Tribunal upholds CIT (A) decisions on storm water drain expenditure & credit card commission disallowance.

The Tribunal upheld the CIT (A)'s decisions on both issues, allowing the expenditure for covering the storm water drain and dismissing the disallowance of credit card commission, thereby dismissing the Revenue's appeal in its entirety.

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Issues:
1. Allowance of expenditure for covering storm water drain
2. Disallowance of credit card commission

Issue 1: Allowance of expenditure for covering storm water drain
The appeal by the Revenue raised concerns about the CIT (A) allowing a claim of expenditure for covering a storm water drain. The Assessee, engaged in running hotels, had incurred an expenditure of Rs.2,24,70,345 for covering open drainages near its hotel premises. The Assessee argued that the drainage, overflowing with sewage water, caused a bad smell and mosquito menace, affecting the hotel's guests. The Assessee contended that the drainage was on a common area owned by BBMP, and as BBMP did not cover it, the Assessee had to incur the expense. The AO, however, viewed it as resulting in enduring benefit and denied the claim. The CIT (A) disagreed, noting that the expenditure did not create any new profit-making apparatus and improved only the functioning efficiency, thus treating it as a revenue outgo and deleting the disallowance. The Tribunal concurred, emphasizing that the expenditure did not lead to the creation of a new income-earning asset, but rather enhanced the hotel's operational efficiency.

Issue 2: Disallowance of credit card commission
The Revenue contested the CIT (A) decision to delete the disallowance made by the AO on credit card commission. The Assessee had paid Rs.1,46,36,138 to the bank for credit/debit card payment realisation, with the AO treating it as falling under commission attracting Section 194H of the Act. The CIT (A) overturned this, considering the payments as bank charges rather than commission, citing a tribunal decision. The Tribunal upheld the CIT (A)'s decision, stating that the CBDT notification exempting certain payments from tax deduction at source from 01.01.2013 could not retroactively apply to payments made before that date. The Tribunal agreed with the view that such payments were akin to bank charges and not commission, hence Section 194H did not apply. Consequently, the Tribunal dismissed the Revenue's appeal.

In conclusion, the Tribunal upheld the CIT (A)'s decisions on both issues, allowing the expenditure for covering the storm water drain and dismissing the disallowance of credit card commission, thereby dismissing the Revenue's appeal in its entirety.

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