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TMI Blog2024 (12) TMI 1331X X X X Extracts X X X X X X X X Extracts X X X X ..... e individual is prop. of M/s. Ratnavali Jewels, engaged in the trading of selling products on ecommerce platforms like Amazon, Flipkart and Snapdeal etc. The case of the assessee was selected for scrutiny under CASS for complete scrutiny for the reason "Large Commission Expenses and Low Net Profit". During the year under consideration the assessee filed his return of income on 09.02.2021 declaring total income at Rs. 17, 45,090/-. During the assessment proceedings it was observed by the AO that the turnover of the assessee during the previous year was Rs. 1, 25, 92,493/- and Rs. 2, 94, 62,792/- for the current year under consideration, hence the assessee was under obligation to deduct T.D.S. u/s. 194H of the Act @ 10% on commission payments made to the e-commerce platforms mentioned (supra). Consequently, applying the provisions of section 40(a)(ia) of the Act disallowance @ 30% amounting to Rs. 30,18,426/- was made. The assessee being aggrieved with this order of the AO preferred an appeal before the Ld. CIT (A), who in turn confirmed the order of the AO. The assessee being further aggrieved preferred the present appeal before us. 3. We have gone through the order of the AO, orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (1) of section 9; (iii) "professional services" shall have the same meaning as in clause (a) of the Explanation to section 194J; (iv) "work" shall have the same meaning as in Explanation III to section 194C; (v) "rent" shall have the same meaning as in clause (i) to the Explanation to section 194-I; (vi) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9; Commission or brokerage. 194H. Any person, not being an individual or a Hindu undivided family, who is responsible for paying, on or after the 1st day of June, 2001, to a resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of two per cent : Provided that no deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-commerce platforms only and in turn after various deductions, it will reach to the account of the assessee. Here the mechanism provided in the section is failed and beyond the control of the assessee. Similar situation was being considered by the Hon'ble High Court of Delhi in the case of PCIT vs. Make My Trip India (P). Ltd. [2019] 104 taxmann.com 263 (Delhi),wherein the Hon'ble High Court observed as under: "The decision in CIT v. JDS Apparels (P.) Ltd. [2015] 53 taxmann.com 139/370 ITR 454 (Delhi) holds that in a similar kind of transaction, the amount retained by the bank is a fee charged for having rendered 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.' The Tribunal has in the instant case, rightly held that the services provided by the payment gateway is such that the charges collected by it has to be necessarily treated as fees and not as a commission. The payment in fact is made by one principal to another and it is only being facilitated by the payment gateway by providing a service. [Para 9] In that view of the matter, the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby 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 rationale 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 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. H 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 buying or selling of goods as the banker does not render any service in the nature of agency. [Para 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid principle should be applied as ecommerce platform would necessarily have acted as per law and it is not the case of the revenue that the e-commerce platform had not paid taxes on their income. It is not a case of loss of revenue as such or a case where the recipient did not pay their taxes. 8. Moreover, the assessee also filed an application under Rule 29 of the ITAT Rules, 1963 for admission of additional evidences, i.e. copy of form no. 26A obtained from Amazon Seller Services Pvt. Ltd. And Flipkart Internet Pvt. Ltd. For our perusal. These two companies itself covers major amount of Rs. 96, 65,541/- and Rs. 1, 49,060/- respectively out of total amount involved 1, 00, 61,420/-. We found the reason assigned by the assessee for not filing the same before the authorities below and allow to submit the same before us and accepted also. 9. The additional evidences submitted by the assessee are duly accepted and considered in the light of section 201(1) of the Act as under: Consequences of failure to deduct or pay. 201. (1) Where any person, including the principal officer of a company,- (a) who is required to deduct any sum in accordance with the provisions of this Act; or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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