DCIT, Jaipur V. SAMARTH LIFESTYLE RETAILING PVT. LTD., Jaipur

ITA 652/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99603 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 05-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA
• Keywords: Opportunity of being heard
• Section: 201(1)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA- @ ITA NO. 652/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2011-12 DEPUTY COMMISSIONER OF INCOME TAX (TDS), JAIPUR. CUKE VS. M/S SAMARTH LIFESTYLE RETAILING PVT. LTD., 601, GANGA HEIGHTS, TONK ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: TAN: JPRV02489E VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI O.P. BHATEJA ( ADDL.CIT) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 19/11/2015 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 16/12/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 17/04/2013 PASSED BY THE LEARNED CIT(A)-III, JAIPUR FOR A.Y. 2011-12. THE SOLE GROUND OF APPEAL IS AS UNDER:- 1 THE LD CIT(A), JAIPUR HAS ERRED IN LAW AND ON FACTS HOLDING THAT THE ASSESSEE IS NOT LIABLE TO MAKE TDS U/S 194H ON THE CREDIT AND SWAP CHARGES PAID TO THE BANKERS ITA 652/JP/2013_ DCIT VS. M/S SAMARTH LIFESTYLE RETAILING 2 2. THE SOLE GROUND OF THE APPEAL IS AGAINST, NOT LIA BLE TO MAKE TDS I/S 194H ON THE CREDIT AND SWAP CHARGES PAID TO THE BANK ERS. THE LD DCIT, (TDS), JAIPUR HAD VERIFIED THE ASSESSEES CASE AND F OUND THAT THE ASSESSEE HAD DEDUCTED TDS AMOUNTING TO RS. 70,65,622/- BUT H AD NOT DEPOSITED IT IN GOVERNMENT EXCHEQUER. THE TDS AMOUNT WAS PERTAINING TO F.Y. 2011- 12. THE ASSESSEE AFTER KNOWING THE CONSEQUENCES OF NO N DEPOSITION OF TDS, DEPOSITED THE AMOUNT BY VARIOUS CHALLANS IN F.Y . 2011-12. THE LD DCIT FOUND THAT THE ASSESSEE HAD PAID COMMISSION TO BANK IN F.Y. 2010-11 AT RS. 66,49,221/-. AS PER DCIT (TDS), IT WAS A COMMIS SION/CHARGES PAID TO THE BANK FOR AVAILING CREDIT CARD FACILITIES. HE GAVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHICH HAS AVAILED BY IT. THE LD DCIT (TDS) HELD THAT THERE WAS A RELATION BETWEEN THE A SSESSEE AND THE BANK AS PRINCIPAL AND AGENT ON FOLLOWING REASONING:- A. FULL LEGAL AND EQUITABLE TITLE ON THE PAYMENT TO BE RECEIVED AGAINST SALES MADE BY THE ASSESSEE REMAINS WITH HIM AND AT NO STAGE PASSES TO THE BANK. B. THE BANK I.E. THE AGENT CANNOT GIVE ANY DISCOUNT OR ALTER IN ANY WAY THE NATURE OF TRANSACTION OR THE SALE PRICE DECIDED BY THE SELLER I.E. THE ASSESSEE. ITA 652/JP/2013_ DCIT VS. M/S SAMARTH LIFESTYLE RETAILING 3 C. THE BANK IS ALLOWED TO COLLECT THE PAYMENT ONLY A FTER AUTHORIZATION BY THE ASSESSEE ON SUBMISSION OF THE VALID SALES DRAFTS TO IT. D. IF THE CARDHOLDER DISPUTES ANY CARD TRANSACTIONS OR THE PAYMENTS ARE NOT MADE THEN THE DISPUTED AMOUNT OF S UCH CARD TRANSACTIONS ARE TO BE CHARGED BACK FROM THE M ERCHANT ACCOUNTS OR ITS RESERVE ACCOUNTS MAINTAINED IN THE BANK. E. THE BANK PROVIDES THE INFORMATION OF COLLECTION O F THE CARD TRANSACTION AMOUNTS ON A REGULAR BASIS TO THE MERCH ANT. ALL PENALTIES, DAMAGES ON THE SALE ARE TO BE BORNE BY T HE MERCHANT OR PRINCIPAL. F. THE BANK CHARGES COMMISSION/FEE FOR SERVICES REND ERED AS DESCRIBED IN THE AGREEMENT/CONTRACT BETWEEN THE MERC HANT I.E. THE PRINCIPAL AND BANK I.E. THE AGENT. AS PER DCIT (TDS), THE ASSESSEE WAS LIABLE TO DEDUCT TAX. ACCORDINGLY, HE CALCULATED DEMAND U/S 201(1) AND INTEREST U/S 201(1 A) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AT RS. 8,84,144/- AND 1,63,961/- RESPECTIVELY. THUS, TOTAL DEMAND WAS CREDITED AT RS. 10,48,105/- 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASSE SSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD ALLOWED THE APPEAL BY OBSERVING AS UNDER:- 02.03 ON DUE CONSIDERATION OF THE ORDER OF THE HON BLE ITAT, JAIPUR IN THE CASE OF M/S GEMS PARADISE (SUPRA), I HOLD THAT ITA 652/JP/2013_ DCIT VS. M/S SAMARTH LIFESTYLE RETAILING 4 THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE APPE LLANT. THE FINDINGS OF THE HONBLE TRIBUNAL IN PARA 27 OF IT S ORDER IS REPRODUCED HERE UNDER:- 27. AFTER CONSIDERING THE ORDERS OF THE AO AND LD . CIT (A), WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THIS REGARD. SECTION 194H IS APPLICABLE WHERE ANY COMMISSION HAS BEEN PAID BY TH E PRINCIPAL TO THE COMMISSION AGENT. THIS IS NOT A CASE OF COMM ISSION AGENT AS ASSESSEE SOLD ITS GOODS THROUGH CREDIT CARD AND ON PRESENTATION OF BILL ISSUED AGAINST CREDIT CARD, TH E BANK MAKES PAYMENT TO THE ASSESSEE AFTER DEDUCTING AGREED FEES AS PER TERMS AND CONDITIONS IN CASE OF CREDIT CARD. THIS IS NOT A COMMISSION PAYMENT BUT A FEES DEDUCTED BY THE BANK. IF THERE IS AN AGREEMENT, THAT IS AGREEMENT BETWEEN THE CREDIT CAR DHOLDER AND THE BANK. BANK IS A PRINCIPAL AND TO SPREAD OVER I TS BUSINESS, A SCHEME IS FLOATED BY BANK I.E. ISSUANCE OF CREDIT C ARDS. BANK ISSUES CREDIT CARD TO THE VARIOUS CUSTOMERS WHO PUR CHASE THE VARIOUS CREDIT CARDS ON THE AGREED TERMS AND CONDIT IONS. ONE OF THE MAJOR CONDITION IS THAT IF CREDIT CARD HOLDER D OES NOT MAKE PAYMENT WITHIN THE PRESCRIBED TIME LIMIT THEN THEY CHARGE 2% PENAL AMOUNT OF BILL WHICH IS RAISED BY THE SHOP KE EPER AGAINST SALE OF ITS ITEMS THROUGH CREDIT CARD. BANK CANNOT REFUSE THE PAYMENT TO THE SHOP KEEPER WHO SALE THEIR GOODS THR OUGH CREDIT CARD. ONLY IN THOSE CASES WHERE GOODS ARE FOUND DA MAGED AND CREDIT CARD HOLDER INFORM THE BANK THAT THE MATERIA L PURCHASED BY THEM IS DAMAGED OR DEFECTIVE AND REQUEST THE BANK N OT TO MAKE THE PAYMENT, IN SUCH CASES ONLY BANK CAN WITHHOLD T HE PAYMENT, OTHERWISE THE BANK HAS TO MAKE THE PAYMENT TO THE S HOP KEEPER. THEREFORE, IN OUR CONSIDERED VIEW, THERE IS NO SUCH RELATION BETWEEN THE BANK AND THE SHOP KEEPER WHICH ESTABLIS HES THE RELATIONSHIP OF A PRINCIPAL AND COMMISSION AGENT. TECHNICALLY IT MAY BE WRITTEN THAT BANK WILL CHARGE CERTAIN PERCEN TAGE OF COMMISSION BUT THIS IS NOT A COMMISSION BECAUSE ASS ESSEE SELLS ITS GOODS AGAINST CREDIT CARDS, AND ON PRESENTATION OF BILLS, THE BANK HAS TO MAKE THE PAYMENT. IT IS NOT THE CASE THAT BA NK HAS ADVISED THE ASSESSEE TO SELL THEIR GOODS TO ITS CUSTOMERS T HEN HE WILL PAY THE COMMISSION. IT IS REVERSED IN A SITUATION AS BA NK ISSUED CREDIT ITA 652/JP/2013_ DCIT VS. M/S SAMARTH LIFESTYLE RETAILING 5 CARDS TO THE CREDIT CARD HOLDERS ON CERTAIN FEES OR WHATEVER THE CASE MAY BE AND THE CARD HOLDER PURCHASES MATERIAL FROM THE MARKET THROUGH HIS CREDIT CARD WITHOUT MAKING ANY P AYMENT AND THAT SHOP KEEPER PRESENTS THE BILL TO THE BANK AGAI NST WHOSE CREDIT CARD THE GOODS WERE SOLD AND ON PRESENTATION OF BILL AS STATED ABOVE THE BANK MAKES THE PAYMENT. THEREFORE , IN OUR CONSIDERED VIEW, PROVISIONS OF SECTION 194H ARE NOT ATTRACTED IN THIS TYPE OF TRANSACTION. THEREFORE, WE HOLD THAT A DDITION MADE AND CONFIRMED BY LD. CIT (A) WAS NOT JUSTIFIED. ACC ORDINGLY, THE ADDITION MADE AND CONFIRMED BY LD. CIT (A) IS DELET ED. SIMILAR DECISION WERE ALSO RENDERED BY THE HONBLE ITAT, HYDERABAD IN THE CASE OF M/S VAH MAGNA RETAIL PVT. LTD. (SUPRA). IN VIEW OF THE AFORESAID DECISIONS, THE GROUND RAI SED BY THE APPELLANT IS ALLOWED. APPELLANT IS NOT LIABLE TO MAK E TDS U/S 194H ON THE CREDIT CARD SWAP CHARGES PAID TO THE BANKERS. ITO TDS IS DIRECTED TO DELETE THE DEMAND RA ISED U/S 201(1)/201(1A) IN RESPECT OF AFORESAID PAYMENTS . 03. THE APPELLANT HAS RAISED SEVERAL OTHER GROUNDS I N RESPECT OF TDS LIABILITY ON OTHER PAYMENTS. DURING THE APPEA L PROCEEDINGS, LD AR WITHDREW THESE GROUNDS OF APPEAL AS NOT PRESSED. ACCORDINGLY, THESE GROUNDS OF APPEAL ARE TREATED AS DISMISSED. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE DCIT(TDS), JAIPUR AND AR GUED THAT ORDER MAY BE CONFIRMED. AT THE OUTSET, THE LD AR OF THE ASSES SEE HAS REITERATED THE ARGUMENTS MADE BEFORE THE LD CIT(A) AND FURTHER SUBM ITTED THAT THIS ISSUE ITA 652/JP/2013_ DCIT VS. M/S SAMARTH LIFESTYLE RETAILING 6 IS COVERED BY THE VARIOUS DECISIONS OF HONBLE ITAT, THEREFORE ORDER OF THE LD CIT(A) MAY PLEASE BE UPHELD. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE CASE LAWS C ITED BY THE LD CIT(A) ARE SQUARELY APPLICABLE ON PAYMENT OF SWAP CHARGES M ADE TO BANK AND SECTION 194H IS APPLICABLE ON DEMAND MADE BY THE P RINCIPAL TO THE COMMISSION AGENT. IN ASSESSEES CASE, THE ASSESSEE HAD SOLD THE GOODS TO THE CUSTOMER AND PAYMENT RECEIVED THROUGH CREDIT CA RE AND SWAP CHARGES AT THE TIME OF CREDITING THE SALE AMOUNT IN THE ACC OUNT OF THE ASSESSEE AND SERVICE CHARGES WERE CHARGES BY THE BANKS FOR PROVID ING THE FACILITY OF CREDIT CARD. THE FINDINGS GIVEN BY THE LD CIT(A) ARE NOT CONTROVERTED BY THE LD DR. THEREFORE, WE UPHOLD THE ORDER OF THE LD CIT(A) . 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 16/12/2015. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 16 TH DECEMBER, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE DCIT, (TDS), JAIPUR. ITA 652/JP/2013_ DCIT VS. M/S SAMARTH LIFESTYLE RETAILING 7 2. IZR;FKHZ @ THE RESPONDENT- M/S SAMRATH LIFESTYLE RETAILING PVT. LTD. JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 652/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR