ITO (TDS)(OSD) RG 2, MUMBAI V. INFINITI RETAIL LTD, MUMBAI

ITA 5408/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3987 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2016
• Appeal Filed By: Department
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 27-08-2014
• Court: TRIBUNAL
• Department Lawyers: K RAVIKIRAN
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER I.T.A. NO. 5408/MUM/2014 (ASSESSMENT YEAR: 2011 - 201 2 ) ITO - (TDS) (OSD) - RANGE - 2, R.NO.704, 7 TH FLOOR, SMT. K.G. MITTAL AAYURVEDIC HOSPITAL BUILDING, CHARNI ROAD, MUMBAI 400 002. / VS. M/S. INFINITI RETAIL LIMITED, BOMBAY HOUSE 24, HOMI MODI STREET, FORT, MUMBAI 400 002. ./ PAN : AACCV1726H ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI K. RAVI KIRAN, DR / RESPONDENT BY : SHRI NITESH JOSHI / DATE OF HEARING : 04 .04.2016 / DATE OF PRONOUNCEMENT : 13 .04.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 27.8.2014 IS AGAINST THE ORDER OF THE CIT - (A) - 14, MUMBAI DATED 12.6.2014 FOR THE ASSESSMENT YEAR 2011 - 2012. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITION MADE U/S 201(1)/201(1A) OF THE ACT HOLDING THAT NO TDS WAS DEDUCTIBLE U/S 194H BY THE ASSESSEE COMPANY ON THE AMOUNT HELD BY THE BANKS / CREDIT CARD AGENCIES AS PROCESSING CHARGES IN RESPECT OF CREDIT SERVICES PROVED IGNORING THE FACT THAT THE ENTIRE PROCESS OF FACILITATION OF CREDIT CARD, THE BANK IS NOTHING BUT A CONSTRUCTIVE AGENT FOR TH E ASSESSEE - COMPANY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN FAILING TO APPRECIATE THE REAL AND TRUE NATURE OF THE RELATIONSHIP BETWEEN THE ASSESSEE COMPANY AND BANK / CREDIT CARD AGENCIES. 3. ON THE FACTS AN D IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN FAILING TO APPRECIATE THAT IN SUBSTANCE AND IN FACT RELATIONSHIP BETWEEN THE ASSESSEE COMPANY AND BANK / CREDIT CARD AGENCIES WAS IN THE NATURE OF PRINCIPAL AND AGENTS RELATIONSHIP AND THEREFORE, THE LD CIT (A) ERRED IN NOT UPHOLDING THE AOS CONCLUSION OF BRINGING THE CHARGES CHARGED TO THE ASSESSEE COMPANY BY BANK / CREDIT CARD AGENCIES WITHIN THE PURVIEW OF SECTION 194H OF THE IT ACT, 1961. 2. AT THE OUTSET, LD COUNSEL FOR THE ASSES SEE BRIEFLY NARRATED THE FACTS OF THE CASE AND SUBMITTED THAT IN THE SCRUTINY ASSESSMENT, AO INVOKED THE PROVISIONS OF SECTION 194H READ WITH SECTION 201(1) / 201(1A) OF THE ACT AND THRUST ON THE 2 ASSESSEE THE TDS IN RESPECT OF THE BANK CHANGES COLLECTED BY THE BANK FOR CREDIT CARD SERVICES BEFORE REMITTING THE NET AMOUNT TO THE ASSESSEE. IN THIS REGARD, IT IS THE ARGUMENT OF THE LD COUNSEL FOR THE ASSESSEE THAT THE RELATIONSHIP BETWEEN THE BANK AND THE ASSESSEE IS NOT PRINCIPAL TO AGENT BUT PRINCIPAL TO PRINCIPAL. THEREFORE, THE PROVISIONS OF SECTION 194H OF THE ACT ARE NOT APPLICABLE. FOR THIS PROPOSITION ON THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AY 2009 - 2010 IN ITA NO.4461/M/2013, DATED 1.5.2015 AND MANY OTHERS. 3. ON THE OTHER HAND, LD DR FOR THE REVENUE RELIED ON THE ORDER OF THE AO. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED DECISION OF THE TRIBUNAL AND ALSO THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF TH E SAID DECISION OF THE TRIBUNAL (SUPRA) DATED 1.5.2015, WE FIND, ON IDENTICAL ISSUE, THE TRIBUNAL DISMISS ED THE REVENUES APPEAL AND UPHELD THE DECISION OF THE CIT (A) VIDE PARA 2.1 OF ITS ORDER. CONSIDERING THE SIGNIFICANCE OF THE SAID PARA 2.1 OF THE TR IBUNALS ORDER (SUPRA) AND FOR THE SAKE OF COMPLETENESS OF THIS ORDER, THE SAME IS EXTRACTED AS UNDER: 2.1. WE HAVE CONSIDERED THE SUBMISSIONS OF LD DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF ARE THAT THE ASSESSEE IS IN THE BUSINESS OF RETAILS IN ELECTRONIC GOODS, KITCHEN APPLIANCES, COMPUTERS, LAPTOPS AND RELATED ACCESSORIES THROUGH DEDICATED OUTLETS CALLED CROMA. THE ASSESSEE DECLARED LOSS OF RS. 85,33,61,594/ - IN ITS RETURN FILED ON 29.9.2009. THE LD AO DURING THE ASSE SSMENT PROCEEDINGS ASKED THE ASSESSEE 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 COMMUNICATION DATED 15.12.2011 EXPLAIN ED THAT THE PROVISIONS OF SECTION 194H OF THE ACT WILL BE ATTRACTED ONLY WHEN ONE PERSON ACTS ON BEHALF OF ANOTHER, THEREBY, CREATING A PRINCIPLE AND AGENT RELATIONSHIP AND FURTHER IN THE INSTANT CASE, THE SALE IS CONDUCTED BY THE ASSESSEE ON ITS OWN AND N OT THROUGH THE BANK AND FURTHER THE TRANSACTION MAY TERMED AS CREDIT CARD MSF CHARGES BUT IN CHARGES, CHEQUE BOOK REQUEST CHARGES, ETC. THE LD AO COMPLETED THE ASSESSMENT DISALLOWING THE EXPENDITURE OF RS. 5,02,36,000/ - INCURRED ON ACCOUNT OF PAYMENT OF P ROCESSING CHARGES TO HDFC BANK ON TOTAL AMOUNT SWIPED THROUGH CUSTOMER CREDIT CARD AND EXPENDITURE OF RS. 49,02,000/ - ON ACCOUNT OF VARIOUS OTHER BANK CHARGES (CASH MANAGEMENT SERVICES) U/S 40(A)(IA) OF THE ACT. ACCORDING TO THE LD AO, TAX SHOULD HAVE BEE N DEDUCTED AT SOURCE U/S 194 OF THE ACT. ON APPEAL, LD CIT (A) EXAMINED THE FACTS AND FOLLOWING THE DECISION IN THE CASE OF AHMEDABAD STAMP VENDORS ASSOCIATION VS. UOI (257 ITR 202) AND TATA TELE SERVICES LTD VS. DCIT (TDS) A DECISION 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 REQUIREMENT OF MAKING TDS ON THE COMMISSION RETAINED BY CARD COMPANIES, OPINED THAT THE PROVISIONS OF SECTION 40(A)(IA) R.W.S 194H OF THE ACT ARE NOT APPLICA BLE, DELETED THE ADDITION. WE FIND NO INFIRMITY IN THE CONCLUSION OF THE LD CIT (A) UNDER THE FACTS AVAILABLE ON RECORD. HIS STAND IS AFFIRMED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. 3 5. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE AND A LSO RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL FOR THE AY 2009 - 2011 AND ALSO FOLLOWING THE PRINCIPLES OF CONSISTENCY, WE ARE OF THE OPINION, THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCOR DINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNC ED IN THE OPEN COURT ON 1 3 T H APRIL, 2016. S D / - S D / - ( RAM LAL NEGI ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1 3 .4.2016 . . ./ OKK , SR. PS / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI