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TMI Blog2015 (7) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... it card facilities would be in the nature of bank charge and not in the nature of commission within the meaning of sec.194H of the Act. The same cannot also be said to be in the nature of professional services as services rendered by Banks is neither a service specified in the section nor notified. The CBDT by notification u/s.197A of the Act vide notification NO.56/2012 dated 31.12.2012 specified that credit/debit card commission for transaction between the merchant establishment and acquirer bank need not be subject to TDS. The revenue has argued before us that before the said notification such charges were subject to TDS. We are of the view that the notification is only recognition of the position as it always prevailed and as interprete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instrument to the Assessee. Customers of the Assessee when they make payment to the Assessee for availing services or effecting purchases from the Assessee when they pay by credit card, the card swiping machine is used. HDFC Bank collects money from paying bank of the customers who use the credit card and gives credit to the Account of the assessee after deducting service charges (discount charge) thereon. 3. According to the AO the amount retained by HDFC Bank was nothing but a commission paid by the Assessee to HDFC Bank and therefore the Assessee ought to have deducted tax at source on such amount retained by HDFC Bank. The AO referred to the agreement between the Assessee and HDFC Bank in which it has been provided that in considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of bank charges and hence the provisions of Sec.194-H of the Act were not attracted. The order u/s.201(1) 201(1A) of the Act was cancelled by the CIT(A). Aggrieved by the order of the CIT(A) the revenue has filed the present appeals before the Tribunal. 7. Before us the learned DR relied on the order of the AO and reiterated the stand of the revenue as reflected in the grounds of appeal filed before the Tribunal. The learned counsel for the Assessee relied on the order of the CIT(A). 8. We have given a careful consideration to the rival submissions. The provisions of Sec.194-H of the Act, in so far as it relevant for the present appeal, read as follows: Section 194H: COMMISSION, BROKERAGE, ETC. (1) Any person, not being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing; (ii) Professional services means services rendered by a person in the course of carrying on a legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or such other profession as is notified by the Board for the purposes of section 44AA; 9. The question whether the payments on account of credit card charges should be treated as commission within the meaning of sec.194H of the Act came up for consideration before the Hon ble ITAT, Hyderabad, in the case of DCIT Vs. Van Magna Retain (P) Ltd. (supra) and it was held as follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the said section arises only when a person acts behalf of another person. In the case of commission retained by the credit card companies however, it cannot be said that the bank acts on behalf of the merchant establishment or that even the merchant establishment conducts the transaction for the bank. The sale made on the basis of a credit card is clearly a transaction of the merchants establishment only and the credit card company only facilitates the electronic payment, for a certain charge. The commission retained by the credit card company is therefore in the nature of normal bank charges and not in the nature of commission/brokerage for acting on behalf of the merchant establishment. Accordingly, concluding that there was no requir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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