE OF AHMEDABAD STAMP VENDORS ASSOCI ATION VS UNION OF INDIA (257 ITR 202), AND BY CO ORDINATE BE NCHES OF THIS TRIBUNAL IN THE CASES OF BAIDYNATH AYURVED BHA WAN LTD VS JCIT (83 TTJ 409) AND ACIT VS THE SAMAJ (71 TTJ783) . NONE OF THESE SUBMISSIONS, HOWEVER, IMPRESSED THE ASSESSING OFFICER. HE WAS OF THE VIEW THAT, IN TERMS OF THE PROVISION OF EXPLANATION TO SECTION 194 H, COMMISSION OR BROKERAGE COVERS ANY PAYMENT, RECEIVED OR RECEIVABLE DIRECTLY OR INDIR ECTLY, FOR ANY SERVICES IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET, VALUABLE OR THING. HE REJECTED THE ASSESSEES SUBMI SSION REGARDING PRINCIPAL AGENT RELATIONSHIP BEING SINE Q UA NON FOR INVOKING THE TAX DEDUCTION AT SOURCE REQUIREMENTS A S TOTALLY INCORRECT AND DEVOID OF ANY MERITS AND OBSERVED TH AT THE EXPLANATION TO SECTION 194 H IS VERY WIDE AND COVER S ANY PAYMENTS IN THE NATURE OF ANY COMMISSION OR BROKERA GE FOR ANY SERVICES IN RELATION TO ANY TRANSACTION RELATIN G TO ANY ASSET. HE FURTHER NOTED THAT THE ASSESSEE HAS TAKE N BANK GUARANTEES FROM VARIOUS BANKS AND THESE BANK GUARAN TEES PROTECT THE STOCK EXCHANGES FROM ANY DEFAULT BY THE ASSESSEE AND ACTS AS SECURITY FOR DUE PERFORMANCE AND FULFIL LMENT OF OBLIGATIONS BY THE ASSESSEE. THE BANK GUARANTEE COM MISSION PAID BY THE ASSESSEE FOR THESE BANK GUARANTEES, ACC ORDING TO THE ASSESSING OFFICER, WAS LIABLE FOR DEDUCTION AT SOURCE UNDER ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 8 SECTION 194 H. THE ASSESSEES FAILURE TO DEDUCT THE TAX SOURCE WAS, ACCORDINGLY, VISITED WITH DEMANDS RAISED UNDER SECTION 201(1) R.W.S. 194H, TO MAKE GOOD THE SHORTFALL IN T AX DEDUCTION AT SOURCE, AND UNDER SECTION 201(1A) R.W.S. 194 H, TO COMPENSATE INTEREST FOR DELAY IN REALIZING THE TAX DEDUCTION AT SOURCE REVENUES. AGGRIEVED BY THE STAND SO TAKEN BY THE ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A) HELD THAT THE DEFINITION OF COMMISSION OR BROKERAGE, AS GIV EN IN EXPLANATION TO SECTION 194 H, IS NOT EXHAUSTIVE BUT ONLY INCLUSIVE, WHICH, IN EFFECT, IMPLIES THAT ANY PAYME NT FOR COMMISSION OR BROKERAGE, AS UNDERSTOOD IN COMMON PA RLANCE, WILL ALSO BE COVERED BY THE SAID PROVISION. HE INTE R ALIA OBSERVED THAT IT IS EVIDENT THAT THE EXPLANATION S EEKS TO INCLUDE EVEN THOSE PAYMENTS (BESIDES NORMAL COMMISS ION OR BROKERAGE) WHICH OTHERWISE MAY NOT BE CALLED COMMI SSION OR BROKERAGE AND WHICH ARE IN THE NATURE OF PAYMENT F OR SERVICES RENDERED (EXCEPT FOR PROFESSIONAL SERVICES WHICH AR E COVERED U/S 194J) BY AN AGENT OF A PRINCIPAL. THIS, LEAR NED CIT(A) REASONED, OBVIOUSLY DOES NOT MEAN THAT NORMAL COMM ISSION OR BROKERAGE PAYMENTS ARE EXCLUDED FROM THE PURVIEW OF SECTION 194 H. LEARNED CIT(A) THUS UPHELD , AND IN FACT FORTIFIED, THE STAND OF THE ASSESSING OFFICER, AND THUS CONFIRMED THE IMPUGNED DEMANDS RAISED UNDER SECTION 201(1)R.W .S. 194 H AND UNDER SECTION 201(1A) R.W.S. 194 H. THE ASSES SEE IS AGGRIEVED AND IS IN FURTHER APPEAL BEFORE US. ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 9 3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THI S CASE AS ALSO THE APPLICABLE LEGAL POSITION. 4. LET US FIRST TAKE A LOOK AT SECTION 194 H, WHICH IS REPRODUCED AS FOLLOWS: COMMISSION OR BROKERAGE 194H. ANY PERSON, NOT BEING AN INDIVIDUAL OR A HIND U UNDIVIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING, ON OR AFTER THE 1ST DAY OF JUNE, 2001, TO A RESIDENT, ANY INCOME BY WAY OF COMMISSION (NOT BEING INSURANCE COMMISSION REFERRED TO IN SECTION 194D) OR BROKERAGE, SHALL, AT THE TIME OF C REDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME O F PAYMENT OF SUCH INCOME IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT INCOME -TAX THEREON AT THE RATE OF TEN PER CENT : PROVIDED THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION IN A CASE WHERE THE AMOUNT OF SUCH INCOME OR, AS THE C ASE MAY BE, THE AGGREGATE OF THE AMOUNTS OF SUCH INCOME CREDITE D OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCI AL YEAR TO THE ACCOUNT OF, OR TO, THE PAYEE, DOES NOT EXCEED FIVE THOUSAND RUPEES : PROVIDED FURTHER THAT AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY, WHOSE TOTAL SALES, GROSS RECEIPTS OR TURNOV ER FROM THE BUSINESS OR PROFESSION CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 10 YEAR IN WHICH SUCH COMMISSION OR BROKERAGE IS CREDI TED OR PAID, SHALL BE LIABLE TO DEDUCT INCOME-TAX UNDER TH IS SECTION: PROVIDED ALSO THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION ON ANY COMMISSION OR BROKERAGE PAYABLE BY B HARAT SANCHAR NIGAM LIMITED OR MAHANAGAR TELEPHONE NIGAM LIMITED TO THEIR PUBLIC CALL OFFICE FRANCHISEES. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (I) COMMISSION OR BROKERAGE INCLUDES ANY PAYMENT RECEIVED OR RECEIVABLE, DIRECTLY OR INDIRECTLY, BY A PERSON ACTING ON BEHALF OF ANOTHER PERSON FOR SERVICES RENDERED (NOT BEING PROFESSIONAL SERVICES) OR FOR ANY SERVICES IN THE C OURSE OF BUYING OR SELLING OF GOODS OR IN RELATION TO ANY TR ANSACTION RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING, N OT BEING SECURITIES; (II) THE EXPRESSION PROFESSIONAL SERVICES MEANS S ERVICES RENDERED BY A PERSON IN THE COURSE OF CARRYING ON A LEGAL, MEDICAL, ENGINEERING OR ARCHITECTURAL PROFESSION OR THE PROFESSION OF ACCOUNTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR SUCH OTHER PROFESSION AS IS NOTIFIED BY THE BOARD FOR THE PURPOSES OF SECTION 44AA; (III) THE EXPRESSION SECURITIES SHALL HAVE THE ME ANING ASSIGNED TO IT IN CLAUSE (H) OF SECTION 2 OF THE SE CURITIES CONTRACTS (REGULATION) ACT, 1956 (42 OF 1956) ; (IV) WHERE ANY INCOME IS CREDITED TO ANY ACCOUNT, W HETHER CALLED SUSPENSE ACCOUNT OR BY ANY OTHER NAME, IN THE BOOKS OF ACCOUNT OF THE PERSON LIABLE TO PAY SUCH INCOME, SUCH ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 11 CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCO ME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SEC TION SHALL APPLY ACCORDINGLY. 5. A PLAIN READING OF THE ABOVE PROVISION INDICATES THAT TAX WITHHOLDING REQUIREMENTS UNDER SECTION 194H APPLY I N RESPECT OF COMMISSION OR BROKERAGE, WHICH, IN TURN, IS DE FINED BY EXPLANATION TO SECTION 194 H. NO DOUBT, THIS DEFINI TION IS INCLUSIVE BUT THE FUNDAMENTAL QUESTION THAT WE REAL LY NEED TO CONSIDER IN THE FIRST PLACE IS AS TO WHAT ARE THE C ONNOTATIONS OF EXPRESSION COMMISSION OR BROKERAGE IN COMMON PARL ANCE, AND THEN PROCEED TO DEAL WITH THE INCLUSIONS THERET O BY THE VIRTUE OF SPECIFIC PROVISION OF LAW. 6. WE FIND THAT THE EXPRESSION COMMISSION AND BR OKERAGE HAVE BEEN USED TOGETHER IN THE STATUTE. IT IS WELL SETTLED, AS NOTED BY MAXWELL IN INTERPRETATION OF STATUTES AND WHILE ELABORATING ON THE PRINCIPLE OF NOSCITUR A SOCIIS, THAT WHEN TWO OR MORE WORDS WHICH ARE SUSCEPTIBLE TO ANALOGOUS ME ANING ARE USED TOGETHER THEY ARE DEEMED TO BE USED IN THE IR COGNATE SENSE. THEY TAKE, AS IT WERE, THEIR COLOURS FROM EA CH OTHER, THE MEANING OF MORE GENERAL BEING RESTRICTED TO A SENSE ANALOGOUS TO THAT OF LESS GENERAL. EXPLAINING THIS PRINCIPLE IN GENERAL TERMS, HONBLE SHRI M.K. CHATURVEDI, THE THEN VICE PRESIDENT (MZ) HAS, IN INTERPRETATION OF TAXING STATUTES (AIF TP JOURNAL : VOL. 4, NO. 7, JULY, 2002, AT P. 7), IN HIS INIMITA BLE WORDS OBSERVED: LAW IS NOT A BROODING OMNIPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL ORDER. THE TENETS OF LAW BEING E NACTED ON THE ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 12 BASIS OF PRAGMATISM. SIMILARLY, THE RULES RELATING TO INTERPRETATION ARE ALSO BASED ON COMMON-SENSE APPRO ACH. SUPPOSE A MAN TELLS HIS WIFE TO GO OUT AND BUY BREA D, MILK OR ANYTHING ELSE SHE NEEDS, HE WILL NOT NORMALLY BE UN DERSTOOD TO INCLUDE IN THE TERMS ANYTHING ELSE SHE NEEDS A NE W CAR OR AN ITEM OF JEWELLERY. THE DICTUM OF EJUSDEM GENERIS RE FERS TO SIMILAR SITUATION. IT MEANS OF THE SAME KIND, CLASS OR NATURE. THE RULE IS THAT WHEN GENERAL WORDS FOLLOW PARTICUL AR AND SPECIFIC WORDS OF THE SAME NATURE, THE GENERAL WORD S MUST BE CONFINED TO THE THINGS OF SAME KIND AS SPECIFIED. N OSCITUR A SOCIIS IS A BROADER VERSION OF THE MAXIM EJUSDEM GE NERIS. A MAN MAY BE KNOWN BY THE COMPANY HE KEEPS AND A WORD MAY BE INTERPRETED WITH REFERENCE TO BE ACCOMPANYING WO RDS. WORDS DERIVE COLOUR FROM THE SURROUNDING WORDS. 7. BROOMS LEGAL MAXIMS (10TH EDN.) OBSERVES THAT ' IT IS A RULE LAID DOWN BY LORD BACON, THAT COPULATIO VERBORUM IN DICAT ACCEPTATIONEM IN EODEM SENSU THE COUPLING OF WORDS TOGETHER SHOWS THAT THEY ARE TO BE UNDERSTOOD IN THE SAME SE NSE.' 8. LET US NOW DEAL WITH LEGAL CONNOTATIONS OF THESE TWO EXPRESSIONS, NAMELY COMMISSION AND BROKERAGE. T HE LAW LEXICON (EDITED BY JUSTICE Y.V. CHANDRACHUD; 1997 E DN.) OBSERVES THAT 'IN COMMERCIAL LAW, COMMISSION IS A COMPENSATION TO A FACTOR OR OTHER AGENT FOR SERVICE S TO BE RENDERED IN MAKING A SALE OR OTHERWISE; A SUM ALLOW ED AS COMPENSATION TO A SERVANT, FACTOR OR AGENT WHO MANA GES THE AFFAIRS OF OTHERS, IN RECOMPENSE FOR HIS SERVICES.' ACCORDING TO THE GIVEN DEFINITION, 'IT IS AN ALLOWANCE, RECOMPEN SE OR REWARD MADE TO AGENTS, FACTORS AND BROKERS AND OTHERS FOR EFFECTING ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 13 SALES AND CARRYING OUT BUSINESS TRANSACTIONS. IT IS GENERALLY CALCULATED AS A CERTAIN PERCENTAGE ON THE AMOUNT OF THE TRANSACTIONS ON THE PROFITS TO THE PRINCIPAL.' THE EXPRESSION BROKERAGE IS DEFINED AS FEES OR COMMISSION GIVEN TO OR CHARGED BY A BROKER. IN TURN A BROKER IS DEFINED A S 'A MIDDLEMAN OR AGENT WHO, FOR A COMMISSION ON THE VAL UE OF TRANSACTION, NEGOTIATES FOR OTHERS THE PURCHASE OR SALE OF BOOKS, BONDS OR COMMODITIES, OR PROPERTY OF ANY KIN D, OR WHO ATTENDS TO THE DOING OF SOMETHING FOR ANOTHER'. 9. IN THE LIGHT OF THE ABOVE DISCUSSIONS, AND WHEN WE LOOK AT THE CONNOTATIONS OF EXPRESSION COMMISSION OR BROKERAGE IN ITS COGNATE SENSE, AS IN THE LIGHT OF THE PRINCIPLE OF NOSCITUR A SOCIIS AS WE ARE OBLIGED TO, IN OUR CONSIDERED VIEW , SCOPE OF EXPRESSION COMMISSION, FOR THIS PURPOSE, WILL BE CONFINED TO AN ALLOWANCE, RECOMPENSE OR REWARD MADE TO AGENTS, FACTORS AND BROKERS AND OTHERS FOR EFFECTING SALES AND CARR YING OUT BUSINESS TRANSACTIONS AND SHALL NOT EXTEND TO THE PAYMENTS, SUCH AS BANK GUARANTEE COMMISSION, WHICH ARE IN T HE NATURE OF FEES FOR SERVICES RENDERED OR PRODUCT OFFERED BY THE RECIPIENT OF SUCH PAYMENTS ON PRINCIPAL TO PRINCIPAL BASIS. E VEN WHEN AN EXPRESSION IS STATUTORILY DEFINED UNDER SECTION 2, IT STILL HAS TO MEET THE TEST OF CONTEXTUAL RELEVANCE AS SECTION 2 ITSELF STARTS WITH THE WORDS IN THIS ACT ( I.E. INCOME TAX ACT), UNLESS CONTEXT OTHERWISE REQUIRES, AND, THEREFORE, CONTE XTUAL MEANING ASSUMES SIGNIFICANCE. EVERY DEFINITION IN T HE INCOME TAX ACT MUST DEPEND ON THE CONTEXT IN WHICH THE EXP RESSION IN SET OUT, AND THE CONTEXT IN WHICH EXPRESSION COMMI SSION APPEARS IN SECTION 194 H, I.E. ALONGWITH THE EXPRES SION ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 14 BROKERAGE, SIGNIFICANTLY RESTRICTS ITS CONNOTATIO NS. THE COMMON PARLANCE MEANING OF THE EXPRESSION COMMISSI ON THUS DOES NOT EXTEND TO A PAYMENT WHICH IS IN THE NATURE OF FEES FOR A PRODUCT OR SERVICE; IT MUST REMAIN RESTRICTED TO , AS HAS BEEN ELABORATED ABOVE, A PAYMENT IN THE NATURE OF REWARD FOR EFFECTING SALES OR BUSINESS TRANSACTIONS ETC. THE I NCLUSIVE DEFINITION OF THE EXPRESSION COMMISSION OR BROKERA GE IN EXPLANATION TO SECTION 194 H IS QUITE IN HARMONY WI TH THIS APPROACH AS IT ONLY PROVIDES THAT ANY PAYMENT RECE IVED OR RECEIVABLE, DIRECTLY OR INDIRECTLY, BY A PERSON ACT ING ON BEHALF OF ANOTHER PERSON FOR SERVICES RENDERED (NOT BEING PROFESSIONAL SERVICES) OR FOR ANY SERVICES IN THE COURSE OF BUYI NG OR SELLING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING, NOT BEING SECURITIES IS INCLUDIBLE IN THE SCOPE OF MEANING OF COMMISSION OR BROKERAGE. THEREFORE, WHAT THE INCLUSIVE DEFINITION REALLY CONTAINS IS NO THING BUT NORMAL MEANING OF THE EXPRESSION COMMISSION OR BRO KERAGE. IN THE CASE OF SOUTH GUJARAT ROOFING TILES MANUFACT URERS ASSOCIATION VS STATE OF GUJARAT [(1976) 4 SCC 601], HONBLE SUPREME COURT WERE IN SEISIN OF A SITUATION IN WHIC H AN EXPRESSION, NAMELY PROCESSING, WAS GIVEN AN INCLU SIVE DEFINITION, BUT THEIR LORDSHIPS WERE OF THE VIEW TH AT THERE COULD BE NO OTHER MEANING OF PROCESSING BESIDES W HAT IS STATED AS INCLUDED IN THAT EXPRESSION AND THAT TH OUGH INCLUDE IS GENERALLY USED IN INTERPRETATION CLAUS E AS A WORD OF ENLARGEMENT, IN SOME CASES CONTEXT MIGHT SUGGEST A DIFFERENT INTENTION. THEIR LORDSHIPS THEN CONCLUDED THAT THO UGH THE EXPRESSION USED IN THE DEFINITION CLAUSE IS INCLUD ES, IT SEEMS TO US THAT THE WORD INCLUDES HAS BEEN USED HERE I N THE SAME ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 15 SENSE OF MEANS; THIS IS THE ONLY CONSTRUCTION THA T THE WORD CAN BEAR IN THIS CONTEXT. IN OTHER WORDS, AN INCLUSIVE DEFINITION, AS THEIR LORDSHIPS NOTED, DOES NOT NECESSARILY ALWAYS EXTEND THE MEANING OF AN EXPRESSION. WHEN INCLUSIVE DEFINITION CONTAINS ORDINARY NORMAL CONNOTATIONS OF AN EXPRESSION, IN O UR CONSIDERED VIEW, EVEN AN INCLUSIVE DEFINITION HAS T O BE TREATED AS EXHAUSTIVE. THAT IS THE SITUATION IN THE CASE BE FORE US AS WELL. EVEN AS DEFINITION OF EXPRESSION COMMISSION OR BRO KERAGE, IN EXPLANATION TO SECTION 194 H, IS STATED TO BE EXCLU SIVE, IT DOES NOT REALLY MEAN ANYTHING OTHER THAN WHAT HAS BEEN S PECIFICALLY STATED IN THE SAID DEFINITION. THEREFORE, AS HELD B Y THE COORDINATE BENCHES IN A NUMBER OF CASES INCLUDING S RL RANBAXY LTD VS ACIT (ITA NO. 434/DEL/11; ORDER DATE D 16.12.2011), FOSTERS INDIA LTD VS ITO (117 TTJ 346) , AND AJMER ZILA DUGDH UTPADAK SANGH LTD VS ITO (34 SOT 216), P RINCIPAL AGENT RELATIONSHIP IS A SINE QUA NON FOR INVOKING T HE PROVISIONS OF SECTION 194 H. IN THE CASE BEFORE US, THERE IS N O PRINCIPAL AGENT RELATIONSHIP BETWEEN THE BANK ISSUING THE BAN K GUARANTEE AND THE ASSESSEE. WHEN BANK ISSUES THE BA NK GUARANTEE, ON BEHALF OF THE ASSESSEE, ALL IT DOES I S TO ACCEPT THE COMMITMENT OF MAKING PAYMENT OF A SPECIFIED AMOUNT TO, ON DEMAND, THE BENEFICIARY, AND IT IS IN CONSIDERATION OF THIS COMMITMENT, THE BANK CHARGES A FEES WHICH IS CUSTOM ARILY TERMED AS BANK GUARANTEE COMMISSION . WHILE IT IS TERMED AS GUARANTEE COMMISSION, IT IS NOT IN THE NATURE OF COMMISSION AS IT IS UNDERSTOOD IN COMMON BUSINESS PARLANCE AND IN THE CONTEXT OF THE SECTION 194H. THIS TRANSACTION, IN O UR CONSIDERED VIEW, IS NOT A TRANSACTION BETWEEN PRINCIPAL AND AG ENT SO AS TO ATTRACT THE TAX DEDUCTION REQUIREMENTS UNDER SECTIO N 194H. ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 16 WE ARE, THEREFORE, OF THE CONSIDERED VIEW THAT THE CIT(A) INDEED ERRED IN HOLDING THAT THE ASSESSEE WAS INDEE D UNDER AN OBLIGATION TO DEDUCT TAX AT SOURCE UNDER SECTION 19 4 H FROM PAYMENTS MADE BY THE ASSESSEE TO VARIOUS BANKS. AS WE HAVE HELD THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT T AX AT SOURCE UNDER SECTION 194 H, THE QUESTION OF LEVY OF INTERE ST UNDER SECTION 201(1A) CANNOT ARISE. 10. IN VIEW OF THE ABOVE DISCUSSIONS, WE QUASH THE IMPUGNED DEMANDS UNDER SECTION 201(1) AND 201(1A) R.W.S. 194 H . WE, THEREFORE, ALSO SEE NO NEED TO DEAL WITH OTHER PERI PHERAL LEGAL ISSUES RAISED BY THE ASSESSEE. 11. IN THE RESULT, THE APPEAL IS ALLOWED. IN THE AFORESAID DECISION, THE TRIBUNAL HAS MADE AN ELABORATE DISCUSSION BY HOLDING THAT THERE IS NO PR INCIPAL AGENT RELATIONSHIP BETWEEN THE BANK ISSUING THE BAN K GUARANTEE AND THE ASSESSEE. IN ANOTHER CASE, IN JDS APPARELS PVT. LTD. VS CIT (ITA NO.608 OF 2014) ORDE R DATED 18/11/2014 AFTER HAVING A DISCUSSION FROM THE DECIS ION FROM HONBLE APEX COURT IN AHMADABAD STAMP VENDOR ASSOCIATION, CIT VS IDEA CELLULAR LTD (2010) 325 IT R 148 (DEL.) HELD THAT THE AMOUNT RETAINED BY THE BANK IS A FEE CHARGED BY THEM FOR RENDERING BANK SERVICES AND CAN NOT BE TREATED AS COMMISSION OR BROKERAGE PAID IN THE COUR SE OF ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 17 USE OF ANY SERVICES BY A PERSON ACTING ON BEHALF OF ANOTHER FOR BUYING AND SELLING THE GOODS AND THUS, THE BANK ING SERVICES CANNOT BE COVERED AND TREATED AS SERVICES RENDERED BY AN AGENT FOR THE PRINCIPLE. IT WAS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING SECTION 40(A) (IA) OF THE ACT AND CONSEQUENT ADDITION I.E. THE CHARGES DEDUCT ED BY HDFC BANK ON PAYMENT MADE THROUGH CREDIT CARD. THUS , IT IS HELD THAT NO TDS IS PAYABLE ON CREDIT CARD CHARG ES U/S 194H OF THE ACT AS THE ASSESSEE IS NOT REQUIRED TO DEDUCT TDS, CONSEQUENTLY, CANNOT BE SAID TO BE ASSESSEE IN DEFAULT U/S 201(1)/201(1A) OF THE ACT, THEREFORE, WE AFFIRM THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL ). FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 16/05/2016. SD/- SD/- (RAJENDRA) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER MUMBAI; $ DATED : 16/05/2016 F{X~{T? P.S/. .. ITA NO.5049/MUM/2014 M/S CLEARTRIP TRAVEL SERVICES PVT. LTD 18 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. &' () / THE APPELLANT (RESPECTIVE ASSESSEE) 2. *+() / THE RESPONDENT. 3. , , - ( &' ) / THE CIT, MUMBAI. 4. , , - / CIT(A)- , MUMBAI, 5. /01 *2 , , &' ! &23 , / DR, ITAT, MUMBAI 6. 14 5 / GUARD FILE. / BY ORDER, +/' * //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI