TMI Blog2018 (12) TMI 1637X X X X Extracts X X X X X X X X Extracts X X X X ..... into, for the Appellant in both the Appeals. P.C: These Appeals arise from common background. We may, therefore, record facts from the Income Tax Appeal No.847 of 2016. Appeal is filed by the Revenue, challenging Judgment of the Income Tax Appellate Tribunal (for short the Tribunal ), dated 19th August, 2015. Following question was argued before us: Whether on the facts and in the circumstances of the case and in law, the Tribunal is justified in upholding the deletion of disallowance ₹ 1,96,68,165/under section 40a(ia) by the Tribunal without appreciating that the assessee had failed to deduct tax at source from commission paid to Banks for providing credit card services, in contravention of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of breach of Section 194H of the Act in connection with the credit card charges. The Court, after analyzing the provisions contained in Section 194H of the Act, held and observed as under: 15:Applying the above cited case law to the factual matrix of the present case, we feel that section 194H of the Act would not be attracted. HDFC was not acting as an agent of the respondentassessee. Once the payment was made by HDFC, it was received and credited to the account of the respondentassessee. In the process, a small fee was deducted by the acquiring bank, i.e. the bank whose swiping machine was used. On swiping the credit card on the swiping machine, the customer whose credit card was used, got access to the internet gateway of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler and the buyer as an agent and thereby renders services in the course of buying and/or selling of goods. This happens when there is a middleman or an agent who interacts on behalf of one of the parties, helps the buyer/seller to meet, or participates in the negotiations or transactions resulting in the contract for buying and selling of goods. Thus, the requirement of an agent and principal relationship. This is the exact purport and the rationable behind the provision. The bank in question is not concerned with buying or selling of goods or even with the reason and cause as to why the card was swiped. It is not bothered or concerned with the quality, price, nature, quantum etc., of goods bought/ sold. The bank merely provides banking se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e opinion that the payment in question, though categorized as bank guarantee commission is not strictly speaking payment of commission since there is no principal to agent relationship between the payer and the payee. The Tribunal, therefore, held that the requirement of deducting tax at source emanating from Section 194H of the Act in the present case does not arise. We are broadly in agreement with the view of the Tribunal. The so called bank guarantee commission is not in the nature of commission paid to an agent but it is in the nature of bank charges for providing one of the banking service. The requirement of Section 194H of the Act, therefore, would not arise. No question of law arises. The Income Tax Appeal is dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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