TMI Blog2014 (7) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... ood and beverages. The customers paid this 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. As relying on case of Gems Paradise Vs. ACIT [2012 (2) TMI 521 - ITAT JAIPUR] wherein held it is not the case that bank has advised the assessee to sell their goods to its customers then he will pay the commission. It is reversed in a situation as bank issued credit cards to the credit card holders on certain fees or whatever the case may be and the card holder purchases material from the market through his credit card without making any payment and that shop keeper presents the bill to the bank against whose credit card the goods were sold and on presentation of bill as stated above the bank makes the payment. Therefore, in our considered view, provisions of section 194H are not attracted in this type of transaction. Therefore, we hold that addition made and confirmed by ld. CIT (A) was not justified - Decided in favour of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes 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 assessee s reply, the learned Assessing Officer analysed Section 32 of the Income Tax Act, 1961 (in short the Act) alongwith Appendix (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 on wind mill as well as renewal energy saving devices. The learned Assessing Officer after analyzing the whole investment in mind mill has categorized the expenditure under the following heads: 1] Expenditure incurred for civil work carried out at site, charges for creation of foundation/platform. 2] Expenditure incurred on accessories and electrical items to renewable energy device and their components and labour charges for installation of electrical lie for transmission and metering. 3] Consideration in connection with transfer of lease land. Further he bifurcated chart-A as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1632/JP/2008 for A.Y. 2005-06 order dated 26/2/2010. The learned A.R. further argued that the assets was used for business purposes and depreciation was claimed on actual cost of assets acquired in the previous year. The accepted accountancy rule for determining the cost of fixed asset is to be included in the expenditure necessary for bringing such assets into existence and to put them in working condition for use in business, for which She relied in case of Challapalli Sugars Ltd. Vs. CIT (1975) 98 ITR 167. The expenditure incurred by the appellant on putting into use the windmill itself and not on any ancillary item or on any accessory. The amount of ₹ 2,74,20,696/- was for purchase of wind mill plant, which cannot be put to use without installation and commissioning. The wind turbine generation machine has much weight, therefore, civil foundation is essential for putting wind mill 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. also drawn our attention on accountant standard issued by the Instituted of Chartered Account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee s reply, hold that the assessee s payment to the bank covered under Explanation of Section 194H of the 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 assessee s case. The learned Assessing Officer further relied in case of Canara Bank Vs. ITO 305 ITR (AT) 189 wherein the MICR charges paid by the Canara bank are liable for TDS U/s 194J of the Act. In case of Ultra Entertainment Solutions Ltd. Vrs. ITO reported in 17 SOT 249 wherein it was held that when service industry is gaining prominence, the term technical 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 Assessing 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 app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to collection of payment from the card holders for sales effected by the assessee. 5.13 In view of the above discussion, it is held that TDS was required to be made u/s 194H on ₹ 7,88,442/- being commission paid to banks on credit card services. Since the assessee has not done so this amount is directed to be disallowed u/s 40(a)(ia). The ground of appeal is decided against the appellant. Now the assessee is before us. 9. The learned A.R. argued that these expenses debited under the head discount/bank charges deducted by the bankers of the assessee company out of realization of room hire charges or sales proceeds of the sales made to foreign tourists and Indian tourists against credit 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 assessee s bank account. The remaining amount after deducting the discount/bank charges for rendering bank services for realization and payment of the services. Thus, the discount/bank charges deducted by the bank out of realization through credit cards are not brokerage or commission in the sense in which the expressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o spread over its business, a scheme is floated by bank i.e. issuance of credit cards. Bank issues credit card to the various customers who purchase the various credit cards on the agreed terms and conditions. One of the major condition is that if credit card holder does not make payment within the prescribed time limit then they charge 2% penal amount of bill which is raised by the shop keeper against sale of its items through credit card. Bank cannot refuse the payment to the shop keeper who sale their goods through credit card. Only in those cases where goods are found damaged and credit card holder inform the bank that the material purchased by them is damaged or defective and request the bank not to make the payment, in such cases only bank can withhold the payment, otherwise the bank has to make the payment to the shop keeper. Therefore, in our considered view, there is no such relation between the bank and the shop keeper which establishes the relationship of a Principal and Commission Agent. Technically it may be written that bank will charge certain percentage of commission but this is not a commission because assessee sells its goods against credit cards, and on presentat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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