ACIT (TDS) 1(2), MUMBAI V. HOTEL LEELA VENTURES LTD (THE LEELA), MUMBAI

ITA 7089/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4252 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2011-2012
• Appeal Filed On: 25-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI . . , ! '# , $ , % BEFORE S/SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND AMARJIT SINGH, JUDICIAL MEMBER / I.T.A. NO.7089/M/14 ( $ & '& / ASSESSMENT YEAR: 2011-12) ASST. COMMISSIONER OF INCOME TAX (TDS) 1(2) ROOM NO.803, K.G.MITTAL HOSPITAL BUILDING, CHARNI ROAD(W), MUMBAI - 400002 / VS. M/S. HOTEL LEELA VENTURE LTD. (THE LEELA) THE LEELA KEMPENSKI, SAHAR, ANDHERI (EAST), MUMBAI - 400059 ./ ./ PAN/GIR NO. : AAACH3167J ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 31.12.2015 !' /DATE OF PRONOUNCEMENT: 10.02.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST TH E ORDER DATED 10.09.2014 PASSED BY THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS)-14, MUMBAI [HEREINAFTER REFERRED TO AS TH E LEARNED CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 2011-12. ASSESSEE BY: SHRI PRAKASH K. JOTWANI DEPARTMENT BY: SHRI M. DAYA SAGAR CIT-DR ITA NO.7089/MUM/14 A.Y. 2011-12 2 2. THE REVENUE HAS TAKEN FOLLOWING GROUNDS CHALLENG ING THE ORDER DATED 10.09.2014:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETIN G THE ADDITION MADE U/S 201(1)/201(1A) OF THE IT 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 SERVICE CHARGES IN RESPECT OF CREDIT CARD SERVICES PROVIDED IGNORING THE FACT THAT IN THE ENTIRE PROCESS OF FACILITATION OF CREDIT CARD, THE BANK IS NOTHING BUT A CONSTRUCTIVE AGENT FOR THE 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 AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN FAILING TO APPRECIATE THAT IN SUBSTANCE AN D IN FACT RELATIONSHIP BETWEEN THE ASSESSEE COMPANY AND BANK/CREDIT CARD AGENCIES WAS IN THE NATURE OF PRINCIPAL AND AGENTS RELATIONSHIP AND THEREFORE, TH E LD.CIT(A) ERRED IN NOT UPHOLDING THE AOS CONCLUSION OF BRINGING THE CHARGES CHARGED TO THE ASSESSEE COMPANY BY THE BANK/CREDIT CARD AGENCIES WITHIN THE PURVIEW OF SECTION 194H OF THE I.T.ACT,1961. 3. IN BRIEF THE REVENUE HAS SOLITARY GRIEVANCE WITH REGARD TO THE DECISION OF LEARNED CIT(A) IN DELETING THE ADDITION TO THE TUNE OF RS.11,06,421/- MADE BY THE ASSESSING OFFICER BY INV OKING THE PROVISION MADE UNDER SECTION 40(A)(IA) OF THE INCOM E TAX ACT, 1961 ITA NO.7089/MUM/14 A.Y. 2011-12 3 ( IN SHORT THE ACT). THE FACTS OF THE CASE ARE T HAT THE RESPONDENT ASSESSEE IS A COMPANY INCORPORATED UNDER THE PROVIS ION OF COMPANIES ACT 1956 AND IS INTER-ALIA, ENGAGED IN THE BUSINESS OF SETTING UP AND RUNNING OF 5-STAR DELUXE HOTELS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE UNDER SECTION 194H OF THE ACT IN RELATION COMMISSION PAID TO THE BANKS ON PROCESSING OF CREDI T CARD TRANSACTIONS. AS A CONSEQUENCE, THE ASSESSING OFFI CER DISALLOWED THE CORRESPONDING EXPENDITURE OF RS.11,06,421/- BY INVO KING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE LEARNED CIT(A ) HAS SINCE DELETED THE ADDITION BY HOLDING THAT THE COMMISSION PAID TO THE BANKS FOR PROCESSING OF CREDIT CARD PAYMENTS DOES NOT FALL WI THIN THE PURVIEW OF TAX DEDUCTION AT SOURCE UNDER SECTION 194H OF THE A CT. THUS THE REVENUE HAS FILED THE APPEAL AGAINST THE DECISION O F LEARNED CIT(A) WITH REGARD TO THE DELETION OF SAID EXPENDITURE. 4. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECOR DS CAREFULLY. AT THE VERY OUTSET THE REPRESENTATIVE OF THE DEPARTMENT HA S ARGUED THAT THE LEARNED CIT(A) IS WRONG IN DELETION OF THE ADDITION TO THE TUNE OF RS.11,06,421/- MADE BY THE ASSESSING OFFICER BY IN VOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. IT IS ALSO ARGUED THAT THE TAX AT SOURCE IS LIABLE TO BE DEDUCTABLE ON THE AMOUNT PAID TO TH E BANK ON PROCESSING OF CREDIT CARD TRANSACTION IN VIEW OF PR OVISION OF 194H BUT ITA NO.7089/MUM/14 A.Y. 2011-12 4 THE LEARNED CIT(A) HAS TAKEN THE DECISION WRONGLY THEREFORE THE ORDER DATED 10.09.2014 IS WRONG AGAINST LAW AND FACTS AND IS LIABLE TO BE SET ASIDE. ON THE OTHER HAND LEARNED REPRESENTATIVE OF THE ASSESSEE HAS REFUTED THE SAID CONTENTIONS AND ARGUED THAT THE MA TTER OF CONTROVERSY HAS ALREADY BEEN ADJUDICATED BY THE MUMBAI BENCH IN THE ASSESSEES OWN CASE IN ITA NO. 150/MUM/2014 TITLED AS DY. COMM ISSIONER OF INCOME TAX (OSD) 8 (2) VS. M/S. HOTEL LEELAVENTURES LTD. FOR THE A.Y. 2010-11 AND IN ITA NO. 2703/MUM/2013 TITLED AS DY. COMMISSIONER OF INCOME TAX VS. HOTEL LEELAVENTURE L TD. FOR THE A.Y. 2009-10. THEREFORE, THE LEARNED CIT(A) HAS P ASSED THE ORDER DATED 10.09.2014 RIGHTLY AND CORRECTLY WHICH DOES N OT REQUIRED TO BE INTERFERED WITH IN ACCORDANCE WITH LAW. THE ORDER OF LEARNED CIT(A) DATED 10.09.2014 PERUSED WHICH HAS BEEN PASSED ON T HE BASIS OF ORDER PASSED BY THE HONBLE INCOME TAX APPELLATE TRIBUNAL , MUMBAI BENCH IN CASE OF M/S. JET AIRWAYS (INDIA) LTD. IN I TA NOS. 7439, 7440 & 7441/M/2010 DATED 17.07.2013 FOR A.Y. 2007-08, 20 08-09 & 2009-10. SUBSEQUENTLY, IN THE ASSESSEES OWN CASE IN ITA NO. 150/MUM/2014 TITLED AS DY. COMMISSIONER OF INCOME T AX (OSD) 8 (2) VS. M/S. HOTEL LEELAVENTURES LTD. FOR THE A.Y. 2010-11 AND IN ITA NO. 2703/MUM/2013 TITLED AS DY. COMMISSIONER OF INCOME TAX VS. HOTEL LEELAVENTURE LTD. FOR THE A.Y. 2009-10. THE SAID ORDERS WERE PASSED ON THE BASIS OF JUDGMENT PASSED BY THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. JDS APPARELS PVT. LTD . [2015] 370 ITR 454 (DELHI). IT HAS BEEN SQUARELY HELD THAT THE PA YMENT OF ITA NO.7089/MUM/14 A.Y. 2011-12 5 COMMISSION TO THE BANK WITH REGARD TO THE PROCESSIN G OF CREDIT CARD TRANSACTIONS WAS NOT LIABLE TO BE CONSIDERED AS COM MISSION WITH THE MEANING OF SECTION 194H OF THE ACT. IT HAS ALSO BE EN HELD THAT THE BANK DID NOT ACT AS AN AGENT OF THE ASSESSEE WHILE PROCESSING THE CREDIT CARD PAYMENTS AND A CHARGE COLLECTED BY THE BANK FO R SUCH SERVICES DOES NOT AMOUNT TO COMMISSION WITHIN THE MEANING OF SECTION 194H OF THE ACT. 5. THEREFORE, IN VIEW OF THE SAID CIRCUMSTANCES AND BY HONOURING THE ORDER PASSED BY THE CO-ORDINATE BENCH OF MUMBAI , WE ARE OF THE VIEW THAT LEARNED CIT(A) HAS PASSED THE ORDER DATED 10.09.2014 JUDICIOUSLY AND CORRECTLY WHICH DOES NOT REQUIRE TO BE INTERFERED WITH AT THE APPELLATE STAGE. 6. ACCORDINGLY THE APPEAL FILED BY THE REVENUE IS H EREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH FEBRUARY , 2016. SD/- SD/- (B.R.BASKARAN) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 10 TH FEBRUARY, 2016 MP MP MP MP ITA NO.7089/MUM/14 A.Y. 2011-12 6 ) * +$!', -,'! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ) / BY ORDER, - & //TRUE COPY// ./# /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI