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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 ..... ant acts as a mediator for remitting amount to e-seva by utilizing the HDFC Bank. As far as HDFC Bank is concerned, it gives discount/commission to the retail merchant for utilizing the facility of the Bank. Thus, if any principal-agent relationship is existing that is between the Bank and the retail merchant but not between Bank and e-seva. Thus 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M. This appeal by assessee is directed against the order of the Ld. CIT(A), Vijayawada dated 27.11.2013 on the issue of levy of demand and interest under section 201(1) and 201(1A) of the Income Tax Act, 1961. Assessee has raised the following grounds in the appeal : 1. The learned CIT(A), erred in apply the provisions of section 194C without considering the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principal relationship. It is further contended that assessee is not providing any services to HDFC and HDFC only credits the amount payable to e-seva while paying commission to its Merchant establishments/customers, therefore, question of receiving commission or allowing commission by e-seva does not arise. The Ld. CIT(A) noticed that provision of section 194H are not applicable and so asked the 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/intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yments made to HDFC Bank are not tor discounting bills, collecting I receiving payments through cheques/drafts opening and negotiating letters of credit and transactions In negotiable instruments. The AO has erroneously treated this payment as commission under the provisions of Sec.194H of the Act. In the light of the above position. the A.O. is directed to treat this payment as payment made in pursuance 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O. order in this regard is factually correct but interpretations raised by him are wrong. As far as nature of transaction is concerned, A.O. has recorded the following : If the nature of transaction is analyzed it is seen that there are five players in a credit card transactions namely: 1. Credit card holder (Customer) 2.Credit card issuing bank 3.Credit card acquiring bank 4.Retail merchant 5.Bill settling 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. Thus, in the transaction between credit card holder and the Bank, e-seva service has no role to play. As far as credit card holder is concerned, the amount payable to eseva is charged to his account and retail merchant acts as a mediator for remitting amount to e-seva by utilizing the HDFC Bank. As far as HDFC Bank is concerned, it gives discount/commission to the retail merchant for utilizing the facility of the Bank. Thus, 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. Moreove ..... X X X X Extracts X X X X X X X X Extracts X X X X
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