TMI Blog2017 (5) TMI 1558X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided against revenue Disallowance made u/s 14A worked out by the Assessing Officer by applying Rule 8D(2) for the interest expenses - Held that:- The rationale explained in the case of Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT) by the Hon'ble Bombay High Court is attracted and it is to be presumed that the interest expenditure is not relatable to such investments. Such presumption has also been held to be applicable in the context of section 14A of the Act by the Hon'ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd.,(2014 (8) TMI 119 - BOMBAY HIGH COURT) and in the case of HDFC Bank Ltd. vs. DCIT(2016 (3) TMI 755 - BOMBAY HIGH COURT). Therefore, we affirm the order of the CIT(A) deleting the disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee? 3. Whether on the facts and in the circumstances of the case, the Ld. CIT-(A) erred in ignoring the definite finding given by the AO that the assessee company has made investment decisions which are of complex nature which require substantial market research, day to day analysis and hence it is not possible to earn dividend income without incurring any expenditure before invoking section 14A? 4. Whether on the facts and in the circumstances of the case, the Ld. CIT-(A) erred in deleting the disallowance of interest expenses of ₹ 23,31,350/- u/s 14A, thereby ignoring the principles as laid down by jurisdictional Hon'ble Bombay High Court in the case of Godrej and Boyce Limited and the Special Branch of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first issue is concerned, the Assessing Officer noted that assessee had debited an expenditure of ₹ 24,64,25,637/- in the P L Account on account of credit card charges. On being asked to explain, assessee explained that it is engaged in the business of sale of readymade garments and other products and it receives payments from customers through credit cards. The aforesaid expenditure reflects the charges paid to the banks for collecting payments and is on account of service fees/ discount/ merchant discount rate/ commission, etc. The Assessing Officer was of the view that such charges are in the nature of commission , for which the requisite tax is required to be deducted at source under section 194H of the Act. Since the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bench of the Tribunal in the case of Gems Paradise ITA No. 746/JP/2011 (AY2008-09) dated 02/.02/2012 and the Tribunal held that the provisions of section 194H of the Act are not applicable as the banks make payments to assessee after deducting certain fees as per the terms and conditions in the credit card and it is not a commission but a fee deducted by the banks. The said issue was again considered by the Jaipur Bench of the Tribunal in the case of Bhandari Jewellers ITA No.745/JP/2011 (AY-2008-09) dated 02/02/2012 wherein it was also held that no TDS is required to be deducted on the fees charged by the banks on credit card transactions. Further, Hyderabad Bench of the Tribunal in the case of DCIT v. Vah Magna Retail (P) Ltd. In ITA No.9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India) Ltd.(supra),which has been followed by the CIT(A). It was also a common point between the parties that the said decision of the Tribunal continues to hold the field and the same has not been altered by any higher authority. Ostensibly, our co-ordinate bench, in the case of Jet Airways(India) Ltd. (supra) has concluded that credit card charges paid to the collecting banks would not fall within the meaning of the expressions commission or brokerage as understood for the purposes of section 194H of the Act, therefore, no amount of tax is deductible at source on such payments under section 194H of the Act. In this view of the matter, we hereby affirm the decision of the CIT(A) in deleting the impugned addition. Thus, on this aspect Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Power Ltd., 313 ITR 340(Bom), it has to be inferred that the investments have been made out of interest free funds available with the assessee. In this background, the CIT(A) deleted the disallowance made out of interest expenditure of ₹ 23,31,350/- and retained the disallowance of ₹ 2,55,750/- suo-motu made by the assessee. Against such a decision of the CIT(A), Revenue is in appeal before the Tribunal. 8. At the time of hearing, the Ld. Departmental Representative has not controverted the factual finding of the CIT(A) to the effect that the own noninterest bearing funds are enough to cover the investments made in the tax free securities, thus, leading to a presumption that such investments are out of interest free funds. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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