TMI Blog2022 (11) TMI 1414X X X X Extracts X X X X X X X X Extracts X X X X ..... held Section 194H 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 respondent-assessee. 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 acquiring bank resulting in the realisation of payment. Subsequently, the acquiring bank realised and recovered the payment from the bank which had issued the credit card. HDFC had not undertaken any act on behalf of the respondent-assessee. The amount retained by the bank is a fee charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961 ( the Act ). He states that the ITAT has erred in holding that assessee was not required to deduct TDS on charges retained by the Banks/credit card agencies out of sale consideration of tickets booked through credit /debit cards. He further states that the ITAT has erred in deleting the addition on the ground that the amounts retained by various banks for Credit card commission do not attract the provisions of Section 194H of the Act whilst ignoring the fact that the CBDT Notification No.561/2010 dated 31st December, 2012 exempting deduction of tax from credit card commission came into force w.e.f. 01st January, 2013, and therefore, the deduction of tax at source was required to be made for the period prior to 01st January, 2013. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd were not associated with buying or selling of goods as such. Upon swiping the card, the bank made payment of the bill amount to the respondent-assessee. Thus, the respondent assessee received the sale consideration. In turn, the bank in question had to collect the amount from the bankers of the credit card holder. The Bank had taken the risk and also remained out of pocket for sometime as there would be a time gap between the date of payment and recovery of the amount paid. 16. The amount retained by the bank is a fee charged by them for having rendered the banking services and cannot be treated as a commission or brokerage paid in course of use of any services by a person acting on behalf of another for buying or selling of goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tful penalization which requires strict construction of penal provisions. The said principle applies not only to criminal statutes but also to provisions which create a deterrence and results in punitive penalty. Section 40(a)(ia) is a deterrent and a penal provision. It has the effect of penalising the assessee, who has failed to deduct tax at source and acts to the detriment of the assessee's property and other economic interests. It operates and inflicts hardship and deprivation, by disallowing expenditure actually incurred and treating it as disallowed. The Explanation, therefore, requires a strict construction and the principle against doubtful penalization would come into play. The detriment in the present case, as is noticeable, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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