CA Navdeep Gupta
Airport Retail P. Ltd. Vs DCIT (ITAT Mumbai)
Hon’ble ITAT Mumbai in recent case of Airport Retail P. Ltd. vs. DCIT ITA No. 4816/Mum/2015 date of decision 09.01.2019 has decided that TDS u/s 194H is not application on bank charges paid for credit card payments and conversion charges of foreign exchange into cash. Hon’ble tribunal has examined the nature of transaction has concluded that there was no principal – agent relationship between assesse and bank and thus liability of deduct TDS u/s 194H is not attracted.
FULL TEXT OF THE ITAT JUDGMENT
This appeal, filed by assessee, being ITA No. 4816/Mum/2015, is directed against appellate order dated 30.03.2015 passed by learned Commissioner of Income Tax (Appeals)-55, Mumbai (hereinafter called “the CIT(A)”), for assessment year 2010-11, the appellate proceedings had arisen before learned CIT(A) from the assessment order dated 04.03.2014 passed by learned Assessing Officer (hereinafter called “the AO”) u/s 143(3) r.w.s. 144C(3)(a) of the Income-tax Act, 1961 (hereinafter called “the Act”) for AY 2010-11, which assessment order was passed by the AO in pursuant to the order dated 15.01.2014 passed by learned Transfer Pricing Officer(hereinafter called the “the TPO”) u/s 92CA(3) of the 1961 Act.
2. The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the tribunal”) read as under:-
“1. On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) – 55 [‘Ld. CIT(A)’] erred in confirming the adjustment of Rs 5,87,35,794/- made by the Learned Deputy. Commissioner of Income-Tax Circle -8(1), (‘Ld. AO’) towards the international transaction of import of finished goods for resale.
The Appellant prays that the aforesaid adjustment be deleted.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in making a disallowance of Rs. 1,05,53,740/- by applying the provisions of section 4o(a)(ia) of the Income Tax Act , 1961 (‘the Act’) being charges paid for processing of credit card transactions on the alleged ground that the Appellant was liable to deduct tax at source on such amount as per provision of section 194 H of the Act.
3. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in making a disallowance of Rs 95,75,838/- applying the provision of section 40(a)(ia) of the Act being charges paid for collection and deposit of foreign exchange by authorised money collector/ exchanger into the Appellant’s EEFC account on the alleged ground that the Appellant was liable to deduct tax at source on such amount as per the provision section 194 H of the Act.
4. On the facts and in the circumstances of the case and in law, the Ld AO erred in initiating penalty proceedings under Section 274 read with Section 271(1)(c) of the Act.
5. The Appellant craves leave to add, to delete or alter the above grounds of appeal.”
6. The brief facts of the case are that the assessee company is in the business of retail trade and operation of duty free shops at airports in India. The assessee had entered into an international transactions within the meaning of Section 92B of the 1961 Act with its Associated Enterprises(AE) as defined u/s. 92A of the 1961 Act, the matter was referred by the AO u/s. 92CA to Transfer Pricing Officer to compute Arms Length Price of international transactions entered into by the assessee with its AE by selecting most appropriate method(MAM) as prescribed u/s. 92C of the 1961 Act to compute the income from international transaction having regard to Arms Length Price(ALP) as defined u/s. 92 of the 1961 Act.
7. The assessee has reported following international transactions in Form no. 3CEB for AY 2010-11, as under:-
