Dy. Commissioner of Income Tax, Hyderabad V. M/s. Shri Ram Chits Pvt. Ltd., Hyderabad

ITA 1142/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69942 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 02-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: K C DEVADAS
• Keywords: Business expenditure; Bad and doubtful debts
• Section: 234B; 260A; 37(1); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1142/HYD/2013 ASSESSMENT YEAR: 2010-11 DY. COMMISSIONER OF INCOME-TAX, CIRCLE 3(1), HYDERABAD. VS. M/S SHRI RAM CHITS PVT. LTD., HYDERABAD. PAN AAFCS4916D APPELLANT RESPONDENT ITA NO. 1049/HYD/2013 ASSESSMENT YEAR: 2010-11 M/S SHRI RAM CHITS PVT. LTD., HYDERABAD. PAN AAFCS4916D VS. DY. COMMISSIONER OF INCOME-TAX, CIRCLE 3(1), HYDERABAD. APPELLANT RESPONDENT REVENUE BY: SRI P. SOMASEKHAR REDDY ASSESSEE BY: SRI K.C. DEVADAS DATE OF HEARING: 13.11.2013 DATE OF PRONOUNCEMENT: 06.12.2013 O R D E R PER CHANDRA POOJARI, AM: THESE ARE CROSS APPEALS DIRECTED AGAINST THE ORDER OF THE CIT(A)-IV, HYDERABAD, DATED 10.05.2013 FOR THE ASSESSMENT YEAR 2010-11 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE IS RUNNING CHIT FUND BUSINESS THROUGHOUT AP THROUGH VARIOUS BR ANCHES. THE CHIT-FUND BUSINESS IS GOVERNED BY THE CHIT FUND S ACT, 1982 AND RULES FRAMED THEREUNDER. AS PER THE PROVIS IONS OF THE CHIT FUND AC, THE RELEVANT BYE-LAWS ARE REGISTE RED WITH ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 2 REGISTRAR OF CHITS AND AFTER OBTAINING CERTIFICATE OF COMMENCEMENT, THE COMPANY CONDUCTS AUCTIONS. AS PE R THE PROVISIONS OF BYE-LAWS AND CHIT AGREEMENT, EACH SUB SCRIBER IN HIS TERM AS DETERMINED BY LOT OR BY AUCTION SHALL B E ENTITLED TO PRIZE AMOUNT. THE MINUTES OF THE PROCEEDINGS OF THE AUCTION WILL BE RECORDED AND SUCH MINUTES WILL BE FILED WIT H REGISTRAR AS PER THE PROVISIONS OF THE AC. THE PRIZED SUBSCRI BER IS PAID PRIZE MONEY AFTER THE PROCESS OF VERIFICATION AND S UBMISSION OF SURETIES. THE COMPANY DERIVES 5% OF THE CHIT VALUE AS FOREMAN COMMISSION. 3. DURING THE YEAR, ASSESSEE HAD DEBITED AN AMOUNT OF RS. 28,56,19,123.44 ON ACCOUNT OF BAD DEBTS WRITTEN OFF , OUT OF WHICH RS. 17,05,35,065.60 PERTAINED TO THE RUNNING CHITS, WHILE RS. 11,50,84,057.84 PERTAINED TO THE TERMINAT ED CHITS. FOLLOWING THE RATIO OF THE ASSESSMENTS MADE IN EARL IER YEARS, THE ASSESSING OFFICER RESTRICTED THE CLAIM OF BAD D EBT TO 5% OF AMOUNTS DUE FROM PRIZED SUBSCRIBERS, WHICH IS THE F OREMANS COMMISSION, AS THE SAME WAS OFFERED TO INCOME EITHE R IN THE PREVIOUS YEAR OR IN THE EARLIER PREVIOUS YEARS. THE REMAINING 95% OF THE BAD DEBTS, NOT OFFERED AS INCOME IN THE PREVIOUS YEAR OR ANY OTHER EARLIER PREVIOUS YEAR WERE BROUGH T TO TAX. IN VIEW ABOVE, 95% OF BAD DEBTS OF RS. 28,56,19,123.44 , AMOUNTING TO RS. 27,13,38,167/- WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. HE ALSO R EJECTED THE ALTERNATIVE CLAIM OF THE BAD DEBTS U/S 37(1) AND AS BUSINESS U/S 28. 4. ON APPEAL, THE CIT(A) FOLLOWING THE DECISIONS OF ITAT ON THIS ISSUE, DIRECTED THE ASSESSING OFFICER TO ALLOW THE BAD DEBTS RELATABLE TO TERMINATED CHITS AND ALSO DIREC TED THE ASSESSING OFFICER TO COMPUTE BAD DEBTS RELATABLE TO RUNNING CHITS AS PER THE DIRECTIONS IN THE ORDER OF THE ITA T ON THIS ISSUE. ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 3 5. AGGRIEVED BY THE ORDER OF CIT(A) BOTH THE ASSESS EE AND REVENUE ARE IN APPEAL BEFORE US CONTENDING AS UNDER : ASSESSEES GROUNDS: THE LEARNED CIT(A) OUGHT TO HAVE ALSO HELD THAT TH E DEDUCTION OF IRRECOVERABLE AMOUNTS IN RESPECT OF RU NNING AND TERMINATED CHITS WAS DEDUCTIBLE U/S 28 OF THE I T ACT, 1961 AND LOSS ARISING IN THE COURSE OF CARRYING ON BUSINESS BY THE APPELLANT. THE LEARNED CIT(A) FAILED TO NOTE THAT THE ASSESSIN G OFFICER FOR THE EARLIER YEARS FOLLOWING THE DIRECTI ONS OF ITAT ALLOWED THE DEDUCTION FOR BAD DEBTS IN RESPECT OF RUNNING CHITS AND THEREFORE ERRED IN GIVING THE DIR ECTIONS ONCE AGAIN TO COMPUTE THE IRRECOVERABLE AMOUNTS IN RESPECT OF RUNNING CHITS, INSTEAD OF DIRECTING ITS DEDUCTION ABSOLUTELY. REVENUES GROUND: 1) THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE DISALLOWANCE OF BAD DEBTS ON RUNNING AND TERMINATED CHITS. 6. THE LEARNED COUNSEL RELIED ON THE EARLIER ORDERS OF THE ITAT IN ASSESSEES OWN CASE. 7. THE LEARNED DR CONTENDED THAT THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE DISALLOWANCE OF BAD DEBTS ON RUN NING AND TERMINATED CHITS. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE RECORD AS WELL AS THE ORDERS OF THE LOWER AUTHORITI ES. WE HAVE ALSO PERUSED THE EARLIER ORDERS OF THE ITAT IN ASSE SSEES OWN CASE. THE COORDINATE BENCH IN AY 2009-10 IN ASSESS EES OWN CASE FOR AY 2009-10 IN ITA NO. 651/HYD/2012, ON SIM ILAR ISSUE, VIDE ORDER DATED 05/04/2013, HELD AS FOLLOWS : 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. THE CRUX OF ARGUMENT OF THE ASSESSEES COUNSEL IS THAT IN EARLIER YEARS SIMILA R CLAIM OF THE ASSESSEE HAS BEEN ALLOWED BY THE TRIBUNAL AN D ON THAT BASIS THE PRESENT CLAIM IS TO BE ALLOWED. H E RELIED ON THE ORDER OF THE TRIBUNAL DATED 12.10.201 2 IN ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 4 ITA NO. 975/12 FOR A.Y. 2009-10. WHILE DISPOSING TH E APPEAL FOR A.Y. 2009-10, THE TRIBUNAL RELIED ON THE EARLIER ORDER OF THE TRIBUNAL FOR A.YS. 1995-96 TO 1999- 2000, 2002-03 TO 2006-07 AND 2008-09. IN EARLIER YE AR, THE TRIBUNAL REMITTED THE ISSUE FOR COMPUTING THE B AD DEBTS RELATABLE TO RUNNING CHITS. WE HAVE NO DISPU TE WITH REGARD TO THE FINDINGS OF THE TRIBUNAL ON EARL IER OCCASION. THE AMOUNT OF LOSS INCURRED BY THE ASSESS EE HAS TO BE ALLOWED ON BOTH RUNNING AND TERMINATED C HITS IF IRRECOVERABLE IF THE PRIZED CHIT AMOUNT HAS GONE OUT OF THE HANDS OF THE ASSESSEE. IN OTHER WORDS, BAD DEBT S CAN BE ALLOWED TO THE EXTENT OF INSTALMENTS DEFAULT ED BY THE PRIZED SUBSCRIBERS AND WRITTEN OFF AS BAD DEBT IN THE BOOKS OF THE ASSESSEE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DECIDE THE ISSUE IN THE LIGHT OF THE ORDER OF THE TRIBUNAL FOR A.YS. 1995-96, 1997-98, 1 998- 99 AND 1999-2000 IN ITA NO.500/HYD/1999 AND 506/HYD/1999 (1995-96), 294/HYD/2010 AND 327/HYD/ 2001 (1997-98), 471/HYD/2002(1998-99), 1049/HYD/200 2 (1999-2000) IN ASSESSEES OWN CASE DATED 26.7.2004 WHEREIN THE TRIBUNAL REMITTED THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO SEE WHETHER THE ASSESSE E MADE A CLAIM OF BAD DEBT AND WRITTEN OFF IN THE BO OKS OF ACCOUNT. THUS ON SIMILAR DIRECTION WE REMIT THE ISS UE BACK TO THE FILE OF THE ASSESSING OFFICER TO RE-EXA MINE THE ISSUE IN THE LIGHT OF THE ORDER OF EARLIER YEAR S I.E., 1995-96, 1997-98, 1998-99 AND 1999-2000 (SUPRA). TH IS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE COORDINATE BENCH, WE REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH IDENTICAL DIRECTIONS. ACCORD INGLY, GROUND NOS. 2 & 3 RAISED BY ASSESSEE AND GROUND NO. 2 BY REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 10. THE ASSESSEE IN GROUND NO. 4 CONTENDED THAT THE CIT(A) ERRED IN UPHOLDING THE TAXABILITY OF FOREMAN DIVIDEND AT RS. 9,79,21,623/-. 11. ASSESSEE CLAIMED FOREMANS DIVIDEND OF RS. 9,79,21,623/- AS EXEMPT ON THE PRINCIPLE OF MUTUALI TY. THE ASSESSING OFFICER REJECTED THE CLAIM AND BROUGHT TH IS AMOUNT TO TAX. THE CIT(A) UPHELD THE ACTION OF THE ASSESSI NG OFFICER ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 5 FOLLOWING THE DECISION OF COORDINATE BENCH IN ASSES SEES OWN CASE REPORTED IN 83 ITD 792. 12. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 13. AFTER HEARING THE PARTIES AND PERUSING THE RECO RD, WE FIND THAT THIS ISSUE IS SQUARELY COVERED AGAINST TH E ASSESSEE BY THE DECISIONS OF ITAT IN EARLIER YEARS IN ASSESS EES OWN CASE. FOR AY 2009-10 (SUPRA) THE COORDINATE BENCH, HELD AS FOLLOWS: 11. THE NEXT GROUND (GROUND NO. 4) IS WITH REGARD TO UPHOLDING THE TAXABILITY OF FOREMAN DIVIDEND AT RS.8,44,39,492. BRIEF FACTS OF THE ISSUE ARE THAT D URING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ABOVE REFERRED DIVIDEND INCOME ON COMPANY'S CHITS WAS CLAIMED AS NOT TAXABLE IN VIEW OF THE DECISION OF HON'BLE PUNJAB AND HARYANA HIGH COU RT IN THE CASE OF SODA SILICATE AND CHEMICAL WORKS (17 9 ITR 588). HOWEVER, THE ASSESSING OFFICER CONCLUDED THAT THE CONTRIBUTORS TO THE CHIT WERE NOT CONTRIBUTORS TO THE MUTUAL SOCIETY. BESIDES, THE PROFIT ARISING AS DIVI DEND ON THE CHIT SUBSCRIBED BY THE FOREMAN IS NOT DISTRIBUT ED AMONG THE SUBSCRIBERS BUT AMONG THE SHARE HOLDERS O F THE ASSESSEE COMPANY. HE FURTHER FOUND THAT DEPARTMENT'S CONTENTION HAD BEEN UPHELD BY THE TRIBUNAL FOR ASST. YEARS 1999-2000, 2000-01 AND 200 1- 02 AS REPORTED IN 83 ITD 792, BESIDES IN THE ASSESS EE'S OWN APPEALS FOR THE A.YS. 2002-03 TO 2007-08. HE AL SO REFERRED TO THE DECISION OF THE TRIBUNAL DELHI BENC H IN THE CASE OF SARVPRIYA CHITS PVT. LTD. VS. CIT (60 I TD 674) WHEREIN IT WAS HELD THAT IN CASE OF CHIT FUND BUSINESS, PRINCIPLE OF MUTUALITY WILL NOT APPLY. ACCORDINGLY, THE CLAIM OF EXEMPTION OF FOREMAN'S DIVIDEND WAS REJECTED AND ADDITION UNDER REFERENCE WAS MADE. 12. DURING THE APPELLATE PROCEEDINGS, THE REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THOUG H THE DEPARTMENT'S CONTENTION HAS BEEN UPHELD BY THE TRIBUNAL, THE ASSESSEE'S APPEAL UNDER SEC. 260A OF THE ACT ON THIS ISSUE IS STILL PENDING BEFORE THE HON'B LE ANDHRA PRADESH HIGH COURT. HE, THEREFORE, REITERATE D THE ARGUMENTS SUBMITTED ON THIS ISSUE IN THE EARLIE R YEARS. ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 6 13. ON APPEAL THE CIT(A) FOLLOWED THE EARLIER ORDE R OF THE TRIBUNAL IN ASSESSEES OWN CASE REPORTED IN 83 ITD 792 (HYD) FOR A.Y. 1991-92 TO 1994-95 WHEREIN THE TRIBUNAL OBSERVED AS FOLLOWS: 'THE ONLY ISSUE TO BE DECIDED WAS WHETHER THE PRINCIPLE OF MUTUALITY WAS APPLICABLE TO THE ASSESSEE, WHICH WAS A CHIT FUND COMPANY. ADMITTEDLY, THE ASSESSEE WAS A COMMERCIAL ENTITY FORMED TO DERIVE PROFITS AND GAINS FROM THE BUSINESS OF CHITS. IT IS A SETTLED PROPOSITION OF L AW THAT THE PRINCIPLE OF MUTUALITY IS NOT APPLICABLE T O COMMERCIAL ORGANISATIONS FORMED WITH AN OBJECT OF EARNING PROFIT OF COMMERCIAL NATURE. UNDER CONSIDERATION WAS THE CASE OF A COMPANY WHICH CARRIED ON THE BUSINESS OF CHIT FUNDS AND NOT THAT OF AN ASSESSEE WHO JOINED AS A SUBSCRIBER TO CHITS FOR PERSONAL SAVINGS OR OTHERWISE. THE ISSUE ON HAND WAS THE TAXABILITY OF THE DIVIDEND EARNED BY THE ASSESSEE-COMPANY, WHICH JOINED THE CHIT GROUPS PROMOTED BY IT EITHER AS A FOREMAN IN FULFILMENT OF THE REQUIREMENT OF LAW, I.E., CHIT FUNDS ACT, 1982 (CENTRAL ACT 40 OF 1982) OR ON THE ASSESSEE- COMPANY ENTERING INTO THE SHOES OF DEFAULTING SUBSCRIBERS OR IN SOME CASES TO FILL UP VACANT CHITS AS A MATTER OF NECESSITY OR EXPEDIENCY OF ITS BUSINESS AND NOT BY CHOICE. IT WAS NOT THE CASE OF THE ASSESSEE-COMPANY THAT IT PARTICIPATED IN CHITS PROMOTED BY OTHER COMPANIES OR ENTITIES. THE BASIC PRINCIPLE OF MUTUALITY CANNO T BE APPLIED TO INCOME FROM COMMERCIAL PURSUITS. PROFIT EARNING WAS THE MOTTO OF THE ASSESSEE- COMPANY. THE PROFITS IN QUESTION AROSE AND ACCRUED FROM THE TRADE OR VOCATION WHICH IT CARRIED ON. THE PRINCIPLES OF MUTUALITY ARE BASED ON THE CONCEPT THAT NO ONE CAN MAKE PROFITS OUT OF HIMSELF. THE ESSENCE OF MUTUALITY IS OF COMPLETE IDENTITY BETWEEN THE CONTRIBUTOR AND THE PARTICIPATOR. UNDER SECTION 21 OF THE CHIT FUNDS ACT, 1982, THE FOREMAN 5 ROLE AND RIGHTS ARE AT VARIANCE WITH THE OTHER PARTICIPATORS AND CONTRIBUTORS. THE FOREMAN NEED NOT FOREGO DISCOUNT OR LOSS AND CAN TAKE THE FIRST INSTALMENT. THUS, IT CANNOT BE SAID THAT THERE IS COMPLETE IDENTITY BETWEEN THE FOREMAN AND OTHER PARTICIPATORS IN THE CHIT. IT CANNOT ALSO BE SAID T HAT THE PROFIT IS MADE OUT OF ITSELF. THUS, THE PRINCIP LES OF MUTUALITY CANNOT ON THIS COUNT ALSO BE APPLIED TO CHIT FUND COMPANIES. THE ASSESSEE WAS A ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 7 BUSINESS CONCERN AND ITS AIM WAS TO MAKE PROFITS AND, THUS, THE PRINCIPLES OF MUTUALITY COULD NOT BE APPLIED TO IT. THE ISSUE ON HAND, WAS COVERED BY THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF KOVUR TEXTILES (SUPRA), INASMUCH AS THE ASSESSEE HAD EARNED INCOME FOR THE PURPOSES OF ITS BUSINESS AND TO BE UTILISED ONLY FOR THE PURPOSES OF ITS BUSINESS. THE ISSUE WAS SQUARELY COVERED IN FAVOUR OF THE REVENUE BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF PURUSHOTHAM REDDY (SUPRA) AS THE ONLY PLANK ON WHICH EXEMPTION WAS CLAIMED IN THAT CASE, WAS MUTUALITY AND NOTHING ELSE. IT COULD BE SAID THAT I T WAS A CONSISTENT VIEW OF THE JURISDICTIONAL HIGH COURT. THUS, THE ORDER OF THE COMMISSIONER (APPEALS) WAS UPHELD AND APPEALS OF THE ASSESSEE DISMISSED.' 14. BEFORE US THE LEARNED AR MADE A PLEA THAT THE ASSESSEE CLAIM HAS TO BE ALLOWED IN VIEW OF THE JUDGEMENT OF MADRAS HIGH COURT IN THE CASE OF CIT V S. SHRIRAM CHITS AND INVESTMENTS LTD. (83 DTR 208). 15. WE HAVE HEARD BOTH THE PARTIES AD PERUSED THE MATERIAL ON RECORD. THE PLEA OF THE ASSESSEE IS DEV OID OF MERIT. THE ISSUE CONSIDERED BY THE MADRAS HIGH C OURT IS RELATING TO ALLOWABILITY OF CONTRIBUTION OF THE ASSESSEE AS A FOREMAN IN THE PLACE OF A DEFAULTED SUBSCRIBER AS BAD DEBT U/S. 36(1)(VII) OR AS A BUSINESS LOSS U/S. 28(1) OF THE ACT. NOW WE ARE CONCERNED IN ASSESSEES CASE WITH REGARD TO TAXABILITY OF FOREMAN DIVIDEND RECE IVED. IT WAS CATEGORICALLY HELD BY THE TRIBUNAL IN EARLIER Y EARS AS THERE IS NO APPLICABILITY OF MUTUALITY ON THIS IN COME. BEING SO, WE ARE INCLINED TO FOLLOW THE EARLIER ORD ER OF THIS TRIBUNAL AND DISMISS THIS GROUND. 14. SINCE THE ISSUE UNDER CONSIDERATION IS MATERIAL LY IDENTICAL TO THAT OF AY 2009-10 (SUPRA), FOLLOWING THE DECISION OF COORDINATE BENCH IN THAT YEAR, WE UPHOLD THE ORD ER OF CIT(A) AND DISMISS GROUND NO. 4 & 5 RAISED BY ASSES SEE. 15. GROUND NOS. 6 & 7 IN ASSESSEES APPEAL ARE PERT AINING TO LEVY OF INTEREST U/S. 234B AND 234C. CHARGING OF INTEREST UNDER THESE SECTIONS IS CONSEQUENTIAL IN NATURE, TH EREFORE, THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 8 16. GROUND NO. 1 & 5 IN REVENUES APPEAL ARE GENERA L IN NATURE. GROUND NO. 2 HAS ALREADY BEEN DECIDED WHILE DECIDING ASSESSEES APPEAL. 17. GROUND NO. 3 IS THAT THE LEARNED CIT(A) OUGHT T O HAVE UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFIC ER TOWARDS COMMISSION ON CANCELLED CHITS. 18. THE ASSESSING OFFICER MADE THE ADDITION OF RS. 1,06,15,700 BEING COMMISSION OF CANCELLED CHITS CLA IMED BY THE ASSESSEE. THE CIT(A) OBSERVED THAT THE TRIBUNAL HAS HELD IN EARLIER YEARS IN ASSESSEES OWN CASE THAT THE ME THOD OF ACCOUNTING OF COMMISSION ON CALLED CHITS ADOPTED BY THE ASSESSEE WAS CORRECT. HE, THEREFORE, FOLLOWING THE DECISION OF TRIBUNAL IN EARLIER YEARS, DIRECTED THE ASSESSING O FFICER TO DELETE THE ADDITION MADE ON THIS COUNT. 19. REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE US . 20. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH IN ASSESSEES OWN CASE IN EARL IER YEARS. IN AY 2009-10 THE TRIBUNAL IN ITA NO. 975/HYD/2012 VIDE ORDER DATED 12/10/2012 DISMISSED THE GROUND RAISED BY THE REVENUE OBSERVING AS UNDER: 9. GROUND NO. 3 IS DIRECTED AGAINST THE ACTION OF THE CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE AO TOWARDS COMMISSION ON CANCELLATION CHITS. 10. THE AO HAD NOTICED THAT FROM THE AY 1998-99, TH E ASSESSEE IS RECOGNIZING THE INCOME FROM COMMISSION ON CANCELLED CHITS ON ACTUAL PAYMENT BASIS, AS AGAINS T THE EARLIER POLICY OF RECOGNIZING THE SAME ON REMOVAL B ASIS. ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 9 HE NOTED THAT WHEN NON-PRIZED SUBSCRIBERS MAKE DEFA ULT IN PAYMENT OF LATER INSTALMENTS OF THEIR SUBSCRIPTI ONS, NEW SUBSCRIBERS WERE TAKEN IN THEIR PLACE. THE DEFAULTING NON PRIZED SUBSCRIBERS GET BACK THEIR SUBSCRIPTIONS AFTER DEDUCTION OF COMMISSION OF 5% O F THE CHIT VALUE ON CANCELLED CHITS. HE OPINED THAT THE I NCOME BY WAY OF COMMISSION @5% ON THE AMOUNT PAYABLE TO THE REMOVED SUBSCRIBERS ACCRUES AT THE TIME OF COMPLETION OF THE SERIES AS PER THE CHIT AGREEMENT AND NOT WHEN THE ACCOUNT OF THE DEFAULTING NON-PRIZED SUBSCRIBER IS SETTLED BY PAYMENT TO HIM, AS CONTEND ED BY THE ASSESSEE. AFTER REFERRING TO THE PROVISIONS OF THE ANDHRA PRADESH CHIT FUND ACT, 1971, DECISIONS OF HI GH COURT AND SUPREME COURT AND THE DETAILS FURNISHED B Y THE ASSESSEE, THE AO OBSERVED THAT THE AMOUNT TO WH ICH THE ASSESSEE WAS ENTITLED AS COMMISSION FROM THE REMOVED SUBSCRIBERS IN RESPECT OF THE CHIT SERIES W HICH WERE COMPLETED DURING THE FY 2008-09, @5% OF CHIT VALUE OF CANCELLED CHITS WAS RS. 8,75,71,450/- AND OUT OF THE SAME, AN AMOUNT OF RS. 8,00,92,773/- HAD BEE N ADDED BACK TO THE INCOME OF THE ASSESSEE IN THE ASSESSMENT ORDER FOR AY 2008-09.THE BALANCE AMOUNT OF RS. 74,78,677/- WAS ADDED BACK TO THE TOTAL INCO ME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 11. ON APPEAL, BEFORE THE CIT(A), THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE HONBLE ITAT B BE NCH IN ITS ORDER DATED 20/07/2004 HELD THAT THE METHOD OF ACCOUNTING OF COMMISSION ON CANCELLED CHITS ADOPTED BY THE ASSESSEE WAS CORRECT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) HELD THAT S INCE THE ACCOUNTING TREATMENT GIVEN BY THE ASSESSEE TO S UCH COMMISSION HAS BEEN UPHELD BY THE HONBLE ITAT IN THE EARLIER YEARS, RESPECTFULLY FOLLOWING THE DECIS ION OF THE ITAT, DIRECTED THE AO TO ACCEPT THE SAME AND DELETED THE ADDITION OF RS. 74,78,677/- MADE BY THE AO. 12. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 13. THE LEARNED COUNSEL FOR THE ASSESSEE CANVASSED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY TH E DECISIONS OF THE ITAT IN ASSESSEES OWN CASE FOR EA RLIER YEARS. THE LEARNED DR, ON THE OTHER HAND, DID NOT CONTROVERT THE SUBMISSION MADE BY THE LEARNED COUNS EL FOR THE ASSESSEE NOR BROUGHT ANY CONTRARY DECISION IN THIS REGARD. 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE DECISIONS OF THE ITAT IN ASSESSEES OWN CASES IN EA RLIER ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 10 YEARS. IN AY 2008-09 BEING ITA NOS. 390/HYD/2012(REVENUES APPEAL) AND 324/HYD/2012 (ASSESSEES APPEAL), THE TRIBUNAL DISMISSED SIMILAR GROUND RAISED BY THE REVENUE BY OBSERVING AS UNDER: - 11. IN GROUND NO.3, THE REVENUE HAS CHALLENGED THE DELETION OF THE AMOUNT OF RS.1,62,45,800/- TOWARDS COMMISSION ON CANCELLED CHITS. WE FIND IDENTICAL IS SUE CAME UP BEFORE THE ITAT, HYDERABAD BENCH IN ASSESSEE'S OWN CASE PASSED IN ITA NO.120/HYD/2010 THE ITAT FOLLOWING ITS EARLIER ORDER PASSED IN ASSE SSEE'S OWN CASE UPHELD THE ORDER OF THE CIT (A) IN ALLOWIN G THE COMMISSION ON CANCELLED CHITS. THE OBSERVATION OF T HE ITAT IN PARA-15 WHICH IS EXTRACTED HEREUNDER:- '15. SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THIS TRIBUNAL IN ASSESSEE'S OWN CASE IN EARLIER ORDERS F OR THE ASSESSMENT YEARS 1998-99, 1999-2000 IN ITA NOS.471/H/2002 & 1049/H/2002 RESPECTIVELY WHEREIN T HE TRIBUNAL HELD IN PARA 6.3 AS FOLLOWS: 6.3. TIME OF RECOGNITION OF INCOME FROM COMMISSION ON CANCELLED CHITS. THIS ISSUE IS INVOLVED IN THE ASSESSEE'S APPEALS FOR ASSESSMENT YEARS 1998-99 AND 1999-2000. THE DISPUTE IS ABOUT TIME OF ACCRUAL OF THE INCOME BY WAY OF COMMISSION IN RESPECT OF CASES WHERE DEFAULTING NON PRIZED SUBSCRIBERS WHO ARE REMOVED FROM THE CHIT AND IN WHOSE PLACE NEW SUBSCRIBERS ARE SUBSTITUTED. ON A CAREFUL CONSIDERATION OF THE ISSUE, WE FIND THAT FROM OUT OF THE AMOUNT THAT IS PAYABLE TO THE DEFAULTING SUBSCRIBER CONSEQUENT TO HIS REPLACEMENT BY ANOTHER PERSON THE COMPANY IS ENTITLED TO DEDUCT 5% AS COMMISSION. THIS HAS NOTHING TO DO WITH THE REGULAR COMMISSION INCOME OF THE ASSESSEE. THUS THE STAND OF THE ASSESSEE THAT THE COMMISSION INCOME ACCRUES WHEN THE ACCOUNTS HAVE BEEN FINALLY SETTLED TO THE DEFAULTING NON SUBSCRIBER TO OUR MIND APPEARS TO BE THE CORRECT POSITION. OTHERWISE IN CASE OF A NON PRIZED SUBSCRIBER THE AMOUNT ,OF 5% WOULD BE DEDUCTED FROM THE AMOUNTS DUE TO HIM MUCH BEFORE THE SETTLEMENT OF HIS ACCOUNT AND RECOGNISED AS INCOME BY WAY OF TRANSFER FROM CURRENT LIABILITIES TO PROFIT AND LOSS ACCOUNT. RELIANCE PLACED BY THE REVENUE ON THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN THE CASE OF SHRIRAM CHITS & INVESTMENTS P LTD. CHENNAL VS. ACIT (263 ITR (AT) 65). THIS DECISION IS NOT APPLICABLE TO THE FACTS OF THIS CASE. THE ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 11 COMMISSION/REMUNERATION TO THE FOREMAN IN THAT CASE WAS SOUGHT TO BE RECOGNISED ON THE COMPLETION OF CHIT METHOD AND HAD NOTHING TO DO WITH THE TYPE OF ADDITIONAL COMMISSION RECEIVABLE IN CASE OF SUBSTITUTION OF A SUBSCRIBER AS IN THIS CASE. THE NATURES OF INCOME IN BOTH THESE CASES ARE DIFFERENT. THE FURTHER COMMISSION OF 5% RECEIVABLE FROM A DEFAULTING SUBSCRIBER CONSEQUENT TO HIS REMOVAL AND SUBSTITUTION ON A FULL AND FINAL SETTLEMENT OF A DEFAULTING SUBSCRIBE R ACCOUNT IS RECOGNISED AS INCOME ON THE FINALISATION OF THE ISSUES. THIS IS NOT AN UNACCEPTABLE PROPOSITION. WE AGREE WITH THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE. ASSESSEE, WHICH ARE AT PARA 4.11 OF THIS ORDER. IN THE RESULT, THIS GROUND OF APPEAL OF THE ASSESSEE I S ALLOWED.' FOLLOWING THE AFORESAID ORDER OF THE ITAT, WE UPHOL D THE ORDER OF THE CIT (A) AND REJECT THE GROUND RAISED B Y THE REVENUE. 15. SINCE THE ISSUE UNDER CONSIDERATION IS IDENTICA L TO THAT OF AY 2008-09, RESPECTFULLY FOLLOWING THE DECI SION OF THE COORDINATE BENCH IN THAT YEAR, WE UPHOLD THE OR DER OF THE CIT(A) IN DELETING THE ADDITION OF RS. 74,78 ,677/- MADE BY THE AO AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 21. AS THE ISSUE UNDER CONSIDERATION IS IDENTICAL T O THAT OF AY 2009-10 (SUPRA), RESPECTFULLY FOLLOWING THE DECI SION OF THE COORDINATE BENCH IN THAT YEAR, WE UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE AND DISMISS THE GROUND RAISED BY THE REVENUE. 22. GROUND NO.4 RAISED BY THE REVENUE IS THAT THE L EARNED CIT(A) OUGHT TO HAVE UPHELD THE DISALLOWANCE OF ROY ALTY PAYMENT MADE BY THE ASSESSING OFFICER. 23. WHEN THE ASSESSING OFFICER MADE THE DISALLOWANC E OF ROYALTY PAYMENT OF RS. 3,33,86,186/- THE CIT(A) FOL LOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 12 YEARS, DIRECTED THE ASSESSING OFFICER TO ALLOW THE DISALLOWANCE. 24. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 25. AFTER HEARING THE PARTIES AND PERUSING THE RECO RD, WE FIND THAT THIS ISSUE ALSO DECIDED BY THE TRIBUNAL I N ASSESSEES OWN CASE IN EARLIER YEARS. IN AY 2009-10 IN ITA NO. 975/HYD/2012 VIDE ORDER DATED 12/10/2012, THE COORD INATE BENCH DISMISSED THE SIMILAR GROUND RAISED BY THE RE VENUE BY HOLDING AS UNDER: 21. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSI NG THE RECORD, WE FIND THAT THE ISSUE IN DISPUTE IS SQ UARELY COVERED BY THE ORDERS OF THE ITAT IN ASSESSEES OWN CASES IN EARLIER YEARS. IN AY 2008-09, THE ITAT WHI LE REJECTING THE GROUND RAISED BY THE REVENUE HELD AS UNDER: 12. GROUND NO. 4 RELATES TO DELETION OF THE ROYALT Y PAYMENT OF RS.3,34,31,583/-. SIMILAR ISSUE CAME UP BEFORE THE ITAT FOR THE EARLIER ASSESSMENT YEAR IN ITA NO. 490/HYD/10, ITA NO.720/HYD/10 AND THE ITAT HELD IN THE FOLLOWING MANNER:- '20. SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THIS TRIBUNAL FOR THE ASSESSMENT YEARS 2004-05! 2005~06 AND 2006-07. THE TRIBUNAL VIDE ITS ORDER DATED 26.7.2004 IN PARA 20 HELD AS FOLLOWS: PAGE 136, 137, 138 OF PB. 6.7(LV): WE ARE CONVINCED WITH THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE. THE BANGALORE BENCH OF THE TRIBUNAL IN ITA NO.751, 750, 749 &. 748/(BANG.)/1998 IN THE CASE OF M/S SRLRAM CHITS (BANGALORE) LTD. VS. DCIT (ASSISTANT) SPECIAL RANGE, BANGALORE HELD AS FOLLOWS: '29. WE HAVE CAREFULLY GONE THROUGH THE RECORDS AND CONSIDERATION THE RIVAL CONTENTIONS. M/S SRIRAM CHITS &. INVESTMENT (P) LTD. HAVING REGISTERED OFFICE AT MADRAS WAS THE ABSOLUTE OWNER OF THE COPY RIGHT RELATING TO EXISTING ARTIST IC WORK 'SRLRAM CHITS' LOGO REGISTERED AS SUCH UNDER ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 13 THE PROVISIONS OF THE COPY RIGHT ACT, 1957 WITH THE REGISTRAR OF COPYRIGHTS BEARING REGISTRATION NO.A/49899/88 DATED 7.7.1988. THE ASSESSEE ENTERED INTO AN AGREEMENT WITH THE HOLDING COMPANY FOR EXCLUSIVE USE OF THE LOGO OF THE HOLDING COMPANY IN THE COURSE OF SOLICITING ITS BUSINESS AMONGST POTENTIAL INVESTORS. THE CONDITIONS OF THE AGREEMENT PROVIDED THAT THE ASSESSEE SHALL PAY ROYALTY OF 0.5% ON THE ANNUAL AUCTION TURNOVER OF THE ASSESSEE DETERMINED ON THE BASIS OF VALUE OF AUCTIONS FIXED DURING THE YEAR. IN FACT, THE ASSESSEE HAS USED THE LOGO TO THE BEST ADVANTAGE OF BUSINESS. THE ASSESSEE WAS TO CARRY ON THE BUSINESS OF CHIT FUND IN THE STATE OF KARNATAKA AND THE HOLDING COMPANY GRADUALLY STOPPED FLOATING NEW (GROUNDS AS IT DID IN 1984) ALLOWING SUBSIDIARY COMPANY TO EXPAND ITSELF. THE GROWTH OF BUSINESS OF THE ASSESSEE OVER THE YEARS OF THE ORDER OF THE CIT (A) IS VERY MUCH RELEVANT. THE RELEVANT PORTION READS: 1. SRLRAM CHITS 8R. INVESTMENTS (P) LTD. COMMENCED OPERATIONS IN KARNATAKA IN THE YEAR 1984. THE BUSINESS OF THE COMPANY IN KARNATAKA INCREASED OVER THE YEARS UPTO 1990-91 WHEN THE AUCTION TURNOVER TOUCHED RS.80.39 LAKHS. 2. SRLRAM CHITS AND INVESTMENTS (P) LTD. DECIDED TO EXPAND ITS BUSINESS IN KARNATAKA BY FORMING A SUBSIDIARY COMPANY SRLRAM CHITS (BANGALORE) (P) LTD. 3. IN THE YEAR 1990, SRLRAM CHITS (BANGALORE) (P) LTD. WAS FORMED AND WAS CARRYING ON THE BUSINESS OF CHIT FUNDS IN THE STATE OF KARNATAKA AND SRLRAM CHITS AND INVESTMENTS (P) LTD. GRADUALLY STOPPED FLOATING NEW GROUPS ALLOWING THE SUBSIDIARY COMPANY TO EXPAND. 4. SRLRAM CHITS (BANGALORE) (P) LTD. SINCE INCEPTION CONTINUED TO BOOK NEW BUSINESS BY USING THE LOGO OF ITS HOLDING COMPANY. 5. THE BUSINESS GROWTH OF SRLRAM CHITS (BANGALORE) (P) LTD. OVER THE YEARS CAN BE INFERRED FROM THE FOLLOWING FIGURES: ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 14 FY 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996- 97 NO.OF 4 6 7 9 11 19 19 BRANCHES BUSINESS 29.49 66.41 105 81.26 184.01 260.05 359.05 (IN LAKHS) AUCTION 29.49 95.9 181.15 225.69 348.29 542.28 753.23 TURNOVER 6. THE RIGHT TO USE THE LOGO FROM THE HOLDING COMPANY SRIRAM CHITS AND INVESTMENTS (P) LTD. WAS FORMALLY GIVEN TO SRI RAM CHITS (8ANGALORE) (P) LTD. THE SUBSIDIARY COMPANY IN THE YEAR 1994 VIDE AN AGREEMENT ENTERED INTO, WHICH PROVIDED FOR THE PAYMENT OF CERTAIN 010 OF THE AUCTION TURNOVER AS ROYALTY TO SRIRAM CHITS AND INVESTMENTS (P) LTD. 8 7. BY THE AGREEMENT, SRIRAM CHITS AND INVESTMENTS (P) LTD., HAS FORMALLY COMMITTED ITSELF TO THE GROWTH AND DEVELOPMENT OF SRIRAM CHITS (BANGALORE) (P) LTD. FOR A FURTHER PERIOD OF 7 YEAR S. 8. THE DUTY OF SRIRAM CHLTS AND INVESTMENTS (P) LTD. DOES NOT END WITH MERELY TRANSFERRING THE RIGH T TO SUE ITS LOGO TO ITS SUBSIDIARY COMPANY. IT ALSO ASSUMES THE RESPONSIBILITY TO ENSURE THAT THE NAME WHICH IT HAS BUILT UP OVER THE YEARS IS MAINTAINED BY SRIRAM CHITS (BANGALORE) (P) LTD. TOWARDS THE, SRIRAM CHITS AND INVESTMENTS (P) LTD. HAS PROVIDED FINANCIAL ASSISTANCE TIME AND AGAIN TO SRLRAM CHITS (BANGALORE) (P) LTD. TO HELP ITS WORKING CAPITAL REQUIREMENTS. WHEN SRIRAM CHITS (BANGALORE) (P) LTD. COMMENCED OPERATIONS, ALL ITS EMPLOYEES WERE FROM SRIRAM' CHITS A. INVESTMENTS (P) LTD. WHO HAD PRIOR EXPERIENCE IN THIS LINE. EVEN NOW, SRIRAM CHITS (BANGALORE) {P} LTD. LOOKS FOR MANAGERIAL SUPPORT FROM SRLRAM CHITS AND INVESTMENTS (P) LTD. WHICH IS BEING PROVIDED. IN ADDITION TO THIS, THE ENTIRE SOFTWARE PACKAGE OF SRIRAM CHITS AND INVESTMENTS {P} LTD. WHICH WAS BEING USED BY IT FOR ITS OPERATIONS WAS TRANSFERRED TO SRIRAM CHITS. ,. (BANGALORE) (P) LTD. FOR CARRYING OUT ITS DAY TO DAY ROUTINES. THE HOLDING COMPANY ALSO HOLDS PERIODICAL MEETINGS WITH THE EXECUTIVES OF THE SUBSIDIARY COMPANY IN ORDER TO MONITOR ITS ACTIVITIES. : ... ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 15 10. THE REASONABILITY OF 0.5% ROYAL. THE USE OF LOGO IS ENHANCING THE GROWTH OF SRIRAM CHITS (BANGALORE) (P) LTD. CANNOT BE UNDER ESTIMATED.' 30. THE RECORD ALSO SHOWS THAT HOLDING COMPANY WAS PROVIDING FINANCIAL ASSISTANCE TIME AND AGAIN TO THE ASSESSEE TO HELP IN ITS WORKING CAPITAL REQUIREMENTS. THE RECORD FURTHER SHOWS THAT WHEN THE ASSESSEE COMMENCED ITS OPERATION, AILS ITS EMPLOYEES WERE FROM HOLDING COMPANY WHO HAD PRIOR EXPERIENCE IN THIS LINE. IT IS CLAIMED THAT E VEN THE ASSESSEE LOOKS FOR MANAGERIAL SUPPORT, FROM ITS HOLDING COMPANY WHICH IS AGAIN PROVIDED. THE HOLDING COMPANY IS ALSO STATED TO HAVE CONDUCTED PERIODICAL MEETINGS WITH THE EXECUTIVES OF THE ASSESSEE IN ORDER TO MONITOR ITS MEETINGS. ALL THESE AND THE TABLE EXTRACTED ABOVE SHOWS THAT THERE HAS BEEN A SUBSTANTIAL INCREASE IN THE NEW BUSINESS AS ALSO AUCTION TURNOVER FROM WHAT WAS ONLY 29.49 LAKHS IN ASSESSMENT 1990-91 TO RS:225.69 LAKHS IN THE ASSESSMENT YEAR 1994-95 AND RS.348.29 LAKHS IN THE ASSESSMENT YEAR 1995- 96 AND THE BUSINESS HAS BEEN SUBSTANTIALLY GROWING FROM YEAR TO YEAR. THE FINANCING BUSINESS AND CONDUCTING OF THE CHIT BUSINESS IS NOT THAT EASY UNLESS IT IS BACKED BY THE PROMOTERS WHO HAVE HIGHEST INTEGRITY AND TRUSTWORTHINESS. MIS SRLRAM CHITS AND INVESTMENTS (P) LTD. MADRAS (HOLDING COMPANY HAS BEEN IN THE NAMES FOR ITSELF WITH THE INVESTORS IN THE SOUTH. WE ARE, THEREFORE, OF THE CONSIDERED OPINION THAT THE PAYMENT OF ROYALTY AT 0.5% OF HAVING REGARD TO THE BUSINESS REQUIREMENTS OF THE ASSESSEE. IN OUR VIEW, THE PAYMENT IS FOR, LEGITIMATE BENEFIT TAKEN IN THE COURSE OF BUSINESS AND FROM ANY STANDARD, IT CANNOT BE SAID THAT PAYMENT OF RS.1 LAKH AS ROYALTY IS SUFFICIENT TO PRODUCE THE BUSINESS OF TH E MAGNITUDE PROCURED BY THE ASSESSEE OVER THE YEARS. THE HOLDING COMPANY HAS ENTERED INTO SIMILAR AGREEMENTS WITH OTHER SUBSIDIARY COMPANIES AND THE CIT(A) HAS CONSIDERED THE SAME TO BE REASONABLE BUSINESS OUTFLOW PROPERTY UNDER A SPECIFIC AGREEMENT EXECUTED BY THE PARTIES IS VERY MUCH REASONABLE AND SHOULD HAVE BEEN ACCEPTED AS A BUSINESS EXPENDITURE ALLOWABLE AS DEDUCTION. WE, THEREFORE, DELETE THE DISALLOWANCE FOR THESE TWO YEARS. THE DISALLOWANCE HAS BEEN PRIMARILY BASED ON A SUSPICION AND INCORRECT APPRECIATION OF HARD REALITIES OF THE BUSINESS BY THE REVENUE ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 16 AUTHORITIES. THE DISALLOWANCE IS ACCORDINGLY DELETED.' FOLLOWING THE AFORESAID FINDING OF THE ITAT, WE UPHOLD THE ORDER OF THE CIT (A) AND REJECT THE GROUND RAISED BY THE REVENUE. 22. AS THE ISSUE UNDER CONSIDERATION IS IDENTICAL T O THAT OF AY 2008-09, RESPECTFULLY FOLLOWING THE DECI SION OF THE ITAT IN THAT YEAR, WE UPHOLD THE ORDER OF THE C IT(A) ON THIS COUNT AND DISMISS THE GROUND OF APPEAL OF T HE REVENUE. 26. SINCE THE ISSUE IN THIS YEAR IS IDENTICAL TO TH AT OF AY 2009-10, RESPECTFULLY FOLLOWING THE DECISION OF TRI BUNAL IN THAT YEAR, WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE GROUND RAISED BY THE REVENUE IN THIS REGARD. 27. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE BEI NG ITA NO. 1049/HYD/2013 AND REVENUE BEING ITA NO. 1142/HY D/2013 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DECEMBER, 2013 SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 6 TH DECEMBER, 2013 KV ITA NOS. 1142 & 1049HYD/2013 M/S SRI RAM CHITS PVT. LTD. 17 COPY FORWARDED TO: 1. DCIT, CIRCLE 3(1), 7 TH FLOOR, B BLOCK, IT TOWERS, AC GUARDS, HYDERABAD. 2. M/S SHRIRAM CHITS (P) LTD., 3-6-478, 6 TH FLOOR, ANAND ESTATES, OPP. INDIAN BANK, LIBERTY ROAD, HYDERABAD 500 029. 3. THE CIT(A)-IV, HYDERABAD. 4. THE CIT-III, HYDERABAD 4. THE DR ITAT, HYDERABAD