DCIT 6(2)(1), MUMBAI v. CLEAR TRIP TRAVEL SERVICES P.LTD, MUMBAI

ITA 85/MUM/2016 | 2011-2012
Pronouncement Date: 30-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 8519914 RSA 2016
Assessee PAN AACCC6016B
Bench Mumbai
Appeal Number ITA 85/MUM/2016
Duration Of Justice 1 year(s) 10 month(s) 23 day(s)
Appellant DCIT 6(2)(1), MUMBAI
Respondent CLEAR TRIP TRAVEL SERVICES P.LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Department
Tags No record found
Order Result Partly Allowed
Bench Allotted Not Allotted
Tribunal Order Date 30-11-2017
Assessment Year 2011-2012
Appeal Filed On 07-01-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI . BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI G. MANJUNATHA ACCOUNTANT MEMBER ITA NO.85/MUM/2016 ASSESSMENT YEAR: 2011-12 DCIT CIRCLE-6(2)(1) R. NO.563 AAYAKAR BHAVAN M.K. ROAD MUMBAI-400020 / VS. M/S CLEAR TRIP TRAVEL PVT. LTD. UNIT NO.1 GROUND FLOOR DTC BLDG SITARAM MILLS COMPOUND N.M. JOHI MARG LOWER PAREL MUMBAI ( / REVENUE) ( ! ' /ASSESSEE) P.A. NO.AACCC6016B / REVENUE BY SHRI H.N.SINGH CIT-DR ! ' / ASSESSEE BY SHRI NITESH JOSHI # $ % ' & / DATE OF HEARING : 30/11/2017 % ' & / DATE OF PRONOUNCEMENT 30/11/2017 ITA NO.85/MUM/2016 M/S CLEAR TRIP TRAVEL PVT. LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 09/10/2015 OF THE LD. FIRST APPELLATE AUTHORI TY MUMBAI. THE FIRST GROUND RAISED BY THE REVENUE PER TAINS TO DELETING THE DISALLOWANCE MADE U/S 40(A)(IA) R.W .S 194H OF THE INCOME TAX ACT 1961 (HEREINAFTER THE ACT) F OR NON- DEDUCTION OF TAX AT SOURCE ON THE PAYMENTS FOR CRED IT CARD SERVICES. 2. DURING HEARING AT THE OUTSET SHRI NITESH JOSH I LD. COUNSEL FOR THE ASSESSEE EXPLAINED THAT THE IM PUGNED ISSUE HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN F AVOUR OF THE ASSESSEE FOR ASSESSMENT YEAR 2010-11 AND 2011-1 2 WHICH HAS BEEN FOLLOWED BY THE FIRST APPELLATE AUTH ORITY. THIS FACTUAL ASSERTION WAS NOT CONTROVERTED BY SHRI H. N. SINGH LD. CIT-DR. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE ORDER OF THE TRIBUNAL DATED 16/05/2016 FOR ITA NO.85/MUM/2016 M/S CLEAR TRIP TRAVEL PVT. LTD. 3 ASSESSMENT YEAR 2010-11 IN ITA NO.5049/MUM/2014 FO R READY REFERENCE AND ANALYSIS:- THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 20/05/2014 OF THE LD. FIRST APPELLATE AUTHORI TY MUMBAI. 2. THE ONLY GROUND RAISED IN THE APPEAL OF THE REVENUE PERTAINS TO HOLDING THAT NO TDS WAS DEDUCTI BLE U/S 194H OF THE INCOME TAX ACT 1961 (HEREINAFTER T HE ACT) BY THE ASSESSEE ON THE AMOUNT HELD BY THE BANKS/CRE DIT CARD AGENCIES AS SERVICE CHARGES IN RESPECT OF CRED IT CARD SERVICES PROVIDED BY THEM BY FURTHER HOLDING THAT BANK/CREDIT CARD AGENCIES ARE NOT AGENCIES OF THE A SSESSEE IGNORING THE FACT THAT ENTIRE PROCESS OF FACILITATI ON OF CREDIT CARD OF SUCH BANK/AGENCIES ARE NOTHING BUT CONSTRUC TIVE AGENTS FOR THE ASSESSEE COMPANY AND BRINGING SUCH CHARGES WITHIN THE PURVIEW OF SECTION 194H OF THE A CT. 2.1. DURING HEARING THE LD. DR SHRI V.K. AGARWAL ADVANCED ARGUMENTS WHICH IS IDENTICAL TO THE GROUN D RAISED. ON THE OTHER HAND MS. RASHMI MISHRA LD. COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDER BY PL ACING RELIANCE UPON THE DECISION IN DCIT VS VAH MAGNA RET AIL PVT. LTD. AND KOTAK SECURITIES LTD. VS DCIT (ITA NO.6657/MUM/2011). THIS FACTUAL MATRIX OF THE ASSES SEE WAS NOT CONTROVERTED BY THE LD. DR. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S IN BRIEF ARE THAT A SURVEY U/S 133A OF THE ACT WAS CARRIED O UT AT THE PREMISES OF HDFC BANK LTD WHEREIN PURSUANT TO THE INQUIRIES IT WAS REVEALED THAT THE DISCOUNT IN THE NATURE OF 'COMMISSION' WITHHELD BY THE ACQUIRING BANK WHILE MAKING PAYMENTS TO RETAIL MERCHANT OUGHT TO BE SUBJECTED T O TDS @ 10% UNDER SECTION 194H OF THE ACT. THE A.O. OBSERVED TH AT THE APPELLANT IS A COMPANY ENGAGED IN THE BUSINESS OF PROVIDING TRAVEL AGENCY SERVICES. THE A.O. OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION THE ACQUIRING BANK HAD WITHHELD AN AMOUNT OF RS.11 16 46 150/- AS 'TRANSACTION CHARGES' (CREDIT CARD COLLECTION CH ARGES) WHILE ITA NO.85/MUM/2016 M/S CLEAR TRIP TRAVEL PVT. LTD. 4 MAKING PAYMENTS OF BILLING AMOUNT OF SALES CARRIED OUT THROUGH CREDIT CARDS TO THE APPELLANT COMPANY (RET AIL MERCHANT). SINCE THIS PAYMENT OF TRANSACTION CHARGE S HAD NOT BEEN SUBJECTED TO TDS A SHOW CAUSE NOTICE WAS ISSUED TO THE APPELLANT TO SHOW CAUSE AS TO WHY IT SHOULD NOT BE TREATED AS AN 'ASSESSEE-IN-DEFAULT' U/S.201(1) OF THE ACT. THE APPELLANT FURNISHED THE WRITTEN SUBMISSION CONTEND ING INTER ALIA THAT CREDIT CARD COLLECTION CHARGES ARE IN THE NATURE OF BANK CHARGES WHICH ARE NOT SUBJECT TO TD S. THE A.O. CONSIDERED THE APPELLANT'S SUBMISSION BUT DID NOT FIND IT ACCEPTABLE FOR THE REASONING DISCUSSED IN DETAIL IN PARA 4 & 5 OF THE IMPUGNED ORDER AND ACCORDINGLY HELD THE APPELLANT AS 'ASSESSEE-IN-DEFAULT' FOR NON-DEDUCTIO N OF TAX AT SOURCE U/S.194H @ 101'0 ON THE PAYMENT OF CREDIT CA RD COLLECTION CHARGES OF RS.11 16 46 150/- WHICH WORKED OUT TO RS.1 1L 64 615/-. THUS THE A.O. RAISED THE DEMAND OF RS.1 51 83 876/- COMPRISING OF THE DEMAND OF RS.1 1 1 64 615/- AND INTEREST OF RS.40 19 261/- THEREON U/S 201(1A) OF THE ACT. 2.3. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL) THE ASSESSEE EXPLAINED THAT WH EN A CUSTOMER BOOKS A TICKET ONLINE THROUGH A CREDIT CAR D THE AMOUNT IS REMITTED BACK TO THE CREDIT CARD COMPANY (BANK) TO THE APPELLANT AFTER DEDUCTING CHARGES COMMONLY K NOWN AS CREDIT CARD CHARGES WHICH ARE INTRINSICALLY IN THE NATURE OF BANK CHARGES DIRECTLY DEDUCTED BY THE CREDIT C ARD COMPANY/BANK AND THE ASSESSEE HAS NO SCOPE FOR DEDUCTION OF TAX AT SOURCE SINCE IT IS NOT THE ASS ESSEE WHO MAKES THE PAYMENT BUT IT IS THE CREDIT CARD COMPANY /BANK THAT MAKES THE PAYMENT TO THE APPELLANT AFTER DEDUC TION OF SUCH CHARGES. RELIANCE WAS ALSO PLACED UPON CBDT CI RCULAR DATED 04/01/2013. THE FIRST APPELLATE AUTHORITY DE LETED THE ADDITION. THE REVENUE IS AGGRIEVED AND IS IN AP PEAL BEFORE THIS TRIBUNAL. 2.4. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER LEADING TO ADDITION MADE TO THE TOTAL INCOME CONCLUSION DRAWN IN THE IMPUGNED ORDER MATERIAL AV AILABLE ON RECORD ASSERTIONS MADE BY THE LD. RESPECTIVE CO UNSEL IF KEPT IN JUXTAPOSITION AND ANALYZED WE FIND THAT T HE IMPUGNED ISSUE SQUARELY COVERED BY THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF KOTAK SECURITIES LTD. (ITA NO.6657/MUM/2011) AND FURTHER IN THE ITA NO.85/MUM/2016 M/S CLEAR TRIP TRAVEL PVT. LTD. 5 OWN CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2011-1 2. EVEN OTHERWISE IF THE DEPARTMENT HAS ALLOWED THE C LAIM OF THE ASSESSEE FOR EARLIER ASSESSMENT YEAR AND THE SA ME HAS NOT BEEN REVERSED BY HIGHER AUTHORITIES THE DEPART MENT IS NOT EXPECTED TO TAKE U-TURN. THE TRIBUNAL IN THE CASE OF KOTAK SECURITIES LTD. VS DCIT IDENTICALLY VIDE ORD ER DATED 03/02/2012 HELD AS UNDER:- 2. TO ADJUDICATE ON THIS APPEAL ONLY A FEW MATERI AL FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSE IS A COMPANY ENGAG ED IN STOCK BROKING BUSINESS AND IS A MEMBER OF THE BOMBAY STOC K EXCHANGE AND NATIONAL STOCK EXCHANGE. DURING THE CO URSE OF BUSINESS CARRIED ON BY THE ASSESSEE ASSESSEE FURNI SHES BANK GUARANTEES MAINLY IN LIEU OF MARGIN DEPOSITS TO V ARIOUS AGENCIES SUCH AS BSE AND NSE. IN CONSIDERATION FOR ISSUANCE OF SUCH BANK GUARANTEES BANKS CHARGE THE FEES WHICH IS TERMED AS BANK GUARANTEE COMMISSION. ON 16TH NOVEMBER 2 006 THE ASSESSEE WAS SUBJECTED TO A SURVEY UNDER SECTION 13 3A. DURING THE COURSE OF THIS SURVEY IT WAS NOTICED THAT THE ASSESSEE WAS NOT DEDUCTING ANY TAX AT SOURCE FROM THE PAYMENTS M ADE BY THE ASSESSEE TO THE BANKS IN RESPECT OF BANK GUARA NTEE COMMISSION. IN RESPONSE TO THE ASSESSING OFFICERS REQUISITION TO SHOW CAUSE AS TO WHY ACTION NOT BE TAKEN AGAINST THE ASSESSEE FOR NON-DEDUCTION OF TAX AT SOURCE FROM BA NK GUARANTEE COMMISSION PAYMENTS IT WAS INTER ALIA SU BMITTED BY THE ASSESSEE THAT A PLAIN READING OF EXPLANATION TO SECTION 194 H WHICH DEALS WITH DEDUCTION OF TAX SOURCE FRO M COMMISSION OR BROKERAGE PAYMENTS INDICATES THAT TH E ELEMENT OF AGENCY IS ESSENTIAL IN CASE OF ALL THE SERVICES OR THE TRANSACTIONS CONTEMPLATED BY EXPLANATION TO SECTION 194 H AND THAT THE TRANSACTIONS OR SERVICES WHICH ARE ON PRINCIPAL TO PRINCIPAL BASIS WOULD NOT BE GOVERNED BY THE SAID PROVISION REQUIRING TAX DEDUCTION AT SOURCE. THE ASSESSEE ALS O REFERRED TO VARIOUS JUDICIAL PRECEDENTS INCLUDING BY HONBLE G UJARAT HIGH COURT IN THE CASE OF AHMEDABAD STAMP VENDORS ASSOCI ATION VS UNION OF INDIA (257 ITR 202) AND BY CO ORDINATE BE NCHES OF THIS TRIBUNAL IN THE CASES OF BAIDYNATH AYURVED BHA WAN LTD VS JCIT (83 TTJ 409) AND ACIT VS THE SAMAJ (71 TTJ783) . NONE OF THESE SUBMISSIONS HOWEVER IMPRESSED THE ASSESSING OFFICER. HE WAS OF THE VIEW THAT IN TERMS OF THE PROVISION OF EXPLANATION TO SECTION 194 H COMMISSION OR BROKERAGE COVERS ANY PAYMENT RECEIVED OR RECEIVABLE DIRECTLY OR INDIR ECTLY FOR ANY SERVICES IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET VALUABLE OR THING. HE REJECTED THE ASSESSEES SUBMI SSION REGARDING PRINCIPAL AGENT RELATIONSHIP BEING SINE Q UA NON FOR ITA NO.85/MUM/2016 M/S CLEAR TRIP TRAVEL PVT. LTD. 6 INVOKING THE TAX DEDUCTION AT SOURCE REQUIREMENTS A S TOTALLY INCORRECT AND DEVOID OF ANY MERITS AND OBSERVED TH AT THE EXPLANATION TO SECTION 194 H IS VERY WIDE AND COVER S ANY PAYMENTS IN THE NATURE OF ANY COMMISSION OR BROKERA GE FOR ANY SERVICES IN RELATION TO ANY TRANSACTION RELATIN G TO ANY ASSET. HE FURTHER NOTED THAT THE ASSESSEE HAS TAKE N BANK GUARANTEES FROM VARIOUS BANKS AND THESE BANK GUARAN TEES PROTECT THE STOCK EXCHANGES FROM ANY DEFAULT BY THE ASSESSEE AND ACTS AS SECURITY FOR DUE PERFORMANCE AND FULFIL LMENT OF OBLIGATIONS BY THE ASSESSEE. THE BANK GUARANTEE COM MISSION PAID BY THE ASSESSEE FOR THESE BANK GUARANTEES ACC ORDING TO THE ASSESSING OFFICER WAS LIABLE FOR DEDUCTION AT SOURCE UNDER SECTION 194 H. THE ASSESSEES FAILURE TO DEDUCT THE TAX SOURCE WAS ACCORDINGLY VISITED WITH DEMANDS RAISED UNDER SECTION 201(1) R.W.S. 194H TO MAKE GOOD THE SHORTFALL IN T AX DEDUCTION AT SOURCE AND UNDER SECTION 201(1A) R.W.S. 194 H TO COMPENSATE INTEREST FOR DELAY IN REALIZING THE TAX DEDUCTION AT SOURCE REVENUES. AGGRIEVED BY THE STAND SO TAKEN BY THE ASSESSING OFFICER ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A) HELD THAT THE DEFINITION OF COMMISSION OR BROKERAGE AS GIV EN IN EXPLANATION TO SECTION 194 H IS NOT EXHAUSTIVE BUT ONLY INCLUSIVE WHICH IN EFFECT IMPLIES THAT ANY PAYME NT FOR COMMISSION OR BROKERAGE AS UNDERSTOOD IN COMMON PA RLANCE WILL ALSO BE COVERED BY THE SAID PROVISION. HE INTE R ALIA OBSERVED THAT IT IS EVIDENT THAT THE EXPLANATION S EEKS TO INCLUDE EVEN THOSE PAYMENTS (BESIDES NORMAL COMMISS ION OR BROKERAGE) WHICH OTHERWISE MAY NOT BE CALLED COMMI SSION OR BROKERAGE AND WHICH ARE IN THE NATURE OF PAYMENT F OR SERVICES RENDERED (EXCEPT FOR PROFESSIONAL SERVICES WHICH AR E COVERED U/S 194J) BY AN AGENT OF A PRINCIPAL. THIS LEAR NED CIT(A) REASONED OBVIOUSLY DOES NOT MEAN THAT NORMAL COMM ISSION OR BROKERAGE PAYMENTS ARE EXCLUDED FROM THE PURVIEW OF SECTION 194 H. LEARNED CIT(A) THUS UPHELD AND IN FACT FORTIFIED THE STAND OF THE ASSESSING OFFICER AND THUS CONFIRMED THE IMPUGNED DEMANDS RAISED UNDER SECTION 201(1)R.W .S. 194 H AND UNDER SECTION 201(1A) R.W.S. 194 H. THE ASSES SEE IS AGGRIEVED AND IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THI S CASE AS ALSO THE APPLICABLE LEGAL POSITION. 4. LET US FIRST TAKE A LOOK AT SECTION 194 H WHICH IS REPRODUCED AS FOLLOWS: ITA NO.85/MUM/2016 M/S CLEAR TRIP TRAVEL PVT. LTD. 7 COMMISSION OR BROKERAGE 194H. ANY PERSON NOT BEING AN INDIVIDUAL OR A HIND U UNDIVIDED FAMILY WHO IS RESPONSIBLE FOR PAYING ON OR AFTER THE 1ST DAY OF JUNE 2001 TO A RESIDENT ANY INCOME BY WAY OF COMMISSION (NOT BEING INSURANCE COMMISSION REFERRED TO IN SECTION 194D) OR BROKERAGE SHALL AT THE TIME OF C REDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME O F PAYMENT OF SUCH INCOME IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE WHICHEVER IS EARLIER DEDUCT INCOME -TAX THEREON AT THE RATE OF TEN PER CENT : PROVIDED THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION IN A CASE WHERE THE AMOUNT OF SUCH INCOME OR AS THE C ASE MAY BE THE AGGREGATE OF THE AMOUNTS OF SUCH INCOME CREDITE D OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCI AL YEAR TO THE ACCOUNT OF OR TO THE PAYEE DOES NOT EXCEED FIVE THOUSAND RUPEES : PROVIDED FURTHER THAT AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY WHOSE TOTAL SALES GROSS RECEIPTS OR TURNOV ER FROM THE BUSINESS OR PROFESSION CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH SUCH COMMISSION OR BROKERAGE IS CREDI TED OR PAID SHALL BE LIABLE TO DEDUCT INCOME-TAX UNDER TH IS SECTION: PROVIDED ALSO THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION ON ANY COMMISSION OR BROKERAGE PAYABLE BY B HARAT SANCHAR NIGAM LIMITED OR MAHANAGAR TELEPHONE NIGAM LIMITED TO THEIR PUBLIC CALL OFFICE FRANCHISEES. EXPLANATION.FOR THE PURPOSES OF THIS SECTION (I) COMMISSION OR BROKERAGE INCLUDES 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 ANY SERVICES IN THE C OURSE OF BUYING OR SELLING OF GOODS OR IN RELATION TO ANY TR ANSACTION RELATING TO ANY ASSET VALUABLE ARTICLE OR THING N OT BEING SECURITIES; (II) THE EXPRESSION PROFESSIONAL SERVICES MEANS S ERVICES 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; ITA NO.85/MUM/2016 M/S CLEAR TRIP TRAVEL PVT. LTD. 8 (III) THE EXPRESSION SECURITIES SHALL HAVE THE ME ANING ASSIGNED TO IT IN CLAUSE (H) OF SECTION 2 OF THE SE CURITIES CONTRACTS (REGULATION) ACT 1956 (42 OF 1956) ; (IV) WHERE ANY INCOME IS CREDITED TO ANY ACCOUNT W HETHER CALLED SUSPENSE ACCOUNT OR BY ANY OTHER NAME IN THE BOOKS OF ACCOUNT OF THE PERSON LIABLE TO PAY SUCH INCOME SUCH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCO ME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SEC TION SHALL APPLY ACCORDINGLY. 5. A PLAIN READING OF THE ABOVE PROVISION INDICATES THAT TAX WITHHOLDING REQUIREMENTS UNDER SECTION 194H APPLY I N RESPECT OF COMMISSION OR BROKERAGE WHICH IN TURN IS DE FINED BY EXPLANATION TO SECTION 194 H. NO DOUBT THIS DEFINI TION IS INCLUSIVE BUT THE FUNDAMENTAL QUESTION THAT WE REAL LY NEED TO CONSIDER IN THE FIRST PLACE IS AS TO WHAT ARE THE C ONNOTATIONS OF EXPRESSION COMMISSION OR BROKERAGE IN COMMON PARL ANCE AND THEN PROCEED TO DEAL WITH THE INCLUSIONS THERET O BY THE VIRTUE OF SPECIFIC PROVISION OF LAW. 6. WE FIND THAT THE EXPRESSION COMMISSION AND BR OKERAGE HAVE BEEN USED TOGETHER IN THE STATUTE. IT IS WELL SETTLED AS NOTED BY MAXWELL IN INTERPRETATION OF STATUTES AND WHILE ELABORATING ON THE PRINCIPLE OF NOSCITUR A SOCIIS THAT WHEN TWO OR MORE WORDS WHICH ARE SUSCEPTIBLE TO ANALOGOUS ME ANING ARE USED TOGETHER THEY ARE DEEMED TO BE USED IN THE IR COGNATE SENSE. THEY TAKE AS IT WERE THEIR COLOURS FROM EA CH OTHER THE MEANING OF MORE GENERAL BEING RESTRICTED TO A SENSE ANALOGOUS TO THAT OF LESS GENERAL. EXPLAINING THIS PRINCIPLE IN GENERAL TERMS HONBLE SHRI M.K. CHATURVEDI THE THEN VICE PRESIDENT (MZ) HAS IN INTERPRETATION OF TAXING STATUTES (AIF TP JOURNAL : VOL. 4 NO. 7 JULY 2002 AT P. 7) IN HIS INIMITA BLE WORDS OBSERVED: LAW IS NOT A BROODING OMNIPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL ORDER. THE TENETS OF LAW BEING E NACTED ON THE BASIS OF PRAGMATISM. SIMILARLY THE RULES RELATING TO INTERPRETATION ARE ALSO BASED ON COMMON-SENSE APPRO ACH. SUPPOSE A MAN TELLS HIS WIFE TO GO OUT AND BUY BREA D MILK OR ANYTHING ELSE SHE NEEDS HE WILL NOT NORMALLY BE UN DERSTOOD TO INCLUDE IN THE TERMS ANYTHING ELSE SHE NEEDS A NE W CAR OR AN ITEM OF JEWELLERY. THE DICTUM OF EJUSDEM GENERIS RE FERS TO SIMILAR SITUATION. IT MEANS OF THE SAME KIND CLASS OR NATURE. THE RULE IS THAT WHEN GENERAL WORDS FOLLOW PARTICUL AR AND SPECIFIC WORDS OF THE SAME NATURE THE GENERAL WORD S MUST BE ITA NO.85/MUM/2016 M/S CLEAR TRIP TRAVEL PVT. LTD. 9 CONFINED TO THE THINGS OF SAME KIND AS SPECIFIED. N OSCITUR A SOCIIS IS A BROADER VERSION OF THE MAXIM EJUSDEM GE NERIS. A MAN MAY BE KNOWN BY THE COMPANY HE KEEPS AND A WORD MAY BE INTERPRETED WITH REFERENCE TO BE ACCOMPANYING WO RDS. WORDS DERIVE COLOUR FROM THE SURROUNDING WORDS. 7. BROOMS LEGAL MAXIMS (10TH EDN.) OBSERVES THAT ' IT IS A RULE LAID DOWN BY LORD BACON THAT COPULATIO VERBORUM IN DICAT ACCEPTATIONEM IN EODEM SENSU THE COUPLING OF WORDS TOGETHER SHOWS THAT THEY ARE TO BE UNDERSTOOD IN THE SAME SE NSE.' 8. LET US NOW DEAL WITH LEGAL CONNOTATIONS OF THESE TWO EXPRESSIONS NAMELY COMMISSION AND BROKERAGE. T HE LAW LEXICON (EDITED BY JUSTICE Y.V. CHANDRACHUD; 1997 E DN.) OBSERVES THAT 'IN COMMERCIAL LAW COMMISSION IS A COMPENSATION TO A FACTOR OR OTHER AGENT FOR SERVICE S TO BE RENDERED IN MAKING A SALE OR OTHERWISE; A SUM ALLOW ED AS COMPENSATION TO A SERVANT FACTOR OR AGENT WHO MANA GES THE AFFAIRS OF OTHERS IN RECOMPENSE FOR HIS SERVICES.' ACCORDING TO THE GIVEN DEFINITION 'IT IS AN ALLOWANCE RECOMPEN SE OR REWARD MADE TO AGENTS FACTORS AND BROKERS AND OTHERS FOR EFFECTING SALES AND CARRYING OUT BUSINESS TRANSACTIONS. IT IS GENERALLY CALCULATED AS A CERTAIN PERCENTAGE ON THE AMOUNT OF THE TRANSACTIONS ON THE PROFITS TO THE PRINCIPAL.' THE EXPRESSION BROKERAGE IS DEFINED AS FEES OR COMMISSION GIVEN TO OR CHARGED BY A BROKER. IN TURN A BROKER IS DEFINED A S 'A MIDDLEMAN OR AGENT WHO FOR A COMMISSION ON THE VAL UE OF TRANSACTION NEGOTIATES FOR OTHERS THE PURCHASE OR SALE OF BOOKS BONDS OR COMMODITIES OR PROPERTY OF ANY KIN D OR WHO ATTENDS TO THE DOING OF SOMETHING FOR ANOTHER'. 9. IN THE LIGHT OF THE ABOVE DISCUSSIONS AND WHEN WE LOOK AT THE CONNOTATIONS OF EXPRESSION COMMISSION OR BROKERAGE IN ITS COGNATE SENSE AS IN THE LIGHT OF THE PRINCIPLE OF NOSCITUR A SOCIIS AS WE ARE OBLIGED TO IN OUR CONSIDERED VIEW SCOPE OF EXPRESSION COMMISSION FOR THIS PURPOSE WILL BE CONFINED TO AN ALLOWANCE RECOMPENSE OR REWARD MADE TO AGENTS FACTORS AND BROKERS AND OTHERS FOR EFFECTING SALES AND CARR YING OUT BUSINESS TRANSACTIONS AND SHALL NOT EXTEND TO THE PAYMENTS SUCH AS BANK GUARANTEE COMMISSION WHICH ARE IN T HE NATURE OF FEES FOR SERVICES RENDERED OR PRODUCT OFFERED BY THE RECIPIENT OF SUCH PAYMENTS ON PRINCIPAL TO PRINCIPAL BASIS. E VEN WHEN AN EXPRESSION IS STATUTORILY DEFINED UNDER SECTION 2 IT STILL HAS TO MEET THE TEST OF CONTEXTUAL RELEVANCE AS SECTION 2 ITSELF STARTS WITH THE WORDS IN THIS ACT ( I.E. INCOME TAX ACT) UNLESS CONTEXT OTHERWISE REQUIRES AND THEREFORE CONTE XTUAL ITA NO.85/MUM/2016 M/S CLEAR TRIP TRAVEL PVT. LTD. 10 MEANING ASSUMES SIGNIFICANCE. EVERY DEFINITION IN T HE INCOME TAX ACT MUST DEPEND ON THE CONTEXT IN WHICH THE EXP RESSION IN SET OUT AND THE CONTEXT IN WHICH EXPRESSION COMMI SSION APPEARS IN SECTION 194 H I.E. ALONGWITH THE EXPRES SION BROKERAGE SIGNIFICANTLY RESTRICTS ITS CONNOTATIO NS. THE COMMON PARLANCE MEANING OF THE EXPRESSION COMMISSI ON THUS DOES NOT EXTEND TO A PAYMENT WHICH IS IN THE NATURE OF FEES FOR A PRODUCT OR SERVICE; IT MUST REMAIN RESTRICTED TO AS HAS BEEN ELABORATED ABOVE A PAYMENT IN THE NATURE OF REWARD FOR EFFECTING SALES OR BUSINESS TRANSACTIONS ETC. THE I NCLUSIVE DEFINITION OF THE EXPRESSION COMMISSION OR BROKERA GE IN EXPLANATION TO SECTION 194 H IS QUITE IN HARMONY WI TH THIS APPROACH AS IT ONLY PROVIDES THAT ANY PAYMENT RECE IVED OR RECEIVABLE DIRECTLY OR INDIRECTLY BY A PERSON ACT ING ON BEHALF OF ANOTHER PERSON FOR SERVICES RENDERED (NOT BEING PROFESSIONAL SERVICES) OR FOR ANY SERVICES IN THE COURSE OF BUYI NG OR SELLING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET VALUABLE ARTICLE OR THING NOT BEING SECURITIES IS INCLUDIBLE IN THE SCOPE OF MEANING OF COMMISSION OR BROKERAGE. THEREFORE WHAT THE INCLUSIVE DEFINITION REALLY CONTAINS IS NO THING BUT NORMAL MEANING OF THE EXPRESSION COMMISSION OR BRO KERAGE. IN THE CASE OF SOUTH GUJARAT ROOFING TILES MANUFACT URERS ASSOCIATION VS STATE OF GUJARAT [(1976) 4 SCC 601] HONBLE SUPREME COURT WERE IN SEISIN OF A SITUATION IN WHIC H AN EXPRESSION NAMELY PROCESSING WAS GIVEN AN INCLU SIVE DEFINITION BUT THEIR LORDSHIPS WERE OF THE VIEW TH AT THERE COULD BE NO OTHER MEANING OF PROCESSING BESIDES W HAT IS STATED AS INCLUDED IN THAT EXPRESSION AND THAT TH OUGH INCLUDE IS GENERALLY USED IN INTERPRETATION CLAUS E AS A WORD OF ENLARGEMENT IN SOME CASES CONTEXT MIGHT SUGGEST A DIFFERENT INTENTION. THEIR LORDSHIPS THEN CONCLUDED THAT THO UGH THE EXPRESSION USED IN THE DEFINITION CLAUSE IS INCLUD ES IT SEEMS TO US THAT THE WORD INCLUDES HAS BEEN USED HERE I N THE SAME SENSE OF MEANS; THIS IS THE ONLY CONSTRUCTION THA T THE WORD CAN BEAR IN THIS CONTEXT. IN OTHER WORDS AN INCLUSIVE DEFINITION AS THEIR LORDSHIPS NOTED DOES NOT NECESSARILY ALWAYS EXTEND THE MEANING OF AN EXPRESSION. WHEN INCLUSIVE DEFINITION CONTAINS ORDINARY NORMAL CONNOTATIONS OF AN EXPRESSION IN O UR CONSIDERED VIEW EVEN AN INCLUSIVE DEFINITION HAS T O BE TREATED AS EXHAUSTIVE. THAT IS THE SITUATION IN THE CASE BE FORE US AS WELL. EVEN AS DEFINITION OF EXPRESSION COMMISSION OR BRO KERAGE IN EXPLANATION TO SECTION 194 H IS STATED TO BE EXCLU SIVE IT DOES NOT REALLY MEAN ANYTHING OTHER THAN WHAT HAS BEEN S PECIFICALLY STATED IN THE SAID DEFINITION. THEREFORE AS HELD B Y THE COORDINATE BENCHES IN A NUMBER OF CASES INCLUDING S RL ITA NO.85/MUM/2016 M/S CLEAR TRIP TRAVEL PVT. LTD. 11 RANBAXY LTD VS ACIT (ITA NO. 434/DEL/11; ORDER DATE D 16.12.2011) FOSTERS INDIA LTD VS ITO (117 TTJ 346) AND AJMER ZILA DUGDH UTPADAK SANGH LTD VS ITO (34 SOT 216) P RINCIPAL AGENT RELATIONSHIP IS A SINE QUA NON FOR INVOKING T HE PROVISIONS OF SECTION 194 H. IN THE CASE BEFORE US THERE IS N O PRINCIPAL AGENT RELATIONSHIP BETWEEN THE BANK ISSUING THE BAN K GUARANTEE AND THE ASSESSEE. WHEN BANK ISSUES THE BA NK GUARANTEE ON BEHALF OF THE ASSESSEE ALL IT DOES I S TO ACCEPT THE COMMITMENT OF MAKING PAYMENT OF A SPECIFIED AMOUNT TO ON DEMAND THE BENEFICIARY AND IT IS IN CONSIDERATION OF THIS COMMITMENT THE BANK CHARGES A FEES WHICH IS CUSTOM ARILY TERMED AS BANK GUARANTEE COMMISSION . WHILE IT IS TERMED AS GUARANTEE COMMISSION IT IS NOT IN THE NATURE OF COMMISSION AS IT IS UNDERSTOOD IN COMMON BUSINESS PARLANCE AND IN THE CONTEXT OF THE SECTION 194H. THIS TRANSACTION IN O UR CONSIDERED VIEW IS NOT A TRANSACTION BETWEEN PRINCIPAL AND AG ENT SO AS TO ATTRACT THE TAX DEDUCTION REQUIREMENTS UNDER SECTIO N 194H. WE ARE THEREFORE OF THE CONSIDERED VIEW THAT THE CIT(A) INDEED ERRED IN HOLDING THAT THE ASSESSEE WAS INDEE D UNDER AN OBLIGATION TO DEDUCT TAX AT SOURCE UNDER SECTION 19 4 H FROM PAYMENTS MADE BY THE ASSESSEE TO VARIOUS BANKS. AS WE HAVE HELD THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT T AX AT SOURCE UNDER SECTION 194 H THE QUESTION OF LEVY OF INTERE ST UNDER SECTION 201(1A) CANNOT ARISE. 10. IN VIEW OF THE ABOVE DISCUSSIONS WE QUASH THE IMPUGNED DEMANDS UNDER SECTION 201(1) AND 201(1A) R.W.S. 194 H . WE THEREFORE ALSO SEE NO NEED TO DEAL WITH OTHER PERI PHERAL LEGAL ISSUES RAISED BY THE ASSESSEE. 11. IN THE RESULT THE APPEAL IS ALLOWED. IN THE AFORESAID DECISION THE TRIBUNAL HAS MADE AN ELABORATE DISCUSSION BY HOLDING THAT THERE IS NO PR INCIPAL AGENT RELATIONSHIP BETWEEN THE BANK ISSUING THE BAN K GUARANTEE AND THE ASSESSEE. IN ANOTHER CASE IN JDS APPARELS PVT. LTD. VS CIT (ITA NO.608 OF 2014) ORDE R DATED 18/11/2014 AFTER HAVING A DISCUSSION FROM THE DECIS ION FROM HONBLE APEX COURT IN AHMADABAD STAMP VENDOR ASSOCIATION CIT VS IDEA CELLULAR LTD (2010) 325 ITR 148 (DEL.) HELD THAT THE AMOUNT RETAINED BY THE BANK IS A FEE CHARGED BY THEM FOR RENDERING BANK SERVICES A ND CANNOT BE TREATED AS COMMISSION OR BROKERAGE PAID I N THE COURSE OF USE OF ANY SERVICES BY A PERSON ACTING ON BEHALF OF ANOTHER FOR BUYING AND SELLING THE GOODS AND THU S THE ITA NO.85/MUM/2016 M/S CLEAR TRIP TRAVEL PVT. LTD. 12 BANKING SERVICES CANNOT BE COVERED AND TREATED AS SERVICES RENDERED BY AN AGENT FOR THE PRINCIPLE. IT WAS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INV OKING SECTION 40(A)(IA) OF THE ACT AND CONSEQUENT ADDITIO N I.E. THE CHARGES DEDUCTED BY HDFC BANK ON PAYMENT MADE THROUGH CREDIT CARD. THUS IT IS HELD THAT NO TDS I S PAYABLE ON CREDIT CARD CHARGES U/S 194H OF THE ACT AS THE ASSESSEE IS NOT REQUIRED TO DEDUCT TDS CONSEQUENTL Y CANNOT BE SAID TO BE ASSESSEE IN DEFAULT U/S 201(1)/201(1A) OF THE ACT THEREFORE WE AFFIRM THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL). FINALLY THE APPEAL OF THE REVENUE IS DISMISSED. IT IS NOTED THAT IN THE AFORESAID ORDER ON IDENTICA L ISSUE THE TRIBUNAL FOLLOWED THE DECISION IN THE CASE OF KOTAK SECURITIES LTD. (ITA NO.6657/MUM/2011) AND THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2011-12. IDENTICALLY VIDE ORDER DATED 28/01/2016 (ITA NO.3950/MUM/2014) THE TRIBUNAL TOOK IDENTICAL VIEW AND ALSO IN ORDER DATED 15/11/2016 (ITA NO.7352/MUM/201 4 AND 7353/MUM/2014). NO CONTRARY FACTS WERE BROUGHT TO OUR NOTICE BY EITHER SIDE AND MORE SPECIFICALLY THE REVENUE THEREFORE FOLLOWING THE DECISION OF THE COORDINATE BENCH WE AFFIRM THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEAL) RESULTING INTO DISMISSAL OF THIS GROUND O F THE REVENUE. ITA NO.85/MUM/2016 M/S CLEAR TRIP TRAVEL PVT. LTD. 13 3. THE NEXT GROUND PERTAINS TO DELETING THE ADDITI ON OF RS.38 LAKHS HOLDING THAT NOTHING WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER TO PROVE THE ADDITION BY O BSERVING THAT IT IS INFLATED ONE. THE CRUX OF ARGUMENT ON BE HALF OF THE REVENUE IS THAT THE ASSESSEE CLAIMED TRAVELLING EXP ENSES WHICH ARE HIGHLY INFLATED AND THE LD. COMMISSIONER OF INCOME TAX (APPEAL) MERELY STATED THAT NOTHING WAS BROUGHT ON RECORD AND DELETED THE ADDITION. THE LD. CIT- DR INVITED OUR ATTENTION TO THE TRAVELLING MADE BY SHRI SATEESH ANDRA BHAVIK BANKER AND JHANVI WADHWA BY CLAIMING THAT THESE PERSONS VISITED THE PLACES AND RETURNED BACK ON THE SAME DATE AND AGAIN WENT TO THE SAME PL ACE ON THE SAME DATE THEREFORE THERE WAS NO LOGIC BEHIND IT. THE LD. COUNSEL FOR THE ASSESSEE CLAIMED THAT IN BETWEE N CLAIMED TICKET WAS GOT CANCELLED. HOWEVER THE LD. CIT-DR INSISTED THAT IT IS NOT SO. AT THIS STAGE THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT 50% OF SUCH EXPENSES MA Y BE DISALLOWED. THE LD. CIT-DR HAD NO OBJECTION TO THE REQUEST OF THE ASSESSEE. THUS ON PERUSAL OF RECORD AND AFT ER HEARING THE RIVAL SUBMISSIONS AND ALSO TO PUT AN EN D TO THE LITIGATION ON THIS COUNT WE REDUCE THE AMOUNT TO 5 0% OF ITA NO.85/MUM/2016 M/S CLEAR TRIP TRAVEL PVT. LTD. 14 THE RELIEF GRANTED BY THE LD. COMMISSIONER OF INCOM E TAX (APPEAL) WITH RESPECT TO TRAVELLING AND CONVENIENCE EXPENSES. THUS THIS GROUND OF THE REVENUE IS PARTL Y ALLOWED. FINALLY THE APPEAL OF THE REVENUE IS PARTLY ALLOWE D. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 30/11/2017. SD/- (G. MANJUNATHA) SD/- (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; + DATED : 30/11/2017 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. -./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. 2 2 # 3' ( - ) / THE CIT MUMBAI. 4. 2 2 # 3' / CIT(A)- MUMBAI 5. 56 0' 2 -& # $ / DR ITAT MUMBAI 6. 7 8$ / GUARD FILE. / BY ORDER 15-' 0' //TRUE COPY// / (DY./ASSTT. REGISTRAR) # $ / ITAT MUMBAI