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TMI Blog2019 (5) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that the amount retained by a bank/credit card Nesarikar agency out of the sale consideration of the tickets booked through credit cards is not covered under the definition of "commission or brokerage" given in the Explanation (i) to section 194H of the Act and the assessee was not liable to deduct tax at source under section 194H in respect of this amount? (b) Whether, on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in holding that the use of lounge premises paid by the assessee were payments for contract of work under section 194C of the I.T. Act and not in the nature of rent as per section 194I of the I.T. Act? 2. Learned Counsel for the parties pointed out that question (a) is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Delhi High Court in the case of JDS Apparels P. Ltd., (supra) was also rendered in the background of the Revenue's contention 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 respondent assessee. 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Legislature is to include and treat commission or brokerage paid when a third person interacts between the seller 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the words "commission or brokerage" must make colour from each other. The Tribunal was of the 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oordinate Bench in case of ACIT Vs. Qantas Airways Ltd., reported in (2015) 152 ITD 434 and held that the department was not right in insisting deduction of tax at source under section 194I of the Act. 5. Having heard learned Counsel for the parties and having perused documents on record, we notice that the Assessing Officer in the present case, had placed reliance on a decision of Delhi High Court in case of Japan Airlines Ltd., reported in (2009) 325 ITR 298 and United Airlines (2006) 287 ITR 281. We may however note that the Supreme Court in case of Japan Airlines Company limited reported in (2015) 377 ITR 372 has overrulled such decision of Delhi High Court. Supreme Court approved the view of Madras High Court in case of CIT Vs Sing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would enter into an agreement with the agency which has rented out the lounge space at the Airport from the Airport Authority. Under such agreement, the assessee would pay committed charges be it on lumpsum basis or on the basis of customer flow to such agency. This in turn would enable the passengers of the Airlines to utilize the lounge facilities while in transit. 8. We accept the suggestion of Mr.A.R. Malhotra appearing for the revenue that service of providing beverages and refreshments was not the dominant part of service. It may only be incidental to providing quiet, comfortable and clean place for customers to spend some spare time. However, we do not descreen element of rent being paid by the assessee to the agency. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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