Assistant Commissioner of Income-Tax, Hubli V. M/s. karnataka Vikas Grameen Bank, Dharwad

ITA 1392/BANG/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8132 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 21-01-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 08-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR BENGALURU
• Keywords: Opportunity of being heard; Non-deduction of tax; Bad and doubtful debts; Revised return; TDS; Set aside
• Section: 143(3); 40(a)(ia); 194C; 201; 48; 194J; 40a(ia); 194A; 72; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B R BASKARAN , ACCOUNTANT MEMBER IT A NO. 1391 & 1392/BANG/2016 ASSESSMENT YEAR: 2012 - 13 & 2013 - 14 THE JT. COMMISSIONER OF INCOME-TAX, CIRCLE-2(1), HUBLI. VS. M/S KARNATAKA VIKAS GRAMEENA BANK, HEAD OFFICE, H.O BUILDING BELGAUM ROAD, DHARWAD. PAN : AAAAK 6324Q APPELLANT RESPONDENT CO NOS.107 & 108/BANG/2017 [IN ITA NO. 1391 & 1392/BANG/2016 ] ASSESSMENT YEAR: 20 12 - 13 & 2013 - 14 M/S KARNATAKA VIKAS GRAMEENA BANK, HEAD OFFICE, H.O BUILDING BELGAUM ROAD, DHARWAD. PAN: AAAAK 6324Q VS. THE JT. COMMISSIONER OF INCOME-TAX, CIRCLE-2(1), HUBLI. CROSS OBJECTOR RESPONDENT REVENUE BY : SHRI PRADEEP KUMAR, CIT(DR)(ITAT), BENGALURU ASSESSEE BY : S / SHRI PRANAV KRISHNA, & RAVISHANKAR , ADVOCATES DATE OF HEARING : 21 .01.2020 DATE OF PRONOUNCEMENT : 23 .01.2020 ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 2 OF 17 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT ITA NO. 1391/BANG/2016 IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 31.3.2016 OF COMMISSIONER OF INCOME-TAX (APPEALS), HUBLI RELATING TO THE ASSESSMENT YEAR 2012-13. ITA NO.13 92/BANG/2016 IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 24/3/ 2015 OF COMMISSIONER OF INCOME-TAX (APPEALS), HUBLI RELATING TO THE ASSE SSMENT YEAR 2013-14. THE ASSESSEE HAS FILED CROSS OBJECTION BEING C.O.10 7/ & 08/BANG/2017 FOR AY 2012-13 & 2013-14 RESPECTIVELY, AGAINST THE VERY SAME ORDERS OF CIT(A) AGAINST WHICH THE REVENUE IS IN APPEAL. SIN CE COMMON ISSUES ARE INVOLVED IN THESE APPEALS, AS WELL AS CROSS-OBJECTI ONS, THESE APPEALS AND CROSS-OBJECTIONS WERE HEARD TOGETHER. WE DEEM IT C ONVENIENT TO PASS A COMMON ORDER. 1391/BANG/2016 (REVENUES APPEAL FOR ASST. YEAR 201 2-13) 2. GROUND NOS.1 & 2 RAISED BY THE REVENUE BY THE R EVENUE READS AS FOLLOWS:- 1. WHETHER ON FACTS & CIRCUMSTANCES OF THE CASE, I S THE LEARNED CIT(A) CORRECT IN HOLDING THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.36(1)((VII) AS WELL AS U/S.36(1)(VIIA ), OF THE INCOME TAX ACT, 1961, WITHOUT THE RESTRICTION IMPOSED BY T HE PROVISIONS OF SE.36(2)(V) OF THE INCOME TAX ACT, 1961.. 2. WHETHER ON THE FACTS & CIRCUMSTANCES AND IN LAW, THE CIT(A) IS CORRECT IN ALLOWING DEDUCTION /S.36(1(VII) AS WE LL AS U/S.36(1)(VIIA) OF THE INCOME TAX ACT, 1961 THEREBY ALLOWING THE PROVISIONS OF SECTIONS TO OPERATE INDEPENDENTLY AND ALLOWING THE ASSESSEE DOUBLE DEDUCTION. 3. THE ASSESSEE IS A RURAL REGIONAL BANK ENGAGED IN THE BUSINESS OF BANKING. IN THE COURSE OF ASSESSMENT PROCEEDINGS U /S 143(3) OF THE INCOME-TAX ACT, 1961 (ACT) FOR AY 2009-10, THE AO N OTICED THAT THE ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 3 OF 17 ASSSESSEE HAD CLAIMED DEDUCTION ON ACCOUNT OF PROVI SION FOR BAD AND DOUBTFUL DEBTS FOR A SUM OF RS.247,43,85,350/- U/S. 36(1)(VIIA) OF THE INCOME TAX ACT, 1961 (ACT). 4. THE PROVISIONS OF SECTION 36(1)(VIIA)(A) OF THE ACT LAYS DOWN AS FOLLOWS: VIIA) IN RESPECT OF ANY PROVISION FOR BAD AND DOUB TFUL DEBTS MADE BY (A) A SCHEDULED BANK NOT BEING A BANK INCORPORATED BY OR UNDER THE LAWS OF A COUNTRY OUTSIDE INDIA] OR A CO-OPERAT IVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRI MARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, AN AMOUNT NOT EXCEEDING SEVEN AND ONE-HALF PER CENT OF THE TOTAL INCOME (COMPUTED BEFORE MAKING ANY DEDUCTION UNDER THIS CL AUSE AND CHAPTER VI-A) AND AN AMOUNT NOT EXCEEDING TEN PER C ENT OF THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCH ES OF SUCH BANK COMPUTED IN THE PRESCRIBED MANNER; PROVIDED THAT A SCHEDULED BANK OR A NON-SCHEDULED B ANK REFERRED TO IN THIS SUB-CLAUSE SHALL, AT ITS OPTION, BE ALLO WED IN ANY OF THE RELEVANT ASSESSMENT YEARS, DEDUCTION IN RESPECT OF ANY PROVISION MADE BY IT FOR ANY ASSETS CLASSIFIED BY THE RESERVE BANK OF INDIA AS DOUBTFUL ASSETS OR LOSS ASSETS IN ACCORDANCE WIT H THE GUIDELINES ISSUED BY IT IN THIS BEHALF, FOR AN AMOUNT NOT EXCE EDING FIVE PER CENT OF THE AMOUNT OF SUCH ASSETS SHOWN IN THE BOOK S OF ACCOUNT OF THE BANK ON THE LAST DAY OF THE PREVIOUS YEAR. 5. THERE ARE TWO DEDUCTIONS ALLOWED UNDER THE AFORE SAID PROVISIONS VIZ., (I) 7.5% OF THE TOTAL INCOME (COMPUTED BEFORE MAKING ANY DEDUCTION UNDER CLAUSE (VIIA) OF SEC.36(1) OF THE ACT TOWARDS PROVISIONS FOR BAD AND DOUBTFUL DEBTS; (II) 10% OF THE AGGREGATE AVERAGE ADVANCES MADE BY RURAL BRANCHES OF THE BANK COMPUTED IN THE MANNER PRESCRI BED. THE ASSESSEE CLAIMED A SUM OF RS.8,09,63,529 TOWARDS PROVISION F OR BAD AND DOUBTFUL DEBTS AND A SUM OF RS.239,34,21,821/- TOWARDS PROVI SION FOR BAD AND ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 4 OF 17 DOUBTFUL DEBTS IN RESPECT OF AGGREGATE AVERAGE ADVA NCES MADE BY THE ASSESSEES RURAL BRANCHES, IN ALL AN AGGREGATE SUM OF RS.247,43,85,350/-. THE SUM CLAIMED AS DEDUCTION U/S.36(1)(VIIA) OF THE ACT HAD NOT BEEN DEBITED TO THE PROVISION FOR BAD AND DOUBTFUL DEBTS ACCOUNT. THE QUESTION BEFORE THE AO WAS WHETHER THE ASSESSEE CAN CLAIM DE DUCTION U/S.36(1)(VIIA) OF THE ACT WITHOUT DEBITING PROFIT & LOSS ACCOUNT THE SUM WHICH IS CONSIDERED AS PROVISION FOR BAD AND DOUBTF UL DEBTS. THE AO HELD THAT DEDUCTION U/S 36(1)(VIIA) CANNOT BE CLAIMED IF THE SUM CLAIMED AS DEDUCTION HAS NOT BEEN DEBITED BY THE ASSESSEE AS P ROVISION FOR BAD AND DOUBTFUL DEBTS ACCOUNT IN THE PROFIT AND LOSS ACCOU NT AND ACCORDINGLY REFUSED TO ALLOW THE CLAIM OF DEDUCTION AS MADE BY THE ASSESSEE. 6. ON APPEAL BY THE ASSESSEE, THE CIT(A) ALLOWED TH E CLAIM OF THE ASSESSEE AS MADE IN THE REVISED RETURN OF INCOME AN D IN DOING SO FOLLOWED THE DECISION OF THE ITAT, BANGALORE BENCH IN THE CA SE OF SYNDICATE BANK VS. DCIT, (2001) 72 TTJ (BANG) 744. 7. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVE NUE HAS RAISED GROUND NOS.1 & 2 BEFORE THE TRIBUNAL. AT THE TIME OF HEARING IT WAS AGREED BY THE PARTIES THAT SIMILAR ISSUE HAD COME UP FOR C ONSIDERATION BEFORE THE ITAT IN ASSESSEES OWN CASE FOR AY 2009-10 & 2010-1 1 IN ITA NO.673 & 674/BANG/2014 ORDER DATED 25.4.2018 AND THIS TRIBUN AL REVERSED THE ORDER OF THE CIT(A) AND HELD THAT THE DEDUCTION U/S.36(1) (VIIA) OF THE ACT CANNOT BE ALLOWED UNLESS THE PROVISION IS CREATED BY DEBIT ED TO PROVISION FOR BAD AND DOUBTFUL DEBTS ACCOUNT. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE TRIBUNAL:- 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LEAR NED DR SUBMITTED THAT AS LAID DOWN BY THE HONBLE PUNJAB A ND HARYANA HIGH COURT IN THE CASE OF STATE BANK OF PATIALA VS. CIT 272 ITR 53 (P & H), CLAIM FOR DEDUCTION U/S.36(1)(VIIA) OF THE ACT CANNOT BE GREATER THAN THE AMOUNT DEBITED TO THE PROFIT AN D LOSS ACCOUNT AS PROVISION. OUR ATTENTION WAS DRAWN TO A DECISIO N OF THE ITAT ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 5 OF 17 BANGALORE IN THE CASE OF SYNDICATE BANK VS. DCIT (2 014) 150 ITD 0103 (BANGALORE), WHEREIN THE HONBLE ITAT BANG ALORE BENCH PREFERRED TO FOLLOW THE VIEW TAKEN BY THE HON BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF STATE BANK OF P ATIALA (SUPRA) RATHER THAN THE DECISION OF THE SYNDICATE B ANK (SUPRA) OF THE BANGALORE BENCH RELIED UPON BY THE LEARNED CIT( A) IN GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE . THE LD. COUNSEL FOR THE ASSESSES SUBMITTED THAT THE DECISION OF THE BANGALO RE BENCH OF ITAT IN THE CASE OF SYNDICATE BANK (SUPRA) SHOULD B E FOLLOWED BY THE TRIBUNAL IN PREFERENCE TO THE DECISION OF TH E HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF STATE BANK OF PATIALA (SUPRA)AND IN THIS REGARD SUBMITTED THAT TH E DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL SHOULD BE FOLLOWE D IN PREFERENCE TO THE DECISION OF NON JURISDICTIONAL HI GH COURT DECISION. IN THIS REGARD, THE LD COUNSEL FOR THE AS SESSEE PLACED RELIANCE ON THE DECISION OF THE HONBLE KARNATAKA H IGH COURT IN THE CASE OF PATIL VIJAYAKUMAR & OTHERS VS. UNION OF INDIA 151 ITR 48 (KAR). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION. THE PR OVISIONS OF SECTION 36(1)(VIIA)(A) OF THE ACT LAYS DOWN AS FOLL OWS: VIIA) IN RESPECT OF ANY PROVISION FOR BAD AND DOUB TFUL DEBTS MADE BY (A) A SCHEDULED BANK NOT BEING A BANK INCORPORATED BY OR UNDER THE LAWS OF A COUNTRY OUTSIDE INDIA] OR A CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CR EDIT SOCIETY OR A PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, AN AMOUNT NOT EXCEEDING SEVEN AND ONE-HALF PER CENT OF THE TOTAL INCOME (COMPUTED BEF ORE MAKING ANY DEDUCTION UNDER THIS CLAUSE AND CHAPTER VI- A) AND AN AMOUNT NOT EXCEEDING TEN PER CENT OF THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCH ES OF SUCH BANK COMPUTED IN THE PRESCRIBED MANNER; PROVIDED THAT A SCHEDULED BANK OR A NON-SCHEDULED B ANK REFERRED TO IN THIS SUB-CLAUSE SHALL, AT ITS OPTION , BE ALLOWED IN ANY OF THE RELEVANT ASSESSMENT YEARS, DEDUCTION IN RESPECT OF ANY PROVISION MADE BY IT FOR ANY ASSETS CLASSIFIED BY THE RESERVE BANK OF INDIA AS DOUBTFUL ASSETS ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 6 OF 17 OR LOSS ASSETS IN ACCORDANCE WITH THE GUIDELINES IS SUED BY IT IN THIS BEHALF, FOR AN AMOUNT NOT EXCEEDING FIVE PER CENT OF THE AMOUNT OF SUCH ASSETS SHOWN IN THE BOOKS OF ACCOUNT OF THE BANK ON THE LAST DAY OF THE PREVIOUS YEAR. 9. IN THE CASE OF SYNDICATE BANK (SUPRA) 78 ITD 103 (BANG.) , THE BANGALORE BENCH OF ITAT TOOK THE VIEW THAT IRRESPEC TIVE OF THE DEBIT TO THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS (PBDD), AN ASSESSEE IS ENTIT LED TO 10 PERCENT OF THE AARA AS DEDUCTION U/S.36(1)(VIIA) OF THE ACT. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IN THE AFORES AID DECISION WAS AS FOLLOWS: 20. THE LEARNED CIT HAS ALSO ACTED UNDER THE MISCONCEPTION THAT DEDUCTION UNDER CL. (VIIA) IS RELATED TO THE ACTUAL AMOUNT OF PROVISION MADE BY THE ASSESSEE FOR BAD AND DOUBTFUL DEBTS. THE TRUE MEANING OF THE CLAUSE, AS INDICATED EARLIER, IS THA T ONCE A PROVISION FOR BAD AND DOUBTFUL DEBTS IS MADE BY A SCHEDULED BANK HAVING RURAL BRANCHES, THE ASSESSEE IS ENTITLED TO A DEDUCTION WHICH IS QUANTIFIED NOT WITH RESPECT TO THE AMOUNT PROVIDED FOR IN THE ACCOUNTS, BUT WITH RESPECT TO A CERTAIN PERCENTAGE OF THE TOTAL INCOME AND ALSO A CERTAIN PERCENTAGE OF THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES OF THE BANK. IN OTHER WORDS, THIS IS A SPECIFIC DEDUCTION GIVEN BY THE STATUTE IRRESPECTIVE OF THE QUANTUM PROVIDED BY THE ASSESSEE IN ITS ACCOUNTS TOWARDS PROVISION FOR BAD AND DOUBTFUL DEBTS. 10. HOWEVER THE BANGALORE BENCH OF ITAT IN THE CASE OF SYNDICATE BANK (SUPRA) 150 ITD 103 (BANG.) NOTICED THAT THE ITAT BANGALORE BENCH IN THE CASE OF CANARA BANK IN ITA NO.58/BANG/2004 DATED 9.6.2006 CONSIDERED IN THE CA SE OF CANARA BANK IN ITA NO.58/BANG/2004 DATED 9.6.2006 C ONSIDERED THE DECISION OF THE ITAT IN THE CASE OF SYNDICATE BANK 78 ITD 103(BANG) AND THE DECISION OF THE HONBLE PUNJAB AN D HARYANA HIGH COURT IN THE CASE OF STATE BANK OF PATIALA (SUPRA) AND HELD THAT THE DECISION RENDERED BY THE HONBLE HIGH COUR T HAS TO BE FOLLOWED. THE ABOVE DECISION THOUGH OF A NON JURISD ICTION HIGH ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 7 OF 17 COURT WAS FOLLOWED AS THE SAID DECISION OF THE HON BLE HIGH COURT WAS RENDERED AFTER THE DECISION IN THE CASE O F SYNDICATE BANK 78 ITD 103 (BANG.). THE TRIBUNAL HELD THAT JUDICIAL DISCIPLINE DEMANDS THAT THE TRIBUNAL SHOULD FOLLOW THE LATER DECISION WHICH HAS CONSIDERED BOTH THE DECISIONS ON THE ISSUE. THE TRIBUNAL FOLLOWING THE SAID DECISION HELD DEDUC TION ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS U/S .36(1)(VIIA) OF THE ACT HAS TO BE ALLOWED ONLY TO THE EXTENT SUC H PROVISION IS ACTUALLY DEBITED IN THE PROFIT & LOSS ACCOUNT BY TH E ASSESSEE FOR THE RELEVANT PREVIOUS YEAR. WE THEREFORE RESPECTF ULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF CANARA BANK (SUPRA), ALLOW GR.NO.2 TO 4 RAISED BY THE REVENUE AND HOLD T HAT THE DISALLOWANCE MADE BY THE AO WAS PROPER AND THE ASSE SSEE IS ENTITLED TO DEDUCTION ONLY TO THE EXTENT PBDD IS DE BITED TO THE P & L A/C. THUS GR.NO.2 TO 4 3 RAISED BY THE REVENUE ARE ALLOWED. 8. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBU NAL IN ASSESSEES OWN CASE WE HOLD THAT THE AO WAS JUSTIFIED IN DISALLOWI NG THE CLAIM FOR DEDUCTION ON ACCOUNT OF PROVISIONS FOR BAD AND DOUB TFUL DEBTS U/S.36(1)(VIIA) OF THE ACT AS ADMITTEDLY THE ASSESS EE DID NOT DEBIT ITS PROFIT AND LOSS ACCOUNT ANY SUM TOWARDS PROVISION FOR BAD AND DOUBTFUL DEBTS. WE THEREFORE RESTORE THE ORDER OF THE AO AND ALLOW GR.NO.1 & 2 RAISED BY THE REVENUE. 9. GROUND NO.3 RAISED BY THE REVENUE READS AS FOLLO WS: WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LAW, THE CIT(A) IS CORRECT IN HOLDING THAT NO DISALLOWANCE OF INTER EST COULD BE RESORTED TO U/S.40(A)(IA) OF THE INCOME TAX ACT, 19 61 FOR NON- DEDUCTION OF TAX AT SOURCE IN RESPECT OF INTEREST P AID DURING THE FINANCIAL YEAR DISREGARDING THE DECISION OF THE HON BLE HIGH COURT OF KARNATAKA, DHARWAD BENCH IN ITA NOS.100111 - 120/2015, ITA NO.100012/2016 TO ITA NOS.100017/2016 DATED 26-02-2016 IN THE CASE OF RYATAR SAHAKARI SAKKARE K ARKANE NIYAMIT, TIMMAPUR, MUDHOL TALUQ. ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 8 OF 17 10. THE ISSUE THAT ARISES CONSIDERATION ON GR.NO.3 RAISED BY THE REVENUE IS WITH REGARD TO THE DISALLOWANCE OF INTER EST EXPENSES MADE BY THE AO U/S 40A(IA) OF THE ACT. IN TERMS OF SEC.40(A)(I) OF THE ACT, I F TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B OF THE AC T AND WHERE IT IS NOT SO DEDUCTED AT SOURCE ON THE AMOUNT OF ANY INTEREST OR ROYALTY, FEES FOR TECHNICAL SERVICES OR OTHER SUM CHARGEABLE UNDER TH E ACT, WHICH IS PAYABLE OUTSIDE INDIA OR IN INDIA TO A NON-RESIDENT, NOT BE ING A COMPANY OR TO A FOREIGN COMPANY, THE SAME SHALL NOT BE ALLOWED AS D EDUCTION WHILE COMPUTING INCOME FROM BUSINESS. IN TERMS OF SEC. 40(A)(IA) OF THE ACT, IF TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B OF THE ACT AND WHERE IT IS NOT SO DEDUCTED AT SOURCE ON THE AMOUNT OF ANY INTE REST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SE RVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB- CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WO RK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), THE SAME SHALL N OT BE ALLOWED AS DEDUCTION WHILE COMPUTING INCOME FROM BUSINESS. THE RELEVANT STATUTORY PROVISIONS READ AS FOLLOWS:- AMOUNTS NOT DEDUCTIBLE. 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO 38 , THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PRO FITS AND GAINS OF BUSINESS OR PROFESSION', ( A) IN THE CASE OF ANY ASSESSEE (IA) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SER VICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR S UB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDIN G SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BE EN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID DURING THE P REVIOUS YEAR, OR ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 9 OF 17 IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF THE TIM E PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 200 : PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR, HAS BEEN DEDUCT ED IN THE PREVIOUS YEAR BUT PAID IN ANY SUBSEQUENT YEAR AFTER THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 200 , SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING TH E INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. EXPLANATION.FOR THE PURPOSES OF THIS SUB-CLAUSE, (I) 'COMMISSION OR BROKERAGE' SHALL HAVE THE SAME MEANING AS IN CLAUSE (I) OF THE EXPLANATION TO SECTION 194H ; (II) 'FEES FOR TECHNICAL SERVICES' SHALL HAVE THE S AME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB-SECTION (1) OF SECTION 9 ; (III) 'PROFESSIONAL SERVICES' SHALL HAVE THE SAM E MEANING AS IN CLAUSE (A) OF THE EXPLANATION TO SECTION 194J ; (IV) 'WORK' SHALL HAVE THE SAME MEANING AS IN EXPLANATION III TO SECTION 194C ; (V) 'RENT' SHALL HAVE THE SAME MEANING AS IN CLAU SE (I) TO THE EXPLANATION TO SECTION 194-I; (VI ) 'ROYALTY' SHALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VI) OF SUB-SECTION (1) OF SECTION 9; 11. UNDER SECTION 194A OF THE ACT WHICH IS A SECTIO N APPEARING IN PART XVIIB OF THE ACT, THE ASSESSEE WAS OBLIGED TO DEDUC T TAX AT SOURCE WHERE INTEREST PAID IS IN EXCESS OF RS.10,000/- PER ANNUM . DURING THE ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE AO THAT THE ASSES SEE HAS PAID TOTAL INTEREST OF RS 411,29,54,190/- DURING THE FY 2011-1 2 (RELEVANT TO AY 2012- 13). OUT OF THE ABOVE A SUM OF RS.80,49,49,266/- WA S INTEREST PAID ABOVE RS.10,000/- TO EACH OF THE DEPOSITORS BUT NO TAX AT SOURCE WAS DEDUCTION BECAUSE THE DEPOSITORS HAD FURNISHED FORM NO.15G/15 H. WITH REGARD TO ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 10 OF 17 NON DEDUCTION OF TAX AT SOURCE (TDS) ON TERM DEPOSI TS WHERE PAYMENT ON INTEREST WAS IN EXCESS OF RS. 10,000/- , THE ASSESS EE SUBMITTED THAT DEPOSITORS HAVE SOUGHT EXEMPTION FROM TDS ON PAYMEN T OF INTEREST BY SUBMITTING DECLARATION IN FORM NO. 15G/H AND IN THO SE CASES, THE VARIOUS BRANCHES HAVE NOT DEDUCTED TDS BASED ON 15G /H SUBM ITTED BY THE DEPOSITORS. THE AO WAS HOWEVER OF THE VIEW THAT AP ART FROM OBTAINING DECLARATION IN FORM NO.15G/H, THE ASSESSEE OUGHT TO HAVE FURNISHED THOSE FORMS TO COMMISSIONER OF INCOME TAX, WITHIN THE PRE SCRIBED PERIOD. SINCE THE ASSESSEE FAILED TO DO SO, THE AO HELD THAT DISA LLOWANCE U/S.40(A)(IA) OF THE ACT HAS TO BE MADE. THE AO THEREFORE DISALLOWE D INTEREST EXPENSE OF RS.80,49,49,266 U/S.40(A)(IA) OF THE ACT. 12. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT ONCE THE DEPOSITORS GIVE FORM NO.15G/H, THE LAW EMPOWERS THE ASSESSEE TO MAK E PAYMENT OF INTEREST WITHOUT DEDUCTION OF TAX AT SOURCE. THE R EQUIREMENT OF FILING THE FORM SO OBTAINED BEFORE THE PRESCRIBED AUTHORITY WI THIN THE PRESCRIBED PERIOD WAS ONLY A PROCEDURAL REQUIREMENT AND IT WAS MANDATORY AND FOR FAILURE TO FILE THE FORM BEFORE THE PRESCRIBED AUTH ORITY NO DISALLOWANCE CAN BE MADE U/S.40(A)(IA) OF THE ACT. THE ASSESSEE IN THIS REGARD RELIED ON THE DECISIONS OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. VALIBHAI KHANBHAI MANHAD (2012) TAXMAN 119 (GUJ.) & CIT VS. GURUVINDAR TRANSPORT (2013) 215 TAXMAN 593 (GUJ.) LAYING DOWN THE PROPOSITION THAT REQUIREMENT OF FILING THE FORM SO OBTAINED BEFORE T HE PRESCRIBED AUTHORITY WITHIN THE PRESCRIBED PERIOD WAS ONLY A PROCEDURAL REQUIREMENT AND IT WAS MANDATORY AND FOR FAILURE TO FILE THE FORM BEFORE T HE PRESCRIBED AUTHORITY NO DISALLOWANCE CAN BE MADE U/S.40(A)(IA) OF THE ACT. APART FROM THE ABOVE, THE ASSESSEE ALSO CONTENDED THAT AS ON THE LAST DATE OF THE PREVIOUS YEAR THE INTEREST IN QUESTION HAD ALREADY BEEN PAID AND DID NOT REMAIN PAYABLE AS ON THE LAST DATE OF THE PREVIOUS YEAR. THE ASSESSEE RELIED ON THE DECISION OF THE SPECIAL BENC H OF ITAT, ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 11 OF 17 VISAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS ADDL. CIT 136 ITD 23 (VISAKHAPATNAM)(SB) AND SUBMITTED THAT IN A CASE WHERE THE AMOUNTS IN QUESTION HAVE ALREADY BEEN PAI D AS IN THE LAST DATE OF THE PREVIOUS YEAR NO DISALLOWANCE CAN BE MA DE U/S 40(A)(IA) OF THE ACT. 13. THE CIT(A) DELETED THE ADDITION BY THE AO BY HO LDING THAT THERE WAS NO BREACH COMMITTED BY ASSESSEE BY NOT FILING FORM NO.15G/H BEFORE THE CIT AND ALSO ON THE GROUND THAT THE SUMS IN QUESTIO N DID NOT REMAIN PAYABLE AS ON THE LAST DATE OF THE RELEVANT PREVIOU S YEAR BY FOLLOWING THE DECISION OF THE SPECIAL BENCH, VISAKAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA). AGGRIEVED BY THE OR DER OF THE CIT(A), THE REVENUE HAS RAISED GR.NO.3 BEFORE THE TRIBUNAL. 14. AT THE TIME OF HEARING IT WAS AGREED BY THE PAR TIES THAT SIMILAR ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE ITAT IN AS SESSEES OWN CASE FOR AY 2010-11 IN ITA NO.684/BANG/2014 AND THE TRIBUNAL BY ITS ORDER DATED 25.4.2018, HELD THAT NO DISALLOWANCE U/S.40(A)(IA) OF THE ACT CAN BE MADE FOR NON FURNISHING OF FORM NO.15G/H BEFORE THE CIT. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE TRIBUNAL. 39. BEFORE THE TRIBUNAL, ON THE ISSUE OF DISALLOW ANCE OF A SUM OF RS.28,98,43,706, THE LEARNED COUNSEL FOR THE ASS ESSEE SUBMITTED THAT ONCE THE DEPOSITORS GIVE FORM NO.15G /H, THE LAW EMPOWERS THE ASSESSEE TO MAKE PAYMENT OF INTEREST W ITHOUT DEDUCTION OF TAX AT SOURCE. THE REQUIREMENT OF FIL ING THE FORM SO OBTAINED BEFORE THE PRESCRIBED AUTHORITY WITHIN THE PRESCRIBED PERIOD WAS ONLY A PROCEDURAL REQUIREMENT AND IT WAS MANDATORY AND FOR FAILURE TO FILE THE FORM BEFORE THE PRESCRI BED AUTHORITY NO DISALLOWANCE CAN BE MADE U/S.40(A)(IA) OF THE ACT. FOR THE ABOVE PROPOSITION THE LEARNED COUNSEL FOR THE ASSESSEE RE LIED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SRI MARIKAMBA TRANSPORT CO. 231 TAXMAN 484 (KARN.) WHER EIN THE HONBLE KARNATAKA HIGH COURT AS FOLLOWS: ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 12 OF 17 4. THE COMBINED READING OF THESE TWO PROVISIONS MA KE IT CLEAR THAT IF THERE IS ANY BREACH OF REQUIREMENTS O F SECTION 194C(3), THE QUESTION OF APPLICABILITY OF SECTION 4 0(A)(IA) ARISES. THE EXCLUSION PROVIDED IN SUB-SECTION OF SE CTION 194C FROM THE LIABILITY TO DEDUCT TAX AT SOURCE UND ER SUB- SECTION (2) WOULD BE COMPLETE, THE MOMENT THE REQUIREMENTS CONTAINED THEREIN ARE SATISFIED. ONCE, THE DECLARATION FORMS ARE FILED BY THE SUBCONTRACTOR, THE LIABILITY OF THE ASSESSEE TO DEDUCT TAX ON THE PAYMENTS MADE TO THE SUB-CONTRACTOR WOULD NOT ARISE. AS WE HAVE EXAMINED, THE SUB-CONTRACTORS HAVE FILED FORM NO. 15-1 BEFORE THE ASSESSEE. SUCH BEING THE CASE, THE ASSESSEE IS NOT REQUIRED TO DEDUCT TAX UNDER SECTION 194C(3) OF THE ACT AND TO FILE FORM NO. 15J. IT IS ONLY A TECHNICAL DEFECT AS POINTED OUT BY THE TRIBUNAL IN NOT FILING FORM NO.15J BY THE ASSESSEE. THIS MATTER WAS EXTENSIVELY CONSIDERED BY THE ITAT, AHMEDABAD BENCH IN VALIBHAI KHANCLBAI MANKAD CASE (SUPRA) AND THE SAID JUDGMENT HAS BEEN UPHELD BY IN HIGH COURT OF GUJARAT IN CIT V. VALIBHAI KHANBHAI MANKAD 120131 216 TAXMAN 18/28 TAXMANN.COM 119 WHEREIN IT IS HELD THAT ONCE THE CONDITIONS OF SECTION 194C(3) WERE SATISFIED, THE LIABILITY OF TH E PAYEE TO DEDUCT TAX AT SOURCE WOULD CEASE AND ACCORDINGLY, APPLICATION OF SECTION 40(A)(IA) WOULD ALSO NOT ARISE. THE TRIBUNAL, PLACING RELIANCE ON THE JUDGMENT OF THE ITAT, AHMEDABAD BENCH, HAS DISMISSED THE APPEAL FILED BY THE REVENUE. WE AGREE WITH THE SAID PROPOSITIONS AND HOLD THAT FILING OF FORM NO. 151/J IS ONLY DIRECTORY AND NOT MANDATORY. (EMPHASIS SUPPLIED) 40. THE LEARNED DR RELIED ON THE ORDER OF THE CIT( A). HE FURTHER POINTED OUT THAT AS FAR AS THE PAYMENTS TO OTHER EXEMPTED PERSON IS CONCERNED, THE AO IN HIS ORDER HAS MADE THE FOLLOWING OBSERVATIONS:- 9.3. DURING THE COURSE OF HEARING THE ASSESSEE WAS ASKED TO FURNISH THE RESPECTIVE EVIDENCES. APART FROM TH E QUESTIONNAIRE ISSUED U/S.142(1) DATED 24.1.2013, TH E ASSESSEE WAS ASKED TO FURNISH THE NECESSARY EVIDENCE S IN SUPPORT OF ITS CLAIM FOR NOT INVOKING PROVISIONS OF SEC. 40A(IA), DURING THE HEARINGS ON 26.02.2013, 06.02.2 013, ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 13 OF 17 07.03.2013 AND 11.03.2013. HOWEVER, THE ASSESSEE CO ULD NOT PRODUCE ANY SUCH EVIDENCES HENCE THE AMOUNT WHI CH IS LIABLE FOR DEDUCTION OF TDS AMOUNTING TO RS 28,98,43,076/- BUT NO TDS WAS DONE BECAUSE OF STATE D SUBMISSIONS OF FORM 15G/15H BY THE RECIPIENT OR INT EREST CLAIMED TO BE PAID TO THE GOVERNMENT , NOW CANNOT B E ALLOWED AS DEDUCTION. THE NON SUBMISSIONS OF 15G/15 H BEFORE THE PRESCRIBED AUTHORITY, AMOUNTS TO, ALL TO GETHER, NON - DEDUCTION OF TDS, WHERE IT OUGHT TO HAVE BEEN DONE, THUS INVITING THE DISALLOWANCE OF THE SAME U/S 40A (IA) OF IT ACT. LIKE SO THE CLAIM OF INTEREST PAYMENT STATED TO BE MADE TO GOVERNMENT WAS NOT PROPERLY SUPPORTED WITH THE EVIDENCES THUS INVITING THE DISALLOWANCE OF THE SAM E U/S 40A (IA) OF IT ACT. 9.4. THUS AN AMOUNT THE RS 12,98,57,409 FOR NON-DE DUCTION OF TDS ON THE INTEREST PAID EXCEEDING RS 10,000/- A ND AN AMOUNT OF RS 28,98,43,076/- WHERE NO 15G/15H FORMS WERE STATED TO BE SUBMITTED OR INTEREST STATED TO BE PAI D TO GOVERNMENT DEPARTMENT, IS DISALLOWED U/S 40A(IA) OF IT ACT. THUS THE TOTAL AMOUNT OF RS. 41,97,00,485/- DISALLO WED AND ADDED BACK TO THE INCOME RETURNED BY THE ASSESSEE. 41. WITHOUT PREJUDICE TO HIS RELIANCE ON THE ORDER OF THE AO, THE LD DR SUBMITTED THAT THE DISALLOWANCE TO THE EX TENT OF PAYMENT TO GOVERNMENT SHOULD BE SET ASIDE TO THE AO AND THE ASSESSEE SHOULD BE ASKED TO FURNISH THE REQUIRED DE TAILS. 42. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS. AS FAR AS DISALLOWANCE OF INTEREST OF A SUM OF RS.28,98,43,076/- IS CONCERNED TO THE EXTENT OF THE DISALLOWANCE RELATES TO INTEREST PAID TO PERSONS FU RNISHED FORM 15 G AND FORM 15 H TO THE ASSESSEE, NO DISALLO WANCE CAN BE MADE U/S 40A(IA) OF THE ACT AS HELD BY THE H ONBLE KARNATAKA HIGH COURT IN THE CASE OF SRI MARIKAMBA T RANSPORT CO., (SUPRA). THE REQUIREMENT OF FILING OF FORM 15 G AND 15H WITH THE PRESCRIBED AUTHORITY VIZ., CIT IS ONLY PRO CEDURAL AND THAT CANNOT RESULT IN A DISALLOWANCE U/S 40A(IA) OF THE ACT. TO THE EXTENT THAT PAYMENT OF INTEREST RELATES TO THE GOVERNMENT AND THE EXEMPTED CATEGORY OF PERSONS, THE ASSESSEE IS DIRECTED TO FURNISH REQUIRED DETAILS TO THE AO AND THE AO W ILL ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 14 OF 17 CONSIDER THE CLAIM OF THE ASSESSEE AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 15. THE DECISION CITED BY THE REVENUE IN THE GROUND S OF APPEAL IS WITH REGARD TO THE ACTION OF THE CIT(A) IN THE DELETING THE DISALLOWANCE U/S.40(A)(IA) OF THE ACT ON THE GROUND THE SUMS IN QUESTION DID NOT REMAIN PAYABLE AS ON THE LAST DATE OF THE RELEVANT PREVIOU S YEAR AND BY FOLLOWING THE DECISION OF THE SPECIAL BENCH, VISAKAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA). AS WE HAVE ALREADY S EEN THE CIT(A) APPEAL DELETED THE DISALLOWANCE U/S.40(A)(IA) OF THE ACT O N TWO GROUNDS VIZ., (I) ONCE THE DEPOSITORS GIVE FORM NO.15G/H, THE L AW EMPOWERS THE ASSESSEE TO MAKE PAYMENT OF INTEREST WITHOUT DEDUCT ION OF TAX AT SOURCE. THE REQUIREMENT OF FILING THE FORM SO OBTA INED BEFORE THE PRESCRIBED AUTHORITY WITHIN THE PRESCRIBED PERIOD W AS ONLY A PROCEDURAL REQUIREMENT AND IT WAS MANDATORY AND FOR FAILURE TO FILE THE FORM BEFORE THE PRESCRIBED AUTHORITY NO DI SALLOWANCE CAN BE MADE U/S.40(A)(IA) OF THE ACT, AND (II) THE SUMS IN QUESTION DID NOT REMAIN PAYABLE AS ON THE LAST DATE OF THE RELEVANT PREVIOUS YEAR AND BY FOLLOWING THE DECISION OF THE SPECIAL BENCH, VISAKAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA). THE DECISION CITED BY THE REVE NUE IN THE GROUNDS OF APPEAL IS ONLY IN THE CONTEXT OF THE SEC OND GROUND ON WHICH THE CIT(A) ALLOWED RELIEF TO THE ASSESSEE. AS FAR AS THE FIRST GROUND ON WHICH CIT(A) GAVE REL IEF TO THE ASSESSEE IS CONCERNED, THAT GROUND IS SUPPORTED BY THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SRI MARIKAMMA T RANSPORT CO.(SUPRA) AND THAT BASIS ON WHICH CIT(A) GAVE RELI EF TO THE ASSESSEE STILL HOLDS GOOD. ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 15 OF 17 16. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIB UNAL IN ASSESSEES OWN CASE WE HOLD THAT THE CIT(A) WAS JUSTIFIED IN AO WA S JUSTIFIED IN DELETING THE DISALLOWANCE OF INTEREST EXPENSES U/S.40(A)(IA) OF THE ACT, TO THE EXTENT OF THE DISALLOWANCE RELATES TO INTEREST PAID TO PERSON S FURNISHED FORM 15 G AND FORM 15 H TO THE ASSESSEE AS NO DISALLOWANCE CA N BE MADE U/S 40A(IA) OF THE ACT AS HELD BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SRI MARIKAMBA TRANSPORT CO., (SUPRA). THE REQUI REMENT OF FILING OF FORM 15G AND 15H WITH THE PRESCRIBED AUTHORITY VIZ., CIT IS ONLY PROCEDURAL AND THAT CANNOT RESULT IN A DISALLOWANCE U/S 40A(IA) OF THE ACT. CONSEQUENTLY, WE UPHOLD THE ORDER OF CIT(A) AND DISMISS GR.NO.3 R AISED BY THE REVENUE. 17. IN THE RESULT, THE APPEAL BY THE REVENUE IS PAR TLY ALLOWED. ITA NO.1392/BANG/2016 (REVENUES APPEAL FOR ASST. Y EAR 2013-14) 18. AS FAR AS AY 2013-14 IS CONCERNED, THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE IDENTICAL TO GROUNDS RAISED IN THE APPEAL FOR AY 2012-13. THE GROUNDS RAISED IN THE APPEAL FOR AY 2013-14 REA D THUS: 1. WHETHER ON FACTS & CIRCUMSTANCES OF THE CASE, I S THE LEARNED CIT(A) CORRECT IN HOLDING THAT THE ASSESSEE IS ENTI TLED TO DEDUCTION U/S.36(1)((VII) AS WELL AS U/S.36(1)(VIIA ), OF THE INCOME TAX ACT, 1961, WITHOUT THE RESTRICTION IMPOSED BY T HE PROVISIONS OF SE.36(2)(V) OF THE INCOME TAX ACT, 1961.. 2. WHETHER ON THE FACTS & CIRCUMSTANCES AND IN LAW, THE CIT(A) IS CORRECT IN ALLOWING DEDUCTION /S.36(1(VII) AS WE LL AS U/S.36(1)(VIIA) OF THE INCOME TAX ACT, 1961 THEREBY ALLOWING THE PROVISIONS OF SECTIONS TO OPERATE INDEPENDENTLY AND ALLOWING THE ASSESSEE DOUBLE DEDUCTION. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LAW, THE CIT(A) IS CORRECT IN HOLDING THAT NO DISALLOWANCE O F INTEREST COULD BE RESORTED TO U/S.40(A)(IA) OF THE INCOME TA X ACT, 1961 FOR NON-DEDUCTION OF TAX AT SOURCE IN RESPECT OF INTERE ST PAID DURING THE FINANCIAL YEAR DISREGARDING THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA, DHARWAD BENCH IN ITA NOS.100111 - 120/2015, ITA NO.100012/2016 TO ITA NOS.100017/2016 DATED ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 16 OF 17 26-02-2016 IN THE CASE OF RYATAR SAHAKARI SAKKARE K ARKANE NIYAMIT, TIMMAPUR, MUDHOL TALUQ. 19. IT IS NOT DISPUTED THAT THE FACTS AND CIRCUMSTA NCES OF THE CASE AND THE BASIS ON WHICH ADDITION WAS MADE BY THE AO AND RELIEF WAS ALLOWED BY THE CIT(A) IS SAME IN AY 2013-14 EXCEPT FOR CHANGE IN THE SUM ADDED/DISALLOWED. IN THE CIRCUMSTANCES, WE FOLLOW THE DECISION RENDERED IN AY 2012-13 AND ALLOW GR.NO.1 & 2 RAISED BY THE REVE NUE AND DISMISS GROUND NO.3 RAISED BY THE REVENUE IN AY 2013-14. 20. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. 21. AS FAR AS THE CROSS-OBJECTIONS OF THE ASSESSEE ARE CONCERNED, THEY ARE IN SUPPORT OF THE RELIEF ALLOWED TO THE ASSESSE E ON THE DISALLOWANCE MADE BY THE AO U/S.40(A)(IA) OF THE ACT. SINCE THE RELEVANT GROUND OF APPEAL OF THE REVENUE IS DISMISSED, WE ARE OF THE V IEW THAT THERE IS NO NECESSITY TO DECIDE THE GROUNDS RAISED IN THE CROSS OBJECTION, THOUGH WE FIND THAT SIMILAR OBJECTIONS AS IS SOUGHT TO BE RAI SED IN THE CROSS-OBJECTION WAS RAISED BY THE ASSESSEE IN ITS APPEAL FOR AY 201 0-11 IN ITA NO,.684/BANG/2014 ORDER DATED 25.4.2018 AND DISMISS ED. HENCE, THE CROSS-OBJECTIONS ARE DISMISSED AS INFRUCTUOUS. 22. IN THE COMBINED RESULT, THE APPEALS BY THE REVE NUE ARE PARTLY ALLOWED, WHILE THE CROSS-OBJECTIONS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF JANUARY, 2020. SD/- SD/- ( B R BASKARAN ) ( N V VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 23 RD JANUARY, 2020. / DESAI S MURTHY / ITA NO.1391 & 1392/B/2016 & CO 107 & 108/B/2017 PAGE 17 OF 17 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FIL E BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.