2021 (5) TMI 234 - AT - Income Tax

TDS u/s 194H - disallowance u/s 40(a)(ia) - Assessee has paid commission on credit cards to various banks without deducting tax at source - HELD THAT - Following this decision and the decision in assessee's own case in the earlier years 2017 (10) TMI 1564 - ITAT MUMBAI and 2016 (2) TMI 1300 - ITAT MUMBAI Ld.CIT(A) deleted the disallowance made u/s. 40(a)(ia) r.w.s. 194H of the Act. We do not see any good reason to interfere with the decision of the Ld.CIT(A) in deleting the disallowance made u/s.40(a)(ia) of the Act. - Decided in favour of assessee.

Summary

Issues:
Deletion of disallowance under section 40(a)(ia) of the Income-tax Act, 1961.

Analysis:
The appeal by the revenue was against the deletion of disallowance of ?1,85,38,431/- made under section 40(a)(ia) of the Income-tax Act, 1961 for the assessment year 2013-14. The assessing officer disallowed the amount for non-deduction of tax at source on commission paid by the assessee to various banks. The assessee contested the disallowance before the Commissioner (Appeals), who deleted it after considering the submissions and noting that a similar disallowance in the previous assessment year was deleted. The Tribunal found that the issue was covered by its decisions in the assessee's own case for earlier assessment years, where similar disallowances were deleted based on the nature of the transactions involving credit card commissions.

The Tribunal observed that the issue was squarely covered by its previous decisions in the assessee's case for Assessment Years 2011-12 & 2012-13. The Tribunal upheld the decision of the Commissioner (Appeals) in deleting the disallowance in those years. The Tribunal referred to the decision of the Hon'ble Delhi High Court in a similar case, emphasizing that the bank's role in credit card transactions did not constitute acting as an agent for the assessee. The Tribunal concluded that the amount retained by the bank was a fee for banking services and not commission or brokerage, thereby not attracting section 194H.

Based on the precedent set in earlier years and the legal interpretations provided by the Tribunal and the Hon'ble High Court, the Tribunal upheld the decision of the Commissioner (Appeals) to delete the disallowance under section 40(a)(ia) for the assessment year 2013-14. The Tribunal dismissed the revenue's appeal, stating that the facts were identical to previous cases and there was no reason to interfere with the decision of the Commissioner (Appeals). Consequently, the appeal was dismissed, and the order was pronounced on 08/03/2021.