HINDUSTAN THOMPSON ASSOCIATES P LTD, MUMBAI V. ACIT RG 11(1), MUMBAI

ITA 6185/MUM/2011

• Counselvise Citation: 618519914 RSA 2011
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: L
• Next Hearing Date: 03-04-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 07-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARVIND SONDE
• Assessee Lawyers: NARENDER KUMAR
• Keywords: Bad and doubtful debts; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 147; 148; 143(3); 14A; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, A ND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 6184, 1302, 6185/MUM./2011 (ASSESSMENT YEAR : 2005-06, 2006-07, 2007-08 ) HINDUSTAN THOMPSON ASSOCIATES P. LTD. PENINSULA CHAMBERS GANPATRAO KADAM MARG LOWER PAREL, MUMBAI 400 013 PAN AAACH14363M .. APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX RANGE-11(1), AAYAKAR BHAVAN 101, M.K. MARG, MUMBAI 400 020 .... RESPONDENT ITA NO. 6666, 1865/MUM./2011 (ASSESSMENT YEAR : 2005-06, 2006-07 ) ASSTT. COMMISSIONER OF INCOME TAX RANGE-11(1), AAYAKAR BHAVAN 101, M.K. MARG, MUMBAI 400 020 .. APPELLANT V/S HINDUSTAN THOMPSON ASSOCIATES P. LTD. PENINSULA CHAMBERS GANPATRAO KADAM MARG LOWER PAREL, MUMBAI 400 013 PAN AAACH14363M .... RESPONDENT REVENUE BY : MR. ARVIND SONDE ASSESSEE BY : MR. NARENDER KUMAR DATE OF HEARING 16.04.2012 DATE OF ORDER 25/05/2012 HINDUSTAN THOMPSON ASSOCIATES PVT. LTD. 2 O R D E R PER J. SUDHAKAR REDDY THE CROSS APPEALS FOR ASSESSMENT YEAR 2005-06, ARE DIRECTED AGAINST THE IMPUGNED ORDER DATED 4 TH JULY 2011, FOR ASSESSMENT YEAR 2005-06, AND THE CROSS APPEALS FOR ASSESSMENT YEAR 2006-07 ARE D IRECTED AGAINST THE IMPUGNED ORDER DATED 10 TH DECEMBER 2010, PASSED BY THE COMMISSIONER (APPEALS)III, MUMBAI. THE ASSESSEE ALSO PREFERRED AN APPEAL WHICH IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 4 TH JULY 2011, PASSED BY THE COMMISSIONER (APPEALS)III, MUMBAI, FOR ASSESSMENT YEAR 2007-08. AS THE ISSUES IN THESE APPEALS ARE COMMON, FOR THE SAKE OF CONVENIENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER. 2. BOTH THE PARTIES SUBMITTED BEFORE US THAT THE LEAD ORDER IS FOR THE ASSESSMENT YEAR 2006-07 AND, HENCE, THE SAME MAY BE TAKEN UP. 3. FACTS IN BRIEF:- THE ASSESSEE IS A COMPANY AND IS I N THE BUSINESS OF ADVERTISEMENT, MARKET RESEARCH AND INFORMATION AND PUBLIC RELATIONS. THE FACTS RELATING TO THE GROUND NO.1, ARE BROUGHT OUT BY THE COMMISSIONER (APPEALS) AT PARA-2.1.2/PAGE-6 OF HIS ORDER, WHICH IS EXTRACTED BELOW:- 2.1.2 . APPELLANT IS ENGAGED IN THE BUSINESS OF ADVERTISING AND ARE ONE OF THE TOP MOST ADVERTISING AGENCIES. DURIN G THE YEAR ENDED 31 ST MARCH 2006, THE APPELLANTS HAVE RECEIVED ADVANCES FROM VARIOUS PARTIES AGGREGATING TO ` 26,59,88,972. THESE ADVANCES HAVE BEEN RECEIVED AGAINST SPECIFIC JOBS AND HAVE BEEN SUBSEQ UENTLY ADJUSTED AGAINST THE BILLS RAISED ON THEM. DETAILS OF ADVANC ES RECEIVED FROM THE PARTIES AND BILLS RAISED IN THE SUBSEQUENT PERIOD O N THE SAID PARTIES WERE FURNISHED TO THE ACIT. ALL THE WORK CARRIED OUT BY APPELLANT WHETHER RELAT ING TO ADVERTISING OR MARKET RESEARCH IS TAGGED BY A JOB NUMBER. ALL PAYM ENTS RECEIVED AND BILLS RAISED ARE ALSO LINKED TO THE SPECIFIC JOB NO S. BILLING IS DONE ON THE BASIS OF THIS JOB NUMBER AND THE SAME ALSO MENTIONE D ON PAYMENTS RECEIVED. THE SYSTEM AUTOMATICALLY MATCHES THESE JO B NUMBERS AND IS ABLE TO GENERATE A STATEMENT GIVING CLIENTWISE DETA ILS OF BILLS OUTSTANDING AT ANY GIVEN POINT IN TIME. COST ARE AL SO TAGGED JOB NO WISE AND ARE MATCHED WITH THE SALES INVOICES. ANY A DVANCE RECEIVED FROM OUR CLIENTS IS ALSO ALLOTTED A JOB NUMBER AND IS ACCORDINGLY HINDUSTAN THOMPSON ASSOCIATES PVT. LTD. 3 ENTERED IN THE CLIENTS ACCOUNT. THE SAID AMOUNT REC EIVED CONTINUOUS TO BE REFLECTED AS AN ADVANCE UNTIL A BILL IS RAISED O N THE CLIENTS. AS SOON AS THIS IS DONE, THE SYSTEM AUTOMATICALLY ADJUSTS T HE ADVANCE AGAINST THE BILL BY MATCHING THE JOB NUMBER. UNTIL THE BIL LS ARE RAISED, ALL ADVANCES CONTINUE TO BE REFLECTED AS ADVANCES AND T HE SYSTEM IS ABLE TO GENERATE A STATEMENT GIVING CLIENT WISE/JOB WISE DETAILS OF THE ADVANCES. ADVANCES RECEIVED FROM CLIENTS ARE, THERE FORE NOT ADJUSTED AGAINST BILLS WHICH DO NOT BEAR THE SAME JOB NUMBER AND CONTINUE TO BE SHOWN AS ADVANCES AT THE YEAR END IN OUR ACCOUNT S. STATEMENTS GIVING CLIENTWISE AMOUNTS WHICH HAVE BEEN WRITTEN O FF DURING THE YEAR CAN BE SEPARATELY IDENTIFIED BILL WISE/ JOB WISE. T HE ADVANCES RECEIVED FROM THE SAME CLIENT CAN ALSO BE IDENTIFIED SEPARAT ELY JOBWISE. SINCE THE DECISION TO WRITE OFF BAD DEBTS IS BASED ON COM MERCIAL AND BUSINESS EXIGENCIES IS INCORRECT REPRODUCTIONS, DEF ECTIVE JOBS/ RELEASES IN MEDIA AND NOT NECESSARILY BECAUSE THE PARTY IS N OT FINANCIALLY SOUND, THE ADVANCES RECEIVED CANNOT BE PRESUME TO B E ADJUSTABLE AGAINST THE OUTSTANDING BILLS WHICH HAVE BEEN WRITT EN OFF, AS DONE BY THE ASSESSING OFFICER. 4. THE MAIN CONTENTION OF THE ASSESSEE WAS THAT THE WR ITE-OFF WAS BASED ON COMMERCIAL CONSIDERATION AND BUSINESS PRUDENCE. BILLS WERE FURNISHED. RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE SUPR EME COURT IN TRF LIMITED V/S CIT, (2010) 35 DTR 156 (SC). 5. THE FIRST APPELLATE AUTHORITY DID NOT FULLY ACCEPT THE CONTENTION OF THE ASSESSEE. HE HELD AS FOLLOWS:- THE ACIT REJECTED THE APPELLANTS CLAIM FOR BAD DEBT S FOR THE REASONS MENTIONED BY HIM IN THE ASSESSMENT ORDER, WHICH WER E SUMMARIZED BY APPELLANT AS UNDER:- I) SINCE THE ASSESSEE HAS RECEIVED ADVANCES FROM TH E PARTIES, WHOSE DEBTS HAVE BEEN WRITTEN OFF AS BAD DEBTS, THE WRITE OFF CAN AT BEST BE SAID TO BE ARBITRARY, IRRATIONAL OR MALA-FIDE AND L ACKING COMMERCIAL PRUDENCE. II) IT IS ONLY A BAD DEBT WHICH IS IRRECOVERABLE WH ICH CAN BE WRITTEN OFF AND NOT ANY DEBT, AS ALREADY STATED ABOVE, THAT THE DEBT BECOMES BAD ONLY WHEN THE CREDITOR HAS NO CHANCE OF RECOVERING IT FROM THE DEBTORS. III) THE APPELLANTS HAVE RELIED ON THE BOMBAY HIGH COURT DECISION IN THE-CASE OF STAR CHEMICALS LTD. (303 ITR 128) AND T HE DECISION OF THE APEX COURT REJECTING THE DEPARTMENTS SLP ON THIS IS SUE IN THE CASE OF NELCO LTD. ( 317 ITR 6 ). THE ACIT HAS RELIED ON TH E KERALA HIGH COURT DECISION IN THE CASE OF KERALA TRANSPORT CO. V/S. C IT (156 TAXMAN 327) AND ITO V./S. OMAN INTERNATIONAL BANK TO HOLD THAT ONLY BONAFIDE BAD DEBTS WOULD BE ALLOWED UNDER SECTION 36(1)(VII) . HE HAS ALSO HINDUSTAN THOMPSON ASSOCIATES PVT. LTD. 4 MENTIONED THAT THE ASSESSEE IS UNDER AN OBLIGATION TO ESTABLISH AT LEAST PRIMA-FACIE THAT THE DEBT HAS BECOME BAD. THE ASSES SEE THEREFORE, IN THE ACITS VIEW, CANNOT ARBITRARILY TREAT A GOOD DE BT AS BAD AND WRITE IT OFF IN ITS ACCOUNT. THE ACIT HAS ALSO RELIED ON THE MADRAS HIGH COURT DECISION IN THE CASE OF SOUTH INDIA SURGICAL CO. LT D. V/S. ACIT (287 ITR 62) TO HOLD THAT THE ASSESSEE MUST HONESTLY FE EL CONVINCED THAT THE FINANCIAL POSITION OF THE DEBTOR WAS SO PRECARI OUS AND SHAKY THAT IT WOULD BE IMPOSSIBLE TO COLLECT ANY MONEY FROM HIM. IV) THE ACIT HAS ACCORDINGLY CONCLUDED AS UNDER:- A. BASED ON THE ABOVE DISCUSSIONS, / HAVE GOOD REASONS TO HOLD THAT THE DEBTS WRITTEN OFF BY THE ASSESSEE COMPANY HAD N OT TURNED BAD AS THE ASSESSEE COMPANY WAS IN FUTURE ALSO DEAL ING WITH THE SAME CLIENTS. FURTHER, THE DEBTS WERE CERTAINLY NOT IRRECOVERABLE AS THE DEBTORS WRITTEN OFF AS BAD HAD ADVANCED SUMS OF MONEY TO THE ASSESSEE COMPANY, FROM WHICH SUM THE ASSESSE E COMPANY COULD HA YE ADJUDICATED ITS DEBTS BEFORE AD JUSTING THE SAME AGAINST THE BILLS RAISED. THE FINANCIAL CONDIT IONS OF THE DEBTORS WERE CERTAINLY NOT PRECARIOUS AS THEY HA YE ENTERED INTO BUSINESS TRANSACTIONS WITH THE ASSESSEE COMPANY FOR FUTURE BY WAY OF PAYING ADVANCES FOR THE SERVICES TO BE RENDE RED. MORE SO WHEN THE DEBTORS ARE OF THE STATURE OF BHARATI AIRT EL LTD., ITC LTD., HINDUSTAN LEVER LTD., JOHNSON & JOHNSON LTD., ETC. IT IS HARD TO BELIEVE THAT THEIR FINANCIAL WOULD BE PRECA RIOUS ENOUGH TO DENY THE ASSESSEE COMPANY OF ITS LEGITIMATE DUES WHEN THEY CAN, ON THE CONTRARY, LEAVE SUFFICIENT AMOUNTS AS A DVANCES WITH THE ASSESSEE COMPANY FOR THE FUTURE WORK TO BE DONE . AS SUCH, THE DEBTS WRITTEN OFF BY THE ASSESSEE COMPANY WERE CERTAINLY NOT IRRECOVERABLE AND THE WRITE-OFF BY THE ASSESSEE COMPANY WAS IRRATIONAL, ARBITRARY AND MA/A FIDE. B. CONCLUSION - AS THERE IS A LOT OF INTER LACING B ETWEEN THE PARTIES FROM THE ASSESSEE COMPANY HAS RECOVERABLE DEBTS AND FROM WHOM IT HAS RECEIVED ADVANCES YEAR AFTER YEAR, THE ENTIRE BAD DEBTS WRITTEN OFF DURING THE FY 2005-06 OF RS.2,44, .23, 135/- IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF TH E ASSESSEE COMPANY FOR THE A Y 2007-08. 6. FURTHER DISALLOWANCE WAS MADE UNDER SECTION 40(A)(I A) OF THE ACT, WHICH IS ALSO A SUBJECT MATTER IN THIS APPEAL. THE ASSESSEE HAS FILED AN APPEAL ON THE FOLLOWING GROUNDS:- 1) THE COMMISSIONER OF INCOME TAX (APPEALS)-3, MUMB AI (HEREINAFTER REFERRED TO AS CIT(A)) ERRED IN HOLDIN G THAT THE ASSISTANT COMMISSIONER OF INCOME TAX, RANGE-I 1(1), MUMBAI (H EREINAFTER REFERRED TO AS THE ACIT) HAS RIGHTLY REOPENED THE A PPELLANTS ASSESSMENT UNDER SECTION 147 I 148 OF THE ACT. THE APPELLANTS SUBMIT THAT SINCE THE ORIGINAL ASSESSMENT HAS BEEN COMPLET ED UNDER SECTION 143(3) AND THE APPELLANTS HAVE FULLY DISCLOSED ALL MATERIAL FACTS FOR THE HINDUSTAN THOMPSON ASSOCIATES PVT. LTD. 5 COMPLETION OF THE ASSESSMENT, THE REASONS MENTIONED BY THE ACIT FOR REOPENING THE APPELLANTS ASSESSMENT ARE MERELY BASE D ON A CHANGE OF OPINION AND THEREFORE IT IS SUBMITTED THAT THERE IS NO REASON FOR THE ACIT TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX H AD ESCAPED ASSESSMENT SO AS TO REOPEN THE ASSESSMENT UNDER SEC TION 148. THE APPELLANTS THEREFORE SUBMIT THAT THE ORDER PASSED B Y THE ACIT IS BAD IN LAW AND VOID AB-INITIO AND PRAY THAT THE SAME BE QUASHED. 2) WITHOUT PREJUDICE TO GROUND NO.1, THE CIT (A) ER RED IN HOLDING THAT THE ORDER PASSED BY THE ACIT UNDER SECTION 148 WAS VALID DESPITE OF THE FACT THAT THE NOTICE UNDER SECTION 143(2) WAS N OT SERVED ON THE APPELLANTS WITHIN THE STATUTORY PERIOD OF 6 MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN WAS FILED IN RES PONSE TO THE NOTICE ISSUED BY THE ACIT UNDER SECTION 148. THE APPELLANT S SUBMIT THAT THE SAID FECT IN NOT SERVING THE NOTICE UNDER SECTION 1 43(2) WITHIN THE STATUTORLY PERIOD IS NOT CURABLE UNDER SECTION 292B B OF THE ACT AS HELD BY THE CIT (A) AND THEREFORE THE ORDER PASSED BY TH E ACIT IS BAD IN LAW AND VOID AB-INITO AND PRAY THAT THE SAME BE QUA SHED. WITHOUT PREJUDICE TO GROUND NOS. (1) & (2) ABOVE; 3)(A) THE CIT (A) ERRED IN CONFIRMING THE ACTION OF THE ACIT IN HOLDING THAT PAYMENTS MADE TO FIELD AGENTS FOR CONDUCTING MARKET RESEARCH SURVEYS IN INDIA OF RS. 12,53,99,046 WERE COVERED B Y THE PROVISIONS SECTION 194J AS AGAINST THE APPELLANTS STAND THAT T HESE WERE COVERED UNDER SECTION 194C AND IN MAKING A PROPORTIONATE DI SALLOWANCE UNDER SECTION 40(A)(IA) WITHOUT CONSIDERING THE FINDINGS GIVEN BY THE CIT (A) FOR THE ASSESSMENT YEAR 2006-07. THE APPELLANTS SUB MIT THAT THE SAID PAYMENTS ARE COVERED BY SECTION 194C AND PRAY THAT THE DISALLOWANCE MADE BY THE ACIT BE CANCELLED. (B) THE CIT (A) ERRED IN HOLDING THAT THE ACIT WAS RIGHT IN DISALLOWING EXPENSES OF RS.1,04,97,229 INCURRED BY THE APPELLAN TS ON PAYMENTS MADE TO FIELD AGENTS FOR CONDUCTING MARKET RESEAR CH SURVEYS OUTSIDE INDIA UNDER SECTION 40(A)(IA). THE APPELLANTS SUBMI T THAT THE SAID PAYMENTS ARE NOT LIABLE FOR TAX AS PER THE RELEVANT DOUBLE TAXATION TREATIES AS SUCH THE APPELLANTS WERE NOT LIABLE TO DEDUCT TAX UNDER SECTION 195 OF THE ACT. THE APPELLANTS THEREFORE PR AY THAT THE DISALLOWANCE OF RS. 1,04,97,229 MADE BY THE ACIT BE DELETED. (C) THE CIT (A) ERRED IN DIRECTING THE ACIT TO VER IFY THE PAYMENTS OF RS.64,99,043 IN RESPECT OF WHICH THE APPELLANTS HAV E DEDUCTED TAX UNDER SECTION 195 AND IN NOT DELETING THE DISALLOWA NCE IN RESPECT OF THESE PAYMENTS. (D) WITHOUT PREJUDICE TO (A) & (B), EVEN ASSUMING THAT TAX IS DEDUCTIBLE UNDER SECTION 194J, THE APPELLANTS SUBMI T THAT SINCE THEY HAVE DEDUCTED TAX UNDER SECTION 194C, THERE IS NO P ROVISION UNDER SECTION 40(A)(IA) TO MAKE A PROPORTIONATE DISALLOWA NCE IN RESPECT OF THE ABOVE EXPENSES. THE APPELLANTS THEREFORE PRAY THAT THE ADDITIONS MA DE BY THE ACIT ON THIS ACCOUNT BE DELETED. HINDUSTAN THOMPSON ASSOCIATES PVT. LTD. 6 4(A) THE CIT (A) ERRED IN HOLDING THAT THE ACIT WA S RIGHT IN DISALLOWING A PROPORTIONATE PART OF THE EXPENSES OF RS.4,64,46,529 ON DATA COMPILATION / ANALYSIS & TRANSLATION / TABULAT ION UNDER SECTION 40(A)(IA) ON THE GROUND THAT THE APPELLANTS HAD NOT DEDUCTED TAX UNDER SECTION 194J OF THE ACT. THE APPELLANTS SUBMI T THAT THE SAID EXPENSES ARE NOT COVERED BY SECTION 194J AND SINCE THEY HAVE DEDUCTED TAX UNDER SECTION 194C, THE ACIT OUGHT NOT TO HAVE MADE A PROPORTIONATE DISALLOWANCE UNDER SECTION 40(A)(IA). (B) THE CIT (A) ERRED IN DIRECTING THE ACIT TO VERI FY THE PAYMENT OF RS.99,82,871 IN RESPECT OF WHICH THE APPELLANTS HAD DEDUCTED TAX UNDER SECTION 1 94J AND IN NOT DELETING THE DISALLO WANCE IN RESPECT OF THESE PAYMENTS. (C) WITHOUT PREJUDICE TO (A) & (B), EVEN ASSUMING THAT TAX IS DEDUCTIBLE UNDER SECTION 194J, THE APPELLANTS SUBMI T THAT SINCE THEY HAVE DEDUCTED TAX UNDER SECTION 194C, THERE IS NO P ROVISION UNDER SECTION 40(A)(IA) TO MAKE A PROPORTIONATE DISALLOWA NCE IN RESPECT OF THE ABOVE EXPENSES. 7. THE LEARNED COUNSEL, MR. ARVIND SONDE, REPRESENTING THE ASSESSEE, CONTENDED THAT THE WRITE-OFF IN QUESTION WAS BONAFI DE AND WAS BASED ON COMMERCIAL CONSIDERATION. HE REFERRED TO THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE BASIS OF DISALLOWANCE WAS TH AT THE WRITE-OFF IN QUESTION WAS ARBITRARY IRRATIONAL AND MALAFIDE. HE FILED PAPER BOOK RUNNING INTO 111 PAGES AND TRIED TO DEMONSTRATE THAT THERE IS A BILL-WISE ANALYSIS OF THE AMOUNT WRITTEN-OFF AGAINST EACH ADVANCE. HE POI NTED OUT THAT IN MANY CASES, THE AMOUNTS WRITTEN-OFF WERE MINOR AMOUNT AS COMPARED TO THE BILLING AND THIS WAS DONE AS A MATTER OF BUSINESS P RUDENCE AND WITH AN INTENTION NOT TO LOSE THE CUSTOMER. HE POINTED OUT THAT THE ASSESSEE HAS MANY VALUABLE CUSTOMERS LIKE BHARATI CELLULAR, GLAX O SMITHKLINE CONSUMER HEALTH, NESTLE INDIA LTD., ETC. AND WHEN THE BILLS HAVE BEEN RAISED BY THE ASSESSEE, THESE VALUABLE CUSTOMERS DISALLOW CERTAIN PORTIONS AND PASSED THE BILL FOR CERTAIN LESSER AMOUNTS AND IN THE INTEREST OF CONTINUED BUSINESS RELATIONSHIP, THE ASSESSEE HAS WRITTEN-OFF THESE SM ALL AMOUNTS. HE VEHEMENTLY CONTENDED THAT THE ACTION OF THE ASSESSE E MAKES GOOD COMMERCIAL SENSE. HE POINTED OUT THAT IN REALITY, I T WAS NEGOTIATED SETTLEMENT OF BILLS AND NOT BAD DEBTS. HE TOOK US T HROUGH THE PAPER BOOK TO POINT OUT THE INFORMATION JOB-WISE AND CLIENT-WISE. HE FOUND FAULT WITH THE HINDUSTAN THOMPSON ASSOCIATES PVT. LTD. 7 ORDER OF THE COMMISSIONER (APPEALS) WHEREIN BAD DEB T WAS ALLOWED WHERE ADVANCES WERE NOT RECEIVED AND WAS NOT ALLOWED WHAT EVER ADVANCES WERE RECEIVED. 8. ON THE ISSUE OF DISALLOWANCE UNDER SECTION 40(A)(IA ), IN GROUND NO.2(A) AND 2(B), HE SUBMITTED THAT TDS WAS DEDUCTED AT 2.2 4% UNDER SECTION 194C AND WHEREAS IT IS THE ASSESSING OFFICERS CASE THAT DEDUCTION SHOULD HAVE BEEN MADE @ 5.61% UNDER SECTION 194J AND, HENCE, A PROPORTIONATE DISALLOWANCE WAS MADE. HE SUBMITTED THAT THE DISALL OWANCE CANNOT BE MADE WHEN THERE HAS BEEN DEDUCTION OF TAX AT SOURCE ON T HE ALLEGATION THAT THERE IS A SHORT DEDUCTION OF TAX. FOR THIS PROPOSITION, HE RELIED ON THE ORDER OF THE TRIBUNAL IN ITA NO.20/MUM./2010, IN THE CASE OF 9. ON GROUND NO.2(B), WHICH IS ON THE DEDUCTION OF TAX AT SOURCE THAT PAYMENT MADE TO A FOREIGN AGENCY. HE SUBMITTED THAT PAYMENT WAS NOT FOR FEE FOR TECHNICAL SERVICES. HE SUBMITTED THAT THE D EFINITION OF FTS IS SAME BOTH IN SECTIONS 194J AND 9(I)(VII). HE RELIED ON T HE VISHAKHAPATNAM SPECIAL BENCH DECISION OF THE TRIBUNAL IN MERILYN SHIPPING AND TRANSPORT V/S ACIT, ITA NO.477/VIZ./2008 (SB), ORDER. HE SUBMITTED THAT THE ISSUE MAY BE SET ASIDE TO THE FILE OF ASSESSING OFFICER TO APPLY THE DECISION OF THE SPECIAL BENCH AND RESTRICTED THE DISALLOWANCE TO THE AMOUNT PAYABLE. 10. THE LEARNED COUNSEL DID NOT PRESS GROUND NO.3, ON S ECTION 14A AND GROUND NO.4(A) AND 4(B) ON THE ISSUE OF TREATMENT O F SOFTWARE EXPENDITURE AS CAPITAL. 11. LEARNED DEPARTMENTAL REPRESENTATIVE, MR. NARENDER K UMAR, REPRESENTING THE REVENUE, ON THE OTHER HAND, CONTRO VERTED THE SUBMISSIONS OF THE ASSESSEES COUNSEL AND ARGUED THAT THE WRITE -OFF WAS NOT BONAFIDE. HE RELIED ON THE JUDGMENT OF HON'BLE JURISDICTIONAL HI GH COURT IN OMAN INTERNATIONAL BANK SAOG, 313 ITR 128, FOR THE PROPO SITION THAT THE DECISION MUST BE BASED ON MATERIAL THAT THE DEBT IS NOT RECO VERABLE AND THE DECISION MUST BE BONAFIDE. HE POINTED OUT THAT THE ASSESSEE WAS HAVING ADVANCES FROM THESE VERY CUSTOMERS AND INSTEAD OF ADJUSTING THE AMOUNTS DUE, THE HINDUSTAN THOMPSON ASSOCIATES PVT. LTD. 8 ASSESSEE WROTE OFF CERTAIN DEBTS AS BAD. HE RELIED ON THE DECISION OF BANGALORE BENCH OF THE TRIBUNAL IN EMBASSY CLASSIC (P) LTD. & ANR. V/S ACIT (2011) 7 ITR (TRIB.) 287 (BANG.). ON A QUERY FROM T HE BENCH, IT IS SUBMITTED THAT THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR AS SESSMENT YEAR 2002-03, HAS DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE. H E RELIED ON THE FINDINGS OF THE ASSESSING OFFICER AND THE COMMISSIONER (APPEALS ). 12. ON GROUNDS NO.2(A) AND 2(B), THE LEARNED DEPARTMENT AL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ISSUE MAY BE RESTORED TO THE FILE OF THE A SSESSING OFFICER. 13. THE LEARNED COUNSEL FOR THE ASSESSEE, IN REPLY, DIS TINGUISHED THE DECISION OF THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF ASSESSEE. 14. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A PERUSAL OF THE P APERS ON RECORD, AS WELL AS THE CASE LAWS CITED BEFORE US, WE HOLD AS FOLLOW S:- 15. FROM THE PAPER BOOK FILED BY THE ASSESSEE, IT CAN B E SEEN THAT THE ASSESSEE OBTAINS JOB WORK AND IT ALSO RECEIVES CERT AIN ADVANCES AGAINST SPECIFIC JOBS. ONCE THE JOB IS COMPLETED, A BILL IS RAISED ON THE PARTY AND THE ADVANCE ADJUSTED. EVERY JOB OF ADVERTISEMENT OR MAR KET RESEARCH IS TAGGED BY A JOB NUMBER. WHEN A BILL IS RAISED, THE SAME IS TREATED AS INCOME. THE CUSTOMER, WHILE PASSING THE BILL, MAY DISALLOW CERT AIN PORTIONS FOR REASONS SPECIFIED. IN OTHER WORDS, THE BILLS RAISED BY THE ASSESSEE ARE PASSED FOR LESSER AMOUNT. THE ASSESSEE, OUT OF COMMERCIAL CONS IDERATION AND WITH A VIEW TO MAINTAIN CUSTOMER RELATIONSHIP AND NOT TO L OOSE VALUABLE CUSTOMERS SUCH AS BHARATI CELLULAR LTD., NESTLE LTD. HINDUSTA N LIVER LIMITED, ETC. GOES FOR A NEGOTIATED SETTLEMENT OF CLAIMS AND ACCEPTS S HORT PAYMENTS. A PERUSAL OF THE QUANTUM OF BILLING AND THE AMOUNT OF SHORT P AYMENT DEMONSTRATE THAT THE DISALLOWANCE IS MINIMAL. FOR EXAMPLE THE BILL R AISED ON 12 TH JANUARY 2006, ON BLACK BOX RESEARCH WAS ` 5,31,720, AND THE AMOUNT DISALLOWED WHICH IS ULTIMATELY WRITTEN OFF WAS ` 2,554. IN THE CASE OF HERO HONDA MOTORS LTD., THE BILLING WAS OF ` 96,00,000 AND THE AMOUNT WRITTEN OFF WAS ` 8,444. HINDUSTAN THOMPSON ASSOCIATES PVT. LTD. 9 IN THE CASE OF GLAXO SMITH (SUPRA), THE BILLING WAS OF ` 21,25,000 AND THE AMOUNT WRITTEN-OFF WAS ` 3,13,430. SIMILAR IS THE FIGURES IN OTHER CASES. THUS, ON THESE FACTS, WE ARE UNABLE TO AGREE WITH T HE FINDINGS OF THE REVENUE AUTHORITIES THAT THE WRITE-OFF IN QUESTION WAS NOT BONAFIDE. IT IS BORNE OUT OF A COMMERCIAL CONSIDERATION AND CANNOT BE TERMED AS ARBITRARY OR IRRATIONAL. IN FACT, IT IS A REVERSAL OF INCOME WHICH WAS BOOKED IN EXCESS. THE JUDGMENT OF HON'BLE SUPREME COURT IN TRF LTD. ( SUPRA), SQUARELY APPLIES. THUS, WE ALLOW THIS GROUND ON THE SIMILAR ISSUE BY THE ASSESSEE. 16. COMING TO THE DISALLOWANCE UNDER SECTION 40(A)(IA), INSOFAR AS GROUND NO.2(A) IS CONCERNED, THE ASSESSEE HAS DEDUCTED TAX UNDER SECTION 194C. IT IS A CASE OF THE ASSESSING OFFICER THAT THE TAX SHO ULD HAVE BEEN DEDUCTED UNDER SECTION 194J. IN OUR CONSIDERED VIEW, UNDER S UCH CIRCUMSTANCES, NO DISALLOWANCE CAN BE MADE UNDER SECTION 40(A)(IA) IN VIEW OF THE DECISION OF THE TRIBUNAL IN ITA NO.70/MUM./2010 IN THE CASE OF M/S. CHANDABHOY & JASSOBHOY, ORDER DATED 8 TH JULY 2011, AND IN THE CASE OF MR. NITIN M. PANCHEMIYA, ITA NO.3874/MUM./2009, AND ITA NO.3244/ MUM./2007, ORDER DATED 17 TH FEBRUARY 2012. FOLLOWING THE SAME, WE DELETE THE D ISALLOWANCE OF ` 3,93,14,264, AND ALLOW THIS GROUND OF THE ASSESSEE . 17. ON GROUND NO.2(A), AS SUGGESTED BY BOTH THE PARTIES , WE SET ASIDE THE SAME TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJ UDICATION BY APPLYING THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN TH E CASE OF MERILYN SHIPPING & TRANSPORT (SUPRA). THIS GROUND IS ALLOWED FOR STA TISTICAL PURPOSE. 18. GROUNDS NO.3, 4(A) AND 4(B) ARE DISMISSED AS NOT PR ESSED. 19. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. WE NOW TAKE UP REVENUES APPEAL IN ITA NO.1865/MUM. /2011. FOLLOWING GROUNDS HAVE BEEN RAISED:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LI CIT(A) MUMBAI HAS ERRED IN DELETING THE DISALLOWANC E MADE BY THE AO OF BAD DEBTS CLAIMED BY THE ASSESSEE AND IN IGNORIN G THE FINDINGS OF THE AO THAT THE BAD DEBTS HAVE BEEN CLAIMED AGAINST PARTIES FROM HINDUSTAN THOMPSON ASSOCIATES PVT. LTD. 10 WHOM ADVANCES HAVE BEEN RECEIVED AND ALSO THE FACT THAT ASSESSEE COMPANY WAS IN FUTURE ALSO DEALING WITH THE SAME CL IENTS AND THUS THE CLAIM OF BAD DEBTS IS MALAFIDE AND ARBITRARY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) MUMBAI ERRED IN DELETING DISALLOWANCE MA DE BY THE AO ON ACCOUNT OF SHORT DEDUCTION OF TDS ON PAYMENT TO FIE LD AGENTS AND PAYMENT FOR EVENT MANAGEMENT BY INVOKING PROVISION OF 40(A)(IA) OF THE INCOME TAX ACT 1961 BY HOLDING THAT THE NATURE OF PAYMENTS IS SUCH THAT THEY ARE LIABLE FOR DEDUCTION OF TAX AT S OURCE UNDER SECTION 194J AND NOT 194C AS DONE BY THE ASSESSEE COMPANY. 20. GROUND NO.1, IS DISMISSED, CONSISTENT WITH THE VIEW TAKEN BY US IN GROUND NO.1 IN ASSESSEES APPEAL, WHICH IS ON THE S AME ISSUE OF ALLOWABILITY OF BAD DEBTS. 21. IN GROUND NO.2, IS DISMISSED FOR THE REASON THAT NO DISALLOWANCE UNDER SECTION 40(A)(IA) CAN BE MADE FOR SHORT DEDUCTION O F TAX, AS HELD IN PARA16, OF THE ORDER. 22. IN THE RESULT, REVENUES APPEAL IS DISMISSED. WE NOW TAKE UP REVENUES APPEAL IN ITA NO.6666/MUM. /2011 AND 6184/MUM./2011, FOR ASSESSMENT YEAR 2005-06. 23. APPEAL IN ITA NO.666/MUM./2011, IS ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE TAX WA S DEDUCTIBLE AT SOURCE FROM THE RELEVANT PAYMENTS @ 2.24% UNDER SEC TION 194C INSTEAD OF @ 5.61% UNDER SECTION 194J AS HELD BY A. O. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O F ` 2,24,37,327 MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(I A) OF THE ACT. 24. CONSISTENT WITH THE VIEW TAKEN BY US WHILE DISPOSIN G OFF GROUND NO.2, OF REVENUES APPEAL FOR ASSESSMENT YEAR 2006-07, WE DISMISS THESE GROUNDS OF APPEAL AS NO DISALLOWANCE UNDER SECTION 40(A)(IA ) CAN BE MADE WHEN THERE IS NO SHORT DEDUCTION OF TAX. 25. IN THE RESULT, REVENUES APPEAL IS DISMISSED. HINDUSTAN THOMPSON ASSOCIATES PVT. LTD. 11 WE NOW TAKE UP ASSESSEES APPEAL IN ITA NO.6184/MUM ./2011, FOR ASSESSMENT YEAR 2005-06. 26. GROUNDS NO.1 AND 2, ARE ON THE ISSUE OF RE-OPENING. 27. GROUNDS NO.3(A), 3(B), 3(C) AND 3(D), ARE ON THE IS SUE OF DISALLOWANCE UNDER SECTION 40(A)(IA). 28. GROUNDS NO.4(A), 4(B) AND 4(C) ARE ALSO ON THE ISSU E OF DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. 29. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REOPENING WAS MADE WITHIN A PERIOD OF FOUR YEARS, AS IS EVIDENT F ROM THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER VIDE PARA-4/PAGE-1. THE REASONS ARE NOTHING BUT A CHANGE OF OPINION. HE POINTED OUT THAT THE OR IGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) AND THE ASSESSING OF FICER ALLOWED THE CLAIM OF THE ASSESSEE DESPITE SHORT DEDUCTION OF TAX. HEN CE, HE ARGUED THAT RE- OPENING IS BAD IN LAW. HE FURTHER SUBMITTED THAT NO NOTICE WAS GIVEN UNDER SECTION 143(2), HENCE, THE ASSESSMENT IS BAD IN LAW . HE POINTED OUT TO PAGE- 14 OF THE ASSESSEES PAPER BOOK AND SUBMITTED THAT ONLY A LETTER WAS ISSUED ON 16 TH NOVEMBER 2010. ALTERNATIVELY, HE SUBMITTED THAT IF THIS LETTER IS CONSIDERED TO BE A NOTICE, THEN THE SAME WAS NOT IS SUED WITHIN A PERIOD OF SIX MONTHS. HE REFERRED TO PAGES-4 AND 5 OF THE COM MISSIONER (APPEALS)S ORDER AT PARA-2.1, AND RELIED ON THE JUDGMENT OF HO N'BLE SUPREME COURT IN CIT V/S DEODHAR ELECTRO DESIGN P. LTD., [2008] 300 ITR 103 (BOM.). 30. ON GROUNDS NO.3(A) AND 3(B), HE RELIED ON THE ARGUM ENTS MADE FOR ASSESSMENT YEAR 2006-07. 31. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, RELIED ON THE ORDER OF THE COMMISSIONER (APPEALS) AND SUBMITTED T HAT SECTION 292BB INTRODUCED W.E.F. 1 ST APRIL 2008, APPLIES AND AS THE ASSESSEE HAD APPEAR ED DURING ASSESSMENT PROCEEDINGS IN RESPONSE TO A NOTI CE / LETTER DATED 16 TH NOVEMBER 2010, AND CO-OPERATED WITH THE ASSESSMENT PROCEEDINGS, HE HINDUSTAN THOMPSON ASSOCIATES PVT. LTD. 12 CANNOT TAKE SUCH A PLEA NOW. ON THE OTHER ISSUE, HE REITERATED HIS ARGUMENT MADE IN THE EARLIER ASSESSMENT YEARS. 32. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A PERUSAL OF THE P APERS ON RECORD, AS WELL AS THE CASE LAWS CITED BEFORE US, WE FIND THAT AT P AGE-13 OF THE ASSESSEES PAPER BOOK, REASONS OF THE RE-OPENING HAVE BEEN STA TED. BEFORE US, THE LEARNED COUNSEL COULD NOT DEMONSTRATE THAT A CONSID ERED VIEW WAS TAKEN BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMEN T PROCEEDINGS UNDER SECTION 143(3) OF THE ACT. AS THE ISSUE HAD NOT BEE N EXAMINED BY THE ASSESSING OFFICER IN THE EARLIER ASSESSMENT YEAR, T HE QUESTION OF THE ASSESSING OFFICER FORMING AN OPINION DOES NOT ARISE AND, HENCE, THE QUESTION OF CHANGE OF OPINION ALSO DOES NOT ARISE. THUS, THE RE-OPENING IS UPHELD. 33. COMING TO THE NOTICE UNDER SECTION 143(2), WE AGREE WITH THE FINDINGS OF THE COMMISSIONER (APPEALS), VIDE PARA-2.2.1 AND 2.2.2 OF HIS ORDER, WHICH ARE EXTRACTED BELOW:- 2.2.1 THUS, IT IS SEEN FROM THE ABOVE THAT THE AB OVE LETTER WAS IN FACT A NOTICE U/S 143(2) IN RESPECT OF THE REASSESS MENT, REQUIRING THE ASSESSEE TO APPEAR BEFORE THE AO. IT IS ALSO TO BE MENTIONED THAT THE APPELLANT HAS TREATED THIS LETTER AS THE NOTICE U/S . 143(2) OF THE ACT. THEREFORE, BY NON MENTIONING THE SECTION, IT DOES N OT MEAN THAT THE LETTER WAS NOT A NOTICE U/S. 143(2) OF THE ACT AS T HE PURPOSE OF THE LETTER AND INTENT OF THE LETTER WAS TO FIX THE HEAR ING BY ASKING THE ASSESSEE TO PRODUCE THE DETAILS AND ATTEND THE HEAR INGS. IT IS ALSO SEEN THAT IN RESPONSE TO THE SAID NOTICE/LETTER, THE APP ELLANT HAS ATTENDED THE HEARING BEFORE THE AO AND DID NOT COMPLAIN TO T HE AFORES ID LETTER/NOTICE AND DID NOT RAISE ANY OBJECTION DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS WITH REGARD TO THAT THE NOTI CE WAS NOT SERVED UPON HIM OR NOT SERVED UPON HIM IN TIME AND SERVED UPON HIM IN IMPROPER MANNER TILL THE COMPLETION OF THE REASSESS MENT PROCEEDINGS. THEREFORE, THE PROVISIONS OF SECTION 292BB WOULD BE APPLICABLE AS THE APPELLANT WOULD BE HAS NOT TAKEN SUCH OBJECTION DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS. THE PROVISIONS OF SECTION 2 92BB INTRODUCED W.E.F. 1-4-2008 READS AS UNDER:WHERE AN ASSESSEE H AS APPEARED IN ANY PROCEEDING OR CO-OPERATED IN ANY INQUIRY RELATI NG TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UNDER ANY PROVISION OF THIS ACT, WHICH IS REQUIRED TO BE SERVED UPON HIM, HAS BEEN DULY SERVED UPON HIM IN TIME IN ACCORDANCE WIT H THE PROVISIONS OF THIS ACT AND SUCH ASSESSEE SHALL BE PRECLUDED FROM TAKING ANY OBJECTION IN ANY PROCEEDING OR INQUIRY UNDER THIS A CT THAT THE NOTICE WAS HINDUSTAN THOMPSON ASSOCIATES PVT. LTD. 13 (A) NOT SERVED UPON HIM; OR (B) NOT SERVED UPON HIM IN TIME; OR (C) SERVED UPON HIM IN AN IMPROPER MANNER: PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHA LL APPLY WHERE THE ASSESSEE HAS RAISED SUCH OBJECTION BEFORE THE COMPL ETION OF SUCH ASSESSMENT OR REASSESSMENT. 2.2.2 IN VIEW OF THE ABOVE, IT IS SEEN THAT THE A SSESSEE HAS APPEARED DURING REASSESSMENT PROCEEDINGS IN RESPONSE TO THE NOTICE/LETTER DATED 16-11-10 AND COOPERATED IN THE ASSESSMENT PRO CEEDINGS. THEREFORE, IT WOULD BE DEEMED THAT THE NOTICE UNDER THE PROVISIONS OF L.T. ACT HAS BEEN DULY SERVED UPON THE ASSESSEE IN TIME IN ACCORDANCE WITH THE PROVISIONS OF THE 1.1. ACT AND, THEREFORE, THE APPELLANT CANNOT TAKE ANY OBJECTION IN ANY PROCEEDINGS OR ENQUIRY UN DER THIS ACT AS THE APPELLANT HAS NOT RAISED SUCH OBJECTION BEFORE THE COMPLETION OF SAID REASSESSMENT PROCEEDINGS. IN THE LIGHT OF THESE FAC TS, THE OBJECTION OF THE APPELLANT IS WITHOUT ANY BASIS AND, THEREFORE, THIS GROUND OF APPELLANT IS LIABLE TO BE REJECTED HENCE, DISMISSED . IN VIEW OF THE AFORESAID FINDINGS OF THE COMMISSION ER (APPEALS), WE DISMISS THIS GROUND ALSO. 34. COMING TO THE GROUND NO.3(A), CONSISTENT WITH THE V IEW TAKEN BY US IN EARLIER ASSESSMENT YEAR ON SIMILAR ISSUE OF SHORT D EDUCTION OF TAX, WE ALLOW THIS GROUND OF THE ASSESSEE. 35. GROUND NO.3(B), CONSISTENT WITH THE VIEW TAKEN IN E ARLIER ASSESSMENT YEAR, WE RESTORE THIS ISSUE TO THE FILE OF ASSESSIN G OFFICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH THE PROVISIONS OF L AW LAID DOWN BY THE VISHAKHAPATNAM SPECIAL BENCH DECISION OF THE TRIBUN AL IN MERILYN SHIPPING AND TRANSPORT (SUPRA). 36. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. WE NOW TAKE UP ASSESSEES APPEAL IN ITA NO.6185/MUM ./2011, FOR ASSESSMENT YEAR 2007-08. 37. GROUND NO.1, IS ON THE ISSUE OF DISALLOWANCE UNDER SECTION 14A OF THE ACT. HINDUSTAN THOMPSON ASSOCIATES PVT. LTD. 14 38. THE LEARNED COUNSEL FOR THE ASSESSEE WANTS RULE-8D TO BE APPLIED. HE ARGUED THAT IF THE LEGISLATURE HOLDS THAT DISALLOWA NCE MADE BY APPLYING RULE- 8D IS REASONABLE DISALLOWANCE, THEN THE ASSESSING O FFICER CANNOT DO OTHERWISE. 39. WE ARE CONVINCED WITH THIS ARGUMENT. WE DIRECT THE ASSESSING OFFICER TO QUANTIFY THE DISALLOWANCE BY APPLYING RULE-8D. A CCORDINGLY, THIS ISSUE IS RESTORED TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. 40. GROUND NO.2, IS ON THE ISSUE OF TREATING SOFTWARE E XPENDITURE AS CAPITAL IN NATURE. 41. THIS ISSUE IS DISMISSED AS NOT PRESSED. 42. GROUND NO.3, IS ON THE DISALLOWANCE UNDER SECTION 4 0(A)(IA) FO THE ACT ON THE PAYMENT MADE TO AGENTS FOR CONDUCTING MARKET RESEARCH SERVICES OUTSIDE INDIA. 43. CONSISTENT WITH THE VIEW TAKEN BY US ON SIMILAR ISS UE IN THE EARLIER ASSESSMENT YEARS, WE RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER FOR DENOVO ADJUDICATION IN ACCORDANCE WITH LAW. 44. GROUND NO.4(A) AND 4(B), ARE ON THE ISSUE OF DISALL OWANCE UNDER SECTION 40(A)(IA), FOR SHORT DEDUCTION OF TDS. 45. SIMILAR IS THE CASE IN GROUNDS NO.5(A), 5(B) AND 5( C) OF THE ACT. 46. CONSISTENT WITH THE VIEW TAKEN BY US IN THE EARLIER ASSESSMENT YEARS, WE HOLD THAT NO DISALLOWANCE CAN BE MADE UNDER SECT ION 40(A)(IA) OF THE ACT ON THE GROUND THAT THERE IS A SHORT DEDUCTION OF TD S. CONSEQUENTLY, GROUNDS NO.4(A), 4(B), 5(A), 5(B) AND 5(C) ARE ALLOWED. 47. GROUND NO.6, IS ON THE NON-GRANT OF CREDIT OF TDS. HINDUSTAN THOMPSON ASSOCIATES PVT. LTD. 15 48. AFTER HEARING BOTH THE PARTIES, WE RESTORE THIS ISS UE TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDA NCE WITH LAW. 49. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MAY 2012 SD/- R.S. PADVEKAR JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH MAY 2012 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, L BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI