SANDVIK ASIA LTD., Pune V. JT. CIT OF SPL RANGE 5, Pune

ITA 758/PUN/1999

• Counselvise Citation: 75824514 RSA 1999
• Duration Of Justice: 12 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-11-2011
• Assessment Year: 1994-1995
• Appeal Filed On: 07-10-1999
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA
• Assessee Lawyers: J D MISTRY
• Keywords: Non-deduction of tax; Bad and doubtful debts
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APP ELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO 758/PN/99 & CO NO 58/PN/05 (ASSTT. YEAR: 1994-95) SANDVIK ASIA LTD., .. APPELLANT/CROSS OBJECTOR MUMBAI-PUNE ROAD, DAPODI, PUNE 411 012 VS. JT. COMMISSIONER OF INCOME-TAX, .. RESPOND ENT SPL. RANGE 5, PUNE AND ITA NO 113/PN/98 (ASSTT. YEAR: 1994-95) DY. COMMISSIONER OF INCOME-TAX, .. APPELLANT SPL. RANGE 5, PUNE VS. SANDVIK ASIA LTD., .. RESPONDENT PUNE 411 012 ASSESSEE BY: SHRI J D MISTRY DEPARTMENT BY: SHRI HARESHWAR SHARMA DATE OF HEARING : 16.11.2011 DATE OF PRONOUNCEMENT : 29.11.2011 ORDER PER G.S. PANNU, AM SINCE THE CAPTIONED APPEALS AND CROSS OBJECTION PERTAIN TO SAME ASSESSEE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY A COMMON ORDER FOR THE SAKE OF BREVITY. 2. WE SHALL FIRST TAKE UP ASSESSEES APPEAL VIDE ITA NO 75 8/PN/99 PERTAINING TO THE ASSESSMENT YEAR 1994-95. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST 2 THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) D ATED 26.7.1999 WHICH, IN TURN, HAS ARISEN OUT OF THE ORDER OF THE ASSESSING OFF ICER DATED 10.3.1998 GIVING EFFECT TO THE EARLIER ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) DATED 28.11.1997. 3. THE PERTINENT FACTS WITH REGARD TO THE ISSUE INVOLV ED IN GROUND NOS 1 TO 6 RELATING TO DISALLOWANCE OF RS 8,82,234/- ON ACCOUNT OF LOSS ON FOREIGN EXCHANGE RATE FLUCTUATION CAN BE UNDERSTOOD AS FOLLOWS. THE EX CHANGE RATE FLUCTUATION IS IN RELATION TO THE FOURTH INSTALMENT OF RESEARCH AND KNOW HOW FEE REMITTED BY THE ASSESSEE TO ITS FOREIGN COLLABORATOR. DURING THE YEAR UND ER CONSIDERATION, THE ASSESSEE HAD CLAIMED DEDUCTION OF RS 42,89,872/- AS FOURTH INSTALMENT OF RESEARCH AND KNOW HOW FEE IN ITS RETURN OF INCOME. NOTAB LY, THE ASSESSEE HAD ENTERED INTO A RESEARCH AND KNOW HOW AGREEMENT WITH A B SANDVIK COROMANT, SWEDEN DURING THE ASSESSMENT YEAR 1991-92 IN TERMS OF WHICH THE ASSESSEE WAS LIABLE TO PAY SWISS KRONER 38,58,000/-. IN THE ASSE SSMENT ORDER FOR THE ASSESSMENT YEAR 1991-92, THE ASSESSING OFFICER HELD THAT SIN CE THE DURATION OF THE AGREEMENT WAS FOR FIVE YEARS, THE APPELLANT WAS EN TITLED TO DEDUCTION OF SWISS KRONER 7,71,600/- BEING 1/5 TH OF THE AMOUNT PAYABLE UNDER THE AGREEMENT IN FIVE ASSESSMENT YEARS COMMENCING FROM THE ASSESSMENT YEAR 1 991-92. HOWEVER, AT THAT POINT OF TIME, THE ASSESSEE HAD DEDUC TED THE PRESCRIBED TAX DEDUCTIBLE AT SOURCE (TDS) ALSO AND REMITTED THE SAME T O THE EXCHEQUER, ON THE ENTIRE AMOUNT OF FEE PAYABLE TO THE FOREIGN COLLABOR ATOR, INCLUDING THE FUTURE INSTALMENTS AS THE ASSESSEE HAD CREDITED THE ENTIRE AMOUNT TO THE ACCOUNT OF THE COLLABORATOR IN THE ACCOUNT BOOKS. ACCORDINGLY, IN THE Y EAR UNDER CONSIDERATION, ASSESSEE CLAIMED DEDUCTION OF RS 42,89,872/- AS FOURTH INSTA LMENT OF RESEARCH AND KNOW HOW FEE IN ITS RETURN OF INCOME. WHILE REMI TTING THE INSTALMENT TO THE FOREIGN COLLABORATOR DURING THE YEAR, IT SUFFERED FOR EIGN EXCHANGE FLUCTUATION LOSS OF RS 8,82,234/- WHICH WAS COMPRISED IN ITS CLAIM OF RS 42, 85,872/-. AT THE TIME OF ORIGINAL ASSESSMENT, THE ASSESSING OFFICER DISALLOWED T HE LOSS OF RS 8,82,234/- ON THE GROUND THAT THE ADDITIONAL CLAIM O F EXCHANGE LOSS DID NOT 3 PERTAIN TO THE YEAR UNDER CONSIDERATION.THEREFORE, H E ALLOWED DEDUCTION FOR RESEARCH AND KNOW HOW FEE TO THE EXTENT OF RS 34,07,63 8/- AS AGAINST THE CLAIM OF RS 42,89,872/- IN THE ASSESSMENT PROCEEDINGS DATED 17. 2.1997. THE COMMISSIONER OF INCOME-TAX (APPEALS) IN ITS ORDER DATE D 28.11.1997 NOTICED THAT THE FIRST THREE INSTALMENTS HAVE BEEN DEDUCTED ON ACTUAL PAYMENT BASIS IN THE EARLIER YEARS AND, THEREFORE, DIRECTED THAT EVEN IN T HIS YEAR DEDUCTION ON ACCOUNT OF EXCHANGE LOSS SHOULD BE ALLOWED, IF THE REMITTANCES ARE ACTUALLY MADE SUBJECT TO APPROPRIATE DEDUCTION OF TAX AT SOURCE AS PER SECTION 40(A)(I) OF THE ACT. THE MATTER IS RESTORED TO THE ASSESSING OFFICER . 4. THEREAFTER, THE ASSESSING OFFICER PASSED AN ORDER DATE D 10.3.1998 GIVING EFFECT TO THE ORDER OF THE COMMISSIONER OF INCOME-TAX ( APPEALS), AND AGAIN DENIED THE CLAIM OF DEDUCTION ON ACCOUNT OF LOSS ON FORE IGN EXCHANGE FLUCTUATION AMOUNTING TO RS 8,82,234/-. NOW, THE ASSESSING OFFICER W AS OF THE VIEW THAT TAX HAS BEEN DEDUCTED AT SOURCE IN THE INITIAL YEAR ONLY W ITH RESPECT TO THE AMOUNT OF RS 34,07,638/- CORRESPONDING TO SW.KR 7,71,600/- (I.E. 1/5 TH OF THE AMOUNT PAYABLE) AND IN SO FAR AS THE ADDITIONAL SUM INCURRED OF RS 8,82,234/- ON ACCOUNT OF LOSS ON EXCHANGE RATE FLUCTUATION IS CONCERNED, NO TAX WAS DEDUCTED DURING THE YEAR UNDER CONSIDERATION, WHICH WAS VIOLATIV E OF SECTION 40(A)(I) OF THE ACT. THE COMMISSIONER OF INCOME-TAX (APPEALS) VIDE HIS IM PUGNED ORDER DATED 26.7.1999 HAS UPHELD THE DISALLOWANCE AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 5. BEFORE US, THE ASSESSEE HAS ASSAILED THE STAND OF TH E REVENUE BY RAISING THE FOLLOWING SIX GROUNDS OF APPEAL, BUT ESSENTIALLY TH E GRIEVANCE IS THAT THE ASSESSING OFFICER HAS WRONGLY DISALLOWED RS 8,82,234/- BY INVOKING SECTION 40(A)(I) OF THE ACT:- 1. THE LD CIT(A) I PUNE ERRED IN CONFIRMING THE DI SALLOWANCE OF RS 8,82,234/- WHEN COMPUTING THE APPELLANTS INCOME CHARGEABLE TO TAX. 2. THE LD CIT(A) ERRED IN UPHOLDING THE AOS VIEW T HAT DISALLOWANCE OF RS 8,82,234/- COULD BE SUSTAINED IN VIEW OF S. 40(A)(I ) OF THE ACT. 4 3. THE LD CIT(A) ERRED IN UPHOLDING THE DISALLOWANC E OF RS 8,82,234/- WITHOUT ANYWHERE CONSIDERING OR DEALING WITH THE SAID PROVI SION, THE OTHER PROVISIONS OF THE INCOME-TAX ACT AND RULES, THE ARGUMENTS URGED A ND CONTENTIOUS AND MATERIALS IN SUPPORT THEREOF. 4. THE LD CIT(A) FAILED TO APPRECIATE THAT: I) THE PROVISIONS OF S.40(A)(I) OF THE ACT HAVE NO APPLICATION TO THE SUM OF RS 8,82,234/-, II) ASSUMING FOR THE SAKE OF ARGUMENT THAT THE SAI D PROVISION REQUIRED CONSIDERATION, EVEN THEN THE SAME DID NOT PERMIT DI SALLOWANCE OF THE SUM OF RS 8,82,234/-. 5. THE CIT(A) GRAVELY ERRED IN HOLDING THAT THE PRE VIOUS APPELLATE ORDER OF THE CIT(A) DATED 28.11.1997 DIRECTED TAT THE PROVISIONS OF S. 40(A)(I) OF THE ACT WERE TO BE APPLIED WHEN CONSIDERING DEDUCTIBILITY OF RS 8,82,234/-. AT THE VERY HIGHEST THE SAID ORDER CAN BE READ AS DIRECTING THE AO TO C ONSIDER WHETHER SECTION 40(A)(I) OF THE ACT HAD ANY BEARING WHEN CONSIDERIN G DEDUCTIBILITY OF RS 8,82,234/-. 6. ASSUMING FOR THE SAKE OF ARGUMENT THAT IT IS HEL D THAT THE PREVIOUS CIT(A)S ORDER DT 28.11.97 REQUIRED THAT S, 40(A)(I) OF THE ACT WA S TO BE APPLIED, IF IT IS FOUND THAT THE SAID PROVISION IS NOT APPLICABLE THE CIT(A) OUG HT TO HAVE SO HELD AND THEREFORE, ALLOWED THE DEDUCTION OF RS 8,82,234/-. 6. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS MAD E MULTI-FACETED ARGUMENTS ASSAILING THE DISALLOWANCE OF RS 8,82,234/- RE PRESENTING LOSS ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION IN REMITTING TH E INSTALMENT OF RESEARCH AND KNOW-HOW FEE TO THE FOREIGN COLLABORATOR. THE FIR ST AND FOREMOST ARGUMENT SET UP BY THE APPELLANT IS THAT THE ASSESSEE IS NOT REQUI RED BY THE PROVISIONS OF SECTION 195(1) OF THE ACT TO DEDUCT TAX AT SOURCE ON THE IMPUGNED AMOUNT, INASMUCH AS THE SAME DOES NOT FORM PART OF TECHNICAL FEE BUT MERELY REPRESENTS EXPENSES MET OUT BY THE ASSESSEE TO REMIT THE APPROPRIATE AMOUNT OF FOREIGN EXCHANGE TO THE FOREIGN COLLABORATOR. IT IS POINTED OU T THAT WHEN THE ASSESSEE CREDITED THE RESEARCH AND TECHNICAL KNOW-HOW FEE PAYABL E TO THE FOREIGN COLLABORATOR IN THE EARLIER YEAR, THE APPROPRIATE AM OUNT OF TAX WAS DEDUCTED AT SOURCE IN TERMS OF SECTION 195(1) OF THE ACT AND DURING T HE YEAR UNDER CONSIDERATION, THE INCREASE IN THE EXPENDITURE IS MERELY ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION AND ACCORDINGLY, IT WOULD NOT BE NECESSARY TO DEDUCT TDS AGAIN ON THE SAID AMOUNT AND THUS SECTION 40(A)(I) IS N OT ATTRACTED. SECONDLY, IT IS SOUGHT TO BE MADE OUT THAT EVEN IF IT IS ACCEPTED THAT THE IMPUGNED AMOUNT PARTAKES THE CHARACTER OF RESEARCH OR TECHNICAL KNOW-HOW F EE, EVEN THEN THE DISALLOWANCE ENVISAGED UNDER SECTION 40(A)(I) IS NOT PE RMISSIBLE. THIS ASSERTION 5 IS BASED ON THE PLEA THAT SECTION 40(A)(I) CAN BE INVOKE D ONLY IN THE EVENT OF COMPLETE NON-DEDUCTION OF TAX AT SOURCE, BUT NOT IN A CASE WHERE THE TAX DEDUCTED AT SOURCE IS FOUND TO BE SHORT. IT IS POINTED OUT THAT THERE IS NO DISPUTE THAT IN SO FAR AS THE AMOUNT OF RS 34,07,738/- IS CONCERN ED, TAX HAS BEEN DEDUCTED AT SOURCE AND IT IS ONLY ON THE ADDITIONAL CLA IM OF RS 8,82,234/- REPRESENTING LOSS ON FOREIGN EXCHANGE FLUCTUATION THAT THE TAX HAS NOT BEEN DEDUCTED. THUS, IT IS A CASE OF MERE SHORT DEDUCTION OF TA X AT SOURCE, WHICH AS PER THE ASSESSEE, CANNOT BE USED TO INVOKE THE DISALLOWANCE ENVISAGED UNDER SECTION 40(A)(I) OF THE ACT. IN THIS CONTEXT, RELIANCE HA S BEEN PLACED ON THE FOLLOWING TWO DECISIONS OF THE TRIBUNAL, WHEREIN IT HA S BEEN OPINED THAT PROVISIONS OF SECTION 40(A)(IA) OF THE ACT DO NOT APPLY IN THE EVENT OF LESSER DEDUCTION OF TAX AT SOURCE, BUT ARE APPLICABLE ONLY IN THE EVENT OF NON DEDUCTION OF TAX AT SOURCE: (I) DCIT-11(2), MUMBAI V. M/S CHANDABHOY & JASSOBHOY, M UMBAI VIDE ITA NO 20/MUM/2010 ORDER DATED 8.7.2011; AND, (II) DCIT CIR. 33, KOLKOTA V. M/S S K TEKRIWAL, VIDE I TA NO 1135/KOL/2010 DATED 21.10.2011 IT IS CONTENDED THAT THE PARITY OF REASONING LAID DOW N IN THE AFORESAID DECISIONS IS EQUALLY RELEVANT AND APPLICABLE IN THE CONTEXT OF SECTI ON 40(A)(I) OF THE ACT ALSO, WHICH IS THE SUBJECT MATTER OF CONSIDERATION IN THE INSTA NT CASE. APART FROM THE AFORESAID SUBMISSIONS, THE LEARNED COUNSEL ALSO POINTED O UT THAT THE ASSESSING OFFICER WHILE GIVING EFFECT TO THE ORDER OF THE COMM ISSIONER OF INCOME-TAX (APPEALS) DATED 28.11.1997, HAS TRAVELLED BEYOND HIS JURISDICTION BY INVOKING THE PROVISIONS OF SECTION 40(A)(I) IN THE CONTEXT OF THE IM PUGNED SUM OF RS 8,82,234/. IN THIS REGARD, REFERENCE HAS BEEN MADE TO THE DIRECTI ONS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) CONTAINED IN HIS ORDER DATED 28.11 .1997 TO POINT OUT THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAD REQUIRED T HE ASSESSING OFFICER TO MERELY VERIFY IF THE REMITTANCE WAS ACTUALLY MADE IN T HE YEAR AND THE WORDINGS APPROPRIATE DEDUCTION OF TAX AT SOURCE AS PER SECTION 4 0(A)(I) CONTAINED IN THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS ON LY TO EXAMINE WHETHER 6 THE REQUISITE TAX HAS BEEN DEDUCTED WITH REFERENCE TO T HE AMOUNT OF 1/5 TH INSTALMENT PAYABLE, ON WHICH THE NECESSARY TAX HAD ALREA DY BEEN DEDUCTED IN THE PRECEDING YEAR. THUS, IT WAS SUBMITTED THAT THE D ISALLOWANCE OF RS 8,82,234/- HAS BEEN WRONGLY PERPETUATED BY THE ASSESSIN G OFFICER. 7. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE, APPEARING FOR THE REVENUE, HAS VEHEMENTLY SUBMITTED THAT THE CO MMISSIONER OF INCOME-TAX (APPEALS) MADE NO MISTAKE IN HOLDING THAT THE ASSESSING OF FICER RIGHTLY INVOKED THE PROVISIONS OF SECTION 40(A)(I) OF THE ACT IN THE PR ESENT CASE IN ORDER TO MAKE THE IMPUGNED DISALLOWANCE. IT WAS CONTENDED THAT THE ASSE SSEE IS REQUIRED TO DEDUCT TAX AT SOURCE NOT ONLY ON THE AMOUNT OF PROVISIO N MADE WITH REGARD TO TECHNICAL KNOWHOW FEE CREDITED IN THE EARLIER YEARS, BU T ALSO ON ACCOUNT OF DIFFERENCE ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION RESULTING IN THE YEAR OF ACTUAL REMITTANCE. ACCORDING TO HIM, THE ASSESSEE WAS REQU IRED TO DEDUCT TDS IN RESPECT OF THE DIFFERENTIAL AMOUNT ALSO AND, THEREFOR E, THE DISALLOWANCE WAS QUITE JUSTIFIED HAVING REGARD TO THE PROVISIONS OF SECTION 40 (A)(I) OF THE ACT. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. BEF ORE ADJUDICATING ON THE CONTROVERSY, WE MAY OBSERVE THAT THE DISPUTE EMA NATES FROM THE ASSESSMENT ORIGINALLY MADE UNDER SECTION 143(3) OF THE ACT ON 17.2.1997 WHEREIN THE FOREIGN EXCHANGE FLUCTUATION LOSS OF RS 8,8 2,234/- PERTAINING TO THE REMITTANCE OF RESEARCH AND KNOW-HOW FEE TO THE FOREIG N COLLABORATOR WAS DISALLOWED ON THE GROUND THAT IT PERTAINED TO THE EA RLIER YEAR. WHEN THE MATTER TRAVELLED TO THE COMMISSIONER OF INCOME-TAX (APPEALS), VIDE ORDER DATED 28.11.1997, THE COMMISSIONER OF INCOME-TAX (APPEALS) IN PARA 14.3 OF HIS ORDER ANALYSED THE FACTS THAT ADDITIONAL LIABILITY ON ACCOUNT OF EXCHANGE LOSS FOR THE FIRST THREE INSTALMENTS WAS ALLOWED DEDUCTION ON ACTUAL PAYM ENT MADE IN EARLIER YEARS. IN ORDER TO ENSURE CONSISTENCY, THE COMMISSIONER OF INCOME-TAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO VERIFY THE ACTUAL REMI TTANCES AND THEREAFTER ALLOW DEDUCTION ON ACCOUNT OF FOREIGN EXCHANGE LOSS IN TH IS YEAR TOO AND 7 ACCORDINGLY THE ISSUE WAS REMANDED TO THE FILE OF THE ASSE SSING OFFICER. HOWEVER, THE FOLLOWING WORDS, IF THE REMITTANCES ARE ACTUALLY MADE SUBJECT TO APPROPRIATE DEDUCTION OF TAX AT SOURCE AS PER SECTION 40(A )(I) OF THE ACT. IN HIS DIRECTION HAS LED TO A NEW ARENA OF DISPUTE BETWEEN T HE ASSESSEE AND THE REVENUE. IN THE ORDER PASSED TO GIVE EFFECT TO THE DI RECTIONS OF THE COMMISSIONER OF INCOME-TAX (APPEALS), THE CASE MADE OUT BY THE ASSESSI NG OFFICER, AND WHICH IS PRESENTLY IN APPEAL BEFORE US, IS TO THE EFFECT THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE EVEN WITH REGARD TO THE EXCHANGE R ATE FLUCTUATION LOSS IN TERMS OF SECTION 195(1) OF THE ACT AND THE ASSESSEE NOT H AVING DONE SO, THE SAME IS TO SUFFER DISALLOWANCE IN TERMS OF SECTION 40(A)( I) OF THE ACT. QUITE CLEARLY, THE CASE MADE OUT BY THE REVENUE IS FOUNDED ON THE ASSUMPTION THAT THE EXCHANGE RATE FLUCTUATION LOSS ALSO PARTAKES THE CHARACTER OF TECHNICAL FEE. WITHOUT GOING INTO THIS CONTROVERSY, IT TRANSPIRES FROM THE MATERIAL ON RECORD THAT LOSS ON ACCOUNT OF FOREIGN EXCHANGE IN RELATION TO THE EARLIER INSTALMENTS REMITTED TO THE FOREIGN COLLABORATOR HAS BEEN ALLOWED IN THE C ASE OF THE ASSESSEE, AND IT IS ONLY IN THIS YEAR THE REVENUE HAS MADE OUT A CASE FOR INVOKING SECTION 40(A)(I) FOR THE ASSESSEE NOT HAVING DEDUCTED THE REQUISITE TAX A T SOURCE. THE PROVISIONS OF SECTION 195(1) OF THE ACT CAST AN OBLIGATION ON THE ASSESSEE TO DEDUCT TAX AT SOURCE ON ANY SUM PAYABLE TO A NON-RESIDENT. THE RELEV ANT PORTION OF SECTION 195(1) READS AS UNDER: 195(1): ANY PERSON RESPONSIBLE FOR PAYING TO A NON -RESIDENT, NOT BEING A COMPANY, OR TO A FOREIGN COMPANY, ANY INTEREST OR ANY OTHER SUM CH ARGEABLE UNDER THE PROVISIONS OF THIS ACT (NOT BEING INCOME CHARGEABLE UNDER THE HEAD SA LARIES SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE T IME OF PAYMENT THEREOF IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE , WHICHEVER IS EARLIER, DEDUCT INCOME TAX THEREON AT THE RATES IN FORCE: SHORN OFF OTHER DETAILS, SECTION 195(1) OF THE ACT, IN SO FAR AS ITS RELEVANCE FOR THE PRESENT CONTROVERSY IS CONCERNED, REQUIRES DEDUCTION OF TAX AT SOURCE AT THE TIME OF CREDIT OR AT THE TIME OF PAYMENT OF AN INCOME, WHICHEVER IS EARLIER. FACTUALLY SPEAKING, THE ASSESSEE WAS LIABLE TO PAY SWISS KRONER 38,5 8,000/- TO M/S A B SANDVIK COROMANT, SWEDEN AND IN THE ACCOUNT BOOKS FOR THE PREVIOUS YEAR 8 RELEVANT TO THE ASSESSMENT YEAR 1991-92, THE SAID INCOME WAS CREDITED TO THE ACCOUNT OF THE AFORESAID FOREIGN CONCERN. IT WAS A COMMO N POINT BETWEEN THE PARTIES THAT WHEN THE ASSESSEE CREDITED THE INCOME PAYABLE TO THE FOREIGN CONCERN AS RESEARCH AND TECHNICAL KNOW-HOW IN THE EARLIER YEAR, THE PROVISION SO MADE ON THE BASIS OF THE EXCHANGE RATE THEN EXISTING WA S SUBJECTED TO TAX DEDUCTION AT SOURCE IN TERMS OF SECTION 195(1) OF THE ACT . NOTABLY, SECTION 195(1) OF THE ACT PRESCRIBES DEDUCTION OF TAX AT SOURCE ON A SUM PAYABLE TO NON-RESIDENT EITHER AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOU NT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF, WHICHEVER IS EARLIER. THE P HRASEOLOGY OF SECTION 195(1) OF THE ACT CLEARLY BRINGS OUT THAT DEDUCTION OF TAX IS TO BE MADE AT ONE INSTANCE, EITHER AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOU NT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF, WHICHEVER IS EARLIER. QUITE CLEARLY, SECTION 195(1) DOES NOT ENVISAGE DEDUCTION OF TAX AT BOTH INSTANCES, I.E. AT THE TIME OF CREDIT OF INCOME TO THE ACCOUNT OF THE PAYEE AS WELL AS AT THE TIM E OF PAYMENT THEREOF. IN OTHER WORDS, IT WOULD BE SAFE TO DEDUCE THAT WHERE THE ASSESSEE HAS DEDUCTED TAX AT SOURCE AT THE EARLIER POINT OF TIME, NAMELY, A T THE TIME OF CREDITING OF INCOME INTO THE ACCOUNT OF THE PAYEE, THE ASSESSEE THEREA FTER IS UNDER NO OBLIGATION TO AGAIN DEDUCT TAX AT SOURCE AT THE TIME O F PAYMENT OF SUCH INCOME. SECTION 195(1) OF THE ACT ALSO ENUMERATES THE TIMING AT WHICH THE TAX IS REQUIRED TO BE DEDUCTED BY THE PAYER IN RELATION TO A TRANSACTI ON WHICH ENTAILS PAYMENT OF A SUM CHARGEABLE UNDER THIS ACT TO A NON-RESIDENT. IN T HE PRESENT CASE, IT IS EVIDENT THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE ON ITS TRANSACTION TO PAY RESEARCH AND TECHNICAL KNOW-HOW FEE TO THE FOREI GN CONCERN AND IT DEDUCTED REQUISITE TAX AT SOURCE AS PER SECTION 195(1) OF THE ACT AT THE TIME WHEN SUCH INCOME WAS CREDITED TO THE ACCOUNT OF THE FOREIGN CON CERN AS PER THE THEN PREVAILING FOREIGN EXCHANGE RATE. CONSEQUENTLY, IT WO ULD FOLLOW THAT WHEN SUCH INCOME IS ACTUALLY PAID BY THE ASSESSEE TO THE FOREIGN CON CERN, THE SAME WOULD NOT AGAIN INVITE THE DEDUCTION OF TAX AT SOURCE AS PER SECTION 195(1) OF THE ACT. OSTENSIBLY, AS PER THE AGREEMENT, THE ASSESSEE IS TO MAK E A TOTAL PAYMENT OF 9 SWISS KRONER 38,58,000/-TO THE FOREIGN CONCERN AND OUT OF WHICH, IT WAS REQUIRED TO REMIT SWISS KRONER 7,71,600/- DURING THE YEAR UND ER CONSIDERATION. THE AMOUNT OF INCOME CREDITED TO THE ACCOUNT OF THE PAYEE CONCERN IN THE EARLIER YEAR CORRESPONDED TO SWISS KRONER 38,58,000/-, ALBEIT IT WA S STATED IN INDIAN RUPEES AT THE THEN PREVAILING EXCHANGE RATE. DURING THE YEA R, OUT OF THE ABOVE AMOUNT, SWISS KRONER 7,71,600/- HAS BEEN REMITTED. THE AMOUNT REMITTED IS ONLY A PART OF THE TOTAL OBLIGATION OF SWISS KRONER 38,58,000/- AND NOT IN ADDITION TO THE AFORESAID AMOUNT. IN THIS YEAR, ON ACCOUNT OF FLUCTUATI ON IN FOREIGN EXCHANGE RATE, ONLY THE COST OF REMITTING THE AMOUNT TO FOREIGN CONCE RN HAS INCREASED, BUT THERE IS NO ADDITIONAL AMOUNT OF SWISS KRONER THAT IS PAYABL E TO THE FOREIGN CONCERN OTHER THAN SWISS KRONER 38,58,000/- CREDITED TO THE ACC OUNT OF THE FOREIGN CONCERN IN THE EARLIER YEAR. OSTENSIBLY, THE TRANSACTION WITH THE PAYEE CONCERN REMAINED OF SWISS KRONER 38,58,000/- AND, THEREFORE, THE SAME HAVING BEEN SUBJECTED TO DEDUCTION OF TAX AT SOURCE ON AN EARLIER O CCASION AT THE TIME OF CREDITING OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE, IT WOULD NOT AGAIN CALL FOR DEDUCTION OF TAX AT SOURCE PER SECTION 195(1) OF THE ACT. IN FACT, EVEN THE RATIO OF THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V MAC CHARLES (I) LTD. 195 TAXMAN 296 (KAR) SUPPORTS THE AFO RESAID PROPOSITION. 10. APART THEREFROM, THE ASSESSEE HAS ALSO MADE AN ALTERN ATIVE PLEA THAT EVEN IF THE IMPUGNED LOSS ON ACCOUNT OF FOREIGN EXCHANG E RATE IS LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER SECTION 195(1) OF THE A CT, YET THE NON-DEDUCTION OF SUCH SUM WOULD NOT INVITE THE DISALLOWANCE OF SECTION 40(A)(I) OF THE ACT. AS PER THE ASSESSEE, OUT OF THE TOTAL CLAIM OF RS 42,89,872 /- AS FOURTH INSTALMENT OF RESEARCH AND KNOW-HOW FEE IN THIS YEAR, TAX HAS BEEN DE DUCTED IN RELATION TO A SUM OF RS 34,07,638/- AND, THEREFORE, IT IS MERELY A CASE INVOLVING SHORT DEDUCTION OF TAX AT SOURCE AND NOT A CASE FOR FAILURE T O DEDUCT TAX AT SOURCE. IN THIS CONTEXT, WE HAVE PERUSED THE DECISIONS OF OUR CO-ORD INATE BENCHES IN THE CASES OF M/S CHANDABHOY & JASSOBHOY, MUMBAI (SUPRA) AND M/S S K TEKRIWAL (SUPRA). IN BOTH THE DECISIONS, WHICH HAVE BEEN RENDERED IN THE CONTEXT OF 10 SECTION 40(A)(IA) OF THE ACT, IT HAS BEEN HELD THAT THE DISALLOWANCE ENVISAGED IN SECTION 40(A)(IA) CAN BE INVOKED ONLY IN THE EVENT OF N ON-DEDUCTION OF TAX, BUT NOT IN CASES INVOLVING SHORT DEDUCTION OF TAX AT SOURCE. IN O UR VIEW, THE RATIO OF THE DECISIONS IS SQUARELY APPLICABLE IN THE PRESENT CASE ALSO, I NASMUCH AS THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE AKIN TO THOSE OF SECTION 40(A)(I) WHICH IS THE SUBJECT-MATTER OF CONSIDERATION BEFORE US. ON THIS COUNT ALSO, WE FIND THAT INVOKING OF SECTION 40(A)(I) OF THE ACT TO DISALLO W THE SUM OF RS 8,82,234/- IS UNTENABLE. 11. THEREFORE, ON BOTH THE COUNTS AS DISCUSSED ABOVE, THE IMPUGNED SUM IS NOT DISALLOWABLE IN TERMS OF SECTION 40(A)(I) OF THE ACT AND ACCORDINGLY, WE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPE ALS) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS 8,82,234/- . THUS, ON THE FIRST ISSUE, ASSESSEE SUCCEEDS. 12. THE SECOND GRIEVANCE OF THE ASSESSEE ARTICULATED IN TE RMS OF GROUND NOS. (7) & (8) RELATE TO A DISALLOWANCE OF RS 6,11,000/-, AND READ AS UNDER:- (7) THE CIT(A) ERRED IN SETTING ASIDE THE ISSUE OF DEDUCTION OF RS 6,11,000/-, (8) THE CIT(A) OUGHT TO HAVE ALLOWED DEDUCTION OF R S 6,11,000/- BEING LIQUIDATED DAMAGES IN VIEW OF INTER ALIA THE FACTS AND CIRCUMS TANCES OF THE CASE I.E. THE REFUSAL TO COMPLY WITH THE DIRECTION IN THE CIT(A) S ORDER DATED 28.11.1997. 13. IN BRIEF THE FACTS ARE THAT IN THE ORIGINAL ASSESSME NT ORDER DATED 17.2.1997, THE ASSESSING OFFICER DISALLOWED A SUM OF RS 6, 11,000/-, AS ACCORDING TO HIM, IT WAS A PROVISION FOR DOUBTFUL DEBTS AND WAS A CONTINGENT LIABILITY. BEFORE THE COMMISSIONER OF INCOME-TAX (APP EALS), IT WAS CONTENDED THAT THE CLAIM WAS ON ACCOUNT OF LIQUIDATED DAMAGES FOR LATE SUPPLY OF GOODS ETC., WHICH WAS ACTUALLY DEDUCTED BY THE GOVERNMENT AUTHORITI ES AT THE TIME OF MAKING PAYMENT AND, THEREFORE, WAS AN ALLOWABLE DEDUCTION. THE COMMISSIONER OF INCOME-TAX (APPEALS) VIDE HIS ORDER DATED 28.11.1997 D ISPOSED OF THE ISSUE IN PARA 6.3 OF HIS ORDER AS FOLLOWS:- 11 6.3 THE MATTER IS CONSIDERED. IT IS OBSERVED THAT THE AMOUNTS HAVE BEEN PROVIDED FOR THROUGH TWO JOURNAL ENTRY NOS 1857 DATED 31.12.1993 AND 194 DATED 28.2.1994. THESE ARE CLAIMED TO BE ACTUAL DEDUCTIONS MADE BY THE GOV ERNMENT BUYERS. THE LIABILITY IS CLAIMED TO HAVE CRYSTALISED IN THE RELEVANT ASSESSM ENT YEAR. ON THIS SCORE IT SHOULD BE AN ALLOWABLE DEDUCTION. IT IS, HOWEVER, NOT MADE CL EAR AS TO WHY THE AMOUNT IS DEBITED TO ACCOUNTS AS PROVISION FOR DOUBTFUL DEBTS. NO EXAM INATION APPEARS TO HAVE BEEN MADE BY THE AO WHEN REJECTING THE CLAIM. IT APPEARS TO H AVE BEEN DISALLOWED ONLY BECAUSE IT IS DEBITED AS PROVISION. THE AO IS DIRECTED TO ALLOW THE DEDUCTION SUBJECT TO VERIFICATION THAT THE LIABILITY CRYSTALISED IN THIS YEAR. 14. IN PURSUANCE TO THE AFORESAID DIRECTIONS, THE ASSESSING OFFICER VIDE ORDER DATED 10.3.1998, WHICH IS THE SUBJECT-MATTER OF DISPUTE BEFORE US, SUSTAINED THE DISALLOWANCE ON THE GROUND THAT THE CLAIM HAS BEEN MADE BY THE ASSESSEE BY CREATING A PROVISION ON ACCOUNT OF DOUBTFUL DEBTS AND T HE SAME HAS NOT BEEN WRITTEN OFF DURING THE YEAR. 15. THE ASSESSEE CONTESTED THE MATTER BEFORE THE COMMI SSIONER OF INCOME- TAX (APPEALS) BY CONTENDING THAT THE ASSESSING OFFICER HA S MISDIRECTED HIMSELF IN CONSIDERING WHETHER THERE WAS ANY DEBT WRITTEN OFF OR NOT, AS THE SAME WAS NOT THE DIRECTION OF THE COMMISSIONER OF INCOME-TAX (APPE ALS). THE ASSESSEE EXPLAINED THAT THE DIRECTIONS OF THE COMMISSIONER OF IN COME-TAX (APPEALS) WERE ONLY TO VERIFY WHETHER THE LIABILITY HAD CRYSTALISED D URING THE YEAR OR NOT AND IF IT WAS SO FOUND, THE ASSESSING OFFICER WAS BOUND TO HAVE ALLO WED THE DEDUCTION. THE PLEA OF THE ASSESSEE THAT THE ASSESSING OFFICER DID N OT CARRY OUT DIRECTIONS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) PROPERLY HAS SIN CE BEEN NEGATED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IN THE IMPUGNE D ORDER DATED 26.7.1999. THE COMMISSIONER OF INCOME-TAX (APPEALS) BY WAY OF THE IMPUGNED ORDER HAS AGAIN DIRECTED THE ASSESSING OFFICER TO EXAMINE WHETHER GOVERNMENTS REFUSAL TO PAY IN RESPECT OF THE TWO ENT RIES IN DISPUTE HAVE BECOME FINAL DURING THE YEAR OR NOT AND HAS ACCORDINGLY REMA NDED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. NOT BEING SATISFIED WITH THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), ASSESSEE IS IN FURTHE R APPEAL BEFORE US. 16. BEFORE US, THE SUM AND SUBSTANCE OF THE ARGUMENTS P UT-FORTH ON BEHALF OF THE APPELLANT IS THAT THE ASSESSING OFFICER WHILE PASSING O RDER DATED 10.3.1998 WENT BEYOND THE SCOPE OF DIRECTIONS GIVEN BY THE COMMISSI ONER OF INCOME-TAX 12 (APPEALS) IN HIS ORDER DATED 28.11.1997 AND, THEREFOR E, THE CLAIM HAS BEEN WRONGLY DISALLOWED. THE LEARNED COUNSEL QUITE FAIRLY SUBMITTED THAT THE DIRECTION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) DATED 28.11 .1997 CONTAINED IN PARA 6.3 WHICH READS AS UNDER: THE AO IS DIRECTED TO ALLOW THE DEDUCTION SUBJECT T O VERIFICATION THAT THE LIABILITY CRYSTALISED IN THIS YEAR. BE CARRIED OUT IN ITS PROPER PERSPECTIVE SO AS TO EXAMIN E WHETHER THE LIABILITY REFLECTED BY THE IMPUGNED SUM HAS BEEN CRYSTALISED IN TH E INSTANT ASSESSMENT YEAR OR NOT. 17. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW IN SUPPORT OF THE CASE OF THE REVENUE. 18. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. LO OKING AT THE CONSPECTUOUS OF FACTS AS EMERGING FROM THE ORDERS OF THE AUTHORITIES BELOW, IT APPEARS THAT THOUGH THE CLAIM OF THE ASSESSEE IS UNDER HEA D PROVISION FOR DOUBTFUL DEBTS, IN ACTUALITY THE CLAIM IS BASED ON CER TAIN DEDUCTIONS CLAIMED TO BE MADE BY THE GOVERNMENT BUYERS AS LIQUIDATED DAMAGE S FOR LATE SUPPLY OF GOODS, ETC. THE COMMISSIONER OF INCOME-TAX (APPEALS) IN H IS ORDER DATED 28.11.1997 HAS REFERRED TO TWO JOURNAL ENTRIES IN THI S REGARD AND ON THAT BASIS DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM, SUBJEC T TO THE VERIFICATION THAT THE LIABILITY CRYSTALISED IN THIS YEAR OR NOT. OSTENSIBLY , IF THE AFORESAID FACTUAL MATRIX NOTED BY THE COMMISSIONER OF INCOME-TAX (APPEA LS) AND WHICH WAS REQUIRED TO BE VERIFIED IS JUSTIFIED, THE CLAIM WOULD BE ALLOWABLE AS SUCH. WE ALSO FIND THAT THE ASSESSING OFFICER IN HIS ORDER DATED 10.3.1 998 HAS NOT CARRIED OUT THE DIRECTIONS OF THE COMMISSIONER OF INCOME-TAX (APPEA LS) IN ITS PROPER PERSPECTIVE, BUT HAS MERELY GONE BY THE FACT THAT THE CLAIM HAS BEEN MADE UNDER PROVISION FOR DOUBTFUL DEBTS. IN OUR CONSIDERED OPINI ON, IT WOULD MEET THE ENDS OF JUSTICE IF THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTIONS TO CONSIDER THE TRUE NATURE OF THE CLAIM IN THE LIGHT OF THE OBSERVATIONS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IN PARA 6. 3 OF HIS ORDER DATED 13 28.11.1997 AND NOT BE GUIDED BY MERELY THE NOMENCLAT URE OF THE HEAD UNDER WHICH THE CLAIM HAS BEEN MADE. NEEDLESS TO SAY, IN CARRYI NG OUT THE AFORESAID EXERCISE, THE ASSESSING OFFICER SHALL PROVIDE REASONABLE O PPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS, ON THIS ISSUE ASSESSEE SUCCEEDS FO R STATISTICAL PURPOSES. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. 20. THE APPEAL BY THE REVENUE VIDE ITA NO 113/PN/98 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) DATE D 28.11.1997 PERTAINING TO THE ASSESSMENT YEAR 1994-95 AND THE CROSS OBJECTION I N CO NO 58/PN/2005 BY THE ASSESSEE ALSO EMANATES FROM THE SAME ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). 21. IN THE APPEAL OF THE REVENUE, FOLLOWING TWO GRO UNDS HAVE BEEN RAISED: (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) ERRED IN DELETING THE ADDITION OF RS 1,99,43,610/- MADE BY THE AO ON ACCOUNT OF EXCISE DUTY PAYMENT ON FINISHED GOODS WHICH IS NOT INCLUDED IN THE VALUE OF CLOSING STOCK. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD CIT(A) ERRED IN TAXING THE NET OF INTEREST AND THUS GIVING RELIEF FOR INTE REST PAID BY THE ASSESSEE TO THE I.T DEPARTMENT. 22. THE FIRST GROUND RELATES TO AN ADDITION OF RS 1,99 ,43,610/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF VALUATION OF CLOSING STOCK OF F INISHED GOODS DUE TO EXCISE DUTY PAYABLE. THE COMMISSIONER OF INCOME-TAX ( APPEALS) HAS DELETED THE ADDITION BY OBSERVING THAT SIMILAR ISSUE WAS CONSIDERE D IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 1992-93 AND 1993-94 IN FAVO UR OF THE ASSESSEE. 23. BEFORE US, IT WAS A COMMON GROUND BETWEEN THE PART IES THAT FOR THE ASSESSMENT YEAR 1992-93, SIMILAR ISSUE HAS BEEN ADJUDICATED BY THE TRIBUNAL VIDE ITS ORDER IN ITA NO 119/PN/96 DATED 13.9.2011 I N FAVOUR OF THE ASSESSEE. IN VIEW OF THE PRECEDENT, COPY OF WHICH HAS BEEN PLACED ON RECORD, THE DECISION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) DELETING THE ADDITION OF RS 1,99,43,610/- ON ACCOUNT OF EXCISE DUTY PAYABLE ON FINI SHED GOODS NOT INCLUDED 14 IN THE VALUATION OF CLOSING STOCK IS HEREBY AFFIRMED. THU S, REVENUE FAILS ON THIS GROUND. 24. THE FACTS IN RELATING TO SECOND GROUND ARE THAT D URING THE YEAR, THE ASSESSEE RECEIVED INTEREST OF RS 25,63,992/- FROM THE INCOM E-TAX DEPARTMENT AND ALSO PAID INTEREST OF RS 10 LAKHS TO THE DEPARTMEN T. THE CLAIM OF THE ASSESSEE WAS THAT ONLY THE NET INTEREST SHOULD BE CHARGED T O TAX. THIS PLEA WAS REJECTED BY THE ASSESSING OFFICER WHEREAS THE COMMISSIONER O F INCOME-TAX (APPEALS) ALLOWED THE PLEA OF THE ASSESSEE IN VIEW OF TH E DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF R N AGARWAL V. ITO. AGAINST SUCH A DECISION, REVENUE IS PRESENTLY IN APPEAL BEFORE US. 25. BEFORE US, IT WAS A COMMON POINT BETWEEN THE PARTI ES THAT SIMILAR ISSUE AROSE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1992-93 I N ITA NO 119/PN/96 (SUPRA) WHEREIN THE ISSUE HAS BEEN DECIDED AGA INST THE ASSESSEE AND IN FAVOUR OF THE REVENUE, BY WAY OF A MAJORITY DECISION VIDE ORDER DATED 13.9.2011 (SUPRA). IT HAS BEEN HELD THAT THE ASSESSEE IS A SSESSABLE IN RESPECT OF THE GROSS INTEREST RECEIVED FROM THE INCOME-TAX DEPART MENT AND NOT MERELY ON THE NET INTEREST REMAINING AFTER SET OFF OF INTEREST P AID TO THE DEPARTMENT. THE INTEREST PAYMENT HAS ALSO NOT BEEN HELD TO BE DEDUCTIB LE FROM INTEREST RECEIVED IN ORDER TO ARRIVE AT THE ASSESSABLE INCOME. IN THIS VIE W OF THE MATTER, THE IMPUGNED ORDER OF THE COMMISSIONER OF INCOME-TAX (APPE ALS) ON THIS ISSUE IS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED. THUS, ON THIS GROUND REVENUE SUCCEEDS. 26. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY AL LOWED. 27. IN SO FAR AS THE ISSUE RAISED BY THE ASSESSEE IN THE CROSS OBJECTION IS CONCERNED, THE SAME IS AS UNDER: 1) ON THE FACTS AND CIRCUMSTANCE OF THE CASE, THE LD CIT(A) ERRED IN DIRECTING THAT AN AMOUNT OF RS 8,82,234/- WAS TO BE ALLOWED SUBJECT T O THE PROVISIONS OF S. 40(A)(I) OF THE ACT. 15 28. THE LEARNED COUNSEL FOR THE ASSESSEE QUITE FAIRLY SU BMITTED AT THE TIME OF HEARING THAT THE SAID ISSUE HAS BEEN RAISED AS AN ABUNDAN T CAUTION IN SUPPORT OF GROUND NO. 1 CONSIDERED BY US IN ITA NO 758/PN/99. ACCO RDINGLY, THE SAME IS RENDERED ACADEMIC AS THE ASSESSEE HAS SUCCEEDED ON THIS ISSUE IN ITA NO 758/PN/99 (SUPRA). AS A RESULT, THE CROSS OBJECTION IS DISM ISSED. 29. RESULTANTLY, WHEREAS APPEAL OF THE ASSESSEE IN ITA NO 758/PN/99 AND THAT OF THE REVENUE IN ITA NO 113/PN/98 ARE PARTLY ALLOWED, THE CROSS OBJECTION OF THE ASSESSEE IN C. O. NO 58/PN/05 IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON THE 29 TH DAY OF NOVEMBER, 2011. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 29 TH NOVEMBER, 2011 B COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT (A)-III, PUNE 4) CIT, PUNE 5) DR, A BENCH, ITAT, PUNE. 6) GUARD FILE TRUE COPY BY ORDER SR. PS, I.T.A.T., PUNE