INCOME TAX ACT, 1961

Section 194H

Tax deduction at source - Under section 194H - Service charges collected by the Banks/Gateways -

Assessee-company was in the business of developing and running online game on its own web portal. It debited a sum under the head 'payment to Gateways'. AO held that the commission retained by the Gateways was the commission paid by the assessee to the Gateways and therefore, TDS was required to be deducted under section 194H. Held: Assessee hosts online games and when the customers make payments through banking Gateways by way of credit or debit card of the relevant banks (which are referred to as Gateways) and while transferring money to the assessee's account, banks invariably retain service charges. It is submitted that service charges collected by the Banks/Gateways cannot be considered as commission paid by the assessee and, therefore, provisions of section 194H were not applicable.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2015-16

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