Deputy Commissioner of Income-Tax, Bangalore V. M/s.Max Hypermarket India Pvt. Ltd., Bangalore

ITA 2083/BANG/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7631 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 28-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K ME GHANATH CHOWHAN
• Assessee Lawyers: K R VASUDEVAN
• Keywords: Commercial expediency; Revenue expenditure
• Section: 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI N.V VASUDEVAN , JUDICIAL MEMBER SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.2083, 2086, 2087 & 2088/BA NG/2016 (ASST. YEAR 2009-10 TO 2012-13) THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-4(1)(2), BANGALORE. . APPELLANT VS. M/S MAX HYPERMARKET INDIA PVT. LTD., NO.39/3 & 44, 2 ND FLOOR, BANNERGHATTA ROAD, BENGALURU. . RESPONDENT APPELLANT BY : SHRI K MEGHANATH CH OWHAN, ADDL. CIT RESPONDENT BY : SHRI K.R VASUDEVAN, A DVOCATE DATE OF HEARING : 2-5-2018 DATE OF PRONOUNCEMENT : 20-7-2018 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THESE ARE A BATCH OF 4 APPEALS BY REVENUE DIRECTED AGAINST THE ORDERS OF THE CIT(A)-4, BANGALORE FOR ASST. YEA RS 2009-10 TO 2012-13. AS THESE APPEALS HAVE COMMON CONNECTED I SSUES, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY W AY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. REVENUES APPEAL IN ITA NO. 2083/BANG/2016 FOR ASST. YEAR 2009-10 ITA NOS.2083 & 2086 TO 2088/B /16 2 2. BRIEFLY STATED, THE FACTS OF THE CASE AS UNDER:- 2.1 FOR ASST. YEAR 2009-10, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30/9/2009 DECLARING LOSS OF RS.31,13,18,618/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (I N SHORT THE ACT) AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SC RUTINY. THE ASSESSMENT WAS CONCLUDED U/S 143(3) OF THE ACT VIDE ORDER DATED 30/12/2011 WHEREIN THE ASSESSEES LOSS WAS DETERMIN ED AT RS.(-)31,41,96,788/- IN VIEW OF THE AFORESAID DISAL LOWANCES/ DEDUCTIONS:- (I) DISALLOWANCE OF WRITE-OFF (ADVANCES PAID) - RS.10,00,000/- (II) DISALLOWANCES OF BANK CHARGES COMMISSION U/S 40(A)(IA) - RS.61,21,830/- 2.2 ON APPEAL, THE CIT(A)-4 VIDE THE IMPUGNED ORDER DATED 31/8/2016 ALLOWED THE ASSESSEES APPEAL ON BOTH THE ABOVE ISSUES. 3. REVENUE, BEING AGGRIEVED BY THE ORDER OF THE CIT (A)-1, BANGALORE DATED 31/8/2016 FOR ASST. YEAR 2009-10, H AS FILED THIS APPEAL WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS: - 1. THE ORDER OF THE LD.CIT (A) IS OPPOSED TO THE LAW AND FACTS OF THE CASE. 2. WHETHER THE CIT (A) WAS JUSTIFIED IN DELETING TH E WRITE-OFF (ADVANCE PAID) STATING THEY SAID LOSS IS AN ALLOWABLE BUSINESS LOSS FOR THE REASON THAT THE ASSESSEE HAS TAKEN ON RENT NUMEROUS SUCH PREMISES SPREAD ACROSS INDIA, AND THIS ACT OF OPERATING THE ITA NOS.2083 & 2086 TO 2088/B /16 3 STORES /SUPER MARKET PREMISES IS IN NORMAL COURSE O F ASSESSEE'S BUSINESS ACTIVITY. 3. WHETHER THE CIT (A) IS RIGHT IN HOLDING THE DECISION IN FAVOUR OF THE ASSESSEE DESPITE THE FACT THAT THE ASSESSEE IS SQUARELY COVERED UNDER THE SECTION 194H AND THE CBDT'S CIRCULAR IS EFFECTIVE ONLY FROM 01.04.2013. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT (A) IN SO FAR AS IT IS RELATES TO THE ABOVE GRO UNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED. 4. THE GROUNDS S NO.1,4, AND 5, BEING GENERAL IN NATURE AND SINCE NO ADJUDICATION IS CALLED FOR THEREON, THEY A RE DISMISSED AS INFRUCTUOUS. 5. GROUND NO.2 DISALLOWANCE OF ADVANCES WRITTEN OFF 5.1 IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO (AO) NOTICED THAT THE ASSESSEE COMPANY HAD DEBITED AN AM OUNT OF RS.10,00,000/- TOWARDS ADVANCE PAYMENT MADE FOR TAK ING A PROPERTY ON RENT FOR OPENING OF STORE AT MOHALI. O N BEING QUERIED ABOUT THE NATURE OF THE ADVANCES WRITTEN OFF, THE A SSESSEE SUBMITTED THAT IT HAD PAID AN ADVANCE OF RS.10 LAKHS TO THE L ANDLORD FOR TAKING UP A PREMISES ON RENT FOR RUNNING THE STORE. HOWEV ER, DUE TO COMMERCIAL REASONS, THE ASSESSEE DECIDED AGAINST OP ENING THE STORE AT MOHALI AND THE CONTRACT WITH THE PROPERTY OWNER WAS CANCELLED. ITA NOS.2083 & 2086 TO 2088/B /16 4 THE OWNER OF THE PROPER FORFEITED THE ADVANCE OF RS .10 LAKHS AND THE ASSESSEE HAS WRITTEN OFF THE SAME IN ITS BOOKS OF ACCOUNT I.E. PROFIT AND LOSS ACCOUNT. THE AO HOWEVER, REJECTED THE AFORESAID EXPLANATION PUT FOR TH BY THE ASSESSEE, TREATED THE EXPENDITURE AS CAPITAL IN NAT URE AND CONSEQUENTLY DISALLOWED THE SAME. 5.2 ON APPEAL THE LD CIT(A) ACCEPTED THE CONTENTION S OF THE ASSESSEE AND HELD THAT THE AMOUNT PAID AS RENTAL DE POSIT WAS ALLOWABLE AS A DEDUCTION. WHILE DECIDING THE ISSU E IN FAVOUR OF THE ASSESSEE, THE LD CIT(A) MADE THE FOLLOWING OBSE RVATIONS:- (I) THE AO HAS NOT DISPUTED THE ACTUAL PAYMENT OR THE GENUINENESS OF THE PARTY TO WHOM THE IMPUGNED AMOUNT WAS PAID AS RENTAL ADVANCE. THE ONLY ISSUE RAISED IS WHETHER THE RENTAL ADVANCE IS CAPITAL IN NATURE. (II) THE ONLY ISSUE IS WHETHER THE RENTAL ADVANCE WAS CAPITAL IN NATURE OR NOT. THE LOSS IS AN ALLOWABLE BUSINESS LOSS FOR THE REASON THAT THE ASSESSEE HAS TAKEN ON RENT NUMEROUS SUCH PREMISES DURING THE NORMAL COURSE OF ITS BUSINESS ACTIVITY. THE IMPUGNED TRANSACTION BEING INTRICATELY CONNECTED TO THE ASSESSEES CORE BUSINESS ACTIVITY, IS DIRECTLY INCI DENTAL TO ITS REVENUE/PROFIT GENERATION. (III) ANY LOSSES OCCURRING IN THE NORMAL COURSE OF BUSINE SS WOULD PARTAKE THE CHARACTER OF REVENUE LOSS. ITA NOS.2083 & 2086 TO 2088/B /16 5 5.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD,; INCLU DING THE ORDERS OF THE AUTHORITIES BELOW. THE FACTS ON THE ISSUE BEFO RE US ARE NOT IN DISPUTE. THE ASSESSEE IS IN THE BUSINESS OF RETAIL TRADE BY OPERATING SUPER-MARKET STORES ACROSS THE COUNTRY IN THE NAME OF SPAR. THE ASSESSEE HAD PAID RENTAL ADVANCE OF RS.10 LAKHS TO A LANDLORD FOR THE PURPOSE OF OBTAINING A PROPERTY ON RENTAL B ASIS TO OPEN AND OPERATE A STORE AT MOHALI. HOWEVER, THE ASSESSEE S UBSEQUENTLY, FOR REASONS OF COMMERCIAL EXPEDIENCY, DECIDED AGAINST O PENING THE STORE AT MOHALI. THE LANDLORD FORFEITED THE AMOUNT OF RENTAL ADVANCE PAID BY THE ASSESSEE AND THE ASSESSEE HAD W RITTEN OFF THIS AMOUNT OF RS.10 LAKHS IN ITS PROFIT AND LOSS ACCOUN T. THE AO WAS OF THE VIEW THAT THE AMOUNT OF RENAL ADVANCE IS CAP ITAL IN NATURE AND ACCORDINGLY DISALLOWED THE ASSESSEES CLAIM FOR THE SAID AMOUNT TO BE AS REVENUE EXPENSE. ON APPEAL, THE LD CIT(A) FOR THE REASONS RECORDED IN THE IMPUGNED ORDER HELD TH AT WRITE OFF THE AFORESAID RENTAL ADVANCE IS PERMISSIBLE AND ALLOWED THE ASSESSEES CLAIM. 5.3.2 THE ASSESSEES CONTENTION IS THAT THE SAID PR EMISES AT MOHALI WAS TAKEN ON LEASE TO CARRY ON THE EXISTING BUSINES S OF THE ASSESSEE AND THEREFORE THE PAYMENT OF RENTAL ADVANCE BY IT, IN THIS REGARD, WAS IN THE NORMAL COURSE OF AND INCIDENTAL TO THE C ONDUCT OF ITS BUSINESS ACTIVITY. IT WAS SUBMITTED THAT BY MAKING THE RENTAL ADVANCE/DEPOSITS, THE ASSESSEE HAD NEITHER ACQUIRED ANY ASSET OF CAPITAL NATURE NOR HAS IT RESULTED IN ANY BENEFIT O F ENDURING NATURE. ACCORDING TO THE ASSESSEE, SINCE THE RENTAL DEPOSIT HAS BEEN ITA NOS.2083 & 2086 TO 2088/B /16 6 FORFEITED, THE ASSESSEE HAS ACTUALLY WRITTEN OFF TH E AMOUNT IN THE PROFIT AND LOSS ACCOUNT AS THE LOSS HAS ACTUALLY BE EN INCURRED. THE LD AR CONTENDED THAT IN VIEW OF THE ABOVE FACTS, TH E LD CIT(A) HAS CORRECTLY ALLOWED THE SAME AS REVENUE EXPENDITURE. 5.3.3 IN SUPPORT OF THE ASSESSEES CONTENTIONS, THE LD AR PLACED RELIANCE ON A FEW JUDICIAL PRONOUNCEMENTS, AND PART ICULARLY ON THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF LG SOFT INDIA (P) LTD., VS. DCIT (2013) 35 TAXMANN.COM 202 (BANG- TRIBUNAL) SUBMITTED THAT ON SIMILAR FACTS, THE TRIB UNAL HELD THAT THE WRITE OFF OF INTEREST FREE DEPOSIT MADE BY THE ASSE SSEE TO THE LICENSOR WAS A LOSS INCIDENTAL TO THE BUSINESS AND HENCE LIABLE TO CLAIM THE SAME AS ALLOWABLE DEDUCTION. THE RELEVAN T PORTION OF THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF LG SOFT INDIA (P) LTD., (SUPRA) AT PARAS 6 TO 6.4 THEREOF ARE EXTRACT ED HEREUNDER:- 6. THE ASSESSEE HAD TAKEN A BUILDING ON LEASE FOR ITS OFFICE PURPOSES. AS PER THE LEASE DEED THE APPELLAN T HAD PLACED A REFUNDABLE DEPOSIT OF RS.24,93,600/- WITH THE LANDLORD. SINCE THE ASSESSEE HAD DIFFICULTY IN RECO VERING THE DEPOSIT FROM THE LANDLORD, IT HAD FILED A SUIT BEFORE THE HONBLE HIGH COURT OF KARNATAKA, WHICH WAS DISMISSED OIL GROUND THAT THE LEASE DEED WAS NOT DU LY REGISTERED. HENCE, THE ASSESSEE WROTE OFF THE RENTA L DEPOSIT IN ITS BOOKS AND CLAIMED AS DEDUCTION WHILE COMPUTING BUSINESS PROFITS OF THE ASESSEE. THE AO H AS DISALLOWED THE SAME WITH THE CONTENTION THAT THE SA ME IS NOT REVENUE ILL AND, HENCE, NOT DEDUCTIBLE UNDER TH E ACT. THE VIEW OF THE AO WAS AFFIRMED BY THE DRP; HENCE, THE ASSESSEE IS IN APPEAL BEFORE US OIL ISSU E. 6.1 THE LEARNED AR HAS FILED WRITTEN SUBMISSIONS. T HE SUMMARY OF THE SAME READS AS FOLLOWS: ITA NOS.2083 & 2086 TO 2088/B /16 7 'THE LOSSES ARISING IN COURSE OF THE BUSINESS, OTHER THAN A CAPITAL LOSS, WHICH IS INCIDENTAL TO THE TRADE WOULD QUALIFY FOR DEDUCTION UNDER SECTION 28 OF THE ACT. RELIANCE IS PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF BADRIDAS DAGA V. CIT(34 ITR 10) (SC), WHEREIN IT WAS HELD THAT 'WHEN A CLAIM IS MADE FOR A DEDUCTION FOR WHICH THERE IS NO SPECIFIC PROVISION IN THE ACT, ALLOWABILITY OF THE SAME WOULD DEPEND ON WHETHER, HAVING REGARD TO ACCEPTED COMMERCIAL PRACTICE AND TRADING PRINCIPLES, IT CAN BE SAID TO ARISE OUT OF THE CARRYING OIL THE BUSINESS AND TO BE INCIDENTAL TO IT'. SINCE THE VERY PURPOSE OF TAKING THE SAID PREMISES ON RENT WAS TO MERELY TO CONDUCT THE EXISTING BUSINESS OPERATIONS, THE LOSS ARISING TO THE APPELLANT ON ACCOUNT OF THE WRITE OFF OF THE RENTAL DEPOSIT WOULD BE INCIDENTAL TO THE BUSINESS. THE APPELLANT DID NOT ACQUIRE ANY ASSET OF CAPITAL NATURE IN THE PRESENT CASE, NOR THERE IS ANY CHANGE IN THE CAPITAL FIELD AND THUS THE LOSS ARISING DUE TO WRITE OFF OF THE RENTAL DEPOSIT IS PURELY REVENUE IN NATURE. RELIANCE IS PLACED ON THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF IBM WORLD TRADE CORPORATION V. CIT (186 ITR 412) WHEREIN IT HELD THAT IN OUR VIEW THE ACQUISITION OF PREMISES ON LEASE WOULD NOT ORDINARILY BE IN THE CAPITAL FIELD AND HENCE WE HAVE NO HESITATION IN HOLDING THAT THE MONEYS ADVANCED BY THE ASSESSEE IN PURSUANCE OF THESE AGREEMENTS TO THE LANDLORD FOR THE PURPOSES OF AND IN CONNECTION WITH THE ACQUISITION OF THE PREMISES ON LEASE, WERE FOR THE PURPOSE OF BUSINESS. NATURALLY, THEREFORE, WHEN SUCH ADVANCES ARE LOST TO THE ASSESSEE, THE LOSS WOULD BE A BUSINESS LOSS AND NOT A CAPITAL LOSS WHICH IS ELIGIBLE FOR DEDUCTION WHILE COMPUTING THE BUSINESS PROFITS OF THE ASSESSEE. RELIANCE IS ALSO ITA NOS.2083 & 2086 TO 2088/B /16 8 PLACED ON THE RECENT RULING OF MUMBAI TRIBUNAL IN THE CASE OF UNITED MOTORS V. ITO (6 TAXMANN.COM 32) WHEREIN IT WAS HELD THAT WRITE OFF OF THE INTEREST FREE DEPOSIT MADE BY THE ASSESSEE TO THE LICENSOR AGAINST RENTAL PROPERTIES WAS A LOSS INCIDENTAL TO THE BUSINESS AND HENCE COULD NOT BE SAID TO BE UNSUSTAINABLE IN LAW. THE APPELLANT FURTHER PLACES RELIANCE ON THE BANGALORE TRIBUNAL RULING IN THE CASE OF WENDT (INDIA) LIMITED (ITA 269/BANG/1) WHEREIN WRITE OFF OF IRRECOVERABLE INTER-CORPORATE DEPOSITS WERE HELD TO BE AN ALLOWABLE DEDUCTION UNDER THE ACT. EVERY EXPENDITURE RESULTING IN SOME KIND OF ENDUING BENEFIT WOULD NOT NECESSARILY BE A CAPITAL OUTLAY AND HENCE WHAT NEEDS TO BE CONSIDERED IS WHETHER SUCH AN EXPENDITURE IS GIVING ANY BENEFIT TO THE ASSESSEE IN CAPITAL FIELD . [EMPIRE JUTE CO. LTD. V. CIT(L980) (124 ITR I) (SC)I. HENCE, THE FACT THAT THE LEASE AGREEMENT IS FOR A PERIOD OF MORE THAN YEAR, WOULD NOT BE RELEVANT TO DETERMINE THE NATURE OF THE RENTAL DEPOSIT AS TO WHETHER THE SAME IS REVENUE OR CAPITAL OUTLAY'. 6.2 THE LEARNED D R PRESENT SUPPORTED THE REASONS RECORDED BY THE AO IN REJECTING THE ASSESSEE'S CONTENTIONS. 6.3 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AS WELL AS THE DEPARTMENTAL REPRESENTATIVE ON THE ISSUE. THE HON'BLE MUMBAI BENCH 'F', IN THE CASE OF UNITED MOTORS (INDIA) LTD . V. ITO{ 20101 6 TAXMANN.COM 32, WHEREIN A SIMILAR ISSUE TO THAT OF PRESENT ISSUE UNDER CONSIDERATION HAD COME UP FOR CONSIDERATION. AFTER HEARING THE RIVAL PARTIES, THE HON'BLE BENCH HAD OBSERVED THAT 'WHETHER SINCE BY MAKING INTEREST-FREE DEPOSITS FOR PURPOSE OF OBTAINING PERMISSIVE USE OR LICENCE TO U SE PREMISES, ASSESSEE DID NOT OBTAIN ANY ENDURING ITA NOS.2083 & 2086 TO 2088/B /16 9 ADVANTAGE OR INTEREST IN PROPERTIES, LOSS OF SECURI TY DEPOSIT AND WRITE OFF OF SAME AGAINST RENTAL OF PROPERTIES WAS A LOSS INCIDENTAL TO BUSINESS AND, THUS, ASSESSING OFFICER WAS RIGHT IN ALLOWING SAID AMOUNT AS A DEDUCTION.' 6.4 IN CONFORMITY WITH THE FINDINGS OF THE HONBLE MUMBAI BENCH OF THE TRIBUNAL ON A SIMILAR ISSUE (SUPRA), WE ARE OF THE FIRM VIEW THAT THE WRITE OFF OF THE INTEREST FREE DEPOSIT MADE BY THE ASSESSEE TO T HE LICENSOR AGAINST RENTAL PROPERTIES WAS A LOSS INCIDENTAL TO THE BUSINESS AND, HENCE, THE ASSESSEE WAS ENTITLED TO CLAIM THE SAME AS ALLOWABLE DEDUCTION. IT IS ORDERED ACCORDINGLY. 5.4.4 IN THE CASE ON HAND ALSO, THE FACTUAL MATRIX IS SIMILAR. THE ASSESSEE IS IN THE BUSINESS OF RUNNING STORES AND R ENTING OUT PREMISES IN THIS REGARD IS PART OF ITS NORMAL BUSIN ESS ACTIVITY. THEREFORE, IN OUR CONSIDERED VIEW, THE IMPUGNED TRA NSACTION IS INTRINSICALLY LINKED AND IDENTICAL TO THE ASSESSEE S CORE BUSINESS ACTIVITY. IN THIS VIEW OF THE MATTER, WE ARE OF TH E OPINION THAT THE LD CIT(A) HAS RIGHTLY HELD THAT THE WRITE OFF OF RENTA L ADVANCE PAID IS IN THE REALM OF REVENUE EXPENDITURE AND ALLOWABLE A S DEDUCTION. WE, THEREFORE, UPHOLD THE DECISION OF THE LD CIT(A) ON THIS ISSUE AND CONSEQUENTLY DISMISS GROUND NO.2 RAISED BY REVE NUE. 6. GROUND NO.3 DISALLOWANCE OF BANK CHARGES ( FOR NON- DEDUCTION OF TAX AT SOURCE U/S 194H 6.1 THIS ISSUE IS COMMON FOR ALL THE FOUR ASST. YEA RS IN APPEAL BEFORE US. THE FACTS OF THE MATTER ON THIS ISSUE A RE THAT THE ASSESSEE HAS DEBITED BANK CHARGES PAID TO BANK TOWARDS COLLE CTION SERVICES. ITA NOS.2083 & 2086 TO 2088/B /16 10 COLLECTION SERVICES ARE THE FACILITY PROVIDED BY TH E BANK ON CREDIT- CARD PAYMENTS DONE BY THE ASSESSEES CUSTOMERS FOR SALES EFFECTED IN THE ASSESSEES STORES ON A DAY TO DAY BASIS. FO R THESE COLLECTION SERVICES RENDERED, THE BANK CHARGES A CERTAIN PERCE NTAGE ON SALES WHICH GET AUTOMATICALLY DEDUCTED FROM THE ASSESSEE S BANK ACCOUNT ON A DAILY BASIS. 6.2 ACCORDING TO THE ASSESSEE, THESE CHARGES LEVIED BY THE BANK AND COLLECTED AUTOMATICALLY ARE IN THE NATURE OF BA NK PROCESSING CHARGES AND NOT IN THE NATURE OF COMMISSION AND AR E THEREFORE NOT LIABLE FOR TDS U/S 194H OF THE ACT. THE AO, HOWEVE R WAS OF THE VIEW THAT THESE CHARGES PAID TO THE BANK ARE IN TH E NATURE OF COMMISSION AND THEREFORE BEING COVERED WITH THE AMB IT OF THE PROVISION OF SEC. 194H OF THE ACT, THE ASSESSEE WAS REQUIRED TO DEDUCT TDS ON THESE AMOUNTS. AS THE ASSESSEE HAD F AILED TO DEDUCT TDS THEREON, THE AO HELD THAT THESE CHARGES ARE LIA BLE TO BE DISALLOWED U/S 40A(IA) OF THE ACT. 6.3 ON APPEAL, THE LD CIT(A), AFTER MAKING A DETAIL ED ANALYSIS OF THE FACTS OF THE CASE ON THIS ISSUE, THE PROCESS IN VOLVED IN THE DEDUCTION OF THE CHARGES BY THE BANKS, THE LEGAL PO SITION AND THE JUDICIAL PRECEDENTS CITED BY THE ASSESSEE HAS HELD THAT THE BANK CHARGES ARE NOT LIABLE FOR DEDUCTION OF TDS U/S 194 H OF THE ACT AND, THEREFORE, PROCEEDED TO DELETE THE DISALLOWANC E U/S 40(A)(IA) OF THE ACT. ITA NOS.2083 & 2086 TO 2088/B /16 11 6.4.1 IN THE APPEALS BEFORE US, THE ASSESSEE HAS CL AIMED THAT ITS CASE IS SQUARELY COVERED U/S 194H OF THE ACT AND TH E CBDT CIRCULAR IS EFFECTIVE ONLY FROM 1/4/2013. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED AND CAREFULLY CONSIDE RED THE MATERIAL ON RECORD; INCLUDING THE ORDERS OF THE AUT HORITIES BELOW AND THE JUDICIAL PRONOUNCEMENTS CITED. THE FACTS O F THE CASE ARE NOT IN DISPUTE AND THE SAME HAVE ELABORATELY DISCUS SED BY THE LD CIT(A) IN THE IMPUGNED ORDER. THE LD CIT(A) HAS AL SO DISCUSSED THE PROCESS INVOLVED IN THE DEDUCTION OF CHARGES BY THE BANK; AS WELL AS THE LEGAL POSITION AND THE JUDICIAL DECISI ONS ON THE ISSUE WHICH, INTER ALIA, INCLUDES THE DECISION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF TATA TELE SERVICES LTD ., VS. DCIT (2013) 29 TAXMANN.COM 262. THE LD CIT(A) HAS ALSO REFERRED TO THE RELIANCE PLACED BY THE ASSESSEE ON CBDT CIRCULA R NO.56/2012 DATED 31/12/2012 AND HAS CONCLUDED THAT THE CBDT N OTIFICATION BRINGS CLARITY TO THIS ISSUE. 6.4.2 WE FIND THAT THE CO-ORDINATE BENCH OF THIS TR IBUNAL IN THE CASE OF TATA TELESERVICES LTD., VS. DCIT (SUPRA) HA S EXAMINED THIS ISSUE IN ALL ITS FACETS AND CONCLUDED THAT THE PAYM ENT TO BANKS ON ACCOUNT OF UTILIZATION OF CREDIT CARD FACILITIES WO ULD BE IN THE NATURE OF BANK CHARGES AND NOT IN THE NATURE OF COMMISSION WITHIN THE MEANING OF SEC. 194H OF THE ACT. WE FIND THAT THE FACTS OF THE CASE ON HAND AND THE ISSUES RAISED HEREIN ARE SIMILAR TO THAT OF THE CASE CITED (SUPRA) AND ARE THEREFORE OF THE CONSIDERED V IEW THAT THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF TA TA TELESERVICES ITA NOS.2083 & 2086 TO 2088/B /16 12 LTDS., (SUPRA) ARE SQUARELY APPLICABLE TO THE CASE ON HAND. THE LD. DR FOR REVENUE HAS NOT BROUGHT ON RECORD ANY DETAIL S TO CONTROVERT THE FACTS OF THE CASE, AS LAID OUT ABOVE, OR ANY JU DICIAL DECISION CONTRARY TO THAT CITED BY THE ASSESSEE. IN THIS VI EW OF THE MATTER, WE ARE OF CONSIDERED OPINION THAT THE LD CIT(A) WAS RIGHT IN PLACING RELIANCE ON THE CITED CASE (SUPRA) AND IN H OLDING THAT THE COLLECTION CHARGES BY THE BANK FOR SERVICES RENDERE D ARE IN THE NATURE OF BANK CHARGES AND NOT COMMISSION AND HENCE WAS NOT LIABLE FOR TDS THEREON U/S 194H OF THE ACT. CONSEQ UENTLY, WE HOLD THAT THE LD CIT(A) WAS RIGHT IN DELETING THE D ISALLOWANCE OF THESE BANK CHARGES MADE U/S 40(A)(IA) OF THE ACT. 6.5 THE GROUND RAISED BY REVENUE THAT THE CBDT CIRC ULAR NO.56/2012 IS EFFECTIVE FROM 1/4/2013 ONLY IS NOT TENABLE. THE ASSESSEE REFERRED TO THIS CIRCULAR DATED 31/12/2012 WHEREIN IT WAS CLARIFIED THAT NO TAX IS REQUIRED TO BE DEDUCTED AT SOURCE ON PAYMENTS MADE TO BANK ON ACCOUNT OF CREDIT CARD COM MISSION FOR TRANSACTIONS BETWEEN THE MERCHANT AND THE BANK. TH E LD CIT(A) HAD REFERRED TO THE CBDT NOTIFICATION TO STATE THAT IT BRINGS CLARITY ON THE ISSUE. IT IS NOT CORRECT TO SAY THAT THE LD CIT(A) RELIED SOLELY ON THIS CBDT NOTIFICATION WHICH IS EFFECTIVE FROM 1 /4/2013. ON A PERUSAL OF THE IMPUGNED ORDER, IT IS CLEAR THAT THE LD CIT(A) HAS EXAMINED THE FACTUAL MATRIX OF THE CASE ON HAND, TH E LEGAL POSITION AND THE JUDICIAL PRONOUNCEMENTS ON THE ISSUE BEFORE DELETING THE DISALLOWANCE. ALSO, THE DECISION IN THE CASE OF TA TA TELESERVICES LTD., (SUPRA) RELIED UPON BY THE LD CIT(A) HAS BEEN RENDERED ON ITA NOS.2083 & 2086 TO 2088/B /16 13 27/2/2012, WHICH WAS BEFORE THE ABOVE MENTIONED CBD T, NOTIFICATION (SUPRA) WAS ISSUED. IT IS THEREFORE O BVIOUS THAT THE CO- ORDINATE BENCH OF THIS TRIBUNAL HAS DECIDED THE ISS UE BEFORE THE ISSUANCE OF CBDT, NOTIFICATION AND IS THEREFORE APP LICABLE FOR THE PERIOD PRIOR TO THE ISSUE OF THE CBDT NOTIFICATION. 6.6 CONSEQUENTLY, THIS GROUND OF REVENUES APPEAL I S DISMISSED. 7. IN THE RESULT, REVENUES APPEAL FOR ASST. YEAR 2 009-10 IS DISMISSED. REVENUES APPEAL IN ITA NOS. 2083, 2087 AND 2088/BA NG/2016 FOR ASST. YEAR 2010-11 TO 2012-13 8. THE GROUNDS RAISED BY REVENUE IN THESE ASST. YEA RS 2010-11 TO 2012-13 ARE IDENTICAL AND ARE AS UNDER:- 1. THE ORDER OF THE LD.CIT (A) IS OPPOSED TO THE LAW AND FACTS OF THE CASE. 2. WHETHER THE CIT (A) IS RIGHT IN HOLDING THE DECISION IN FAVOUR OF THE ASSESSEE DESPITE THE FACT THAT THE ASSESSEE IS SQUARELY COVERED UNDER THE SECTION 194H AND THE CBDT'S CIRCULAR IS EFFECTIVE ONLY FROM 01.04.2013. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT (A) IN SO FAR AS IT IS RELATES TO THE ABOVE GRO UNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED. ITA NOS.2083 & 2086 TO 2088/B /16 14 9. GROUNDS 1,3 AND 4 (SUPRA) BEING GENERAL IN NATUR E, NO ADJUDICATION IS CALLED FOR THEREON AND ARE THEREFOR E DISMISSED AS IN FRUCTUOUS. 10. GROUND NO.2 (FOR ASST. YEARS 2010-11 TO 2012- 13) DISALLOWANCE OF BANK CHARGES U/S 40(A)(IA) FOR NON DEDUCTION OF TAX AT SOURCE U/S 194H OF THE ACT. 10.1 THIS ISSUE/GROUND RAISED BY REVENUE IS IN RESP ECT OF THE DELETION OF THE DISALLOWANCE OF BANK CHARGES U/S 40 (A)(IA) OF THE ACT MADE BY THE AO. THIS ISSUE HAS ALREADY BEEN CO NSIDERED AND DECIDED BY US IN FAVOUR OF THE ASSESSEE AND AGAINS T REVENUE IN THE PROCEEDING PARAGRAPHS 6 TO 6.6 OF THIS ORDER WHILE DISPOSING OFF REVENUES APPEAL FOR ASST. YEAR 2009-10 (SUPRA). F OLLOWING THE DECISION TAKEN THEREIN, WE DISMISS THIS GROUND RAIS ED BY REVENUE FOR ASST. YEARS 2010-11 TO 2012-13 ALSO. 11. IN THE RESULT, REVENUES APPEALS FOR ASST. YEAR 2009-10 TO 2012-13 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2018 . SD/- SD/- (N.V VASUDEVAN) ( JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMB ER BANGALORE DATED : 20/7/2018 VMS ITA NOS.2083 & 2086 TO 2088/B /16 15 COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGAL ORE. ITA NOS.2083 & 2086 TO 2088/B /16 16 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR. P.S... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WE BSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT.. 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR D ISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..