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2015 (3) TMI 51 - AT - Income TaxNon deduction of TDS - A.O. invoked the provisions of section 194H against the assessee and CIT(A) confirming the amount under section 194C - Assessee has entered into an agreement with HDFC for providing co-branded credit cards - AO held that assessee is having a principal-agent relationship with HDFC and the amount withheld by the bank is in the nature of commission - demand u/s 201(1) and interest u/s 201(1A) raised - Held that:- In the transaction between credit card holder and the Bank, e-seva service has no role to play. As far as credit card holder is concerned, the amount payable to eseva is charged to his account and retail merchant acts as a mediator for remitting amount to e-seva by utilizing the HDFC Bank. As far as HDFC Bank is concerned, it gives discount/commission to the retail merchant for utilizing the facility of the Bank. Thus, if any principal-agent relationship is existing that is between the Bank and the retail merchant but not between Bank and e-seva. Thus the A.O. has wrongly invoked the provisions of section 194H against the assessee who is nowhere connected with the commission paid by HDFC to the retail merchant. Moreover, the Ld. CIT(A) has further erred in confirming the amount under section 194C. There is no contract more so, any work contract between HDFC and assessee. As seen from the terms of agreement, no services are rendered by e-seva to HDFC or vice-versa. Both of them have entered into an alliance for promoting the ‘e-seva HDFC Credit Card’ for the use of customers not only for remitting e-seva amounts but also for utilizing it as a general credit card for certain value added benefits. This does not involve any contract between these parties, so as to invoke provisions of section 194C. Since, Ld. CIT(A) already held that provisions of section 194H are not applicable to the facts of the case and since provisions of section 194C are also not applicable, demand raised by A.O. cannot be sustained at all. Not only that, we are also not sure on what basis the A.O. has arrived at the amount, if at all any amount is withheld by HDFC Bank, it is not out of amount paid to e-seva but out of the amounts payable to merchant Banker for using the credit facility. How that amount can be attributable to e-seva is not explained by A.O. As seen from the details placed on record, except the cards settlement details, no other details are available. Moreover, assessee was not given any opportunity on what basis amounts were crystallized. Not only on the facts but also on legal principles, the A.O. action cannot be sustained at all in raising demands unnecessarily. - Decided in favour of assessee.
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