For this situation, the Revenue had filed an Income Tax Appeal against a request gone by the Income Tax Appellate Tribunal, (ITAT) in deleting the addition made by the Assessing Officer (AO) u/s 40(a)(ia) of the Income Tax Act, 1961 (the Act) being non derivation of TDS because of installment entryway charges. The Assessee was occupied with the matter of pitching its movement items to the clients through a prestigious site to be specific makemytrip.com. A client can sign on to the Assessee’s site, look over its different travel items showed there. When the client goes into an exchange, installment therefor is made by utilizing the office of an Internet Payment Gateway, which naturally opens. The installment entryway, which is given for this situation by four banks viz., HDFC, ICICI, Citibank and American Express, electronically exchange the client information to the Mastercard backer through VISA/Master Card, for the endorsement of the guarantor and subsequently the sum is charged by the backer to the cardholder. In a split second the installment door site affirms endorsement to the vendor/online business site and the exchange gets closed.
The net cost after the conclusion of office charges by the installment passage is consequently credited to the financial balance of the trader. The sum held by the installment door office supplier incorporates the charges for the office of verified installment passage and the charges of VISA/Mastercard. The AO denied the payment made by the Assessee to the above Banks towards charges for giving the installment entryway office to the AY being referred to under Section 40(a)(ia) of the Act since as indicated by the AO the said installment was in the idea of commission paid to the Banks from which TDS under Section 194 H of the Act should had been deducted. The Commissioner of Income Tax (Appeals) decreased the forbiddance as the assessee, before the AO, had delivered the ‘Nil’ retaining charge declaration under Section 195 (3) of the Act as for certain installments. The ITAT, in the decried order permitted the Assessee’s appeal on this issue and held that the payment entryway charges were in nature of fees for banking administrations and not commission or brokerage and accordingly no TDS was deductible from the said charges under Section 194 H of the Act. The Hon’ble High Court noticed that the ITAT had depended on its judgment wherein it was held that in a comparative sort of exchange, the sum held by the bank is an expense charged for having rendered banking administrations and can’t be treated as a commission or financier paid in course of utilization of any administrations by an individual following up in the interest of another for purchasing or selling of merchandise.
The Hon’ble High Court opined that the ITAT had properly, held that the administrations given by the installment portal is with the end goal that the charges gathered by it must be fundamentally treated as expenses and not as a commission. The installment in actuality was made by one foremost to another and it is just being encouraged by the installment door by giving an administration. The Hon’ble High Court additionally noticed that the Central Government, by notice dated 31st December, 2012 had advised that no TDS will be made on indicated installments to the banks recorded in the Second Schedule to the Reserve Bank of India Act which bury alia exempted charge card or plastic commission for exchange between the trader foundation and acquirer bank. The Hon’ble High Court saw that the said notice however alluded to in the request of the CIT (A) yet not talked about. The assessee was directly in fighting that by righteousness of the above notice no TDS is deductible from installments made towards charge card or check card commission for exchange between the dealer foundation and the acquirer bank. This connected to the charges paid to the Banks for giving installment passage for the situation available. The Hon’ble High Court held that the ITAT had not submitted any blunder in erasing the addition under segment 40(a)(ia) of the Act by virtue of non-finding of TDS from the installment passage charges paid to the Banks