The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the Airlines Company, Spice Jet is not liable to deduct TDS on the sale consideration of tickets booked through debit/ credit cards.
The Assessing Officer noticed that the assessee has not deducted TDS on the amounts retained by banks for rendering credit card processing services from the payments received by such banks from the passengers for booking tickets to fly in the aircrafts operated by the assessee.
The assessing Officer held that there is an implied agency relationship between the assessee airline and the banks and, therefore, the charges retained by the Banks on the sale consideration of tickets booked through debit/ credit cards are in the nature of commission or brokerage.
The first appellate authority held that the amount retained by Banks/ Credit Card Agencies out of Sale consideration of the tickets booked through credit / debit cards is not covered under the definition of “commissioner or brokerage” as per Section 194H of the Income Tax Act. The decision was based on the Delhi High Court decision in the case of CIT vs. JDS Apparels Pvt. Ltd.
Confirming the order of the first appellate authority, the Tribunal observed that “the issue involved in present appeal being identical to that decided by the Hon’ble Jurisdictional High Court, respectfully following the verdict of M/s JDS Apparel (supra) it is held that the assessee was not required to deduct TDS on charges retained by Bank / credit card agencies out of the sale consideration of tickets booked through credit / debit cards. It is held that provision of section 194H are not attracted.”
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