ITO, Hubli V. The Madeena Co-Operative Credit Society Ltd., Alnavar

ITA 1066/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0315 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 09-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 13-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Question of law
• Section: 56

Judgement Text

ITA.1066/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'C', BANGALORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.1066/BANG/2015 (ASSESSMENT YEAR : 2010-11) INCOME-TAX OFFICER, WARD -2 (3), HUBLI .. APPELLANT V. THE MADEENA CO-OPERATIVE CREDIT SOCIETY LTD, AXAD ROAD, ALNAVAR .. RESPONDENT PAN : AAABT2347P ASSESSEE BY : NONE REVENUE BY : SHRI. SUNIL KUMAR AGARWAL, JCIT HEARD ON : 09.06.2016 PRONOUNCED ON : 24.06.2016 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THIS APPEAL FILED BY REVENUE IS DIRECTED AGAINST O RDER DT.30.03.2015 OF CIT (A), HUBBALLI. 02. ALTOGETHER, FIVE GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE, OF WHICH GROUNDS 1, 4 AND 5 ARE GENERAL NEEDING NO ADJUDICAT ION. GROUNDS 2 AND 3 ARE REPRODUCED HEREUNDER : ITA.1066/BANG/2015 PAGE - 2 2. WHETHER ON FACTS & CIRCUMSTANCES OF THE CASE, I S THE LEARNED CIT(A) CORRECT IN ALLOWING THE CLAIM OF THE ASSESSE E FOR DEDUCTION U/S.80P(2)(A)(I) OF RS.28,42,280/- FOLLOW ING THE JUDGMENTS OF THE HON HIGH COURT IN THE CASE OF SHRI . BILURU GURUBASAVA PATTINA SAHAKARI SANGH NIYAMITH, BAGALKO T. 3. WHETHER ON FACTS & CIRCUMSTANCES OF THE CASE, IS THE LEARNED CIT(A) CORRECT IN DISMISSING THE ADDITION MADE U/S. 40(A)(IA) FOR NON DEDUCTION OF TAX FROM THE PAYMENTS OF PIGMY COM MISSION. A READING OF GROUND 2 WOULD SHOW THAT REVENUE IS AG GRIEVED ON DEDUCTION GIVEN BY CIT (A) TO THE ASSESSEE U/S.80P(2)(A)(I) O F THE INCOME-TAX ACT, 1961 (THE ACT IN SHORT). 04. FACTS APROPOS ARE THAT ASSESSEE, A COOPERATIVE SOCIETY HAD FILED ITS RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR IN WH ICH IT HAD CLAIMED DEDUCTION OF RS.23,10,815/-, U/S.80P(2)(A)(I) OF TH E ACT. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE ASSESSEE FELL W ITHIN THE DEFINITION OF A COOPERATIVE BANK GIVEN IN CLAUSE (CCV) OF SECTION 5 OF THE BANKING REGULATIONS ACT, 1949. THEREFORE, ACCORDING TO HIM , SUB-SECTION (4) OF SECTION 80P STOOD ATTRACTED. THE SAID SUB-SECTION SPECIFICALLY STATED THAT THE PROVISIONS OF SECTION 80P WOULD NOT APPLY TO A COOPERATIVE BANK. THOUGH THE ASSESSEE ARGUED THAT IT HAD TRANSACTIONS ONLY WITH ITS MEMBERS AND NOT PUBLIC, THIS CONTENTION WAS NOT ACCEPTED. ACCORDING TO THE ASSESSING OFFICER EVEN A SECTION OF THE PUBLIC WAS GOOD ENOUGH TO BE ITA.1066/BANG/2015 PAGE - 3 CONSIDERED AS 'SERVICE TO THE PUBLIC'. FURTHER, AS PER THE ASSESSING OFFICER, THE PRIMARY OBJECT OF THE ASSESSEE WAS TRANSACTING IN BANKING BUSINESS AND ITS PAID-UP SHARE CAPITAL EXCEEDED RS.1 LAKH. ITS B YE LAWS DID NOT HAVE A CLAUSE PERMITTING ADMISSION OF ANY OTHER COOPERATIV E SOCIETY AS A MEMBER. HE THEREFORE HELD IT TO BE A COOPERATIVE BANK. ACC ORDING TO THE ASSESSING OFFICER, ASSESSEE WAS NOT ELIGIBLE FOR A DEDUCTION U/S.80P(2)(I) OF THE ACT. 05. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE THE CIT (A). ARGUMENT OF ASSESSEE WAS THAT THE AMOUNTS WHICH WERE PLACED IN DEPOSITS WERE HAVING DIRECT NEXUS WITH THE AMOUNTS RECEIVED AS DE POSITS FROM MEMBERS. WHEN THERE WERE NO IMMEDIATE NEED OF THE FUNDS FOR LOAN DISBURSEMENTS, INSTEAD OF KEEPING THE FUNDS IDLE, ASSESSEE HAD PLA CED IT WITH THE BANKS AS DEPOSITS. AS PER ASSESSEE, IT WAS BOUND TO PAY INT EREST TO THE MEMBERS. SUBMISSION OF ASSESSEE WAS THAT ACCEPTANCE OF DEPOS ITS FROM ITS MEMBERS, CLOSURE OF SUCH DEPOSITS AND REPAYMENTS WERE REGULA R AND ROUTINE FEATURE OF ITS BUSINESS. AS PER ASSESSEE, UNLESS THE FUNDS WH ICH WERE REMAINING WITH IT WERE PLACED IN BANKS, IT WOULD NOT HAVE BEEN POS SIBLE FOR IT TO PAY THE INTEREST DUE TO ITS MEMBERS. 06. CIT (A) WAS IMPRESSED BY THE CONTENTIONS RAISED BY ASSESSEE AND RELYING ON THE JUDGMENT OF HONBLE HIGH COURT OF KA RNATAKA IN CIT V. SRI ITA.1066/BANG/2015 PAGE - 4 BILURU GURUBASAVA PATTIN SAHAKARI SANGH NIYAMIT, BA GALKOT (SUPRA), HELD THAT ASSESSEE WAS ENTITLED TO EXEMPTION U/S.80P(2)( A)(I) OF THE ACT. 07. LD. DR STRONGLY ASSAILING THE ORDER OF THE CIT (A) SUBMITTED THAT SOURCE OF THE INTEREST WAS DEPOSITS IN THE BANK. A CCORDING TO HIM, ONLY THE IMMEDIATE SOURCE WAS REQUIRED TO BE SEEN AND NOT TH E REMOTE SOURCE. HONBLE APEX COURT WAS CLEAR IN THIS ASPECT IN THE DECISION OF TOTGARS COOPERATIVE SALE SOCIETY LTD., (SUPRA). HERE IN TH E CASE OF ASSESSEE, ONLY A VERY SMALL AMOUNT WAS LENT BY IT TO ITS MEMBERS. IT WAS NOT SIMILAR TO A SOCIETY WHICH WAS CARRYING ON CREDIT BUSINESS. THE REFORE ACCORDING TO HIM, CLAIM FOR DEDUCTION U/S.80P(2)(A)(I) OF THE ACT, O N SUCH INTEREST WAS UNJUSTIFIED. 08. NOBODY APPEARED ON BEHALF OF THE ASSESSEE. 09. I HAVE PERUSED THE ORDERS AND HEARD THE LD. DR THERE IS NO DISPUTE THAT ONE OF THE MAIN OBJECT OF ASSESSEE SOCIETY WAS PROVIDING CREDIT FACILITY TO ITS MEMBERS. AO HIMSELF HAS MENTIONED THAT THIS WAS THE PRIMARY OBJECT FOR WHICH ASSESSEE WAS INCORPORATED. NODOUBT, OUT OF SUBSTANTIAL SUM RECEIVED AS DEPOSITS FROM THE MEMBERS, ONLY SMALL PORTION WERE GIVEN BY ASSESSEE AS LOANS TO ITS MEMBERS. MAJOR PART OF TH E FUNDS WERE PARKED IN FDS. HOWEVER, IT IS AN ADMITTED POSITION THAT ASSE SSEE WAS BOUND TO GIVE ITA.1066/BANG/2015 PAGE - 5 INTEREST TO ITS MEMBERS ON THE DEPOSITS RECEIVED BY IT FROM THEM. THEREFORE, WHEN THERE WERE NO TAKERS FOR THE MONEY, WHICH ASSESSEE AS A PART OF ITS OBJECTS WANTED TO LEND, THE ONLY AVAILA BLE CHOICE FOR ASSESSEE, IN ORDER NOT TO KEEP THE FUNDS IDLE, WAS TO PLACE IT I N BANKS FOR EARNING INTEREST. HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD (ITA.307 OF 2014, DT.28.10.2014), WHICH WAS ALSO IN RELATION TO A COO PERATIVE SOCIETY HAVING AS ITS OBJECT, BUSINESS OF PROVIDING BUSINESS CREDI TS TO ITS MEMBERS, HELD AS UNDER AT PARAS 3 TO 10 OF THE JUDGEMENT DT.28.10.20 14 : '4. THE LEARNED COUNSEL FOR THE ASSESSEE ASSA ILING THE IMPUGNED ORDER CONTENDED, THE INTEREST ACCRUED IN A SUM OF RS.1,77,305/- IS FROM THE DEPOSITS MADE BY THE ASSE SSEE IN A NATIONALIZED BANK OUT OF THE AMOUNTS WHICH WAS USED BY THE ASSESSEE FOR PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND THEREFORE THE SAID INTEREST AMOUNT IS ATTRIBUTABLE TO THE CREDIT FACILITIES PROVIDED BY THE ASSESSEEAND FORMS PART O F PROFITS AND GAINS OF BUSINESS AND THEREFORE HE SUBMITS THE APPE LLATE AUTHORITIES WERE NOT JUSTIFIED IN DENYING THE SAID BENEFIT IN TERMS OF SUB-SEC.(2) OF SECTION 80P OF THE ACT. IN SUPPORT O F HIS CONTENTIONS, HE RELIED ON SEVERAL JUDGMENTS AND POINTED OUT THAT THE APEX COURT IN THE AFORESAID JUDGMENT HAS NOT LAID DOWN ANY LAW . 5. PER CONTRA, LEARNED COUNSEL FOR THE REVENUE STRO NGLY RELIED ON THE SAID JUDGMENT OF THE SUPREME COURT AND SUBMITTE D, THE CASE IS COVERED BY THAT JUDGMENT OF THE APEX COURT AND NO C ASE FOR INTERFERENCE IS MADE OUT. 6. FROM THE AFORESAID FACTS AND RIVAL CONTENTIONS, THE UNDISPUTED FACTS WHICH EMERGES IS, THE SUM OF RS. 1,77,305/- R EPRESENTS THE ITA.1066/BANG/2015 PAGE - 6 INTEREST EARNED FROM SHORT-TERM DEPOSITS AND FROM S AVINGS BANK ACCOUNT. THE ASSESSEE IS A COOPERATIVE SOCIETY PROV IDING CREDIT FACILITIES TO ITS MEMBERS. IT IS NOT CARRYING ON AN Y OTHER BUSINESS. THE INTEREST INCOME EARNED BY THE ASSESSEE BY PROVI DING CREDIT FACILITIES TO ITS MEMBERS IS DEPOSITED IN THE BANKS FOR A SHORT DURATION WHICH HAS EARNED INTEREST. THEREFORE, WHET HER THIS INTEREST IS ATTRIBUTABLE TO THE BUSINESS OF PROVIDI NG CREDIT FACILITIES TO ITS MEMBERS, IS THE QUESTION. IN THIS REGARD, IT IS NECESSARY TO NOTICE THE RELEVANT PROVISION OF LAW IE., SECTION 8 0P(2)(A)(I): DEDUCTION IN RESPECT OF INCOME OF CO-OPERATIVE SOC IETIES: 80P (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A C O-OPERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORD ANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB- SECTION (2) , IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. (2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL B E THE FOLLOWING, NAMELY: (A) IN THE CASE OF CO-OPERATIVE SOCIETY ENGAGED IN (I) )CARRYING ON THE BUSINESS OF BANKING OR PROVIDI NG CREDIT FACILITIES TO ITS MEMBERS, OR (II) XXX (III) XXX (IV) XXX (V) XXX (VI) XXX (VII) XXX THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUS INESS ATTRIBUTABLE TO ANY ONE OR MORE OF SUCH ACTIVITIES. 7. THE WORD ATTRIBUTABLE USED IN THE SAID SECTION IS OF GREAT IMPORTANCE. THE APEX COURT HAD AN OCCASION TO CONSI DER THE MEANING OF THE WORD ATTRIBUTABLE AS SUPPOSED TO D ERIVE FROM ITS USE IN VARIOUS OTHER PROVISIONS OF THE STATUTE IN T HE CASE OF CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. VS. ITA.1066/BANG/2015 PAGE - 7 COMMISSIONER OF INCOME-TAX, GUJARAT-LL REPORTED IN ITR VOL. 113 (1978) PAGE 842 AT PAGE 93 AS UNDER : AS REGARDS THE ASPECT EMERGING FROM THE EXPRESSION ATTRIBUTABLE TO OCCURRING IN THE PHRASE PROFITS AND GAINS ATTRIBUTABLE TO THE BUSINESS OF THE SPECIFIED INDUS TRY HERE GENERATION AND DISTRIBUTION OF ELECTRICITY ON WHICH THE LEARNED SOLICITOR-GENERAL RELIED, IT WILL BE PERTIN ENT TO OBSERVE THAT THE LEGISLATURE HAS DELIBERATELY USED THE EXPRESSION ATTRIBUTABLE TO AND NOT THE EXPRESSION DERIVED FROM. I T CANNOT BE DISPUTED THAT THE EXPRESSION ATTRIBUTABLE TO IS CERTAINLY WIDER IN IMPORT THAN THE EXPRESSION DERIVED FROM. HAD THE EXPRESSION DERI VED FROM BEEN USED, IT COULD HAVE WITH SOME FORCE BEEN CONTENDED THAT A BALANCING CHARGE ARISING FROM THE SALE OF OLD MACHINERY AND BUILDINGS CANNOT BE REGARDED AS P ROFITS AND GAINS DERIVED FROM THE CONDUCT OF THE BUSINESS OF GENERATION AND DISTRIBUTION OF ELECTRICITY. I N THIS CONNECTION, IT MAY BE POINTED OUT THAT WHENEVER THE LEGISLATURE WANTED TO GIVE A RESTRICTED MEANING IN THE MANNER SUGGESTED BY THE LEARNED SOLICITOR GENERAL, IT HAS USED THE EXPRESSION DERIVED FROM, AS, FOR INSTANCE, IN SEC TION 80J. IN OUR VIEW, SINCE THE EXPRESSION OF WIDER IMPORT, NAM ELY, ATTRIBUTABLE TO, HAS BEEN USED, THE LEGISLATURE I NTENDED TO COVER RECEIPTS FROM SOURCES OTHER THAN THE ACTUAL C ONDUCT OF THE BUSINESS OF GENERATION AND DISTRIBUTION OF ELECTRIC ITY. 8. THEREFORE, THE WORD ATTRIBUTABLE TO IS CERTAIN LY WIDER IN IMPORT THAN THE EXPRESSION DERIVED FROM. WHENEVER THE LEGISLATURE WANTED TO GIVE A RESTRICTED MEANING, TH EY HAVE USED THE EXPRESSION DERIVED FROM. THE EXPRESSION ATTRIBUT ABLE TO BEING OF WIDER IMPORT, THE SAID EXPRESSION IS USED BY THE LEGISLATURE WHENEVER THEY INTENDED TO GATHER RECEIPTS FROM SOUR CES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS. A COOPERATIVE S OCIETY WHICH IS CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILI TIES TO ITS MEMBERS, EARNS PROFITS AND GAINS OF BUSINESS BY PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE INTEREST INCOME SO ITA.1066/BANG/2015 PAGE - 8 DERIVED OR THE CAPITAL, IF NOT IMMEDIATELY REQUIRED TO BE LENT TO THE MEMBERS, THEY CANNOT KEEP THE SAID AMOUNT IDLE. IF THEY DEPOSIT THIS AMOUNT IN BANK SO AS TO EARN INTEREST, THE SAI D INTEREST INCOME IS ATTRIBUTABLE TO THE PROFITS AND GAINS OF THE BUS INESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS ONLY. THE SOCIETY IS NOT CARRYING ON ANY SEPARATE BUSINESS FOR EARNING SUCH INTEREST INC OME. THE INCOME SO DERIVED IS THE AMOUNT OF PROFITS AND GAIN S OF BUSINESS ATTRIBUTABLE TO THE ACTIVITY OF CARRYING ON THE BUS INESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS BY A CO-OPERATIVE SOCIETY AND IS LIABLE TO BE DEDUCTED FROM THE GROSS TOTAL INCOME UNDER SECTION 80P OF THE ACT. 9. IN THIS CONTEXT WHEN WE LOOK AT THE JUDGMENT OF THE APEX COURT IN THE CASE OF M/S. TOTGARS CO-OPERATIVE SALE SOCIE TY LTD., ON WHICH RELIANCE IS PLACED, THE SUPREME COURT WAS DEA LING WITH A CASE WHERE THE SOCIETY, APART FROM PROVIDING CREDIT FACILITIES TO THE MEMBERS, WAS ALSO IN THE BUSINESS OF MARKETING OF A GRICULTURAL PRODUCE GROWN BY ITS MEMBERS. THE SALE CONSIDERATIO N RECEIVED FROM MARKETING AGRICULTURAL PRODUCE OF ITS MEMBERS WAS RETAINED IN MANY CASES. THE SAID RETAINED AMOUNT WHICH WAS P AYABLE TO ITS MEMBERS FROM WHOM PRODUCE WAS BOUGHT, WAS INVESTED IN A SHORT- TERM DEPOSIT/SECURITY. SUCH AN AMOUNT WHICH WAS RET AINED BY THE ASSESSEE - SOCIETY WAS A LIABILITY AND IT WAS SHOWN IN THE BALANCE SHEET ON THE LIABILITY SIDE. THEREFORE, TO THAT EXTENT, SUCH INTEREST INCOME CANNOT BE SAID TO BE ATTRIBUTABLE EITHER TO THE ACTIVITY M ENTIONED IN SECTION 80P(2)(A)(I) OF THE ACT OR UNDER SECTION 80 P(2)(A)(III) OF THE ACT. THEREFORE IN THE FACTS OF THE SAID CASE, T HE APEX COURT HELD THE ASSESSING OFFICER WAS RIGHT IN TAXING THE INTER EST INCOME INDICATED ABOVE UNDER SECTION 56 OF THE ACT. FURTHE R THEY MADE IT CLEAR THAT THEY ARE CONFINING THE SAID JUDGMENT TO THE FACTS OF THAT CASE. THEREFORE IT IS CLEAR, SUPREME COURT WAS NOT LAYING DOWN ANY LAW. 10. IN THE INSTANT CASE, THE AMOUNT WHICH WAS INVES TED IN BANKS TO EARN INTEREST WAS NOT AN AMOUNT DUE TO ANY MEMBERS. IT WAS NOT THE LIABILITY. IT WAS NOT SHOWN AS LIABILITY IN THE IR ACCOUNT. IN FACT THIS AMOUNT WHICH IS IN THE NATURE OF PROFITS AND G AINS, WAS NOT IMMEDIATELY REQUIRED BY THE ASSESSEE FOR LENDING MO NEY TO THE ITA.1066/BANG/2015 PAGE - 9 MEMBERS, AS THERE WERE NO TAKERS. THEREFORE THEY HA D DEPOSITED THE MONEY IN A BANK SO AS TO EARN INTEREST. THE SAI D INTEREST INCOME IS ATTRIBUTABLE TO CARRYING ON THE BUSINESS OF BANKING AND THEREFORE IT IS LIABLE TO BE DEDUCTED IN TERMS OF S ECTION 80P(1) OF THE ACT. IN FACT SIMILAR VIEW IS TAKEN BY THE ANDHR A PRADESH HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX III , HYDERABAD VS. ANDHRA PRADESH STATE COOPERATIVE BANK LTD., REPORTED IN (2011) 200 TAXMAN 220/12 IN THAT VIEW OF THE MATTER, THE ORDER PASSED BY THE APPELLATE AU THORITIES DENYING THE BENEFIT OF DEDUCTION OF THE AFORESAID AMOUNT IS UNSUSTAINABLE IN LAW. ACCORDINGLY IT IS HEREBY SET ASIDE. THE SUBS TANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AG AINST THE REVENUE. HENCE, WE PASS THE FOLLOWING ORDER. APPEAL IS ALLOWED.' 10. I AM OF THE OPINION THAT IN VIEW OF THE JUDGEM ENT OF HONBLE JURISDICTIONAL HIGH COURT REPRODUCED ABOVE, WHERE I N AT PARA 10, IT HAS BEEN CLEARLY MENTIONED THAT THE MONEY MEANT FOR LEN DING, REMAINING SURPLUS, THERE BEING NO TAKERS, IF DEPOSITED IN BAN KS FOR EARNING INTEREST, SUCH INTEREST INCOME WOULD BE ATTRIBUTABLE TO THE B USINESS OF BANKING CARRIED OUT BY THE ASSESSEE. I AM OF THE OPINION T HAT THE FACTS OF THE CASE HERE FIT PERFECTLY WELL WITH THE FACTS IN THE JUDGM ENT MENTIONED ABOVE. I, THEREFORE, HOLD THAT ASSESSEE WAS ELIGIBLE FOR CLAI MING DEDUCTION U/S.80P(2)(A)(I) OF THE ACT, ON THE INTEREST EARNED ON THE FDS PLACED BY IT WITH BANKS, THIS BEING A PART OF ITS BUSINESS INCOM E. I DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE CIT (A ). ITA.1066/BANG/2015 PAGE - 10 11. VIDE ITS THIRD GROUND, REVENUE IS AGGRIEVED TH AT CIT (A) HELD ASSESSEE TO BE NOT LIABLE FOR DEDUCTING TAX AT SOUR CE FOR A REASON THAT THE PAYMENTS TO PIGMY AGENTS WERE LESS THAN RS.1,60,000 /-. IN MY OPINION WHETHER THE PAYMENTS MADE TO EACH OF THE PIGMY AGEN T WAS LESS THAN LIMITS LAID DOWN UNDER LAW, REQUIRES VERIFICATION BY THE A O. I THEREFORE SET ASIDE THE ORDER OF CIT (A) WITH REGARD TO DISALLOWANCE U/ S.40(A)(IA) OF THE ACT, AND REMIT THE ISSUE BACK TO THE FILE OF AO FOR CONS IDERATION AFRESH IN ACCORDANCE WITH LAW. GROUND THREE IS ALLOWED FOR S TATISTICAL PURPOSE. 12 IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH DAY OF JUNE, 2016. SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER MCN COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ITA.1066/BANG/2015 PAGE - 11 ASSISTANT REGISTRAR