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Asst. Commissioner of Income Tax (TDS) & Others Versus M/s. Trident Automobiles (P) Ltd. & Others

2015 (7) TMI 406 - ITAT BANGALORE

Non deduction of TDS - “ME Commission” - card swiping machine is used - HDFC Bank collects money from paying bank of the customers who use the credit card and gives credit to the Account of the assessee after deducting service charges (discount charge) thereon - According to the AO as per said agreement that the amount retained by HDFC Bank was in the nature of commission and therefore the Assessee ought to have deducted tax at source on the amount retained by HDFC Bank as per the provisions of .....

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.2012 specified that credit/debit card commission for transaction between the merchant establishment and acquirer bank need not be subject to TDS. The revenue has argued before us that before the said notification such charges were subject to TDS. We are of the view that the notification is only recognition of the position as it always prevailed and as interpreted by several decisions rendered by the different benches of ITAT. The notification therefore cannot be the basis on which it can be sai .....

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Srihari, Addl CIT ORDER Per Bench: ITA Nos. 1508 to 1510/Bang/2013 are appeals by the Revenue against the order dated 14.08.2013 of CIT(A)-V, Bangalore, relating to AY 09-10 to 11-12. The Assessee has filed C.O.Nos. 22 to 24/Bang/2015 against the very same orders of the CIT(A). The Cross-objections filed by the Assessee are only supportive of the order of the CIT(A). 2. The appeals by the revenue and cross-objection by the Assessee arise out of an order of the ACIT (TDS), Circle 18(2), Bangalore .....

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credit card, the card swiping machine is used. HDFC Bank collects money from paying bank of the customers who use the credit card and gives credit to the Account of the assessee after deducting service charges (discount charge) thereon. 3. According to the AO the amount retained by HDFC Bank was nothing but a commission paid by the Assessee to HDFC Bank and therefore the Assessee ought to have deducted tax at source on such amount retained by HDFC Bank. The AO referred to the agreement between t .....

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provisions of Sec.194-H of the Act. 4. The plea of the Assessee was that as per the definition of commission or brokerage as per the provisions of Sec.194H of the Act, the HDFC Bank was not acting on behalf of the Assessee when it collected payments from the Bankers of the customers of the Assessee who use credit cards and that HDFC Bank does not render any service to the Assessee but services are rendered to the customers of the Assessee who use credit/debit cards to make payments. 5. The AO re .....

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dated 10.4.2012 held that the payment in question was in the nature of bank charges and hence the provisions of Sec.194-H of the Act were not attracted. The order u/s.201(1) & 201(1A) of the Act was cancelled by the CIT(A). Aggrieved by the order of the CIT(A) the revenue has filed the present appeals before the Tribunal. 7. Before us the learned DR relied on the order of the AO and reiterated the stand of the revenue as reflected in the grounds of appeal filed before the Tribunal. The lear .....

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sion (not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent. (2) The provisions of sub-section (1) shall not apply - (a) To such persons or class or classes of persons as the Central Government may, having regard to the exte .....

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five hundred rupees. Explanation : For the purposes of this section, - (i) "Commission or brokerage" includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing; (ii) "Professional services" means services rendered by a p .....

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a Retain (P) Ltd. (supra) and it was held as follows: 4. We heard the Learned Departmental Representative and perused the orders of the lower authorities and other material on record. Assessee is a company engaged in the business of direct retail trading in consumer goods. Assessee claimed deduction of ₹ 16,34,000 on account of commission paid to the credit card companies, which has been disallowed by the assessing officer in terms of S.40(a)(ia) on account of the failure of the assessee t .....

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g these submission of the assessee, the CIT(A) accepted the claim of the assessee for deduction of the amount of ₹ 16,34,000 on the following reasoning- 9.8 On going through the nature of transactions, I find considerable merit in the contention of the appellant that commission paid to the credit card companies cannot be considered as falling within the purview of S.194H. Even though the definition of the term commission or brokerage used in the said section is an inclusive definition, it .....

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he electronic payment, for a certain charge. The commission retained by the credit card company is therefore in the nature of normal bank charges and not in the nature of commission/brokerage for acting on behalf of the merchant establishment. Accordingly, concluding that there was no requirement for making TDS on the Commission retained by the credit card companies, the disallowance of ₹ 16,34,000 is deleted….. We find no infirmity in the above reasoning given by the CIT(A). We acc .....

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