TMI Blog2021 (5) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-2021 - Shri Saktijit Dey (Judicial Member) And Shri S.Rifaur Rahman (Accountant Member) For the Appellant : Shri Gurbinder Singh, DR For the Respondent : Shri Milind Nane, AR ORDER PER SAKTIJIT DEY (JM): This is an appeal by the revenue against order dated 20-06-2019 of learned Commissioner of Income-tax (Appeals)-17, Mumbai for the assessment year 2013-14. 2. The grievance of the revenue in the present appeal is with regard to deletion of disallowance of ₹ 1,85,38,431/- made under section 40(a)(ia) of the Income-tax Act, 1961. 3. Briefly the facts are, the assessee is a resident company. As stated by the assessing officer, assessee is in the business of running five star deluxe hotels. For the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal in assessee s own case for Assessment Years 2011-12 2012-13. Copies of the aforesaid orders of the Tribunal have also been submitted before us. As could be seen from the order passed in assessment year 2011-12 vide ITA No.4990/Mum/2014 dated 16-02- 2016 on the identical issue of disallowance made under section 40(a)(ia) towards alleged non deduction of tax on credit card commission charged by banks, the Tribunal, following its earlier decision has upheld the decision of learned Commissioner (Appeals) in deleting the disallowance. The same view was reiterated by the Tribunal while deciding revenue s appeal in assessee s case for Assessment Year 2012-13 vide ITA No.5825/Mum/2016 dated 25-10-2017. The relevant observations of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind 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, ITA.No.5825/MUM/2015 (A.Y: 2012-13) M/s. Hotel Leela Venture Ltd. quantum, etc. of the goods bought/sold. The bank merely provides banking services in the form of payment and subsequently collects the payment. The amount punched in the swiping machine is credited to the account of the retailer by the acquiring bank, i.e. HDFC in this case, after retaining a small portion of the same as their charges. The banking services cannot be covered and treated as services rendered by an agent for the principal during the course of buyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,65,654/- ITA.No.5825/MUM/2015 (A.Y: 2012-13) M/s. Hotel Leela Venture Ltd. should be disallowed under section 40a(ia) as this amount had been claimed as an expenditure by the assessee. The Commissioner (Appeals) held that the transaction was in the nature of bill discounting by HDFC, which had paid the bill amount after deducting the commission payable to the assessee. HDFC had taken up the entire risk relating to recovery of payment from the issuing bank. The Tribunal, however, held that the assessee had not violated section 194H. As a consequence, it held that the Assessing Officer was wrong in invoking section 40(a)(ia) and, accordingly, had erred in making the addition of ₹.44,65,654/- i.e. the charges deducted by HDFC on the pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fee charged for having rendered the banking services and could not be treated as a commission or brokerage paid in course of use any services by a person acting on behalf of another for buying or selling of goods. Therefore, section 194H would not be attracted. (ii) That another reason why section 40(a)(ia) should not have been invoked in the present assessee was the principle of doubtful penalization which required strict construction of penal provisions. The principle applies not only to criminal statutes but also to provisions which create a deterrence and result in punitive penalty. Section 40(a)(ia) is a deterrent and a penal provision. It has the effect of penalizing the assessee, who has failed to deduct tax at source and acts t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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