Section 40, 194H of Income Tax Act, 1961— TDS on account of payment gateway charges—In the instant case, question of law sought to be urged by the Revenue is as follows—

“Whether the ITAT erred in deleting the addition of 12,52,49,946/- made by the AO u/s 40(a)(ia) of the Income Tax Act,1961 being non deduction of TDS on account of payment gateway charges?”

The AO disallowed the payment of Rs. 12,52,49,946/- made by the Assessee to the Banks towards charges for providing the payment gateway facility for the AY in question under Section 40(a)(ia) of the Act since according to the AO the said payment was in the nature of commission paid to the Banks from which TDS under Section 194 H of the Act ought to have been deducted.

However the ITAT held that the payment gateway charges were in nature of fees for banking services and not ‘commission’ or ‘brokerage’ and thus no TDS was deductible from the said charges under Section 194 H of the Act.

Held that— this Court finds that the ITAT has not committed any error in deleting the addition of  12,52,49,946/- made by the Assessing officer under section 40(a)(ia) of the Act [(as further educed by the CIT (A)] on account of non-deduction of TDS from the payment gateway charges paid to the Banks.[THE COMMISSIONER OF INCOME TAX-6 VERSUS MAKE MY TRIP INDIA PVT. LTD.] [2019] 11 ITCD Online (25) [DELHI HIGH COURT]