M/s. The District Co - Operative Central Bank Ltd., Eluru V. The ACIT, Eluru

CO 29/VIZ/2015

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3509 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 3 month(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 12-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T S N MURTHY
• Keywords: Reopening of assessment; Depreciation; Additional evidence; Bad and doubtful debts; Tax effect
• Section: 143(3); 133A; 234B; 37(1); 194C; 145; 148; 37; 28; 154

Judgement Text

ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NOS.49 & 50/VIZAG/2012 ( / ASSESSMENT YEARS: 2007-08 & 2008-09) THE DISTRICT CO - OPERATIVE CENTRAL BANK, ELURU ITO, WARD - 2, ELURU [PAN NO. AADFT3506D ] ( ' / APPELLANT) ( ()' / RESPONDENT) ./I.T.A.NO.78/VIZAG/2012 ( / ASSESSMENT YEAR: 2008-09) ITO, WARD - 2, ELURU THE DISTRICT CO - OPERATIVE CENTRAL BANK, ELURU ( ' / APPELLANT) ( ()' / RESPONDENT) ./I.T.A.NO.476/VIZAG/2012 ( / ASSESSMENT YEAR: 2009-10) ACIT, CIRCLE - 1, ELURU THE DISTRICT CO - OPERATIVE CENTRAL BANK, ELURU ( ' / APPELLANT) ( ()' / RESPONDENT) ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 2 C.O. NO.33/VIZAG/2013 (ARISING OUT OF I.T.A.NO.476/VIZAG/2012) ( / ASSESSMENT YEAR: 2009-10) THE DISTRICT CO - OPERATIVE CENTRAL BANK, ELURU ACIT, CIRCLE - 3(1), ELURU ( ' / APPELLANT) ( ()' / RESPONDENT) ./I.T.A.NO.524/VIZAG/2014 ( / ASSESSMENT YEAR: 2010-11) THE DISTRICT CO - OPERATIVE CENTRAL BANK, ELURU ACIT, CIRCLE - 1, ELURU ( ' / APPELLANT) ( ()' / RESPONDENT) ./I.T.A.NOS.269/VIZAG/2015 ( / ASSESSMENT YEAR: 2011-12) ACIT, CIRCLE - 1, ELURU THE DISTRICT CO - OPERATIVE CENTRAL BANK, ELURU ( ' / APPELLANT) ( ()' / RESPONDENT) C.O. NO.29/VIZAG/2015 (ARISING OUT OF I.T.A.NO.269/VIZAG/2015) ( / ASSESSMENT YEARS: 2011-12) THE DISTRICT CO - OPERATIVE CENTRAL BANK, ELURU ACIT, CIRCLE - 1, ELURU ( ' / APPELLANT) ( ()' / RESPONDENT) ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 3 ./I.T.A.NO.515/VIZAG/2014 ( / ASSESSMENT YEAR: 2007-08) THE DISTRICT CO - OPERATIVE CENTRAL BANK, ELURU THE ACIT, CIRCLE - 2(1), VISAKHAPATNAM ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI T.S.N. MURTHY, DR / DATE OF HEARING : 18.01.2018 / DATE OF PRONOUNCEMENT : 25.01.2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THESE CROSS APPEALS FILED BY THE ASSESSEE AS WELL AS THE REVENUE ARE DIRECTED AGAINST ORDERS OF THE COMMISSI ONER OF INCOME TAX (APPEALS) {CIT(A)}, VISAKHAPATNAM VIDE ITA NO.196&1 97/ITO,WARD- 2/ELURU/10-11/11-12 DATED 30.11.2011, ITA NO.0059/1 3- 14/1111/ACIT,C-1,ELURU/2014-15 DATED 26.3.2015, ITA NO.309/CIT(A)/GNT/11-12 DATED 9.10.2012, ITA NO.11/ 2009-10/ACIT,C- 1 ELR/2014-15 DATED.1.7.2014 & ITA NO.0011/13-14/AC IT,C-1, ELURU/2014-15 DATED 30.7.2014 FOR THE ASSESSMENT YE ARS 2007-08 TO 2011-12. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, THEY ARE ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 4 CLUBBED, HEARD TOGETHER AND DISPOSED-OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.49/VIZAG/2012: (ASSESSEE APPEAL): 2. GROUND NOS.1 & 5 ARE GENERAL IN NATURE, WHICH DO NOT REQUIRE SPECIFIC ADJUDICATION. 3. GROUND NO.2 IS RELATED TO THE ISSUE OF NOTICE U /S 148 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT'). I N THIS CASE, A SURVEY U/S 133A OF THE ACT WAS CONDUCTED AND DURING THE COURSE OF SURVEY, THE A.O. HAS NOTICED THAT THE ASSESSEE HAD CLAIMED THE DEDUCTION FOR PREMIUM PAYMENTS TO LIC GRATUITY FUND OF ITS EMPLOY EES IN VIOLATION OF THE PROVISIONS OF SECTION 36(1)(V) & SECTION 40A(7) (B) OF THE ACT. THE A.O. OBSERVED THAT THE GRATUITY FUND/TRUST WAS NOT A RECOGNIZED GRATUITY, FUND HENCE THE ASSESSEE IS NOT ENTITLED FOR DEDUCTI ON. ACCORDINGLY, THE A.O. REOPENED THE ASSESSMENT BY ISSUE OF NOTICE U/S 148 OF THE ACT. 3.1 THIS ISSUE IS INVOLVED FOR THE ASSESSMENT YE AR 2007-08 AND IN APPEAL NO.50/VIZAG/2012 FOR THE ASSESSMENT YEAR 2008-09 ALSO. 3.2 ON APPEAL THE LD. CIT(A) UPHELD THE ISSUE O F REOPENING OF ASSESSMENT U/S 147, HOLDING THAT THE CLAIM OF DEDUC TION FOR GRATUITY IN VIOLATION OF THE PROVISIONS OF SECTION 36(1)(V) AND SECTION 40A(7)(B) OF THE ACT HAS COME TO THE NOTICE OF THE AO, ONLY AFTE R CONDUCTING THE SURVEY U/S 133A OF THE ACT. THE ASSESSMENT IN THIS CASE WAS COMPLETED ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 5 U/S 143(1) OF THE ACT AND NO SCRUTINY ASSESSMENT HA S BEEN MADE AND THERE WAS NO OCCASION TO THE A.O. TO CONSIDER THE I SSUE OF PAYMENT OF GRATUITY. HENCE, THE LD CIT(A) UPHELD THE REOPENIN G OF ASSESSMENT AND THE ISSUE OF NOTICE U/S 148 OF THE ACT. THE LD. CI T(A) RELIED ON THE DECISION OF RAYMOND WOOLLEN MILLS LTD. VS. ITO 236 ITR 34, CIT VS. RAMAN A. & COMPANY 67 ITR 11 AND RAJESH JHAVERI STO CK BROKERS PVT. LTD. 91 ITR 500 (SC) AND GANGASHARAN & SONS PVT. L TD. VS. ITO 130 ITR 1 OF HONBLE APEX COURT. 3.3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. IN THIS CASE, THE A.O. HAS RE OPENED THE ASSESSMENT SINCE THE ASSESSEE HAS NOT TAKEN THE APPROVAL FOR G RATUITY FUND/TRUST AND THE DEDUCTION IS NOT ALLOWABLE FOR CONTRIBUTIONS MA DE TO UNAPPROVED GRATUITY FUND/TRUST, AS PER SECTION 36(1)(V) OF THE ACT AND SECTION 40A(7)(B) OF THE ACT. DURING THE APPEAL HEARING, T HE LD. A.R., REITERATED THE SUBMISSIONS MADE BEFORE THE FIRST APPELLATE AUT HORITY AND DID NOT BRING ANY OTHER DECISION SUPPORTING THE ASSESSEES CASE. THE ASSESSMENT HAS BEEN REOPENED WITHIN FOUR YEARS, HAV ING MATERIAL TO SHOW THAT THE ASSESSEE HAS MADE INCORRECT CLAIM LEA DING TO ESCAPEMENT OF INCOME. THEREFORE, WE DO NOT SEE ANY REASON TO I NTERFERE WITH THE ORDER OF THE LD. CIT(A) AND WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THE ASSESSEES GROUND ON REOPENING OF ASSES SMENT. ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 6 4. GROUND NO.3 IS RELATED TO THE DISALLOWANCE MADE BY THE A.O. TOWARDS GRATUITY PREMIUM PAYABLE/PAID TO LIC OF IND IA LIMITED. THIS ISSUE IS COMMON FOR ALL THE ASSESSMENT YEARS 2007-0 8, 2008-09, 2009-10, 2010-11 & 2011-12. SINCE THE ISSUE IS COM MON FOR ALL THE ASSESSMENT YEARS THE FACTS ARE EXTRACTED FROM THE A SSESSMENT YEAR 2007-08. DURING THE ASSESSMENT YEAR 2007-08, THE A .O. OBSERVED THAT THE ASSESSEE HAS DEBITED A SUM OF RS.4,60,59,225/- TO THE PROFIT & LOSS ACCOUNT TOWARDS THE GRATUITY PREMIUM PAID/PAYABLE TO LIC. OUT OF WHICH RS.70 LAKHS WAS PAID TO LIC OF INDIA AND A SU M OF RS.3,90,59,225/- WAS PAYABLE AT THE END OF THE YEAR . THE BANK HAS PAID THE REMAINING PREMIUM DURING THE FINANCIAL YEAR 200 7-08 BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME. THE A.O. WAS OF THE VIEW THAT THE ASSESSEE HAS NOT SATISFIED THE CONDITIONS OF SECTIO N 36(1)(V) AND ALSO SECTION 40A(7)(B) OF THE ACT TO BE ELIGIBLE FOR DED UCTION. THE FUND IS NEITHER APPROVED BY THE CIT NOR THE ASSESSEE MAINTA INED THE SEPARATE BOOKS OF ACCOUNTS. THE A.O. WAS OF THE VIEW THAT AS PER SECTION 40A(7) OF THE ACT, UNLESS THE ASSESSEE MAKES THE PAYMENT T O THE APPROVED GRATUITY FUND, THE DEDUCTION IS NOT ALLOWABLE. TH E A.O. RELIED ON THE DECISION IN THE CASE OF SHREE SAJJAN MILLS VS. CIT REPORTED IN 156 ITR 585 (SC), SONY INDIA (P) LTD. VS.CIT, 285 ITR 123(D EL) AND THE DECISION IN THE CASE OF CIT.VS PRADESHIYA INDUSTRIAL AND INV ESTMENT CORPORATION ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 7 OF U.P. LTD,325 ITR 583 AND DISALLOWED THE SUM OF R S.4,60,59,225/- AND BROUGHT TO TAX. 5. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSE E WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) OBSERVE D THAT THE GRATUITY FUNDS/TRUST WAS NOT AN APPROVED FUND/TRUST. EVEN TH OUGH A SEPARATE TRUST WAS CREATED FOR THE PURPOSE OF GRATUITY, THE ASSESSEE HAS BEEN MAKING THE PAYMENTS DIRECTLY TO LIC BECAUSE OF THE REASON THE TRUST WAS NOT AN APPROVED TRUST. THE ASSESSEE ARGUED BEFORE THE CIT(A) THAT SINCE THE PAYMENTS WERE MADE DIRECTLY TO LIC, THERE IS A CONSTRUCTIVE COMPLIANCE OF THE PROVISIONS OF LAW IN VIEW OF THE HONBLE MADRAS HIGH COURT JUDGEMENT IN THE CASE OF CIT VS. TEXTOOL COMP ANY LIMITED 257 ITR 39 AND THE LIABILITY WAS ASCERTAINED. THE LD. A .R FURTHER SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSEE HAS BEEN FO LLOWING THE SAME PRACTICE FOR SO MANY YEARS AND PAYING THE GRATUI TY TO THE EMPLOYEES IMMEDIATELY AFTER RETIREMENT AND THE SAME IS CLAIM ED FROM LIC. THE COMPANY HAS NOT CLAIMED ANY DEDUCTION SEPARATELY TO WARDS THE PAYMENT OF GRATUITY FROM ITS EXPENDITURE. ALL SUCH DEBITS AND CREDITS RELATING TO GRATUITY PAYMENT WAS ROUTED THROUGH THE BANK ACCOUNTS. THE CIT(A) HELD THAT PAYMENT OF GRATUITY IS COVERED IN SECTION 36(1)(V) OF THE ACT WHICH STATES THAT ANY SUM BY THE ASSESSE E BY WAY OF ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 8 CONTRIBUTION TOWARDS AN APPROVED GRATUITY FUND UNDE R AN IRREVOCABLE TRUST IS AN ALLOWABLE DEDUCTION BUT ANY SUCH CONTRI BUTIONS ARE SUBJECT TO THE RESTRICTIONS PLACED IN SECTION 40A(7)(B) OF THE ACT. SECTION 40A(7)(B) OF THE ACT STATES THAT NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF ANY PROVISION MADE FOR PAYMENT OF GRATUITY UNLES S THE GRATUITY FUND IS APPROVED BY THE CIT. THE LD. CIT(A) FURTHER VIEWED THAT SINCE THE DEDUCTION IS ALLOWED SPECIFICALLY U/S 36(1)(V) OF T HE ACT, NO DEDUCTION IS ALLOWABLE U/S 37(1) OF THE ACT. 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEA RING, THE LD. A.R. ARGUED THAT THE ASSESSEE HAS CREATED A TRUST FOR EM PLOYEES GRATUITY BUT IT WAS NOT APPROVED. PENDING RECEIPT OF APPROVAL F ROM THE LD. CIT, THE ASSESSEE HAS BEEN CONTRIBUTING THE SUMS TO THE LIC OF INDIA UNDER MASTER PROPOSAL FOR GROUP SCHEME. THE ASSESSEE HAS ASCERTAINED THE LIABILITY ON ACTUARIAL BASIS AND CONTRIBUTED THE SU MS TO THE LIC OF INDIA. THE ASSESSEE HAS ENCLOSED COPY OF APPLICATION MADE TO THE LIC OF INDIA IN THE SCHEME OF MASTER PROPOSAL FOR GROUP. THE AS SESSEE HAS SUBMITTED THE LIST OF ELIGIBLE EMPLOYEES AS ON THE DATE OF COMMENCEMENT OF THE SCHEME I.E. ON 1.7.2003 TO THE LIC OF INDIA. THE ASSESSEE ALSO ENCLOSED THE POLICY AND THE CONDITION S OF POLICY OF LIFE ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 9 INSURANCE IN POLICY NO.GGCA/5300797 AND ARGUED THAT THE ASSESSEE HAS CONTRIBUTED THE GROUP GRATUITY PREMIUM TO THE LIC O F INDIA UNDER MASTER PROPOSAL GROUP SCHEME. THE PAYMENTS MADE TOWARDS T HE GRATUITY IN THE FORM OF PREMIUMS TO THE LIC OF INDIA HAVE NO CO NTROL TO THE ASSESSEE BANK TO UTILIZE THE SAME FOR ITS BUSINESS PURPOSE. THE INTENTION OF THE STATUTE FOR OBTAINING THE APPROVAL FROM COMMISSIONER OF INCOME TAX TO THE GROUP GRATUITY FUND IS TO PREVENT THE MIS-UTILISATION OF THE FUNDS BY THE COMPANY OR BY THE DIRECTORS OF THE COMPANY. SINCE THE PAYMENT WAS MADE TO THE APPROVED SCHEMES OF THE LIC, THE PAYMENT MADE TO THE LIC UNDER GRATUITY SCHEME IS CO MPLETELY UNDER THE CONTROL AND MANAGEMENT OF THE LIC OF INDIA AND THE ASSESSEE HAS NO CONTROL ON UTILIZATION OF THE FUNDS. AS HELD BY HO NBLE MADRAS HIGH COURT IN TEXTOOL COMPANY LIMITED, THERE IS A CONSTR UCTIVE COMPLIANCE OF THE PROVISIONS OF LAW AND THE REQUIREMENTS HAVE BEE N COMPLIED WITH BY THE ASSESSEE. THE ASSESSEE RELIED ON THE DECISION OF COORDINATE BENCH IN THE CASE OF CAPITAL IQ INFORMATION SYSTEM (INDIA ) PVT. LTD. ITA NO.84/HYD/2013 DATED 31.5.2013 FOR THE ASSESSMENT Y EAR 2008-09 OF HONBLE ITAT, HYDERABAD A BENCH AND THE DECISION OF ITAT AHMEDABAD C BENCH IN THE CASE OF DCIT VS. BARODA GUJARAT GRAMEEN BANK IN ITA NO.1479/AHD/2010 DATED 6.8.2010 AND THE DECISION OF ITAT A BENCH CHENNAI IN THE CASE OF ACIT VS. M/S. VERI ZON DATA SERVICES ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 10 INDIA PVT. LTD. IN ITA NOS.1654, 1703, 1704/MDS./20 14 DATED 4.9.2015 AND ARGUED THAT THE ISSUE IS SQUARELY COVERED BY TH E DECISIONS CITED ABOVE AND THE DECISION OF TEXTOOL COMPANY LIMITED ( SUPRA) HAS BEEN CONFIRMED BY THE HONBLE SUPREME COURT. THEREFORE, ARGUED THAT THE ORDERS OF THE CIT(A) REQUIRED TO BE SET ASIDE AND A LLOW THE APPEAL OF THE ASSESSEE. 7. ON THE OTHER HAND, THE LD. D.R. ARGUED THAT AS PER SECTION 36(1)(V) R.W.S. SECTION 40A(7) & 40A(9) OF THE ACT, UNLESS THE PAYMENT IS MADE TO APPROVED GRATUITY FUND, THE DEDUCTION IS NOT AVAILABLE TO THE ASSESSEE. SECTION 40A(7) OF THE ACT SPECIFICALLY P ROHIBITS THE PROVISION MADE IN RESPECT OF THE PAYMENT OF GRATUITY TO HIS E MPLOYEES ON THEIR RETIREMENT OR TERMINATION OF THEIR EMPLOYMENT FOR A NY REASON UNLESS THE PAYMENT IS MADE BY WAY OF CONTRIBUTION TO AN APPROV ED GRATUITY FUND AND FURTHER, SUB SECTION 9 OF SECTION 40A OF THE AC T ALSO PLACES RESTRICTION IN RESPECT OF ANY SUM PAID BY THE ASSES SEE AS AN EMPLOYEE TOWARDS THE SETTING UP OF OR CONFIRMATION OF OR CON TRIBUTION TO ANY FUND/TRUST COMPANY, ASSOCIATION OF PERSONS, BODY OF INDIVIDUALS OR ANY OTHER INSTITUTION UNLESS IT IS COVERED BY SECTION 3 6(1)(V) OF THE ACT. IN THE INSTANT CASE THE ASSESSEE HAD MADE THE GRATUITY PAYMENT DIRECTLY TO THE LIC OF INDIA WITHOUT ROUTING THE SAME THROUGH T HE APPROVED GRATUITY ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 11 FUND. SINCE THE ASSESSEE HAS NOT MADE ANY CONTRIBU TION TO THE APPROVED GRATUITY FUND, THE SAME IS REQUIRED TO BE DISALLOWED AND ARGUED THAT THE CIT(A) HAS RIGHTLY UPHELD THE DISAL LOWANCE MADE BY THE A.O., WHICH REQUIRED TO BE UPHELD. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE IS A COOPERATIVE BANK AND CREA TED THE GROUP GRATUITY FUND/TRUST OF THE DISTRICT CO-OPERATIVE CE NTRAL BANK EMPLOYEES BUT THE SAME WAS NOT YET APPROVED BY THE CIT. PEND ING RECEIPT OF APPROVAL, THE ASSESSEE HAD MADE APPLICATION TO LIC OF INDIA UNDER PENSION AND GROUP SCHEMES, AND TAKEN POLICY UNDER M ASTER PROPOSAL FOR GROUP FOR PAYMENT OF GRATUITY ON 1.7.2003, AND IS C ONTRIBUTING THE SUMS TO THE LIC OF INDIA TOWARDS THE GROUP GRATUITY ON A CTUARIAL BASIS. THE ASSESSEE HAS NOT MADE ANY PROVISION AND MADE THE PA YMENT BEFORE FILING THE RETURN OF INCOME. ON HAPPENING THE EVENT , THE ASSESSEE BANK IS RECEIVING THE GRATUITY PAYMENT FROM THE LIC WHIC H IS BEING PAID TO THE EMPLOYEE CONCERNED AND NO FURTHER DEDUCTION IS BEIN G CLAIMED BY THE ASSESSEE AS EXPENDITURE. THUS NO DOUBLE DEDUCTION IS CLAIMED. THE EXPENDITURE CLAIMED BY THE ASSESSEE UNDER GROUP GRA TUITY SCHEME TO LIC OF INDIA WAS ALLOWED IN THE EARLIER YEARS PRIOR TO 2007-08. DURING ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 12 THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2 007-08, THE A.O. DISALLOWED THE SAME SINCE THE PAYMENT MADE TO LIC O F INDIA TOWARDS GROUP GRATUITY SCHEME IS NOT COVERED BY SECTION 36( 1)(V), 40A(7)(B) & 40A(9) OF THE ACT BECAUSE THE ASSESSEE HAS NOT SATI SFIED THE CONDITIONS. THE ARGUMENT OF THE ASSESSEE IS THAT SINCE THE PAYM ENTS WERE MADE TO LIC OF INDIA IN MASTER POLICY SCHEME, THE PREMIUMS CONTRIBUTED TO THE LIC OF INDIA IS ALLOWABLE DEDUCTION AND RELIED ON T HE DECISIONS OF COORDINATE BENCH OF HYDERABAD IN THE CASE OF CAPITA L IQ INFORMATION SYSTEMS (INDIA) PVT. LIMITED (SUPRA). THE HONBLE ITAT HYDERABAD BENCH WHILE DECIDING THE ISSUE ON SIMILAR FACTS HEL D AS UNDER: 8. WE HAVE HEARD THE ARGUMENTS OF THE PARTIES, PERU SED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW. WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE IT AT, HYDERABAD IN THE CASE OF M/S. SRI KRISHNA DRUGS LTD. VS. DEPARTMENT OF INCOME-TAX IN ITA NO.2126/HYD/2011 FOR AY 2007.08 DATED 11.4.2012, WHERE THE JM WAS ONE OF THE PARTY. THE TRIBUNAL IN THE SAID CASE HELD AS FOLLOWS: 3. THE SECOND GROUND RAISED BY THE REVENUE IS AS UNDER : 'THE LEARNED CIT(A) ERRED IN HOLDING THAT UNRECOGNI SED GRATUITY FUND IS ALLOWABLE U/S. 37(1),WHEN THE CASE IS HIT B Y THE PROVISIONS OF SECTION 40A(9) AND ESPECIALLY WHEN TH E ASSESSEE FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 36( 1)(V).' 4. AFTER HEARING BOTH THE SIDES, WE FIND THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE IN I.T.A. NO. 198/HYD/2011 IN ASSESSEE'S OWN CASE FOR A.Y. 2006-07 ORDER DATED 16.12.2011 WHEREIN THIS TRIBUNAL HELD A S FOLLOWS: '3. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINI ON THAT SIMILAR ISSUE CAME UP FOR CONSIDERATION IN ASSESSEE 'S OWN CASE FOR ASSESSMENT YEAR 2002-03 IN I.T.A. NO. 349/HYD/2 006. THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSE E VIDE ITS ORDER DATED :15.2.2008 BY HOLDING AS FOLLOWS: ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 13 '4. WE HAVE CONSIDERED RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMI TTEDLY, THE GROUP GRATUITY SCHEME WAS NOT RECOGNISED BY THE COMMISSIONER OF INCOME-TAX. THIS FACT IS NOT IN DIS PUTE. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SEC. 36(1)(V) OF THE INCOME-TAX AC. SEC. 36(1)(V) READS AS FOLLOWS: '36. (1) THE DEDUCTIONS PROVIDED FOR IN THE FOLLOWI NG CLAUSES SHALL BE ALLOW D IN RESPECT OF THE MATTERS DEALT WI TH THEREIN, IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 - (V) ANY SUM PAID BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TOWARDS AN APPROVED GRATUITY FUND CREA TED BY HIM FOR THE EXCLUSIVE BENEFIT OF HIS EMPLOYEES UNDER AN IRREVOC ABLE TRUST. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SEC. 37 OF THE INCOME-TAX ACT. SEC. 37 PROVIDES FOR DEDU CTION OF EXPENDITURE NOT BEING IN THE NATURE DESCRIBED IN SE CTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL EXPEND ITURE OR PERSONAL EXPENDITURE OF THE ASSESSEE, BUT LAID OUT AND EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION, WHILE COMPUTING INCOME CHAR GEABLE TO TAX. THE MAIN CONTENTION OF THE REVENUE IS THAT UNDER SEC. 36(1)(V), THE PAYMENT MADE BY THE ASSESSEE AS EMPLOYER COULD BE ALLOWED ONLY IN RESPECT OF APPROV ED GRATUITY FUND. SINCE THE GROUP GRATUITY SCHEME IS N OT APPROVED BY THE CIT, ACCORDING TO THE REVENUE, IT C ANNOT BE ALLOWED. HOWEVER, THE CONTENTION OF THE ASSESSEE IS THAT IN VIEW OF THE JUDGEMENT OF THE MADRAS HIGH COURT IN T HE CASE OF PREMIER SPINNING MILLS LTD. (SUPRA) AND THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE C ASE OF WARNER HINDUSTAN LTD. (SUPRA), IT HAS TO BE ALLOWED. 5. WE HAVE CAREFULLY GONE THROUGH THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF WARNER HIN DUSTAN LTD. (SUPRA). IN THE CASE BEFORE THE JURISDICTIONAL HIGH COURT, THE PROVIDENT FUND WAS NOT APPROVED BY THE CIT. THE AND HRA PRADESH HIGH COURT AFTER REFERRING TO THE JUDGEMENT OF THE BOMBAY HIGH COURT IN TATA IRON & STEEL CO. LTD. V. D. V. BAPAT, ITO (1975) 101 ITR 292, AND THE JUDGEMENT OF THE SUPREME COURT IN METAL BOX COMPANY OF INDIA LTD. VS . THE WORKMEN (1969) 73 ITR 53, HELD THAT THE AMOUNT PAID TOWARDS AN UNAPPROVED GRATUITY FUND CAN BE DEDUCTED UNDER SEC. 37 OF THE I.T. ACT, THOUGH NOT UNDER SEC. 36(1 )(V). IN VIEW OF THIS JUDGMENT OF THE JURISDICTIONAL HIGH CO URT, IN OUR OPINION, EVEN IF ANY PAYMENT IS MADE TO AN UNAPPROV ED GRATUITY FUND, IT HAS TO BE ALLOWED UNDER SEC. 37. BY RESPECTFULLY FOLLOWING THE BINDING JUDGEMENT OF AND HRA ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 14 PRADESH HIGH COURT IN THE CASE OF WARNER HINDUSTAN LTD. (SUPRA), WE UPHOLD THE ORDER OF THE CIT(A). IN VIEW OF THE ABOVE DISCUSSION, WE DISMISS THE GRO UND TAKEN BY THE REVENUE. 5. IN VIEW OF THE ABOVE DECISION OF THIS TRIBUNAL, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 9. SINCE THE ISSUE UNDER CONSIDERATION IS MATERIALL Y IDENTICAL TO THE ONE DECIDED BY THE ITAT IN THE CASE OF M/S. SRI KRI SHNA DRUGS LTD. (SUPRA), RESPECTFULLY FOLLOWING THE SAME, WE SET AS IDE THE ORDER OF THE CIT(A) AND ALLOW THE GROUND OF APPEAL OF THE ASSESS EE. 9. SIMILARLY, ITAT AHMEDABAD BENCH IN THE CASE OF BARODA GUJARAT GRAMEEN BANK CITED (SUPRA) HELD THAT THE PA YMENT MADE TO LIC OF INDIA IS NOT A PROVISION BUT IT IS ACTUAL EXPEND ITURE CLAIMED UNDER THE GRATUITY CONTRIBUTION. HONBLE ITAT AHMEDABAD BENC H HELD THAT SINCE ASSESSEE HAS NOT CLAIMED THE PROVISION AND CLAIMED ON ACTUAL BASIS, THE EXPENDITURE IS ALLOWABLE DEDUCTION. FOR READY REFE RENCE, WE REPRODUCE PARA NOS.4 & 5 OF THE ORDER OF THE HONBLE ITAT AHM EDABAD BENCH WHICH READS AS UNDER: 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MA TERIAL AVAILABLE ON RECORD. SECTION 40A (7) OF THE IT ACT PROVIDES T HAT SUBJECT TO PROVISION OF CLAUSE (B), NO DEDUCTION SHALL BE ALLO WED IN RESPECT OF ANY PROVISION MADE BY THE ASSESSEE FOR PAYMENT OF G RATUITY TO HIS EMPLOYER ON THEIR RETIREMENT OR ON TERMINATION OF T HEIR EMPLOYMENT FOR ANY REASON. IT IS CLEAR FROM THE ABOVE PROVISIO N THAT SECTION 40A (7) OF THE IT ACT WOULD APPLY IN RESPECT OF THE PRO VISION ONLY. HOWEVER, IN THE CASE OF THE ASSESSEE, THE ASSESSEE CLAIMED DEDUCTION OF THE EXPENDITURE ON ACCOUNT OF ACTUAL E XPENSES CLAIMED UNDER THE HEAD GRATUITY CONTRIBUTION. ITAT AHMEDABA D BENCH IN THE CASE OF NEW BHARAT ENGINEERING WORKS (JAM) LTD. (SU PRA) HELD 'DISALLOWANCE UNDER S. 40A(7) - GRATUITY ACTUAL P AYMENT OF FUNDS TO LIC AND NOT MERE PROVISION - NOT HIT BY S. 40A(7) - CIT VS GUJARAT MACHINE TOOLS (ITA 666/A ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 15 HD/1985) FOLLOWED'. HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS BITONI LAMPS LTD. 144 TAXMAN 33 HELD THAT 'SECTION 40A(7) OF THE INCOME-TAX ACT, 1961 - BUSIN ESS DISALLOWANCE - GRATUITY - ASSESSMENT YEAR 1979-80 - ASSESSEE-COMPANY CLAIMED DEDUCTION UNDER SECTION 40A(7) (B) (I) ON ACCOUNT OF GRATUITY ACTUALLY DEPO SITED IN FUND CREATED BY IT - WHETHER SUCH A CLAIM COULD ONLY HAVE BEEN DISALLOWED IF IT HAD BEEN PROVED THAT GRA TUITY, IN RESPECT OF WHICH SAID PAYMENT HAD BEEN MADE, HAD NOT BECOME PAYABLE DURING PREVIOUS YEAR - HELD, YES - WHETHER IN ABSENCE OF SUCH A CASE MADE OUT BY REVEN UE, TRIBUNAL WAS RIGHT IN HOLDING THAT GRANT OF APPROVA L OF GRATUITY FUND WAS NOT RELEVANT FOR PURPOSE OF INSTA NT CASE AS SAID DEDUCTION WAS NOT BEING CLAIMED ON ACC OUNT OF ANY PROVISION AND AMOUNT OF GRATUITY WAS AN ALLO WABLE DEDUCTION - HELD, YES'. 5. CONSIDERING THE ABOVE ASPECTS, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITIO N. THERE IS NO MERIT IN THE DEPARTMENTAL APPEAL. SAME IS ACCORDINGLY DISMIS SED. 10. IN THE CASE OF VERIZON DATA SERVICES INDIA PVT . LTD. (SUPRA) THE COORDINATE BENCH OF MADRAS HELD THAT PAYMENT MADE T O GRATUITY FUND MAINTAINED WITH LIC HAS NO CONTROL OVER THE IRREVOC ABLE TRUST CREATED EXCLUSIVELY FOR THE BENEFIT OF EMPLOYEES AND DEDUCT ION SHALL BE ALLOWED. THE COORDINATE BENCH OF MADRAS WHILE DECIDING THE A PPEAL RELIED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF TEXTOOL INDIA PVT. LIMITED (SUPRA) (CIVIL APPEAL NO.447 OF 2003). IN THE INSTANT CASE THE ASSESSEE HAS MADE THE PAYMENTS TO THE LIC TOWARDS G ROUP GRATUITY SCHEME DIRECTLY IN APPROVED SCHEMES. THE ASSESSEE HAS ALSO OBTAINED THE POLICY IN FAVOUR OF THE BANK. THE ASSESSEE HAS NO CONTROL OVER THE FUNDS CONTRIBUTED TO LIC TOWARDS THE GRATUITY. THE ASSESSEE IS RECEIVING ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 16 THE GRATUITY PAYMENT DIRECTLY FROM THE LIC OF INDIA AS PER THE SCHEME WHICH IS PAID TO THE EMPLOYEE ON HAPPENING OF THE E VENT I.E. RETIREMENT OR DEATH OR RESIGNATION. THEREFORE, THE FACTS OF T HE ASSESSEES CASE ARE SQUARELY COVERED BY THE DECISIONS CITED SUPRA. THE COORDINATE BENCH OF HYDERABAD WHILE DELIVERING THE RULING RELIED ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF WARNER HIN DUSTAN LTD. SINCE THE FACTS ARE IDENTICAL, RESPECTFULLY FOLLOWING THE VIE W TAKEN BY THE COORDINATE BENCHES, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR THE DEDUCTION FOR PAYMENT OF GRATUITY TO LIC AND ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND ALLOW THE APPEAL OF THE ASSES SEE. 11. THIS ISSUE IS INVOLVED FOR THE ASSESSMENT YEAR 2007-08, 2008-09, 2009-10, 2010-11 & 2011-12 ON IDENTICAL FACTS. THE APPEAL OF THE ASSESSEE ON THIS GROUND FOR ALL THE SAID ASSESSMENT YEARS STANDS ALLOWED. 12. GROUND NO.4 IS RELATED TO CHARGING OF INTEREST U/S 234B & C OF THE ACT. CHARGING OF INTEREST U/S 234B&C IS MANDATORY AND CONSEQUENTIAL IN NATURE. NO ARGUMENTS ARE ADVANCED BY THE LD. A.R O N THIS ISSUE, THEREFORE, THIS GROUND IS DISMISSED. 13. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FO R THE ASSESSMENT YEAR 2007-08 IS PARTLY ALLOWED. ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 17 ITA NO.50/VIZAG/2012 (ASSESSEE APPEAL): 14. GROUND NOS.1 & 8 ARE GENERAL IN NATURE, WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 15. GROUND NO.2 IS RELATED TO THE ISSUE OF NOTICE U/S 148 OF THE ACT. IN THIS CASE ASSESSMENT WAS COMPLETED U/S 143 (3) OF THE ACT ON 15.9.2009. SUBSEQUENTLY, A SURVEY U/S 133A OF THE ACT WAS CONDUCTED IN THIS CASE ON 18.3.2010 AND DURING THE COURSE OF SUR VEY, THE A.O. FOUND THAT PREMIUM PAYMENTS TO LIC TOWARDS GROUP GRATUITY FOR ITS EMPLOYEES WAS CLAIMED AS DEDUCTION. SINCE THE GROUP GRATUITY FUND OF THE TRUST WAS NOT AN APPROVED FUND OR TRUST AS REQUIRED UNDER SEC TION 40A(7)(B) OF THE ACT THE A.O., REOPENED THE ASSESSMENT AND ISSUED NO TICE U/S 148 OF THE ACT, WHICH IS CHALLENGED BY THE ASSESSEE. THE LD. CIT (A) UPHELD THE ISSUE OF NOTICE U/S 148 OF THE ACT. THE FACTS OF T HE ASSESSEES CASE ARE SIMILAR TO THAT OF IN APPEAL NO.49 OF 2012 FOR A.Y. 2007-08 DECIDED IN THIS ORDER AGAINST THE ASSESSEE, EXCEPT IN THE INSTANT C ASE THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. HO WEVER, THE ASSESSMENT IS REOPENED WITHIN 4 YEARS AFTER HAVING RECEIVED THE INFORMATION THAT THE ASSESSEE HAD MADE THE INCORREC T CLAIM LEADING TO ESCAPEMENT OF INCOME. THE LD. AR OF THE ASSESSEE H AS REITERATED THE SUBMISSIONS MADE IN THE EARLIER ORDER. AS PER THE DETAILED DISCUSSION ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 18 MADE IN ORDER NO.49/VIZAG/2012 DISCUSSED ABOVE, WE UPHOLD THE ISSUE OF NOTICE U/S 148 OF THE ACT AND ASSESSEES APPEAL ON THIS GROUND IS DISMISSED. 16. GROUND NO.3 IS RELATED TO DISALLOWANCE MADE BY THE A.O. IN RESPECT OF THE GRATUITY PREMIUM PAID OR PAYABLE TO LIC OF I NDIA. THIS ISSUE IS DISCUSSED IN DETAIL AND DECIDED IN FAVOUR OF THE AS SESSEE IN APPEAL NO.49 OF 2012 FOR THE A.Y. 2007-08 IN THIS ORDER. ACCORD INGLY, WE HOLD THAT THE GROUP GRATUITY PREMIUM PAID TO LIC OF INDIA IS AN A LLOWABLE DEDUCTION AND ALLOW THE APPEAL OF THE ASSESSEE. 17. GROUND NO.4 IS RELATED TO THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT MADE BY THE A.O. FOR A SUM OF ` 6,58,091/-. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. FOUND THAT THE ASSESSEE HAD M ADE THE PAYMENT OF ` 2,63,123/- FOR THE PURPOSE OF ADVERTISEMENT EXPENSE S FOR WHICH THE ASSESSEE REQUIRED TO DEDUCT THE TAX AT SOURCE U/S 1 94C OF THE ACT. SIMILARLY, THE ASSESSEE HAD MADE THE PAYMENTS OF ` 3,96,568/- FOR WHICH THE ASSESSEE REQUIRED TO DEDUCT TDS U/S 194J OF THE ACT AGGREGATING THE PAYMENT OF ` 6,58,691/-. SINCE THE ASSESSEE FAILED TO DEDUCT TH E TAX AT SOURCE U/S 194C & 194J OF THE ACT, THE A.O. DISALLO WED THE SAID SUMS U/S 40(A)(IA) OF THE ACT AND ADDED BACK TO THE INCOME. ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 19 18. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSE E WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) UPHELD THE ADD ITION. 19. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, T HE LD. A.R. RELIED ON THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. HOWEVER, THE A.R. DID NOT ESTABLISH THAT THE PAYMENTS IN QUESTION, DOES NOT A TTRACT TDS. 20. ON THE OTHER HAND, THE LD. A.R. RELIED ON THE O RDERS OF THE LOWER AUTHORITIES. 21. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. IN THIS CASE, IT IS AN UNDISPUTED FACT THAT THE PAYMENTS MA DE BY THE ASSESSEE TOWARDS ADVERTISEMENT AND PROFESSIONAL CHARGES ATTR ACT THE TDS AND ASSESSEE FAILED TO DEDUCT THE TAX AT SOURCE. THERE FORE, WE DO NOT HAVE ANY HESITATION TO UPHOLD THE ORDER OF THE LD. CIT(A ) AND THE ASSESSEES APPEAL ON THIS GROUND IS DISMISSED. 22. GROUND NOS.5 & 6 ARE RELATED TO THE ADDITION OF ` 12,52,25,946/- RELATING OVERDUE INTEREST ON NON PERFORMING ASSETS. THIS ISSUE IS INVOLVED FOR THE ASSESSMENT YEAR 2008-09 & 2009-10. DURING THE ASSESSMENT ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 20 PROCEEDINGS, THE A.O. FOUND THAT THE ASSESSEE HAS D EBITED A SUM OF ` 12,52,25,946/- TOWARDS OVERDUE INTEREST TO P&L ACCO UNT IN THE BALANCE SHEET. ON SCRUTINY OF THE DETAILS, THE A.O. FOUND THAT THE SAID SUM WAS RELATED TO THE INTEREST CHARGED ON NON PERFORMING A SSETS. THE ASSESSEE HAS DEBITED THE INTEREST TO THE DEBTORS AND CREDITE D TO THE P&L ACCOUNT. SUBSEQUENTLY, THE ASSESSEE HAS REVERSED THE INCOME CREDITED TO THE P&L ACCOUNT. THE PRUDENTIAL NORMS OF THE RBI PRESCRIB E THAT THE INTEREST ON NPA HAS TO BE ACCOUNTED ON REALIZATION BASIS. SINC E THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING AND T HE INTEREST REQUIRED TO BE CHARGED ON THE BASIS OF THE ACCOUNTING PRACTICE FOLLOWED BY THE ASSESSEE, THE A.O. VIEWED THAT THE INTEREST ON NPA REQUIRED TO BE TAKEN AS INCOME AND RELIED ON THE DECISIONS OF HONBLE SU PREME COURT/HIGH COURT IN THE FOLLOWING CASES AND BROUGHT TO TAX: 1. TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD. VS. CIT 227 ITR 172 (SC) 2. 37 ITR 66 (SC) INDIAN MOLAYSIS COMPANY PRIVATE L TD. 3. SHREE SAJJAN MILLS PRIVATE LIMTED 156 ITR 585 4. MYSORE LAMPS 185 ITR 96 (KR) 23. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESS EE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) CONFIRM ED THE ADDITION MADE BY THE A.O. WHILE CONFIRMING THE ADDITION OF THE A .O., THE LD. CIT(A) HELD THAT THE DEBT IN QUESTION FOR WHICH THE OVERDUE IN TEREST IS CLAIMED, IS NOT ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 21 THE DEBT IN WHICH THE RECOVERY IS DOUBTFUL AND NON RECOVERY CASE. THE CIT(A) FURTHER OBSERVED THAT OUT OF THE TOTAL INTER EST CREDITED TO THE P&L ACCOUNT, THE LIONS SHARE OF DEBTS ARE STANDARD ASS ETS BUT NOT THE DOUBTFUL DEBTS WHICH REQUIRE TO BE CONSIDERED AS A BAD LOAN. THE ASSESSEE HAD CLAIMED THE 24% OF INTEREST AS OVERDUE INTEREST AND AS PER THE INFORMATION FURNISHED BY THE ASSESSEE, SUB STAN DARD, DOUBTFUL AND LOST ASSET ACCOUNTS FOR ` 1870.95 LAKHS AGAINST THE TOTAL DEBTS OF ` 62,888.20 LAKHS WHICH WORKS OUT TO 2.97% OF WHICH INDICATES T HAT THE CLAIM MADE BY THE ASSESSEE FOR NPA INTEREST IS NOT COMMENSURAT ING WITH SUB STANDARD AND DOUBTFUL ASSETS. ACCORDING TO THE CIT(A), THE INTEREST ON NPA IS NOT ALLOWABLE DEDUCTION AND THE CLAIM MADE BY THE ASSES SEE IS EXCESSIVE. ACCORDING TO THE LD. CIT(A) THE SECTION 45Q OF RBI ACT IS NOT APPLICABLE TO THE ASSESSEE BANK AND IT WAS IN RELATION TO NBFCS. THE LD. CIT(A) HELD THAT THE ASSESSEE HAS TO RECOGNIZE THE INCOME ON ME RCANTILE BASIS. THE LD.CIT(A) DISCUSSED THE ISSUE AT LENGTH IN HIS ORDE R AND RELIED ON CATENA OF DECISIONS AND THE SAME IS SUMMED UP IN PARA NO.7 .39 TO 9 WHICH READS AS UNDER: 7.39 IN THE LIGHT OF ANALYSIS OF THE ABOVE THREE S UPREME COURT DECISIONS IT CAN BE OBSERVED THAT THE HON'BLE COURT WAS OF THE C ONSISTENT VIEW THAT BENEVOLENT CIRCULARS ISSUED BY THE BOARD ARE NOT IN CONTRAVENTION OF THE PROVISIONS OF THE ACT AND HENCE ARE BINDING ON THE DEPARTMENT. IT CAN FURTHER BE INFERR ED THAT THE COURT WAS OF THE CONSISTENT VIEW THAT THE CIRCULAR DTD 06.10.1952 IS BINDING ON THE INCOME TA AUTHORITIES UPTO A.Y.1973- 79 AS THE SAID CIRCULAR COULD HAVE ONLY BEEN WITHDR AWN PROSPECTIVELY. CIRCULAR DATED 09.10.1984 IS BINDING ON THE INCOME TAX AUTHORITIES FROM A.YR.1979-80 ONWARDS AND THE METHOD STATED IN THE CIRCULAR SHOULD BE FOLLOWED IN RECOGNIZING THE INTEREST ON STICKY LOANS. AS ALREADY DISCUSSED, INTEREST ON STICKY LOANS WHICH A RE DOUBTFUL OF RECOVERY ACCRUES TO THE ASSESSEE AND THE SAME HAS TO BE TAXED AS INCOME ON THE ASSESSEE ON ACCRUAL BASIS FOR THREE ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 22 YEARS THOUGH THERE IS NON- PAYMENT OF INTEREST/PRIN CIPLE. IT IS ONLY FROM THE 4 TH YEAR THAT CHARGING OF INTEREST ON SUCH LOANS CAN BE DONE ON R ECEIPT BASIS. THIS COUPLED WITH THE STAND OF HON'BLE SUPREME COURT IN THE CASE OF SOUTHERN TECHN OLOGIES THAT RBI GUIDELINES ARE NOT BINDING ON THE DEPARTMENT SETTLES THE ISSUE WITH RE GARD TO ACCOUNTING OF INTEREST ON STICKY ADVANCES. FROM THE ABOVE DISCUSSION IT CAN BE SUMMED UP THAT (A) THE LOANS GIVEN BY THE ASSESSEE IN THE PRESENT CASE HAVE NOT BECOME BAD AS THE ASSESSEE ITSELF CLASSIFIED THE ASSETS AS STANDARD A SSETS; (B) THE ASSESSEE IS REASONABLY CERTAIN OF RECOVERY OF THESE LOANS AND INTEREST THEREON AND HENCE IT DEBITED THE INTEREST AMOUNT TO THE INDIVID UAL ACCOUNTS AND CREDITED TO THE SAME TO THE P&L ACCOUNT; (C) IT IS NOT THE CASE OF THE ASSESSEE THAT THE INT EREST DID NOT ACCRUE TO IT ON THESE LOANS. THE ONLY CONTENTION IS THAT THE DEFERMENT/REVERSAL OF THIS INTEREST PORTION IS IN ACCORDANCE WITH THE RBI NORMS /COOPERATIVE AUDIT PRINCIPLES; (D) ASSESSEE COULD NOT ESTABLISH THAT THE LOANS HAV E BECOME BAD AND/OR ARE NOT BACKED BY SUFFICIENT ASSETS TO SAY THAT THE INTEREST ON THESE LOANS DID NOT ACCRUE TO THE ASSESSEE; (E) ASSESSEE'S REVERSAL OF INTEREST INCOME/DEFEREME NT OF INTEREST INCOME IS NOT AN EXPENDITURE WHICH IS ALLOWABLE EITHER UNDER 36(1)(V II)/36(I)(VIIA)/37(1) OF INCOME-TAX ACT, 1961; (F) THE RATIO LAID DOWN BY THE HON'BLE SUPREME COUR T IN THE CASE OF SOUTHERN TECHNOLOGIES WITH REGARDS TO THE THEORY OF REAL INCOME WHICH STA TES THAT COMPUTATION OF REAL INCOME IS SUBJECT TO THE PROVISIONS OF THAT ACT SQUARELY APPL IES TO THE ASSESSEE'S CASE; (G) RBI NORMS ARE NOT BINDING ON INCOME-TAX DEPARTM ENT AS PER THE UNAMBIGUOUS DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SOUTHERN TE CHNOLOGIES AND ALSO AS HELD BY THE HON'BLE DELHI SPECIAL BENCH IN THE CASE OF NEW INDIA INDUST RIES LIMITED VS. ACIT 18 SOT 51. (H) OVERRIDING NATURE OF SECTION 45Q OF RBI ACT, IT IS RESTRICTED TO THE NON BANKING FINANCE COMPANIES ONLY AND IT IS NOT APPLICABLE TO THE COOP ERATIVE BANKS. (I) THE HON'BLE DELHI HIGH COURT DECISION IN THE CA SE OF VASISTH CHAY VYAPAR LIMITED IS DISTINGUISHABLE ON FACTS AS THE MATTER ON HAND BEFO RE THE HON'BLE COURT WAS REGARDING A SINGLE DEBTOR WHOSE LOAN ACCOUNT HAS BECOME BAD. FURTHER T HE HON'BLE HIGH COURT DEPENDED ON THE OVERRIDING NATURE OF SECTION 45Q OF RBI ACT WHICH I S ONLY SPECIFIC TO NON BANKING FINANCE COMPANIES (NBFCS) AND HENCE WOULD NOT APPLICABLE TO THE CASE ON HAND; (J) ACCOUNTING STANDARD AS-9 CANNOT BE UNIFORMLY AP PLIED TO EACH AND EVERY LOAN ACCOUNT WITHOUT ASCERTAINING AS TO WHETHER THE LOAN HAS BEC OME BAD OR NOT AS SUCH UNIFORM APPLICATION WOULD RENDER THE MERCANTILE SYSTEM OF ACCOUNTING RE DUNDANT. (K) EVEN IF IT IS CONSIDERED THAT THE LOANS HAVE BE COME BAD, ACCOUNTING OF INTEREST THEREON HAS TO BE DONE IN ACCORDANCE WITH CIRCULAR NO.201 D TD.06.10.1984 WHICH CLEARLY STATES THAT THE INTEREST ON STICKY LOANS HAS TO BE BROUGHT TO TAX O N RECEIPT BASIS ONLY FROM 4TH YEAR OF NON- PAYMENT OF THESE LOANS. THIS CIRCULAR IS PRESENTLY IN VOGUE AND IS BINDING ON THE DEPARTMENTAL AUTHORITIES AS HELD B THE HON'BLE SUPREME COURT IN THE CASE OF MERCANTILE BANK AND UCO BANKS. (L) HON'BLE SUPREME COURT IN THE CASE OF UCO BANK L TD (SUPRA) HELD THAT THE ASSESSING OFFICER IS RIGHT IN TAXING THE INTEREST ON STICKY LOANS AS PER CIRCULAR NO.201DATED 09.10.1984. (M) IN THE CASE ON HAND THERE ARE NO LOANS ON WHICH INTEREST/PRINCIPLE IS NOT REALIZED FOR LAST THREE YEARS AND HENCE IN VIEW OF BOARD CIRCULAR DAT ED 09.10.1984 THE INTEREST ON THESE LOANS NEEDS TO BE BROUGHT TO TAX IN THE YEAR OF ITS ACCRU AL AND CANNOT BE DEFERRED TO THE YEAR OF ACTUAL REALIZATION. IN VIEW OF THE ABOVE OBSERVATIONS AND IN VIEW OF TH E BINDING DECISIONS OF HON'BLE APEX COURT IN SOUTHERN TECHNOLOGIES, UCO BANK, STATE BANK OF TRAV ANCORE AND MERCANTILE BANK I HOLD THAT THE JUDGMENTS OF THE HON'BLE DELHI HIGH COURT IN TH E CASE OF VASISTH CHAY VYAPAS LIMITED AND THE HON'BLE JURISDICTIONAL TRIBUNAL IN THE CASE OF DURGA COOPERATIVE URBAN BANK LIMITED ARE DISTINGUISHABLE ON FACTS. THUS FOLLOWING THE BOARD CIRCULAR IN THIS REGARD AND HON'BLE APEX COURT'S DECISIONS I HOLD THAT THE AO IS CORRECT IN BRINGING TO TAX THE OVERDUE INTEREST AND IN DISALLOWING THE DEBIT OF OVERDUE INTEREST RESERVE. HENCE I UPHOLD THE DISALLOWANCE MADE BY THE AO. 9. HAVING HELD THAT INTEREST ON STICKY LOANS IS TAX ABLE, THERE ARE TWO CONSEQUENTIAL ISSUES WHICH ARE REQUIRED TO BE ADJUDICATED VIZ (I) CREDIT FOR THE INTEREST INCOME SHOWN ON RECEIPT ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 23 BASIS FROM THE EARLIER OVERDUE INTEREST AND (II) TH E CREDIT FOR THE OVERDUE INTEREST WHICH WILL BE RECEIVED IN THE FUTURE YEARS PERTAINING TO THE DISA LLOWANCE MADE DURING THE REAR. REGARDING THE FIRST ISSUE I HOLD THAT NO SEPARATE SET-OFF OF THE INTEREST RECEIVED FROM TIE EARLIER YEARS NEEDS TO BE GIVEN AS THERE IS NO DISALLOWANCE OF OVERDUE INT EREST MADE IN EARLIER ASSESSMENT YEARS. WITH REGARD TO THE SECOND ISSUE I DIRECT THE AO TO GIVE SET-OFF IN THE SUBSEQUENT ASSESSMENT YEARS TO THE INCOME OF OVERDUE INTEREST OFFERED BY THE AS SESSEE ON RECEIPT BASIS AS THE SAID INTEREST IS ALREADY BEING TAXED IN THE CURRENT YEAR ON ACCRU AL BASIS. 24. THE CIT(A) DISTINGUISHED THE DECISION IN THE CASE OF DCIT VS. DURGA COOPERATIVE URBAN BANK LIMITED IN IT A NO.511/VIZAG/2010 DECIDED BY THIS TRIBUNAL AND HELD THAT THE ASSESSEE HAS TO PROVE THAT THE INTEREST IS NOT RECO GNIZABLE DUE TO UNCERTAINTY IN COLLECTION OF INCOME AND IT IS FOR T HE A.O. TO ACCEPT THE CLAIM OR NOT EVEN IN REAL INCOME THEORY. 25. THE CIT(A) HELD THAT THE INTEREST ON LOANS WHI CH ARE DOUBTFUL OF RECOVERY ACCRUES TO THE ASSESSEE AND TH E SAME HAS TO BE TAXED AS INCOME OF THE ASSESSEE ON ACCRUAL BASIS FO R 3 YEARS THOUGH THERE IS NON-PAYMENT OF INTEREST OR PRINCIPLE. IT IS ONLY FROM 4 TH YEAR THAT THE INTEREST ON SUCH LOANS CAN BE ON RECEIPT B ASIS. ACCORDINGLY, THE LD. CIT(A) HELD THAT THE DISALLOWANCE MADE BY T HE A.O. RELATING TO OVERDUE INTEREST IS UPHELD AND DISMISSED THE APPEAL OF THE ASSESSEE. 26. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, T HE LD. A.R. ARGUED THAT THE ASSESSEE IS A COOPERATIVE BANK AND IT IS F OLLOWING THE PRUDENTIAL NORMS ISSUED BY THE RBI FOR RECOGNIZING THE INCOME. AS PER THE PRUDENTIAL NORMS OF RBI, THE INTEREST ON NON-PERFOR MING ASSETS IS ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 24 RECOGNIZED ON ACTUAL RECEIPT BASIS BUT NOT ON ACCRU AL BASIS. IT IS ALSO ARGUED BY THE LD. A.R. THAT IT IS A PRACTICE OF THE BANK APPROVED BY THE RBI IN THE PRUDENTIAL NORMS TO DEBIT THE INTEREST T O INDIVIDUAL DEBTOR AND DE-RECOGNISE THE INCOME ACCORDINGLY. THE ASSESSEE HAS ACCOUNTED THE INTEREST SUBSEQUENTLY ON RECEIPT BASIS AND OFFERED THE SAME TO INCOME. THE LD AR FURTHER SUBMITTED THAT HE ASSESSEE IS FOL LOWING THE SAME SYSTEM OF ACCOUNTING FOR THE LAST SO MANY YEARS WHI CH HAS BEEN ACCEPTED BY THE DEPARTMENT. THE LD. A.R. RELIED ON THE ORDERS OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VS. SRI MAHILA SEWA SAHAKARI BANK LTD. ( 2016) 140 DTR (GUJ) 113, THE HEAD NOTE OF THE ABOVE CASE READS AS UNDER: 26.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE CASE OF SRI MAHILA SEW A SAHAKARI BANK LTD. (SUPRA), HONBLE HIGH COURT OF GUJARAT HELD THE ISS UE IN FAVOUR OF THE ASSESSEE. THE HEAD NOTE OF THE ABOVE CASE READS AS UNDER: INCOME-ACCRUAL INTEREST ON NON- PERFORMING ASSETS OF CO- OPERATIVE BANK- IN SO FAR AS THE COMPUTATION OF TAX ABILITY IS CONCERNED, THE SAME IS SOLELY GOVERED BY THE PROVISIONS OF THE IT ACT AND THE ACCOUNTING PRINCIPLES HAVE NO ROLE TO PLAY HOWEVER, RECOGNIT ION OF INCOME STANDS ON A DIFFERENT FOOTING-INSOFAR AS INCOME RECOGNITION IS CONCERNED, IT WOULD BE THE RBI DIRECTIONS WHICH WOULD PREVAIL IN VIEW OF THE P ROVISIONS OF S. 45Q OF THE RBI ACT AND S. 145 WOULD HAVE NO ROLE TO PLAY-HENCE, TH E AO HAS TO FOLLOW THE RBI DIRECTIONS-IN VIEW OF THE MANDATE OF THE RBI GUIDEL INES THE ASSESSEE CANNOT RECOGNISE INCOME FROM NON-PERFORMING ASSETS ON ACCR UAL BASIS BUT CAN BOOK SUCH INCOME ONLY WHEN IT IS ACTUALLY RECEIVED UNT IL A CIRCULAR IS REVOKED, THE SAME CONTINUES TO BE IN FORCE AND THE CIRCULAR F.NO .201/21/84-ITA-II, DT.9 TH OCT.1984 HAVING BEEN ISSUED TO MITIGATE THE HARDSHI PS CAUSED TO THE CLASS OF ASSESSEES COVERED BY THE CIRCULAR, SUCH ASSESSEES W OULD BE ENTITLED TO THE BENEFIT THEREOF-MERELY BECAUSE BY VIRTUE OF THE PRO VISIONS OF S. 43D, A CERTAIN CLASS OF ASSESSEES IS GIVEN BENEFIT UNDER THE PROVI SIONS OF THE ACT WOULD NOT MEAN THAT THE SAME WOULD OVERRIDE THE CIRCULAR-TRIB UNAL WAS THEREFORE RIGHT IN LAWS AND ON FACTS IN HOLDING THAT INTEREST ON NON P ERFORMING ASSETS IS NOT TAXABLE ON ACCRUAL BASIS LOOKING TO THE GUIDELINES OF THE RBI. ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 25 HONBLE HIGH COURT WITH REGARD TO RECOGNITION OF IN COME IN PARA NO.19 TO 23 HELD AS UNDER: 1 9. SECTION 45Q OF THE RBI ACT, WHICH IS RELEVANT FOR THE PRESENT PURPOSE, READS THUS: '45-Q. CHAPTER III-B TO OVERRIDE OTHER LAWS.THE PR OVISIONS OF THIS CHAPTER SHALL HAVE EFFECT NOTWITHSTANDING ANYTHING INCONSISTENT THEREW ITH CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE OR ANY INSTRUMENT HAVING EFFECT BY VIRTUE OF ANY SUCH LAW.' 20. SECTION 45Q FINDS PLACE IN CHAPTER IIIB OF THE RBI ACT. THUS, THE PROVISIONS OF CHAPTER IIIB OF THE RBI ACT HAVE AN OVERRIDING EFFECT QUA O THER ENACTMENTS TO THE EXTENT THE SAME ARE INCONSISTENT WITH THE PROVISIONS CONTAINED THEREIN. IN ORDER TO REFLECT A BANK'S ACTUAL FINANCIAL HEALTH IN ITS BALANCE SHEET, THE RESERVE BANK HAS INTRODUCED PRUDENTIAL NORMS FOR INCOME RECOGNITION, ASSET CLASSIFICATION AND PROVIS IONING FOR ADVANCES PORTFOLIO OF THE CO- OPERATIVE BANKS. THE GUIDELINES PROVIDED THEREUNDER ARE MANDATORY AND IT IS INCUMBENT UPON ALL CO-OPERATIVE BANKS TO FOLLOW THE SAME. INSOFAR AS INCOME RECOGNITION IS CONCERNED, CLAUSE 4.1.1 OF THE CIRCULAR PROVIDES THAT THE POLICY OF I NCOME RECOGNITION HAS TO BE OBJECTIVE AND BASED ON THE RECORD OF RECOVERY. INCOME FROM NON-PE RFORMING ASSETS (NPA) IS NOT RECOGNISED ON ACCRUAL BASIS BUT IS BOOKED AS INCOME ONLY WHEN IT IS ACTUALLY RECEIVED. THEREFORE, BANKS SHOULD NOT TAKE TO INCOME ACCOUNT INTEREST ON NON-P ERFORMING ASSETS ON ACCRUAL BASIS. THUS, IN VIEW OF THE MANDATE OF THE RBI GUIDELINES THE AS SESSEE CANNOT RECOGNISE INCOME FROM NON- PERFORMING ASSETS ON ACCRUAL BASIS BUT CAN BOOK SUC H INCOME ONLY WHEN IT IS ACTUALLY RECEIVED. THUS, THIS IS A CASE WHERE AT THE THRESHO LD, THE ASSESSEE, IN VIEW OF THE RBI GUIDELINES, CANNOT RECOGNISE INCOME FROM NPA ON ACC RUAL BASIS. THIS IS, THEREFORE, A CASE PERTAINING TO RECOGNITION OF INCOME AND NOT COMPUTA TION OF THE INCOME OF THE ASSESSEE. 21. THE SUPREME COURT IN SOUTHERN TECHNOLOGIES LTD. (S UPRA) HAS HELD THAT THE 1998 DIRECTIONS ARE ONLY DISCLOSURE NORMS AND HAVE NOTHI NG TO DO WITH COMPUTATION OF TOTAL INCOME UNDER THE IT ACT OR WITH THE ACCOUNTING TREA TMENT. THE 1998 DIRECTIONS ONLY LAY DOWN THE MANNER OF PRESENTATION OF NPA PROVISION IN THE BALANCE SHEET OF AN NBFC. THE COURT HAS REFERRED TO THE DEVIATIONS BETWEEN THE RBI DIRECTIO NS AND THE COMPANIES ACT AS FOLLOWS: '42. BROADLY, THERE ARE THREE DEVIATIONS: (I) IN T HE MATTER OF PRESENTATION OF FINANCIAL STATEMENTS U NDER SCHEDULE VI TO THE COMPANIES ACT; ( II ) IN NOT RECOGNISING THE 'INCOME' UNDER THE MERCANTIL E SYSTEM OF ACCOUNTING AND ITS INSISTENCE TO FOLLOW CASH SYSTEM WITH RESPECT TO AS SETS CLASSIFIED AS NPA AS PER ITS NORMS; (III) IN CREATING A PROVISION FOR ALL NPAS SUMMARILY AS A GAINST CREATING A PROVISION ONLY WHEN THE DEBT IS DOUBTFUL OF RECOVERY UNDER THE NOR MS OF THE ACCOUNTING STANDARDS ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. THESE DEVIATIONS PREVAIL OVER CERTAIN PROVISIONS OF THE COMPANIES ACT, 1956 TO PROTECT THE DEPOSITORS IN THE CONTEXT OF INCOME RECOGNITION AND PRESENTATION OF THE ASSETS AND PROVISIONS CREATED AGAINST THEM. THUS, THE P&L ACCO UNT PREPARED BY NBFC IN TERMS OF THE RBI DIRECTIONS, 1998 DOES NOT RECOGNISE 'INCOME FROM NPA' AND, THEREFORE, DIRECTS A PROVISION TO BE MADE IN THAT REGARD AND HENCE AN 'ADD BACK'. IT IS IMPORTANT TO NOTE THAT 'ADD BACK' IS THERE ONLY IN THE CASE OF PROVIS IONS.' [EMPHASIS SUPPLIED] ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 26 22. THEREFORE, IN TERMS OF THE ABOVE DECISION, WHERE A N ASSESSEE MAKES PROVISION FOR NPA AND SEEKS DEDUCTION OF SUCH AMOUNT UNDER SECTION 36 (1)(VII) OR SECTION 37 OF THE ACT, THEN IN THE COMPUTATION OF INCOME, THE RBI GUIDELINES WOULD HAVE NO ROLE TO PLAY, AND HENCE, AN ADD BACK. INSOFAR AS INCOME RECOGNITION IS CONCERNED, T HE SUPREME COURT HAS HELD THUS: 'APPLICABILITY OF SECTION 145 57. AT THE OUTSET, WE MAY STATE THAT IN ESSENCE THE RBI DIRECTIONS, 1998 ARE PRUDENTIAL/PROVISIONING NORMS ISSUED BY RBI UNDER C HAPTER III-B OF THE RBI ACT, 1934. THESE NORMS DEAL ESSENTIALLY WITH INCOME RECOGNITIO N. THEY FORCE THE NBFCS TO DISCLOSE THE AMOUNT OF NPA IN THEIR FINANCIAL ACCOUNTS. THEY FORCE THE NBFCS TO REFLECT 'TRUE AND CORRECT' PROFITS. BY VIRTUE OF SECTION 45-Q, AN OVE RRIDING EFFECT IS GIVEN TO THE RBI DIRECTIONS, 1998 VIS--VIS'INCOME RECOGNITION' PRIN CIPLES IN THE COMPANIES ACT, 1956. THESE DIRECTIONS CONSTITUTE A CODE BY ITSELF. HOWEV ER, THESE RBI DIRECTIONS, 1998 AND THE IT ACT OPERATE IN DIFFERENT AREAS. THESE RBI DI RECTIONS, 1998 HAVE NOTHING TO DO WITH COMPUTATION OF TAXABLE INCOME. THESE DIRECTIONS CAN NOT OVERRULE THE 'PERMISSIBLE DEDUCTIONS' OR 'THEIR EXCLUSION' UNDER THE IT ACT. THE INCONSISTENCY BETWEEN THESE DIRECTIONS AND THE COMPANIES ACT IS ONLY IN THE MAT TER OF INCOME RECOGNITION AND PRESENTATION OF FINANCIAL STATEMENTS. THE ACCOUNTIN G POLICIES ADOPTED BY AN NBFC CANNOT DETERMINE THE TAXABLE INCOME. IT IS WELL SET TLED THAT THE ACCOUNTING POLICIES FOLLOWED BY A COMPANY CAN BE CHANGED UNLESS THE AO COMES TO THE CONCLUSION THAT SUCH CHANGE WOULD RESULT IN UNDERSTATEMENT OF PROFITS. H OWEVER, HERE IS THE CASE WHERE THE AO HAS TO FOLLOW THE RBI DIRECTIONS, 1998 IN VIEW O F SECTION 45-Q OF THE RBI ACT. HENCE, AS FAR AS INCOME RECOGNITION IS CONCERNED, S ECTION 145 OF THE IT ACT HAS NO ROLE TO PLAY IN THE PRESENT DISPUTE.' THUS, INSOFAR AS INCOME RECOGNITION IS CONCERNED, T HE COURT HAS HELD THAT EVEN THE ASSESSING OFFICER HAS TO FOLLOW THE RBI DIRECTIONS, 1998 IN V IEW OF SECTION 45Q OF THE RBI ACT AND THAT AS FAR AS INCOME RECOGNITION IS CONCERNED, SECTION 145 OF THE INCOME-TAX ACT, HAS NOT ROLE TO PLAY. 23. IN THE LIGHT OF THE ABOVE DISCUSSION WHAT EMERGES IS THAT WHILE DETERMINING THE TAX LIABILITY OF AN ASSESSEE, TWO FACTORS WOULD COME IN TO PLAY. FIRSTLY, THE RECOGNITION OF INCOME IN TERMS OF THE RECOGNISED ACCOUNTING PRINCIPLES AN D AFTER SUCH INCOME IS RECOGNISED, THE COMPUTATION THEREOF, IN TERMS OF THE PROVISIONS OF THE INCOME-TAX ACT, 1961. INSOFAR AS THE COMPUTATION OF TAXABILITY IS CONCERNED, THE SAME IS SOLELY GOVERNED BY THE PROVISIONS OF THE INCOME-TAX ACT AND THE ACCOUNTING PRINCIPLES HAVE N O ROLE TO PLAY. HOWEVER, RECOGNITION OF INCOME STANDS ON A DIFFERENT FOOTING. INSOFAR AS IN COME RECOGNITION IS CONCERNED, IT WOULD BE THE RBI DIRECTIONS WHICH WOULD PREVAIL IN VIEW OF T HE PROVISIONS OF SECTION 45Q OF THE RBI ACT AND SECTION 145 WOULD HAVE NO ROLE TO PLAY. HEN CE, THE ASSESSING OFFICER HAS TO FOLLOW THE RBI DIRECTIONS. HONBLE GUJARAT HIGH COURT HAS CONSIDERED THE DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES WHICH WAS RELIED BY THE LD. CIT(A) AND HELD THAT SINCE SECTION 45Q O F THE RBI ACT SHALL HAVE OVERRIDING EFFECT OVER THE INCOME RECOGNITION, FOLLOWED BY THE ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 27 COOPERATIVE BANKS ALSO THE A.O. HAS TO FOLLOW THE R BI DIRECTIONS. IN PARA NO.14, THE HONBLE HIGH COURT HAS CONSIDERED T HE ISSUE WITH REGARD TO THE METHOD OF ACCOUNTING APPLIED FOR RECOGNIZING THE INCOME AND HELD THAT THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSES SEE IS IN ACCORDANCE WITH THE ACCOUNTING PRACTICE. THE ASSESSEE ALSO RE LIED ON THE DECISION OF HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. DEOGIRI NAGARI SAHAKARI BANK LTD. (2015) 128 DTR (BOM) 0209 HEAD N OTES, WHICH READS AS UNDER: INCOME-ACCRUAL-INTEREST ON STICKY ADVANCES-ASSESSEE BEING A CO-OPERATIVE BANK ALSO GOVERNED BY THE RBI AND THUS THE DIRECTION S WITH REGARD TO THE PRUDENTIAL NORMS ISSUED BY THE RBI ARE EQUALLY APPLI CABLE TO THE CO- OPERATIVE BANKS-TRIBUNAL WAS THEREFORE JUSTIFIED IN DELETING ADDITION ON ACCOUNT OF INTEREST ON STICKY ADVANCES UCO BANK V S. CIT(1999) 154 CTR (SC) 88:(1999)4SCC 599 AND MERCANTILE BANK LTD. VS. CIT (2006) 202 CTR (SC) 457 : (2006) 5 SCC 221 FOLLOWED. 27. THIS TRIBUNAL IN THE CASE OF GANDHI CO-OPERATIV E URBAN BANK LIMITED IN ITA NO.469/VIZAG/2012 DATED 30.11.2015 H AS CONSIDERED THE SIMILAR ISSUE AND ALLOWED THE INTEREST ON NON-PERFO RMING ASSETS. THE RELEVANT EXTRACT OF THIS TRIBUNAL IN PARA NO.7 TO 1 0 IS EXTRACTED AS UNDER: 7. WE HAVE GONE THROUGH THE REASON GIVEN BY THE CIT (A) AS WELL AS THE CASE LAWS RELIED UPON BY THE ASSESSEE. THE A.R. OF THE ASSESSEE AT THE TIME OF HEARING SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF ITAT VISAKHAPATNAM BENCH IN THE CASE OF DCIT VS. DURGA CO-OPERATIVE UR BAN BANK LTD. (SUPRA). WE HAVE EXAMINED THE CASE LAW REFERRED BY THE A.R. IN THE LIGHT OF THE FACTS OF THE PRESENT CASE AND FIND THAT THE ITAT, VISAKHAPATNAM BENCH IN THE ABOVE MENTIONED CASE ON SIMILAR FACTS HELD THE ISSUE IN FAVOUR OF T HE ASSESSEE. THE RELEVANT PORTION IS REPRODUCED AS UNDER: 10. TURNING TO THE FACTS OF THE CASE BEFORE US, TH E ASSESSEE HEREIN IS A ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 28 COOPERATIVE BANK AND IT IS NOT IN DISPUTE THAT IT I S ALSO GOVERNED BY THE RESERVE BANK OF INDIA. HENCE THE DIRECTIONS WITH RE GARD TO THE PRUDENTIAL NORMS ISSUED BY THE RESERVE BANK OF INDIA ARE EQUALL Y APPLICABLE TO THE ASSESSEE AS IT IS APPLICABLE TO THE COMPANIES REGIS TERED UNDER THE COMPANIES ACT. THE HON'BLE SUPREME COURT HAS HELD I N THE CASE OF SOUTHERN TECHNOLOGIES LTD (SUPRA), THAT THE PROVISION OF 45Q OF RESERVE BANK OF INDIA ACT HAS AN OVERRIDING EFFECT VIS-- VIS INCOME RECO GNITION PRINCIPLE UNDER THE COMPANIES ACT. HENCE SEC.45 Q OF THE RBI ACT SHALL H AVE OVERRIDING EFFECT OVER THE INCOME RECOGNITION PRINCIPLE FOLLOWED BY C OOPERATIVE BANKS ALSO. HENCE THE ASSESSING OFFICER HAS TO FOLLOW THE RESER VE BANK OF INDIA DIRECTIONS 1998, AS HELD BY THE HON I BLE SUPREME COURT. 10.1 BASED ON THE PRUDENTIAL NORMS, THE ASSESSEE HE REIN DID NOT ADMIT THE INTEREST RELATABLE TO NPA ADVANCES IN ITS TOTAL INCOME. THE HONBLE DELHI HIGH COURT IN THE CASE OF VASISTH CHAY VYAPAR LTD. (SUPRA) HAS HELD THAT THE INTEREST ON NPA ASSETS CANNOT BE SAID TO H AVE ACCRUED TO THE ASSESSEE. IN THIS REGARD, THE FOLLOWING OBSERVATIONS OF HON'BLE DELHI HIGH COURT IN THE ABOVE CITED CASE ARE RELEVANT: 'WHAT TO TALK OF INTEREST, EVEN THE PRINCIPLE AMOUN T ITSELF HAD BECOME DOUBTFUL TO RECOVER. IN THIS SCENARIO IT WAS LEGITIM ATE MOVE TO INFER THAT INTEREST INCOME THEREUPON HAS NOT 'ACCRUED'. THE SAID DECISION OF THE HON'BLE DELHI HIGH COURT I S EQUALLY APPLICABLE TO THE ISSUE IN OUR HANDS. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY WITH THE DECISION OF THE LEARNED CIT (A) IN HOLDING THAT THE INTEREST INCOME RELATABLE ON NPA ADVANCES DID NOT ACCRUE TO THE ASS ESSEE. ACCORDINGLY WE UPHOLD HIS ORDER. 8. AN IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEF ORE THE ITAT PUNE BENCH IN THE CASE OF VAIDYANATH URBAN CO-OP. BANK LTD. VS. C IT IN ITA NO.413/PN/2014 DATED 31.3.2015, WHEREIN THE ITAT UNDER SIMILAR SET OF FACTS HELD AS UNDER: 10. TURNING TO THE FACTS OF THE CASE BEFORE US, TH E ASSESSEE HEREIN IS A COOPERATIVE BANK AND IT IS NOT IN DISPUTE THAT IT IS ALSO GOVERNED BY THE RESERVE BANK OF INDIA. HENCE THE DIRECTIONS WITH REGARD TO THE PRUDENTIAL NORMS ISSUED BY THE RESERVE BANK OF INDIA ARE EQUALLY APPLICABLE TO THE ASSESSEE AS IT IS APPLICABLE TO T HE COMPANIES REGISTERED UNDER THE COMPANIES ACT. THE HONBLE SUP REME COURT HAS HELD IN THE CASE OF SOUTHERN TECHNOLOGIES LTD (SUPR A), THAT THE PROVISION OF 45Q OF RESERVE BANK OF INDIA ACT HAS AN OVERRIDING EFFECT VIS--VIS INCOME RECOGNITION PRINCIPLE UNDER THE COMPANIES ACT. HENCE SEC.45 Q OF THE RBI ACT SHALL HAVE OVERRI DING EFFECT OVER THE INCOME RECOGNITION PRINCIPLE FOLLOWED BY COOPER ATIVE BANKS ALSO. HENCE THE ASSESSING OFFICER HAS TO FOLLOW THE RESER VE BANK OF INDIA DIRECTIONS 1998, AS HELD BY THE HON'BLE SUPREME COU RT. ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 29 BASED ON THE PRUDENTIAL NORMS, THE ASSESSEE HEREIN DID NOT ADMIT THE INTEREST RELATABLE TO NPA ADVANCES IN ITS TOTAL INCOME. THE HON'BLE DELHI HIGH COURT IN THE CASE OF VASISTH CHA Y VYAPAR LTD (SUPRA) HAS HELD THAT THE INTEREST ON NPA ASSETS CA NNOT BE SAID TO HAVE ACCRUED TO THE ASSESSEE. IN THIS REGARD, THE FO LLOWING OBSERVATIONS OF HON'BLE DELHI HIGH COURT IN THE ABO VE CITED CASE ARE RELEVANT: WHAT TO TALK OF INTEREST, EVEN THE PRINCIPLE AMOUNT ITSELF HAD BECOME DOUBTFUL TO RECOVER. IN THIS SCENARIO IT WAS LEGITIMATE MOVE TO INFER THAT INTEREST INCOME THERE UPON HAS NOT 'ACCRUED'. THE SAID DECISION OF THE HON'BLE DELHI HIGH COURT I S EQUALLY APPLICABLE TO THE ISSUE IN OUR HANDS. ACCORDINGLY W E DO NOT FIND ANY INFIRMITY WITH THE DECISION OF THE LEARNED CIT (A) IN HOLDING THAT THE INTEREST INCOME RELATABLE ON NPA ADVANCES DID NOT ACCRUE TO THE ASSESSEE. ACCORDINGLY WE UPHOLD HIS ORDER.' FOLLOWING THE AFORESAID DISCUSSION, WHICH HAS BEEN RENDERED ON AN IDENTICAL ISSUE UNDER SIMILAR CIRCUMSTANCES, WE FIND NO REASONS TO INTERFERE WITH THE ULTIMATE CONCLUSION O F THE CIT(A) IN DELETING THE IMPUGNED ADDITION RELATING T O INTEREST INCOME IN RESPECT OF NPAS. 9. THE HONBLE SUPREME COURT OF INDIA, IN THE CASE O F UCO BANK VS. CIT HAD AN OCCASION TO CONSIDER THE ISSUE. THE HONBLE SUPREM E COURT, WHILE DEALING WITH SIMILAR ISSUE HELD AS UNDER: THE METHOD OF ACCOUNTING WHICH IS FOLLOWED BY THE ASSESSEE-BANK IS MERCANTILE SYSTEM OF ACCOUNTING. HOWEVER, THE AS SESSEE CONSIDERS INCOME BY WAY OF INTEREST PERTAINING TO DOUBTFUL LO ANS AS NOT REAL INCOME IN THE YEAR IN WHICH IT ACCRUES, BUT ONLY WH EN IT IS REALISED. A MIXED METHOD OF ACCOUNTING IS THUS FOLLOWED BY TH E ASSESSEE-BANK. THIS METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE I S IN ACCORDANCE WITH ACCOUNTING PRACTICE. UP TO THE ASST. YR. 1978- 79, THE CBDT'S CIRCULAR OF 6TH OCT., 1952 WOULD BE APPLICABLE; WHI LE FROM THE ASST. YR. 1979-80, THE CBDT'S CIRCULAR OF 9TH OCT., 1984 IS MADE APPLICABLE. IN THE PRESENT CASE, THE ASSESSMENT WAS MADE ON THE BASIS OF THE CBDT'S CIRCULAR OF 9TH OCT., 1984, SINCE THE ASSESS MENT PERTAINS TO ASST. YR. 1981-82 TO WHICH THE CIRCULAR OF 9TH OCT. , 1984, IS ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 30 APPLICABLE. UNDER SUB-S. (2) OF S. 119, WITHOUT PRE JUDICE TO THE GENERALITY OF THE BOARD'S POWER SET OUT IN SUB-S. ( 1), A SPECIFIC POWER IS GIVEN TO THE BOARD FOR THE PURPOSE OF PROP ER AND EFFICIENT MANAGEMENT OF THE WORK OF ASSESSMENT AND COLLECTION OF REVENUE TO ISSUE FROM TIME TO TIME GENERAL OR SPECIAL ORDERS I N RESPECT OF ANY CLASS OF INCOMES OR CLASS OF CASES SETTING FORTH DI RECTIONS OR INSTRUCTIONS, NOT BEING PREJUDICIAL TO ASSESSEES, A S THE GUIDELINES, PRINCIPLES OR PROCEDURES TO BE FOLLOWED IN THE WORK RELATING TO ASSESSMENT. SUCH INSTRUCTIONS MAY BE BY WAY OF RELA XATION OF ANY OF THE PROVISIONS OF THE SECTIONS SPECIFIED THERE O R OTHERWISE. THE BOARD THUS HAS POWER, INTER AL/A, TO TONE DOWN THE RIGOUR OF THE LAW AND ENSURE A FAIR ENFORCEMENT OF ITS PROVISIONS, BY ISSUING CIRCULARS IN EXERCISE OF ITS STATUTORY POWERS UNDER S. 119 WH ICH ARE BINDING ON THE AUTHORITIES IN THE ADMINISTRATION OF THE ACT. U NDER S. 119(2)(A), HOWEVER, THE CIRCULARS AS CONTEMPLATED THEREIN CANN OT BE ADVERSE TO THE ASSESSEE. THUS, THE AUTHORITY WHICH WIELDS T HE POWER FOR ITS OWN ADVANTAGE UNDER THE ACT IS GIVEN THE RIGHT TO F OREGO THE ADVANTAGE WHEN REQUIRED TO WIELD IT IN A MANNER IT CONSIDERS JUST BY RELAXING THE RIGOUR OF THE LAW OR IN OTHER PERMISSI BLE MANNERS AS LAID DOWN IN S. 119. THE POWER IS GIVEN FOR THE PURPOSE OF JUST, PROPER AND EFFICIENT MANAGEMENT OF THE WORK OF ASSE SSMENT AND IN PUBLIC INTEREST. IT IS A BENEFICIAL POWER GIVEN TO THE BOARD FOR PROPER ADMINISTRATION OF FISCAL LAW SO THAT UNDUE HARDSHIP MAY NOT BE CAUSED TO THE ASSESSEE AND THE FISCAL LAWS MAY BE CORRECTL Y APPLIED. HARD CASES WHICH CAN BE PROPERLY CATEGORISED AS BELONGING TO A CLASS, CAN THUS BE GIVEN THE BENEFIT OF RELAXATION OF LAW BY ISSUING C IRCULARS BINDING ON THE TAXING AUTHORITIES. IF THE BOARD HAS CONSIDERED IT NECESSARY TO LAY DOWN A GENERAL TEST FOR DECIDING WHAT IS A DOUBTFUL DEBT , AND DIRECTED THAT ALL ITOS SHOULD TREAT SUCH AMOUNTS AS NOT FORMING P ART OF THE INCOME OF THE ASSESSEE UNTIL REALIZED, THIS DIRECTION BY W AY OF A CIRCULAR CANNOT BE CONSIDERED AS TRAVELLING BEYOND THE POWER S OF THE BOARD UNDER S. 119. SUCH A CIRCULAR IS BINDING UNDER S. 1 19. THE CIRCULAR OF 9TH OCT., 1984, THEREFORE, PROVIDES A TEST FOR RECO GNISING WHETHER A CLAIM FOR INTEREST CAN BE TREATED AS A DOUBTFUL CLA IM UNLIKELY TO BE RECOVERED OR NOT. 10. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO APPLYING THE RATIOS OF THE JUDGEMENTS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT I NTEREST ON A LOAN WHOSE RECOVERY IS DOUBTFUL AND WHICH HAS NOT BEEN R ECOVERED BY THE ASSESSEE-BANK, BUT HAS BEEN KEPT IN A SUSPENSE ACCOUNT AND HAS NOT BEEN BROUGHT TO THE P&L A/C OF THE ASSESSEE, COULD NOT BE INCLUDED IN THE INCOM E OF THE ASSESSE. THE CIT(A) RIGHTLY DELETED THE ADDITIONS TOWARDS INTEREST ON N PAS. THERE IS NO ERROR OR INFIRMITY IN THE ORDER OF CIT(A). ACCORDINGLY, WE DIRECT THE A.O. TO DELETE THE ADDITIONS MADE TOWARDS INTEREST ON NPAS. ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 31 28. SINCE THE FACTS ARE IDENTICAL, RESPECTFULLY FOL LOWING THE VIEW TAKEN BY THE DECISION OF HONBLE GUJARAT HIGH COURT IN TH E CASE OF SRI MAHILA SEWA SAHAKARI BANK LIMITED (SUPRA) AND THE OTHER DE CISIONS CITED SUPRA, WE HOLD THAT THE INTEREST ON NPA IS TO BE RECOGNIZE D ON ACTUAL RECEIPT BASIS BUT NOT ON ACCRUAL BASIS. ACCORDINGLY, WE SE T ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE ADDITION. THE APPEAL OF THE ASSESSEE ON THIS GROUND IS ALLOWED. 29. GROUND NO.7 IS WITH REGARD TO THE CHARGING INT EREST U/S 234B&C WHICH IS MANDATORY IN NATURE AND THE LD. A.R . HAS NOT MADE ANY ARGUMENT IN THIS REGARD ACCORDINGLY, THE ASSESS EES APPEAL ON THIS GROUND IS DISMISSED. 30. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR T HE A.Y. 2008-09 IS PARTLY ALLOWED. ITA NO.78/VIZAG/2012 (REVENUE APPEAL): 31. WHEN THIS APPEAL IS TAKEN UP FOR HEARING, THE L D. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE TAX EFFECT INVO LVED IN THIS APPEAL IS BELOW RS.10 LAKHS. AS PER THE CIRCULAR NO.21/2015 DATED 10.12.2015 OF CBDT BEING RETROSPECTIVE IN NATURE, THE APPEAL FILE D BY THE REVENUE IS NOT MAINTAINABLE. THE LD. D.R. HAS NOT RAISED ANY OBJECTION. IN VIEW OF ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 32 THE ABOVE, THE APPEAL FILED BY THE REVENUE IS NOT M AINTAINABLE. HENCE, THE SAME IS DISMISSED. 32. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IN ITA NO.78/VIZAG/2012 IS DISMISSED. ITA NO.476/VIZAG/2012: (REVENUE APPEAL) 33. GROUND NOS.1 & 9 ARE GENERAL IN NATURE, WHICH DO NOT REQUIRE SPECIFIC ADJUDICATION. 34. GROUND NO.2 IS RELATED TO THE ADDITIONAL EVID ENCE PLACED BY THE ASSESSEE BEFORE THE CIT(A). THE REVENUE HAS FI LED AN APPEAL STATING THAT THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE BEF ORE THE CIT(A) AND THE LD. CIT(A) HAS NEITHER CALLED FOR ANY REMAND RE PORT NOR GIVEN ANY OPPORTUNITY TO THE ASSESSING OFFICER TO MAKE HIS SU BMISSIONS. HOWEVER, DURING THE APPEAL HEARING, THE LD. D.R. DID NOT FUR NISH THE DETAILS OF ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE BEFOR E THE FIRST APPELLATE AUTHORITY. THEREFORE, THIS GROUND OF APPEAL IS DIS MISSED. 35. GROUND NOS.3 & 4 ARE RELATED TO THE PAYMENTS M ADE TO LIC OF INDIA TOWARDS THE GRATUITY. THIS ISSUE HAS BEEN DECIDED BY US IN APPEAL NOS.49/VIZAG/2012 FOR THE ASSESSMENT YEAR 20 07-08 IN FAVOUR OF ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 33 THE ASSESSEE IN THIS ORDER. SINCE THE FACTS OF THE CASE ARE THE SAME, THIS GROUND OF THE REVENUE IS DISMISSED. 36. GROUND NOS.5, 6 & 7 ARE RELATED TO THE REALIZA TION OF OVERDUE INTEREST OF ` 2,76,82,103/- AND THE OVERDUE INTEREST OF ` 1,20,00,975/-. THE LD CIT(A) HAS DIRECTED THE A.O. TO EXEMPT AN AMOUNT OF ` 1,56,81,135/- OUT OF THE OD INTEREST REALIZED AT ` 2,76,82,110/-.WHILE DECIDING THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 OF THE ASSESSEE WE HAVE HELD THAT OD INTERE ST RELATING TO NPA IS TO BE RECOGNIZED ON ACTUAL RECEIPT BASIS. SINCE THE INCOME IS TO BE RECOGNIZED ON ACTUAL RECEIPT BASIS THE INTEREST REA LIZED ON NPA REQUIRED TO BE TAXED IN THE YEAR UNDER CONSIDERATION. ACCORD INGLY, WE DIRECT THE A.O. TO ALLOW THE NPA INTEREST AS A DEDUCTION FOLLO WING PRUDENTIAL NORMS OF THE RBI AND TAX THE INTEREST REALIZED ON NPA ON ACTUAL BASIS. THE A.O. IS DIRECTED TO VERIFY AND ALLOW THE DEDUCTION. GROUND NOS.5 TO 7 ARE ALLOWED FOR STATISTICAL PURPOSES. 37. GROUND NO.8 IS RELATED TO THE PRIOR PERIOD EXP ENSES OF ` 31,95,707/-. DURING THE ASSESSMENT PROCEEDINGS, TH E A.O. FOUND FROM THE AUDIT REPORT THAT THE ASSESSEE HAS CLAIMED A SU M OF ` 31,95,707/- TOWARDS THE PRIOR PERIOD EXPENSES. OUT OF WHICH A SUM OF ` 10,39,506/- ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 34 WAS RELATED TO THE ASSESSMENT YEAR 2006-07 AND RS.2 1,56,201/- RELATED TO THE ASSESSMENT YEAR 2007-08. THE A.O. DISALLOWE D ABOVE SUM AS NOT ALLOWABLE EXPENDITURE IN THE YEAR UNDER CONSIDERATI ON. 38. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSE E WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) DELETED THE AD DITION OBSERVING THAT THE ACTUAL PAYMENT WAS MADE DURING THE YEAR 2010-11 AND THE ASSESSEE HAS NOT CLAIMED THE ABOVE SUM AS EXPENDITURE IN THE YEAR UNDER CONSIDERATION. FOR READY REFERENCE, WE REPRODUCE T HE RELEVANT EXTRACT OF THE CIT(A) ORDER IN PARA NOS.7.1 TO 7.2 AS UNDER: 7.1 WITH REGARD TO THIRD GROUND ON DISALLOWANCE OF PRIOR PERIOD EXPENSES AMOUNTING TO RS.31,95,707/- THE APPELLANT HAD SUBMI TTED ITS EXPLANATION AS UNDER:- THE APPELLANT CONTENDS THAT THE ENTIRE AMOUNT OF ` 31,95,707/- WAS ACTUALLY PAID ON 21.8.2009 (RELEVANT FOR A.Y. 2010- 11) AND WAS THEREFORE NOT A PRIOR PERIOD ITEM FOR THE CURRENT YEAR. IN FACT THE APPELLANT HAD NOT AT ALL DEBITED THE SAID AMOUNT TO THE PROFIT AND LOSS ACCOUNT DURI NG THE YEAR UNDER DISPUTE. IT WAS DEBITED DURING THE FINANCIAL YEAR 2009-10 AND W AS CLAIMED IN THE NEXT YEAR ONLY. HOWEVER, THE STATUTORY AUDITORS HAVE INADVERT ENTLY MENTIONED ABOUT THE SAME IN THEIR TAX AUDIT REPORT IN FORM NO 3 CD AND THE ASSESSING OFFICER HAS DISALLOWED THE SAME BASING ON SUCH OBSERVATION IN F ORM 3CD. IN FACT IT WAS NOT CLAIMED DURING THE YEAR UNDER REFERENCE. IT IS, THE REFORE, PRAYED THAT THE SAME MAY KINDLY BE DIRECTED TO BE ALLOWED.' 7.2. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT. THE ACTUAL PAYMENT WAS MADE DURING THE FINANCIAL YEAR RELEVANT FOR THE A.Y.2010-11 AS PER THE VOUCHERS PRODUCED BY THE ASSESSEE. IT WAS C LAIMED THAT THERE WAS NO CLAIM OF EXPENDITURE DURING THE YEAR UNDER DISPUTE AND THE DISALLOWANCE WAS MADE BASED ON THE OBSERVATIONS IN FORM NO. 3CD REPO RT, WHICH IS STATED TO BE AN INADVERTENT MISTAKE. ACCORDINGLY, I DIRECT THE A SSESSING OFFICER TO DELETE THE ADDITION MADE IN THIS REGARD. ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 35 SINCE THE EXPENDITURE WAS NOT DEBITED IN THE YEAR UNDER CONSIDERATION, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE REVENUE ON THIS GROUND. 39. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. CROSS OBJECTION NO.33/VIZAG/2013 (476/VIZAG/2012) 40. THE ASSESSEE HAS FILED THE CROSS OBJECTION AG AINST THE APPEAL OF THE REVENUE IN ITA NO.476/VIZAG/2012 FOR THE A.Y. 2 009-10 RAISING FIVE GROUNDS COVERING TWO ISSUES. FIRST ISSUE IS ADDITIO N OF RS.31,95,707/- AND THE SECOND ISSUE IS OVERDUE INTEREST OF RS.1,20 ,00,975/-. BOTH THE ISSUES ARE ADJUDICATED BY US IN REVENUES APPEAL IN THIS ORDER. HENCE WE CONSIDER IT IS NOT NECESSARY TO ADJUDICATE THE CO S EPARATELY. ACCORDINGLY THE CROSS OBJECTIONS OF THE ASSESSEE ARE PARTLY ALL OWED. ITA 524/VIZAG/2014 (ASSESSEE APPEAL): 41. THIS APPEAL IS FILED BY THE ASSESSEE ON THE AD DITION OF ` 1,25,65,587/- RELATING TO THE DISALLOWANCE OF PREM IUM PAYMENTS MADE TO LIC GROUP GRATUITY SCHEME. THIS ISSUE HAS ALREADY BEEN ADJUDICATED ABOVE IN ITA NO.49/VIZAG/2012 IN FAVOUR OF THE ASSE SSEE IN THIS ORDER. IN VIEW OF THE ABOVE FINDINGS, THE APPEAL OF THE ASSES SEE IS ALLOWED. ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 36 ITA 269/VIZAG/2015: (REVENUE APPEAL) 42. THIS APPEAL RAISED BY THE REVENUE IS ON DELETIO N ADDITION OF ` 1,55,00,000/- BY THE LD.CIT(A) RELATING TO THE PREM IUM PAID IN RESPECT OF GRATUITY TO THE EMPLOYEES OF THE BANK FOR NOT SATIS FYING THE CONDITIONS LAID DOWN U/S 36(1)(V) AND 40A(7)(B) OF THE ACT. THIS I SSUE HAS ALREADY BEEN ADJUDICATED IN THIS ORDER IN ITA NO.49/VIZAG/2012 I N FAVOUR OF THE ASSESSEE. HENCE, THE APPEAL OF THE REVENUE ON THIS GROUND IS DISMISSED. CROSS OBJECTION NO.29/VIZAG/2015 (ITA 269/VIZAG/201 5) 43. THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS IN SUPPORT OF LD. CIT(A)S ORDER IN DIRECTING THE ASSESSING OFFICER T O ALLOW THE PAYMENTS OF ` 1,55,00,000/- MADE BY THE ASSESSEE TOWARDS THE LIC STAFF GRATUITY FUND. THIS ISSUE HAS BEEN ADJUDICATED BY US IN REVENUES APPEAL IN THIS ORDER IN FAVOUR OF THE ASSESSEE. HENCE WE CONSIDER IT IS NOT NECESSARY TO ADJUDICATE THE CO SEPARATELY. IN VIEW OF THE ABOVE FINDINGS, THE APPEAL OF THE ASSESSEE ON THIS GROUND STANDS ALLOWED. 44. GROUND NO.2 IS RELATED TO THE DISALLOWANCE OF A MORTIZATION EXPENDITURE. THE A.O. DISALLOWED A SUM OF ` 2,82,989/- THE EXPENDITURE DEBITED TO P&L ACCOUNT HOLDING THAT THE SUM AS CAPI TAL EXPENDITURE. ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 37 45. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESS EE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) UPHELD T HE SAME. DURING THE APPEAL HEARING, THE LD. A.R. ARGUED THAT THE EX PENDITURE WAS RELATABLE TO THE INTERNAL FURNISHINGS IN THE LEASED PREMISES AND THE A.O. HAS NEITHER ALLOWED DEPRECIATION NOR ALLOWED THE AM ORTIZATION OF EXPENDITURE. THEREFORE, REQUESTED TO ALLOW THE AMO RTIZATION OF EXPENDITURE OR THE DEPRECIATION. HOWEVER NO DETAIL S WERE FURNISHED EITHER BEFORE THE A.O. OR BEFORE THE CIT(A). DURIN G THE APPEAL HEARING ALSO, THE ASSESSEE HAS NOT FURNISHED ANY DETAILS. THEREFORE, WE SET ASIDE THIS ISSUE TO THE FILE OF THE A.O. TO EXAMINE THE ISSUE WITH REGARD TO THE NATURE OF EXPENDITURE AND ALLOW THE DEPRECIA TION AS PER LAW. 46. GROUND NO.3 IS RELATED TO THE ADDITION U/S 40( A)(IA) OF THE ACT. DURING THE APPEAL HEARING, THE A.O. FOUND THA T THE ASSESSEE HAD PAID INTEREST OF ` 13,50,831/- TO THE INCOME TAX DEPARTMENT FOR DIFFERENT DEFAULTS. THEREFORE, THE A.O. DISALLOWED THE INTEREST CLAIMED BY THE ASSESSEE PAID TO THE INCOME TAX DEPARTMENT. THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE CIT(A) UPHELD T HE ADDITION MADE BY THE A.O. 47. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 38 BELOW. ON VERIFICATION, THE DISALLOWANCE MADE BY T HE A.O., THE PAYMENT IS RELATED TO THE INCOME TAX PAYMENT RELATING TO IN TEREST ON INCOME TAX, WHICH IS NOT ALLOWABLE EXPENDITURE. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND THE SAME I S UPHELD. 48. IN THE RESULT, THE C.O. FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO.515/VIZAG/2014 (ASSESSEE APPEAL): 49. THIS APPEAL IS RELATED TO LEVY OF SURCHARGE ON FRINGE BENEFIT TAX LIABILITY FOR THE ASSESSMENT YEAR 2007-08. THE A.O. LEVIED SURCHARGE ON FRINGE BENEFIT TAX PAYABLE BY THE ASSESSEE. 50. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESS EE WENT ON APPEAL BEFORE THE CIT(A) AND CIT(A) CONFIRMED THE O RDER OF THE A.O. AND DISMISSED THE APPEAL OF THE ASSESSEE. 51. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSE SSEE IS IN APPEAL BEFORE US. DURING THE APPEAL HEARING, THE L D. A.R. ARGUED THAT THE SURCHARGE ON FRINGE BENEFIT IS NOT LEVIABLE IN THE CASE OF COOPERATIVE SOCIETIES. THE ASSESSEE BEING A COOPERATIVE SOCIET Y AS PER CIRCULAR NO.3 OF 2008 DATED 12.3.2008 NO SURCHARGE IS LEVIABLE AS PER PARA 3.3.7 OF THE SAID CIRCULAR AND THE LD. A.R. HAS TAKEN OUR AT TENTION TO SAID PARAGRAPH OF THE CIRCULAR WHICH READS AS UNDER: 3.3-7 CO-OPERATIVE SOCIETIES IN THE CASE OF EVERY CO-OPERATIVE SOCIETY, THE RATES OF INCOME-TAX HAVE BEEN SPECIFIED IN PARAGRAPH B OF PART III OF THE FIRST SCHEDULE TO THE ACT. THE RATES ARE AS FOLLOWS: ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 39 INCOME CHARGEABLE TO TAX RATE UP TO RS.10,000 10% RS.10,0001 RS.20,000 20% EXCEEDING RS.20,000 30% NO SURCHARGE SHALL BE LEVIED. EDUCATION CESS ON IN COME-TAX AND SECONDARY AND HIGHER EDUCATION CESS ON INCOME-TAX SHALL BE LE VIED AT THE RATE OF TWO PER CENT AND ONE PER CENT, RESPECTIVELY OF THE AMOUNT O F TAX COMPUTED. NO MARGINAL RELIEF SHALL BE AVAILABLE IN RESPECT OF EDUCATION C ESS. 52. LD. D.R. COULD NOT BRING ANY OTHER MATERIAL TO CONTROVERT THE SUBMISSIONS MADE BY THE LD. A.R. THEREFORE, WE HOL D THAT THE SURCHARGE IS NOT LEVIABLE ON FRINGE BENEFIT TAX. A CCORDINGLY, WE SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND ALLOW THE AP PEAL OF THE ASSESSEE. 53. IN THE RESULT, THE APPEALS FILED BY THE ASSESS EE IN ITA NO.49 & 50/VIZAG/2012 FOR THE A.YS. 2007-08 & 2008-09 ARE PARTLY ALLOWED. THE CROSS OBJECTION FILED BY THE ASSESSEE IN C.O. N O.33/VIZAG/2013 FOR THE A.Y. 2009-10 IS PARTLY ALLOWED. THE ASSESSEES APPEAL IN ITA NO.524/VIZAG/2014 FOR THE A.Y. 2010-11 IS ALLOWED. THE CROSS OBJECTION FILED BY THE ASSESSEE IN C.O. NO.29/VIZAG/2015 FOR THE A.Y. 2011-12 IS PARTLY ALLOWED. ASSESSEES APPEAL IN ITA NO.515/VI ZAG/2014 FOR THE A.Y. 2007-08 IS ALLOWED. THE APPEALS FILED BY THE REVENU E IN ITA NO.78/VIZAG/2012 FOR THE A.Y. 2008-09 IS DISMISSED, ITA ITA NO.49, 50,78, 476/VIZAG/2012, 515, 524/VIZAG/20 14, 269/VIZAG/2015 & CO 33/VIZAG/2013 & CO 29/VIZAG/2015 M/S. THE DISTRICT CO-OPERATIVE CENTRAL BANK LTD., E LURU 40 NO.476/VIZAG/2012 FOR THE A.Y. 2009-10 IS PARTLY AL LOWED FOR STATISTICAL PURPOSES AND ITA NO.269/VIZAG/2015 FOR THE A.Y. 201 1-12 IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 25 TH JAN18. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 25.01.2018 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE DISTRICT CO-OPERATIVE CENTRA L BANK LTD., NEAR OVER BRIDGE, N.R. PET, ELURU 2. / THE RESPONDENT (1) THE ITO, WARD-2, ELURU. 3. / THE RESPONDENT (2) THE ACIT, CIRCLE-2(1), VISA KHAPATNAM 4. / THE RESPONDENT (3) THE ACIT, CIRCLE-(1), ELURU 5. / THE RESPONDENT (4) THE ACIT, CIRCLE-3(1), ELUR U 6. + / THE CIT, RAJAHMUNDRY 7. + ( ) / THE CIT (A), VISAKHAPATNAM 8. # . , . , # / DR, ITAT, VISAKHAPATNAM 9 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM