JUDGMENT judgment of court was delivered by Sanjiv Khanna J.-This appeal by Revenue under section 260A of Income-tax Act, 1961 ("the Act", for short), impugns finding recorded by Income-tax Appellate Tribunal ("the Tribunal", for short) in their order dated February 7, 2014, that respondent-assessee, JDS Apparels P. Ltd., had not violated section 194H of Act. As consequence, it has been held that Assessing Officer was wrong in invoking section 40(a)(ia) of Act and, accordingly, had erred in making addition of Rs. 44,65,654, i.e., charges deducted by M/s. HDFC Bank Ltd. ("HDFC", for short) on payments made through credit cards. respondent-assessee had for assessment year 2009-10 filed return on November 30, 2009, declaring income of Rs. 4,91,69,380, which was made subject matter of scrutiny assessment under section 143(3) of Act, vide order dated December 16, 2011. assessment order records that respondent-assessee was engaged in business of trading in readymade garments. letter was received from Assessing Officer, TDS Circle, Mumbai, that respondent-assessee had paid "commission" to HDFC on payments received from customers who had made purchases through credit cards. Survey under section 133A of Act had been conducted on HDFC, who had provided card swiping machines to retail merchants, including respondent-assessee. credit card holder could make payment by swiping credit card on said machines. details of bill amount, etc., were thereupon forwarded to acquiring bank, which is bank which had provided machine, i.e., HDFC in this case, which then made payment to respondent-assessee. payment made to respondent-assessee was after withholding or deducting fee payable to HDFC. Thereafter, acquiring bank, i.e., HDFC recovered bill amount from issuing bank of customer. Assessing Officer held that amount earned by acquiring bank, i.e., HDFC in this case, was in nature of "commission" and should have been subjected to deduction of tax at source at 10 per cent. under section 194H of Act. As commission had not been subjected to tax at source, Rs. 44,65,654 should be disallowed under section 40(a)(ia) of Act, as this amount had been claimed as expenditure by assessee. aforesaid opinion was affirmed by Commissioner of Income-tax (Appeals), who held that transaction in question was in nature of bill discounting by acquiring bank, who had paid bill amount after deducting commission payable to them. acquiring bank had taken up entire risk relating to recovery of payment from issuing bank. Reference was made to following portion of Circular No. 619, dated December 4, 1991 (see [1992] 193 ITR (St.) 17), issued by Central Board of Direct Taxes (CBDT): "For purposes of this section commission or brokerage includes any payment received or receivable, directly or indirectly, by person acting on behalf of another person for services rendered (not being professional services) or for any services in course of buying or selling of goods or in relation to any transaction relating to any assets, valuable article or thing." As noticed above, Tribunal has held that section 194H of Act is not applicable. Section 194H of Act reads as under: "194H. Commission or brokerage.-Any person, not being individual or Hindu undivided family, who is responsible for paying, on or after 1st day of June, 2001, to resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, at time of credit of such income to account of payee or at time of payment of such income in cash or by issue of cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at rate of ten per cent.: Provided that no deduction shall be made under this section in case where amount of such income or, as case may be, aggregate of amounts of such income credited or paid or likely to be credited or paid during financial year to account of, or to, payee, does not exceed five thousand rupees: Provided further that individual or Hindu undivided family, whose total sales, gross receipts or turnover from business or profession carried on by him exceed monetary limits specified under clause (a) or clause (b) of section 44AB during financial year immediately preceding financial year in which such commission or brokerage is credited or paid, shall be liable to deduct income-tax under this section: Provided also that no deduction shall be made under this section on any commission or brokerage payable by Bharat Sanchar Nigam Ltd. or Mahanagar Telephone Nigam Ltd. to their public call office franchisees. Explanation.-For purposes of this section,- (i)'commission or brokerage' includes any payment received or receivable, directly or indirectly, by person acting on behalf of another person for services rendered (not being professional services) or for any services in course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities; (ii) expression'professional services' means services rendered by person in course of carrying on legal, medical, engineering or architectural profession or profession of accountancy or technical consultancy or interior decoration or such other profession as is notified by Board for purposes of section 44AA; (iii) expression'securities' shall have meaning assigned to it in clause (h) of section 2 of Securities Contracts (Regulation) Act, 1956 (42 of 1956); (iv) where any income is credited to any account, whether called 'Suspense account' or by any other name, in books of account of person liable to pay such income, such crediting shall be deemed to be credit of such income to account of payee and provisions of this section shall apply accordingly." Section 194H of Act applies to income by way of commission or brokerage excluding insurance commission referred to in section 194D of Act. Tax at source is to be deducted at time of credit of such income to account of payee or at time of payment of such income in cash or by way of cheque/draft or any other mode. Explanation clause (i) states that for purpose of this section, commission or brokerage includes any payment received or receivable directly or indirectly by person acting on behalf of another person, (i) for services rendered, not being in nature of professional services; (ii) any service rendered in course of buying or selling of goods; and (iii) in relation to any transaction relating to any asset, valuable article or thing, not being securities. expression "securities" has been defined in clause (iii) to Explanation. High Court of Gujarat in Ahmedabad Stamp Vendors Association v. Union of India [2002] 257 ITR 202 (Guj) examined clause (i) of Explanation and whether it would be applicable to persons carrying on business of stamp vendors who purchase stamps from Government treasury and sell them to public. Gujarat High Court drew distinction between contract of sale and contract of agency by which agent is authorised to buy or sell on behalf of principal. In case of agency, agent is not owner of property and does not sell same of his own accord but as per directions and instructions of principal, who is owner of property. profit and loss is that of principal, and what is paid to agent is commission or brokerage. expressions "commission" and "discount" were distinguished after making reference to definitions in Black's Law Dictionary. expression "discount", it was observed, is allowance or deduction made from gross sale on any account whatsoever. "deduction" normally represents reduction in original price or debt such as in case of securities (e.g., treasury bills), which are issued below face value and are redeemed at face value. Commission, it was held, is reward paid to agent as well as to salesman, executor, trustee, broker or bailee and is calculated as percentage of amount of transaction or on profit of principal. It is fee paid to agent or employee for generating piece of business or performing service. In such cases, normally, there exists fiduciary duty, which has to be discharged by person to whom commission is paid. following excerpt from decision of Bombay High in Harihar Cotton Pressing Factory v. CIT [1960] 39 ITR 594 (Bom) was referred to with approval (page 610): "The expression'commission' has no technical meaning but both in legal and commercial acceptation of term it has definite signification and is understood as allowance for service or labour in discharging certain duties such as for instance of agent, factor, broker or any other person who manages affairs or undertakes to do some work or renders some service to another. Mostly it is percentage on price or value or upon amount of money involved in any transaction of sale or service or quantum of work involved in transaction. It can be for variety of services and is of nature of recompense or reward for such services.'Rebate', on other hand, is remission or payment back and of nature of deduction from gross amount. It is sometimes spoken of as discount or draw-back. dictionary meaning of term includes refund to purchaser of thing or commodity of portion of price paid by him. It is not confined to transaction of sale and includes any deduction or discount from stipulated payment, charge or rate. It need not necessarily be taken out in advance of payment but may be handed back to payer after he has paid stipulated sum. repayment need not be immediate. It can be made later and in case of persons who have continuous dealings with one another it is nothing unusual to do so." Importantly, Gujarat High Court held that there should be element of agency in all three situations as envisaged in clause (i) of Explanation to section 194H of Act. On appeal before Supreme Court, decision was upheld by short order, which is reported as CIT v. Ahmedabad Stamp Vendors Association [2012] 348 ITR 378 (SC), observing that stamp vendors had purchased stamps in bulk and had received cash discount. Supreme Court concurred with judgment of High Court that transaction was of sale and section 194H of Act had no application. Thus, holding that contract of agency did not exist. Similar view has been expressed by Kerala High Court in Kerala State Stamp Vendors Association v. Office of Accountant-General [2006] 282 ITR 7 (Ker), wherein it held (page 10): "No doubt, payment of commission or brokerage in relation to sale or purchase of goods also would attract deduction of tax at source under section 194H of Act. However, such situation arises only when there is involvement of services of third party on payment other than seller and purchaser of goods or when recipient of benefit markets goods as'agent' of owner and not as independent dealer." Allahabad High Court in Chief Treasury Officer v. Union of India [2013] 355 ITR 484 (All) has held that words "by person acting on behalf of another person" imply element of agency and must be present in all such services or transactions in order to fall within expression "commission" and "brokerage". Reference was made to definition of term "agent" in Indian Contract Act and implication thereof and it was observed that contract between principal and agent primarily is contract of employment to bring about legal relationship with third party and agent either actually or by law is held to be authorised or employed by first, i.e., principal, whom he represents. Representative character and derivative authority are distinguishing features of agent. It was, accordingly, held that provisions of section 194H of Act were not attracted in case of stamp vendors. expressions "commission" or "brokerage" are words of general and common parlance used both commercially and by common man on street. Clause (i) expressly seeks to define expression "commission" or "brokerage" but states that it will include payments received or receivable, directly or indirectly by person acting on behalf of another if they fall in three categories. definition may be exhaustive or restrictive of its common meaning or may be extensive one. Indeed, there are decisions which observe that use of word "includes" in clause can show legislative intent to enlarge meaning of words or phrases occurring so as to not only mean and comprehend such things as they signify according to their nature and import but also things which interpretation clause declares that they shall include (see CIT v. Taj Mahal Hotel [1971] 82 ITR 44 (SC); [1971] 3 SCC 550). But this may not always be case and in certain cases, expression "includes" has been construed as "equivalent to" and, therefore, given narrower meaning (see South Gujarat Roofing Tiles Manufacturers Association v. State of Gujarat, AIR 1977 SC 90). Thus, word "includes" can be used in sense of word "means". definition clause in such cases is treated as exhaustive one (see RBI v. Peerless General Finance and Investment Co. Ltd. [1987] 61 Comp Cas 663 (SC); [1987] 1 SCC 424). Thus, in particular context word "includes" when used, may only mean "comprise of" or "consist of". It is apparent from decision of Supreme Court in case of Ahmedabad Stamp Vendors Association (supra) that clause (i) of Explanation to section 194H of Act has been read as exhaustive and not as expansive. This is reason why Supreme Court in short order drew distinction between transaction of sale and contract of agency and also between discount and commission/brokerage. Otherwise, expression "any service rendered in course of buying or selling of goods" possibly would have encompassed and included "discount" given to stamp vendors, who render service during course of buying and selling of goods, i.e. stamp papers. Contention could be raised that payment received or receivable directly or indirectly for any services in course of buying or selling of goods need not arise out of contract of agency or from relationship of principal and agent. said contention has to be rejected in view of aforesaid judgments, which positively hold that three separate conditions when tax at source is required to be deducted would only apply provided recipient is acting on behalf of another, i.e., relationship of principal and agent exists and not otherwise. This interpretation has been consistent and uniformly applied while interpreting clause (i) of Explanation to section 194H of Act. Appropriate in this regard would be to refer to decision of High Court of Delhi in CIT v. Idea Cellular Ltd. [2010] 325 ITR 148 (Delhi) wherein Explanation clause (i) to section 194H of Act had come up for consideration and on interpretation it was held that it would apply only if payment was received or receivable directly or indirectly by person acting on behalf of another person for (i) services rendered (not being professional) and (ii) for any services in course of buying or selling of goods or in relation to any transaction relating to asset, valuable article or thing. judgment records that counsel for both parties, i.e. Revenue and assessee, had agreed that element of agency was to be established in all aforesaid circumstances (see page 156 placitum 9 of ITR citation). Thus, this contention if raised would not stand judicial scrutiny on principles of consistency and certainty. Even otherwise, view expounded and accepted is plausible, besides being reasonable. Applying above cited case law to factual matrix of present case, we feel that section 194H of Act would not be attracted. HDFC was not acting as agent of respondent-assessee. Once payment was made by HDFC, it was received and credited to account of respondent-assessee. In process, small fee was deducted by acquiring bank, i.e., bank whose swiping machine was used. On swiping credit card on swiping machine, customer whose credit card was used, got access to internet gateway of acquiring bank resulting in realisation of payment. Subsequently, acquiring bank realised and recovered payment from bank which had issued credit card. HDFC had not undertaken any act on "behalf" of respondentassessee. relationship between HDFC and respondent-assessee was not of agency but that of two independent parties on principal to principal basis. HDFC was also acting and equally protecting interest of customer whose credit card was used in swiping machines. It is noticeable that bank in question or their employees were not present at spot and were not associated with buying or selling of goods as such. Upon swiping card, bank made payment of bill amount to respondent- assessee. Thus, respondent-assessee received sale consideration. In turn, bank in question had to collect amount from bankers of credit card holder. bank had taken risk and also remained out of pocket for sometime as there would be time gap between date of payment and recovery of amount paid. amount retained by bank is fee charged by them for having rendered banking services and cannot be treated as commission or brokerage paid in course of use of any services by person acting on behalf of another for buying or selling of goods. intention of Legislature is to include and treat commission or brokerage paid when third person interacts include and treat commission or brokerage paid when third person interacts between seller and buyer as agent and thereby renders services in course of buying and/or selling of goods. This happens when there is middleman or agent who interacts on behalf of one of parties, helps buyer/seller to meet, or participates in negotiations or transactions resulting in contract for buying and selling of goods. Thus, requirement of agent and principal relationship. This is exact purport and rationale behind provision. bank in question is not concerned with buying or selling of goods or even with reason and cause as to why card was swiped. It is not bothered or concerned with quality, price, nature, quantum, etc., of goods bought/ sold. bank merely provides banking services in form of payment and, subsequently, collects payment. amount punched in swiping machine is credited to account of retailer by acquiring bank, i.e., HDFC in this case, after retaining small portion of same as their charges. banking services cannot be covered and treated as services rendered by agent for principal during course of buying or selling of goods as banker does not render any service in nature of agency. Another reason why we feel section 40(a)(ia) of Act should not have been invoked in present case is principle of doubtful penalisation which requires strict construction of penal provisions. said principle applies not only to criminal statutes but also to provisions which create deterrence and results in punitive penalty. Section 40(a)(ia) is deterrent and penal provision. It has effect of penalising assessee, who has failed to deduct tax at source and acts to detriment of assessee's property and other economic interests. It operates and inflicts hardship and deprivation, by disallowing expenditure actually incurred and treating it as disallowed. Explanation, therefore, requires strict construction and principle against doubtful penalisation would come into play. detriment in present case, as is noticeable, would include initiation of proceedings for imposition of penalty for concealment, as was directed by Assessing Officer in present case. aforesaid principle requires that person should not be subjected to any sort of detriment unless obligation is clearly imposed. When words are equally capable of more than one construction, one not inflicting penalty or deterrent may be preferred. In Maxwell's Interpretation of Statutes, 12th edition (1969) it has been observed: "The strict construction of penal statutes seems to manifest itself in four ways: in requirement of express language for creation of offence; in interpreting strictly words setting out elements of offence; in requiring fulfilment to letter of statutory conditions precedent to infliction of punishment; and in insisting on strict observance of technical provisions concerning criminal procedure and jurisdiction." aforesaid principles and interpretations can apply to taxing statutes. In present case, we further feel said principle should be applied as HDFC would necessarily have acted as per law and it is not case of Revenue that bank had not paid taxes on their income. It is not case of loss of revenue as such or case where recipient did not pay their taxes. In these circumstances, we do not find any merit in present appeal and same is dismissed. *** Commissioner of Income-tax v. JDS Apparels P. Ltd.