PVR Inox Limited Vs DCIT (ITAT Mumbai)
Summary: The appeal was filed by PVR INOX Limited against the order dated 28.01.2026 passed by the CIT(A), arising from proceedings under sections 201(1) and 201(1A) of the Income-tax Act, 1961 for AY 2013-14. The proceedings originally concerned Inox Leisure Limited, which subsequently amalgamated with PVR Limited, now PVR INOX Limited, with effect from 01.01.2023 pursuant to an NCLT-approved scheme. Ground No. 1 concerning alleged violation of natural justice and denial of a personal hearing through video conference was not pressed and was dismissed.
The substantive dispute concerned whether the convenience fee collected from customers and retained by Big Tree Entertainment Private Limited, which operated the online ticketing platform under the brand “BookMyShow”, attracted tax deduction at source under section 194H. Under the agreement dated 30.03.2011, customers used BookMyShow’s digital platform to select the city, cinema, show and seat and make payment. BookMyShow generated a voucher against which the customer obtained the cinema ticket from the assessee. The customer payment comprised the cinema ticket’s face value and a separate convenience fee charged by BookMyShow for the online booking facility. BookMyShow was required to remit the entire ticket value and ₹7.25 per ticket out of the convenience fee to the assessee, while retaining the balance. It also guaranteed payment to the assessee for booked tickets irrespective of recovery from customers.
During the relevant previous year, BookMyShow retained convenience fees aggregating to ₹5,08,58,545. The Assessing Officer treated BookMyShow as selling cinema tickets on behalf of the assessee and regarded the retained amount as commission, amounting to constructive payment of commission. Although Form No. 26A had been furnished and the assessee was therefore not treated as an assessee in default under section 201(1) for the principal tax, the Assessing Officer levied interest of ₹9,15,454 under section 201(1A). The CIT(A) affirmed the conclusion that the arrangement was in the nature of principal-agent relationship and that the retained amount represented constructive payment of commission.
Before the Tribunal, the assessee contended that the statutory foundation for section 194H was absent because BookMyShow did not act on behalf of the assessee. The convenience fee was charged by BookMyShow from its own customers for the digital facility, while the assessee received the ticket face value and its predetermined ₹7.25 share. The assessee relied upon several judicial precedents, including Jagran Prakashan Ltd. v. DCIT (TDS), CIT v. Super Religare Laboratories Ltd., CIT v. Piramal Healthcare Ltd., Optimal Media Solutions Ltd., Dempo Industries (P.) Ltd., Tata Sky Ltd., Nikhil Sharma v. ITO and Shanthala Enterprises v. ITO (TDS), besides CBDT Circular No. 5 of 2016.
The Tribunal held that an indispensable ingredient of the inclusive definition of “commission or brokerage” under section 194H is that the recipient must be acting “on behalf of” another person. The representative character of the relationship, rather than merely the fact that one party facilitates the business of another, provides the juridical foundation for treating a payment as commission. The agreement must be considered as a whole, together with the actual manner in which the parties discharged their reciprocal obligations.
On examining the agreement, the Tribunal found that BookMyShow’s customers were users of its digital platform; customer data generated through the facility belonged to BookMyShow subject to specified restrictions; marketing expenditure could be shared only on mutual agreement; and BookMyShow could undertake promotions independently at its own commercial risk. These provisions indicated an independent digital platform and commercial operation rather than a mere marketing or ticketing agent acting under the assessee’s directions.
The Tribunal further found significance in the agreed convenience-fee mechanism. BookMyShow could charge a service or convenience fee within the agreed monetary cap, while only ₹7.25 per ticket was payable to the assessee. The assessee’s entitlement did not vary with the actual convenience fee charged. The agreed ceiling and concurrence requirement were viewed as commercial safeguards and did not establish that the entire convenience fee belonged to the assessee and was thereafter retained by BookMyShow as remuneration. BookMyShow also bore the risk of non-collection because it guaranteed payment to the assessee irrespective of customer recovery.
The Tribunal also considered provisions allocating third-party and consumer liabilities, indemnification, and separate intellectual-property rights. Their cumulative effect demonstrated that the parties retained independent commercial identities, dealt with their respective customers and stakeholders in their own capacities, and bore risks within their respective spheres. The mere collection and remittance of the cinema ticket’s face value did not establish agency in relation to the separately charged convenience fee. The ticket price and convenience fee possessed distinct commercial attributes despite being collected through a single payment interface.
The Tribunal distinguished CBDT Circular No. 619 dated 04.12.1991 and J.B. Boda & Co. (P.) Ltd. v. CBDT, holding that constructive payment is only a mode of satisfying an existing payment obligation and cannot itself create the underlying commission obligation or agency relationship. Director, Prasar Bharati v. CIT was also distinguished because the agreement in that case contained features expressly indicating commission and agency, whereas the present agreement contained provisions pointing towards an independent commercial arrangement.
The Tribunal relied on the distinction between principal-agent and principal-to-principal relationships reflected in the decisions referred to before it and in CBDT Circular No. 5 of 2016. It also found substantial similarity between the present arrangement and the arrangement considered by the Bangalore Bench in Shanthala Enterprises v. ITO (TDS), where the convenience or transaction fee collected and retained by BookMyShow was treated as consideration for its online facility rather than as commission for acting on behalf of a theatre owner.
Ultimately, the Tribunal held that the ₹5,08,58,545 collected and retained by BookMyShow did not constitute commission paid or constructively paid by the assessee within the meaning of section 194H. BookMyShow was not acting on behalf of the assessee while charging the convenience fee; it was providing an independent digital booking facility to users and receiving the convenience fee as consideration. Accordingly, the assessee was not required to deduct tax at source on the retained amount and the proceedings under sections 201(1) and 201(1A), to that extent, could not be sustained. Ground No. 2 was allowed.
Consequently, the interest demand of ₹9,15,454 under section 201(1A) was directed to be deleted. The assessee’s alternative contention based on Form No. 26A and payment of tax by BookMyShow was left academic, and the Tribunal expressly refrained from deciding the wider proposition concerning whether Form No. 26A by itself extinguishes statutory interest under section 201(1A). Ground No. 3 was allowed consequentially.
The Tribunal clarified that a separate demand of ₹30,376 relating to alleged short deduction under section 194J and non-deduction under section 194C, together with corresponding interest, was not challenged in the appeal and therefore remained undisturbed. The appeal was accordingly partly allowed.
Cases Discussed
- J.B. Boda & Co. (P.) Ltd. v. CBDT [1997] 223 ITR 271 (SC)
- Director, Prasar Bharati v. CIT [2018] 403 ITR 161 (SC)
- Jagran Prakashan Ltd. v. DCIT (TDS) [2012] 345 ITR 288 (All.)
- CIT v. Super Religare Laboratories Ltd. [2021] 133 taxmann.com 313 (Bom.)
- CIT v. Piramal Healthcare Ltd. [2015] 55 taxmann.com 534 (Bom.)
- Optimal Media Solutions Ltd. [2023] 155 taxmann.com 606 (Delhi)
- Dempo Industries (P.) Ltd. [2021] 126 taxmann.com 112 (Bom.)
- Tata Sky Ltd. [2018] 99 taxmann.com 272 (Mum.–Trib.)
- Nikhil Sharma v. ITO, ITA No. 1217/JP/2024
- Shanthala Enterprises v. ITO (TDS), ITA No. 1042/Bang/2025, order dated 25.07.2025
- Srinivas Rudrappa v. ITO, ITA Nos. 702 and 703/Bang/2022, dated 02.12.2022
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The aforesaid appeal has been filed by the assessee against the order dated 28.01.2026 passed by the learned Commissioner of Income-tax (Appeals), Addl./JCIT(A)-1, Hyderabad, under section 250 of the Income-tax Act, 1961, arising out of the order dated 31.03.2021 passed by the Assistant Commissioner of Income-tax, OSD–TDS Circle 1(2), Mumbai, under sections 201(1) and 201(1A) of the Act for the assessment year 2013-14.
2. At the outset, it is relevant to note that the proceedings were originally initiated in the case of Inox Leisure Limited. Subsequently, Inox Leisure Limited stood amalgamated with PVR Limited, now known as PVR INOX Limited, with effect from 01.01.2023, pursuant to a scheme of amalgamation approved by the Hon’ble National Company Law Tribunal, New Delhi Bench, vide order dated 12.01.2023. Consequent to the amalgamation, all the assets, liabilities and operations of Inox Leisure Limited stood vested in PVR INOX Limited. The present appeal has, accordingly, been prosecuted by PVR INOX Limited as the successor entity. In ground no. 1, the assessee has challenged the impugned order on the ground of violation of principles of natural justice and denial of an opportunity of personal hearing through video conference. However, at the time of hearing, the learned counsel submitted that the assessee does not wish to press the said ground. Accordingly, ground no. 1 is dismissed as not pressed.
3. The substantive dispute raised in ground no. 2 relates to the applicability of section 194H to the amount of convenience fee collected from customers and retained by Big Tree Entertainment Private Limited, which operates the online ticketing platform under the brand name “BookMyShow”. The essential issue which falls for our consideration is whether, having regard to the terms of the agreement and the actual manner in which the transactions were undertaken, BookMyShow acted as an agent of the assessee in collecting the convenience fee and whether the amount retained by it could be regarded as commission paid or constructively paid by the assessee, so as to attract the obligation to deduct tax at source under section 194H.
4. Brief facts are that the assessee is engaged in the business of exhibition of cinematographic films and in operating and managing multiplexes and cinema theatres. An agreement dated 30.03.2011 was entered into between Inox Leisure Limited and Big Tree Entertainment Private Limited for facilitating online booking of cinema tickets through the digital platform maintained and operated by BookMyShow. A customer intending to book a cinema ticket could access the BookMyShow platform, select the city, cinema, show and seat, and make payment through the payment gateways available on that platform. Upon confirmation of the transaction, a voucher was generated by BookMyShow, on the basis of which the customer could obtain the cinema ticket from the assessee. The amount collected by BookMyShow comprised the face value of the cinema ticket fixed by the assessee and a separate convenience fee charged by BookMyShow for providing the online booking facility. In terms of the commercial arrangement, BookMyShow was required to remit to the assessee the entire face value of the ticket and a fixed amount of ₹7.25 per ticket out of the convenience fee. The balance convenience fee was retained by BookMyShow. The obligation to remit the stipulated amounts was not contingent upon actual recovery from the customer; BookMyShow guaranteed payment to the assessee in respect of the tickets booked through its platform irrespective of whether it received the corresponding payment from the customer. The assessee raised invoices for its fixed share of the convenience fee and BookMyShow deducted tax at source under section 194C while making such remittance to the assessee.
5. During the relevant previous year, BookMyShow retained convenience fee aggregating to ₹5,08,58,545. The Assessing Officer was of the view that BookMyShow was selling cinema tickets on behalf of the assessee and that the amount retained by it represented commission for services rendered to the assessee. According to him, retention of the amount by BookMyShow constituted constructive payment of commission by the assessee. For reaching this conclusion, he principally relied upon CBDT Circular No. 619 dated 04.12.1991, the decision of the Hon’ble Supreme Court in J.B. Boda & Co. (P.) Ltd. v. CBDT [1997] 223 ITR 271 (SC), and certain clauses of the agreement which, according to him, indicated that the assessee exercised control over BookMyShow, particularly in relation to the amount of convenience fee chargeable from the customers.
6. Since the assessee had furnished a certificate of an accountant in Form No. 26A in accordance with the first proviso to section 201(1), certifying that BookMyShow had filed its return of income, had taken the amount of ₹5,08,58,545 into account while computing its income and had paid the tax due on its returned income, the Assessing Officer did not ultimately treat the assessee as an assessee in default under section 201(1) in respect of the principal tax. He, however, held that interest under section 201(1A) remained leviable. Since month-wise details of the convenience fee retained by BookMyShow were stated not to have been furnished, the Assessing Officer calculated interest on the entire amount of tax allegedly deductible from April 2012 up to 28.09.2013, being the date on which BookMyShow filed its return of income, resulting in a demand of ₹9,15,454 under section 201(1A). The learned CIT(A) affirmed the conclusion of the Assessing Officer by holding, inter alia, that the arrangement was in the nature of a principal-agent relationship; that the convenience fee was subject to the control of the assessee and could not be altered without its approval; and that the amount retained by BookMyShow represented constructive payment of commission liable for deduction of tax under section 194H.
7. Before us, the learned counsel submitted that the statutory foundation for invoking section 194H is absent because BookMyShow did not act on behalf of the assessee while providing the online booking facility to users of its platform. The convenience fee was charged by BookMyShow from its customers for the digital facility provided to them and the assessee neither paid nor credited any amount to BookMyShow. On the contrary, the assessee received from BookMyShow the entire face value of the ticket and its predetermined share of ₹7.25 per ticket out of the convenience fee. The mere fixation of an outer limit for the convenience fee, or the requirement of mutual concurrence for changing that limit, it was submitted, did not convert an independent commercial arrangement into a relationship of agency. It was further pointed out that the agreement, read as a whole, demonstrated that both parties operated in their respective independent spheres, bore their own commercial risks and were separately responsible for their obligations towards customers and third parties.
8. The learned counsel relied upon the decisions of the Hon’ble Allahabad High Court in Jagran Prakashan Ltd. v. DCIT (TDS) [2012] 345 ITR 288 (All.); the Hon’ble Bombay High Court in CIT v. Super Religare Laboratories Ltd. [2021] 133 taxmann.com 313 (Bom.), CIT v. Piramal Healthcare Ltd. [2015] 55 taxmann.com 534 (Bom.) and CIT v. Dempo Industries (P.) Ltd. [2021] 126 taxmann.com 112 (Bom.); the Hon’ble Delhi High Court in Optimal Media Solutions Ltd. [2023] 155 taxmann.com 606 (Delhi); and the decisions of the Tribunal in Tata Sky Ltd. [2018] 99 taxmann.com 272 (Mum.–Trib.) and Nikhil Sharma v. ITO, ITA No. 1217/JP/2024. Particular reliance was placed upon the decision of the Bangalore Bench of the Tribunal in Shanthala Enterprises v. ITO (TDS), ITA No. 1042/Bang/2025, order dated 25.07.2025, wherein an arrangement involving convenience fee collected and retained by BookMyShow was examined and section 194H was held to be inapplicable. Reliance was also placed upon CBDT Circular No. 5 of 2016 dated 29.02.2016, issued after considering the decisions in Jagran Prakashan Ltd. and Living Media Ltd., clarifying that where the relationship between the parties is on a principal-to-principal basis, the amount retained by an intermediary does not become liable for deduction under section 194H merely because it is described as a discount, margin or retention. The learned DR, on the other hand, strongly relied upon the orders of the authorities below and submitted that BookMyShow was
9. We have heard the rival submissions, perused the orders of the authorities below and examined the material placed on record. Section 194H fastens an obligation upon a person responsible for paying to a resident any income by way of commission or brokerage. Explanation (i) defines “commission or brokerage” inclusively to encompass any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered, not being professional services, or for services in the course of buying or selling of goods or in relation to a transaction concerning any asset, valuable article or thing, other than securities. Thus, notwithstanding the width of the inclusive definition, an indispensable statutory ingredient is that the person receiving the payment must be acting “on behalf of” another. It is this representative character of the relationship, and not merely the fact that the activity of one contracting party facilitates or augments the business of the other, which constitutes the juridical foundation for treating the payment as commission. Unless the recipient acts in a representative capacity for the alleged principal, the transaction cannot be brought within section 194H merely because the recipient earns a margin or retains a part of the gross collections.
10. Whether one contracting party acts on behalf of another cannot be determined by isolating a solitary expression or clause from the agreement. The agreement must be read as a composite commercial instrument, together with the manner in which the parties have actually discharged their reciprocal obligations. Ordinarily, an agent acts in a representative capacity, is subject to the authority of the principal in matters entrusted to him and, within the scope of such authority, can affect the legal relationship between the principal and third parties. Conversely, where each party performs distinct commercial functions, deals with customers in its own capacity, bears its own risks and liabilities, and receives consideration for an independent facility or service, the arrangement does not acquire the character of agency merely because the activities of one party are commercially connected with, or facilitate, the business of the other. The substance of the relationship must, therefore, be gathered from the entirety of the agreement and not from the nomenclature employed in a particular clause.
11. Examined on these principles, the agreement contains several stipulations which militate against the inference drawn by the authorities below. Clause 1(a) identifies persons using the digital platform as customers of BookMyShow. Clause 6 provides that the customer data collected by BookMyShow through the facility would remain its sole and exclusive property, subject to the specified restriction concerning disclosure of data relating to the ticket sales of the assessee. Clause 3.4 provides that marketing expenditure would be shared only where the promotional activity was mutually agreed upon; if the assessee declined to participate and BookMyShow nevertheless proceeded with the promotion, the entire expenditure was to be borne by BookMyShow. These provisions do not indicate that BookMyShow was merely executing the directions of the assessee as its marketing or ticketing agent. On the contrary, they recognise that BookMyShow operated an independent digital platform, dealt with users of that platform as its customers, owned the customer data generated through the platform and could undertake promotional activities on its own account and at its own commercial risk.
12. Clause 5.1 permits BookMyShow to charge its customers a service or convenience fee towards the online sale of tickets, subject to the agreed monetary cap. Out of that fee, only a fixed amount of ₹7.25 per ticket was payable to the assessee. The entitlement of the assessee did not vary with the actual convenience fee charged by BookMyShow. While BookMyShow could determine the fee within the agreed commercial parameters, its obligation towards the assessee remained confined to a predetermined amount per ticket. The prescription of an upper ceiling, or the requirement of concurrence before changing that ceiling, was evidently a commercial safeguard having regard to the possible impact of an excessive convenience fee upon ticket sales, customer experience and the goodwill of both contracting parties. Such a contractual safeguard cannot, by itself, lead to the conclusion that the entire convenience fee first belonged to the assessee and was thereafter allowed to be retained by BookMyShow as remuneration for acting on its behalf.
13. Clause 5.3 is equally significant. BookMyShow guaranteed payment of the agreed amounts to the assessee in respect of all tickets booked through its platform irrespective of whether it actually recovered the corresponding payment from the customer and was liable to pay interest in the event of delay in remittance. Thus, the risk of non-collection from the customer was borne by BookMyShow and not by the assessee. Clause 8.3 further stipulates that the amounts payable to the assessee were to be determined on the basis of confirmed transactions recorded on the interface or system of BookMyShow and were not dependent upon production of proof of physical delivery of the cinema ticket by the assessee. This clause merely prescribes the commercial basis for reconciliation and settlement between the parties. It neither authorises BookMyShow to bind the assessee beyond the confirmed ticket transaction nor converts the independently provided digital booking facility into an agency service rendered to the assessee.
14. Clause 11 allocates liability for third-party and consumer claims according to the party primarily responsible and, in particular, makes BookMyShow independently responsible for disputes, litigation, expenses, consumer claims and liabilities arising from the operation of its electronic platforms or from non-compliance attributable to it. The assessee and its directors, employees and authorised representatives were to remain indemnified against risks and liabilities arising from the business activities of BookMyShow. Clause 12 similarly protects the separate intellectual-property rights of both parties and restricts either party from commercially exploiting the intellectual property of the other except for the limited purposes contemplated under the agreement. The cumulative effect of these provisions is that the parties retained their independent commercial identity, dealt with their respective customers and stakeholders in their own capacity, and bore the risks and liabilities arising within their respective spheres of operation. These are not merely incidental or formal stipulations; they constitute the substantive architecture of the commercial arrangement and cannot be disregarded while determining whether BookMyShow acted in a representative capacity for the assessee.
15. The circumstance that BookMyShow collected the face value of the ticket and remitted it to the assessee does not, in isolation, establish an agency extending to the convenience fee. The face value of the cinema ticket undoubtedly belonged to the assessee and was collected for onward remittance. The convenience fee, however, was separately charged for access to and use of the online booking platform. BookMyShow provided the technological interface, online access, payment-processing facility and allied customer-facing services. Its obligation to remit a fixed amount of ₹7.25 per ticket to the assessee remained unaffected by the precise amount of convenience fee charged or collected by it within the agreed parameters. The ticket price and the convenience fee thus possessed distinct commercial attributes and could not be amalgamated merely because both components were collected through a single payment interface. The manner of collection cannot obliterate the separate source and character of the two receipts.
16. The reliance placed by the Assessing Officer upon CBDT Circular No. 619 dated 04.12.1991 does not carry the case of the Revenue any further. The said Circular explains that where an agency relationship otherwise exists, retention of commission by a consignee or agent may amount to constructive payment by the consignor or principal. It does not dispense with the anterior and essential requirement of establishing that the amount retained is commission and that the recipient acts as an agent of the person alleged to be the principal. Constructive payment is only a mode of satisfying an existing payment obligation; it cannot create the underlying obligation or an agency relationship where none is otherwise demonstrated. Likewise, the decision of the Hon’ble Supreme Court in J.B. Boda & Co. (P.) Ltd. (supra) recognises that settlement through netting may constitute payment and that insistence upon a circuitous two-way remittance may amount to an empty formality. That principle concerns the mode of settlement of an acknowledged payment and does not lay down that every amount retained out of gross collections constitutes commission, irrespective of the legal and commercial relationship between the parties.
17. The decision of the Hon’ble Supreme Court in Director, Prasar Bharati v. CIT [2018] 403 ITR 161 (SC) also does not support an indiscriminate application of section 194H. In that case, the agreement itself repeatedly characterised the amount as commission; the advertising agencies were expressly acting for securing advertisements for Doordarshan; the tariff was prescribed by Doordarshan; the parties understood the arrangement as one of agency; and there was a specific contractual stipulation concerning deduction of tax at source from the commission. The Hon’ble Supreme Court recognised that the true nature of the relationship must be determined from the terms of the agreement and the facts of each case. The present agreement does not contain comparable stipulations. On the contrary, the provisions concerning customer ownership, customer data, pricing within an agreed range, fixed remittance, credit risk, promotional expenditure, consumer and third-party liabilities and separate intellectual-property rights point towards an independent commercial arrangement rather than one party acting as a representative of the other.
18. The Hon’ble Bombay High Court in CIT v. Super Religare Laboratories Ltd. (supra) held that where the assessee did not pay any amount to the collection centres but only received from them the charges collected from patients after the collection centres had retained their margin, section 194H could not be invoked in the absence of an act of payment or credit by the assessee. A similar principle was recognised in CIT v. Piramal Healthcare Ltd. (supra). The decisions in Jagran Prakashan Ltd., Optimal Media Solutions Ltd., Dempo Industries (P.) Ltd. and Tata Sky Ltd. also reiterate that the decisive test is not the retention of a margin in isolation, but whether the recipient acts on behalf of the alleged principal and earns the amount for services rendered in such representative capacity. CBDT Circular No. 5 of 2016 proceeds on the same underlying distinction between a principal-agent relationship and a transaction undertaken on a principal-to-principal basis.
19. More directly, the Bangalore Bench of the Tribunal in Shanthala Enterprises v. ITO (TDS), ITA No. 1042/Bang/2025, order dated 25.07.2025, examined an arrangement between a cinema theatre operator and BookMyShow involving the collection and retention of transaction or convenience charges. After considering its earlier decision in Srinivas Rudrappa v. ITO, ITA Nos. 702 and 703/Bang/2022, dated 02.12.2022, the Tribunal held that the transaction, service or convenience fee collected and retained by BookMyShow from the end-user was consideration for the online facility provided by it and did not lead to an inference that BookMyShow acted on behalf of the theatre owner. The Tribunal further noticed that invoices were raised periodically and that cancellation or refund adjustments were resolved before the amount became payable to the theatre operator. The material features considered therein bear substantial similarity to the commercial arrangement before us and reinforce the conclusion which otherwise emerges from our independent examination of the present agreement.
20. In our considered view, the authorities below have placed disproportionate emphasis upon the expression “appoints” occurring in clause 2 and upon the agreed ceiling for the convenience fee, while overlooking the remaining provisions which define the substantive rights, risks and obligations of the parties. An expression used to introduce or appoint a service provider cannot, by itself, determine the legal character of the relationship. What is relevant is whether the service provider acts in a representative capacity on behalf of the assessee and whether the amount retained by it is, in substance, remuneration paid or payable by the assessee for such representative services. The agreement before us, read in its entirety, does not establish either of these requirements. The convenience fee was collected by BookMyShow from users of its digital platform for the facility provided through that platform; the assessee neither credited nor paid that fee to BookMyShow; the amount payable by BookMyShow to the assessee was independently fixed; and BookMyShow bore the commercial risks and liabilities associated with its digital operations. The existence of commercial coordination between the parties was indispensable for the functioning of the online booking arrangement, but commercial coordination is not synonymous with legal agency.
21. We, therefore, hold that the amount of ₹5,08,58,545 collected and retained by BookMyShow did not constitute commission paid or constructively paid by the assessee within the meaning of section 194H. BookMyShow was not acting on behalf of the assessee while charging the convenience fee from users of its online platform; rather, it was rendering an independent digital booking facility to such users and receiving the convenience fee in consideration thereof. Consequently, the assessee was under no obligation to deduct tax at source from the amount so retained and the proceedings under sections 201(1) and 201(1A), to that extent, cannot be sustained. The finding of the learned CIT(A) affirming the applicability of section 194H is, accordingly, reversed and ground no. 2 is allowed.
22. Ground no. 3 challenges the levy of interest of ₹9,15,454 under section 201(1A). Once it has been held that the assessee was not required to deduct tax under section 194H from the convenience fee retained by BookMyShow, the very foundation for charging interest under section 201(1A) ceases to subsist. The interest levied under section 201(1A) is consequential upon a legally sustainable obligation to deduct tax at source; it cannot survive where the primary obligation itself is found to be absent. The levy of interest of ₹9,15,454 is, therefore, directed to be deleted.
23. The assessee has also raised an alternative contention that no interest could be charged because BookMyShow had included the amount in its return of income and discharged the applicable tax liability, as evidenced by Form No. 26A, and there was no loss of revenue. In view of our conclusion that section 194H itself is not attracted, adjudication of this alternative contention is rendered academic. We, therefore, refrain from expressing any concluded opinion on the wider proposition as to whether furnishing Form No. 26A, by itself and irrespective of the express provisions of section 201(1A), extinguishes the liability to statutory interest in every case. Ground no. 3 is allowed as a consequence of our decision on ground no. 2.
24. Before parting, we may clarify that the order under sections 201(1) and 201(1A) also refers to a separate demand aggregating to ₹30,376 arising from an alleged short deduction of tax under section 194J and non-deduction under section 194C, together with the corresponding interest. No specific ground or submission challenging that distinct demand has been raised before us. Our adjudication is, therefore, confined to the convenience fee retained by BookMyShow and the corresponding interest of ₹9,15,454. The other demand, not being the subject matter of the grounds raised in this appeal, remains undisturbed.
25. In the result, the appeal of the assessee is partly allowed.
Order pronounced on 31st August, 2026.
