TMI Blog2023 (7) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... n its online platform sells tickets of other / many theatre owners apart from the assessee before us. The agreement of the assessee with M/s.Bigtree is a non exclusive agreement for selling cinema tickets of the assessee through its platform. The only income earned by the Bigtree is the convenience fee that it collects from the customers / movie viewers. Even there is no discounts given by the assessee to the Bigtree on account of tickets purchased by the customer from their platform. In our view, the transaction / service fee collected by M/s. Bigtree from the end customers are actually margin charged from the end customers for provision of such services to the end customers. It is also to be noted that the end customer, pays service tax on such additional transaction / convenience fee charged by M/s. Bigtree. It is also very much pertinent to note that such service tax is not levied on the ticket charges. This fact establishes that the assessee do not cast any obligation on M/s.Bigtree to sell tickets from their platform. However one more aspect that needs to be considered is the situation where the tickets are liable to be refunded. For example, the theater owner is una ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant as the Appellant has not paid any commission on actual payment mode or constructive payment iode. 5. On the facts and circumstances of the case, the Assessing Officer erred in passing the order u/s 201(1) and 201(1A) of the Income Tax Act, 1961 without bringing on record, the convenience charges collected by the M/s Bigtree belongs to the Appellant and the convenience charges retained by M/s Bigtree on behalf of the Appellant. But in fact, the convenience charges collected from the customers by M/s Bigtree and the Appellant is unaware of the value of convenience charges collected by M/s Bigtree. 6. On the facts and circumstances of the case and under the provisions of the law, the order passed by the Assessing Officer u/s 201(l) and 201(1A) of the Income Tax Act, 1961 for the financial year 2012-13 relevant to the assessment year 2013-14 on 30-03- 2021 is barred by limitation hence deserved to be annulled. 7. On the facts and circumstances of the case and under the provisions of the law, the Assessing Officer erred in miscarrying the facts perversely to suit her requirement to paste the liability on the Appellant u/s 201(1) and 201(1A) of the Income Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payment made by the cinema owners(assessee) to M/s. Bigtree. He therefore, was of the opinion that tax should be deducted at source under sec. 194H of the Act. The Ld.AO computed the TDS payable by the assessee on such convenience fee as under: FY Cinema Hall Amount retained towards convenience charges (in Rs.) TDS deductible u/s 194H @ 10% (in Rs.) TDS deducted remitted (in Rs.) 2012-13 Eshwari Cinema, Bangalore 1,20,915 12,091/- Nil 2012-13 Kamakya Cinema, Bangalore 63,470/- 6,347/- Nil Total 1,84,385 18,438/- Nil 4. The Ld.AO issued show cause notice u/s 201(1) and 201(1A) of the Act dated 16/03/2021 for the financial year 2013-14 on the cinema owner, to show cause, as to why, the assessee should not be treated to as an assessee is in default as per provisions of sec. 201(1) and 201(1A) of the Act. In response, the assessee filed letter dated 24/03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for allowing it to upload the seat layout of the appellant cinema theatre. Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal. 6. During the course of hearing the ld.AR has raised legal issue in Ground No.6 in the appeal filed for assessment year 2013-14, stating that, the order passed by the Ld.AO is barred by limitation, and therefore, it is nonest :- 6.1. The Ld.AR in the statement of facts has submitted as under: 6. For the financial year 2012-13 the order passed by the Assessing Officer on 30-03-2021 u/s 201(1) 201(1A) of the Income Tax Act, 1961 is barred by limitation. Up to the assessment year 2009-10 relevant to the financial year 2008- 09 there was no limitation period u/s 201(1) of the Income Tax Act, 1961 for initiating proceedings for failure to deduct the tax at source. It means until then as per Hon'ble Supreme Court in the case of State of Punjab Vs Bhatinda Co-op Milk Producers Union Ltd (2007) 11 SCC 363 held that action must be initiated by the competent authority under the Act that there is specified limitation period is prescribed then it should be initiated within four years period from the end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 250 of the Income Tax Act, 1961 by dismissing the appeal of the Appellant without appreciating the contention of the Appellant on question of law and merits. The Commissioner of Income Tax (Appeals) has not even rebutted the judgements relied by the Appellant in support of his contention. In view of the above submission, the Appellant did not pay any commission to M/s Bigtree so as to attract provision of 194H of the Income Tax Act, 1961. When the Appellant is not liable to pay commission to the M/s Bigtree whether on actual payment or constructive payment the question of making TDS u/s 194H of the Income Tax Act, 1961 does not arise. The order passed by Commissioner of Income Tax (Appeals), National faceless Appeal Centre, Delhi u/s 250 of the Income Tax Act, 1961 and the Assessing Officer u/s 201(1) and 201(1A) of the Income Tax Act, 1961 is against the fact and law. Hence, this Honourable Bench is requested to delete the amount levied u/s 201(1) of the Income Tax Act, 1961 for default u/s 201(1) of the Income Tax Act, 1961 Rs. Rs. 18,438/- and interest levied u/s 201(1A) of the Income Tax Act, 1961 Rs. 19,913/-, for default u/s 201(1) of the Income Tax Act, 1961 for the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 201(3) that the time limit period of six years is applicable for the failure to deduct whole or any part of the tax from the person resident in India and in the appellant s case the deductee is not an Indian resident company and therefore the time limit period of six years prescribed u/s. 201(3) will not apply to the present case. In view of the above, it is held that the order passed by the Assessing Officer is legally valid. 10.5 The learned DR submitted that the order passed u/s 201(1) and 201(1A) was not barred by limitation u/s 201(3) of the I.T. Act for the reason that the payee in the instant case is a non-resident, whereas, the limitation prescribed u/s 201(3) of the I.T.Act would apply only to payments made to Indian resident company. Section 201(3) and (4) was inserted by the Finance (No.2) Act, 2009 with effect from 01.04.2010 and it was later substituted by the Finance (No.2) Act, 2014 with effect from 01.10.2014. Prior to the time limit being prescribed by virtue of insertion of section 201(3), the Courts have held that when the statute does not prescribe the time limit for passing an order u/s 201(1) / 201(1A) of the I.T.Act, then reasonable time limit ought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime limit 41 ITA No.2931/Bang/2018 C.O. No. 42/Bang/2019 prescribed under the statute for passing an order u/s 201(1) / 201(1A) of the I.T. Act, a reasonable time limit should be read into the provision. The Hon ble Bombay High Court had confirmed the Special Bench order of the Tribunal, wherein the time limit prescribed for initiating and completion of reassessment u/s 147 of the I.T. Act was upheld to be correct. The Hon ble High Court was considering the following substantial question of law:- (1) Whether the Tribunal was justified in prescribing the time limit for initiation and completion of proceedings under sub-sections (1) and (1A) of Section 201 of the Income-tax Act, 1961 in the absence of any time-limit provided under the said Act? (2) Whether the Tribunal was justified in prescribing the time limit statutorily provided for initiation and completion of reassessment proceedings under Section 147 of the Income-tax Act, 1961 for the purposes of sub-sections (1) and (1A) of Section 201 of the said Act? In deciding the above question, the Hon ble High Court confirmed the Special Bench order of the Tribunal by following the judgment of the Hon ble Delhi High Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipulated time limit, in this regard he reiterated the pages in appeal set , which is placed at page Nos.11 and 12. In this regard he relied on the judgment on the coordinate bench of Tribunal in the case of DCIT Vs. M/s Coffee Day Enterprises Ltd., in ITA No.2931/Bang/2018 for the assessment year 2011-12. 7.1. The ld.DR relied on the orders of the authorities below. Further she submitted that the Ld.CIT(A) rightly dismissed the appeal of the assessee, as was indirect payment to M/s. Bigtree that was allowed retained by M/s. Bigtree as per the agreement clause. She submitted that there was an implied agency relationship between the assessee and M/s. Bigtree. 7.2. He thus submitted that M/s. Bigtree provided indirect services to the assessee. She also submitted that the case is squarely in favour of the Revenue as per the decision of Hon ble Supreme Court in the case of M/s. JB Boda Company Pvt. Ltd. vs. CBDT reported in 223 ITR 271. She thus submitted that the assessee was liable to deduct tax at source on the transaction / service fee retained by M/s. Bigtree. 7.3. We have perused the submissions advanced by both sides in the light of records placed before us. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y hire charges. The facts in respect of this issue was that the assessee therein had hired certain machinery and paid hire charges to Italian Thailand Development Co. Ltd. on which TDS was not deducted. 7.5. The Ld.CIT(A) relied on the decision of Hon ble Supreme Court in case of M/s. JB Boda Company Pvt. Ltd. vs. CBDT (supra), we have perused this decision carefully and in our view the facts of the present case are not similar to that of the present assessee before us. In the case of M/s. JB Boda Company Pvt. Ltd. vs. CBDT (supra), Hon ble Supreme Court was dealing with the issue of an amount whether eligible to be claimed u/s. 80O. Hon ble Supreme Court observed that the assessee therein was engaged in the brokerage business as reinsurance brokers and in respect of reinsurance risk covered by Indian and foreign insurance companies it arranged for reinsurance of the portion of the risk with various reinsurance companies either directly or through foreign brokers. In return of such services, the assessee therein received a percentage of the premium received by the foreign or Indian companies as its share of brokerage. As per the agreement with the foreign company, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.9. The applicability of section 194H in the case of amount received by the M/s.Bigtree from its end customer depends on whether there is any payments that retained by the Bigtree as payable by the assessee. Even though the definition of the term commission or brokerage used in section 194H is in a inclusive definition, it is clear that the liability to make TDS arises only when a person acts on behalf of another person. This issue also depends on whether sale of tickets to the end customer is a service or as a commodity. In the present facts of the case, the transaction charges or service charges, or convenience fee by whatever name it may be called, retained by M/s. Bigtree from the end customer cannot lead to the inference that M/s. Bigtree acts on behalf of the theatre owner ( the assessee ). 7.10. In our view, the transaction / service fee collected by M/s. Bigtree from the end customers are actually margin charged from the end customers for provision of such services to the end customers. It is also to be noted that the end customer, pays service tax on such additional transaction / convenience fee charged by M/s. Bigtree. It is also very much pertinent to note that suc ..... 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