Manorama Co- Op Bank Ltd, Solapur V. ACIT Cir-2 Solapur, Solapur

ITA 1669/PUN/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76289 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 09-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Capital asset; Business expenditure; Cost of acquisition; Bad and doubtful debts; Revenue expenditure; Capital expenditure
• Section: 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 166 9 / P N/ 20 1 2 ASSESSMENT YEAR : 200 8 - 09 MANORAMA CO - OPERATIVE BANK LTD., 20 2, SHUKRAWAR PETH, SOLAPUR VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2, SOLAPUR (APPELLANT) (RESPONDENT) PAN NO. AAJFM6823C APPELLANT BY: SHRI S.N. PURANIK RESPONDENT BY: SHRI S.P. WALIMBE DATE OF HEARING : 05 - 03 - 2014 DATE OF PRONOUNCEMENT : 26 - 03 - 2014 ORDER PER R.S . PADVEKAR , JM : - THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT(A) - III, PUNE DATED 31 - 10 - 2011 FOR THE A.Y. 200 8 - 09. 2. THE ISSUE IS IN RESPECT OF ADDITION OF RS.48,06,557/ - IN RESPECT O F INTEREST ON NPA A/CS AND THIS ISSUE ARISES FROM GROUND NOS. 1 & 2. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE ASSESSEE IS A CO - OPERATIVE SOCIETY ENGAGED IN THE BANKING BUSINESS. RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL WA S FILED ON 29 - 05 - 2009 DECLARING TOTAL INCOME OF RS.23,65,710/ - . BY SELECTING THE CASE FOR SCRUTINY ASSESSMENT, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE ASSESSING OFFICER AT RS.85,65,020/ - BY MAKING ADDITIONS TO THE RETURNED INCOME ON VARIOUS POINTS VIDE ITS ORDER PASSED U/S. 143(3) DATED 16 - 12 - 2010. 3. IN RESPECT OF THE ISSUE BEFORE US , THE RELEVANT FACTS IN THIS REGARD AS EMERGING FROM THE RECORDS ARE THAT IT IS OBSERVED BY THE ASSESSING 2 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR OFFICER THAT THE ASSESSEE HAD MADE A REVERSAL ENTRY FOR AN AMOUNT OF RS.48,06,557/ - BEING INTEREST RECEIVABLE ON ADVANCES TERMED AS NPA. IT WAS STATED THAT THE INTEREST WAS FIRST CREDITED TO THE INTEREST RECEIPT ACCOUNT AND REVERSED AT THE END OF THE YEAR PERTAINING TO NPAS. THE ASSESSING OFFICER WAS OF TH E VIEW THAT SUCH A TREATMENT WAS NOT PERMISSIBLE CONSIDERING THE FACT THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND ALSO IN THE LIGHT OF THE EXPRESSED PROVISIONS CONTAINED IN SEC. 43D. IT WAS CONTENDED BY THE ASSESSEE THAT WHILE THEY ARE CONSISTENTLY FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, IN RESPECT OF INTEREST ON NPA CASH SYSTEM WAS BEING FOLLOWED AND SUCH A PRACTICE WAS BEING FOLLOWED PURSUANT TO THE DIRECTIONS OF THE RBI. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT SUCH DIRECTIVES WERE NOT APPLICABLE IN CASE OF THE ASSESSEE SINCE IT IS NOT A FINANCIAL CORPORATION BUT A COOPERATIVE SOCIETY. ACCORDING TO THE ASSESSING OFFICER, EVEN IF SUCH DIRECTIVES ARE PRESUMED TO BE APPLICABLE IN CASE OF THE ASSESSEE, THE ASSESSEE HAS NO T CHANGED ITS METHOD OF ACCOUNTING FROM MERCANTILE TO CASH SYSTEM IN OFFERING THE ENTIRE INTEREST INCOME. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE WAS ATTEMPTING TO OFFER PART OF ITS INTEREST INCOME ON MERCANTILE BASIS AND PART ON CASH BASIS. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAS BEEN FOLLOWING THE MERCANTILE SYSTEM ACCOUNTING AND THEREFORE, IT WAS OBLIGED TO OFFER THE INCOME ON ACCRUAL BASIS. AS REGARDS THE RBI DIRECTIVES WHICH WAS CITED BY THE ASSESSEE IN SUPPORT OF THE A CCOUNTING TREATMENT IN RESPECT OF THE INTEREST RECEIVABLE ON NPAS, IT IS EMPHASIZED BY THE ASSESSING OFFICER THAT SUCH DIRECTIVES OR GUIDELINES ARE FOR THE PURPOSE OF SUPERVISION, MANAGEMENT AND CONTROL OF MONETARY AND CREDIT SYSTEM AND IT CAN IN NO WAY STOP THE ACCRUAL OF INCOME UNDER SEC. 5 OF THE INCOME TAX ACT. 3.1. IT IS ASSERTED BY THE ASSESSING OFFICER THAT RBI RULES CANNOT OVERRIDE THE PROVISIONS OF INCOME TAX. REFERRING TO THE PROVISIONS OF SEC. 3 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR 145, IT IS NOTED BY THE ASSES SING OFFICER THAT THE INCOME OF AN ASSESSEE IS TAXABLE EITHER ON MERCANTILE BASIS OR ON RECEIPT BASIS DEPENDING UPON THE METHOD OF ACCOUNTING THAT HAS BEEN FOLLOWED BY THE ASSESSEE REGULARLY AND ONCE THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOU NT, ALL INCOME THAT HAS ACCRUED TO IT DURING A PARTICULAR YEAR HAS TO BE INCLUDED IN THE INCOME IN THAT YEAR ONLY. HIGHLIGHTING THAT IN CASE OF OTHER INTEREST, THE ASSESSEE HAS BEEN OFFERING THE SAME ON ACCRUAL BASIS WHILE FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, IT IS ONLY IN CASE OF OVERDUE INTEREST ON ADVANCES ON NPAS A/C. THE ASSESSEE HAS CHOSEN TO BOOK THE INCOME ON ACTUAL RECEIPTS BASIS AND NOT ON ACCRUAL BASIS . T HE ASSESSING OFFICER HAS OBSERVED THAT ASSESSEE IS NOT ALLOWED TO FOLLOW SUCH A HYBRID SYSTEM OF ACCOUNTING. IT IS ALSO HIGHLIGHTED BY THE ASSESSING OFFICER THAT THE ASSESSEE IS NOT AN INSTITUTION SPECIFIED IN SEC.4 3 D WHEREBY SUCH INSTITUTIONS ARE ALLOWED TO OFFER THE INCOME ON RECEIPT BASIS IN RESPECT OF NPA. ACCORDINGLY, THE INTERE ST ACCRUED DURING THE YEAR AMOUNTING TO RS.48,06,557/ - WAS HELD TO BE TAXABLE IN THE CURRENT ASSESSMENT YEAR AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE . WHILE DOING SO, THE ALTERNATE CONTENTION RAISED BY THE ASSESSEE THAT IF THE INTERES T INCOME IS TO BE ASSESSED ON ACCRUAL BASIS, THEN THE INTEREST INCOME PERTAINING TO EARLIER YEARS WHICH WAS NOW OFFERED BE EXCLUDED FROM THE TOTAL INCOME, WAS ALSO TURNED DOWN BY THE ASSESSING OFFICER OBSERVING THAT THE ASSESSEE HAD NOT REVISED THE RETURNS FOR THOSE YEARS TO OFFER SUCH INCOME FOR TAXATION. 4. THE ASSESSEE CARRIED THE ISSUE BEFORE THE LD. CIT(A). IT APPEARS THAT THE WRITTEN SUBMISSION WAS FILED AND ON THE BASIS OF WRITTEN SUBMISSION THIS ISSUE WAS DECIDED AGAINST THE ASSESSEE AND THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER FOR BRINGING TO TAX THE INTEREST ON THE NPA A/C. THE LD. CIT(A) ALSO DID NOT ACCEPT THE ALTERNATE PLEA OF THE ASSESSEE THAT THE AMOUNT OFFERED TO TAX IN THE PROFIT 4 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR AND LOSS ACCOUNT ON RECEIPT BASIS THAT MAY BE EXCLUDED WAS ALSO DISMISSED. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE PARTIES. THE BENCH HAS GIVEN THE DIRECTION S TO THE ASSESSEE BANK TO FILE THE CHART SHOWING THE OVERDUE INTEREST ON THE NPA A/C. FOR THE PRECEDING YEARS A S WELL AS SUBSEQUENT YEARS TO THE A.Y. 2008 - 09 AND THE INTEREST RECEIVED DURING THE YEAR OUT OF THE OVERDUE INTEREST WHICH WAS OFFERED TO TAX. AS PER THE DIRECTIONS OF THE BENCH THE ASSESSEE BANK HAS FILED THE CHART WHICH IS PLACED ON RECORD. AS PER THE CHART FILED BY THE BANK IT IS SEEN THAT THE OVERDUE INTEREST ON THE NPA A /C. ARE SHOWN UNDER THE HEAD NPA INTEREST RESERVED/OVERDUE INTEREST RESERVED AND INTEREST RECEIVED DURING THE YEAR OUT OF OVERDUE INTEREST ON THE NPA A/C. IS REDUCED AND THE ASSESSEE OFFERING THE INTEREST ON THE ACTUAL RECEIPT BASIS. 5.1. THE IDENTICAL ISSUE HAS COME FOR THE CONSIDERATION IN THE CASE OF ACIT , CIRCLE - 3, NANDED VS. THE OMERGA JANTA SAHAKARI BANK LTD., ITA NO. 350/PN/2013 ORDER DATED 31 - 1 0 - 2013. IN THE SAID CASE ALSO T HE ASSESSEE BANK IN TERMS OF PRUDENTIAL NORMS OF RBI , DID NOT A CCOUNT FOR INTEREST INCOME RELATABLE TO NPAS I.E. ADVANCE S TO CUSTOMERS WHICH HAVE BEEN CLASSIFIED AS NPAS IN TERMS OF THE PRUDENTIAL NORMS OF RBI. IN THE SAID CASE THE ASSESSING OFFICER WAS O F THE OPINION THAT INTEREST INCOME EVEN IN RELATION TO SUCH NPAS WAS LIABLE TO BE INCLUDED ON ACCRUAL BASIS HAVING REGARD TO THE MERCANTILE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE. THE ASSESSING OFFICER ACCORDINGLY BROUGHT TO TAX THE INTEREST ON THE NPAS. WHEN THE MATTER REACHED BEFORE THE TRIBUNAL IT IS HELD AS UNDER: 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN SO FAR AS THE APPLICABILITY OF SECTION 43D OF THE ACT TO THE ASSESSEE IS CONCERNED, THERE IS A CONVERGENCE OF OPINION BETWEE N THE ASSESSEE AND THE REVENUE TO THE EFFECT THAT THE SAME IS NOT APPLICABLE TO THE ASSESSEE. OSTENSIBLY, ASSESSEE IS A CO - OPERATIVE BANK CARRYING ON 5 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR BANKING BUSINESS IN TERMS OF A LICENSE GRANTED BY RBI AND IS NOT A SCHEDULED BANK INCLUDED IN SECOND SC HEDULE OF RBI SO AS TO FALL WITHIN THE SCOPE OF SECTION 43D OF THE ACT. NOTABLY, SECTION 43D OF THE ACT PRESCRIBES THAT INTEREST INCOME ON SUCH CATEGORIES OF BAD AND DOUBTFUL DEBTS AS PRESCRIBED BY THE RBI GUIDELINES SHALL BE CHARGEABLE TO TAX IN THE YEAR IN WHICH SUCH INTEREST INCOME IS CREDITED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT OR IN THE YEAR OF ACTUAL RECEIPT, WHICHEVER IS EARLIER. SINCE ASSESSEE IS NOT AN ENTITY COVERED WITHIN THE SCOPE OF SECTION 43D OF THE ACT, THE PRESENT CONTROVERSY C ANNOT BE ADJUDICATED IN THE LIGHT OF SECTION 43D OF THE ACT, AND IT IS LIABLE TO BE DECIDED ON GENERAL PRINCIPLES AS TO WHETHER THE IMPUGNED INCOME HAS ACCRUED TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. 9. IN THIS CONNECTION, WE FIND THAT THE V ISAKHAPATNAM BENCH OF THE TRIBUNAL IN THE CASE OF THE DURGA COOPERATIVE URBAN BANK LTD. (SUPRA) HAS CONSIDERED AN IDENTICAL CONTROVERSY. THE ASSESSEE BEFORE THE VISAKHAPATNAM BENCH WAS A CO - OPERATIVE BANK OPERATING UNDER A LICENSE ISSUED BY RBI BUT WAS NO T A SCHEDULED BANK SO AS TO FALL WITHIN THE SCOPE OF SECTION 43D OF THE ACT. THE ISSUE RELATED TO TAXABILITY OF INTEREST INCOME RELATING TO NPAS, WHICH AS PER THE REVENUE WAS LIABLE TO BE TAXED ON ACCRUAL BASIS IN LINE WITH MERCANTILE SYSTEM OF ACCOUNTI NG ADOPTED BY THE ASSESSEE THEREIN. THE ASSESSEE, ON THE OTHER HAND, CONTENDED THAT HAVING REGARD TO THE GUIDELINES ISSUED BY RBI REGARDING ACCOUNTING OF INTEREST ON NPAS, NO INTEREST INCOME ACCRUED IN RESPECT OF NPAS AND THAT THE SAME WAS TO BE TAXED ONL Y ON RECEIPT BASIS. THE TRIBUNAL OBSERVED THAT THE QUESTION OF TAXABILITY OF INTEREST ON NPAS CLASSIFIED BY RBI, WAS CONSIDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF M/S VASISTH CHAY VYAPAR LTD. (SUPRA) WHEREIN AFTER CONSIDERING THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD. (SUPRA) IT WAS HELD THAT INTEREST INCOME RELATABLE TO NPAS WAS NOT INCLUDIBLE IN TOTAL INCOME ON ACCRUAL BASIS SINCE THE SAME DID NOT ACCRUE TO THE ASSESSEE. THE FOLLOWING DISCUSSION BY TH E VISAKHAPATNAM BENCH OF THE TRIBUNAL IN THE CASE OF THE DURGA COOPERATIVE URBAN BANK LTD. (SUPRA) IS WORTHY OF NOTICE : - 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULLY PERUSED THE RECORD. THE QUESTION OF TAXABILITY OF INTEREST ON NPAS HAS BEEN CONS IDERED BY THE HON'BLE DELHI HIGH COURT IN 6 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR THE CASE OF M/S VASISTH CHAY VYAPAR LTD (SUPRA); WHEREIN THE HON'BLE DELHI HIGH COURT TOOK INTO ACCOUNT THE DECISION RENDERED BY THE HON'BLE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD (SUPRA). IN THE CA SE OF M/S VASISTH CHAY VYAPAR LTD, THE ASSESSEE THEREIN WAS A NON BANKING FINANCIAL COMPANY AND IT WAS ALSO BOUND BY THE PRUDENTIAL NORMS DIRECTIONS ISSUED BY THE RESERVE BANK OF INDIA FOR INCOME RECOGNITION AND ASSET CLASSIFICATION. THE ASSESSEE DID NOT INCLUDE THE INTEREST INCOME RELATABLE TO NPA ASSETS IN ITS TOTAL INCOME. THE ASSESSING OFFICER, HOWEVER, ADDED THE SAID INTEREST AS THE INCOME OF THE ASSESSEE BY HOLDING THAT IT HAD ACCRUED TO THE ASSESSEE EVEN IT WAS NOT REALIZED AS THE ASSESSEE WAS FO LLOWING MERCANTILE SYSTEM OF ACCOUNTING. THE LEARNED CIT (A) AFFIRMED THE ORDER OF THE ASSESSING OFFICER. HOWEVER, THE ITAT DELETED THE AFORESAID INCOME. HENCE THE REVENUE PREFERRED APPEAL BEFORE THE HON'BLE DELHI HIGH COURT. 8.1 AFTER HEARING THE RIVAL S UBMISSIONS, THE HON'BLE DELHI HIGH COURT TOOK NOTE OF SEC.45Q OF RESERVE BANK OF INDIA ACT WHICH READS AS UNDER: CHAPTER IIIB TO OVERRIDE OTHER LAWS. 45Q. THE PROVISIONS OF THIS CHAPTER SHALL HAVE EFFECT NOTWITHSTANDING ANYTHING INCONSISTENT THEREWITH C ONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE OR ANY INSTRUMENT HAVING EFFECT BY VIRTUE OF ANY SUCH LAW. THE HIGH COURT TOOK NOTE OF THE FACT THAT THE PROVISION OF 45Q OF RESERVE BANK OF INDIA HAS OVERRIDING EFFECT OVER ANY OTHER LAW. THEN THE HO N'BLE HIGH COURT ALSO CONSIDERED ACCOUNTING STANDARD AS - 9 ON REVENUE RECOGNITION AND ALSO EXTRACTED FOLLOWING RELEVANT PORTION FROM THE SAID ACCOUNTING STANDARD: 9. EFFECT OF UNCERTAINTIES ON REVENUE RECOGNITION 9.1 RECOGNITION OF REVENUE REQUIRES TH AT REVENUE IS A MEASURABLE AND THAT AT THE TIME OF SALE OR THE RENDERING OF THE SERVICE, IT WOULD NOT BE UNREASONABLE TO EXPECT ULTIMATE COLLECTION. 7 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR 9.2 WHERE THE ABILITY TO ASSESS THE ULTIMATE COLLECTION WITH REASONABLE CERTAINTY IS LACKING AT THE TIME O F RAISING ANY CLAIM, E.G., FOR ESCALATION OF PRICE, EXPORT INCENTIVES, INTEREST ETC., REVENUE RECOGNITION IS POSTPONED TO THE EXTENT OF UNCERTAINTY INVOLVED. IN SUCH CASES, IT MAY BE APPROPRIATE TO RECOGNIZE REVENUE ONLY WHEN IT IS REASONABLY CERTAIN THAT THE ULTIMATE COLLECTION WILL BE MADE. WHERE THERE IS NO UNCERTAINTY AS TO ULTIMATE COLLECTION, REVENUE IS RECOGNIZED AT THE TIME OF SALE OR RENDERING OF SERVICE EVEN THOUGH PAYMENTS ARE MADE BY INSTALMENTS. 9.3 WHEN THE UNCERTAINTY RELATING TO COLLECTABIL ITY ARISES SUBSEQUENT TO THE TIME OF SALE OR THE RENDERING OF THE SERVICE, IT IS MORE APPROPRIATE TO MAKE A SEPARATE PROVISION TO REFLECT THE UNCERTAINTY RATHER THAN TO ADJUST THE AMOUNT OF REVENUE ORIGINALLY RECORDED. 9.4 AN ESSENTIAL CRITERION FOR THE R ECOGNITION OF REVENUE IS THAT THE CONSIDERATION RECEIVABLE FOR THE SALE OF GOODS, THE RENDERING OF SERVICES OR FROM THE USE OF OTHERS OF ENTERPRISE RESOURCES IS REASONABLY DETERMINABLE. WHEN SUCH CONSIDERATION IS NOT DETERMINABLE WITHIN REASONABLE LIMITS, THE RECOGNITION OF REVENUE IS POSTPONED. 9.5 WHEN RECOGNITION OF REVENUE IS POSTPONED DUE TO THE EFFECT OF UNCERTAINTIES, IT IS CONSIDERED AS REVENUE OF THE PERIOD IN WHICH IT IS PROPERLY RECOGNIZED. 8.2 THE DELHI HIGH COURT ALSO CONSIDERED THE DECISION RENDERED IN THE FOLLOWING CASES: I) CIT VS. ELGI FINANCE LTD., 293 ITR 357 (MAD) II) CIT VS. KKM INVESTMENTS (CAL) SLP DISMISSED BY SUPREME COURT (310 ITR 4) III) CIT VS. MOTOR CREDIT CO (P) LTD., 127 ITR 572 (MAD) IV) UCO BANK VS. CIT 237 ITR 889 ( SC) V) CIT VS. SHOORJI VALLABHDAS & CO 46 ITR 144 (SC) VI) GODHRA ELECTRICITY CO. LTD., VS.CIT 225 ITR 746 VII) CIT VS. GOYAL M G GASES (P) LTD., 303 ITR 159 (DEL) VIII) CIT VS. EICHER LTD., ITA NO.431/2009 DATED 15.7.2009 (DEL) 8 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR 8.3 AFTER CONSIDERING THE ACCOUNTING STANDARD 9 AND THE VARIOUS CASE LAW LISTED ABOVE, THE HON'BLE DELHI HIGH COURT HELD THAT THE INTEREST ON NPA ADVANCE CANNOT BE TREATED AS ACCRUED TO THE ASSESSEE. 8.4 BEFORE THE DELHI HIGH COURT, THE REVENUE TOOK SUPPORT OF THE DECISION O F THE HON'BLE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD (SUPRA). THE DELHI HIGH COURT CONSIDERED THE SAID DECISION OF HON'BLE APEX COURT AND EXPLAINED THE SAME AS UNDER: WE HAVE ALREADY HELD THAT EVEN UNDER THE INCOME TAX ACT, INTEREST INCOM E HAD NOT ACCRUED. MOREOVER, THIS SUBMISSION OF MR. SABHARWAL IS BASED ENTIRELY ON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGY (SUPRA). NO DOUBT, IN FIRST BLUSH, READING OF THE JUDGMENT GIVES AN INDICATION THAT THE COURT HAS HELD T HAT RESERVE BANK OF INDIA ACT DOES NOT OVERRIDE THE PROVISIONS OF THE INCOME TAX ACT. HOWEVER, WHEN WE EXAMINE THE ISSUE INVOLVED THEREIN MINUTELY AND DEEPLY IN THE CONTEXT IN WHICH THAT HAD ARISEN AND CERTAIN OBSERVATIONS OF THE APEX COURT CONTAINED IN TH AT VERY JUDGMENT, WE FIND THAT THE PROPOSITION ADVANCED BY MR.SABHARWAL MAY NOT BE ENTIRELY CORRECT. IN THE CASE BEFORE THE SUPREME COURT, THE ASSESSEE A NBFC DEBITED RS.81,68,516 AS PROVISION AGAINST NPA IN THE PROFIT AND LOSS ACCOUNT, WHICH WAS CLAIMED A S DEDUCTION IN TERMS OF SECTION 36(1) (VII) OF THE ACT. THE ASSESSING OFFICER DID NOT ALLOW THE DEDUCTION CLAIMED AS AFORESAID ON THE GROUND THAT THE PROVISION OF NPA WAS NOT IN THE NATURE OF EXPENDITURE OR LOSS BUT MORE IN THE NATURE OF A RESERVE, AND THU S NOT DEDUCTIBLE UNDER SECTION 36(I)(VII) OF THE ACT. THE ASSESSING OFFICER, HOWEVER, DID NOT BRING TO TAX RS.20,34,605/ - AS INCOME (BEING INCOME ACCRUED UNDER THE MERCANTILE SYSTEM OF ACCOUNTING). THE DISPUTE BEFORE THE APEX COURT CENTERED AROUND DEDUCTIB ILITY OF PROVISION FOR NPA. AFTER ANALYZING THE PROVISIONS OF THE RESERVE BANK OF INDIA ACT, THEIR LORDSHIPS OF THE APEX COURT OBSERVED THAT IN SO FAR AS THE PERMISSIBLE DEDUCTIONS OR EXCLUSIONS UNDER THE ACT ARE CONCERNED, THE SAME ARE ADMISSIBLE 9 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR ONLY IF SUCH DEDUCTIONS/EXCLUSIONS SATISFY THE RELEVANT CONDITIONS STIPULATED THEREFORE UNDER THE ACT. TO THAT EXTENT, IT WAS OBSERVED THAT THE PRUDENTIAL NORMS DO NOT OVERRIDE THE PROVISIONS OF THE ACT. HOWEVER, THE APEX COURT MADE A DISTINCTION WITH REGARD TO I NCOME RECOGNITION AND HELD THAT INCOME HAD TO BE RECOGNIZED IN TERMS OF THE PRUDENTIAL NORMS, EVEN THOUGH THE SAME DEVIATED FROM MERCANTILE SYSTEM OF ACCOUNTING AND/OR SECTION 45 (SIC. 145) OF THE INCOME TAX ACT. IT CAN BE SAID, THEREFORE, THAT THE APEX C OURT APPROVED THE REAL INCOME THEORY WHICH IS ENGRAINED IN THE PRUDENTIAL NORMS FOR RECOGNITION OF REVENUE BY NBFC. 9. THE HON'BLE SUPREME COURT IN THE CASE OF M/S SOUTHERN TECHNOLOGIES LTD (SUPRA) DISSECTED THE MATTER INTO TWO PARTS VIZ., A) INCOME RE COGNITION AND B) PERMISSIBLE DEDUCTION/EXCLUSIONS UNDER THE INCOME TAX ACT. IN SO FAR AS INCOME RECOGNITION IS CONCERNED, THE HON'BLE SUPREME COURT HELD THAT SECTION 145 OF THE INCOME TAX ACT HAS NO ROLE TO PLAY AND THE ASSESSING OFFICER HAS TO FOLLOW RESE RVE BANK OF INDIA DIRECTIONS 1998, SINCE BY VIRTUE OF 45Q OF THE RESERVE BANK OF INDIA ACT, AN OVERRIDING EFFECT IS GIVEN TO THE DIRECTIONS OF RESERVE BANK OF INDIA VIS - - VIS INCOME RECOGNITION PRINCIPLES IN THE COMPANIES ACT 1956. IN SO FAR AS COMPUTATION OF INCOME UNDER THE INCOME TAX ACT IS CONCERNED, (WHICH INVOLVES DEDUCTION OF PERMISSIBLE DEDUCTIONS AND EXCLUSIONS) THE ADMISSIBILITY OF SUCH DEDUCTIONS SHALL BE GOVERNED BY THE PROVISIONS OF THE INCOME TAX ACT. THE RELEVANT OBSERVATIONS OF THE HON'BLE S UPREME COURT ARE EXTRACTED BELOW: APPLICABILITY OF SECTION 145 40. AT THE OUTSET, WE MAY STATE THAT IN ESSENCE RBI DIRECTIONS 1998 ARE PRUDENTIAL/PROVISIONING NORMS ISSUED BY RBI UNDER CHAPTER IIIB OF THE RBI ACT, 1934. THESE NORMS DEAL ESSENTIALLY WITH INCOME RECOGNITION. THEY FORCE THE NBFCS TO DISCLOSE THE AMOUNT OF NPA IN THEIR FINANCIAL ACCOUNTS. THEY FORCE THE NBFCS TO REFLECT TRUE AND CORRECT PROFITS. BY VIRTUE OF SECTION 45Q, AN OVERRIDING EFFECT IS GIVEN TO THE DIRECTIONS 1998 VIS - - VIS 10 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR INCOM E RECOGNITION PRINCIPLES IN THE COMPANIES ACT, 1956. THESE DIRECTIONS CONSTITUTE A CODE BY ITSELF. HOWEVER, THESE DIRECTIONS 1998 AND THE IT ACT OPERATE IN DIFFERENT AREAS. THESE DIRECTIONS 1998 HAVE NOTHING TO DO WITH COMPUTATION OF TAXABLE INCOME. THESE DIRECTIONS CANNOT OVERRULE THE PERMISSIBLE DEDUCTIONS OR THEIR EXCLUSION UNDER THE IT ACT. THE INCONSISTENCY BETWEEN THESE DIRECTIONS AND COMPANIES ACT IS ONLY IN THE MATTER OF INCOME RECOGNITION AND PRESENTATION OF FINANCIAL STATEMENTS. THE ACCOUNTIN G POLICIES ADOPTED BY AN NBFC CANNOT DETERMINE THE TAXABLE INCOME. IT IS WELL SETTLED THAT THE ACCOUNTING POLICIES FOLLOWED BY A COMPANY CAN BE CHANGED UNLESS THE AO COMES TO THE CONCLUSION THAT SUCH CHANGE WOULD RESULT IN UNDERSTATEMENT OF PROFITS. HOWEVE R, HERE IS THE CASE WHERE THE AO HAS TO FOLLOW THE RESERVE BANK OF INDIA DIRECTIONS 1998 IN VIEW OF SECTION 45Q OF THE RESERVE BANK OF INDIA ACT. HENCE, AS FAR AS INCOME RECOGNITION IS CONCERNED, SECTION 145 OF THE IT ACT HAS NO ROLE TO PLAY IN THE PRESENT DISPUTE. 10. TURNING TO THE FACTS OF THE CASE BEFORE US, THE ASSESSEE HEREIN IS A COOPERATIVE BANK AND IT IS NOT IN DISPUTE THAT IT IS ALSO GOVERNED BY THE RESERVE BANK OF INDIA. HENCE THE DIRECTIONS WITH REGARD TO THE PRUDENTIAL NORMS ISSUED BY THE RES ERVE BANK OF INDIA ARE EQUALLY APPLICABLE TO THE ASSESSEE AS IT IS APPLICABLE TO THE COMPANIES REGISTERED UNDER THE COMPANIES ACT. THE HON'BLE SUPREME COURT HAS HELD IN THE CASE OF SOUTHERN TECHNOLOGIES LTD (SUPRA), THAT THE PROVISION OF 45Q OF RESERVE BAN K OF INDIA ACT HAS AN OVERRIDING EFFECT VIS - - VIS INCOME RECOGNITION PRINCIPLE UNDER THE COMPANIES ACT. HENCE SEC.45 Q OF THE RBI ACT SHALL HAVE OVERRIDING EFFECT OVER THE INCOME RECOGNITION PRINCIPLE FOLLOWED BY COOPERATIVE BANKS ALSO. HENCE THE ASSESSING OFFICER HAS TO FOLLOW THE RESERVE BANK OF INDIA DIRECTIONS 1998, AS HELD BY THE HON'BLE SUPREME COURT. 10.1 BASED ON THE PRUDENTIAL NORMS, THE ASSESSEE HEREIN DID NOT ADMIT THE INTEREST RELATABLE TO NPA ADVANCES IN ITS TOTAL INCOME. THE HON'BLE DELHI HIG H COURT IN THE CASE OF VASISTH CHAY VYAPAR LTD (SUPRA) HAS HELD THAT THE INTEREST ON NPA 11 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR ASSETS CANNOT BE SAID TO HAVE ACCRUED TO THE ASSESSEE. IN THIS REGARD, THE FOLLOWING OBSERVATIONS OF HON'BLE DELHI HIGH COURT IN THE ABOVE CITED CASE ARE RELEVANT: W HAT TO TALK OF INTEREST, EVEN THE PRINCIPLE AMOUNT ITSELF HAD BECOME DOUBTFUL TO RECOVER. IN THIS SCENARIO IT WAS LEGITIMATE MOVE TO INFER THAT INTEREST INCOME THEREUPON HAS NOT ACCRUED. THE SAID DECISION OF THE HON'BLE DELHI HIGH COURT IS EQUALLY APPLI CABLE TO THE ISSUE IN OUR HANDS. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY WITH THE DECISION OF THE LEARNED CIT (A) IN HOLDING THAT THE INTEREST INCOME RELATABLE ON NPA ADVANCES DID NOT ACCRUE TO THE ASSESSEE. ACCORDINGLY WE UPHOLD HIS ORDER. 10. FOLLOWI NG THE AFORESAID DISCUSSION, WHICH HAS BEEN RENDERED ON AN IDENTICAL ISSUE UNDER SIMILAR CIRCUMSTANCES, WE FIND NO REASONS TO INTERFERE WITH THE ULTIMATE CONCLUSION OF THE CIT(A) IN DELETING THE IMPUGNED ADDITION RELATING TO INTEREST INCOME IN RESPECT OF N PAS. 11. SO, HOWEVER, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SAKTHI FINANCE LTD., (2013) 31 TAXMANN.COM 305 (MADRAS) HAS DIFFERED WITH THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF M/S VASISTH CHAY VYAPAR LTD. (SUPRA) ON A SIMILAR ISSUE, I.E. RELATING TO INTEREST INCOME ON NPAS. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER POINTED OUT THAT THE HONBLE MADRAS HIGH COURT FOLLOWED THE DECISION OF THE HONBLE SUPREME C OURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD. (SUPRA) IN HOLDING THAT INTEREST ON NPAS WAS ASSESSABLE TO TAX ON ACCRUAL BASIS. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS PUT - FORTH BY THE LEARNED DEPARTMENTAL REPRESENTATIVE BASED ON THE JUDGEMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF SAKTHI FINANCE LTD. (SUPRA). THE CONTROVERSY BEFORE THE HONBLE MADRAS HIGH COURT RELATED TO NON - RECOGNITION OF INTEREST INCOME ON NPAS BY THE ASSESSEE FOLLOWING THE RBI GUIDELINES. THE HONBLE MADRAS HIGH COURT TOOK THE VIEW THAT THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD. (SUPRA) ALSO APPLIED TO THE INCOME RECOGNITION NORMS PROVIDED BY RBI AND THEREFORE IT HELD THE INTEREST INCOME ON NPAS IS LIABLE TO BE TAXED ON ACCRUAL BASIS AND NOT IN TERMS OF RBIS 12 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR GUIDELINES. BUT THE HONBLE DELHI HIGH COURT IN THE CASE OF M/S VASISTH CHAY VYAPAR LTD. (SUPRA) HAS TAKEN A VIEW THAT SOUTHERN TECHNOLOGIES LTD. (SUPRA) CASE DID NOT APPLY TO THE INCOME RECOGNITION NORMS PRESCRIBED BY RBI. OSTENSIBLY, THERE IS DIVERGENCE OF OPINION BETWEEN THE HONBLE DELHI HIGH COURT AND THE HONBLE MADRAS HIGH COURT AS NOTED BY THE HONBLE MADRAS HIGH COURT IN ITS ORDER. 12. IN SO FAR AS, PRESENT CASE IS CONCERNED THERE IS NO JUDGMENT OF THE JURISDICTI ONAL HIGH COURT. WE ARE FACED WITH TWO CONTRARY JUDGMENTS OF THE NON - JURISDICTIONAL HIGH COURT. IN SUCH A SITUATION, WE ARE INCLINED TO PREFER A VIEW WHICH IS FAVOURABLE OF THE ASSESSEE FOLLOWING THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD. (1973) 88 ITR 192 (SC). 13. THEREFORE, IN VIEW OF THE AFORESAID DISCUSSION, WE ARE INCLINED TO FOLLOW THE DECISION OF OUR CO - ORDINATE BENCH IN THE CASE OF THE DURGA COOPERATIVE URBAN BANK LTD. (SUPRA) AND ACCORDINGLY THE ORDER OF THE CIT(A) IS LIABLE TO THE AFFIRMED. WE HOLD SO. 6. IN THE PRESENT CASE THE FACTS ARE IDENTICAL AS IN THE CASE OF THE OMERGA JANTA SAHAKARI BANK LTD. (SUPRA) . WE, THEREFORE, FOLLOWING THE DECISION OF THE ITAT, PUNE BENCH IN THE CASE OF THE OME RGA JANTA SAHAKARI BANK LTD. (SUPRA) ALLOW THE GROUND NO. 1 AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE TOWARDS THE ACCRUED INTEREST ON NPAS A/C. THE ASSESSEE HAS TAKEN THE GROUND NO. 2 WHICH IS THE ALTERNATE PLEA TO GROUND NO. 1. AS THE ASSESSEE HAS SUCCEEDED ON GROUND NO. 1, THE GROUND NO. 2 BECOMES INFRUCTUOUS. 6.1. THE LD. COUNSEL SUBMITS THAT AS PER THE INSTRUCTIONS OF THE ASSESSEE , HE IS NOT PRESSING GROUND NOS. 3 AND 4 I.E. THE CLAIM OF RS.9,58,862/ - U/S. 36 AND RS.1,01,000/ - BAD DEBTS IN RESPECT OF JILHA AUDYOGIK BANK. AS GROUND NOS. 3 AND 4 NOT PRESSED THE SAME ARE DISMISSED AS NOT PRESSED . 7. THE NEXT ISSUE IS IN RESPECT OF DISALLOWANCE OF RS.3,32,891/ - U/S. 40(A)(IA) OF THE ACT FOR NON - DEDUCTION OF THE TAX AT SOURCE. 13 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR 7 .1 . WE HAVE HEARD THE PARTIES. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE SAID DISALLOWANCE PERTAINS TO THE COMMISSION OF PIGMY AGENT (RS.2,51,966/ - ) , PAYMENT MADE ON ACCOUNT OF ANNUAL M AINTENANCE CONTRACT (RS.60,000/ - ) AND AMOUNT PAID TO MA NORAMA COMPUTERS TOWARDS ADVERTISEMENT (RS.20,925/ - ). IT WAS FOUND BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT DEDUCTED THE TAX AT SOURCE EVEN THOUGH THE PAYMENTS MADE ABOVE COVERED UNDER THE TDS PROVISIONS. THE ASSESSING OFFICER, ACCORDINGLY DISA LLOWED THE SAID EXPENDITURE BY INVOKING THE PROVISIONS OF SEC. 40A(IA) OF THE ACT. THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE LD. COUNSEL SUBMITS THAT THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY THE SPECIAL BENCH O F THE ITAT IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS 136 ITD 23 (SB) (VISAKHA). 8. PER CONTRA, THE LD. DR SUBMITS THAT THE DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS (SUPRA) HAS BEEN REVERSED BY THE HON'BLE HIGH COURT OF KOLKATA IN THE CASE OF CIT, KOLKATA VS. CRESCENT EXPORT SYNDICATE (2013) 33 TAXMANN.COM 250 (KOLKATA) AS WELL AS HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. SIKANDARKHAN N TUNVAR (2013) 33 TAXMANN.COM 133 (GUJARAT) AND ITAT, PUNE BENCH ARE FOLLOWING THE ABOVE TW O PRECEDENTS. HE PLEADED FOR CONFIRMING THE ORDER OF THE LD. CIT(A). HE ALSO RELIED ON THE DECISION OF THE ITAT, A BENCH, PUNE IN THE CASE OF ACIT, CIRCLE - 2, KOLHAPUR VS. SHRI BHARAT DHANPAL PATIL ITA NO. 600/PN/2012 ORDER DATED 30 - 07 - 2013. WE FIND THAT AS RIGHTLY ARGUED BY THE LD. DR THIS ISSUE HAS BEEN DECIDED BY THIS TRIBUNAL IN THE CASE OF SHRI BHARAT DHANPAL PATIL (SUPRA) AND HELD AS FOLLOWS: 3.1 ADMITTEDLY, ALL THE PAYMENTS ARE MADE ON ONE DATE I.E. 30 - 05 - 2007 THAT IS ALMOST AFTER TWO MONTHS FRO M THE END OF THE FINANCIAL YEAR I.E. 31 - 03 - 2007, THE DATE OF THE BILLS ARE PRIOR TO MARCH 2007. NOW THE ISSUE STANDS COVERED AGAINST THE ASSESSEE BY THE FOLLOWING 14 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR TWO DECISIONS (I) CIT VS. SIKANDARKHAN N TUNVAR (2013) 33 TAXMANN.COM 133 (GUJARAT) AND (II) CIT, KOLKATA VS. CRESCENT EXPORT SYNDICATE (2013) 33 TAXMANN.COM 250 (KOLKATA). IN THE CASE OF CRESCENT EXPORT SYNDICATE (SUPRA) THE DECISION OF THE HON'BLE SPECIAL BENCH OF THE ITAT IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS 136 ITD 23 (SB) (VISAKHA ) HAS COME FOR THE JUDICIAL SCRUTINY IN WHICH IT WAS HELD THAT THE DISALLOWANCE U/S. 40(A)(IA) APPLIES ONLY TO AMOUNTS PAYABLE AS ON 31 ST MARCH OF THE PREVIOUS YEAR ON WHICH THE TDS HAS NOT BEEN DEDUCTED AND NO DISALLOWANCE TO BE MADE IN RESPECT OF SUMS PA ID DURING THE PREVIOUS YEAR WITHOUT DEDUCTING TDS. THE HON'BLE HIGH COURT REVERSED THE DECISION OF THE SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING AND TRANSPORT (SUPRA). THE OPERATIVE PART OF THE JUDGMENT IS AS UNDER: IN VIEW OF ABOVE DISCUSSION, WE A NSWER THE QUESTION AS UNDER: - THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961, ARE APPLICABLE NOT ONLY TO THE AMOUNT WHICH IS SHOWN AS PAYABLE ON THE DATE OF BALANCE - SHEET, BUT IT IS APPLICABLE TO SUCH EXPENDITURE, WHICH BECOME PAYABLE AT A NY TIME DURING THE RELEVANT PREVIOUS YEAR AND WAS ACTUALLY PAID WITHIN THE PREVIOUS YEAR. IN THE RESULT THE QUESTION IS DECIDED IN FAVOUR OF REVENUE AND AGAINST THE ASSESSEE.' BEFORE DEALING WITH THE SUBMISSIONS OF THE LEARNED COUNSEL APPEARING FOR THE ASS ESSEES IN BOTH THE APPEALS WE HAVE TO EXAMINE THE CORRECTNESS OF THE MAJORITY VIEWS IN THE CASE OF MERILYN SHIPPING. WE ALREADY HAVE QUOTED EXTENSIVELY BOTH THE MAJORITY AND THE MINORITY VIEWS EXPRESSED IN THE AFORESAID CASE. THE MAIN THRUST OF THE MAJORIT Y VIEW IS BASED ON THE FACT 'THAT THE LEGISLATURE HAS REPLACED THE EXPRESSION 'AMOUNTS CREDITED OR PAID' WITH THE EXPRESSION 'PAYABLE' IN THE FINAL ENACTMENT. COMPARISON BETWEEN THE PRE - AMENDMENT AND POST AMENDMENT LAW IS PERMISSIBLE FOR THE PURPOSE OF ASC ERTAINING THE MISCHIEF SOUGHT TO BE REMEDIED OR THE OBJECT SOUGHT TO BE ACHIEVED BY AN AMENDMENT. THIS IS PRECISELY WHAT WAS DONE BY THE APEX COURT IN THE CASE OF CIT VS. KELVINATOR REPORTED IN 2010(2) SCC 723. BUT THE SAME COMPARISON BETWEEN THE DRAFT AND THE ENACTED LAW IS NOT PERMISSIBLE. NOR CAN THE DRAFT OR 15 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR THE BILL BE USED FOR THE PURPOSE OF REGULATING THE MEANING AND PURPORT OF THE ENACTED LAW. IT IS THE FINALLY ENACTED LAW WHICH IS THE WILL OF THE LEGISLATURE. THE LEARNED TRIBUNAL FELL INTO AN ERROR IN NOT REALIZING THIS ASPECT OF THE MATTER. THE LEARNED TRIBUNAL HELD 'THAT WHERE LANGUAGE IS CLEAR THE INTENTION OF THE LEGISLATURE IS TO BE GATHERED FROM THE LANGUAGE USED'. HAVING HELD SO, IT WAS NOT OPEN TO SEEK TO INTERPRET THE SECTION ON THE BASIS O F ANY COMPARISON BETWEEN THE DRAFT AND THE SECTION ACTUALLY ENACTED NOR WAS IT OPEN TO SPECULATE AS TO THE EFFECT OF THE SO - CALLED REPRESENTATIONS MADE BY THE PROFESSIONAL BODIES. HE LEARNED TRIBUNAL HELD THAT 'SECTION 40(A)(IA) OF THE ACT CREATES A LEGAL FICTION BY VIRTUE OF WHICH EVEN THE GENUINE AND ADMISSIBLE EXPENSES CLAIMED BY AN ASSESSEE UNDER THE HEAD 'INCOME FROM BUSINESS AND PROFESSION' IF THE ASSESSEE DOES NOT DEDUCT TDS ON SUCH EXPENSES ARE DISALLOWED'. HAVING HELD SO WAS IT OPEN TO THE TRIBUNAL TO SEEK TO JUSTIFY THAT 'THIS FICTION CANNOT BE EXTENDED ANY FURTHER AND, THEREFORE, CANNOT BE INVOKED BY ASSESSING OFFICER TO DISALLOW THE GENUINE AND REASONABLE EXPENDITURE ON THE AMOUNTS OF EXPENDITURE ALREADY PAID'? DOES THIS NOT AMOUNT TO DELIBERATEL Y READING SOMETHING IN THE LAW WHICH IS NOT THERE? WE, AS SUCH, HAVE NO DOUBT IN OUR MIND THAT THE LEARNED TRIBUNAL REALIZED THE MEANING AND PURPORT OF SECTION 40(A)(IA) CORRECTLY WHEN IT HELD THAT IN CASE OF OMISSION TO DEDUCT TAX EVEN THE GENUINE AND ADM ISSIBLE EXPENSES ARE TO BE DISALLOWED. BUT THEY SOUGHT TO REMOVE THE RIGOUR OF THE LAW BY HOLDING THAT THE DISALLOWANCE SHALL BE RESTRICTED TO THE MONEY WHICH IS YET TO BE PAID. WHAT THE TRIBUNAL BY MAJORITY DID WAS TO SUPPLY THE CASUS OMISSUS WHICH WAS NO T PERMISSIBLE AND COULD ONLY HAVE BEEN DONE BY THE SUPREME COURT IN AN APPROPRIATE CASE. REFERENCE IN THIS REGARD MAY BE MADE TO THE JUDGMENT IN THE CASE OF BHUWALKA STEEL INDUSTRIES VS. BOMBAY IRON & STEEL LABOUR BOARD REPORTED IN 2010 (2) SCC 273. 'UNPRO TECTED WORKER' WAS FINALLY DEFINED IN SECTION 2 (II) OF THE MATHADI ACT AS FOLLOWS: - 16 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR UNPROTECTED WORKER' MEANS A MANUAL WORKER WHO IS ENGAGED OR TO BE ENGAGED IN ANY SCHEDULED EMPLOYMENT.' THE CONTENTION RAISED WITH REFERENCE TO WHAT WAS THERE IN THE BILL WAS REJECTED BY THE SUPREME COURT BY HOLDING AS FOLLOWS: - 'IT MUST, AT THIS JUNCTURE, BE NOTED THAT IN SPITE OF SECTION 2(11), WHICH INCLUDED THE WORDS 'BUT FOR THE PROVISIONS OF THIS ACT IS NOT ADEQUATELY PROTECTED BY LEGISLATION FOR WELFARE AND BENEFIT S OF THE LABOUR FORCE IN THE STATE', THESE PRECISE WORDS WERE REMOVED BY THE LEGISLATURE AND THE DEFINITION WAS MADE LIMITED AS IT HAS BEEN FINALLY LEGISLATED UPON. IT IS TO BE NOTED THAT WHEN THE BILL CAME TO BE PASSED AND RECEIVED THE ASSENT OF THE VICE - PRESIDENT ON 05 - 06 - 1969 AND WAS FIRST PUBLISHED IN THE MAHARASHTRA GOVERNMENT GAZETTE EXTRAORDINARY, PART IV ON 13 - 06 - 1969, THE AFOREMENTIONED WORDS WERE OMITTED. THEREFORE, THIS WOULD BE A CLEAR POINTER TO THE LEGISLATIVE INTENT THAT THE LEGISLATURE BEIN G CONSCIOUS OF THE FACT AND BEING ARMED WITH ALL THE COMMITTEE REPORTS AND ALSO BEING ARMED WITH THE FACTUAL DATA, DELIBERATELY AVOIDED THOSE WORDS. WHAT THE APPELLANTS ARE ASKING WAS TO READ IN THAT DEFINITION, THESE PRECISE WORDS, WHICH WERE CONSCIOUSLY AND DELIBERATELY OMITTED FROM THE DEFINITION. THAT WOULD AMOUNT TO SUPPLYING THE CASUS OMISSUS AND WE DO NOT THINK THAT IT IS POSSIBLE, PARTICULARLY, IN THIS CASE. THE LAW OF SUPPLYING THE CASUS OMISSUS BY THE COURTS IS EXTREMELY CLEAR AND SETTLED THAT THO UGH THIS COURT MAY SUPPLY THE CASUS OMISSUS, IT WOULD BE IN THE RAREST OF THE RARE CASE AND THUS SUPPLYING OF THIS CASUS OMISSUS WOULD BE EXTREMELY NECESSARY DUE TO THE INADVERTENT OMISSION ON THE PART OF THE LEGISLATURE. BUT, THAT IS CERTAINLY NOT THE CAS E HERE'. WE SHALL NOW ENDEAVOUR TO SHOW THAT NO OTHER INTERPRETATION IS POSSIBLE. THE KEY WORDS USED IN SECTION 40(A)(IA), ACCORDING TO US, ARE 'ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B'. 17 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR IF THE QUESTION IS 'WHICH EXPENSES ARE SOUGHT TO B E DISALLOWED?' THE ANSWER IS BOUND TO BE 'THOSE EXPENSES ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B. ONCE THIS IS REALIZED NOTHING TURNS ON THE BASIS OF THE FACT THAT THE LEGISLATURE USED THE WORD 'PAYABLE' AND NOT 'PAID OR CREDITED'. UNLES S ANY AMOUNT IS PAYABLE, IT CAN NEITHER BE PAID NOR CREDITED. IF AN AMOUNT HAS NEITHER BEEN PAID NOR CREDITED, THERE CAN BE NO OCCASION FOR CLAIMING ANY DEDUCTION. THE LANGUAGE USED IN THE DRAFT WAS UNCLEAR AND SUSCEPTIBLE TO GIVING MORE THAN ONE MEANING. BY LOOKING AT THE DRAFT IT COULD BE SAID THAT THE LEGISLATURE WANTED TO TREAT THE PAYMENTS MADE OR CREDITED IN FAVOUR OF A CONTRACTOR OR SUB - CONTRACTOR DIFFERENTLY THAN THE PAYMENTS ON ACCOUNT OF INTEREST, COMMISSION OR BROKERAGE, FEES FOR PROFESSIONAL SER VICES OR FEES FOR TECHNICAL SERVICES BECAUSE THE WORDS 'AMOUNTS CREDITED OR PAID' WERE USED ONLY IN RELATION TO A CONTRACTOR OR SUB - CONTRACTOR. THIS DIFFERENTIAL TREATMENT WAS NOT INTENDED. THEREFORE, THE LEGISLATURE PROVIDED THAT THE AMOUNTS, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B PAYABLE ON ACCOUNT OF INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES OR TO A CONTRACTOR OR SUB - CONTRACTOR SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME OF AN ASSESSEE IN CASE HE HAS NOT DEDUCED, OR AFTER DEDUCTION HAS NOT PAID WITHIN THE SPECIFIED TIME. THE LANGUAGE USED BY THE LEGISLATURE IN THE FINALLY ENACTED LAW IS CLEAR AND UNAMBIGUOUS WHEREAS THE LANGUAGE USED IN THE BILL WAS AMBIGUOUS. A FEW WORDS ARE NOW NECESSARY TO DEAL WITH THE SUBMISSION OF MR. BAGCHI AND MS. ROYCHOWDHURI. THERE CAN BE NO DENIAL THAT THE PROVISION IN QUESTION IS HARSH. BUT THAT IS NO GROUND TO READ THE SAME IN A MANNER WHICH WAS NOT INTENDED BY THE LEGISLATURE. THIS IS O UR ANSWER TO THE SUBMISSION OF MR. BAGCHI. THE SUBMISSION OF MS. ROYCHOWDHURI THAT THE SECOND PROVISO SOUGHT TO BECOME EFFECTIVE FROM 1ST APRIL, 2013 SHOULD BE HELD TO HAVE ALREADY BECOME OPERATIVE PRIOR TO THE APPOINTED DATE CANNOT ALSO BE ACCEDED TO FOR THE SAME REASON INDICATED ABOVE. THE LAW WAS DELIBERATELY MADE HARSH TO 18 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR SECURE COMPLIANCE OF THE PROVISIONS REQUIRING DEDUCTIONS OF TAX AT SOURCE. IT IS NOT THE CASE OF AN INADVERTENT ERROR. FOR THE REASONS DISCUSSED ABOVE, WE ARE OF THE OPINION THAT THE M AJORITY VIEWS EXPRESSED IN THE CASE OF MERILYN SHIPPING & TRANSPORTS ARE NOT ACCEPTABLE. THE SUBMISSIONS ADVANCED BY LEARNED ADVOCATES HAVE ALREADY BEEN DEALT WITH AND REJECTED. THE APPEAL IS, THUS, ALLOWED IN FAVOUR OF THE REVENUE. 4. WE, THEREFORE, REVE RSE OF ORDER OF THE LD. CIT(A) AND RESTORE THE ORDER OF THE ASSESSING OFFICER AND ALLOW THE GROUNDS TAKEN BY THE REVENUE. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED. WE, THEREFORE, FOLLOWING THE ORDER OF THIS TRIBUNAL IN THE CASE OF SHRI BHARAT DHANP AL PATIL (SUPRA) DISMISS THE GROUND NO. 5 AND CONFIRM THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 9. THE NEXT ISSUE IS REGARDING THE DISALLOWANCE OF RS.1,11,521/ - IN RESPECT OF THE AMORTIZATION OF PREMIUM. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. IT WAS FOUND THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.1,11,521/ - TOWARDS AMORTIZATION OF PREMIUM. BEFORE THE ASSESSING OFFICER, IT WAS CLARIFIED THAT THE AMOUNT WAS CLAIMED ON THE BASIS OF PROPORTIONATE AMOUNT OF REMAINING PERIOD OF MATURITY OF GOVERNMENT SECURITIES WHICH WERE KEPT UNDER 'HELD TO MATURITY (HTM) CATEGORY. THESE SECURITIES ARE ACQUIRED BY BANKS WITH AN INTENTION TO HOLD THEM UP TO MATURITY. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE AMORTIZED PREMIUM IS PART OF THE COST OF THE GOVERNMENT SECURITIES AND ANY LOSS OR GAIN ON SUCH SECURITIES ACQUIRED CAN BE DETERMINED ONLY WHEN THE SECURITIES ARE SOLD AND AS SUCH, ANY LIABILITY ON ACCOUNT OF LOSS ATTRIBUTABLE TO SUCH SECURITY BEFORE ITS SALE CANNOT BE SAID TO HAVE BEEN ACCRUE D TO THE ASSESSEE . NOTING THAT THE SECURITIES HELD UNDER 'HELD FOR TRADING' (HFT), WHICH ARE ACQUIRED WITH AN INTENTION TO TRADE ON THE BASIS OF S H ORT TERM INTEREST RATE MOVEMENTS, AND SECURITIES HELD UNDER AVAILABLE FOR SALE' (AFT) ( W HICH DO NOT FA LL UND ER THE ABOVE BOTH 19 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR CATEGORIES) ARE CONSIDERED TO B E STOCK IN TRADE WHICH ARE VALUED AT COST OR MARKET RATE WHICHEVER IS LESS, WHILE HTM SECURITIES ARE IN THE NATURE OF CAPITA L ASSETS EVEN GOING BY THE RBI GUIDELINES, THE ASSESSING OFFICER WAS OF THE OPINION THAT F OR THE PURPOSE OF INCOME - TAX, THE SECURITIES HELD UNDER HTM HAS TO BE VALUED AT COS T ONLY AND NO PART THEREOF CAN BE CLAIMED AS REVENUE EXPENDITURE IN COMPUTING THE TOTAL INCOME. ON BEING ASKED TO CLARIFY IN THIS REGARD, THE PRIME JUSTIFICATION CITE D BY THE ASSESSEE FOR RESORTING TO SUCH A TREATMENT WAS THE RBI GUIDELINES. THIS REASON WAS RE JECTED BY THE ASSESSING OFFICER ON HIS PREMISE THAT THE MANDATORY PROVISIONS OF SEC. 145 CANNOT BE OVERRIDDEN BY THE RBI GUIDELINES DISCUSSED HEREINBEFORE. REITER ATING THAT THE LIABILITY ON ACCOUNT OF AMORTIZATION OF PREMIUM DID NOT ACCRUE TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND SUCH COST OF ACQUISITION CAN BE CLAIMED ONLY WHEN THE ASSETS ARE SOLD . T HE ASSESSING OFFICER DID NOT ALLOW THE DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF AMORTIZATION OF SUCH PREMIUM. ACCORDINGLY, THE DEDUCTION CLAIMED OF RS.1,11,521/ - WAS DISALLOWED. THE MATTER WAS CARRIED BEFORE THE LD. CIT(A), WHO CONFIRMED THE DISALLOWANCE. 10. WE HAVE HEARD THE PARTIES. WE FIND T HAT THIS ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY ITAT BENCH, PUNE IN THE CASE OF BHAVANI URBAN CO - OP . BANK LTD. VS, ACIT, CIRCLE - 2, AURANGABAD ITA NO. 610/PN/2011 ORDER DATED 31 - 07 - 2013. THE OPERATIVE PART OF THE TRIBUNAL IS AS UNDER: 7.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO MADE AN ADDITION OF RS.1,08,000/ - ON ACCOUNT OF AMORTIZATION OF PREMIUM ON GOVERNMENT SECURITIES IN THE CATEGORY OF INVESTMENT HELD TO MATURITY (HTM). THIS PREMIUM REPRESENTS THE EXCESS OF ACQUISITION COST OVER THE FACE VALUE OF HTM SECURITIES, WHICH IS AMORTIZED BY THE BANK OVER THE REMAINING PERIOD OF MATURITY OR SOME OTHER BASIS. THE AO OBSERVED THAT DEDUCTION UNDER THE HEAD AMORTIZATION OF PERIOD IS NOT ALLOWABLE ACCORDING TO PROVISIONS OF I.T. ACT. HE OBSERVE D THAT 20 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR THE RESERVE BANK OF INDIA HAS ISSUED MASTER CIRCULAR DATED 12 - 07 - 2006 ACCORDING TO WHICH INVESTMENTS HAVE TO BE CATEGORISED INTO THREE CATEGORIES (I) HELD TO MATURITY (HTM), (II) AVAILABLE TO SALE (AFS), (III) HELD FOR TRADING (HFT). ACCORDING TO T HE CIRCULAR, AFS AND HFT SECURITIES ARE IN THE NATURE OF STOCK IN TRADE AND HTM SECURITIES ARE IN THE NATURE OF CAPITAL ASSETS. ALL THE CAPITAL ASSETS ARE TO BE VALUED AT COST ONLY AND NO PART THEREOF CAN BE CLAIMED AS REVENUE EXPENDITURE WHILE COMPUTING TOTAL INCOME. THE ASSESSING OFFICER ACCORDINGLY DISALLOWED RS.1,08,000/ - . 7.2 BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE BANK HAS STRICTLY FOLLOWED THE METHOD LAID DOWN BY THE RBI AND AMORTIZED PREMIUM PAID ON INVESTMENTS ACQUIRED OVER THE REMAINING PER IOD UPTO MATURITY ON YEARLY BASIS AND HENCE THE EXPENDITURE IS PART OF BANKING BUSINESS EXPENDITURE. 7.3 HOWEVER, THE LD. CIT(A) WAS ALSO NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND UPHELD THE ADDITION MADE BY THE AO HOLDING THAT THIS AMO UNT IS CAPITAL IN NATURE AND THE SAME IS NOT ALLOWABLE UNDER SUB SECTION (1) OF SECTION 37. 7.4 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 7.5 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOU R OF THE ASSESSEE IN VIEW OF CBDT INSTRUCTION NO.17/2008 DATED 26 - 11 - 2008. FURTHER, THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF BANK OF RAJASTHAN LTD. VIDE ITA NO.3228/MUM/2010 ORDER DATED 09 - 09 - 2011 AND THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF SRI SUBRAMANYESWARA COOPERATIVE BANK LTD. VS. ACIT VIDE ITA NO.488/BANG/2011 ORDER DATED 06 - 06 - 2012 FOR THE A.Y. 2008 - 09 HAS DECIDED IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. HE ACCORDINGLY SUBMITTED THAT THE ADDITION SHOULD BE DELETED. 7.6 THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 8. AFTER HEARING BOTH THE SIDES WE FIND THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF BANK OF RAJASTHAN LTD. (SUPRA) HAD AN 21 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR OCCASION TO DECIDE SUCH AN ISSUE IN FAVO UR OF THE ASSESSEE. THE RELEVANT OBSERVATION OF THE TRIBUNAL AT PARA 9 AND 10 OF THE ORDER READ AS UNDER : 9. THE AMORTIZED AMOUNT OF PREMIUM PAID FOR SECURITIES HELD UNDER HTM CATEGORY AMOUNTING TO RS.11.77 CRORES WAS CLAIMED BY THE ASSESSEE AS DEDUCTI ON IN ITS COMPUTATION OF TOTAL INCOME. THE SAME, HOWEVER, WAS DISALLOWED BY THE AO HOLDING THAT THE EXPENDITURE INCURRED ON PREMIUM PAID FOR SECURITIES HELD UNDER HTM CATEGORY WAS A CAPITAL EXPENDITURE NOT ALLOWABLE AS DEDUCTION. HE HELD THAT THE SAID SE CURITIES WERE IN THE NATURE OF INVESTMENT AND NOT STOCK IN TRADE. ON APPEAL, THE LEARNED CIT(APPEALS) DELETED THE DISALLOWANCE MADE BY THE AO ON THIS ISSUE. BESIDES RELYING ON HIS OWN ORDER IN ASSESSEES OWN CASE ON A SIMILAR ISSUE FOR THE EARLIER YEAR, THE LEARNED CIT(APPEALS) ALSO RELIED ON CBDT INSTRUCTION NO.17/2008 DATED 26 - 11 - 2008 PUBLISHED IN 220 CTR (STATUTE) PAGE 41. HE HELD THAT THE ASSESSEE COMPANY WAS BOUND TO CLASSIFY ITS INVESTMENT AS PER RBI GUIDELINES DATED 16 - 10 - 2010 AND AS PER THE SAID GUIDELINES, INVESTMENT CLASSIFIED UNDER HTM CATEGORY WAS REQUIRED TO BE CARRIED AT ACQUISITION COST UNLESS IT WAS MORE THAN THE FACE VALUE. HE HELD THAT THE PREMIUM ON SUCH INVESTMENTS WAS ALSO REQUIRED TO BE AMORTIZED OVER THE PERIOD REMAINING TO MATURIT Y. HE HELD THAT THE CLAIM OF THE ASSESSEE THUS WAS AS PER RBI GUIDELINES AND CBDT INSTRUCTION WHICH CLARIFIED THAT PREMIUM AMORTIZED OVER THE PERIOD REMAINING TO MATURITY WAS LIABLE TO BE ALLOWED AS DEDUCTION. 10. AT THE TIME OF HEARING BEFORE US, THE LE ARNED REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THIS ISSUE IS ALSO SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS ORDERS OF THE TRIBUNAL PASSED IN ASSESSEES OWN CASE FOR EARLIER YEARS. COPIES OF THE SAID ORDERS ARE PLACED ON RECORD BE FORE US AND A PERUSAL OF THE SAME SHOWS THAT IN ONE OF SUCH ORDERS DATED 22 ND DEC.,2010 PASSED IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2002 - 03 TO 2006 - 07, THE COORDINATE BENCH OF THIS TRIBUNAL HAS DIRECTED THE AO TO ALLOW THE PREMIUM AMORTIZED BY THE A SSESSEE OVER THE PERIOD REMAINING TO MATURITY HOLDING THAT THE SAME WAS CLAIMED AS 22 ITA NO. 166 9 /PN/201 2 , MANORAMA CO - OPERATIVE BANK LTD., SOLAPUR PER THE RELEVANT RBI GUIDELINES AND EVEN THE CBDT HAS ISSUED INSTRUCTIONS TO ALLOW THE SAME. RESPECTFULLY FOLLOWING THE SAID ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FO R EARLIER YEARS, WE UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND DISMISS GROUND NO.3 OF THE REVENUES APPEAL. 8.1 SIMILAR VIEW HAS BEEN TAKEN BY THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF S UBRAMANYESWARA COOPERATIVE BANK LTD. (SUPRA). RESPECTFULLY FOLLOWING THE DECISIONS CITED ABOVE THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. WE, ACCORDINGLY, ALLOW THE GROUND NO. 6 AND DELETE THE ADDITION MADE BY THE ASSESSING OFFICER. 11. SO FAR AS GROUN D NOS. 7 & 8 ARE CONCERNED, THE LD. COUNSEL SUBMITS THAT THESE ARE ONLY CONSEQUENTIAL IN NATURE . 12. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 26 - 03 - 2014 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 26 TH MARCH, 2014 COPY TO 1 DEPARTMENT 2 ASSESSEE 3 THE CIT(A) - III, PUNE 4 THE CIT - III, PUNE 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE CO PY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE