ACIT, Jaipur V. M/S SHIVANI ENCLAVE P LTD., Jaipur

ITA 840/JPR/2011

• Counselvise Citation: 84023114 RSA 2011
• Duration Of Justice: 2 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-11-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 28-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: G G MUNDARA
• Keywords: Depreciation; Opportunity of being heard
• Section: 32

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. NO. 840/JP/2011 ASSTT. YEAR- 2008-09 PAN NO. AADCS 1951 L THE A.C.I.T., M/S SHIVANI ENCLAVE (P) LTD. CIRCLE-2, JAIPUR. VRS. 24, GOYAL HOUSE, AJMER RO AD, JAIPUR. (APPELLANT) (RESPONDENT) C.O. NO. 26/JP/2012 (ARISING OUT OF I.T.A. NO. 840/JP/2011) ASSTT. YEAR- 2008-09 PAN NO. AADCS 1951 L M/S SHIVANI ENCLAVE (P) LTD. THE A.C.I.T., 24, GOYAL HOUSE, AJMER ROAD, VRS. CIRCLE-2, JAIPU R. JAIPUR. (OBJECTOR) (RESPONDENT) DEPARTMENT BY :- SHRI D.C. SHARMA. ASSESSEE BY :- SHRI G.G. MUNDARA DATE OF HEARING : 14/07/2014 DATE OF PRONOUNCEMENT : 25/07/2014 PER: T.R. MEENA, A.M. THE APPEAL BY REVENUE AND CROSS OBJECTION BY ASSESS EE ARISE FROM THE ORDER DATED 06/07/2011 OF LD. CIT (A)-1, JAIPUR. THE SOLITARY GROUND IN REVENUES APPEAL IS AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LEARNED CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 2 30,68,164/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE ON WIND MILL PL ANT. GROUND IN CROSS OBJECTION THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) IS WRONG, UNJUST AND HAS ERRED IN LA W IN CONFIRMING FINDING RECORDED BY THE ASSESSING OFFICE R THAT THE COLLECTION SERVICE CHARGES DEDUCTED BY THE BANK IN RESPECT CREDIT CARD PRESENTED TO IT FOR PAYMENT ARE IN THE NATURE OF COMMISSION WITHIN MEANING OF SEC. 194H OF I.T. ACT, 1961 AND THE REBY UPHOLDING DISALLOWANCE OF SUCH CHARGES AMOUNTING TO RS. 788442/- U/S 40(A)(IA) FOR NON DEDUCTION OF TDS THER EFROM. 2. THE SOLE GROUND OF REVENUES APPEAL IS AGAINST D ELETING THE ADDITION OF RS. 30,68,164/- MADE BY THE ASSESSING OFFICER ON AC COUNT OF EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE ON WIND MILL PL ANT. THE ASSESSEE IS RUNNING HOTELS, RESTAURANT, BAR AND SHOPPING COMPLE X. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS INSTALLED WIND MILL AT VILLAGE SAADIYA, DISTRICT- JAISALMER, RAJASTHAN OF RS. 3,66,33,382/-. THE ASSES SEE GAVE THE DETAILS AND BREAKUP OF THE ENTIRE PLANT OF WIND MILL, WHICH WAS RE PRODUCED BY THE ASSESSING OFFICER ON PAGES 2 AND 3. THE EXPENDITURE IS RANGING FROM WIND MILL MACHINES TO LAND LEASING CHARGES. THE ASSESSING OFFI CER RAISED THE QUESTION WHETHER ALL THESE DIFFERENT NATURE OF EXPENDITURES A RE ENTITLED FOR DEPRECIATION AT THE RATE SPECIFIED ONLY FOR WIND MILL. HOWEVER, TH E ASSESSEE CLUBBED ALL THE ITEMS OF EXPENDITURE UNDER THE HEAD WIND MILL AND CL AIMED DEPRECIATION @ 3 80%. THE ITEMS NARRATING IN CHART-A MENTIONED ON PA GES 2 AND 3 OF ASSESSMENT ORDER, IT WAS FOUND BY THE ASSESSING OFFI CER THAT THEY ARE ACCESSORIES ITEMS CONNECTED WITH INSTALLATION OF THE WIND MILL. THE ACT PROVIDES DEPRECIATION @ 80% ONLY FOR ENERGY SAVING DEVICES AND DOES NOT INCLUDE ANY OTHER ACCESSORIES AND EXPENDITURE CONNECTED WITH THE SYSTEM. THE ACCESSORIES CONNECTED WITH PLANT AND MACHINERY IS EITHER COVERED UNDER THE HEAD BUILDING @ 10% OR AS PLANT AND MACHINERY @ 15%. THE ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE . AFTER CONSIDERING THE ASSESSEES REPLY, THE LEARNED ASSESSING OFFICER AN ALYSED SECTION 32 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ALONGWITH APP ENDIX (I), RULE 5 OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULES). HE ALSO CONSIDERED DEPRECIATION ALLOWABLE AS PER APPENDIX (I), RULE 5 OF THE RULES O N WIND MILL AS WELL AS RENEWAL ENERGY SAVING DEVICES. THE LEARNED ASSESSING OFFICER AFTER ANALYZING THE WHOLE INVESTMENT IN MIND MILL HAS CATEGORIZED TH E EXPENDITURE UNDER THE FOLLOWING HEADS: 1] EXPENDITURE INCURRED FOR CIVIL WORK CARRIED OUT A T SITE, CHARGES FOR CREATION OF FOUNDATION/PLATFORM. 2] EXPENDITURE INCURRED ON ACCESSORIES AND ELECTRIC AL ITEMS TO RENEWABLE ENERGY DEVICE AND THEIR COMPONENTS AND LAB OUR CHARGES FOR INSTALLATION OF ELECTRICAL LIE FOR TRAN SMISSION AND METERING. 3] CONSIDERATION IN CONNECTION WITH TRANSFER OF LEA SE LAND. 4 FURTHER HE BIFURCATED CHART-A AS UNDER:- (A) ELECTRICAL ITEMS, COMPONENTS OF RENEWABLE ENERGY DEVICE/WIND MILL IN RESPECT OF WIND FARM PROJECT. RS. 8,13,904/- (B) LABOUR RELATED WORK FOR INSTALLATION OF ONE WTG. RS. 11,88,769/- (C) INSTALLATION (WITH MATERIAL) OF ELECTRICAL LINE FOR TRANSMISSION AND METERING. RS. 13,38,1 41/- (D) COMPONENTS & ACCESSORIES OF RENEWABLE ENERGY DEVICE. RS. 9,38,000/- (E) LABOUR CHARGES FOR FINAL TESTING & COMMISSIONING. RS. 67,416/-. THE LEARNED ASSESSING OFFICER ALLOWED 10% DEPRECIATIO N ON CIVIL WORK ON THE BASIS OF DEPRECIATION ALLOWED ON BUILDING AND ON ACC ESSORIES AND ELECTRICAL ITEMS @ 15% ON LAND, NO DEPRECIATION IS ALLOWABLE, TH E POWER EVACUATION CHARGES WERE NOT FOUND PART OF THE PLANT AND MACHINE RY. INTEREST CAPITALIZATION ON PLANT AND MACHINERY WAS ALLOWED DE PRECIATION @ 15%. THE LEARNED ASSESSING OFFICER DISALLOWED THE EXCESS DEPR ECIATION AT RS. 30,68,164/-. 3. BEING AGGRIEVED THE ORDER THE LEARNED ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A), WHO HA S ALLOWED THE APPEAL BY OBSERVING AS UNDER:- I HAVE CAREFULLY PERUSED THE ORDER AND THE SUBMISS IONS OF THE AR. THE HONBLE ITAT, JAIPUR BENCH HAS ALREADY ADJUDI CATED UPON THE ABOVE ISSUE IN THE CASE OF M/S CHIRAS ASSOCIATE S P. LTD. IN ITS ORDER ITA NO. 1632/JP/2008 A.Y. 2005-06 DT. 26/2/20 10. THEY 5 HAVE RELIED ON THE FINDING OF THE HONBLE M.P. HIGH COURT IN THE CASE OF DCIT VS. VIPPY SOLVEX PRODUCTS PVT. LTD. 164 TAXMAN 483 AND HAVE OBSERVED THAT FOR THE PURPOSE OF SETTING U P OF A WIND MILL THE FOUNDATION OF PLATFORM, ERECTION, INSTALL ATION OF PLANT AND MACHINERY, PREPARATION OF CRANE PLATFORM FOR WINDMIL L AND OTHER AND OTHER CIVIL WORK CARRIED OUT FOR INSTALLATION AR E INTEGRAL PART OF THE WINDMILL WHICH HAVE NO INDEPENDENT USE. THUS THE S AME ARE ENTITLED TO CLAIM DEPRECIATION @ 80%. 4. NOW THE REVENUE IS IN APPEAL BEFORE US AND THE LE ARNED D.R. SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER. 5. AT THE OUTSET, THE LEARNED A.R. FOR THE ASSESSEE ARGUED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE HONBLE IT AT, JAIPUR BENCH, JAIPUR IN ITA NO. 1632/JP/2008 FOR A.Y. 2005-06 ORDER DATED 2 6/2/2010. THE LEARNED A.R. FURTHER ARGUED THAT THE ASSETS WAS USED FOR BU SINESS PURPOSES AND DEPRECIATION WAS CLAIMED ON ACTUAL COST OF ASSETS AC QUIRED IN THE PREVIOUS YEAR. THE ACCEPTED ACCOUNTANCY RULE FOR DETERMINING THE COST OF FIXED ASSET IS TO BE INCLUDED IN THE EXPENDITURE NECESSARY FOR BRI NGING SUCH ASSETS INTO EXISTENCE AND TO PUT THEM IN WORKING CONDITION FOR U SE IN BUSINESS, FOR WHICH SHE RELIED IN CASE OF CHALLAPALLI SUGARS LTD. VS. C IT (1975) 98 ITR 167. THE EXPENDITURE INCURRED BY THE APPELLANT ON PUTTING IN TO USE THE WINDMILL ITSELF AND NOT ON ANY ANCILLARY ITEM OR ON ANY ACCESSORY. THE AMOUNT OF RS. 2,74,20,696/- WAS FOR PURCHASE OF WIND MILL PLANT, WHI CH CANNOT BE PUT TO USE WITHOUT INSTALLATION AND COMMISSIONING. THE WIND TURB INE GENERATION MACHINE HAS MUCH WEIGHT, THEREFORE, CIVIL FOUNDATION IS ESSE NTIAL FOR PUTTING WIND MILL 6 INTO WORKING CONDITION. THE APPELLANT RELIED UPON THE ORDER IN THE CASE OF CIT VS. HERDILIA CHEMICAL LTD. (1995) 216 ITR 742 (BOM) AND ACIT VS. MADRAS CEMENTS LTD. (1977) 110 ITR 281. THE LEARNED A.R. ALS O DRAWN OUR ATTENTION ON ACCOUNTANT STANDARD ISSUED BY THE INSTITUTED OF CHARTERED ACCOUNT OF INDIA ON ACCOUNTING FOR FIXED ASSETS. THE APPELLANT COMPAN Y FURTHER INCURRED EXPENDITURE OF RS. 64,51,132/- ON SUPPLY AND ERECTI ON OF INTERNAL AND EXTERNAL LINES INCLUDING TRANSFORMER UPTO DP STRUCTURE FOR I NSTALLATION OF WINDMILL SO AS TO PUT IT TO USE. HE FURTHER ARGUED THAT IN CASE OF DCIT VS. VIPPY SOLVEX PRODUCTS LTD. (2007) 164 TAXMAN 483 WHEREIN 80% DEPR ECIATION WAS ALLOWED ON COAL CONTAINER, COAL CONVEYER AND BUCKET ELEVATO R, DUST COLLECTING SYSTEM JOINTLY WITH BOILER AND FURNACE. THEREFORE, IT IS SUB MITTED THAT CIVIL WORK CARRIED OUT AT SITE, EXPENDITURE INCURRED ON ACCESSORIES AN D ELECTRICAL, CONSIDERATION IN CONNECTION WITH TRANSFER OF LEASE LAND IS A PART OF WIND MILL ON WHICH 80% DEPRECIATION IS ALLOWABLE. IN CASE OF DCIT VS. M/S D ANGAYACH HOTELS PVT. LTD. IN ITA NO. 747/JP/2011 FOR A.Y. 2008-09, THE HONBL E B BENCH OF ITAT, JAIPUR CONFIRMED THE ORDER OF LEARNED CIT(A) ON IDENTICAL ISSUE WHEREIN THE DEPRECIATION WAS NOT ALLOWED INVESTMENT ON BUILDING P ART AND ON ELECTRIC ITEMS FITTED IN WIND MILL TURBINE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE VARIOUS HIGH COURTS AS WELL A S COORDINATE BENCH OF ITAT, JAIPUR IN CASE OF DCIT VS. VIPPY SOLVEX PRODUCT S LTD. AND DCIT VS. M/S CHIRAG ASSOCIATES (P) LTD. RESPECTIVELY, HELD THAT FOUNDATION OF PLATFORM, 7 ERECTION, INSTALLATION OF PLANT AND MACHINERY, PREP ARATION OF CRANE PLATFORM FOR WIND MILL AND OTHER CIVIL WORK CARRIED OUT FOR INSTAL LATION ARE INTERNAL PART OF WIND MILL, WHICH HAVE NOT INDEPENDENT USE. THUS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ENTITLED FOR 80% OF DEPREC IATION ON COMPOSITE WIND MILL PROJECT INCLUDING OTHER EXPENDITURE FOR PUT TO USE FOR WIND MILL. THUS, WE CONFIRM THE ORDER OF LEARNED CIT(A). 7. THE ASSESSEE CHALLENGED THE CONFIRMATION OF COMMI SSION PAYMENT TO THE BANK ON CREDIT CARD IS COVERED U/S 194 OF THE A CT AS FOR TDS AND DISALLOWED CHARGES OF RS. 7,88,442/- U/S 40(A)(IA) O F THE ACT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD PAID CREDIT CARD COMMISSION OF RS. 7,88,442/-. THE ASSESSEE HAD NOT DEDUCTED TDS ON IT. THE CHARGES WERE COMMISSION IN RESPECT OF CREDIT CARD AS PER SECTION 194 OF THE ACT AS THE ASSESSEE HAS NOT DEDUCTED TDS ON RS. 7,88,242/-. THER EFORE, THE LEARNED ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BE ING HEARD ON THIS ISSUE AFTER CONSIDERING THE ASSESSEES REPLY, HOLD THAT T HE ASSESSEES PAYMENT TO THE BANK COVERED UNDER EXPLANATION OF SECTION 194H OF T HE ACT, WHICH IS LIABLE TO BE DEDUCTED TDS. THE LEARNED ASSESSING OFFICER ALSO ANALYSED THE TDS CIRCULAR NO. 619 DATED 4/12/1991 AND ALSO RELIED IN CASE OF CIT VS. SINGAPORE AIRLINES LTD. & ORS. 213 TAXATION 441 AND HELD THAT IT IS SQUARELY APPLICABLE ON ASSESSEES CASE. THE LEARNED ASSESSING OFFICER FURTH ER RELIED IN CASE OF CANARA BANK VS. ITO 305 ITR (AT) 189 WHEREIN THE MICR CHARGE S PAID BY THE CANARA BANK ARE LIABLE FOR TDS U/S 194J OF THE ACT. IN CASE OF ULTRA ENTERTAINMENT 8 SOLUTIONS LTD. VRS. ITO REPORTED IN 17 SOT 249 WHEREI N IT WAS HELD THAT WHEN SERVICE INDUSTRY IS GAINING PROMINENCE, THE TERM T ECHNICAL SERVICE SHOULD BE INTERPRETED IN A WIDEST POSSIBLE MANNER OTHERWISE THE OBJECTS OF THE TDS PROVISIONS WOULD GET DEFEATED. THE LEARNED ASSESSING OFFICER FINALLY DISALLOWED THESE EXPENSES U/S 40(A)(IA) OF THE ACT. 8. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASS ESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- 5.11 IN VIEW OF THE FINDINGS IN THE ABOVE CASE LAWS AND THEIR APPLICABILITY ON THE FACTS OF THE CASE OF ASSESSEE, I HOLD THAT THERE IS A PRINCIPAL AND AGENT RELATIONSHIP BETWEEN THE ASSESSEE (PRINCIPAL) AND THE BANK (AGENT) AS FOLLOWS :- 1. 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. 2. 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. 3. THE BANK IS ALLOWED TO COLLECT THE PAYMENTS ONLY A FTER AUTHORIZATION BY THE ASSESSEE ON SUBMISSION OF THE VALID SALES DRAFTS TO IT. 4. IF THE CARD HOLDER DISPUTES ANY CARD TRANSACTION S OR THE PAYMENTS ARE NOT MADE THEN THE DISPUTED AMOUNT OF S UCH CARD TRANSACTIONS ARE TO BE CHARGED BACK FROM THE MERCHANT ACCOUNTS OR ITS RESERVE ACCOUNTS MAINTAINE D IN THE BANK. 5. 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. 9 6. THE BANK CHARGES COMMISSION/FEE FOR SERVICES REND ERED AS DESCRIBED IN THE AGREEMENT/CONTRACT BETWEEN THE MER CHANT I.E. THE PRINCIPAL & BANK I.E. THE AGENT. 7. SECTION 182 OF THE INDIAN CONTRACT ACT READS A S UNDER: AN AGENT IS A PERSON EMPLOYED TO DO ANY ACT FOR AN OTHER OR TO REPRESENT ANOTHER IN DEALINGS WITH THIRD PERSO NS. THE PERSON FOR WHOM SAID ACT IS DONE, OR WHO IS O REPRESE NTED, IS CALLED THE PRINCIPAL. THUS AN AGENCY COMES INTO EXISTENCE WHERE ONE PERSON IS VESTED WITH THE AUTHORITY OR CAPACITY TO CREATE A LEGAL RELATIO NSHIP BETWEEN PERSONS REFERRED TO AS A PRINCIPAL IN THIS CASE THE ASSESSE E (MERCHANT) AND OUTSIDE THIRD PARTY I.E. THE CARD HOLDER. THIS LEGAL RELATIONSHIP OF A PRINCIPAL AND AGENT BETWEEN THE ASSESSEE AND THE BAN K WAS CREATED AS PER TERMS OF A WRITTEN CONTRACT. THE ABOVE OBSERVATIONS ARE BASED UPON THE TERMS AND CONDITIONS OF THE AGREEMENT BETWEEN THE DIFFERENT BANKS AND THE ASSESS EE FILED BEFORE ME AND EXTRACTED IN DETAIL IN THE MAIN BODY OF THE ORDER ABOVE. 5.12. THEREFORE, I HOLD THAT THE COMMISSION PAID BY THE ASSESSEE TO THE BANK FALLS FIRMLY UNDER THE PURVIEW OF THE EXPLANAT ION OF SECTION 194H FOR PAYMENT RECEIVED OR RECEIVABLE DIRECTLY BY A PERSON (IN THIS CASE THE BANKS) ACTING ON BEHALF OF ANOTHER PE RSON (ASSESSEE) FOR SERVICES RENDERED IN RELATION TO COL LECTION OF PAYMENT FROM THE CARD HOLDERS FOR SALES EFFECTED BY THE ASSESSEE. 5.13 IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THA T TDS WAS REQUIRED TO BE MADE U/S 194H ON RS. 7,88,442/- BEING COMMISS ION PAID TO BANKS ON CREDIT CARD SERVICES. SINCE THE ASSESSEE H AS NOT DONE SO THIS AMOUNT IS DIRECTED TO BE DISALLOWED U/S 40(A)(I A). THE GROUND OF APPEAL IS DECIDED AGAINST THE APPELLANT. NOW THE ASSESSEE IS BEFORE US. 9. THE LEARNED A.R. ARGUED THAT THESE EXPENSES DEBIT ED UNDER THE HEAD DISCOUNT/BANK CHARGES DEDUCTED BY THE BANKERS OF TH E ASSESSEE COMPANY OUT OF REALIZATION OF ROOM HIRE CHARGES OR SALES PROCEE DS OF THE SALES MADE TO 10 FOREIGN TOURISTS AND INDIAN TOURISTS AGAINST CREDI T CARDS. WHEN THE CUSTOMER SETTLED THE ACCOUNT HE USED THE CREDIT CARD, AFTER VERIFYING THE GENUINENESS OF THE CREDIT CARD, THE CONCERNED BANK CREDITED THE AS SESSEES BANK ACCOUNT. THE REMAINING AMOUNT AFTER DEDUCTING THE DISCOUNT/BANK CHARGES FOR RENDERING BANK SERVICES FOR REALIZATION AND PAYMENT OF THE SE RVICES. THUS, THE DISCOUNT/BANK CHARGES DEDUCTED BY THE BANK OUT OF R EALIZATION THROUGH CREDIT CARDS ARE NOT BROKERAGE OR COMMISSION IN THE SENSE IN WHICH THE EXPRESSION IS USED IN SECTION 194H OF THE ACT. EVEN BANK GUARANTE E COMMISSION IS NO COMMISSION IN THE SENSE IN WHICH THE EXPRESSION IS U SED IN SECTION 194H. IT IS FEES CHARGED FOR THE SERVICES RENDERED BY THE BANK. LIKEWISE BANK ALSO CHARGED COMMISSION ON PREPARING DRAFT. HE FURTHER R ELIED THE ORDER OF THE HONBLE BENCH DECISION IN THE CASE OF GEMS PARADISE VS. ACIT (ITA NO. 746/JP/2011) WHEREIN THE ASSESSEE SOLD ITS GOODS TH ROUGH CREDIT CARDS AND ON PRESENTATION OF BILL ISSUED AGAINST THE CREDIT CARD , THE BANK MAKES PAYMENT TO ASSESSEE AFTER TAKING AGGREGATE FEES AS PER THE TER MS AND CONDITIONS IN CASE OF CREDIT CARDS. THIS IS NOT A COMMISSION PAYMENT BU T A FEE DEDUCTED BY THE BANK. THERE IS NO RELATION BETWEEN BANK AND THE SHOP KEEPER OF PRINCIPAL AND COMMISSION AGENT. THEREFORE, THE PROVISIONS OF SECT ION 194 OF THE ACT IS NOT APPLICABLE. 10. AT THE OUTSET, THE LEARNED D.R. SUPPORTED THE ORDER OF LEARNED CIT(A). 11 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ASSESSEE I S IN THE BUSINESS OF HOTEL AND RESTAURANT. DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE PROVIDED SERVICE TO FOREIGN AS WELL AS INDIAN TOURISTS BY WAY OF HIRE CHARGES AS WELL AS SUPPLY OF FOOD AND BEVERAGES. THE CUSTOMERS PAID THI S SERVICE THROUGH CREDIT CARDS, WHICH IS CREDITED BY THE BANK OF CREDIT CARD HOLDERS. THE CONCERNED BANK TRANSFERS THIS MONEY AFTER CHARGING OF FEES. IT IS FACT THAT THESE SERVICES WERE RENDERED BY THE BANK OF CREDIT CARD HOLDERS NOT BY THE BANK OF ASSESSEE. THE APPELLANT GETS REMAINING AMOUNT AFTER DEDUCTING THE FEES. THE COORDINATE A BENCH OF THE ITAT, JAIPUR IN THE CASE OF GEMS PA RADISE VS. ACIT HELD SIMILAR IDENTICAL ISSUES AS UNDER:- 27. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT ( A), WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THIS REGA RD. SECTION 194H IS APPLICABLE WHERE ANY COMMISSION HAS BEEN PAID BY THE PRINCIPAL TO THE COMMISSION AGENT. THIS IS NOT A CASE OF COMMISSION AGENT AS ASSESSEE SOLD ITS GOODS THROUGH CREDIT CARD AND ON PRESENTATION OF BILL ISS UED AGAINST CREDIT CARD, THE BANK MAKES PAYMENT TO THE ASSESSEE AFTER DEDUCTING AGREED FEES AS PER TERMS A ND CONDITIONS IN CASE OF CREDIT CARD. THIS IS NOT A CO MMISSION PAYMENT BUT A FEES DEDUCTED BY THE BANK. IF THERE IS AN AGREEMENT, THAT IS AGREEMENT BETWEEN THE CREDIT CARDHOLDER AND THE BANK. BANK IS A PRINCIPAL AND T O SPREAD OVER ITS BUSINESS, A SCHEME IS FLOATED BY BANK I.E. ISSUANCE OF CREDIT CARDS. BANK ISSUES CREDIT CARD TO THE VA RIOUS CUSTOMERS WHO PURCHASE THE VARIOUS CREDIT CARDS ON THE AGREED TERMS AND CONDITIONS. ONE OF THE MAJOR CONDI TION IS THAT IF CREDIT CARD HOLDER DOES NOT MAKE PAYMENT WIT HIN THE PRESCRIBED TIME LIMIT THEN THEY CHARGE 2% PENAL AMO UNT OF 12 BILL WHICH IS RAISED BY THE SHOP KEEPER AGAINST SALE OF ITS ITEMS THROUGH CREDIT CARD. BANK CANNOT REFUSE THE P AYMENT TO THE SHOP KEEPER WHO SALE THEIR GOODS THROUGH CRED IT CARD. ONLY IN THOSE CASES WHERE GOODS ARE FOUND DA MAGED AND CREDIT CARD HOLDER INFORM THE BANK THAT THE MAT ERIAL PURCHASED BY THEM IS DAMAGED OR DEFECTIVE AND REQUE ST THE BANK NOT TO MAKE THE PAYMENT, IN SUCH CASES ONL Y BANK CAN WITHHOLD THE PAYMENT, OTHERWISE THE BANK HAS TO M AKE THE PAYMENT TO THE SHOP KEEPER. THEREFORE, IN OUR CONSIDERED VIEW, THERE IS NO SUCH RELATION BETWEEN TH E BANK AND THE SHOP KEEPER WHICH ESTABLISHES THE RELATIONSHIP OF A PRINCIPAL AND COMMISSION AGENT. TECHNICALLY IT MAY BE WRITTEN THAT BANK WILL CHARGE CE RTAIN PERCENTAGE OF COMMISSION BUT THIS IS NOT A COMMISSI ON BECAUSE ASSESSEE SELLS ITS GOODS AGAINST CREDIT CAR DS, AND ON PRESENTATION OF BILLS, THE BANK HAS TO MAKE THE PAYMENT. IT IS NOT THE CASE THAT BANK HAS ADVISED THE ASSESS EE TO SELL THEIR GOODS TO ITS CUSTOMERS THEN HE WILL PAY THE COMMISSION. IT IS REVERSED IN A SITUATION AS BANK I SSUED CREDIT CARDS TO THE CREDIT CARD HOLDERS ON CERTAIN FEES OR WHATEVER THE CASE MAY BE AND THE CARD HOLDER PURCHAS ES MATERIAL FROM THE MARKET THROUGH HIS CREDIT CARD WIT HOUT MAKING ANY PAYMENT AND THAT SHOP KEEPER PRESENTS TH E BILL TO THE BANK AGAINST WHOSE CREDIT CARD THE GOODS WERE SOLD AND ON PRESENTATION OF BILL AS STATED ABOVE THE BAN K MAKES THE PAYMENT. THEREFORE, IN OUR CONSIDERED VIEW, PROV ISIONS OF SECTION 194H ARE NOT ATTRACTED IN THIS TYPE OF T RANSACTION. THEREFORE, WE HOLD THAT ADDITION MADE AND CONFIRMED B Y LD. CIT (A) WAS NOT JUSTIFIED. ACCORDINGLY, THE ADDITION MADE AND CONFIRMED BY LD. CIT (A) IS DELETED. 28. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART AND APPEAL OF THE DEPARTMENT IS DISMISSED. BY RESPECTFULLY FOLLOWING THE DECISION OF THE COORD INATE A BENCH OF ITAT JAIPUR, WE ALLOW THE ASSESSEES C.O. ON THIS ISSUE. 13 12. IN THE RESULT, REVENUES APPEAL IS DISMISSED A ND THE C.O. FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/07/2014. SD/- SD/- (R.P. TOLANI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 25 TH JULY, 2014 * RANJAN COPY FORWARDED TO :- 1. THE ACIT, CIRCLE-2, JAIPUR. 2. M/S SHIVANI ENCLAVE (P) LTD., JAIPUR. 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NO. 840/JP/2011 & .C.O. NO. 26/JP /2012) BY ORDER, AR ITAT JAIPUR.