Deputy Commissioner of Income Tax Circle-4(1)(2), Bangalore V. M/s Mysore Saree Udyog Pvt Ltd , Bangalore

ITA 723/BANG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4874 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 30-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B R JAYATHEERTHA
• Keywords: Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO. 723/BANG/2017 ASSESSMENT YEAR : 2012 - 13 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4(1)(2), BANGALORE. VS. M/S. MYSORE SAREE UDYOG PVT. LTD., NO.294, K. KAMARAJ ROAD, BENGALURU 560 042. PAN: AABCM 1340F APP ELLANT RESPONDENT A PPELLANT BY : SMT. PADMAMEENAKSHI, JT.CIT(DR), ITAT, BENGALURU RE SPONDENT BY : SHRI B.R. JAYATHEERTH A, ADVOCATE DATE OF HEARING : 10 . 0 4 .201 8 DATE OF PRONOUNCEMENT : 13 . 0 4 .201 8 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LD.CIT (A) IS OPPOSED TO THE L AW AND FACTS OF THE CASE. 2. THE LD.CIT (A) HAS FAILED TO APPRECIATE THAT THE NOTIFICATION NO 56/2012 DATED 31.12.2012 IS NOT RETROSPECTIVE IN NATURE. HENCE, ANY PAYMENT DONE ON CREDIT CARD TRANSACTION BEFORE ITA NO.723/BANG/2017 PAGE 2 OF 4 31.12.2012 ATTRACTS THE PROVISION OF SECTION 194H O F THE I T ACT. 3. THE LD.CIT (A) OUGHT TO HAVE APPRECIATE THAT THE PROVISION OF SECTION 40(A) (IA) IS APPLICABLE IN THIS CASE AS ASSESSEE HAS FAILED TO DEDUCT TAX U/S 194H OF THE I T ACT ON THE CREDIT CARD COMMISSION PAID TO THE BANK, AS IT IS IN THE N ATURE OF COMMISSION PAYMENT. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT (A) IN SO FAR AS IT IS RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE HAS CONTENDED THAT THE IMPUGNED ISSUE IS SQUARELY COVER ED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 2010-11. COPY OF THE ORDER OF THE TRIBUNAL IS PLACED ON RECORD. 3. THE LD. DR, ON THE OTHER HAND, HAS PLACED RELIAN CE ON THE ORDER OF THE AO. 4. HAVING CAREFULLY EXAMINED THE ORDERS OF THE AUTH ORITIES BELOW IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT THE ASSESS EE COMPANY HAS CLAIMED AN AMOUNT OF RS.48,46,930 AS CREDIT CARD COMMISSION CHARGES PAID TO BANKS FOR COLLECTION OF PAYMENTS FOR SALES THROUGH CREDIT CARDS. ASSESSEE WAS ASKED TO EXPLAIN THE REASONS FOR NOT MAKING TDS ON SUCH CHARGES. IN RESPONSE THERETO, IT WAS STATED THAT CHARGES ARE LE VIED BY BANKS AT A ITA NO.723/BANG/2017 PAGE 3 OF 4 CERTAIN PERCENTAGE OF THE TRANSACTION VALUE AND GET S AUTOMATICALLY DEBITED TO THE ASSESSEES BANK ACCOUNT. THE BANKS ONLY COL LECT THESE PAYMENTS FROM THE ACCOUNT OF THE CREDIT CARD HOLDERS AND PAY TO THE ACCOUNT OF THE MERCHANT COMPANY. IT WAS ALSO CONTENDED THAT THERE IS NO AGENT-PRINCIPAL RELATIONSHIP BETWEEN THE TWO AND BANKS CANNOT BE RE GARDED AS AGENT AND HENCE THE APPLICATION OF SECTION 194H OF THE I.T. A CT IS NOT WARRANTED. THIS EXPLANATION FURNISHED BY THE ASSESSEE WAS NOT ACCEP TED BY THE AO AND HE MADE A DISALLOWANCE OF RS.48,46,930 U/S. 40(A)(IA) FOR NON-DEDUCTION OF TAX U/S. 194 H OF THE ACT. 5. AGAINST THE DISALLOWANCE, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS) AND THE CIT(APPEALS) FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 2010-11, HAS HELD THAT CREDIT CARD COMMISSION IS IN THE NATURE OF BANK CHARGES AND NOT COMMISSION FOR WHICH THE PROVISIONS OF SECTION 194H MAY BE ATTRACTED. H E ACCORDINGLY DELETED THE DISALLOWANCE. 6. THE ORDER OF THE TRIBUNAL STILL HOLDS THE FIELD AS IT HAS NOT BEEN REVERSED BY THE APPELLATE AUTHORITIES. SO LONG AS THE ORDER OF THE TRIBUNAL HOLDS THE FIELD, THE SUBORDINATE AUTHORITIES ARE SU PPOSED TO FOLLOW THE SAME. THE CIT(APPEALS), FOLLOWING THE SAME, HAS DE CIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(APPEALS). ACCORDINGLY, WE CONFIRM THE S AME. ITA NO.723/BANG/2017 PAGE 4 OF 4 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF APRIL, 2018. SD/- SD/- ( INTURI RAMA RAO ) ( SUNIL KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 13 TH APRIL, 2018. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.