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TMI Blog2015 (3) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that there is no contract between assessee and HDFC Bank. 2. The learned CIT(A) has wrongly interpreted the several clauses of agreement between assessee and HDFC bank without considering the fact that it was an arrangement in the nature of alliance or joint venture. 3. The learned CIT(A) failed to appreciate the fact that the assessee is engaged in public utility services and the customers were given a facility of bank payment for their convenience and at their cost without any financial implication for the assessee." 1.1. Assessee also raised an additional ground as under : "On the facts and in the circumstances of the case, since the HDFC Bank (Deductee) has already accounted for the payment and paid taxes, no demand can be rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee whether provisions of section 194C are applicable. It was submitted by assessee that there is no contract between HDFC and assessee and agreement entered by them is in the nature of alliance to join together by providing credit card facilities to citizens. It is further argued that the said agreement do not contain any consideration/intention and therefore, it is not of a contract for any work or service contract. It was further submitted that provision of section 194C would not apply in relation to payments made to banks for discounting bills, collecting receiving payments through the cheque deposits, drafts, letter of credit etc., as per Board's Circular No.681 dated 08.03.1994. Ld. CIT(A) however, did not agree and treated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsuance of a contract and apply provisions of Sec.194C in place of Sec.194H and recalculate the demand accordingly." 4. Ld. Counsel referring to the agreement between assessee and HDFC submitted that they have only entered into an alliance for providing facility to customers by way of e-seva HDFC Bank Card which offered benefits for both e-seva service and credit card service, in addition other value added benefits and facilities as detailed in Annexures 1 and 2 to the agreement. He further referred to the obligation of each party and submitted that there is no consideration payable by either party. Therefore, there is no work contract between the two parties. In fact, it is not even a contract for any consideration but only an alliance to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tling agency An issuing bank issues credit card to a customer. An acquiring bank provides swiping machine to retail merchant. Bill settling agency which is Visa/Master Card facilitates transfer of bill amount. When a retail merchant swipes a credit card for receiving payment from customer then bill details and amount are forwarded to the acquiring bank which makes payment of the bill amount to the retail merchant and withholds its discount in nature of commission for providing services to the retail merchant. The acquiring bank then through Bill Settling Agency recovers the bill amount from the issuing bank. Thus the acquiring bank facilitates recovery of bill amount on behalf of retail merchant for which it charges discount in nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if any principal-agent relationship is existing that is between the Bank and the retail merchant but not between Bank and e-seva. In our opinion, the A.O. has wrongly invoked the provisions of section 194H against the assessee who is nowhere connected with the commission paid by HDFC to the retail merchant. Moreover, the Ld. CIT(A) has further erred in confirming the amount under section 194C. There is no contract more so, any work contract between HDFC and assessee. As seen from the terms of agreement, no services are rendered by e-seva to HDFC or vice-versa. Both of them have entered into an alliance for promoting the 'e-seva HDFC Credit Card' for the use of customers not only for remitting e-seva amounts but also for utilizing it as a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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