ACIT, Trichy V. The Karur Vysya Bank Ltd., Karur

ITA 1527/CHNY/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4832 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-02-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 10-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S SANKARALINGAM
• Assessee Lawyers: N QUADIR HOSEYN
• Keywords: Gift; Depreciation; Business expenditure; Rectification of order; Additional evidence; Bad and doubtful debts; Revenue expenditure; Capital expenditure
• Section: 14A; 37(1); 37; 154

Judgement Text

, , [ : ] IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI [ CAMP: MADURAI ] . . . ! , ' # $ %& .()(*, , # - BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER $./ ITA NOS.1340 & 1341/MDS/2013 ' * /* / ASSESSMENT YEARS : 2003-04 & 2005-06 THE KARUR VYSYA BANK LTD., ERODE ROAD, KARUR 639 001. PAN : AAACT 3373 J V. THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE I, TIRUCHIRAPALLI. (12/ APPELLANT) (3412/ RESPONDENT) $./ ITA NOS.1496 & 1527/MDS/2013 ' * /* / ASSESSMENT YEARS : 2003-04 & 2005-06 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I(1), TRICHY. V. THE KARUR VYSYA BANK LTD., ERODE ROAD, KARUR 639 001. (12/ APPELLANT) (3412/ RESPONDENT) ' *56 7 8 /ASSESSEE BY : SHRI N. QUADIR HOSEYN, ADVOCATE (# 7 8 /REVENUE BY : SHRI S. SANKARALINGAM, CIT 7 6, / DATE OF HEARING : 16.02.2017 9:/ 7 6, / DATE OF PRONOUNCEMENT : 27.04.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE ASSESSEE AND REVENUE HAVE FILED THE APPEA LS AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER O F INCOME TAX 2 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 (APPEALS), TIRUCHIRAPALLI, DATED 25.03.2013 AND PER TAIN TO ASSESSMENT YEARS 2003-04 AND 2005-06. SINCE COMMON ISSUES ARISE FOR CONSIDERATION IN ALL THESE APPEALS, WE HE ARD THESE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON O RDER. 2. THE REVENUE HAS FILED ITS APPEALS IN I.T.A. NO.1496/MDS/2013 AND I.T.A. NO.1527/MDS/2013 BELATE DLY BY 10 DAYS AND 15 DAYS RESPECTIVELY. THE REVENUE HAS FIL ED PETITIONS FOR CONDONATION OF DELAY. WE HAVE HEARD THE LD. DEPART MENTAL REPRESENTATIVE AND LD.COUNSEL FOR THE ASSESSEE. WE FIND THAT THERE WAS SUFFICIENT CAUSE FOR NOT FILING THESE APPEALS B EFORE THE STIPULATED TIME. THEREFORE, WE CONDONE THE DELAY A ND ADMIT THE APPEALS. 3. LETS FIRST TAKE THE ASSESSEES APPEAL FOR ASSES SMENT YEAR 2003-04 IN I.T.A. NO.1340/MDS/2013. 4. THE FIRST ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO EXPENDITURE INCURRED BY THE ASSESSEE IN ISSUING RIG HT ISSUES. 5. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT THE TOTAL DISALLOWANCE WAS ` 43,44,844/- ON ACCOUNT OF EXPENSES INCURRED TO INCREASE AUTHORIZED CAPITAL OUT OF WHICH, 3 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 ` 42,94,844/- PERTAIN TO RIGHT ISSUE EXPENSES AND THE BALANCE OF ` 50,000/- PERTAIN TO LISTING FEES PAID TO SECURITY E XCHANGE BOARD OF INDIA FOR LISTING BONUS AND RIGHT ISSUES. ACCORDIN G TO THE LD. COUNSEL, THIS AMOUNT OF ` 50,000/- WAS PAID TO SECURITY EXCHANGE BOARD OF INDIA WHICH IS THE STATUTORY AUTHORITY AS PER THE GOVERNMENT STIPULATION. THE LD.COUNSEL VERY FAIRLY SUBMITTED THAT EXPENDITURE INCURRED BY THE ASSESSEE FOR INCREASING AUTHORIZED CAPITAL TO THE EXTENT OF ` 43,44,844/- HAS TO BE DISALLOWED IN VIEW OF JUDGMENT OF APEX COURT IN BROOK BOND INDIA LTD. V. CIT (1997) 225 ITR 798. HOWEVER, THE LIST FEE HAS TO BE ALLOWED I N VIEW OF THE JUDGMENT OF MADRAS HIGH COURT IN THE ASSESSEE'S OWN CASE IN TAX CASE APPEAL NO.2139 OF 2008. 6. WE HAVE HEARD SHRI S. SANKARALINGAM, THE LD. DEP ARTMENTAL REPRESENTATIVE ALSO. AS RIGHTLY SUBMITTED BY THE L D.COUNSEL FOR THE ASSESSEE, OUT OF TOTAL EXPENDITURE OF ` 43,44,844/-, A SUM OF ` 42,94,844/- PERTAINS TO INCREASING THE AUTHORIZED C APITAL. THEREFORE, THIS AMOUNT OF ` 42,94,844/- CANNOT BE ALLOWED AS EXPENDITURE IN VIEW OF THE JUDGMENT OF APEX COURT I N BROOK BOND INDIA LTD. (SUPRA). ACCORDINGLY, THE ORDER OF THE LOWER AUTHORITY IS CONFIRMED TO THE EXTENT OF ` 42,94,844/-. HOWEVER, THE BALANCE OF 4 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 ` 50,000/- PERTAINING TO LISTING FEE PAID TO THE SECU RITY EXCHANGE BOARD OF INDIA, WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF MADRAS HIGH COURT IN THE ASSESSEE'S OWN CASE IN T.C . NO.2139 OF 2008 DATED 13.07.2009, A COPY OF WHICH IS AVAILABLE AT PAGE 24 OF THE PAPER-BOOK. IN THE CASE BEFORE MADRAS HIGH COU RT, THE ISSUE AROSE FOR CONSIDERATION IS PAYMENT OF SUBSCRIPTION FEES PAID TO SECURITIES EXCHANGE BOARD OF INDIA TO CARRY ON THE BUSINESS OF MERCHANT BANKING BY THE ASSESSEE-BANK. THE MADRAS HIGH COURT FOUND THAT THE BANK WAS CARRYING ON MERCHANT BANKIN G BUSINESS, THEREFORE, REQUIRES TO PAY AUTHORISATION FEE TO SEB I. ACCORDINGLY, THE HIGH COURT FOUND THAT THE EXPENSES INCURRED BY THE ASSESSEE WAS ONLY TO FACILITATE THE CARRYING ON OF EXISTING BUSINESS OF THE ASSESSEE. HENCE, THE EXPENDITURE IS REVENUE IN NAT URE. IN THE CASE BEFORE US, THE PAYMENT WAS MADE TOWARDS LISTING FEE TOWARDS BONUS AND RIGHT ISSUES. IT IS NOT VERY CLEAR WHETHER THE FEE PAID BY THE ASSESSEE IS FOR CARRYING ON THE MERCHANT BANKING BU SINESS. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER A ND FIND OUT WHETHER THE LISTING FEE IS FOR CARRYING ON MERCHANT BANKING BUSINESS BY THE ASSESSEE OR IT IS FOR LISTING OF THE RIGHT I SSUES FOR INCREASING THE SHARE CAPITAL. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES 5 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 ARE SET SIDE AND THE DISALLOWANCE OF ` 50,000/- TOWARDS LISTING FEE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AND FIND OUT WH ETHER THE LISTING FEE OF ` 50,000/- IS FOR THE PURPOSE OF CARRYING ON MERCHANT BANKING BUSINESS OF THE ASSESSEE OR OTHERWISE AND THEREAFTE R DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER CONSIDERING THE JUDGMENT OF MADRAS HIGH COURT REFERRED ABOVE, AFTER GIVING A RE ASONABLE OPPORTUNITY TO THE ASSESSEE. 7. THE NEXT ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO DISALLOWANCE OF ` 2,01,63,763/- TOWARDS PENSION AND FAMILY PENSION PAID DIRECTLY TO THE RETIRED EMPLOYEES. 8. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT THIS ISSUE WAS CONSIDERED BY THIS TR IBUNAL IN THE ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEARS 2001-0 2, 2004-05 AND 2006-07 IN I.T.A. NOS.902, 903, 904 AND 907/MDS /2010, ETC. DATED 17.01.2013. THIS TRIBUNAL IN FACT REFERRED B ACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATI ON. THIS TRIBUNAL FOUND THAT THE PROVISIONS OF SECTION 37(1) OF THE I NCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') WAS NOT CONSIDERED BY THE LOWER AUTHORITIES. ACCORDINGLY, THE MATTER WAS REMITTED BACK FOR RECON SIDERATION. THE 6 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 LD.COUNSEL SUBMITTED THAT THE ISSUE RAISED FOR THE YEAR UNDER CONSIDERATION WAS ALSO SIMILAR, THEREFORE, THE MATT ER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. 9. WE HAVE HEARD SHRI S. SANKARALINGAM, THE LD. DEP ARTMENTAL REPRESENTATIVE ALSO. THE LD. D.R. VERY FAIRLY SUBM ITTED THAT THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE, AFTER CONSIDER ING THE DECISION OF COCHIN BENCH OF THIS TRIBUNAL IN THE CATHOLIC SY RIAN BANK LTD. V. ADDL. CIT IN I.T.A. NO.10/COCH/2009 DATED 11.02.201 1 AND 06.07.2011 REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE MATTER IN THE LIGHT OF SECT ION 37(1) OF THE ACT. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS PAID DIRECTLY TO THE PENSION FUND OF RETIRED EM PLOYEES. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSES SEE ON THE GROUND THAT THE PAYMENT OF PENSION HAS TO BE ROUTED THROUGH GROUP INSURANCE SCHEME OF LIC AS PROVIDED IN RULE 89 OF I NCOME-TAX RULES, 1962. IN FACT, THE ASSOCIATION OF PUBLIC SE CTOR SCHEDULED BANKS APPROACHED CBDT IN THE YEAR 1998 WITH THE REQ UEST TO PERMIT THEM TO MAINTAIN THEIR OWN FUND FOR PAYMENT OF PENSION. THE REQUEST OF THE PUBLIC SECTOR SCHEDULED BANKS WAS TU RNED DOWN BY 7 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 THE CBDT IN AUGUST, 2003. THEREFORE, THE CIT(APPEA LS) REJECTED THE CLAIM OF THE ASSESSEE. NOW THE ASSESSEE CLAIMS THAT THE EXPENDITURE HAS TO BE ALLOWED UNDER SECTION 37(1) O F THE ACT. IN THE EARLIER YEAR, THIS TRIBUNAL AFTER CONSIDERING THE O RDER OF THE COCHIN BENCH REMITTED BACK THE ISSUE TO THE FILE OF THE AS SESSING OFFICER FOR RECONSIDERATION. WHEN THE ASSESSEE HAS ACTUALLY PA ID FUNDS DIRECTLY TO THE PENSION FUND, THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT THE CLAIM OF THE ASSESSEE HAS TO BE EX AMINED UNDER SECTION 37(1) OF THE ACT AS DIRECTED BY THE TRIBUNA L IN THE EARLIER YEAR. ACCORDINGLY, AS DIRECTED BY THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2001-02, 2004-05 AND 2 006-07, THE CLAIM OF THE ASSESSEE HAS TO BE RE-EXAMINED UNDER S ECTION 37(1) OF THE ACT. ACCORDINGLY, THE ORDERS OF THE LOWER AUTH ORITIES ARE SET ASIDE AND THE DISALLOWANCE MADE BY THE ASSESSING OF FICER TOWARDS PENSION PAYMENT IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER TH E ISSUE AFRESH AS DIRECTED BY THE TRIBUNAL FOR ASSESSMENT YEAR 2001-0 2, 2004-05 AND 2006-06 IN THE LIGHT OF THE PROVISIONS OF SECTION 3 7(1) OF THE ACT AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 8 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 11. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE OF INTEREST PAID AT THE TIME OF PURCHASE OF SECURITIES . 12. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT SECURITIES ARE STOCK-IN -TRADE BY REFERRING TO THE JUDGMENT OF MADRAS HIGH COURT IN T AMIL NADU MERCANTILE BANK LTD. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER INITIALLY DISALLOWED ` 92,96,31,764/- IN THE ORDER DATED 27.03.2006. BY WAY OF RECTIFICATION ORDER, THE ASS ESSING OFFICER GAVE RELIEF TO THE EXTENT OF ` 67,97,07,529/-. THE ISSUE ARISES FOR CONSIDERATION BEFORE THIS TRIBUNAL ONLY TO THE BALA NCE AMOUNT OF ` 24,99,24,235/-. ACCORDING TO THE LD. COUNSEL, IN T HE ASSESSEE'S OWN CASE, THE MADRAS HIGH COURT IN T.C. NO.2139 OF 2008 BY JUDGMENT DATED 13.07.2009, FOUND THAT SUCH EXPENDIT URE IS REVENUE IN NATURE. A COPY OF THE JUDGMENT IS AVAILABLE AT PAGE 24 OF THE PAPER-BOOK. 13. ON THE CONTRARY, SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE INT EREST PAID ON PURCHASE OF SECURITIES IS CAPITAL OUTLAY. THEREFOR E, THE ASSESSING 9 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 OFFICER BY PLACING RELIANCE ON THE JUDGMENT OF APEX COURT IN VIJAYA BANK IN 187 ITR 541, DISALLOWED THE CLAIM OF THE AS SESSEE. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE PAYMENT OF INTEREST FOR PURCHASE OF SECURITIES WAS SUBJECT MAT TER OF DISCUSSION BY THE MADRAS HIGH COURT IN THE ASSESSEE'S OWN CASE . THE MADRAS HIGH COURT FOUND THAT THE EXPENSES INCURRED OR INTE REST PAID ON PURCHASE OF SHARES WAS ONLY REVENUE EXPENDITURE AND NOT CAPITAL EXPENDITURE. THE MADRAS HIGH COURT PLACED ITS RELI ANCE ON THE JUDGMENT OF APEX COURT IN UNITED COMMERCIAL BANK V. CIT (1999) 240 ITR 355 AND FOUND THAT INTEREST PAID BY THE ASS ESSEE WILL NOT BE CAPITAL EXPENDITURE. IN VIEW OF THIS JUDGMENT OF M ADRAS HIGH COURT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT BOT H THE AUTHORITIES ARE NOT JUSTIFIED IN DISALLOWING THE CLAIM OF THE A SSESSEE. ACCORDINGLY, THE ORDERS OF THE AUTHORITIES BELOW AR E SET ASIDE AND DISALLOWANCE MADE BY THE ASSESSING OFFICER AS CONFI RMED BY THE CIT(APPEALS) IS DELETED. 15. THE NEXT ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO LOSS DUE TO NON-DELIVERY OF UTI MASTER GAIN 92 AND UTI M ASTER SHARES. 10 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 16. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT THE LOSS SUFFERED BY THE ASSESSEE DU E TO NON-DELIVER OF UTI MASTER GAIN 92. THE LOSS WAS DUE TO NON-DELI VERY. THE ASSESSEE WAS NOT IN A POSITION TO MAKE NAME TRANSFE R IN THE BOOKS OF UTI. LOSS OF STOCK IN TRANSIT IS A BUSINESS LOS S. THEREFORE, IT IS AN ALLOWABLE EXPENDITURE. THE MADRAS HIGH COURT IN TH E ASSESSEE'S OWN CASE ALLOWED THE CLAIM OF THE ASSESSEE ON IDENT ICAL CIRCUMSTANCES. THE LD.COUNSEL FURTHER SUBMITTED TH AT THE REVENUE ACCEPTED ALL SECURITIES AS STOCK-IN-TRADE IN THE AS SESSMENT YEAR 2011-12, THEREFORE, THE LOSS HAS TO BE ALLOWED AS R EVENUE EXPENDITURE. 17. ON THE CONTRARY, SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE LOS S OF STOCK IN TRANSIT HAS TO BE TREATED AS CAPITAL EXPENDITURE, T HEREFORE, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LOSS OCCURRED DUE TO NON DELIVERY OF UTI MASTER GAIN 92 BOND. THE LOSS OF SALE OF SECURITIES WAS ALLOWED AS BUSINESS LOSS IN THE ASSESSEE'S OWN CASE BY THE MADRAS HIGH COURT IN T.C. NO.2139 O F 2008. IT IS 11 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 NOT IN DISPUTE THAT THE SECURITIES ARE CLASSIFIED A S STOCK-IN-TRADE. THEREFORE, THE LOSS IN TRANSIT HAS TO BE ALLOWED AS REVENUE LOSS. THEREFORE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE OR DER OF THE LOWER AUTHORITY. ACCORDINGLY, THE ORDERS OF THE AUTHORIT IES BELOW ARE SET ASIDE AND THE DISALLOWANCE MADE BY THE ASSESSING OF FICER IS DELETED. 19. THE NEXT ISSUE ARISES FOR CONSIDERATION IS FEES PAID BY THE ASSESSEE TO THE AUDITORS AND ADVOCATES. 20. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED THE FEES PAID TO AUDITORS AND ADVOCATES FOR NON-PRODUCTION OF VOUCHE RS. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE-SCHEDULED BANK IS HAVING 214 BRANCHES ACROSS THE COUNTRY. THE STATUTORY AUDITS ARE CONDUCTED EVERY YEAR BY WELL-KNOWN CHARTERED ACCOUNTANTS. TH E FEES WERE ACTUALLY PAID. ACCORDING TO THE LD. COUNSEL, THE C ONCURRENT AND REVENUE AUDIT WERE ALSO DONE BY OUTSIDE AUDITORS. SOME OF THE BRANCHES WHICH PAID FEES WAS SHIFTED TO OTHER LOCAT IONS. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE ASSESSEE-BANK COU LD NOT PRODUCE THE VOUCHERS FOR PAYMENT OF FEES. EVEN THOUGH 60% OF VOUCHERS WERE COLLECTED AND PRODUCED BEFORE THE ASSESSING OF FICER, THE 12 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 REMAINING VOUCHERS COULD NOT BE PRODUCED. ACCORDIN G TO THE LD. COUNSEL, AFTER CONSIDERING THE VOLUME OF THE BUSINE SS TRANSACTION OF THE ASSESSEE AND NUMBER OF BRANCHES SPREAD ACROSS T HE COUNTRY, THE CLAIM OF THE ASSESSEE MAY BE ALLOWED. 21. ON THE CONTRARY, SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT FOR THE PURPOSE OF ALLOWING THE CLAIM OF THE ASSESSEE AS EXPENDITURE, THE ASSESSEE HAS TO SUBSTANTIATE THE PAYMENT MADE TO THE AUDITOR S. MERELY BECAUSE THE ASSESSEE IS HAVING 214 BRANCHES ACROSS THE COUNTRY AND SOME OF THE BRANCHES WERE SHIFTED TO OTHER LOCA TIONS, THAT CANNOT BE A REASON TO ALLOW THE CLAIM OF THE ASSESS EE WITHOUT VERIFICATION. THE LD. D.R. VERY FAIRLY SUBMITTED T HAT IF THE PAYMENT OF FEES TO THE AUDITORS AND ADVOCATES ARE ESTABLISHED BY PRODUCING NECESSARY MATERIAL, THEN THE DEPARTMENT MAY NOT HAV E ANY HESITATION IN ALLOWING THE CLAIM OF THE ASSESSEE. 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMS THAT PAYMENTS WERE MADE TO AUDITORS AND ADVO CATES TOWARDS PROFESSIONAL FEES. THE ASSESSEE EXPRESSED ITS INAB ILITY TO PRODUCE ALL THE VOUCHERS ON THE GROUND THAT IT HAS 214 BRAN CHES LOCATED AT 13 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 VARIOUS PARTS OF THE COUNTRY AND SOME OF THE BRANCH ES WERE SHIFTED TO OTHER LOCATIONS. THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT FOR THE PURPOSE OF CLAIMING EXPENDITURE, THE ASSESSEE H AS TO ESTABLISH THE PAYMENTS OF FEES TO THE AUDITORS AND ADVOCATES BEFORE THE ASSESSING OFFICER. MERELY BECAUSE THE ASSESSEE ENT ERED INTO HUGE VOLUME OF TRANSACTIONS AND HAVING NUMEROUS BRANCHES ACROSS THE COUNTRY, THAT CANNOT BE A REASON TO ALLOW THE CLAIM OF THE ASSESSEE WHEN THE PAYMENTS CANNOT BE SUBSTANTIATED BY PRODUC ING NECESSARY MATERIAL. THEREFORE, GIVING ONE MORE OPP ORTUNITY TO THE ASSESSEE FOR PRODUCING NECESSARY MATERIAL FOR PAYME NT OF FEES TO AUDITORS AND ADVOCATES WOULD NOT PREJUDICE THE INTE REST OF REVENUE IN ANY CASE. ACCORDINGLY, THE ORDERS OF THE AUTHOR ITIES BELOW ARE SET ASIDE AND THE DISALLOWANCE MADE BY THE ASSESSING OF FICER TOWARDS PAYMENTS MADE AUDITORS AND ADVOCATES IS REMITTED BA CK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SH ALL ALSO EXAMINE WHETHER THE FEES PAID TO ADVOCATES ARE RECOVERED FR OM CUSTOMERS OR NOT? THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE AFRESH ON THE BASIS OF MATERIAL THAT MAY BE PRODUCED BY THE A SSESSEE AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 14 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 23. THE NEXT ISSUE ARISES FOR CONSIDERATION IS ADDI TION ON ACCOUNT OF INCOME RECEIVED IN ADVANCE. 24. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THEREFORE, THE PROVISIONS OF SECTION 5( 1)(A) OF THE ACT IS NOT APPLICABLE TO THE ASSESSEE. ACCORDING TO THE L D. COUNSEL, IN CERTAIN TYPES OF BILLS PURCHASED AND DISCOUNTED, TH E INTEREST WAS RECEIVED IN ADVANCE. IF THE BILL WAS REALIZED BEFO RE 31 ST MARCH, THE INTEREST AMOUNT COLLECTED IN ADVANCE WILL NOT BE DI STRIBUTED. HOWEVER, IF THE ACTUAL REALIZATION WAS SUBSEQUENT T O THE ACCOUNT CLOSING DAY, THE INTEREST RECEIVED UPTO THE PERIOD OF CLOSING DATE WAS OFFERED FOR TAXATION. THE INTEREST RELATED TO THE PERIOD BEYOND THE CLOSING DAY WAS DEBITED FROM INTEREST RECEIVED ACCOUNT AND INTEREST RECEIVED IN ADVANCE ACCOUNT WAS CREDITED. THE CREDIT BALANCE IN INTEREST RECEIVED IN ADVANCE IS A LIABIL ITY ON 31 ST MARCH. AFTER 31 ST MARCH, THE BALANCE INCOME RECEIVED IN ADVANCE IS TRANSFERRED TO INCOME ACCOUNT. ACCORDING TO THE LD . COUNSEL, THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ORDER DATED 27.03.2006 HAD MADE ADDITION OF ` 1,93,59,875/- AND IN THE ORDER DATED 28.01.2009, MADE ADDITION OF ` 1,37,02,564/-. THE TOTAL 15 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 ADDITION MADE WAS OF ` 3,30,62,439/-. SINCE THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, ACCORDIN G TO THE LD. COUNSEL, THE INTEREST RECEIVED IN ADVANCE WAS OFFER ED IN THE SUBSEQUENT YEAR FOR TAXATION. IN CASE THE ADDITION IS CONFIRMED, THE INCOME OFFERED BY THE ASSESSEE IN THE SUBSEQUENT YE AR HAS TO BE DELETED. 25. ON THE CONTRARY, SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASS ESSEE RECEIVED INCOME IN CERTAIN BILLS IN ADVANCE. REFERRING TO S ECTION 5(1)(A) OF THE ACT, THE LD. D.R. SUBMITTED THAT THE TOTAL INCO ME OF THE ASSESSEE WAS INCLUSIVE OF INCOME FROM ALL SOURCE, WHICH WAS RECEIVED OR IS DEEMED TO BE RECEIVED IN INDIA IN SUCH YEAR BY THE ASSESSEE OR ON BEHALF OF THE ASSESSEE. IN THIS CASE, THE ASSESSEE IN FACT PHYSICALLY RECEIVED THE INCOME DURING THE YEAR UNDER CONSIDERA TION. ONLY BY WAY OF ACCOUNTING ENTRY, THE ASSESSEE DECLARED THE SAME IN THE SUBSEQUENT YEAR. THERE WAS NO LIABILITY FOR REPAYM ENT OF AMOUNT AT ANY POINT OF TIME. THEREFORE, ACCORDING TO THE LD. D.R., THE ADVANCE RECEIVED HAS TO BE TREATED AS INCOME OF THE ASSESSE E DURING THE YEAR UNDER CONSIDERATION. 16 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 26. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN CERTAIN TYPES OF BILLS PURCHASED AND DISCOUNTED, THE ASSESSEE IN FACT RECEIVED INTEREST IN ADVANCE. SUCH A RECEIPT OF INCOME/INTE REST ON PURCHASE AND DISCOUNT MAY NOT BE REQUIRED TO BE REPAID BY TH E ASSESSEE AT ANY POINT OF TIME. IN OTHER WORDS, THERE WAS NO LI ABILITY FOR THE ASSESSEE FOR PAYMENT IN THE SUBSEQUENT YEAR OR AT A NY POINT OF TIME. THEREFORE, AS RIGHTLY SUBMITTED BY THE LD. D .R., WHEN THE ASSESSEE HAS PHYSICALLY RECEIVED THE AMOUNT TOWARDS INCOME IN ADVANCE AND THERE WAS NO LIABILITY FOR REPAYMENT, T HIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE SAME HAS TO BE TREA TED AS INCOME OF THE ASSESSEE. THE MATTER WOULD STAND DIFFERENTLY I N CASE THERE WAS LIABILITY FOR REPAYMENT OF MONEY RECEIVED IN ADVANC E. SINCE SUCH A LIABILITY FOR REPAYMENT OF MONEY HAS NOT BEEN ESTAB LISHED BY THE ASSESSEE BEFORE THIS TRIBUNAL, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY, THE SAME IS CONFIRMED. SINCE THE AMOUNT RECEIVED IN AD VANCE IS TREATED AS INCOME IN THE YEAR IN WHICH IT WAS RECEI VED, THE ASSESSING OFFICER SHALL EXCLUDE SUCH INCOME IN CASE IT WAS OFFERED IN THE SUBSEQUENT YEAR AS CLAIMED BY THE ASSESSEE. 17 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 27. WITH THE ABOVE OBSERVATION, THE ORDERS OF THE L OWER AUTHORITIES ARE CONFIRMED. 28. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE OF UNPAID EXPENSES. 29. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT THE UNPAID EXPENSES ARE ASCERTAINED LIABILITY FOR THE SERVICES RENDERED AND ENJOYED BY THE ASSESSEE. ACC ORDING TO THE LD. COUNSEL, THE BUILDING RENT, ELECTRICITY BILLS, TELEPHONE BILLS, COURIER AND POSTAGE CHARGES, AUDIT FEE ARE DUE FOR THE MONT H OF MARCH, IN RESPECT OF SERVICES ENJOYED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE LIABILITY TO PAY IS ALSO IS ALS O CERTAIN AND CRYSTALIZED. SINCE THE ASSESSEE IS FOLLOWING MERCA NTILE SYSTEM OF ACCOUNTING, ACCORDING TO THE LD. COUNSEL, THE EXPEN SES RELATING TO PARTICULAR YEAR, WHICH WAS DEBITED IN THE BOOKS, HA S TO BE ALLOWED. SINCE THE LIABILITY HAS INCURRED DURING THE YEAR UN DER CONSIDERATION, ACCORDING TO THE LD. COUNSEL, THE SAME HAS TO BE AL LOWED DURING THE YEAR UNDER CONSIDERATION. 30. ON THE CONTRARY, SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASS ESSEE HAS 18 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 SHOWN A SUM OF ` 1,85,49,609.63 UNDER THE HEAD UNPAID EXPENSES WHERE PROVISIONS MADE FOR EXPENSES SUCH A S BUILDING RENT, ELECTRICITY, TELEPHONE, AUDIT FEE, POSTAGE CH ARGES, ETC. THE ACTUAL CHARGES PAYABLE WOULD BE KNOWN ON LATER DATE ON RECEIPT OF BILLS. THEREFORE, ACCORDING TO THE LD. D.R., THE E STIMATION MADE BY THE ASSESSEE CANNOT BE ALLOWED DURING THE YEAR UNDE R CONSIDERATION. ACCORDING TO THE LD. D.R., THE UNPA ID EXPENSES ARE ONLY A PROVISION AND IT IS NOT ACCRUED LIABILITY TO THE ASSESSEE, THEREFORE, THE SAME CANNOT BE ALLOWED AS EXPENDITUR E WHILE COMPUTING THE TAXABLE INCOME. 31. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM O F ACCOUNTING. THEREFORE, THE ACCRUED LIABILITY HAS TO BE ALLOWED AS EXPENDITURE WHILE COMPUTING TAXABLE INCOME. THE RENT FOR THE BUILDING, ELECTRICITY BILLS, TELEPHONE BILLS, COURIER AND POS TAGE CHARGES, AUDIT FEE, ETC. THE SERVICES WERE RENDERED DURING THE FIN ANCIAL YEAR UNDER CONSIDERATION. PROBABLY, THE ASSESSEE WOULD NOT HA VE PAID THE SAME DURING THE YEAR UNDER CONSIDERATION. HOWEVER, AS RIGHTLY SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE, THERE IS ACCRUED 19 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 LIABILITY FOR PAYMENT. SINCE THERE IS A LIABILITY FOR THE SERVICES ENJOYED BY THE ASSESSEE DURING THE YEAR UNDER CONSI DERATION, THE SAME HAS TO BE ALLOWED AS EXPENDITURE WHILE COMPUTI NG TAXABLE INCOME IRRESPECTIVE OF THE FACT THAT THE PAYMENT IS ACTUALLY MADE OR NOT. IN OTHER WORDS, IN THE MERCANTILE SYSTEM OF A CCOUNTING, THE LIABILITY FOR PAYMENT TOWARDS SERVICES ENJOYED BY T HE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IS AN ALLOWABLE EXPENDITURE. THEREFORE, BOTH THE AUTHORITIES BELOW ARE NOT JUSTI FIED IN DISALLOWING THE CLAIM OF THE ASSESSEE. ACCORDINGLY, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ADDITION MADE BY THE AS SESSING OFFICER IS DELETED. 32. THE NEXT GROUND OF APPEAL IS REGARDING DISALLOW ANCE OF EX- GRATIA PAYMENT. 33. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED A S UM OF ` 3,12,97,665/- TOWARDS EX-GRATIA AMOUNT PAID TO THE EMPLOYEES OF THE BANK. THE BOARD OF DIRECTORS OF THE ASSESSEE-B ANK, AFTER ANALYSING THE PERFORMANCE OF EACH AND EVERY EMPLOYE E, DECIDED TO GRANT INCENTIVE. THE INCENTIVE PAID WAS CLAIMED AS EX-GRATIA PAYMENT TO THE BANK EMPLOYEES WHILE COMPUTING TAXAB LE INCOME. 20 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE A SSESSEE ON THE GROUND THAT THE INCENTIVE PAID TO THE BANK EMPLOYEE S DEEMED TO BE DISTRIBUTION OF PROFIT TO THE EMPLOYEES. ACCORDING TO THE LD. COUNSEL, IN THE ASSESSEE'S OWN CASE, THIS TRIBUNAL FOR THE A SSESSMENT YEAR 2006-07, ALLOWED THE CLAIM OF THE ASSESSEE IN M.P. NO.205/MDS/2013 DATED 10.01.02014, A COPY OF WHICH IS AVAILABLE AT PAGE 281 OF THE PAPER-BOOK. THE MADRAS HIGH COU RT IN CIT V. LAKSHMI VILAS BANK IN TAX CASE APPEAL NO.897 OF 201 3 BY JUDGMENT DATED 16.04.2014, A COPY OF WHICH IS AVAIL ABLE AT PAGE 284 OF THE PAPER-BOOK, FOUND THAT THE EX-GRATIA PAY MENT HAS TO BE ALLOWED AS REVENUE EXPENDITURE. THEREFORE, ACCORDI NG TO THE LD. COUNSEL, THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFI RMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 34. ON THE CONTRARY, SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASS ESSEE, IN FACT, DISTRIBUTED PROFITS TO THE EMPLOYEES, THEREFORE, IT IS AN APPLICATION OF PROFIT, HENCE, IT CANNOT BE ALLOWED AS REVENUE EXPE NDITURE. 35. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THIS TRIBUNAL I N THE ASSESSEE'S 21 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 OWN CASE FOR ASSESSMENT YEAR 2006-07. THIS TRIBUNA L HELD THAT EX- GRATIA AMOUNT PAID TO THE EMPLOYEES AMOUNTS TO ALLO WABLE EXPENDITURE. IN FACT, THIS TRIBUNAL PLACED ITS REL IANCE ON THE JUDGMENT OF CALCUTTA HIGH COURT IN CIT V. NATIONAL ENGINEERING INDUSTRIES LTD. (1994) 208 ITR 1002. 36. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMEN T OF MADRAS HIGH COURT IN LAKSHMI VILAS BANK (SUPRA). THE MADR AS HIGH COURT FOUND THAT THE EX-GRATIA PAYMENT MADE TO THE EMPLOY EES IN THE FORM OF INCENTIVE IS A BUSINESS EXPENDITURE. THEREFORE, IT HAS TO BE ALLOWED UNDER SECTION 37 OF THE ACT. IN VIEW OF TH IS JUDGMENT OF MADRAS HIGH COURT IN LAKSHMI VILAS BANK (SUPRA), TH IS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE EX-GRATIA PAYMENT I S IN THE NATURE OF BUSINESS EXPENDITURE. THEREFORE, IT HAS TO BE ALLO WED WHILE COMPUTING TAXABLE INCOME. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF ` 3,12,97,665/- TOWARDS EX-GRATIA PAYMENT MADE TO THE EMPLOYEES OF THE BANK IS DELETED. 37. THE NEXT GROUND OF APPEAL IS DISALLOWANCE OF EX PENSES FOR EARNING THE EXEMPTED INCOME. 22 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 38. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT THE INVESTMENT MADE IN THE SHARES AR E STOCK-IN-TRADE OF THE ASSESSEE. ONCE, THE ASSESSEE TREATED THE IN VESTMENT IN THE BONDS AND SHARES AS STOCK-IN-TRADE, THERE CANNOT BE ANY DISALLOWANCE IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER DISALLOWED 10% OF TAX-FREE INCOME. THIS TRIBUNAL CONSISTENTLY DIS ALLOWING 2% OF THE EXPENDITURE WHEREVER EXPENDITURE WAS INCURRED FOR I NVESTMENT. IN THIS CASE, IT IS NOBODYS CASE THAT THE ASSESSEE TR EATED SHARES AND SECURITIES AS INVESTMENT. IN FACT, ACCORDING TO TH E LD. COUNSEL, THE INVESTMENT MADE BY THE ASSESSEE HAS TO BE CLASSIFIE D AS STOCK-IN- TRADE, THEREFORE, THERE CANNOT BE ANY DISALLOWANCE EVEN AT 2%. 39. ON THE CONTRARY, SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASS ESSEE EARNED TAX-FREE INCOME TO THE EXTENT OF ` 7,94,20,205/-. ACCORDING TO THE LD. D.R., SECTION 14A OF THE ACT WAS INTRODUCED BY FINA NCE ACT, 2002. IT IS NOT THE CASE OF THE ASSESSEE THAT NO EXPENDIT URE WAS INCURRED. IN THE ABSENCE OF ANY DETAILS OF EXPENDITURE FOR MA KING INVESTMENT IN STOCKS AND SECURITIES, THE ASSESSING OFFICER HAS RIGHTLY TREATED 10% OF TAX-FREE INCOME AS EXPENDITURE. 23 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 40. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS A SCHEDULED BANK ENGAG ED IN THE BUSINESS OF MERCHANT BANKING. THEREFORE, INVESTMEN T MADE IN SHARES AND SECURITIES HAS TO BE CLASSIFIED AS STOCK -IN-TRADE. ONCE THE INVESTMENT WAS CLASSIFIED AS STOCK-IN-TRADE, TH IS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE EXPENDITURE INCURRE D BY THE ASSESSEE HAS TO BE ALLOWED WHILE COMPUTING TAXABLE INCOME. THE DIVIDEND INCOME, WHICH WAS EXEMPTED FROM TAXATION, WAS INVESTED IN THE BUSINESS OF THE ASSESSEE. THEREFORE, MERELY BECAUSE THE ASSESSEE HAS RECEIVED DIVIDEND INCOME INCIDENTALLY IN BUSINESS ACTIVITY THAT CANNOT BE A REASON TO DISALLOW ANY PA RT OF EXPENDITURE INCURRED BY THE ASSESSEE. THEREFORE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORDERS OF THE AUTHORITIES BELOW. ACCORD INGLY, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ADDI TION MADE BY THE ASSESSING OFFICER IS DELETED. 41. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADV ERTISEMENT AND PUBLICITY. 24 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 42. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT THE ASSESSEE HAS INCURRED AN EXPENDI TURE OF ` 3,75,69,047/- TOWARDS ADVERTISEMENT AND PUBLICITY. THE ASSESSEE WAS ABLE TO PRODUCE VOUCHERS TO THE EXTENT OF ` 2,45,39,333/-. IN FACT, THE ASSESSEE-BANK WAS INCORPORATED IN THE YEA R 1916. THE ASSESSEE HAS NOW 214 BRANCHES ACROSS THE COUNTRY AP ART FROM ADMINISTRATIVE AND DIVISIONAL OFFICE. THE ASSESSIN G OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE FOR WANT OF VO UCHERS. 43. THE LD.COUNSEL FURTHER SUBMITTED THAT DUE TO SH IFTING OF BRANCHES AND VOLUMINOUS VOUCHERS, THE SAME CANNOT B E COLLECTED FROM VARIOUS BRANCHES. ACCORDING TO THE LD. COUNSE L, IT IS COMMON PRACTICE TO EXHIBIT BANNERS IN THE PLACES WHERE MOR E PEOPLE WOULD ASSEMBLE DURING THE FESTIVAL TIME. BY PLACING BANN ERS, THE BANK WAS ABLE TO EXHIBIT AND PROMOTE THE SCHEMES OF FINA NCIAL PRODUCTS. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE EXPEND ITURE INCURRED BY THE ASSESSEE BY EXHIBITING BANNERS DURING FESTIVAL SEASON WHERE LARGE NUMBER OF PEOPLE WOULD ASSEMBLE, IS A BUSINES S EXPENDITURE, THEREFORE, THE ASSESSING OFFICER IS NOT JUSTIFIED I N DISALLOWING THE CLAIM OF THE ASSESSEE. 25 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 44. ON THE CONTRARY, SHRI SANKARALINGAM, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT MERELY BECAUSE THERE WAS LARGE VOLUMINOUS TRANSACTIONS AND VOUCHERS, THE ASSESSEE CANNOT CLAIM ANY EXPENDITURE WITHOUT PRODUCING VOUCHERS FOR EXAM INATION. THE ASSESSEE MAY AT ITS DISCRETION DISPLAY ANY NUMBER O F BANNERS AT ANY NUMBER OF PLACES FOR PROMOTING ITS BUSINESS, HO WEVER, THERE SHOULD BE SOME EVIDENCE FOR THE EXPENDITURE INCURRE D. BY CONSIDERING THE NUMBER OF VOUCHERS AND VOLUME OF TR ANSACTION, THE EXPENDITURE CLAIMED BY THE ASSESSEE CANNOT BE ALLOW ED. 45. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN FACT, THE REVENUE HAS NO OBJECTION FOR ALLOWING THE CLAIM OF THE ASSESSEE TOWARDS ADVERTISEMENT AND PUBLICITY. HOWEVER, THE ASSESSEE HAS TO ESTABLISH THE ACTUAL EXPENDITURE INCURRED FOR ADVER TISEMENT AND PUBLICITY. AS RIGHTLY SUBMITTED BY THE LD. D.R., M ERELY BECAUSE THERE ARE VOLUMES OF VOUCHERS AND BRANCHES ARE SHIF TED FROM ONE PLACE TO ANOTHER, THAT CANNOT BE THE REASON TO CLAI M EXEMPTION WITHOUT PRODUCING VOUCHERS. WHEN THE ASSESSEE CLAI MS EXPENDITURE WHILE COMPUTING TAXABLE INCOME, IT IS T HE RESPONSIBILITY OF THE ASSESSEE-BANK, A PUBLIC LIMITED COMPANY IN W HICH PUBLIC HAS 26 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 SUBSTANTIAL INTEREST, TO PRODUCE NECESSARY VOUCHERS BEFORE THE ASSESSING OFFICER FOR ESTABLISHING THE PAYMENT. IF THE PAYMENTS ARE NOT ESTABLISHED, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE CANNOT CLAIM THE SAME AS EXPENDITURE INCUR RED FOR THE PURPOSE OF BUSINESS. THEREFORE, THE ACTUAL PAYMENT NEEDS TO BE VERIFIED. THEREFORE, ONE MORE OPPORTUNITY NEEDS TO BE GIVEN TO THE ASSESSEE FOR PRODUCING NECESSARY VOUCHERS BEFORE TH E ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF THE AUTHORITIE S BELOW ARE SET ASIDE AND THE ADDITION MADE BY THE ASSESSING OFFICE R TOWARDS PUBLICITY AND ADVERTISEMENT EXPENSES ARE REMITTED B ACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AFRESH IN THE LIGHT OF THE MATERIAL THAT MAY BE PRODUCED BY THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 46. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DEPR ECIATION ON LEASED ASSETS. 47. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT THE ASSESSEE CLAIMED DEPRECIATION ON 18 ASSETS LEASED TO VARIOUS PERSONS. IN FACT, THE ASSESSING OFFICER ALLOWED DEPRECIATION ON 16 ASSETS. THE DISPUTE WAS ONLY WI TH REGARD TO TWO 27 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 ASSETS. ACCORDING TO THE LD. COUNSEL, FOR THE ASSE SSMENT YEAR 1999-2000, THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE IN I.T.A. NO.902/MDS/2010, ALLOWED THE DEPRECIATION. 48. ON THE CONTRARY, SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASS ESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT DEPRECIATION HAS TO BE ALLOWED IN RESPECT OF 18 ASSETS SAID TO BE LEASED OUT. EVEN T HOUGH THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSES SEE BY AN ORDER UNDER SECTION 154 DATED 12.06.2013, THE CIT(APPEALS ) ALLOWED DEPRECIATION ON THE LEASED ASSETS IN RESPECT OF 16 ITEMS TO THE EXTENT OF ` 18,26,230/-. HOWEVER, IN RESPECT OF TWO ITEMS, NAM ELY, THE ASSETS LEASED TO M/S RAJENDER STEELS AND M/S AR UNA TEXTILES AND EXPORTS LTD., THE DEPRECIATION WAS DISALLOWED. ACCORDING TO THE LD. D.R., IT IS FOR THE ASSESSEE TO ESTABLISH THAT THE ASSETS WERE OWNED BY THE ASSESSEE AND THE SAME WERE LEASED OUT IN THE COURSE OF ITS BUSINESS ACTIVITY. 49. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, 18 ASSETS WERE SAID TO BE LEASED OUT. OUT OF WHICH, T HERE WAS NO DISPUTE WITH RESPECT TO 16 ASSETS. THE CLAIM OF DE PRECIATION NOW 28 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 ONLY RELATES TO TWO DISPUTED ASSETS. IT IS NOT KNO WN THE NATURE OF ASSETS LEASED OUT BY THE ASSESSEE. IT IS ALSO NOT KNOWN WHEN THE ASSETS WERE PURCHASED BY THE ASSESSEE. FOR THE PUR POSE OF CLAIMING DEPRECIATION, FIRST THE ASSESSEE HAS TO ES TABLISH THAT IT OWNED THE ASSETS AND USED IN THE BUSINESS OF LEASIN G IN THE COURSE OF ITS BUSINESS ACTIVITY. THE LEASE AGREEMENT WAS ALSO NOT PRODUCED BY THE ASSESSEE BEFORE THIS TRIBUNAL. THE REFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATT ER NEEDS TO BE RE- EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, TH E ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ISSUE REGAR DING DISPUTED TWO ITEMS OF ASSET IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER A FRESH AND BRING ON RECORD WHEN THE ASSETS WERE PURCHASED BY THE ASS ESSEE AND WHETHER IT WAS LEASED OUT IN THE COURSE OF BUSINESS ACTIVITY AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 50. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DIS ALLOWANCE OF TAX-FREE INCOME UNDER SECTION 80M OF THE ACT. 51. WE HAVE HEARD LD.COUNSEL FOR THE ASSESSEE AND L D. DEPARTMENTAL REPRESENTATIVE. IT IS NOT IN DISPUTE THAT THE 29 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 INVESTMENT MADE BY THE ASSESSEE IN SHARES AND SECUR ITIES HAS TO BE CLASSIFIED AS STOCK-IN-TRADE. ONCE THE INVESTME NT WAS CLASSIFIED AS STOCK-IN-TRADE, ALL THE EXPENDITURE INCURRED BY THE ASSESSEE HAS TO BE ALLOWED WITHOUT ANY RESTRICTION. THEREFORE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORDERS OF THE AUTHORITIES BELO W. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET AS IDE AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS DELET ED. 52. THE NEXT GROUND OF APPEAL IS DISALLOWANCE OF ` 27,11,945/- TOWARDS OTHER EXPENSES. 53. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT SOME EXPENSES WERE INCURRED BY THE A SSESSEE AT VARIOUS BRANCHES. THE VOUCHERS WERE SPREAD ACROSS ALL THE BRANCHES AND ALSO ADMINISTRATIVE OFFICE AND DIVISIO NAL OFFICES. IN FACT, THE ASSESSEE REQUESTED FOR SOME TIME FOR PROD UCTION OF VOUCHERS BEFORE THE ASSESSING OFFICER. IN THE MEAN TIME, THE ADDITION WAS MADE. ACCORDING TO THE LD. COUNSEL, S INCE THE VOUCHERS WERE SPREAD ACROSS VARIOUS BRANCHES OF THE ASSESSEE, THE SAME HAS TO BE COLLECTED AND PRODUCED BEFORE TH E ASSESSING OFFICER. THE BANK IS HAVING VARIOUS STATUTORY CONT ROLS, THEREFORE, ACCORDING TO THE LD. COUNSEL, THE EXPENDITURE INCUR RED BY THE 30 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 ASSESSEE ARE GENUINE EXPENDITURE, HENCE, THE ASSESS ING OFFICER IS NOT JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSES SEE. 54. ON THE CONTRARY, SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT IN FACT , THE ASSESSING OFFICER REQUESTED THE ASSESSEE TO PRODUCE ALL THE D ETAILS AND VOUCHERS AND SUPPORTING MATERIAL TO CLAIM THE EXPEN DITURE. SINCE NO SUCH MATERIALS WERE FILED, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSES SEE AND THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ADDITION. 55. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE EXPENSES WERE SAID TO BE INCURRED BY THE ASSESSEE AT VARIOUS BRANCHES. IRRESPECTIVE OF THE NATURE OF EXPENDITURE, WHEN THE ASSESSEE CLAIMS SUCH EXPENDITURE AS DEDUCTION WHILE COMPUTING TAXAB LE INCOME, IT IS FOR THE ASSESSEE TO PRODUCE SOME MATERIAL TO SUBSTA NTIATE THE EXPENDITURE AND THE PURPOSE FOR WHICH IT WAS INCURR ED. IN THE ABSENCE OF ANY MATERIAL, THE ASSESSEE CANNOT BLAME THE ASSESSING OFFICER FOR DISALLOWANCE. SINCE THE ASSESSEE CLAIM S THAT THE MATERIALS WERE SPREAD ACROSS VARIOUS BRANCHES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT GIVING ONE MORE OPPORTU NITY TO PRODUCE 31 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 NECESSARY MATERIAL BEFORE THE ASSESSING OFFICER WOU LD NOT PREJUDICE ANY CAUSE TO THE INTERESTS OF THE REVENUE. ACCORDI NGLY, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE DISA LLOWANCE OF ` 27,11,945/- IS REMITTED BACK TO THE FILE OF THE ASS ESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE AF RESH AFTER CONSIDERING THE MATERIAL THAT MAY BE PRODUCED BY TH E ASSESSEE AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WI TH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 56. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE OF ` 5,49,911/- TOWARDS POOJA EXPENSES. 57. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED ` 5,49,911/- AS INADMISSIBLE DEDUCTION. THIS TRIBUNAL IN THE ASSES SEE'S OWN CASE ALLOWED THE POOJA EXPENSES AS REVENUE EXPENDITURE B Y ORDER DATED 17.01.2013. THE LD.COUNSEL FURTHER SUBMITTED THAT THE MADRAS HIGH COURT IN CIT V. ARUNA SUGARS LTD. (132 ITR 718) HAS ALSO ALLOWED THE CLAIM OF THE ASSESSEE. 58. ON THE CONTRARY, SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT IF THE ASSESSEE 32 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 INCURRED THE EXPENDITURE IN THE COURSE OF ITS BUSIN ESS ACTIVITY, IT HAS TO BE ALLOWED AS DEDUCTION WHILE COMPUTING TAXABLE INCOME. BUT, THE ASSESSEE COULD NOT PRODUCE ANY MATERIAL FOR INC URRING THE EXPENDITURE SO AS TO CLAIM THE SAME. A MERE CLAIM THAT THE ASSESSEE HAS INCURRED ` 5,49,911/- AS POOJA EXPENSES CANNOT BE ALLOWED UNLESS SOME MATERIAL IS PRODUCED TO SUBSTAN TIATE THE EXPENDITURE INCURRED BY THE ASSESSEE. THE LD. D.R. FURTHER SUBMITTED THAT HE WOULD NOT HAVE ANY OBJECTION IF T HE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER IN CASE THE ASSESSEE COULD PRODUCE SOME MATERIAL BEFORE THE ASS ESSING OFFICER. 59. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LD. D.R., IF THE ASSESSEE INCURRED EXPENDITURE FOR POOJA IN THE COURSE OF ITS NORMAL BUSINESS ACTIVITY , THE SAME HAS TO BE ALLOWED WHILE COMPUTING TAXABLE INCOME. HOWEVER , THE ASSESSEE HAS TO PRODUCE SOME MATERIAL TO SUBSTANTIA TE THE EXPENDITURE INCURRED. THE ASSESSING OFFICER DISALL OWED THE CLAIM OF THE ASSESSEE SINCE NO MATERIAL WAS PRODUCED BEFORE HIM. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT GIVING ONE 33 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 MORE OPPORTUNITY TO PRODUCE NECESSARY MATERIAL BEFO RE THE ASSESSING OFFICER WOULD NOT PREJUDICE THE INTERESTS OF THE REVENUE. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BEL OW ARE SET ASIDE AND THE DISALLOWANCE OF POOJA EXPENDITURE TO THE EX TENT OF ` 5,49,911/- IS REMITTED BACK TO THE FILE OF THE ASSE SSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AFRES H IN THE LIGHT OF THE MATERIAL THAT MAY BE PRODUCED BY THE ASSESSEE A ND THEREAFTER DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW, AFTE R GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 60. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE OF ` 4,45,425/- TOWARDS PRESENTS / GIFTS. 61. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT THE ASSESSEE CLAIMED MISCELLANEOUS E XPENDITURE TOWARDS PRESENTS. HOWEVER, THE SAME WAS DISALLOWED BY THE ASSESSING OFFICER. ACCORDING TO THE LD. COUNSEL, T HIS TRIBUNAL IN THE ASSESSEE'S OWN CASE ALLOWED SIMILAR EXPENDITURE IN I.T.A. NO.930/MDS/2011 FOR ASSESSMENT YEAR 2004-05 BY AN O RDER DATED 17.01.2013. 34 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 62. ON THE CONTRARY, SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE NAT URE OF PRESENTS/ GIFTS IS NOT KNOWN. IT IS ALSO NOT KNOWN WHO WERE THE RECIPIENTS OF PRESENTS AND GIFTS. IN THE ABSENCE OF ANY MATERIAL , ACCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY CONFIRMED TH E ADDITION. ACCORDING TO THE LD. D.R., THE ASSESSEE HAS TO ESTA BLISH THAT CERTAIN EXPENDITURE WAS INCURRED FOR OFFERING GIFTS IN THE COURSE OF ITS BUSINESS ACTIVITY. IN THE ABSENCE OF ANY MATERIAL, THE CLAIM OF THE ASSESSEE CANNOT BE ALLOWED. 63. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, THE CLAIM OF THE ASSE SSEE WAS ALLOWED FOR ASSESSMENT YEAR 2004-05. THESE ARE ALL FACTUAL ASPECTS WHICH HAVE TO BE EXAMINED BY BRINGING MATERIAL ON R ECORD FOR EACH YEAR. MERELY BECAUSE THE CLAIM OF THE ASSESSEE WAS ALLOWED FOR ASSESSMENT YEAR 2004-05 THAT DOES NOT MEAN THAT EAC H AND EVERY YEAR SUCH CLAIM HAS TO BE ALLOWED WITHOUT VERIFICAT ION. THE ASSESSING OFFICER HAS TO SATISFY HIMSELF THAT ASSES SEE, IN FACT, INCURRED THE EXPENDITURE IN THE COURSE OF ITS BUSIN ESS ACTIVITY. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE 35 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 ASSESSEE HAS TO PRODUCE DETAILS OF PRESENTS / GIFTS AND THE PURPOSE FOR WHICH IT WAS GIVEN AND THE DETAILS OF RECIPIENT S. IN THE ABSENCE OF SUCH DETAILS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO RE-EXAMINED BY THE ASSESSING OFFICE R. IN OTHER WORDS, GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE TO PRODUCE NECESSARY MATERIAL WOULD NOT CAUSE ANY PREJUDICE TO THE INTERESTS OF REVENUE. ACCORDINGLY, THE ORDERS OF THE AUTHORITIE S BELOW ARE SET ASIDE AND THE DISALLOWANCE MADE BY THE ASSESSING OF FICER TO THE EXTENT OF ` 4,45,425/- IS REMITTED BACK TO THE FILE OF THE ASSE SSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE TH E MATERIAL THAT MAY BE FILED BY THE ASSESSEE AND DECIDE THE ISSUE A FRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPO RTUNITY TO THE ASSESSEE. 64. NOW COMING TO DEPARTMENTS APPEAL IN I.T.A. NO.1496/MDS/2013, THE FIRST ISSUE ARISES FOR CONSID ERATION IS RURAL DEBT WRITTEN OFF BY THE ASSESSEE AND CLAIMED DEDUCT ION UNDER SECTION 36(1)(VII) OF THE ACT. 65. SHRI SANKARALINGAM, THE LD. DEPARTMENTAL REPRES ENTATIVE, SUBMITTED THAT THE ASSESSEE CLAIMED ` 1,34,68,784/- AS BAD DEBT WRITTEN OFF UNDER SECTION 36(1)(VII) OF THE ACT. T HE ACCOUNTS WRITTEN 36 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 OFF AS BAD DEBT AND CLAIMED DEDUCTION UNDER SECTION 36(1)(VII) OF THE ACT DO NOT FIND PLACE IN THE LIST OF ACCOUNTS F OR WHICH THE PROVISION HAS BEEN MADE UNDER SECTION 36(1)(VIIA) O F THE ACT. ACCORDING TO THE LD. D.R., THE ASSESSEE MADE CLAIM FOR DEDUCTION BOTH UNDER SECTION 36(1)(VII) AND 36(1)(VIIA) OF TH E ACT. HOWEVER, THE BANK CANNOT CLAIM DEDUCTION FOR A PARTICULAR DE BT UNDER BOTH THE SECTIONS. THE LD. D.R. FURTHER SUBMITTED THAT THE ASSESSEE HAS ALSO CLAIMED DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT TO THE EXTENT OF ` 8,94,11,100/-. REFERRING TO RULE 6ABA OF INCOME-TA X RULES, 1962, THE LD. D.R. SUBMITTED THAT THE AMOUNTS OF AD VANCES MADE BY EACH RURAL BRANCH AS OUTSTANDING AT THE END OF T HE LAST DAY OF EACH MONTH COMPRISED IN THE PREVIOUS YEAR SHALL BE AGGREGATED SEPARATELY. THE REVENUE IS PLACING MUCH IMPORTANCE TO THE WORD ADVANCES MADE. HOWEVER, THE ASSESSEE IS TAKING A DVANTAGE OF THE WORD AS OUTSTANDING. ACCORDING TO THE LD. D. R., THE AMOUNTS OF ADVANCES MADE SHALL BE AGGREGATED SEPARATELY AT THE LAST DAY OF EACH MONTH COMPRISED IN THE PREVIOUS YEAR. THEREFO RE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 37 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 66. ON THE CONTRARY, SHRI N. QUADIR HOSEYN, THE LD. COUNSEL FOR THE ASSESSEE, SUBMITTED THAT RULE 6ABA MAKES IT VER Y CLEAR THAT THE AMOUNTS OF ADVANCES MADE BY EACH RURAL BRANCH AS OU TSTANDING AT THE END OF THE LAST DAY OF EACH MONTH. THEREFORE, THE REVENUE CANNOT IGNORE THE WORD AS OUTSTANDING AT THE END OF THE LAST DAY OF EACH MONTH COMPRISED IN THE PREVIOUS YEAR. THE CIT (APPEALS) AFTER TAKING INTO CONSIDERATION OF THE PROVISIONS OF SECT ION 36(1)(VII) AND 36(1)(VIIA) OF THE ACT, FOUND THAT THEY ARE DISTINC T AND INDEPENDENT FOR CLAIM OF DEDUCTION. THE LD.COUNSEL FURTHER SUB MITTED THAT THE BAD DEBT ACTUALLY WRITTEN OFF IN THE BOOKS OF ACCOU NT REPRESENTS ONLY THE DEBT ARISING OUT OF RURAL ADVANCE, THEREFORE, T HE CIT(APPEALS) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 36(1)(VII) AND 36(1)(VIIA) OF THE ACT BY PLACING RE LIANCE ON THE JUDGMENT OF APEX COURT IN CATHOLIC SYRIAN BANK LTD. V. CIT (2012) 343 ITR 270. 67. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. DEPARTMENTAL REPRESENTATIVE IS PLACING HIS RELIANCE ON THE WORD ADVANCES MADE IN RULE 6ABA OF INCOME-TAX RULES, 1 962. HOWEVER, THE LD.COUNSEL FOR THE ASSESSEE IS PLACING RELIANCE ON THE 38 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 WORD AS OUTSTANDING AT THE END OF THE LAST DAY OF EACH MONTH. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT RULE 6AB A HAS TO BE READ HARMONIOUSLY BY TAKING INTO CONSIDERATION THE ENTIR E LANGUAGE OF THE RULE. THEREFORE, WHEN THE AMOUNTS OF ADVANCES WERE MADE BY EACH RURAL BRANCH AND IT WAS OUTSTANDING AT THE END OF LAST DAY OF EACH MONTH HAS TO BE CONSIDERED SEPARATELY. THIS W AS ACTUALLY TAKEN BY THE CIT(APPEALS). AS RIGHTLY OBSERVED BY THE CIT(APPEALS), PROVISIONS OF SECTION 36(1)(VII) AND 36(1)(VIIA) OF THE ACT ARE DISTINCT AND INDEPENDENT FOR CLAIM OF DEDUC TION AND BOTH OF THEM OPERATE IN DIFFERENT FIELD. THE BAD DEBT WRIT TEN OFF FOR WHICH PROVISION WAS MADE UNDER 36(1)(VII) OF THE ACT WILL BE COVERED UNDER MAIN PART OF SECTION 36(1)(VII) OF THE ACT. FIRST PROVISO WILL OPERATE IN CASES UNDER CLAUSE 36(1)(VIIA) OF THE ACT TO LIM IT THE EXTENT OF DIFFERENT BAD DEBTS OR PART THEREOF WRITTEN OFF IN THE PREVIOUS YEAR AND CARRIED FORWARD BALANCE IN THE PROVISION OF BAD AND DOUBTFUL DEBTS MADE UNDER CLAUSE 36(1)(VIIA) OF THE ACT. TH EREFORE, THE PROVISO, AS RIGHTLY OBSERVED BY THE CIT(APPEALS), W OULD NOT PERMIT DOUBLE DEDUCTION WITH REFERENCE TO RURAL LOANS. 68. THE CIT(APPEALS) BY PLACING RELIANCE ON THE JUD GMENT OF APEX COURT IN CATHOLIC SYRIAN BANK LTD. (SUPRA), FO UND THAT 39 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 SCHEDULED BANKS CONTINUE TO GET THE BENEFIT OF WRIT E OFF OF IRRECOVERABLE DEBTS UNDER SECTION 36(1)(VII) OF THE ACT IN ORDER TO GET BENEFIT OF DEDUCTION FOR THE PROVISION FOR BAD AND DOUBTFUL DEBTS UNDER SECTION 36(1)(VIIA) OF THE ACT. THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) HAS RIGHTL Y ALLOWED THE CLAIM OF THE ASSESSEE BY PLACING RELIANCE ON THE JU DGMENT OF APEX COURT. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY RE ASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDING LY THE SAME IS CONFIRMED. 69. THE NEXT ISSUE ARISES FOR CONSIDERATION IS INVE STMENT IN HTM CATEGORY OF SECURITIES AS INVESTMENT OF CAPITAL NAT URE. 70. SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REP RESENTATIVE, SUBMITTED THAT THE BANK HAS TO MAINTAIN THE PORTFOL IO OF SECURITIES IN THREE CATEGORIES, VIZ. (I) HELD TO MATURITY (HTM); (II) AVAILABLE FOR SALE (AFS); AND (III) HELD FOR TRADING (HFT). THER EFORE, THE INVESTMENT IN HTM CATEGORY OF SECURITIES HAS TO BE TREATED AS INVESTMENT WHICH IS OF CAPITAL NATURE. THE LD. D.R . VERY FAIRLY SUBMITTED THAT THE MADRAS HIGH COURT FOUND THAT INV ESTMENT IN SECURITIES AND SHARES HAS TO BE TREATED AS STOCK-IN -TRADE, THEREFORE, THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE. 40 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 71. WE HAVE HEARD SHRI N. QUADIR HOSEYN, THE LD.CO UNSEL FOR THE ASSESSEE ALSO. ACCORDING TO HIM, THE MADRAS HI GH COURT FOUND THAT THE INVESTMENT MADE BY THE ASSESSEE IN SHARES AND SECURITIES HAS TO BE CLASSIFIED AS STOCK-IN-TRADE. THE CBDT A LSO INSTRUCTED ITS OFFICERS TO TREAT ALL THE INVESTMENTS IN SHARES AND SECURITIES AS STOCK-IN-TRADE. 72. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SI DE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THERE ARE THREE CATEGORIES OF SECURITIES. IRRESPECTIVE OF NATURE O F SECURITIES, AS RIGHTLY SUBMITTED BY THE LD. D.R., THE MADRAS HIGH COURT HELD THAT IT HAS TO BE CLASSIFIED AS STOCK-IN-TRADE. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 73. THE NEXT ISSUE ARISES FOR CONSIDERATION IS BROK ERAGE PAID IN RESPECT OF HFT AND AFS CATEGORIES OF SECURITIES. 74. SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REP RESENTATIVE, VERY FAIRLY SUBMITTED THAT THE BROKERAGE PAID FOR H ELD FOR TRADING (HFT) AND AVAILABLE FOR SALE (AFS) HAS TO BE ALLOWE D IN VIEW OF JUDGMENT OF MADRAS HIGH COURT. 41 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 75. WE HAVE HEARD SHRI N. QUADIR HOSEYN, THE LD.COU NSEL FOR THE ASSESSEE, ALSO. ACCORDING TO THE LD. COUNSEL, BROKERAGE WAS PAID IN THE COURSE OF ACQUIRING THE SECURITIES. IR RESPECTIVE OF CATEGORY OF SECURITIES, ACCORDING TO THE LD. COUNSE L, THE SAME HAS TO BE CLASSIFIED AS STOCK-IN-TRADE, THEREFORE, THE EXP ENDITURE HAS TO BE ALLOWED. 76. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LD. D.R., THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF MADRAS HIGH COURT. THE BROKERAGE PAID BY THE ASSESSEE IRRESPECTIVE OF CATEGORIES OF SECURITIES HAS TO BE ALLOWED AS EXPENDITURE. THEREFORE, THIS TRIB UNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 77. THE NEXT ISSUE ARISES FOR CONSIDERATION IS UNCL AIMED BALANCES FOR MORE THAN THREE YEARS. 78. SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REP RESENTATIVE, SUBMITTED THAT THERE ARE UNCLAIMED AMOUNTS WITH THE ASSESSEE- BANK CONTINUOUSLY FOR MORE THAN THREE YEARS. THE R EVENUE HAS 42 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 TAKEN THE SAME AS INCOME AS PER THE PROVISIONS OF I NCOME-TAX ACT. HOWEVER, THE ASSESSEE CLAIMS THAT IT CANNOT BE TREA TED AS INCOME UNDER THE PROVISIONS OF RBI ACT. ACCORDING TO THE LD. D.R., INCOME- TAX ACT, BEING A SPECIAL ENACTMENT WILL PREVAIL OVE R THE PROVISIONS OF RBI ACT, THEREFORE, IT HAS TO BE TREATED AS INCOME OF THE ASSESSEE. 79. ON THE CONTRARY, SHRI N. QUADIR HOSEYN, THE LD. COUNSEL FOR THE ASSESSEE, SUBMITTED THAT PROVISIONS OF SECTION 43D OF THE ACT PROVIDES FOR PREPARATION OF STATEMENT AS PER PROVIS IONS OF RBI ACT, HENCE, THE ASSESSEE PREPARES THE STATEMENT AS PER P ROVISIONS OF RBI ACT AS PROVIDED IN SECTION 43D OF THE ACT. THE STATEMENT PREPARED BY THE ASSESSEE IN ACCORDANCE WITH PROVISI ONS OF SECTION 43D OF THE ACT, HENCE THE SAME HAS TO BE ALLOWED. 80. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 43 D OF THE ACT. SECTION 43D OF THE ACT PROVIDES FOR PREPARATION OF BAD OR DOUBTFUL DEBT AS PER THE GUIDELINES ISSUED BY RESERVE BANK O F INDIA. IT IS NOT IN DISPUTE THAT BAD AND DOUBTFUL DEBTS ARE CLASSIFI ED AS PER THE GUIDELINES ISSUED BY RESERVE BANK OF INDIA. SINCE SECTION 43D OF THE ACT PROVIDES FOR APPLICATION OF GUIDELINES ISSU ED BY RESERVE 43 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 BANK OF INDIA, THIS TRIBUNAL IS OF THE CONSIDERED O PINION THAT THE ASSESSEE CANNOT BE FOUND FAULT FOR PREPARING THE BA D AND DOUBTFUL DEBTS AS PER THE GUIDELINES ISSUED BY THE RESERVE B ANK OF INDIA. THE MATTER WOULD STAND DIFFERENTLY IN CASE SECTION 43D OF THE ACT DOES NOT PROVIDE FOR SUCH DIRECTION AS PER RESERVE BANK OF INDIA GUIDELINES. SINCE THE INCOME-TAX ACT, MORE PARTICU LARLY SECTION 43D, SPECIFIES PROVISION FOR PREPARATION OF BAD AND DOUBTFUL DEBTS AS PER GUIDELINES ISSUED BY RESERVE BANK OF INDIA, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 81. THE NEXT ISSUE ARISES FOR CONSIDERATION IS ADDI TION MADE BY THE ASSESSING OFFICER TOWARDS OFFICE BUILDING. 82. SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REP RESENTATIVE, SUBMITTED THAT THE CIT(APPEALS) DELETED THE ADDITIO N MADE TO THE OFFICE BUILDING ON THE BASIS OF ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WITHOUT CALLING FOR REMAND REPORT. THEREF ORE, ACCORDING TO THE LD. D.R., THE MATTER MAY BE REMITTED BACK TO TH E FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION. 83. ON THE CONTRARY, SHRI N. QUADIR HOSEYN, THE LD. COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THERE IS NO ADDITION T O THE BUILDING OR CONSTRUCTION OF ANY NEW BUILDING. IT IS AN EXPENDIT URE INCURRED DURING 44 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 THE COURSE OF BUSINESS ACTIVITY IN RESPECT OF THE B UILDING, THEREFORE, IT IS A REVENUE EXPENDITURE. 84. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE GROUND OF APPEAL IS WITH REFERENCE TO ADDITION MADE TO OFFICE BUILDING. NOW, THE LD.COUNSEL FOR THE ASSESSEE CLAIMS THAT THERE W AS NO CONSTRUCTION OF ANY NEW BUILDING. THEREFORE, THE E XACT NATURE OF EXPENDITURE HAS TO BE VERIFIED. MOREOVER, THE CIT( APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE WITHOUT AFFORDING ANY OPP ORTUNITY TO THE ASSESSING OFFICER. THEREFORE, THE ORDERS OF THE AU THORITIES BELOW ARE SET ASIDE AND THE ADDITION MADE BY THE ASSESSIN G OFFICER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE AND BRING ON RECORD THE NA TURE OF EXPENDITURE AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 85. NOW LET US COME TO THE ASSESSEES APPEAL FOR AS SESSMENT YEAR 2005-06. 86. THE FIRST ISSUE ARISES FOR CONSIDERATION IS IS NON-ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT. 45 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 87. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT THE ASSESSEE FILED RETURN OF INCOME ON 05.09.2009. THE TIME LIMIT EXPIRED FOR ISSUE OF NOTICE UNDER SE CTION 143(2) OF THE ACT ON 30.03.2010. IN FACT, THE NOTICE WAS ISSUED ONLY ON 13.10.2010 AFTER EXPIRY OF TIME LIMIT PROVIDED UNDE R SECTION 142 OF THE ACT. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER IS NOT VALID. ON A QUERY FROM THE BENCH, WHEN THE ASSESSEE APPEARED BEFORE THE AS SESSING OFFICER AND PARTICIPATED IN THE ASSESSMENT PROCEEDI NGS, CAN THE ASSESSEE NOW RAISE SUCH A KIND OF CLAIM BEFORE THIS TRIBUNAL IN VIEW OF SECTION 292BB OF THE ACT? THE LD.COUNSEL SUBMIT TED THAT HE CAN VERY WELL RAISE THE CLAIM BEFORE THIS TRIBUNAL IN V IEW OF JUDGMENT OF MADRAS HIGH COURT IN CIT V. GITSONS ENGINEERING CO. (2015) 370 ITR 87. THEREFORE, ACCORDING TO THE LD. COUNSEL, T HE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER CANNOT STAND IN THE E YE OF LAW. 88. ON THE CONTRARY, SHRI S. SANKARALINGAM, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT NO DOUB T, NOTICE UNDER SECTION 143(2) OF THE ACT WAS NOT ISSUED WITHIN THE TIME FRAME. HOWEVER, THE ASSESSEE HAS PARTICIPATED WITHOUT ANY OBJECTION. MOREOVER, THIS GROUND WAS NOT RAISED BEFORE THE AS SESSING OFFICER 46 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 OR CIT(APPEALS) AND RAISED FIRST TIME BEFORE THIS T RIBUNAL. THEREFORE, IN VIEW OF SECTION 292BB OF THE ACT, THE ASSESSEE CANNOT RAISE THIS ISSUE BEFORE THIS TRIBUNAL. THE LD. D.R . FURTHER SUBMITTED THAT THE MADRAS HIGH COURT EVEN THOUGH FRAMED A QUE STION OF LAW, THERE WAS NO DISCUSSION IN THE ORDER ABOUT SECTION 292BB OF THE ACT. THEREFORE, ACCORDING TO THE LD. D.R., THE JUD GMENT OF MADRAS HIGH COURT IN GITSONS ENGINEERING CO. (SUPRA) IS NO T APPLICABLE TO THE FACTS OF THE CASE. 89. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT NOTICE UNDER SECTION 143(2) OF THE ACT WAS NOT ISSUED WITHIN THE TIME FRAME. THE MADRAS HIGH COURT FOUND THAT ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT WITHIN THE T IME LIMIT PRESCRIBED IS MANDATORY AND IT IS NOT A PROCEDURAL REQUIREMENT. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 292BB OF THE ACT. A QUESTION WAS FRAMED BY THE MADRAS HIGH COURT IN GITSONS ENGINEERING CO. (SUPRA). THE MADRAS HIGH C OURT FOUND THAT A NON-SERVICE OF NOTICE UNDER SECTION 143(2) O F THE ACT WAS NOT AN ISSUE BEFORE THE ASSESSING OFFICER. THE ISSUE W AS RAISED BEFORE THE TRIBUNAL FOR THE FIRST TIME. THE MADRAS HIGH C OURT FOUND THAT THE 47 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 LEGAL PLEA RAISED BY THE ASSESSEE GOES INTO ROOT OF THE MATTER, THEREFORE, THE ASSESSEE IS ENTITLED TO RAISE THIS I SSUE BEFORE THE TRIBUNAL. IN VIEW OF THIS JUDGMENT OF MADRAS HIGH COURT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT EVEN THO UGH NON-ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT WAS NOT RAIS ED BEFORE THE ASSESSING OFFICER OR CIT(APPEALS), THIS BEING A LEG AL ISSUE CAN BE RAISED BEFORE THIS TRIBUNAL. THEREFORE, BY RESPECT FULLY FOLLOWING THE JUDGMENT OF MADRAS HIGH COURT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER CANNOT STAND IN THE EYE OF LAW. ACCORDINGL Y, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ADDITIO N MADE BY THE ASSESSING OFFICER IS DELETED. 90. IN VIEW OF ABOVE FINDING, IT MAY NOT BE NECESSA RY TO ADJUDICATE THE APPEAL OF THE REVENUE IN I.T.A. NO.1 527/MDS/2013. 91. IN THE RESULT, I.T.A. NOS.1340 & 1496MDS/2013 A RE PARTLY ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO.1341/M DS/2013 IS ALLOWED AND I.T.A. NO.1527/MDS/2013 IS DISMISSED. 48 I.T.A. NOS.1340 & 1341/MDS/13 I.T.A. NOS. 1496 & 27/MDS/1 3 ORDER PRONOUNCED ON 27 TH APRIL, 2017 AT CHENNAI. SD/- SD/- (%& .()(* ) ( . . . ! ) (ABRAHAM P. GEORGE) (N.R.S. GANESAN) , #/ ACCOUNTANT MEMBER ' # /JUDICIAL MEMBER /CHENNAI, <$ /DATED, THE 27 TH APRIL, 2017. KRI. 7 3'6 =/6 /COPY TO: 1. ' *56 /ASSESSEE 2. 3412 /RESPONDENT 3. >6 () /CIT(A) 4. >6 /CIT, 5. ?! 3'6' /DR 6. !@* A /GF.