TDS to be deducted only on commission charges and not on gateway charges: ITAT
M/s. Knowledge Hut Solutions Pvt. Ltd (ITA Nos. 466 & 281/Bang/2023)
- M/s. Avenue India Pvt. Ltd. and M/s. Razor Pay are gateway providers who collect fees from participants on the part of the appellant and charging commission. After returning the commission, they transfer the balance amount to the appellant.
- TDS is deducted u/s. 194H on commission part and not on the whole receipt and the amount of Rs.1,32,629/- was deducted as credit of TDS. The company paid Rs.16,76,041/- and Rs.9,76,530/- towards gateway payment charges (commission) to M/s. Razor Pay and M/s. Avenue India Pvt. Ltd. respectively.
- According to the revenue, the appellant has paid commission of Rs.15,34,844/- (Rs.25,11,375 – Rs.9,76,531) as reflecting in the books of accounts and thus addition on the same amount was made by the Ld.AO u/s. 194H of the Act which was further upheld by the Ld.CIT(A).
- According to the appellant, Rs. 16,76,041/- and Rs.9,76,530/- was paid towards the gateway payment charges to the said M/s. Razor Pay and M/s. Avenue India Pvt. Ltd. and also reconciliation statement of commission expenses with books of accounts and the TDS returns was filed by the appellant.
Bangalore ITAT held as below:
- The parties are service providers who collect fees from participants and they collect gateway payment commission from the appellant after returning the gateway charges they transfer the balance amount collected from the participants to the appellant.
- We find that the payments made to gateway providers are not brokerage and TDS u/s. 194H of the Act is not liable to be deducted.
- Thus taking into consideration the entire aspect of the matter and respectfully relying on the judgment passed by the different forums, we find that in the present facts and circumstances of the matter, TDS is not liable to be made u/s. 194H on gateway charges. The addition, is, therefore, deleted.
The copy of the order is attached herewith as under: