The Dy. Commissioner of Income-tax, Jammu V. M/s. Jammu & Kashmir Bank Ltd., Srinagar (J&K)

ITA 294/ASR/2013

• Counselvise Citation: 29420914 RSA 2013
• Duration Of Justice: 2 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 30-11-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 03-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SHARDA
• Keywords: Depreciation; Non-deduction of tax; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, JUDICIAL MEMBER ITA NO.294(ASR)/2013 ASSESSMENT YEAR:2007-08 PAN: DEPUTY COMMR. OF INCOME TAX, VS. JAMMU & KASHMIR BA NK LTD; CIRCLE-1, JAMMU. SRINAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. R.K.SHARDA, DR RESPONDENT BY:SH. R.K. GUPTA, CA DATE OF HEARING: 01/12/2015 DATE OF PRONOUNCEMENT: 15/12/2015 ORDER PER A.D. JAIN, JM THIS IS THE DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2007-08, AGAINST THE ORDER DATED 15.02.2013, PASSED BY THE L D. CIT(A), JAMMU. THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DELETING THE DISALLOWANCE MADE U/S 40(A)(I A) OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF PROCESSING CHARG ES PAID TO SBI WHEN THE PROCESSING CHARGES PAID ARE FOR MA NAGING THE ACCOUNT AND PROCESSING CHARGES FOR THE CREDIT F ACILITIES OF FOOD CREDIT ACCOUNT SQUARELY FAIL WITHIN THE AMBIT OF FEES FOR TECHNICAL SERVICES U/S 194J OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DELETING THE DISALLOWANCE MADE U/S 40(A)(I A) OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF CLEARING HOUSE C HARGES WHEN THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. BHARTI CELLULAR LTD., RELIED UPON, IS DISTINGUI SHABLE FROM THE PRESENT CASE AS SOME AMOUNT OF HUMAN INTERVENTI ON IS INVOLVED IN CLEARING OF CHEQUES BY THE CLEARING HO USE AND AS SUCH THE ACTIVITY CONSTITUTES TECHNICAL SERVICES. ITA NO.294(ASR)/2013 ASSESSMENT YEAR: 2007-08 2 3. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN TREATING THE BARI BRAHMANA BRANCH AS ELIGI BLE FOR DEDUCTION U/S 36(1)(VIIA) WHEN THE BRANCH IS LOCATE D IN BARI BRAHMANA TOWN HAVING POPULATION OF 31,616/- AS PER THE DIGEST OF STATISTICS FOR 2002-03 PUBLISHED BY THE GOVERNMENT OF J & K. 4. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN ALLOWING 100% DEPRECIATION ON WOODEN PARTI TIONS AS THEY ARE PERMANENT STRUCTURES FIXED FOR DIVIDING SP ACES IN THE OFFICE FOR THE STAFF TO WORK AND NOT SUSCEPTIBL E TO DISMANTLING. IN ALL MODERN OFFICES, IT IS USUAL TO HAVE SUCH WOODEN PARTITIONS WHICH ARE NOT SHIFTED OR RELOCATE D AT REGULAR INTERVALS AND THEY ARE ALWAYS FIXED AT A PA RTICULAR LOCATION. 5. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DELETING THE DISALLOWANCE MADE U/S 40(A)(I A) OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF NON DEDUCTION OF TAX ON INTEREST PAID TO JAMMU DEVELOPMENT AUTHORITY WHEN JAMMU DEVELOPMENT AUTHORITY IS A TAXABLE ENTITY ASS ESSED AS LOCAL AUTHORITY AND IT WAS THE LIABILITY AND RESPONSIBILITY OF THE ASSESSEE BANK TO DEDUCT TDS O N INTEREST PAYMENTS. 2. APROPOS GROUND NO.1, THE AO DISALLOWED AN AMOUN T OF RS.79,26,589/- U/S 40(A)(IA) OF THE ACT, ON THE BAS IS THAT NO TAX HAD BEEN DEDUCTED ON PROCESSING CHARGES PAID TO SBI FOR MANA GING THE CONSORTIUM ACCOUNT OF THE FCI. THE AO CONSIDERED THE SERVICES AS MANAGERIAL SERVICES, WHEREAS THE ASSESSEE WAS OF THE VIEW THAT THE PROCESSING CHARGES WERE AN INTEGRAL PART OF INTEREST AND NO TA X WAS REQUIRED TO BE DEDUCTED ON PAYMENT THEREOF. THE LD. CIT(A) DELETED THE DISALLOWANCE. 3. THE LD. DR HAS CONTENDED THAT THE PROCESSING CHA RGES PAID BY THE ASSESSEE TO THE SBI WERE FOR MANAGING THE CONSORTIU M ACCOUNT OF THE FCI; THAT THERE IS NO SERVICE INVOLVED SO AS TO INV ITE THE PROVISIONS OF SECTION 194J OF THE ACT; THAT THE LOAN WAS PROCESSE D BY THE SBI AND NOT ITA NO.294(ASR)/2013 ASSESSMENT YEAR: 2007-08 3 BY THE ASSESSEE AND IT WAS FOR THIS, THAT THE PROCE SSING CHARGES WERE PAID TO THE SBI. 4. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. RELIANCE HAS ALSO BEEN PLACED ON THE TRIBUNAL ORDER DATED 28/05/2013 IN THE ASSESSEE S CASE FOR THE ASSESSMENT YEAR 2008-09 IN ITA NO.206(ASR)/2013. 5. IN THIS REGARD, WE FIND NO FAULT WITH THE ORDER PASSED BY THE LD. CIT(A). AS CORRECTLY OBSERVED BY THE LD. CIT(A), TH E PROCESSING CHARGES WERE COLLECTED FROM THE FCI BY THE SBI FOR PROCES SING OF THE LOAN INVOLVED. IT NEVER WENT TO THE ASSESSEES ACCOUNT. THE ASSESSEE GOT NET OF THE PROCESSING CHARGES I.E., INTEREST EXCLUSIVELY, THERE BEING NO OUTFLOW OF EXPENSES. THERE WAS NO OCCASION FOR THE ASSESSEE TO DEDUCT TDS. IT WAS ON ACCOUNT OF THE ACCOUNTING TREATMENT THAT THE AO WAS OF THE VIEW THAT THE TDS WAS REQUIRED TO BE MADE ON THE PROCESSING C HARGES. IN SUCH FACTS, THE PROVISIONS OF SECTION 194J OF THE ACT AR E DEFINITELY NOT ATTRACTED. SO FAR AS THE PRESENT CASE IS CONCERNED, THE PAYMENT WAS FOR SERVICES RENDERED, I.E., FEES FOR TECHNICAL SERVICE S. NOW, AS PER EXPLANATION (B) TO SECTION 194J (1), FEES FOR TECH NICAL SERVICES SHALL HAVE THE SAME MEANING AS EXPLAINED IN SECTION 9(1)(VII) . AS PER EXPLANATION (2) TO SECTION 9(1)(VII) OF THE ACT, FEES FOR TEC HNICAL SERVICES MEANS ANY CONSIDERATION FOR RENDERING OF ANY MANAGERIAL, TEC HNICAL OR CONSULTANCY SERVICES. HEREIN, HOWEVER, THE PAYMENT HAS BEEN M ADE AS PROCESSING CHARGES TO THE SBI FOR MANAGING CONSORTIUM ACCOUNT OF FCI. IT REMAINS UNDISPUTED THAT THE LOAN INVOLVED WAS PROCESSED BY THE SBI AND NOT BY THE ASSESSEE BANK. THEREFORE, THE PROVISIONS OF SEC TION 194J DID NOT GET ATTRACTED. AS RIGHTLY NOTED BY THE LD. CIT(A), ACCO RDING TO SECTION 2(28) OF THE ACT, INTEREST MEANS INTEREST PAYABLE IN RESP ECT OF ANY MONEY BORROWED, OR DEBT INCURRED, OR IN RESPECT OF ANY OT HER CREDIT FACILITY, WHICH HAS BEEN UTILIZED. THE PROCESSING CHARGES HA D BEEN DEDUCTED BY ITA NO.294(ASR)/2013 ASSESSMENT YEAR: 2007-08 4 THE SBI FROM THE GROSS INTEREST PAID, I.E., THE PR OCESSING CHARGES WERE INCLUDED IN THE INTEREST EARNED. THAT BEING SO, IT HAS RIGHTLY BEEN HELD THAT NO TAX WAS REQUIRED TO BE DEDUCTED ON THE PROC ESSING CHARGES PAID TO THE SBI. IN THIS REGARD, THE TRIBUNAL, VIDE ITS ORDER (SUPRA) IN THE ASSESSEES CASE FOR THE ASSESSMENT YEAR 2008-09, H AS OBSERVED AS FOLLOWS: 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. AS ARGUED BY THE LD. COUNSEL FOR THE A SSESSEE MR. R.K.GUPTA, CA THAT PROCESSING CHARGES ARE PART OF T HE INTEREST, AS DEFINED IN SECTION 2(28A) OF THE ACT, WHICH STATES THAT INTEREST MEANS INTEREST PAYABLE IN ANY MANNER IN RESPECT OF ANY MONEY BORROWED OR DEBT INCURRED INCLUDING A DEPOSIT, CLAI M OR OTHER SIMILAR RIGHT OR OBLIGATION AND INCLUDES SERVICE F EE OR OTHER CHARGES IN RESPECT OF MONEY BORROWED OR DEBIT INCU RRED OR IN RESPECT OF ANY OTHER CREDIT FACILITY WHICH HAS BEEN UTILIZED. ACCORDINGLY, NEITHER PROVISIONS OF SECTION 194A NOR THAT OF SECTION 194J OF THE ACT ARE ATTRACTED. THUS, THE ACTION OF THE AO IS TOTALLY AGAINST THE FACTS, UNLAWFUL & NEEDS TO BE ANNULLED. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE CONCUR WITH T HE VIEWS OF THE LD. CIT(A) THAT PROCESSING CHARGES ARE INTEGRAL PAR T OF INTEREST AND NO TAX IS REQUIRED TO BE DEDUCTED ON THESE PAYMENTS . ACCORDINGLY, THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, ARE NOT ATTRACTED AND THE LD. CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE AND WE FIND NO INFIRMITY IN HIS ORDER. THUS, GROUND NO.1 OF THE RE VENUE IS DISMISSED. 6. IN VIEW OF THE ABOVE, FINDING NO MERIT THEREIN, GROUND NO.1 IS REJECTED. 7. CONCERNING GROUND NO.2, THE AO MADE DISALLOWAN CE OF RS.19,32,159/- U/S 40(A)(IA) OF THE ACT, FOR THE AS SESSEE HAVING NOT DEDUCTED TAX U/S 194J OF THE ACT IN RESPECT OF CL EARING HOUSE CHARGES/MICR CHARGES PAID. THE LD. CIT(A) DELETED T HE DISALLOWANCE. 8. THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE BY RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. BHARTI CELLULAR LTD. , 234 CTR 146 (SC), ITA NO.294(ASR)/2013 ASSESSMENT YEAR: 2007-08 5 PARTICULARLY WHEN THE SAME IS DISTINGUISHABLE IN AS MUCH AS IN THE PRESENT CASE, SOME AMOUNT OF HUMAN INTERVENTION IS INVOLVED IN CLEARING OF CHEQUES BY THE CLEARING HOUSE, DUE TO WHICH, THE ACTIVITY CONSTITUTES TECHNICAL SERVICES. 9. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, PLACED STRONG RELIANCE ON THE IMPUGNED ORDER, AS ALSO THE ORDER O F THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA), FOR THE ASSESSMENT YEA R 2008-09. 10. HERE, IT IS SEEN THAT IN THE EARLIER YEAR ALSO, THE LD. CIT(A) DELETED THE DISALLOWANCE. THE TRIBUNAL UPHELD THE ORDER OF THE LD. CIT(A), HOLDING AS FOLLOWS: 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A ) AND THE ARGUMENTS MADE BY THE LD. COUNSEL FOR THE ASSESSEE, MR. R.K.GUPTA THAT THE LD. CIT(A) IN THE PRESENT CASE H AS GIVEN A PERTINENT FINDING THAT MICR CHQUES ARE CLEARED THRO UGH WITH THE HELP OF ULTRAVIOLET RAYS WHICH SCANS THE GENUINENES S OF CHEQUES. NO HUMAN INTERVENTION IS REQUIRED IN MICR CLEARING OF CHEQUES BY WAY OF EXAMINING TECHNICAL DATA, ANALYZING THEM AN D MAKING THEM USEFUL FOR SUBSEQUENT USE. IN FACT, MICR CLEA RANCE OF CHEQUE CAN BE POSSIBLE BY A MECHANIZED SYSTEM ONLY AND NOT THROUGH HUMAN INTERVENTION KEEPING IN VIEW THE PROCESSING O F BULK CHEQUES. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. BHARTI CELLULAR LTD. (SUPRA) IS CLEARLY APPLICABLE AND THE LD. CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE MADE BY THE A. O. IN GROUND NO.2 OF THE REVENUE. THUS, GROUND NO.2 OF THE REVEN UE IS DISMISSED. 11. THE DISALLOWANCE WAS MADE FOR NON-DEDUCTION OF TAX AT SOURCE ON MICR CHARGES PAID TO CLEARING HOUSE BY VARIOUS BRA NCHES OF THE BANK. MICR STANDS FOR MAGNETIC INK CHARACTER RECOGNITION. AS PER THIS SYSTEM, THE MACHINE RECOGNIZES THE NUMERIC DATA PRINTED WI TH MAGNETIC CHARGED INK. THIS IS DONE WITH THE HELP OF ULTRAVIOLET RAYS WHICH SCAN THE GENUINENESS OF CHEQUES. THE DEPARTMENT HAS NOT BEEN ABLE TO DISPUTE ITA NO.294(ASR)/2013 ASSESSMENT YEAR: 2007-08 6 THAT MICR CLEARANCE OF CHEQUES CAN BE POSSIBLE BY A MECHANIZED SYSTEM ONLY AND NOT THROUGH HUMAN INTERVENTION, KEEPING I N VIEW THE PROCESSING OF BULK CHEQUES. THE ASSESSEE BANK DID N OT MAKE TDS, SINCE THE AMOUNT HAD BEEN PAID AS SHARE OF EXPENDITURE IN CURRED BY THE CONCERNED BANK AND APPORTION TO THE ASSESSEE BANK A S ITS SHARE OF THAT EXPENDITURE. NO TAX WAS REQUIRED TO BE DEDUCTED ON THE AMOUNT INCURRED TOWARDS MICR, AS MERE COLLECTION OF A FEE FOR USE O F A STANDARD FACILITY PROVIDED TO ALL THOSE WHO ARE WILLING TO USE IT DOE S NOT AMOUNT TO FEE RECEIVED FOR TECHNICAL SERVICES, AS WRONGLY HELD B Y THE AO. THE MECHANIZED PROCESSING OF CHEQUES LEADS TO SPEEDIER CLEARANCE OF CHEQUES AND NO PROFESSIONAL SERVICE IS PROVIDED. RATHER, M ICR IS A STANDARD FACILITY PROVIDED BY THE BANK. NOTHING HAS BEEN BRO UGHT ON RECORD BY THE DEPARTMENT THAT INDEED, ANY HUMAN INTERVENTION IS INVOLVED IN THE SERVICE PROVIDED UNDER MICR. NOW, FOR ANY SERVICE TO FALL UNDER SECTION 194J OF THE ACT, AS TECHNICAL SERVICES, AS HELD B Y THE HONBLE SUPREME COURT, IN THE CASE OF BHARTI CELLULAR LTD. (SUPR A), INTERVENTION OF HUMANS IS A MUST. IN THE ABSENCE THEREOF, THE SAME WOULD NOT PARTAKE THE CHARACTER OF TECHNICAL SERVICES. TO REITERATE, MICR IS A CHEQUE CLEARING SERVICE, WHICH IS DIFFERENT FROM MANUAL C LEARING, AS IT IS CLEARANCE THROUGH MACHINES EMPLOYING ULTRAVIOLET RA YS TO SCAN THE GENUINENESS OF THE CHEQUES. 12. MOREOVER, NOTHING HAS BEEN BROUGHT ON RECORD B Y THE DEPARTMENT TO SHOW THAT THE FACTS IN THE PRESENT CA SE ARE ANY DIFFERENT FROM THE FACTS BEFORE THE TRIBUNAL IN THE ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2008-09. THE TRIBUNAL ORDER FOR THE AY 2008-09 HAS ALSO NOT SHOWN TO HAVE UPSET OR STAYED ON APPEAL. 13. IN VIEW OF THE ABOVE, WE HOLD THAT THE LD. CIT( A) IS CORRECT IN OPINING THAT NO TAX IS REQUIRED TO BE DEDUCTED ON MICR CHARGES AND THAT THE AO WAS NOT JUSTIFIED IN HOLDING THAT IN MICR C HARGES, TECHNICAL ITA NO.294(ASR)/2013 ASSESSMENT YEAR: 2007-08 7 SERVICES ARE ATTRACTED, THEREBY INVITING THE PROVIS IONS OF SECTION 40(A)(IA) OF THE ACT. 14. FOR THE ABOVE DISCUSSION, GROUND NO.2 STANDS RE JECTED. 15. SO FAR AS REGARDS GROUND NO.3, THE AO TREATED THE BARI BRAHMANA BRANCH OF THE ASSESSEE AS ELIGIBLE FOR DEDUCTION U /S 36(1)(VIIA) OF THE ACT. THE AO MADE A DISALLOWANCE OF RS.8,17,28,840/- CLAIMED AS DEDUCTION UNDER THE PROVISIONS OF SECTION 36(1)(VII A) OF THE ACT. AS PER THE AO, THE ASSESSEE WAS WRONG IN NOT TREATING THE BARI BRAHMANA BRANCH AS A RURAL BRANCH, ON THE PLEA THAT THIS BRANCH IS SITUATED AT BARI BRAHMANA, WHERE THE POPULATION IS OF MORE THAN 1000 0. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION. 16. THE LD. DR CONTENDED THAT THE LD. CIT(A) HAS E RRED IN DELETING THE DISALLOWANCE, SINCE THE BARI BARHAMANA BRANCH OF TH E ASSESSEE IS LOCATED IN BARI BRAHAMANA TOWN HAVING A POPULATION OF 31616, AS PER THE DIGEST OF STATISTICS FOR 2002-03, PUBLISHED BY THE GOVERNMENT OF J & K. 17. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, BESIDES PLACING RELIANCE ON THE IMPUGNED ORDER, ALSO RELIED ON THE TRIBUNAL ORDER IN THE ASSESSEES CASE FOR THE ASSESSMENT YEAR 2008 -09, WHEREIN, THE TRIBUNAL HAS HELD IN FAVOUR OF THE ASSESSEE, AS FOL LOWS: 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. ON THE IDENTICAL FACTS, SIMILAR ISSUE HA S COME UP BEFORE THE ITAT, AMRITSAR BENCH, IN THE CASE REFERRED TO I N THE CIT(A)S ORDER OF ITAT AMRITSAR BENCH, PASSED IN ITA NOS.363 (ASR)/99, 364(ASR)/99, 365(ASR)/99, 366(ASR)/99, 274(ASR)/200 4 & 275(ASR)/2004, DATED 29.08.2005, WHERE THE SAID ISS UE HAS BEEN IDENTICALLY DEALT BY THIS BENCH IN FAVOUR OF THE AS SESSEE FOR ALLOWING DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT AND THEREFORE, THE LD. CIT(A) HAS RIGHTLY ALLOWED THE C LAIM OF THE ASSESSEE BY FOLLOWING THE AFORESAID DECISION OF ITA T AMRITSAR ITA NO.294(ASR)/2013 ASSESSMENT YEAR: 2007-08 8 BENCH, WHERE IT HAS BEEN HELD THAT THE PLACE WHERE THE BRANCH OF THE BANK IS SITUATED IS TO BE CONSIDERED FIRST AND THE PLACE AND BRANCH OF BANK IS TO BE READ TOGETHER. IN THE PRES ENT CASE, THE VILLAGE KARTHOLI IS THE PLACE WHERE THE BRANCH OF THE BANK IS SITUATED WITH REFERENCE TO WHICH THE LD. CIT(A) HA S RIGHTLY ALLOWED THE DEDUCTION AND WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). THUS, GROUND NO.3 OF THE REVENUE IS DISMISS ED. 18. THE PROVISIONS OF SECTION 36(1)(VIIA) PRESCRIBE THAT IN RESPECT OF ANY PROVISION FOR BAD AND DOUBTFUL DEBTS MADE BY A SCHE DULED BANK, AN AMOUNT NOT EXCEEDING CERTAIN PERCENTAGE, AS SPECIF IED BY THE FINANCE ACTS FOR DIFFERENT ASSESSMENT YEARS, OF AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES OF SUCH BANK COMPUTED IN THE PRESCRIBED MANNER, DEDUCTION IS TO BE ALLOWED. EXPLANATION (1A ) TO THE SECTION DEFINES RURAL BRANCH AS A BRANCH OF A SCHEDULED B ANK OR A NON- SCHEDULED BANK SITUATED IN A PLACE WHICH HAS A POPU LATION OF NOT MORE THAN 10000 ACCORDING TO THE LAST PROCEEDINGS CENSUS , OF WHICH, THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FI RST DAY OF THE PREVIOUS YEAR. 19. IN VIEW OF THE ABOVE SPECIFIC PROVISIONS OF TH E ACT, THE DEFINITION OF THE RURAL BRANCH AS A PLACE WITH POPULATION UPTO 10000, THE DEPARTMENT IS NOT JUSTIFIED IN PLACING RELIANCE ON THE DIGEST OF STATISTICS FOR 2002-03 PUBLISHED BY THE GOVT. OF J & K. IT IS TRITE THAT WHEN THE ACT SPECIFICALLY DEALS WITH A PARTICULAR SITUATION, IT IS THE CONCERNED PROVISIONS OF THE ACT, WHICH HAVE TO BE GONE BY AND NO OUTSIDE MATERIAL CAN BE RESORTED TO. IN THE PRESENT CASE, THE BARI BRAHAMANA BRANCH OF THE BANK IS LOCATED AT VILLAGE KARTHOLI, WHERE THE POPULATION AS PER THE LAST CENSUS WAS OF 314. IT IS THIS LINE OF REASONIN G WHICH HAS BEEN FOLLOWED BY THE TRIBUNAL IN THE ASSESSEES CASE FOR AY 2008-09, FOLLOWING THE TRIBUNAL DECISION IN EARLIER YEARS IN THE ASSE SSEES CASE. THEREFORE, THE LD. CIT(A) CANNOT BE FAULTED FOR FOLLOWING THE SAID TRIBUNAL ORDER. ACCORDINGLY, GROUND NO.3 IS REJECTED. ITA NO.294(ASR)/2013 ASSESSMENT YEAR: 2007-08 9 20. COMING TO GROUND NO.4, THE ASSESSEE CLAIMED 1 00% DEPRECIATION ON WOODEN PARTITIONS, BUT THE AO RESTRICTED THE ALL OWANCE TO 10%. THE LD. CIT(A) ALLOWED THE WHOLE CLAIM, FOLLOWING THE TRIBUNAL ORDER FOR THE AY 2008-09 IN THE ASSESSEES OWN CASE. 21. THE LD. DR CONTENDS THAT THE LD. CIT(A) WAS WR ONG IN ALLOWING 100% DEPRECIATION ON WOODEN PARTITIONS AS PERMANENT STRUCTURES FIXED FOR DIVIDING SPACES IN THE OFFICE FOR THE STAFF TO WORK, NOT SUSCEPTIBLE TO DISMANTLING; AND THAT IN ALL MODERN OFFICES, IT IS USUAL TO HAVE SUCH WOODEN PARTITIONS, WHICH ARE NEVER SHIFTED OR RELOC ATED AT REGULAR INTERVALS AND THEY ARE ALWAYS FIXED AT A PARTICUL AR LOCATION. 22. THE LD. COUNSEL FOR THE ASSESSEE, PER CONTRA, H AS RELIED ON THE IMPUGNED ORDER, AS ALSO ON THE TRIBUNAL ORDER (SUPR A) FOR THE AY 2008- 09. 23. IT IS SEEN THAT DEPRECIATION WAS CLAIMED ON TH E WOODEN PARTITIONS, CLAIMING THAT THE EXPENDITURE WAS INCURRED ON WOODE N PARTITIONS, AS PURELY TEMPORARY ERECTIONS, ELIGIBLE FOR 100% DEP RECIATION AS PROVIDED UNDER THE I.T.ACT, 1961. A SIMILAR ADDITION WAS DEL ETED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2002-03, WHICH DELETION WAS NOT CHALLENGED BY THE DEPARTMENT. THE WOODEN PARTITIONS, AS REMAINS U NDISPUTED, WERE ERECTED IN LEASEHOLD (TENANTED) PREMISES. THE PARTI TIONS HAD NOT PROVIDED ANY ENDURING ADVANTAGE TO THE ASSESSEE. THEY WERE REDESIGNED TIME AND AGAIN, AS PER THE ASSESSEES BUSINESS REQUIREMENT. IT IS ALSO NOT THE CASE OF THE DEPARTMENT THAT THESE PARTITIONS BECAME THE PROPERTY OF THE ASSESSEE AT THE END OF THE LEASE. MOREOVER, IT HAS NOT BEEN SHOWN THAT THEY CREATED ANY TANGIBLE ASSETS, FOR WHICH, A VALU E COULD BE ATTRIBUTABLE. 24. THE TRIBUNAL ORDER FOR ASSESSMENT YEAR 2008-09 (SUPRA) IS IN FAVOUR OF THE ASSESSEE ON THIS ISSUE AND IT HAS NOT BEEN UPSET ON APPEAL. ITA NO.294(ASR)/2013 ASSESSMENT YEAR: 2007-08 10 25. FOR THE ABOVE, GROUND NO.4 IS FOUND TO BE WITHO UT FORCE. HENCE, IT IS REJECTED. 26. APROPOS GROUND NO.5, THE AO WAS OF THE VIEW THA T TAX WAS REQUIRED TO BE DEDUCTED BY THE ASSESSEE ON INTEREST PAID TO JAMMU DEVELOPMENT AUTHORITY. 27. THE LD. CIT(A) DELETED THE DISALLOWANCE OF RS. 2,93,15,880/-, RELYING ON THE TRIBUNAL ORDER (SUPRA) FOR AY 2008-0 9 IN THE ASSESSEES CASE. AS PER THE DEPARTMENT, J.D.A. IS A TAXABLE ENTITY. THE ASSESSEE IS A LOCAL AUTHORITY AND IT WAS THE LIABILITY AND RESP ONSIBILITY OF THE ASSESSEE BANK TO DEDUCT TDS ON INTEREST PAYMENT; AN D THAT THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE CORRE CTLY MADE BY THE AO U/S 40(A)(IA) OF THE ACT. 28. AS FOR GROUND NOS. 1 TO 4, FOR GROUND NO.5 ALS O, BESIDES RELYING ON THE IMPUGNED ORDER, THE LD. COUNSEL FOR THE ASSESSE E HAS PLACED RELIANCE ON THE TRIBUNAL ORDER (SUPRA) IN THE ASSESSEES CAS E FOR THE ASSESSMENT YEAR 2008-09. 29. IT HAS NOT BEEN DISPUTED THAT JAMMU DEVELOPMENT AUTHORITY STANDS INCORPORATED BY THE J & K DEVELOPMENT ACT, 1 970. C.B.D.T. NOTIFICATION NO.3489, DATED 27.10.1970, ISSUED IN P URSUANCE OF THE PROVISIONS OF SECTION 194A(3)(F) OF THE ACT, PROVID ES THAT NO TAX WAS REQUIRED TO BE DEDUCTED ON INTEREST ON DEPOSIT PAID TO A CORPORATION INCORPORATED UNDER A STATE ACT. THE POSITION IS NOT ANY DIFFERENT SO FAR AS REGARDS J.D.A. INCORPORATED UNDER THE SAID STATE ACT, TOO. THEREFORE, THE PROVISIONS OF SECTION 194A OF THE ACT ARE NOT A PPLICABLE, DUE TO WHICH, THE PROVISIONS OF SECTION 40(A)(IA) ARE ALS O NOT ATTRACTED. 30. MOREOVER, THE TRIBUNAL, IN THE ASSESSEES CASE (SUPRA) FOR THE ASSESSMENT YEAR 2008-09, HAS HELD AS FOLLOWS ON THE ISSUE: ITA NO.294(ASR)/2013 ASSESSMENT YEAR: 2007-08 11 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. WE HAVE PERUSED THE ORDER OF ITAT DELHI B ENCH IN THE CASE OF CHIEF/SENIOR MANAGER, ORIENTAL BANK OF COM MERCE VS. ITO (TDS & SURVEY) (SUPRA) AND OUR EARLIER ORDERS MENT IONED HEREINABOVE ON THE IDENTICAL FACTS. IN OUR ORDER IN ITA NO. 206 TO 210(ASR)/2011 DATED 24.04.2012 (PB 60 72) IN ASSES SEES OWN CASE, ESPECIALLY AT PAGE 12 OF THE SAID ORDER (AT P B-71), THE ARGUMENTS MADE BY THE LD. DR HAS BEEN DEALT WITH, W HICH FOR THE SAKE OF CLARITY ARE REPRODUCED HEREUNDER: 6.1. THUS, RESPECTFULLY FOLLOWING THE AFORESAID O RDER OF THE ITAT, DELHI BENCH I WE DISMISS THE APPEAL FILED B Y THE REVENUE BY HOLDING THAT THE JAMMU DEVELOPMENT AUTH ORITY IS IN EXEMPTED CATEGORY WHERE THE PROVISIONS OF SEC TION 194(1) ARE NOT APPLICABLE. WE ALSO HOLD THAT EXCEPT ION PROVIDED IN SECTION 194A(3)(III)(F) OF THE ACT AND AS PER NOTIFICATION, THE JAMMU DEVELOPMENT AUTHORITY IS A CREATION OF J & K DEVELOPMENT ACT AND SATISFIES THE CONDITIO N AT ENTRY NO.39 OF THE SAID NOTIFICATION AND WE HOLD TH AT NO TAX WAS DEDUCTIBLE ON ACCRUED INTEREST ON FDRS OF JAMM U DEVELOPMENTAUTHORITY WITH J & K BANK LTD. KEEPING I N VIEW THE ABOVE DISCUSSIONS, WE HOLD THAT NO INTERFERENC E IS CALLED FOR IN THE WELL REASONED IMPUGNED ORDER PASS ED BY THE LD. FIRST APPELLATE AUTHORITY AND ACCORDINGLY WE UP HOLD THE SAME. HENCE, THE APPEAL OF THE REVENUE IN ITA NO.206(ASR)/2011 IS DISMISSED. 15.1. IN SUCH FACTS AND CIRCUMSTANCES, WE FIND NO I NFIRMITY IN THE ORDER OF THE LD. CIT(A), SINCE ON IDENTICAL FACTS, THE ISSUE IS COVERED BY OUR OWN DECISION IN ITA NOS. 206 TO 210(ASR), DA TED 24.04.2012 MENTIONED HEREINABOVE AND THE ARGUMENTS OF LD DR O N PER INCURIAM CANNOT BE ENTERTAINED BEING WITHOUT ANY BASIS .THE REFORE, WE DO NOT FIND ANY INFIRMITCCY IN THE ORDER OF THE LD. CIT(A), WHO HAS RIGHTLY DELETED THE DISALLOWANCE. THUS, GROUND NO.5 OF THE REVENUE IS DISMISSED. 31. THE FACTS IN THE PRESENT CASE ARE NOT SHOWN TO BE VERY DIFFERENT FROM THOSE FOR THE AY 2008-09. THE TRIBUNAL ORDER H AS ALSO NOT BEEN SHOWN TO HAVE BEEN UPSET ON APPEAL. ITA NO.294(ASR)/2013 ASSESSMENT YEAR: 2007-08 12 32. THEREFORE, THE FINDINGS OF THE TRIBUNAL FOR AY 2008-09 ARE SQUARELY APPLICABLE TO THE PRESENT CASE ALSO. 33. IN VIEW OF THE ABOVE, GROUND NO.5 IS ALSO FOUND TO BE WITHOUT ANY MERIT AND THE SAME IS REJECTED. 34. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15TH DECE MBER, 2015. SD/- SD/- (T.S.KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15/12/2015 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE: THE JAMMU& KASHMIR BANK LTD. SRINA GAR. 2. THE DCIT, CIR.1, JAMMU 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.