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TMI Blog2018 (7) TMI 2159X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded u/s 143(3) of the Act vide order dated 30/12/2011 wherein the assessee's loss was determined at Rs.(-)31,41,96,788/- in view of the aforesaid disallowances/ 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 assessee's 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, has 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 the 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 stores /super market premises is in normal course of 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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the normal course of business would partake the character of revenue loss. 5.3.1 We have heard the rival contentions and perused and carefully considered the material on record,; including the orders of the authorities below. The facts on the issue before 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 basis to open and operate a store at Mohali. However, the assessee subsequently, for reasons of commercial expediency, decided against opening the store at Mohali. The landlord forfeited the amount of rental advance paid by the assessee and the assessee had written off this amount of Rs. 10 lakhs in its profit and loss account. The AO was of the view that the amount of renal advance is capital in nature and accordingly disallowed the assessee's 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 that write off the aforesaid rental advance is permissible and allowed the assessee's claim. 5.3.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 the 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 renting out premises in this regard is part of its normal business activity. Therefore, in our considered view, the impugned transaction is intrinsically linked and identical to the assessee's core business activity. In this view of the matter, we are of the opinion that the ld CIT(A) has rightly held that the write off of rental advance paid is in the realm of revenue expenditure and allowable as deduction. We, therefore, uphold the decision of the ld CIT(A) on this issue and consequently dismiss ground No.2 raised by Revenue. 6. Ground No.3 - Disallowance of Bank Charges (for nondeduction of tax at source u/s 194H 6.1 This issue is common for al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee on CBDT Circular No.56/2012 dated 31/12/2012 and has concluded that the CBDT notification brings clarity to this issue. 6.4.2 We find that the co-ordinate bench of this Tribunal in the case of Tata Teleservices Ltd., Vs. DCIT (Supra) has examined this issue in all its facets and concluded that the payment to banks on account of utilization of credit card facilities would 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 view that the decision of the co-ordinate bench in the case of Tata Teleservices Ltds., (Supra) are squarely applicable to the case on hand. The ld. DR for revenue has not brought on record any details to controvert the facts of the case, as laid out above, OR any judicial decision contrary to that cited by the assessee. In this view 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 holding that the collection charges by the bank for services rendered are in the nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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