The Asstt. Commissioner of Income-tax, Jammu V. M/s The Jammu & Kashmir Bank Ltd, Srinagar

ITA 74/ASR/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8742 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 06-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Business expenditure; Earning of tax free income; Non-deduction of tax; Difference of opinion; TDS; Rule 8D
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 14A; 40(a)(ia); 201; 43; 194J; 40a(ia); 194A; 13; 22

Judgement Text

ITA NO.74, 137 AND 76/ASR./2015 1 IN THE INCOME IN THE INCOME IN THE INCOME IN THE INCOME- -- -TAX APPELLATE TRIBUNAL, TAX APPELLATE TRIBUNAL, TAX APPELLATE TRIBUNAL, TAX APPELLATE TRIBUNAL, (CIRCUIT BENCH AT JALANDHAR) BEFORE : BEFORE : BEFORE : BEFORE : SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI T.S. KAPOOR SHRI T.S. KAPOOR SHRI T.S. KAPOOR SHRI T.S. KAPOOR, ACCOUNTANT MEMBER , ACCOUNTANT MEMBER , ACCOUNTANT MEMBER , ACCOUNTANT MEMBER ITA NO ITA NO ITA NO ITA NOS SS S. .. . 74 & 137(ASR.)/2015 74 & 137(ASR.)/2015 74 & 137(ASR.)/2015 74 & 137(ASR.)/2015 ASST. YEAR ASST. YEAR ASST. YEAR ASST. YEARS SS S: :: : 2010 2010 2010 2010- -- -11 & 2011 11 & 2011 11 & 2011 11 & 2011- -- -12 1212 12 A.C.I.T., CIRCLE 1, VS. M/S. JAMMU & KASHMIR B ANK LTD., JAMMU. M.A. ROAD, SRINAGAR. ITA NO ITA NO ITA NO ITA NOS SS S. .. . 7 77 76 66 6(ASR.)/2015 (ASR.)/2015 (ASR.)/2015 (ASR.)/2015 ASST. YEAR ASST. YEAR ASST. YEAR ASST. YEARS SS S: :: : 2011 2011 2011 2011- -- -12 1212 12 M/S. JAMMU & KASHMIR BANK LTD., VS. A.C.I.T., CIRC LE 1, M.A. ROAD, SRINAGAR. JAMMU. (PAN:AAACT 6167G) (APPELLANT) (RESPONDENT) ASSESSEE ASSESSEE ASSESSEE ASSESSEE BY BYBY BY : :: : SH. R.K. GUPTA, CA REVENUE BY REVENUE BY REVENUE BY REVENUE BY : :: : SH. BHAWANI SHANKER, D.R. DATE OF HEARING DATE OF HEARING DATE OF HEARING DATE OF HEARING : :: : 16.01.2017 DATE OF PRONOUNCEMENT DATE OF PRONOUNCEMENT DATE OF PRONOUNCEMENT DATE OF PRONOUNCEMENT : :: : 2 22 28 88 8 .02.2017 ORDER ORDER ORDER ORDER PER A.D. JAIN, JUDICIAL MEMBER: PER A.D. JAIN, JUDICIAL MEMBER: PER A.D. JAIN, JUDICIAL MEMBER: PER A.D. JAIN, JUDICIAL MEMBER: ITA NOS. 74 & 137/ASR./2015: ITA NOS. 74 & 137/ASR./2015: ITA NOS. 74 & 137/ASR./2015: ITA NOS. 74 & 137/ASR./2015: THESE ARE DEPARTMENTS APPEALS FOR A.YS. 2010-11 A ND 2011-12. COMMON ISSUES ARE INVOLVED AND, THEREFORE, THESE APPEALS A RE BEING DECIDED TOGETHER. FOR CONVENIENCE, FACTS ARE TAKEN FROM ITA NO. 74/AS R./2015. ITA NO.74, 137 AND 76/ASR./2015 2 2. THE FIRST ISSUE CONCERNS DISALLOWANCE U/S. 40(A) (IA) OF THE INCOME-TAX ACT, MADE ON ACCOUNT OF CLEARING HOUSE CHARGES. THE AO MADE DISALLOWANCE FOR NON-DEDUCTION OF TAX U/S. 194J OF THE I.T. ACT ON M ICR CHARGES PAID TO CLEARING HOUSE, I.E., EXPENSES PAID BY VARIOUS BRANCHES OF T HE ASSESSEE, J & K BANK LTD. THE LD. CIT(A) DELETED THE DISALLOWANCE, HOLDING AS FOLLOWS : I HAVE CAREFULLY CONSIDERED THE ISSUE. THE A.O. H AS NOT BROUGHT ON RECORD ANY BASIS ON WHICH HE IS OF THE VIEW THAT TA X IS REQUIRED TO BE DEDUCTED ON MICR CHARGES. MICR CHEQUE CLEARING (MIC R STANDS FOR MAGNETIC INK CHARTER RECOGNITION WHICH MEANS THAT T HE MACHINE RECOGNIZES NUMERIC DATA PRINTED WITH MAGNETIC CHARG ED INK) IS BEING DONE WITH THE HELP OF ULTRAVIOLET RAYS WHICH SCANS THE GENUINENESS OF CHEQUES. IT APPEARS THAT NO HUMAN INTERVENTION IS R EQUIRED IN MICR CLEARING OF CHEQUES BY WAY OF EXAMINING TECHNICAL D ATA, ANALYZING THEM AND MAKING THEM USEFUL FOR SUBSEQUENT USE. IN FACT MICR CLEARANCE 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, FOLLOWING THE PRINCIPLE LAID DOWN BY HON 'BLE SUPREME COURT IN THE CASE OF CIT VS. BHARTI CELLULAR LTD. (2010)234C TR(SC)146, I AM OF THE CONSIDERED OPINION THAT NO TAX IS REQUIRED TO BE DE DUCTED ON MICR CHARGES AND THE A.O IS NOT JUSTIFIED IN HOLDING THA T IN MICR CHARGES, TECHNICAL SERVICES ARE ATTRACTED. ACCORDINGLY, THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT ATTRACTED. SIMILAR TYPE OF DISALL OWANCE HAS ALREADY BEEN DELETED BY ME IN THE ASSESSMENT YEARS 2007-08, 2008 -09 &-2009-10. THUS THIS GROUND OF APPEAL OF THE APPELLANT IS ALLO WED. ITA NO.74, 137 AND 76/ASR./2015 3 3. THE LD. DR CONTENDED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN LAW IN DELETING THE ADDITION MADE IN RESPECT OF DISALLOWAN CE U/S. 40(A)(IA) OF THE INCOME TAX ACT ON ACCOUNT OF CLEARING HOUSE CHARGES , WHEN THE DEPARTMENT IS IN APPEAL BEFORE THE HONBLE HIGH COURT OF J & K ON THE SAME ISSUE FOR A.Y.2008- 09. 4. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, HAS SOUGHT TO PLACE RELIANCE ON ORDER (APB-114) DATED 28.05.2015, PASSE D BY THE AMRITSAR BENCH OF THE TRIBUNAL FOR A.Y. 2008-09 IN THE CASE OF ASS ESSEE, IN THE APPEAL FILED BY THE DEPARTMENT. RELIANCE HAS ALSO BEEN SOUGHT TO BE PLACED ON ORDER (SAPB- 152 TO 163) DATED 15.02.2015, PASSED BY THE AMRITSA R BENCH OF TRIBUNAL IN THE ASSESSEES OWN CASE, IN ITA NO. 294/ASR./2013, FOR A.Y. 2007-08, IN THE APPEAL FILED BY THE DEPARTMENT. 5. IN THIS REGARD, FIRST OF ALL, IT IS SEEN THAT TH E LD. CIT(A), WHILE DELETING THE DISALLOWANCE, HAS OBSERVED THAT MICR CHARGES REPRES ENTING MAGNETIC INK CHARTER RECOGNITION, ARE CHEQUE CLEARING CHARGES. IT IS AN UNDISPUTED FACT THAT THE MACHINE INVOLVES RECOGNIZED NUMERIC DATA PRINTE D WITH MAGNETIC CHARGED INK. THIS IS DONE WITH THE HELP OF ULTRAVIOLET RAYS , WHICH SCANS THE GENUINENESS ITA NO.74, 137 AND 76/ASR./2015 4 OF THE CHEQUES. APPARENTLY, HUMAN INTERVENTION IS N OT REQUIRED IN MICR CLEARING OF CHEQUES, WHICH INVOLVES EXAMINING TECHN ICAL DATA, ANALYZING THEM AND MAKING THEM USEFUL FOR SUBSEQUENT USE. MICR CLE ARANCE OF CHEQUES IS POSSIBLE ONLY BY A MECHANIZED SYSTEM, CONSIDERING T HAT THE PROCESSING IS OF CHEQUES IN BULK. A SIMILAR SITUATION HAD PRESENTED BEFORE THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. BHARTI CELLULAR LTD. , (2010)234CTR(SC)146, FOLLOWING WHICH IT WAS, THAT THE LD. CIT(A) HELD TH E PROVISIONS OF SECTION 40(A)(IA) OF THE ACT NOT TO BE ATTRACTED. THE LD. C IT(A) FOLLOWED HIS OWN ORDER IN THE ASSESSEES CASE FOR A.YS. 2007-08 AND 2009-10 I N DELETING THE DISALLOWANCE. 6. THE ITAT, IN ITS ORDER DATED 28.05.2013 (SUPRA) IN THE ASESSEES CASE FOR A.Y. 2008-09, AND IN ITS ORDER DATED 15.12.2015, IN THE ASESSEES CASE FOR A.Y. 2007-08, HAS UPHELD THE CIT(A)S ORDERS FOR THOSE Y EARS. THESE ORDERS OF THE TRIBUNAL HAVE NOT BEEN SHOWN TO HAVE BEEN REVERSED ON APPEAL, OR EVEN STAYED. THE FACTS IN THE YEAR UNDER CONSIDERATION HAVE ALSO NOT BEEN SHOWN TO HAVE UNDERGONE ANY CHANGE FROM THE EARLIER AFORESAID YEA RS. THEREFORE, FINDING NO ERROR IN THE ORDERS OF THE LD. CIT(A) FOR BOTH THE YEARS UNDER CONSIDERATION, GROUNDS NOS. 1 & 2 TAKEN BY THE DEPARTMENT FOR BOTH THE YEARS ARE REJECTED. ITA NO.74, 137 AND 76/ASR./2015 5 7. THE NEXT ISSUE INVOLVED CONCERNS THE ADDITION IN RESPECT OF DISALLOWANCE OF DEPRECIATION ON WOODEN PARTITIONS. THE AO MADE D ISALLOWANCE BY ALLOWING DEPRECIATION @ 10%, INSTEAD OF 100% AS CLAIMED. THE LD. CIT(A) HELD THE ASSESSEE TO BE ENTITLED TO 100% DEPRECIATION, OBSER VING THAT THE STRUCTURE IN THE FORM OF WOODEN PARTITION WAS PURELY A TEMPORARY WOODEN STRUCTURE ON A RENTED PREMISES, GIVING NO ADVANTAGE OF ENDURING NA TURE; AND THAT SIMILAR DISALLOWANCES HAVE BEEN DELETED IN THE ASSESSEES O WN CASES FOR A.YS. 2005-06 TO 2009-10. 8. THE DEPARTMENT CONTENDS THAT THE EXPENDITURE WAS MADE IN ORDER TO SECURE A LONG LEASE OF A NEW AND MORE SUITABLE BUSI NESS PREMISES AT A LOWER RENT; AND THAT THE ASSESSEE DID NOT GET ANY CAPITAL ASSET BY SPENDING THE AMOUNT, WHICH FACTS HAVE WRONGLY BEEN OVERLOOKED BY THE LD. CIT(A). 9. THE LD. COUNSEL FOR THE ASSESSEE HAS AGAIN PLACE D RELIANCE ON THE AFORESAID TRIBUNAL ORDERS IN THE ASSESSEES OWN CASES. ITA NO.74, 137 AND 76/ASR./2015 6 10. HERE ALSO, THE ISSUE STANDS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY OUR ORDERS (SUPRA) FOR A.YS. 2008-09 AND 2007-08. A CCORDINGLY, GROUND NO. 3 IS ALSO REJECTED IN BOTH THE CASES. 11. GROUND NO. 4 PERTAINS TO ADDITION U/S.40(A)(IA) ON ACCOUNT OF SHORT TDS AS REPORTED IN ANNEXURE J OF THE TAX AUDIT REPORT OF THE ASSESSEE BANK. THE LD. CIT(A) DELETED THE DISALLOWANCE, FOLLOWING HIS ORDE R FOR A.Y. 2009-10. 12. AS CONTENDED ON BEHALF OF THE ASSESSEE, THE HON BLE CALCUTTA HIGH COURT, VIDE ORDER (APB 20 TO 22) DATED 03.12.2012 PASSED I N THE CASE OF CIT, KOLKATA VS. S.K. TERIWAL, IN ITA NO. 183/2012, GA NO. 2069 OF 2012, HAS UPHELD THE TRIBUNAL ORDER IN THAT CASE (AS FOLLOWED BY THE TRI BUNAL IN THE CASE OF THE PRESENT ASSESSEE). THE TRIBUNAL ORDER IN THE CASE O F S.K. TERIWAL HAS BEEN PLACED AT APB 15 TO 19. THE REASONING ADOPTED THERE IN HAS BEEN UPHELD BY THE HONBLE HIGH COURT, HOLDING THAT SINCE NO SUBSTANT IAL QUESTION WAS INVOLVED, THE APPEAL WAS BEING DISMISSED. THE REASONING OF TH E TRIBUNAL IS AS FOLLOWS : IN THE PRESENT CASE BEFORE US THE ASSESSEE HAS DED UCTED TAX U/S. 194C(2) OF THE ACT BEING PAYMENTS MADE TO SUB-CONTR ACTORS AND IT IS NOT A CASE OF NON-DEDUCTION OF TAX OR NO DEDUCTION OF T AX AS IS THE IMPORT OF SECTION 40A(IA) OF THE ACT. BUT THE REVENUE'S CONTE NTION IS THAT THE ITA NO.74, 137 AND 76/ASR./2015 7 PAYMENTS ARE IN THE NATURE OF MACHINERY HIRE CHARGE S FALLING UNDER THE HEAD 'RENT' AND THE PREVIOUS PROVISIONS OF SECTION 1941 OF THE ACT ARE APPLICABLE. ACCORDING TO REVENUE, THE ASSESSEE HAS DEDUCTED TAX @ 1% U/S. 194C(2) OF THE ACT AS AGAINST THE ACTUAL DEDUC TION TO BE MADE AT 10% U/S. 1941 OF THE ACT, THEREBY LESSER DEDUCTION OF T AX. THE REVENUE HAS MADE OUT A CASE OF LESSER DEDUCTION OF TAX AND THAT ALSO UNDER DIFFERENT HEAD AND ACCORDINGLY DISALLOWED THE PAYMENTS PROPOR TIONATELY BY INVOKING THE PROVISIONS OF SECTION 40(A}(IA) OF THE ACT. THE LD. C1T, DR ALSO ARGUED THAT THERE IS NO WORD LIKE FAILURE USED IN SECTION 40(A)(IA) OF THE ACT AND IT REFERRED TO ONLY NON-DEDUCTION OF TA X AND DISALLOWANCE OF SUCH PAYMENTS. ACCORDING TO HIM, IT DOES NOT REFER TO GENUINENESS OF THE PAYMENT OR OTHERWISE BUT ADDITION U/S. 40(A)(IA} CA N BE MADE EVEN THOUGH PAYMENTS ARE GENUINE BUT TAX IS NOT DEDUCTED AS REQUIRED U/S.40(A)(IA) OF THE ACT. WE ARE OF THE VIEW THAT T HE CONDITIONS LAID DOWN U/S.40(A)(IA) OF THE ACT FOR MAKING ADDITION IS THA T TAX IS DEDUCTIBLE AT SOURCE AND SUCH TAX HAS NOT BEEN DEDUCTED. IF BOTH THE CONDITIONS ARE SATISFIED THEN SUCH PAYMENT CAN BE DISALLOWED U/S. 40(A)(IA) OF THE ACT BUT WHERE TAX IS DEDUCTED BY THE ASSESSEE, EVEN UND ER BONAFIDE WRONG IMPRESSION, UNDER WRONG PROVISIONS OF TDS, THE PROV ISIONS OF SECTION 40(A)(IA) OF THE ACT CANNOT BE INVOKED. HERE IN THE PRESENT CASE BEFORE US, THE ASSESSEE HAS DEDUCTED TAX U/S. 194C(2) OF THE A CT AND NOT U/S. 1941 OF THE ACT AND THERE IS NO ALLEGATION THAT THIS TDS IS NOT DEPOSITED WITH THE GOVERNMENT ACCOUNT. WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTION 40(A) (LA) OF THE ACT HAS TWO LIMBS ONE IS WHERE, I NTER ALIA, ASSESSEE HAS TO DEDUCT TAX AND THE SECOND WHERE AFTER DEDUCTING TAX , INTER ALIA, THE ASSESSEE HAS TO PAY INTO GOVERNMENT ACCOUNT. THERE IS NOTHING IN THE SAID SECTION TO TREAT, INTER ALIA, THE ASSESSEE AS DEFAU LTER WHERE THERE IS A SHORTFALL IN DEDUCTION. WITH REGARD TO THE SHORTFAL L, IT CANNOT BE ASSUMED THAT THERE IS A DEFAULT AS THE DEDUCTION IS NOT AS REQUIRED BY OR UNDER THE ACT, BUT THE FACTS IS THAT THIS EXPRESSION, 'ON WHI CH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BE EN DEDUCTED OR, AFTER DEDUCTION HAS NOT BEEN PAID ON OR BEFORE THE DUE DA TE SPECIFIED IN SUB- SECTION (1) OF SECTION 139. THIS SECTION 40(A)(IA) OF THE ACT REFERS ONLY TO THE DUTY TO DEDUCT TAX AND PAY TO GOVERNMENT ACCOUN T. IF THERE IS ANY SHORTFALL DUE TO ANY DIFFERENCE OF OPINION AS TO TH E TAXABILITY OF ANY ITEM OR THE NATURE OF PAYMENTS FALLING UNDER VARIOUS TDS PROVISIONS, THE ASSESSEE CAN BE DECLARED TO BE AN ASSESSEE IN DEFAU LT U/S. 201 OF THE ACT AND NO DISALLOWANCE CAN BE MADE BY INVOKING THE PRO VISIONS OF SECTION 40{A)(IA) OF THE ACT. ITA NO.74, 137 AND 76/ASR./2015 8 ACCORDINGLY, WE CONFIRM THE ORDER OF CIT (A) ALLOWI NG THE CLAIM OF ASSESSEE AND THIS ISSUE OF REVENUE'S APPEAL IS DISM ISSED. 13. IN VIEW OF ABOVE, THIS ISSUE RAISED BY THE DEPARTM ENT ALSO DOES NOT CARRY ANY MERIT. ACCORDINGLY, GROUND NO. 4 IS REJECTED. 14. THE NEXT ISSUE PERTAINS TO ADDITION ON ACCOUNT OF NON-DEDUCTION OF TAX ON INTEREST PAID TO JAMMU DEVELOPMENT AUTHORITY. THE A O MADE PROPORTIONATE DISALLOWANCE U/S. 40(A)(IA) FOR SHORT DEDUCTION OF TAX AS REPORTED IN ANNEXURE J OF THE AUDIT REPORT OF THE ASSESSEE BANK. THE L D. CIT(A) FOLLOWED HIS ORDER OF A.Y. 2009-10 IN THE ASSESSEES CASE WHILE DELETING THE ADDITION. AS PER THE DEPARTMENT, THE LD. CIT(A) HAS ERRED IN DELETING TH E ADDITION ON ACCOUNT OF NON- TDS ON INTEREST PAID TO JDA, AS JDA IS A TAXABLE EN TITY, ASSESSED AS A LOCAL AUTHORITY AND AS SUCH, IT WAS THE LIABILITY AND RES PONSIBILITY OF THE ASSESSEE BANK TO DEDUCT TDS ON INTEREST PAID TO JDA. 15. HERE ALSO, THE TRIBUNAL, IN THE ASSESSEES CASE OF A.YS. 2008-09 AND 2007- 08 (SUPRA), HAS UPHELD THE DELETION OF THE ADDITION S FOR THOSE YEARS. FOR A.Y. 2007-08 (APB 161 163), THE TRIBUNAL HAS HELD AS F OLLOWS : ITA NO.74, 137 AND 76/ASR./2015 9 29. IT HAS NOT BEEN DISPUTED THAT JAMMU DEVELOPMEN T AUTHORITY STANDS INCORPORATED BY THE J & K DEVELOPMENT ACT, 1 970. C.B.D.T. NOTIFICATION NO.3439, DATED 27.10.1970, ISSUED, IN PURSUANCE 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 AC T, TOO. THEREFORE, THE PROVISIONS OF SECTION 194A OF THE ACT ARE NOT APPLI CABLE, DUE TO WHICH, THE PROVISIONS OF .SECTION 40(A)(IA) ARE ALSO NOT ATTRA CTED. 30. MOREOVER, THE TRIBUNAL, IN THE ASSESSEE'S CASE (SUPRA) FOR THE ASSESSMENT YEAR 2008-09, HAS HELD, AS FOLLOWS ON TH E ISSUE: '15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. WE HAVE PERUSED THE ORDER OF ITA T DELHI BENCH IN THE CASE OF CHIEF/SENIOR MANAGER, ORIENTAL BANK OF COMMERCE VS. ITO (TDS & SURVEY) (SUPRA) AND OUR EARLIER ORDERS M ENTIONED 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 SEE'S OWN CASE, ESPECIALLY AT PAGE 12 OF THE SAID ORDER AT PB -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 OR DER OF THE ITAT, DELHI BENCH I, WE DISMISS THE APPEAL FI LED BY THE REVENUE BY HOLDING THAT THE JAMMU DEVELOPMENT AUTHO RITY 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 THAT NO TAX WAS DEDUCTIBLE ON ACCRUED INTEREST ON FDRS OF JAMMU DEVELOPMENT AUTHORITY WITH J & K BANK LTD. KEEPING IN VIEW THE ABOVE DISCUSSIONS, WE HOLD THAT NO INTERFERENCE IS CALLED ITA NO.74, 137 AND 76/ASR./2015 10 FOR IN THE WELL REASONED IMPUGNED ORDER PASSED BY T HE ID. FIRST APPELLATE AUTHORITY AND ACCORDINGLY, WE UPHOL D 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 ID. CIT(A), SINCE ON IDENTICAL FAC TS, THE ISSUE IS COVERED BY OUR OWN DECISION IN ITA NOS. 206 TO 210( ASR) DATED 24.04.2012 MENTIONED HEREINABOVE AND THE ARGUMENTS OF LD DR ON PER INCURIAM CANNOT BE ENTERTAINED BEING WITHOUT A NY BASIS .THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORD ER OF THE LD. CJT(A) WHO HAS RIGHTLY DELETED THE DISALLOWANCE. TH US, 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 TRIBUN AL ORDER HAS ALSO NOT BEEN SHOWN TO HAVE BEEN UPSET ON APPEAL. . THEREFORE, THE FINDINGS OF THE TRIBUNAL FOR AY 20 08-09 ARE SQUARELY APPLICABLE TO THE PRESENT CASE ALSO. 33. IN VIEW OF THE ABOVE, GROUND NO. 5 IS ALSO FOUN D TO BE WITHOUT ANY MERIT AND THE SAME IS REJECTED. 16. IN THIS REGARD, GROUND NO. 6 STATES THAT THE LD . CIT(A) ERRED IN NOT CONSIDERING THE DECISION OF THE HONBLE SUPREME COU RT IN APPEAL (CIVIL) NO.6832/2003, DATED 03.06.2006 IN THE CASE OF ADIT YAPUR INDUSTRIAL AREA DEVELOPMENT AUTHORITY VS. UNION OF INDIA & OTHERS, WHICH IS APPLICABLE IN THIS ITA NO.74, 137 AND 76/ASR./2015 11 CASE, AS THE HONBLE SUPREME COURT HAS HELD THAT TH E APPELLANT/AUTHORITY COULD NOT CLAIM EXEMPTION FROM UNION TAXATION UNDER ARTIC LE 289(1) OF THE CONSTITUTION OF INDIA. HOWEVER, AT THE TIME OF ARGU MENT BEFORE US, NEITHER WAS THIS ARGUMENT TAKEN, NOR WAS THE DECISION OF THE HO NBLE SUPREME COURT FILED. 17. FOLLOWING THE TRIBUNAL ORDERS IN THE ASSESSEES CASES FOR AY 2008-09 AND 2007-08, WHICH HAVE NOT BEEN SHOWN TO HAVE BEEN REV ERSED ON APPEAL, OR EVEN STAYED, THE ORDER OF THE LD. CIT(A) ON THIS ISSUE I S CONFIRMED. GROUND NOS. 5 & 6 ARE REJECTED. 18. GROUND NO.7 CHALLENGES THE ACTION OF THE LD. CI T(A) IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE U/S. 14A O F THE ACT. 19. THE LD. CIT(A) DELETED THE ADDITION BY OBSERVIN G AS FOLLOWS : I HAVE CONSIDERED THE ARGUMENT OF THE APPELLANT. I T HAS BEEN HELD IN APPELLANT'S OWN CASE IN EARLIER YEARS THAT NO DI SALLOWANCE U/S 14A IS REQUIRED TO BE MADE IN RESPECT OF INTEREST OR MANAG EMENT COST. THERE IS NO DOUBT THAT THE FACTS AND FIGURES FOR THE YEAR UN DER CONSIDERATION HAS NOT UNDERGONE ANY CHANGE FROM THE EARLIER YEARS. HO WEVER IF ANY DISALLOWANCE IS TO BE MADE THE AO HAS TO DISAPPROVE THE METHOD OF ITA NO.74, 137 AND 76/ASR./2015 12 ACCOUNTING THAT HE IS NOT SATISFIED WITH THE CLAIM OF THE ASSESSEE . FOR THIS 14A(3) EMPOWERS THE AO TO WORK OUT THE DISALLOWANCE AS PER PRESCRIBED METHOD EVEN IF THE ASSESSEE STATES THAT THERE IS NO EXPENDITURE TO EARN THE EXEMPT INCOME. BUT FOR ALL THIS THE AO IS DUTY BOUND TO DISAPPROVE THE CONTENTION OF THE ASSESSEE. NOW, HERE THE APPELLANT HAS OFFERED WHOLE OF ITS INCOME TO TAX AND IT HAS BEEN HELD IN EARLIER Y EARS THAT THERE IS NO RELATED COST WHICH CAN BE STATED TO BE INCURRED FOR EARNING SUCH INCOME THEN IT IS THE DUTY OF THE AO TO RECORD HIS SATISFA CTION BEFORE INVOKING RULE 8D AND MAKING ADDITIONAL DISALLOWANCE OF RS.2,81,04 ,160/- AS TO WHY HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. SUB- SECTION (2) OF SEC.14 STATES THAT 'THE ASSESSING OF FICER SHALL DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT IN ACCORDANCE WITH THE METHOD AS MAY BE PRESCRIBED, IF THE ASSESSING OFFIC ER, HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, IS NOT SATISFIED WITH THE CORRECTNESS OF CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN R ELATION TO INCOME WHICH DO NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT . IN THE YEAR UNDER CONSIDERATION, THE APPELLANT BANK HAS SHOWN THAT THE INVESTMENTS FROM WHICH THIS INCOME OF RS.49,35, 591/- HAS BEEN EARNED ARE BEING TREATED AS STOCK IN TRADE AND NOT AS AN INVESTMENT. THUS IN VIEW OF THIS FACT ALTHOUGH INCOME FROM DIVIDEND OF RS.49,35,591/- BEING EXEMPT U/S 10(34) YET THE APPELLANT BANK TREA TING THESE INVESTMENTS AS STOCK IN TRADE HAS OFFERED WHOLE OF THE AMOUNT TO TAX AND NOT CLAIMED EXEMPTION ON THIS INCOME UNDER RESPECTI VE SECTION. NOW, SEC.14A IS APPLICABLE TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME WHEREAS THE FACTS IN THIS CASE ARE ENTIRELY DIFFERE NT. THE APPELLANT HAS OFFERED THIS INCOME TO TAX AND HAS NOT CONSIDERED T HIS INCOME AS NOT FORM OF TOTAL INCOME. THUS IN MY CONSIDERED OPINION IT W AS NOT REQUIRED FROM AO TO INVOKE THE PROVISIONS OF SEC.!4A.RATHER,THIS ASPECT OF THE APPELLANT BANK IS IN THE INTEREST OF REVENUE. HAD THE APPELLA NT CLAIMED THIS INCOME EXEMPT EVEN THEN THE FACTS AND FIGURES DO REVEAL TH AT THESE ARE EXACTLY THE SAME AS IN THE PREVIOUS YEARS WHEREIN THOSE YEARS T HE APPELLATE AUTHORITIES INCLUDING MYSELF HAVE GIVEN A FINDING T HAT IN VIEW OF OWN ITA NO.74, 137 AND 76/ASR./2015 13 FUNDS THERE CANNOT BE ANY DISALLOWANCE FOR INTEREST COST AND IN VIEW OF THE FACT THAT MANAGEMENT COST IS FIXED WHETHER OR N OT THIS EXEMPT INCOME IS EARNED THERE CANNOT BE ANY MANAGEMENT COST RELAT ED TO EARN THIS EXEMPT INCOME. UNDER SUCH FACTS AND CIRCUMSTANCES, I AM NOT IN AGR EEMENT WITH THE AO TO MAKE DISALLOWANCE U/S 14A BY APPLYING RULE 8D FURTHER, THERE IS NO NEED TO DISCUSS THE CONTENTION S OF THE APPELLANT ON OTHER GROUNDS TO SET OFF LOSS FROM EXEMPT INCOME TO TAXABLE INCOME WHEN I HAVE GIVEN FINDING THAT NO DISALLOWANCE U/S 14A IS TO BE MADE UNDER SUCH FACTS & CIRCUMSTANCES. SIMILAR TYPE OF D ISALLOWANCE HAS BEEN DELETED BY ME IN THE ORDER PASSED IN APPEAL NO, 346 /11-12 PERTAINING TO ASSESSMENT YEAR 2009-10. HENCE, THE DISALLOWANCE MA DE BY THE AO OF RS.2,81,04,160/- IS HEREBY DELETED. 20. .. . IN THIS CONNECTION, IT IS SEEN THAT THE LD. CIT(A) HELD THAT, AS HELD IN THE EARLIER YEARS, DISALLOWANCE U/S. 14A CAN BE MADE ON LY IF THE AO DISAPPROVES THE METHOD OF ACCOUNTING OF THE ASSESSEE, BEING NOT SAT ISFIED WITH THE ASSESSEES CLAIM; THAT SECTION 14A(3) EMPOWERS THE AO TO WORK OUT THE DISALLOWANCE AS PER THE PRESCRIBED METHOD, EVEN IF IT IS STATED THA T NO EXPENDITURE WAS INCURRED TO EARN THE EXEMPT INCOME; THAT IN THIS CASE, THE A SSESSEE HAS OFFERED THE WHOLE OF ITS INCOME TO TAX AND IN THE EARLIER YEARS, IT H AS BEEN HELD THAT THERE IS NO RELATED COST WHICH CAN BE SAID TO HAVE BEEN INCURRE D FOR EARNING SUCH INCOME; THAT IN THESE FACTS, BEFORE INVOKING RULE 8D OF THE IT RULES AND MAKING ADDITIONAL DISALLOWANCE, THE AO WAS REQUIRED TO REC ORD HIS SATISFACTION AS TO THE ITA NO.74, 137 AND 76/ASR./2015 14 INCORRECTNESS OF THE CLAIM OF THE ASSESSEE; THAT IN THE YEAR UNDER CONSIDERATION, THE BANK HAD SHOWN THAT THE INVESTMENTS, FROM WHICH INCOME HAD BEEN EARNED, STOOD TREATED AS STOCK IN TRADE RATHER THAN INVESTM ENT; THAT THE ASSESSEE HAD NOT CLAIMED EXEMPTION ON THIS INCOME; THAT AS SUCH, THE ASSESSEE HAD OFFERED ITS INCOME AND HAD NOT CONSIDERED THE INCOME TO BE PART OF ITS TOTAL INCOME; THAT THEREFORE, SECTION 14A OF THE ACT WAS NOT APPLICABL E AND IT COULD NOT HAVE BEEN INVOKED; THAT HAD THE ASSESSEE CLAIMED THIS INCOME EXEMPT, IT WAS EXACTLY THE SAME AS IN THE EARLIER YEARS, IN WHICH YEARS, IT WA S HELD THAT IN VIEW OF THE ASSESSEES OWN FUNDS, NO DISALLOWANCE OF INTEREST C OST COULD HAVE BEEN MADE AND THAT IN VIEW OF THE FACT THAT MANAGEMENT COST I S FIXED, WHETHER OR NOT THIS IS EXEMPT INCOME AS EARNED, THERE CANNOT BE ANY MANAGE MENT COST RELATING TO THIS EXEMPT INCOME EARNED; AND THAT A SIMILAR DISALLOWAN CE HAS BEEN DELETED BY HIM [THE LD. CIT(A)] IN THE ASSESSEES CASE FOR A.Y 200 9-10. 21. THE FACTS ARE NOT DISPUTED. FOR A.Y. 2002-03, T HE TRIBUNAL, VIDE ORDER (APB 23 TO 42) DATED 31.12.2012, IN ITA NO.136/ASR. /2010 AND CO NO. 09/ASR/2010 AND FOR A.YS. 2003-04 & 2004-05, VIDE O RDER (APB 43 TO 66), DATED 23.01.2013, IN ITA NOS. 43, 53, 85, 86 AND 41 8/ASR./2012 AND CO NOS. 4 TO 6 & 33/ASR./2012, THE CIT(A)S ORDERS, WHICH ARE ON SIMILAR LINES AS THOSE IN ITA NO.74, 137 AND 76/ASR./2015 15 THE YEAR UNDER CONSIDERATION, WERE UPHELD. AS CONTE NDED, THE ASSESSEES OWN FUNDS BEING USED, NO INTEREST COST IS INCURRED WHIC H CAN BE SAID TO BE RELATED TO EARN INCOME. THE MANAGEMENT COST SHALL ALSO REMAIN FIXED EVEN IF SUCH INCOME IS EARNED. FURTHER, FOR AYS 2005-06 AND 2006-07, AG AIN, THE CIT(A), VIDE ORDER (APB 67 TO 115) DATED 12.02.2014, DELETED THE SIMIL AR ADDITIONS. IT HAS BEEN STATED ON BEHALF OF THE ASSESSEE, AND NOT DENIED BY THE DEPARTMENT, THAT THE DEPARTMENT HAS NOT FILED ANY APPEAL AGAINST THE SAI D CIT(A)S ORDERS FOR A.Y. 2005-06 AND 2006-07. THEN, OBVIOUSLY, AS HELD BY TH E MUMBAI BENCH OF THE TRIBUNAL, VIDE ORDER (APB 116-120) DATED 01.01.2005 , IN ITA NO. 5592/MUM/2012 IN THE CASE OF DAGA GLOBAL CHEMICALS LTD. VS. ACIT, DISALLOWANCE U/S. 14A READ WITH RULE 8D OF THE IT R ULES CANNOT EXCEED THE EXEMPT INCOME. MOREOVER, NO INTEREST EXPENDITURE DI SALLOWANCE MADE IN RELATION TO DIVIDEND RECEIVED FROM TRADING IN SHARE S IS SUSTAINABLE IN LAW, AS HELD BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CAS E OF DCIT VS. INDIA ADVANTAGE SECURITIES LTD., IN ITA NO. 6711/MUM/201 1, VIDE ORDER (APB 121- 127) DATED 14.09.2012. 22. IN VIEW OF THE ABOVE, HERE ALSO, WE DO NOT FIND ANY ERROR WHATSOEVER IN THE ORDER OF THE LD. CIT(A), WHICH IS CONFIRMED. GR OUND NO. 7 IS REJECTED. ITA NO.74, 137 AND 76/ASR./2015 16 23. AS STATED AT THE BEGINNING OF THIS ORDER, THE F ACTS IN BOTH THE APPEALS OF THE DEPARTMENT, I.E., THAT FOR A.Y. 2010-11 AND THA T FOR A.Y. 2011-12, ARE SIMILAR AND THE ISSUES ARE COMMON IN BOTH THE APPEALS INTER SE. THEREFORE, OUR OBSERVATIONS SHALL, MUTATIS MUTANDIS, APPLY EQUALLY TO ITA NO. 137/ASR./2015, THE DEPARTMENTS APPEAL FOR A.Y. 2011-12. ACCORDING LY, BOTH THE APPEALS ARE DISMISSED. ITA NO. 76/ASR./2015: ITA NO. 76/ASR./2015: ITA NO. 76/ASR./2015: ITA NO. 76/ASR./2015: 24. THIS IS ASSESSEES APPEAL FOR A.Y. 2011-12, CON TENDING THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE AS SESSING OFFICER FOR MAKING DISALLOWANCE OF RS.3,20,000/-, RS.28,000/-, RS.8,27 ,250/- AND RS.65,000/- ON ACCOUNT OF PROFESSIONAL CHARGES AND RS.1,11,700/- A ND RS.34,000/- IN RESPECT OF COURIER CHARGES CLAIMED AS EXPENDITURE BY THE GENER AL DEPARTMENT OF THE ASSESSEE J & K BANK DURING THE YEAR UNDER CONSIDERA TION, THOUGH PERTAINING TO EARLIER YEAR. ITA NO.74, 137 AND 76/ASR./2015 17 25. DISALLOWANCE OF RS.52,38,857/- ON ACCOUNT OF PR IOR PERIOD EXPENDITURE DEBITED TO PROFIT & LOSS ACCOUNT OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION, WAS MADE BY THE AO. 26. THE LEARNED CIT(A), CONFIRMING THE DISALLOWANCE , AS MENTIONED ABOVE, HELD THAT THE LIABILITY OF THE EXPENSES ON ACCOUNT OF PROFESSIONAL FEES PAID, STATED AS BOOKED AND PAID ON COMPLETION OF ASSIGNME NT OR SUBMISSION OF REPORT, SHOULD HAVE BEEN PROVIDED FOR IN THE BOOKS IN F.Y. 2009-10, IN THE ABSENCE OF WHICH, THESE EXPENSES WERE NOT ALLOWABLE ; AND THAT THE PROVISIONS IN RESPECT OF OLD ENTRIES ON ACCOUNT OF COURIER CHARGE S SHOULD HAVE BEEN MADE IN THE YEAR TO WHICH THEY ACTUALLY PERTAIN. THE LD. CI T(A) HELD THAT THE AMOUNT HAS TO BE PROVIDED FOR IN THE BOOKS IN THE FINANCIAL YE AR TO WHICH IT ACTUALLY PERTAINS AND THEN, IT HAS TO BE DISALLOWED U/S. 40(A)(IA) AN D ADDED BACK TO THE INCOME IN THAT YEAR, AND IT HAS TO BE SUBSEQUENTLY ALLOWED IN THE F.Y. WHEN THE TAX ON THIS EXPENDITURE WAS DEDUCTED AND DEPOSITED; AND THAT IN THE PRESENT CASE, NEITHER HAD THE ASSESSEE CLAIMED THESE EXPENSES IN EARLIER FINANCIAL YEARS, NOR HAD THEY BEEN DISALLOWED. ITA NO.74, 137 AND 76/ASR./2015 18 27. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTEN DED THAT THE LD. CIT(A) HAS ERRED IN REJECTING THE CONTENTION OF THE ASSESS EE THAT THESE EXPENSES ARE ALLOWABLE, AS TAX THEREON HAS BEEN DEDUCTED AND DEP OSITED IN THE YEAR UNDER CONSIDERATION AND AS PER THE PROVISO TO SECTION 40( A)(IA) WHERE IN RESPECT OF ANY SUM, TAX HAS BEEN DEDUCTED AND PAID IN THE SUBS EQUENT YEAR, SUCH SUM HAS TO BE ALLOWED AS DEDUCTION IN THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. 28. ON THE OTHER HAND, THE LD. DR PLACED STRONG REL IANCE ON THE IMPUGNED ORDER. 29. AS PER PROVISO TO SECTION 40(A)(IA), WHERE IN R ESPECT OF ANY SUM TAX HAS BEEN DEDUCTED AND PAID IN THE SUBSEQUENT YEAR, THEN , SUCH SUM HAS TO BE ALLOWED AS DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR, IN WHICH SUCH SUM HAS BEEN PAID. THE LD. CIT(A), WHILE CONFI RMING THE DISALLOWANCE, HAS OBSERVED THAT THE AMOUNT HAS TO BE PROVIDED FOR IN THE BOOKS OF ACCOUNT IN THE FINANCIAL YEAR TO WHICH IT ACTUALLY PERTAINS; THAT IT THEN HAS TO BE DISALLOWED U/S. 40(A)(IA) AND ADDED BACK TO THE INCOME IN THAT YEAR ; AND THAT IT HAS TO BE SUBSEQUENTLY ALLOWED IN THE FINANCIAL YEAR IN WHICH THE TAX THEREON WAS ITA NO.74, 137 AND 76/ASR./2015 19 DEDUCTED AND DEPOSITED. SINCE THE ASSESSEE HAD NOT DONE SO, THE DISALLOWANCE HAS BEEN CONFIRMED. 30. THE ANSWER TO THE OBJECTION/OBSERVATION OF THE LD. CIT(A), AS CORRECTLY CONTENDED, IS TO BE FOUND IN COMMISSIONER OF INCOM E TAX VS. SMCC CONSTRUCTION, DELHI, 320 ITR 534 (DEL). THE HON BLE HIGH COURT, IN THAT CASE, UPHELD THE OBSERVATIONS/FINDINGS OF THE TRIBUNAL TH AT BECAUSE OF SECTION 40(A)(IA) OF THE ACT, THE DEDUCTION HAS TO BE ALLOW ED IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TDS HAS BEEN PAI D; THAT SECTION 40(A)(IA) STARTS WITH NON-OBSTANTE CLAUSE, WHICH IS TO THE EF FECT THAT SECTION 40 OVERRIDES THE PROVISIONS OF SECTIONS 30 TO 38; THAT THE AMOUN TS WHICH MAY OTHERWISE BE ALLOWABLE AS BUSINESS EXPENDITURE AS PER THE PROVIS IONS OF SECTIONS 30 TO 38 AND WHICH IS CHARGEABLE TO TAX IN THE HANDS OF THE RECIPIENT, WOULD NOT BE ALLOWED AS A DEDUCTION, UNLESS THE REQUISITE AMOUNT OF TAX HAS BEEN DEDUCTED ON THE SAID AMOUNT; THAT THUS, MERELY PASSING A DEB IT ENTRY OF THESE EXPENSES IN THE BOOKS OF ACCOUNT, WOULD NOT BE SUFFICIENT FOR C LAIMING THE DEDUCTION IN THE PRESENT ACCOUNT IN THE CONCERNED YEAR AND THEN ALSO , THE DEDUCTION WOULD NOT BE ADMISSIBLE, UNLESS TAX HAS BEEN PAID ON SUCH AMO UNT; AND THAT THE PROVISO TO ITA NO.74, 137 AND 76/ASR./2015 20 SECTION 40(A)(IA) MAKES IT CLEAR THAT IF TAX HAS BE EN DEDUCTED IN THE SUBSEQUENT YEAR AND PAID, THEN DEDUCTION WOULD BE ALLOWED IN T HAT YEAR. 31. OBVIOUSLY, THOUGH IT MAY BE IMPORTANT FOR ACCOU NTING PURPOSES, PASSING OF A DEBIT ENTRY IN THE BOOKS OF ACCOUNT, CONCERNIN G THE EXPENSES IN THE YEAR IN WHICH THE EXPENSES WERE INCURRED, FOR THE PURPOSES OF SECTION 40(A)(IA) OF THE IT ACT, IT IS NOT DETERMINATIVE OF THE DEDUCTIBILIT Y PARTICULARLY THE YEAR THEREOF. THE PROVISO TO SECTION 40(A)(IA), AS CONSIDERED BY THE HONBLE DELHI HIGH COURT, IS UNAMBIGUOUS. IRRESPECTIVE OF THE DEBIT ENTRY HAV ING NOT BEEN MADE IN THE YEAR OF INCURRENCE OF THE EXPENDITURE, THE DEDUCTIO N NEEDS TO BE ALLOWED IN THE YEAR IN WHICH THE TAX ON THE EXPENSE IS DEDUCTED AN D PAID, PARTICULARLY WHEN THE GENUINENESS OF THE EXPENDITURE, I.E., ADMISSIBI LITY OF THE DEDUCTION IS NOT IN DISPUTE. THIS, EVIDENTLY, IS THE RATIONALE BEHIND SMCC (SUPRA). 32. IN THE PRESENT CASE, AS IN SMCC (SUPRA), THE ADMISSIBILITY OF THE EXPENDITURE, I.E., THE GENUINENESS THEREOF, HAS NOW HERE BEEN QUESTIONED. ITA NO.74, 137 AND 76/ASR./2015 21 33. IN VIEW OF THE ABOVE, THE GRIEVANCE RAISED BY T HE ASSESSEE IS QUITE JUSTIFIED AND IT IS ACCEPTED AS SUCH. THE CIT(A)S ORDER IS R EVERSED. THE ADDITION IS DELETED. THE APPEAL IS ALLOWED. 34. IN THE RESULT, ITA NOS. 74 & 137/ASR./2015 FILE D BY THE DEPARTMENT FOR A.YS. 2010-11 AND 2011-12 ARE DISMISSED, WHEREAS IT A NO. 76/ASR./2015 FILED BY THE ASSESSEE FOR A.Y. 2011-12 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.02.2017. S SS SD DD D/ // /- -- - S SS SD DD D/ // /- -- - (T.S. KAPOOR) (T.S. KAPOOR) (T.S. KAPOOR) (T.S. KAPOOR) (A.D. JAIN) (A.D. JAIN) (A.D. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28.02.2017 *AKS* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSTT. RE GISTRAR