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TMI Blog2017 (10) TMI 1564X X X X Extracts X X X X X X X X Extracts X X X X ..... h service does not amount to commission within the meaning of section 194H. Thus the impugned disallowance made by the AO by invoking section 40(a)(ia) is unsustainable. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd in ITA.No. 905/Hyd/2011 dated 10.04.2012 and the decision of the Bombay Bench in the case of ITO v. M/s. Jet Airways (India) Ltd [36 Taxmann.com 379], it was pleaded before the Assessing Officer that the commission paid to credit card companies cannot be considered as falling within the purview of section 194H as it was a payment by the company but it is only bank charges retained by the credit card companies. However, not convinced with the submission of the assessee, Assessing Officer held that the provisions of section 194H is clearly attracted to the transactions between the banks and the assessee for charging commission on providing credit card services. Since, the assessee did not deduct the TDS, Assessing Officer disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 intention of the legislature is to include and treat commission or brokerage paid when a third person interacts between the seller and the buyer as an agent and thereby 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 rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. HDFC provided card swiping machines to the assessee. The assessee paid commission to HDFC on payments received from customers who had made purchases through credit cards. The details of the bill amount, etc., were thereupon forwarded to HDFC, which then made payment to the assessee after withholding or deducting the fee payable to HDFC. Thereafter, Revenue HDFC recovered the bill amount from the issuing bank of the customer. The Assessing Officer held that the amount earned by HDFC was in the nature of commission and should have been subjected to deduction of tax at source at 10 Per cent Under section 194H. As the commission had not been subjected to tax at source, ₹.44,65,654/- should be disallowed under section 40a(ia) as this am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ping machines. HDFC or its employees were not present at the spot and were not associated with buying or selling of goods as such. Upon swiping the card, HDFC made payment of the bill amount to the assessee. Thus, the assessee received the sale consideration. In turn, HDFC had to collect the amount from the bankers of the credit card holder. HDFC had taken the risk and also remained out of pocket for some time as there would be a time gap between the date of payment and recovery of the amount paid. Therefore, the amount retained by the HDFC was a fee charged for having rendered the banking services and could not be treated as a commission or brokerage paid in course of use any services by a person acting on behalf of another for buying or s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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