Indian Overseas Bank, CHENNAI V. DCIT, CHENNAI

ITA 77/CHNY/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4952 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 08-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 09-01-2014
• Court: TRIBUNAL
• Department Lawyers: R DURAI
• Assessee Lawyers: NARESH
• Keywords: Depreciation; Double taxation relief; Earning of tax free income; Permanent establishment; Bad and doubtful debts
• Section: 43B; 143(3); 14A; 115JB; 28; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , ! ' , # $% & [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ] ./ I.T.A.NO.77/MDS/2014 / ASSESSMENT YEAR : 2011-12 INDIAN OVERSEAS BANK 763, ANNA SALAI CHENNAI 600 002 VS. THE DY. COMMISSIONER OF INCOME-TAX LARGE TAXPAYER UNIT CHENNAI [PAN AAACI 1223 J ] ( '( / APPELLANT) ( )*'( /RESPONDENT) ./ I.T.A.NO.35/MDS/2014 / ASSESSMENT YEAR : 2011-12 THE DY. COMMISSIONER OF INCOME-TAX LARGE TAXPAYER UNIT CHENNAI VS. INDIAN OVERSEAS BANK 763, ANNA SALAI CHENNAI 600 002 ( '( / APPELLANT) ( )*'( /RESPONDENT) ASSESSEE BY : MR.NARESH C.A REVENUE BY : MR.R.DURAI PANDIAN, JCIT D.R / DATE OF HEARING : 08.03.2017 / DATE OF PRONOUNCEMENT : 03 - 04 - 2017 / O R D E R ITA NO.77 ,35/MDS./2014 :- 2 -: PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE CROSS APPEALS FILED BY THE ASSESSEE AND T HE REVENUE FOR ASSESSMENT YEAR 2011-12, ARE DIRECTED AGAINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) LARGE TAXPAYER UNIT, CHENNAI DATED 22.10.2013 PASSED IN APPEAL NO.14/13-14/LTU(A ), IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). SINCE ISSUES INVOLVED IN THESE C ROSS APPEALS ARE COMMON IN NATURE, THESE APPEALS ARE CLUBBED TOGETHE R, HEARD TOGETHER, DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. FIRST WE TAKE UP ASSESSEES APPEAL IN I.T.A.NO.77/MDS/2014 2. THE FIRST GROUND RELATING TO ISSUE NO.1 RAISE D IN THIS APPEAL IS WITH REGARD TO CONFIRMING THE COMPUTATION OF DEDUCT ION U/S.36(1)(VIIA) MADE BY AO BY CONSIDERING THE WORD PLACE AS APPE ARING IN RULE 6EA TO MEAN THE PANCHAYAT WHEREAS THE SAME SHOULD ON LY BE TAKEN TO MEAN THE WARD IN A RURAL AREAS. 2.1 AT THE OUTSET, THE LD.A.R SUBMITTED THAT THIS ISSUE CAME FOR CONSIDERATION IN ASSESSEES OWN CASE IN I.T.A.NO.2 126/MDS/2013 FOR ASSESSMENT YEAR 2010-11 VIDE ORDER DATED 26TH SEPTE MBER,2014. 2.2. ON THE OTHER HAND, LD.D.R DID NOT RAISE ANY O BJECTION TO THE SUBMISSION OF LD.A.R. ITA NO.77 ,35/MDS./2014 :- 3 -: 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. AS RIGHTLY POINTED OUT BY THE LD.A.R, THIS ISSUE WAS DECIDED AGAINST THE ASSESSEE BY THE CO-ORDINATE BENCH OF CH ENNAI TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010-11 CIT ED SUPRA, WHEREIN TRIBUNAL HELD THAT:- AT THE TIME OF HEARING, COUNSEL FOR THE ASSESSEE S UBMITS THAT THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2009-10 IN ITA NO.1949/MDS./2012 DATED 18.06.2014. COPY OF THE ORD ER IS PLACED ON RECORD. WE FIND THAT THE TRIBUNAL WHILE DISMISSI NG THE ASSESSEES GROUND IN THE ABOVE ORDER HELD AS UNDER: - 8. THE ASSESSEES THIRD GROUND RAISES THE ISSUE BAD DEBTS RELATING TO RURAL BRANCHES U/S 36(1)(VIIA). IT PL EADS THAT THE CIT(A) HAS WRONGLY RESTRICTED ITS CLAIM OF AFORESAI D DEDUCTION BY TREATING A BRANCH AS RURAL BASED ON POPULATION OF THE PANCHAYAT INSTEAD OF CONCERNED WARD. 9. IT IS TO BE SEEN THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF BAD AND DOUBTFUL ADVANCES OF ` 654,41,43,300/-. THE ASSESSING OFFICER RESTRICTED THIS CLAIM TO ` 25,58,86,646/-; INTER ALIA, ON THE GROUND THAT THE ASSESSEES 48 BRANCHES WERE NOT R URAL AS PER SECTION 36(1)(VIIA) EXPLANATION READ WITH RULE 6ABA IN VIEW OF THE CENSUS FIGURES GIVEN IN THE MINISTRY OF HOME AFFAIR S WEBSITE. THE CIT(A) HAS ALSO EXPRESSED AGREEMENT WITH THE ASSESS ING OFFICERS FINDINGS IN VIEW OF CASE LAW CIT VS LORD KRISHNA BA NK LTD, 339 ITR 606 (KERALA). 10. IN THE COURSE OF HEARING, WHEN WE CONFRONTED TH E ASSESSEE ABOUT THE AFORESAID DECISION OF THE HON'BLE KERALA HIGH COURT, IT ITA NO.77 ,35/MDS./2014 :- 4 -: HAS FAILED TO DRAW ANY DISTINCTION ON FACTS. THUS, WE DECIDE THIS GROUND AS WELL AGAINST THE ASSESSEE. 3.1 IN VIEW OF THE ABOVE, FOLLOWING THE ORDER OF THE TRIBUNAL, WE ARE INCLINED TO DISMISS THE GROUND RAISED BY THE AS SESSEE. 4. THE NEXT GROUND RELATING TO ISSUE NOS.1.1 & 1.2 RAISED IN THIS APPEAL IS AS FOLLOWS:- 1.1 FURTHER IN COMPUTING THE DEDUCTION U/S.36(1)( VIIA) THE CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING O FFICER IN NOT CONSIDERING PROVISION MADE IN BOOKS OF ACCOUNTS FOR DEBTS HAVING ARREARS, IF ANY, UPTO 90 DAYS CLASSIFI ED UNDER RBI NORMS AS STANDARD ASSETS. 1.2 IN COMPUTING THE DEDUCTION U/S. 36(1)(VIIA) T HE CIT(A) HAD ALSO ERRED IN CONFIRMING THE ORDER OF TH E A.O. IN NOT CONSIDERING PROVISION FOR DEBTS BASED ON COUNTR Y RISK AS PER RBI GUIDELINES. 5. AT THE TIME OF HEARING, THE LD.A.R SUBMITTED BE FORE US THAT THIS ISSUE CAME FOR CONSIDERATION IN ASSESSEES OW N CASE IN I.T.A.NO.2126/MDS/2013 FOR ASSESSMENT YEAR 2010-11 VIDE ORDER DATED 26TH SEPTEMBER,2014. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS RIGHTLY POINTED OUT BY THE LD.A.R, THIS ISSUE WAS DECIDED AGAINST THE ASSESSEE BY THE CO-ORDINATE BENCH OF CH ENNAI TRIBUNAL IN ITA NO.77 ,35/MDS./2014 :- 5 -: ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010-11 CIT ED SUPRA, WHEREIN TRIBUNAL HELD THAT:- 60. WE HAVE PERUSED THE ABOVE ORDER OF THE CO-ORDI NATE BENCH OF THIS TRIBUNAL IN ITA NO.1815/MDS/2011 DATED 2.4.2013 AND FIND THAT THE TRIBUNAL HAS DECIDED BOTH THESE ISSUES AGAINST THE ASSESSEE BY DISMISSING THE GROUNDS OBSERVING AS UNDER:- 4. THE THIRD GROUND OF APPEAL OF THE ASSESSEE IS R EGARDING RESTRICTION OF CLAIM IN RESPECT OF DEDUCTION UNDER SECTION 36(1)(VIIA) TO THE EXTENT OF PROVISION MADE IN THE BOOKS. THE A.R. FOR THE ASSESSEE HAS CONCEDED THAT THIS ISSUE HAS ALREADY BEEN DECID ED AGAINST THE ASSESSEE BANK IN THE CASE OF BHARAT OVERSEAS BANK L TD. IN ITA NO.1191/MDS/2012. THIS ISSUE HAD ALSO COME UP BEFO RE THE TRIBUNAL IN ITA NO.818/MDS/2010 RELEVANT TO THE ASSESSMENT YEAR 2007-08. THE FINDINGS OF THE TRIBUNAL ARE REPRODUCED HEREIN BELO W:- 7. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. THE ORIGINAL CLAIM, WHICH WAS ALLOWED BY THE ASSESSING OFFICER UNDER SECTION 36(1)(VIIA) OF THE ACT, WAS AS FOLLOWS:- 7.5% OF GROSS TOTAL INCOME : ` 5,74,07,362 10% OF RURAL ADVANCES ( ` 27,26,50,990/-) : ` 2,72,65,099 ` 8,46,72,461 THEREAFTER, ASSESSEE HAD MOVED IN APPEAL AGAINST SO ME OF THE ADDITIONS MADE BY THE ASSESSING OFFICER ON OTHER IS SUES AND PURSUANT TO THE RELIEF GRANTED IN SUCH APPEAL, THE GROSS TOTAL INCOME WHICH EARLIER STOOD AT ` 76,54,31,493/- CAME DOWN TO ` 35,38,65,546/-. AS A RESULT OF THE REDUCTION IN GR OSS TOTAL INCOME, DEDUCTION UNDER SECTION 36(1)(VIIA) WAS ALS O SCALED DOWN FROM ` 5,74,07,362/- TO ` 2,65,39,916/-. THIS SUM WHEN AGGREGATED WITH 10% OF RURAL ADVANCES COMING TO ` 2,72,65,099/-, RESULTED IN THE SUM OF ` 5,38,05,015/- BEING EVENTUALLY ALLOWED AS DEDUCTION UNDER SECTION 36(1) (VIIA) OF THE ACT. IN THE BOOKS OF THE ASSESSEE, ACTUAL PROVISIO N FOR BAD AND DOUBTFUL DEBTS WAS ONLY ` 4,01,44,027/-. ASSESSEE HAD ALSO MADE A PROVISION OF ` 2.23 CRORES ON ITS STANDARD ASSETS. IF THE PROVISION FOR BAD AND DOUBTFUL DEBTS ALONE WAS CONS IDERED, THEN THE TOTAL ALLOWANCE UNDER SECTION 36(1)(VIIA) WAS IN EXCESS OF SUCH PROVISION. HOWEVER, IF THE PROVISION FOR S TANDARD ASSETS WAS ALSO CONSIDERED AS PROVISION FOR BAD AND DOUBTF UL DEBTS, ITA NO.77 ,35/MDS./2014 :- 6 -: THEN THE TOTAL PROVISION COULD GO UP TO ` 6,24,44,027/-. THEN OF COURSE, ASSESSEES CLAIM AS FINALLY ALLOWED WAS WEL L WITHIN THE LIMITS SPECIFIED UNDER SECTION 36(1)(VIIA) OF THE A CT. AT THIS JUNCTURE, A LOOK AT SECTION 36(1)(VIIA) IS NECESSAR Y AND THIS IS REPRODUCED HEREUNDER, FOR BREVITY:- 36(1)(VIIA) A SCHEDULED BANK [NOT BEING A BANK INC ORPORATED BY OR UNDER THE LAWS OF A COUNTRY OUTSIDE INDIA] OR A NON- SCHEDULED BANK [OR A CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATI VE AGRICULTURAL AND RURAL DEVELOPMENT BANK], AN AMOUNT [NOT EXCEEDI NG SEVEN AND ONE-HALF PER CENT] OF THE TOTAL INCOME (COMPUTED BE FORE MAKING ANY DEDUCTION UNDER THIS CLAUSE AND CHAPTER VIA) AN D AN AMOUNT NOT EXCEEDING [TEN] PER CENT OF THE AGGREGATE AVERA GE ADVANCES MADE BY THE RURAL BRANCHES OF SUCH BANK COMPUTED IN THE PRESCRIBED MANNER. IT IS CLEAR FROM THE ABOVE THAT IT IS NOT A STANDAR D ALLOWANCE WHICH IS GIVEN, BUT, THE ALLOWANCE IS SUBJECT TO TH E ACTUAL PROVISION MADE BY THE ASSESSEE, WHICH IN NO CASE SH ALL EXCEED 7.5% OF THE GROSS TOTAL INCOME. THEREFORE, THE ARGUMENT OF THE ASSESSEE THAT WHATEVER THE PROVISIO N IT HAD ACTUALLY MADE IN ITS BOOKS, A PROVISION OF 7.5% OF THE GROSS TOTAL INCOME HAD TO BE ALLOWED, IS NOT IN ACCORDANC E WITH LAW. NOW CONSIDERING THE SECOND ASPECT, WHETHER PROVISIO N FOR STANDARD ASSETS COULD BE CONSIDERED AS PROVISION FO R BAD AND DOUBTFUL DEBTS, ADMITTEDLY A PROVISION ON STANDARD ASSETS IS NOT AGAINST ANY DEBTS WHICH HAD BECOME DOUBTFUL. STAND ARD ASSETS ARE ALWAYS CONSIDERED RECOVERABLE, IN THE SE NSE, BANK HAS NO DOUBT OF RECOVERABILITY. WHEN THE BANK ITSE LF HAS TREATED SUCH ASSETS AS GOOD AND RECOVERABLE, ANY PR OVISION MADE ON SUCH ASSETS CANNOT BE CONSIDERED AS A PROVI SION FOR BAD AND DOUBTFUL DEBTS. THE DEBT ITSELF BEING GOOD , A PROVISION MADE ON GOOD DEBT CANNOT BE CONSIDERED AS A PROVISI ON FOR BAD AND DOUBTFUL DEBTS. MAY BE, THE RBI HAS MADE A REGULATION FOR 10% PROVISION FOR STANDARD ASSETS AL SO A PRUDENTIAL NORM. THIS CAN HOWEVER BE CONSIDERED AS A MEASURE PRESCRIBED IN ABUNDANT CAUTION, TO DEAL WIT H A SITUATION WHERE BANKS ARE NOT TO SUFFER SHOCK OF SU DDEN DELINQUENCY THAT COULD HAPPEN IN FUTURE. THERE IS ALWAYS A POSSIBILITY THAT AN ASSET, WHICH IS FULLY RECOVERAB LE, MAY NOT BE SO AT FUTURE DATE. NEVERTHELESS, POSSIBILITY OF HA PPENING OF SUCH A CONTINGENCY CANNOT BE A SUFFICIENT REASON TO CONSIDER A PROVISION MADE ON STANDARD ASSETS ALSO AS A PROVI SION FOR ITA NO.77 ,35/MDS./2014 :- 7 -: BAD AND DOUBTFUL DEBTS. THEREFORE, CLAIM OF THE AS SESSEE THAT PROVISION FOR STANDARD ASSETS ALSO HAS TO BE CONSID ERED FOR APPLYING THE CONDITION SET OUT UNDER SECTION 36(1)( VIIA) IS NOT IN ACCORDANCE WITH LAW. IF THE PROVISION FOR STANDARD ASSETS IS NOT CONSIDERED AS PROVISION FOR BAD AND DOUBTFUL DEBTS, THE ACTUAL PROVISION FOR BAD AND DOUBTFUL DEBTS MADE BY THE AS SESSEE IN ITS BOOKS ` 4,01,44,027/- FALL MUCH BELOW THE SUM OF ` 5,38,05,015/- ALLOWED BY THE ASSESSING OFFICER. IN ANY CASE, A LOOK INTO THE ORIGINAL ASSESSMENT ORDER CLEARLY S HOW THAT BUT FOR THE DEDUCTION ALLOWED TO THE ASSESSEE AS CLAIME D BY IT IN ITS RETURN, THERE WAS NO DISCUSSION AS TO HOW SECTION 3 6(1)(VIIA) WAS APPLIED AND WHETHER THE LIMITS WERE CORRECTED W ORKED OUT. ADMITTEDLY, NO QUESTION WAS ASKED TO THE ASSESSEE D URING THE COURSE OF ASSESSMENT PROCEEDINGS ALSO WITH REGARD T O THE CLAIM MADE BY IT UNDER SECTION 36(1)(VIIA), INSOFAR AS IT CONCERNS THE QUANTUM OF SUCH CLAIM. THIS OBVIOUSLY SHOW THAT THERE WAS NO APPLICATION OF MIND BY THE ASSESSING O FFICER AT THE TIME OF ASSESSMENT. ASSESSING OFFICER HAD NOT COME TO ANY CONCLUSION AT ALL HAVING NOT CONSIDERED THE CLA IM IN THE LIGHT OF THE CONDITIONS SET OUT IN SECTION 36(1)(VI IA) OF THE ACT. WE CANNOT SAY THAT HE HAD TAKEN A VIEW WHICH WAS IN ACCORDANCE WITH LAW. IT IS NOT A CASE WHERE THE AS SESSING OFFICER HAD ADOPTED ONE OF THE COURSES POSSIBLE IN LAW. OF COURSE, A CRYPTIC ORDER OF THE ASSESSING OFFICER BY ITSELF MAY NOT SHOW THAT THERE WAS NO THOUGHT GIVEN BY HIM ON A CLAIM OF THE ASSESSEE. HOWEVER, HERE THERE WAS NO ENQUIRY M ADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THERE FORE, THE ORDER WHICH WAS SILENT ON THE CLAIM MADE BY THE ASS ESSEE, AND ALLOWING SUCH CLAIM, WITHOUT ANY DISCUSSION, WILL D EFINITELY RENDER IT ERRONEOUS AND PREJUDICIAL TO THE INTEREST S OF REVENUE. AS HELD BY HON'BLE APEX COURT IN THE CASE OF MALABA R INDUSTRIAL CO. LTD. V. CIT (243 ITR 83), PREJUDICI AL TO THE INTERESTS OF THE REVENUE IS A TERM OF WIDE IMPORT AND NOT CONFINED TO LOSS OF TAX. AN ORDER WITHOUT APPLICAT ION OF MIND IS DEFINITELY PREJUDICIAL TO THE INTERESTS OF THE REVE NUE. WE ARE IN AGREEMENT WITH LD. CIT THAT THE ORDER OF ASSESSING OFFICER WAS ERRONEOUS INSOFAR AS IT WAS PREJUDICIAL TO THE INTE RESTS OF REVENUE. NO INTERFERENCE IS REQUIRED. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ITA NO.77 ,35/MDS./2014 :- 8 -: IN VIEW OF THE AFORESAID FINDINGS, THIS GROUND OF A PPEAL OF THE ASSESSEE IS DISMISSED. 6.1 RESPECTFULLY FOLLOWING THE ABOVE DECISION OF T RIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010-11, WE REJECT THIS GROUND RAISED BY THE ASSESSEE . 7. THE ASSESSEE RAISED THE ADDITIONAL GROUND RELAT ING TO THE FIRST GROUND WHICH READS AS FOLLOWS:- 1.3 WITHOUT PREJUDICE TO THE CONTENTION THAT THE PROVISION FOR STANDARD ASSETS AND COUNTRY RISK IS T O BE CONSIDERED AS PROVISION MADE FOR BAD AND DOUBTFUL D EBTS, FOR THE PURPOSE OF SEC.36(1)(VIIA), THE APPELLANT S UBMITS THAT EVEN IF PROVISIONS FOR NON-PERFORMING ASSETS AS PER THE GUIDELINES OF RBI IS ALONE TO BE CONSIDERED, THE PR OVISIONS HELD AS AT THE YEAR END SHOULD BE THE BASIS AND NOT THE PROVISION MADE DURING THE YEAR. RELIANCE FOR THIS VIEW IS PLACED ON THE DECISION OF HONBLE ITAT AHMEDABAD IN THE CASE OF DCIT VS. SARVODAYA SAHAKARI BANK LTD. (2014 ) 48 TAXMANN.COM.82. THE LD.A.R FILED A PETITION FOR ADMISSION OF ADDITI ONAL GROUND. SINCE FIRST TIME RAISED BEFORE THE TRIBUNAL, REVENUE AUTH ORITIES HAVE NO OCCASION TO CONSIDER THE SAME, WE REMIT THE ISSUE R ELATING TO THE ABOVE ADDITIONAL GROUND TO THE FILE OF AO FOR HIS C ONSIDERATION. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.77 ,35/MDS./2014 :- 9 -: 8. THE SECOND GROUND IS WITH REGARD TO DISALLOWANCE U/S.14A R.W.RULES 8D OF THE INCOME TAX RULES, 1962. 9. AT THE OUTSET, THE LD.A.R SUBMITTED THAT THIS I SSUE CAME FOR CONSIDERATION BEFORE THIS TRIBUNAL IN ASSESSEES OW N CASE IN I.T.A.NO.2126/MDS/2013(SUPRA) WHEREIN THE TRIBUNAL HELD THAT:- 63. COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSEE BANK IS HOLDING SECURITIES AS STOCK-IN-TRADE, WHEN ONCE SEC URITIES ARE HELD AS STOCK-IN-TRADE, NO DISALLOWANCE UNDER SECTION 14 A IS WARRANTED. THE COUNSEL SUBMITS THAT CO-ORDINATE BENCH OF THIS TRIBUNAL DECIDED SIMILAR ISSUE FOR THE ASSESSMENT YEAR 2009- 10 IN ITA NO.1949/MDS/2012 DATED 18.6.2014. REFERRING TO THE SAID ORDER, COUNSEL SUBMITS THAT IN PRINCIPLE, THE TRIBUNAL DEC IDED THE ISSUE IN FAVOUR OF THE ASSESSEE HOLDING THAT PROVISIONS OF S ECTION 14A HAVE NO APPLICATION WHEN THE SECURITIES ARE HELD AS STOC K-IN-TRADE. HOWEVER, THE TRIBUNAL REMITTED THE MATTER TO THE FI LE OF THE ASSESSING OFFICER TO ASCERTAIN WHETHER SECURITIES A RE HELD AS STOCK- IN-TRADE. 64. DEPARTMENTAL REPRESENTATIVE PLACES RELIANCE ON THE ORDERS OF LOWER AUTHORITIES IN INVOKING PROVISIONS OF SECTION 14A READ WITH RULE 8D FOR THE PURPOSE OF DISALLOWING EX PENDITURE ATTRIBUTABLE FOR EARNING DIVIDEND INCOME. 65. WE HAVE PERUSED THE ORDER OF CO-ORDINATE BENCH OF THIS TRIBUNAL FOR THE ASSESSMENT YEAR 2009-10, WHEREIN T HE TRIBUNAL HELD THAT AUTHORITIES BELOW HAVE WRONGLY INVOKED SE CTION 14A IN CASE OF INVESTMENTS HELD AS STOCK-IN-TRADE. WHILE H OLDING SO THE TRIBUNAL OBSERVED AS UNDER:- 15. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, PERU SED THE RELEVANT FINDINGS AND THE JUDICIAL PRECEDENTS. UNDI SPUTEDLY, THE ITA NO.77 ,35/MDS./2014 :- 10 - : ASSESSEE HAD EARNED EXEMPT INCOME OF ` 21 CRORES FROM INVESTMENTS MADE IN MUTUAL FUNDS AND EQUITIES. ITS STAND ADOPTED THROUGHOUT HAS BEEN TO HAVE HELD THE INVESTMENTS AS STOCK-IN- TRADE. THERE IS NO FINDING ON THIS ISSUE FORTHCOMI NG EITHER FROM THE ASSESSING OFFICER O RTHE CIT(A). WE HAVE ALSO PERUS ED THE GUARD FILE PERTAINING TOI.T.A.NO. 1815/MDS/2011 DECIDED O N 2.4.2013(SUPRA). IT IS EVIDENT THERE FROM THAT THE VERY DISALLOWANCE STANDS UPHELD BY A CO-ORDINATE BENCH. ITS PLEA CHAL LENGING APPLICABILITY OF SECTION 14A IN CASE OF INVESTMENT HELD AS STOCK-IN- TRADE APPEARS TO HAVE NEITHER BEEN RAISEDNOR ADJUD ICATED. SO, WE TREAT IT AS A FRESH PLEA NOT COVERED BY THEEARLIER ORDER. THUS, THE NEW ISSUE THAT ARISES FOR OUR CONSIDERATION ISAS TO WHETHER A DISALLOWANCE U/S 14A CAN BE MADE EVEN IN A CASE WHE N THE INVESTMENTS GIVING RISE TO AN EXEMPT INCOME ARE H ELD ASSTOCK-IN- TRADE OR NOT. PROCEEDING ON THE SAME, WE FIND THAT THE CASELAW QUOTED BY THE ASSESSEE (SUPRA) SQUARELY SUPPORTS IT S PLEA. THE REVENUE HAS BROUGHT TO OUR NOTICE A RECENT THIRD ME MBER DECISION INCASE OF D.H. SECURITIES P. LTD VS DCIT [ 2014] 31 (TRIB) 381. THIS DECISION FOLLOWS THE JUDGMENT OF THE HON' BLE BOMBAY HIGH COURT ( WHICH IS ALSO THE CONCERNED JURISDICTI ONAL HIGH COURT) IN CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD VS ACI T, 328 ITR 81 AND THAT OF HON'BLE CALCUTTA HIGH COURT IN DHANU KA& SONS VS CIT, 339 ITR 319. NOTONLY THIS, THE HON'BLE THIRD M EMBER ALSO REFERS TO THE CASE LAW CCI LTD.(SUPRA) AND EXPRESSE S A VIEW THAT THE AFORESAID DECISIONS OF OTHERHON'BLE HIGH COURTS WERE NOT BROUGHT TO THE NOTICE OF THE KARNATAKAHIGH COURT. I N THESE CIRCUMSTANCES, THE PICTURE THAT EMERGES IS THATVARI OUS HIGH COURTS HAVE EXPRESSED DIVERGENT OPINIONS ON THIS LEGALISSU E. THAT BEING THE CASE, WE APPLY THE DECISION OF CIT VS VEGETABLE PRODUCTS LTD 88 ITR 192 AND IN THE VIEW FAVOURABLE TO THE ASSESS EE IS FOLLOWED. SO, IN PRINCIPLE, WE HOLD THAT THE AUTHORITIES BELO W HAVE WRONGLY INVOKED SECTION 14A IN CASE OF INVESTMENTS HELD AS STOCK-IN TRADEWHEREIN THE EXEMPT INCOME BY WAY OF DIVIDEN DS IS ONLY INCIDENTAL. IT IS ALSO MADE CLEAR THAT SINCE THERE IS NO VERIFICATION OF THE FACTUAL POSITION OF INVESTMENTS HELD AS STOCK- IN-TRADE, WE ACCEPT THE ASSESSEES CONTENTIONS IN PRINCIPLE ONLY AND REMIT THE ISSUE BACK TO THE ASSESSING OFFICER TO DETERMINE TH E TRUE FACTUAL POSITION. THE ASSESSEES ALTERNATIVE PLEA CARRIES O NLY AN ACADEMIC SIGNIFICANCE. THE RELEVANT GROUND IS ACCEPTED FOR S TATISTICAL PURPOSES. 66. SINCE THE FACTS AND CIRCUMSTANCES ARE IDENTICAL , FOLLOWING THE SAID DECISION OF THIS TRIBUNAL, WE ALLOW THE GR OUND RAISED BY THE ASSESSEE. ITA NO.77 ,35/MDS./2014 :- 11 - : 10. ON THE OTHER HAND, THE LD.D.R RELIED ON THE OR DERS OF THE LOWER AUTHORITIES IN INVOKING THE PROVISIONS OF THE SECTI ON 14A R.W.RULE 8D. HE FURTHER SUBMITTED FOR ASSESSMENT YEAR 2008-09, T HE SAME ISSUE WAS DECIDED AGAINST THE ASSESSEE. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE HAVE GONE THROUGH THE ORDER OF THE ASSE SSMENT ORDER. THERE IS NO FINDING IN THE ASSESSMENT ORDER REGARDI NG TREATMENT OF EXEMPTED INCOME YIELDING ASSETS AS STOCK-IN-TRADE. HENCE, IN OUR OPINION, IF IT IS TREATED AS STOCK-IN-TRADE BY THE ASSESSEE, THEN THE CLAIM OF ASSESSEE IS TO BE ALLOWED IN TERMS OF ORD ER OF TRIBUNAL IN ITA NO.2126/MDS./2013 (SUPRA). ACCORDINGLY, THIS ISSUE IS REMITTED TO THE FILE OF AO FOR FRESH CONSIDERATION. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 12. THE THIRD GROUND IS WITH REGARD TO DISALLOWANC E OF CONTRIBUTION OF STAFF WELFARE FUND. 13. AT THE OUTSET, THE LD.A.R SUBMITTED THAT THIS ISSUE CAME FOR CONSIDERATION BEFORE THIS TRIBUNAL IN ASSESSEES OW N CASE IN I.T.A.NO.2126/MDS/2013(SUPRA). ITA NO.77 ,35/MDS./2014 :- 12 - : 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS RIGHTLY POINTED OUT BY THE LD.A.R, THIS ISSUE WAS DECIDED AGAINST THE ASSESSEE BY THE CO-ORDINATE BENCH OF CH ENNAI TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010-11 CIT ED SUPRA, WHEREIN TRIBUNAL HELD THAT:- 67. THE NEXT ISSUE IN THE APPEAL OF THE ASSESSEE I S THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT A LLOWING DEDUCTION IN RESPECT OF CONTRIBUTION TO STAFF WELFA RE FUND OVERLOOKING THE MANDATORY REQUIREMENT OF PAYMENT AS AN EMPLOYER. 68. AT THE TIME OF HEARING, COUNSEL FOR THE ASSESSE E SUBMITS THAT THIS ISSUE HAS BEEN DECIDED AGAINST TH E ASSESSEE BY THE CO-ORDINATE BENCH FOR THE ASSESSMENT YEAR 20 08-09 IN ITA NO.1815/MDS/2011 DATED 2.4.2013 IN PARA 14 OF T HE ORDER. RESPECTFULLY FOLLOWING THE SAID ORDER OF T HIS TRIBUNAL, WE DISMISS THE GROUND OF ASSESSEE ON THIS ISSUE. 14.1 RESPECTFULLY FOLLOWING THE ABOVE DECISION OF TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010-11, WE REJECT THIS GROUND RAISED BY THE ASSESSEE . 15. THE FOURTH GROUND IN THIS APPEAL IS WITH REGAR D TO DISALLOWING THE CLAIM OF DEPRECIATION ON UPS AT 80% OVERLOOKING TH E FACT THAT UPS IS AN ENERGY SAVING DEVICE ENTAILING FOR HIGHER DEPREC IATION. ITA NO.77 ,35/MDS./2014 :- 13 - : 16. AT THE TIME OF HEARING, THE LD.A.R SUBMITTED T HAT THIS ISSUE CAME FOR CONSIDERATION BEFORE THIS TRIBUNAL IN ASSESSEE S OWN CASE IN I.T.A.NO.2126/MDS/2013(SUPRA) AND THE TRIBUNAL DECI DED THE ISSUE AGAINST THE ASSESSEE. 17. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS RIGHTLY POINTED OUT BY THE LD.A.R, THIS ISSUE WAS DECIDED AGAINST THE ASSESSEE BY THE CO-ORDINATE BENCH OF CH ENNAI TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010-11 CIT ED SUPRA, WHEREIN TRIBUNAL HELD THAT:- 69. THE NEXT ISSUE IN THE GROUNDS OF APPEAL OF THE ASSESSEE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER DISAL LOWING THE CLAIM OF DEPRECIATION ON UPS AT 80% OVERLOOKING TH E FACT THAT UPS IS AN ENERGY SAVING DEVICE ENTAILING FOR HIGHER DEPRECIATION. 70. COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS ISSU E HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE CO-ORDINAT E BENCH FOR THE ASSESSMENT YEAR 2009-10 IN ITA NO.1949/MDS/2012 DATED 18.6.2014 AT PAGES 10 & 11 IN PARA 16 TO 18 OF THE ORDER. RESPECTFULLY FOLLOWING THE SAID DECISION, WE DISMIS S THE GROUNDS RAISED BY THE ASSESSEE ON THIS ISSUE. 17. 1 RESPECTFULLY FOLLOWING THE ABOVE DECISION OF TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010-11, WE REJECT THIS GROUND RAISED BY THE ASSESSEE . ITA NO.77 ,35/MDS./2014 :- 14 - : 18. THE LAST GROUND IN THIS APPEAL IS WITH REGARD TO RESTRICTING THE RELIEF U/S.90 TO THE EXTENT OF TAX PAID IN THE FOREIGN COU NTRY. 19. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN OUR OPINION, THE SAME ISSUE CAME FOR CON SIDERATION BEFORE THE CO-ORDINATE BENCH OF CHENNAI TRIBUNAL IN ASSESS EE'S OWN CASE FOR ASSESSMENT YEAR 2010-11 CITED SUPRA, WHEREIN TRIBUN AL HELD THAT:- 76. COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS IS SUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE CO-ORDINATE BEN CH FOR THE ASSESSMENT YEAR 2009-10 IN ITA NO.1949/MDS/2012 DA TED 18.6.2014 AT PAGES 11 TO 13 IN PARAS 21 TO 25 OF THE ORDER . 77. WE HAVE PERUSED THE SAID ORDER OF THIS TRIBUNA L AND FIND THAT THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE HOLDING AS UNDER:- 21. THE SEVENTH SUBSTANTIVE GROUND CHALLENGES THE CIT(A)SORDER RESTRICTING RELIEF @ 90% OF THE TAX PAID IN FOREIGN COUNTRIES. 22. FACTUAL BACKDROP QUA THIS ISSUE IS THAT THE ASS ESSEE HADRAISED A CLAIM OF DOUBLE TAXATION RELIEF IN MEMO OF INCOME FROM ITS OVERSEAS BRANCHES IN SOUTH KOREA, SINGAPOR E, THAILAND, SRILANKA ANDHONG KONG AMOUNTING TO ` 73,57,573/-, ` 21,32,37,338/-, ` 7,84,71,232, ` ` 6,42,94,845/- ANDR ` 39,80,57,968/- RESPECTIVELY. ITS THRUST WAS UPON VA RIOUS DOUBLE TAXATION AVOIDANCE AGREEMENTS (DTAAS) BETWEE N INDIA AND THE SAID COUNTRIES EXCEPT HONG KONG. THE ASSESSING OFFICERHAD RESTRICTED THIS RELIEF @ 16.5% I.E THE PREVAILING TAX RATE IN HONGKONG. THEREAFTER, HE DIS TINGUISHED CASE LAW PVAL KULANDAGANCHETTIAR VS CIT , 267 ITR 6 54 BY OBSERVING THAT CONTRARY TO THE FACTS OFTHIS CASE, S HRI CHETTIAR WAS FISCALLY DOMICILED IN MALAYSIA AND DID NOTHAVE ANY PERMANENT ESTABLISHMENT IN INDIA. ON DTAA WITH SOUT HKOREA, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE TERM S CONTAINEDTHEREIN DID NOT GIVE EXCLUSIVE RATE OF TAX TO THE CONCERNED COUNTRYAND IT HAD ONLY PROVIDED FOR CREDI T METHOD ITA NO.77 ,35/MDS./2014 :- 15 - : OF RELIEF IN DOUBLE TAXATION.ACCORDINGLY, HE DECLIN ED TO ACCEPT THE ASSESSEES CLAIM. 23. COMING TO THE DTAAS BETWEEN INDIA AND SINGAPORE , THAILANDAND SRILANKA, THE ASSESSING OFFICER OBSERVE D THAT THEY ALSO RECOGNIZEDCREDIT METHOD. HE ALLEGED THE ASSESSEE NOT TO HAVE PROVIDED ANYDIFFERENCE IN RATES OF TAX IN THE ABOVE STATED TAX JURISDICTIONS.SIMULTANEOUSLY, THE ASSESS ING OFFICER HELD THAT ON FURNISHING DETAILSON ASSESSEES PART, THE CLAIM WOULD BE ALLOWED IN ITS FAVOUR. THISRESULTED IN DISALLOWANCE/ADDITION OF ` 55,65,44,48/-. 24. IN LOWER APPELLATE ORDER, THE CIT(A) HAS QUOTED A NOTIFICATION NO.S.O 2123(E) DATED 28.8.2008 REPORTE D AS 304 ITR(ST.)63, CLARIFYING THAT IN SUCH A CASE INVOLVIN G A DTAA, AN INCOME HAS TO BE INCLUDED IN THE TOTAL RECEIPTS AND THE NECESSARY RELIEF IS TO BE GRANTED BY ELIMINATION METHOD OR AS PER THE TERMS OF AGREEMENT SEEKING TO AVOID DOUBLE TAXATION. HE RELIES UPON FINANCE ACT, 2012 INSERTING EXPLANAT ION 3 TO SECTION 90 MAKING THE NOTIFICATION RETROSPECTIVELY APPLICABLE. IN THIS MANNER, THE CIT(A) HAS DIRECTED THE ASSESSI NG OFFICER TO ALLOW RELIEF TO THE ASSESSEE AS PER THE AFORESAI D NOTIFICATION. 25. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH THE RELEVANT FINDINGS IN THE ORDERS OF ASSESSING OFFICER AS WELL AS THE CIT(A). THE PARTIES ARE UNANIMOUS BEFORE US THAT TH IS VERY ISSUE STANDS DECIDED IN THE REVENUES FAVOUR BY THE 'TRIBUNAL' (SUPRA) IN PRECEDING ASSESSMENT YEAR. SO, WE ALSO F OLLOW SUIT AND REJECT THE ASSESSEES RELEVANT GROUNDS. 78. RESPECTFULLY FOLLOWING THE SAID DECISION, WE DI SMISS THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE . 20. IN VIEW OF THE ABOVE ORDER OF TRIBUNAL, THIS G ROUND OF APPEAL OF THE ASSESSEE STANDS DISMISSED. NEXT WE TAKE UP ASSESSEES APPEAL IN I.T.A.NO.35/MDS/2014 21. THE FIRST ISSUE IN THE APPEAL OF THE REVENUE IS THA T COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DIRECTING THE ASSE SSING OFFICER TO CONSIDER THE AGGREGATE AVERAGE ADVANCES OUTSTANDING AT THE END OF ITA NO.77 ,35/MDS./2014 :- 16 - : EACH MONTH AND NOT THE INCREMENTAL ADVANCES GRANTE D DURING EACH MONTH WHILE COMPUTING DEDUCTION UNDER SECTION 36(1) (VIIA) OF THE ACT. 22. WE HAVE HEARD THE SUBMISSIONS OF THE COUNSEL A ND PERUSED THE MATERIAL ON RECORD. IN OUR OPINION, THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF CHENNAI TR IBUNAL IN ASSESSEE'S OWN CASE IN ITA NO.2031/MDS./2013 FOR AS SESSMENT YEAR 2010-11 WHEREIN HELD THAT:- 80. AT THE TIME OF HEARING, COUNSEL FOR THE ASSESS EE SUBMITS THAT THE PRESENT ISSUE HAS BEEN DECIDED IN FAVOUR O F THE ASSESSEE BY THIS TRIBUNAL FOR THE ASSESSMENT YEAR 2 009-10 IN ITA NO.1949/MDS/2012 DATED 18.6.2014 AT PAGES 24 TO 26 IN PARAS 56 TO 59 OF THE ORDER. HE PLACES RELIANCE ON THE SA ID ORDER. DEPARTMENTAL REPRESENTATIVE RELIES ON THE ORDER OF THE ASSESSING OFFICER. 81. SIMILAR ISSUE HAS BEEN RAISED BY THE REVENUE I N ITA NO.2030/MDS/2013 FOR THE ASSESSMENT YEAR 2007-08 AN D WE HAVE DEALT WITH THIS ISSUE IN PARA 51 & 52 OF THIS ORDER . FOR THE REASONS MENTIONED THEREIN AND THE DECISION HOLDS GO OD FOR THE ASSESSMENT YEAR 2010-11, WE REJECT THE GROUNDS RAIS ED BY THE REVENUE ON THIS ISSUE. 22.1 IN VIEW OF THE ABOVE ORDER OF TRIBUNAL IN THE APPEAL OF REVENUE, WE DISMISS THE GROUND RAISED BY THE REVENUE. ITA NO.77 ,35/MDS./2014 :- 17 - : 23. THE SECOND GROUND IS WITH REGARD TO DISALLOWAN CE OF INTEREST EXPENSES IN COMPUTING DISALLOWANCE AS PER RULE 8D O F INCOME TAX RULES, 1962. 24. AFTER HEARING BOTH THE PARTIES, IN OUR OPINION , THIS GROUND DOES NOT REQUIRE ADJUDICATION. SINCE THE SAME ISSUE IS D EALT IN ASSESSEES APPEAL IN THE EARLIER PARA NO.11 OF THIS ORDER, WE REMIT THE ISSUE TO THE FILE OF AO FOR FRESH CONSIDERATION. 25. THE THIRD GROUND IS WITH REGARD TO LOSS ON REV ALUATION OF INVESTMENTS. 25.1 WE HAVE HEARD THE SUBMISSIONS OF THE COUNSEL AND PERUSED THE MATERIAL ON RECORD. IN OUR OPINION, THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF CHENNAI TR IBUNAL IN ASSESSEE'S OWN CASE IN ITA NO.2031/MDS./2013 FOR AS SESSMENT YEAR 2010-11 WHEREIN HELD THAT:- 83. COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS ISS UE HAS BEEN DECIDED BY THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 IN ITA NO.1949/MDS/2012 DAT ED 18.6.2014 IN PAGES 20 & 21 AT PARA 43 TO 46 OF THE ORDER. HE PLACES RELIANCE ON THE SAID ORDER. DEPARTMENTAL RE PRESENTATIVE SUPPORTS THE ORDER OF ASSESSING OFFICER. ITA NO.77 ,35/MDS./2014 :- 18 - : 84. ON GOING THROUGH THE ORDER OF THE CO-ORDINATE B ENCH IN ITA NO.1949/MDS/2012 DATED 18.6.2014 WE FIND THAT T HE ISSUE IN APPEAL HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE H OLDING AS UNDER:- 43. THE REVENUES FIFTH SUBSTANTIVE GROUND CHALLENGES THECIT(A)S ORDER DELETING DISALLOWANCE OF ` 69,13,38,139/- QUA LOSS ON REVALUATION OF INVESTMENTS. 44. IN SCRUTINY THE ASSESSING OFFICER FOUND THE ASSES SEE TOHAVE CLAIMED DEDUCTION BY WAY OF LOSS ON REVALUAT ION OF INVESTMENTS OF ` 69,13,38,139/-. PER ASSESSING OFFICER, THE SAME WAS NEITHER AN ALLOWABLE EXPENDITURE NOR AN ASCERTAINED LIABILITY. IN ASSESSMENT ORDER, HE PLAC ED RELIANCE ON HIS FINDINGS FOR ASSESSMENT YEARS 1996- 97AND 1998-99 FOR MAKING THE IMPUGNED DISALLOWANCE. 45. IN LOWER APPELLATE ORDER, THE CIT(A) HAS QUOTED HIS PREDECESSORS ORDERS FOR ASSESSMENT YEARS 2005-06 A ND 2008- 09(SUPRA) AS WELL AS VARIOUS DECISIONS STATED HEREIN BELOW: UCO BANK VS CIT 240 ITR 355 (SC) CIT VS CITY UNION BANK LTD 291 ITR 144 (MAD) BHARAT OVERSEAS BANK LTD VS ACIT I.T.A.NO. 239/MDS/2001DATED 7.1.2005 INDIAN BANK VS DCIT I.T.A.NO.984/MDS/2003 DATED 30.6.2011 ACCORDINGLY, THE IMPUGNED DISALLOWANCE STANDS DELET ED. 46. COMING TO THIS ISSUE AS WELL, THE PARTIES EXPRESS UNANIMITY IN REFERRING TO ORDER OF THE 'TRIBUNAL' F OR ASSESSMENT YEAR 2008- 09(SUPRA) TO STATE THAT THE V ERY ISSUE STANDS DECIDED IN THE ASSESSEES FAVOUR. CONSEQUENTLY, WE AGREE WITH THE CIT(A)S FINDINGS A ND REJECT THE RELEVANT REVENUES GROUND. 85. RESPECTFULLY FOLLOWING THE SAID DECISION, WE UP HOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND REJ ECT THE GROUNDS OF APPEAL OF THE REVENUE. IN VIEW OF THE ABOVE ORDER OF TRIBUNAL IN THE APPEA L OF REVENUE, WE DISMISS THE GROUND RAISED BY THE REVENUE. ITA NO.77 ,35/MDS./2014 :- 19 - : 26. THE FOURTH GROUND IS WITH REGARD TO LOSS ON R EVALUATION OF DERIVATIVE CONTRACTS. 26.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. THE SAME ISSUE CAME FOR CONSIDERATION BEFOR E THIS TRIBUNAL IN ITA NO.2031/MDS./2013 FOR ASSESSMENT YEAR 2010-11(S UPRA) WHEREIN HELD THAT:- 87. WE FIND THAT THE CO-ORDINATE BENCH OF THIS TRI BUNAL WHILE UPHOLDING THE ORDER OF THE COMMISSIONER OF INCOME T AX (APPEALS) IN ALLOWING THE CLAIM OF LOSS ON REVALUATION OF DER IVATIVE CONTRACTS OBSERVED AS UNDER:- 47. THE REVENUES SIXTH SUBSTANTIVE GROUND IS THAT THE CIT(A)HAS WRONGLY DELETED DISALLOWANCE OF ` 11,32,83,633/- ON REVALUATION OFDERIVATIVE CONTRACTS. 48. IN SCRUTINY, THE ASSESSING OFFICER FOUND THE ASSESSEE TOHAVE CLAIMED LOSS OF ` 11,32,83,633/- ON ACCOUNT OF AFORESAIDREVALUATION. PER ASSESSING OFFICER, THIS P ERTAINED TO ONLY SPECULATIVETRANSACTIONS WHICH WOULD INVOKE THE BOARDS INSTRUCTION NO.3 OF 2010.HE HELD THAT THE LOSS ARIS ING OUT OF SPECULATIVE/NOTIONAL TRANSACTIONSCOULD ONLY BE SET OFF AGAINST THE INCOME OF SUCH ACTIVITY AS NOSALE/CONCLUSION/SE TTLEMENT OF CONTRACTS HAD TAKEN PLACE SINCE THEASSETS IN QUESTI ON CONTINUED TO BE OWNED BY THE ASSESSEE.ACCORDINGLY, THE ASSESSING AUTHORITY MADE CONSEQUENTIAL ADDITION INASSESSEES INCOME. 49. HEREIN ALSO, THE CIT(A) HAS FOLLOWED HIS PREDEC ESSORS ORDERFOR ASSESSMENT YEAR 2008-09 AS WELL AS DECISIO N OF THE ITAT MUMBAI INCASE OF EDELWISS CAPITAL LTD VS ITO, I.T.A.NO. 5324/MUM/07 DECIDEDON 10.11.2010, TO HOLD THAT PROV ISION FOR LOSS ON MARKET TO MARKETBASIS IN RESPECT OF TRADI NG DERIVATIVES COULD NOT HAVE BEEN DISALLOWED.SO, THE IMPUGNED DISALLOWANCE STANDS DELETED. 50. COMING TO THIS GROUND, WE FIND FROM THE PARTIES WRITTENSUBMISSIONS AND PAPER BOOKS FILED THAT THE ' TRIBUNAL' HAS UPHELD THECIT(A)S IDENTICAL FINDINGS IN ASSESS MENT YEAR 2008-09. ON BEINGGRANTED OPPORTUNITY, THE REVENUE H AS FAILED TO POINT OUT ANYDISTINCTION ON FACTS. THEREF ORE, WE ITA NO.77 ,35/MDS./2014 :- 20 - : UPHOLD THE CIT(A)S ORDER DELETINGTHE AFORESAID DIS ALLOWANCE AND REJECT THE REVENUES GROUND. 88. RESPECTFULLY FOLLOWING THE SAID ORDER, WE UPHOL D THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) ON T HIS ISSUE AND REJECT THE GROUNDS OF REVENUE. 26.2 IN VIEW OF THE ABOVE ORDER OF TRIBUNAL IN THE APPEAL OF REVENUE, WE DISMISS THE GROUND RAISED BY THE REVENUE. 27. THE FIFTH GROUND IS WITH REGARD TO ADDITION TOW ARDS BAD DEBTS RECOVERED. 27.1 AFTER HEARING BOTH THE PARTIES, THE SAME ISSU E CAME FOR CONSIDERATION BEFORE THIS TRIBUNAL IN ITA NO.1949/M DS./2012 VIDE ORDER DATED 18.06.2014 IN ASSESSEE'S OWN CASE WHERE IN THE TRIBUNAL HELD THAT:- 52. RELEVANT FACTS QUA THIS GROUND ARE THAT IN ITS MEMO OF INCOME, THE ASSESSEE IS STATED TO HAVE CLAIMED DE DUCTION TOWARDS BAD DEBTS RECOVERED. IT EXPLAINED BEFORE THE ASSESSING OFFICER THAT THIS AMOUNT PERTAINED TO RUR AL ADVANCES WRITTEN OFF BUT NOT ALLOWED IN VARIOUS PR ECEDING ASSESSMENT YEARS. IT STRESSED THE FACT THAT WHEN BAD DEBTS ITSELF HAD BEEN DISALLOWED AS DEDUCTION, RECO VERY THEREOF COULD NOT HAVE BEEN TAXED IN THE IMPUGNED ASSESSMENT YEAR. THE ASSESSING OFFICER HELD THAT THE ITA NO.77 ,35/MDS./2014 :- 21 - : ASSESSEE HAD ORIGINALLY CLAIMED THE ABOVE BAD DEBTS WRITTEN OFF AS EXPENDITURE. FURTHER, HE OBSERVED THAT IT H AD ALSO FILED APPEALS BEFORE THE 'TRIBUNAL' AND THE ISSU E WAS YET TO ATTAIN FINALITY. ACCORDINGLY, HE DISALLOWED THE AF ORESAID AMOUNT. 53. IN LOWER APPELLATE ORDER, THE CIT(A) HOLDS THA T THE RECOVERY MADE IN RESPECT OF BAD DEBTS COULD BE TAXE D ONLY IF THE BAD DEBTS THEMSELVES ARE ALLOWED AS A DEDUCT ION BY QUOTING SECTION 41(4) IN SUPPORT. HE DISAGREES W ITH THE ASSESSING OFFICER AFTER EXPRESSING AN OPINION THAT WHEN THE BAD DEBTS WRITTEN OFF HAD NOT BEEN ALLOWED AS A DED UCTION, THE SAME CANNOT BE TAXED AGAIN. THEREFORE, THE REV ENUE HAS RAISED THE INSTANT GROUND. 54. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH THE ORDERS OF ASSESSING OFFICER AND CIT(A). EVEN THE R EVENUE DOES NOT DISPUTE THAT THE ASSESSEE HAD RAISED ITS CLAIM OF DEDUCTION OF BAD DEBTS RELATING TO THE VERY SUMS IN PRECEDING ASSESSMENT YEARS. THE ASSESSING OFFICER DID NOT ALLOW THIS RELIEF. IN RELEVANT PREVIOUS YEAR, WHEN IT HAS RECOVERED THE AFORESAID DEBTS, THE REVENUE IS AGAIN SEEKING TO TAX THE SAME. THERE IS NO COGENT EVIDENCE BEFOR E US TO DISPUTE THIS FACTUAL POSITION. MOREOVER, THE CIT(A ) HAS CITED SECTION 41(4) OF THE ACT WHILST GRANTING RELI EF. THE REVENUE HAS FAILED TO POINT OUT ANY LEGAL OR FACTU AL ERROR IN THE CIT(A)S FINDINGS. THEREFORE, THE SAME ARE AFF IRMED. HOWEVER, AS A MATTER OF CAUTION, WE OBSERVE THAT TH E ASSESSEES CLAIM OF BAD DEBTS PERTAINING TO THOSE S UMS IN PRECEDING ASSESSMENT YEARS, IF ANY, SHALL BE DEEMED TO ITA NO.77 ,35/MDS./2014 :- 22 - : HAVE BEEN DISMISSED . WITH THESE OBSERVATIONS, THE REVENUES GROUND IS REJECTED. IN VIEW OF THE ABOVE ORDER OF TRIBUNAL, WE DISMISS THE GROUND RAISED BY THE REVENUE. FURTHER, WE MAKE IT CLEAR THAT IF I T IS ALLOWED AS BAD DEBT IN EARLIER YEARS AND RECOVERED THE SAME IN THE ASSESSMENT YEAR UNDER CONSIDERATION TO BE TREATED AS INCOME OF ASSE SSEE. 28. THE SIXTH GROUND IS WITH REGARD TO DEPRECIATION ON UPS ALLOWED AT 60%. 28.1 SINCE WE HAVE CONFIRMED THE ORDER OF THE CIT (A) IN EARLIER PARA NO.17 OF THIS ORDER, THIS GROUND RAISED BY THE REVE NUE IS REJECTED. 29. THE SEVENTH GROUND IS WITH REGARD TO ALLOWABILI TY OF PROVISION FOR LEAVE ENCASHMENT. 29.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. THE SAME ISSUE CAME FOR CONSIDERATION BEFOR E THIS TRIBUNAL IN ITA NO.2031/MDS./2013 FOR ASSESSMENT YEAR 2010-11(S UPRA) WHEREIN HELD THAT:- 92. THE NEXT ISSUE IN THE APPEAL OF THE REVENUE I S THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOW ING PROVISION MADE FOR LEAVE SALARY. THE COUNSEL FOR TH E ASSESSEE SUBMITS THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ITA NO.77 ,35/MDS./2014 :- 23 - : ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 IN ITA NO.1815/MDS/2011 DATED 2.4.2013 AT PAGE 11 TO 14 IN PARA 6 OF THE ORDER. THE DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDER OF THE ASSESSING OFFICER IN REJECTING THE CLAIM OF THE ASSESSEE FOR ALLOWING PROVISION FOR LEAVE ENCASHMENT INVOKI NG THE PROVISIONS OF SECTION 43B OF THE ACT. 93. WE FIND THAT THE CO-ORDINATE BENCH OF THIS TRI BUNAL IN ITA NO.1815/MDS/2011 DATED 2.4.2013 ALLOWED THE CLA IM OF THE ASSESSEE BY SUSTAINING THE ORDER OF THE COMMISSION ER OF INCOME TAX (APPEALS) OBSERVING AS UNDER:- 6. THE FIFTH GROUND OF APPEAL RELATES TO ALLOWABLI LITY OF PROVISION FOR LEAVE ENCASHMENT. THE ISSUE HAS ALREA DY BEEN ADJUDICATED BY THE TRIBUNAL IN ITA NO.818/MDS/2010 RELEVANT TO THE ASSESSING OFFICER 2007-08 IN THE CASE OF THE AS SESSEE, WHEREIN THE TRIBUNAL HAS HELD AS UNDER:- WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE PAR TIES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW AN D THE JUDGEMENTS REFERRED TO BY BOTH THE SIDES. THE RELE VANT EXTRACT OF THE PROVISIONS OF SECTION 43B(F) ARE REPRODUCED HEREIN BELOW:- 43B. NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, A DEDUCTION OTHERWISE ALLOW ABLE UNDER THIS ACT IN RESPECT OF A) XXXXXXXXXX B) XXXXXXXXXX C) XXXXXXXXXX D) XXXXXXXXX E) XXXXXXXXX (F) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER IN LIEU OF ANY LEAVE AT THE CREDIT OF HIS EMPLOYEE, SHALL BE ALLOWED (IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED BY THE ASSES SEE ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMP LOYED BY HIM) ONLY IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY P AID BY HIM: PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHA LL APPLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR F URNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 IN ITA NO.77 ,35/MDS./2014 :- 24 - : RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVIDENCE OF S UCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUC H RETURN. 21. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES (SUPRA) HAS HELD THAT THE ORIGINAL ENACT MENT OF SECTION 43B OF THE INCOME TAX ACT WAS TO CURB UNREA SONABLE DEDUCTION ON THE BASIS OF THE MERCANTILE SYSTEM OF ACCOUNTING WITHOUT DISCHARGING STATUTORY LIABILITIES ON THE ON E HAND AND CLAIM APPROPRIATE BENEFIT UNDER THE ACT ON THE OTHE R INTRODUCED THE PROVISIONS OF SECTION 43B(F). UNDER CLAUSE (F) OF SECTION 43B ANY SUM PAYABLE BY THE EMPLOYER TO ITS EMPLOYEES AS LEAVE ENCASHMENT SHALL BE DEDUCTIBLE ONLY IN COMPUTING TH E INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS YEAR IN WHICH THE SUM IS ACTUALLY PAID BY THE EMPLOYER TO ITS EMPLOYEES. THE HONBLE HIGH COURT FURTHER HELD THAT WHILE INSERTING THE C LAUSE (F) NO SPECIAL REASONS WERE DISCLOSED. WITHOUT SUCH REASON S THE ENACTMENT IS INCONSISTENT WITH THE ORIGINAL PROVISI ONS OF THAT SECTION. ALTHOUGH THE DISCLOSURE OF THE REASONS WAS NOT MANDATORY, BUT IN THE INTEREST OF JUSTICE, IT WAS I NCUMBENT UPON THE LEGISLATURE TO DISCLOSE THE REASONS. THE LEGISL ATURE MUST DISCLOSE REASONS WHICH WOULD BE CONSISTENT WITH THE PROVISIONS OF THE CONSTITUTION AND THE LAWS OF THE LAND AND N OT FOR THE SOLE OBJECT OF NULLIFYING THE SUPREME COURT DECISION. THE HONBLE HIGH COURT FURTHER HELD THAT SECTION 43B(F) WAS LI ABLE TO BE STRUCK DOWN AS ARBITRARY AND INCONSISTENT AND DE H ORS THE DECISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF BHARAT EARTH MOVERS LTD. (SUPRA). 22. IN THE PRESENT CASE, THE ASSESSEE HAS CREATED PROVISIONS FOR LEAVE ENCASHMENT OF ` 27.68 CRORES. THE LEARNED AR HAS RELIED ON THE JUDGEMENT OF THE HONBLE CALCU TTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD. (SUPRA) WHEREIN THE HONBLE COURT HAS STRUCK DOWN THE PROVISIONS OF SUB -CLAUSE (F) OF SECTION 43B. THE HONBLE SUPREME COURT OF INDI A IN THE CASE OF BHARAT EARTH MOVERS LTD. VS. CIT REPORTED AS 245 ITR 428 ANSWERING TO THE QUESTION : WHETHER, ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE CASE, THE PROVISION FOR ME ETING THE LIABILITY FOR ENCASHMENT OF EARNED LEAVE BY THE EMP LOYEE IS ADMISSIBLE DEDUCTION? HELD AS UNDER:- A FEW PRINCIPLES WERE LAID DOWN BY THIS COURT, THE RELEVANT OF WHICH FOR OUR PURPOSE ARE EXTRACTED AND REPRODUCED AS UNDER: ITA NO.77 ,35/MDS./2014 :- 25 - : (I) FOR AN ASSESSEE MAINTAINING HIS ACCOUNTS ON THE MERCANTILE SYSTEM, A LIABILITY ALREADY ACCRUED, THOUGH TO BE D ISCHARGED AT A FUTURE DATE, WOULD BE A PROPER DEDUCTION WHILE WORK ING OUT THE PROFITS AND GAINS OF HIS BUSINESS, REGARD BEING HAD TO THE ACCEPTED PRINCIPLES OF COMMERCIAL PRACTICE AND ACCO UNTANCY. IT IS NOT AS IF SUCH DEDUCTION IS PERMISSIBLE ONLY IN THE CASE OF AMOUNTS ACTUALLY EXPENDED OR PAID ; (II) JUST AS RECEIPTS, THOUGH NOT ACTUAL RECEIPTS B UT ACCRUED DUE ARE BROUGHT IN FOR INCOME-TAX ASSESSMENT, SO ALSO L IABILITIES ACCRUED DUE WOULD BE TAKEN INTO ACCOUNT WHILE WORKI NG OUT THE PROFITS AND GAINS OF THE BUSINESS; (III) A CONDITION SUBSEQUENT, THE FULFILMENT OF WHI CH MAY RESULT IN THE REDUCTION OR EVEN EXTINCTION OF THE LIABILITY, WOULD NOT HAVE THE EFFECT OF CONVERTING THAT LIABILITY INTO A CONT INGENT LIABILITY ; (IV) A TRADER COMPUTING HIS TAXABLE PROFITS FOR A P ARTICULAR YEAR MAY PROPERLY DEDUCT NOT ONLY THE PAYMENTS ACTUALLY MADE TO HIS EMPLOYEES BUT ALSO THE PRESENT VALUE OF ANY PAYMENT S IN RESPECT OF THEIR SERVICES IN THAT YEAR TO BE MADE I N A SUBSEQUENT YEAR IF IT CAN BE SATISFACTORILY ESTIMATED. SO IS THE VIEW TAKEN IN CALCUTTA CO. LTD. V. CIT [1 959] 37 ITR 1 (SC) WHEREIN THIS COURT HAS HELD THAT THE LIA BILITY ON THE ASSESSEE HAVING BEEN IMPORTED, THE LIABILITY WOULD BE AN ACCRUED LIABILITY AND WOULD NOT CONVERT INTO A COND ITIONAL ONE MERELY BECAUSE THE LIABILITY WAS TO BE DIS- CHARGED AT A FUTURE DATE. THERE MAY BE SOME DIFFICULTY IN THE ESTIMATIO N THEREOF BUT THAT WOULD NOT CONVERT THE ACCRUED LIABILITY INTO A CONDITIONAL ONE ; IT WAS ALWAYS OPEN TO THE TAX AUTHORITIES CONCERN ED TO ARRIVE AT A PROPER ESTIMATE OF THE LIABILITY HAVING REGARD TO ALL THE CIRCUMSTANCES OF THE CASE. APPLYING THE ABOVE SAID SETTLED PRINCIPLES TO THE F ACTS OF THE CASE AT HAND WE ARE SATISFIED THAT THE PROVISIO N MADE BY THE APPELLANT-COMPANY FOR MEETING THE LIABILITY INCURRE D BY IT UNDER THE LEAVE ENCASHMENT SCHEME PROPORTIONATE WITH THE ENTITLEMENT EARNED BY EMPLOYEES OF THE COMPANY, INCLUSIVE OF TH E OFFICERS AND THE STAFF, SUBJECT TO THE CEILING ON ACCUMULATI ON AS APPLICABLE ON THE RELEVANT DATE, IS ENTITLED TO DED UCTION OUT OF THE GROSS RECEIPTS FOR THE ACCOUNTING YEAR DURING WHICH THE PROVISION IS MADE FOR THE LIABILITY. THE LIABILITY IS NOT A C ONTINGENT LIABILITY. THE HIGH COURT WAS NOT RIGHT IN TAKING THE VIEW TO THE CONTRARY. THE APPEAL IS ALLOWED. THE JUDGMENT UNDER APPEAL IS SET ASIDE. THE QUESTION REFERRED BY THE TRIBUNAL TO THE HIGH C OURT IS ANSWERED IN THE AFFIRMATIVE, I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ITA NO.77 ,35/MDS./2014 :- 26 - : THE HONBLE MADRAS HIGH COURT FOLLOWING THE JUDGEM ENT OF THE HONBLE SUPREME COURT OF INDIA, DISMISSED THE A PPEAL OF THE REVENUE IN THE CASE OF CIT VS. PANASONIC HOME APPLIANCES REPORTED AS 323 ITR 344 WHEREIN SIMILAR QUESTION WAS INVOLVED. IN VIEW OF THE RATIO LAID DOWN IN TH E ABOVE JUDGEMENTS, THIS GROUND OF APPEAL OF THE ASSESSEE I S ALLOWED. IN VIEW OF THE AFORESAID FINDINGS, WE ALLOW THIS GR OUND OF APPEAL OF THE ASSESSEE. 94. RESPECTFULLY FOLLOWING THE SAID DECISION, WE UP HOLD THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND REJECT THE GROUNDS OF APPEAL OF THE REVENUE ON THIS ISSUE. 29.2 IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL, T HIS GROUND RAISED BY THE REVENUE IS REJECTED. 30. THE LAST GROUND IS WITH REGARD TO APPLICABILIT Y OF THE PROVISIONS OF SECTION 115JB OF THE ACT. 30.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. THE SAME ISSUE CAME FOR CONSIDERATION BEFOR E THIS TRIBUNAL IN ITA NO.2031/MDS./2013 FOR ASSESSMENT YEAR 2010-11(S UPRA) WHEREIN HELD THAT:- 95. THE LAST ISSUE IN THE GROUNDS OF APPEAL OF THE REVENUE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT PROVISIONS OF SECTION 115JB ARE NOT APPLICABL E TO THE ASSESSEE. AT THE TIME OF HEARING, COUNSEL FOR THE A SSESSEE SUBMITS THAT THIS ISSUE HAS BEEN DECIDED BY THE CO- ORDINATE BENCH IN ASSESSEES OWN CASE IN ITS FAVOUR IN ITA NO.1757/MDS/2011 DATED 2.4.2013 FOR THE ASSESSMENT YEAR 2006-07. COPY OF THE ORDER IS PLACED ON RECORD. DEP ARTMENTAL REPRESENTATIVE SUPPORTS THE ORDER OF THE ASSESSING OFFICER IN COMPUTING THE BOOK PROFITS UNDER SECTION 115JB OF THE ACT. ITA NO.77 ,35/MDS./2014 :- 27 - : 96. WE HAVE PERUSED THE ORDERS OF LOWER AUTHORITIES AND FIND THAT THE ASSESSING OFFICER COMPUTED BOOK PROFI TS UNDER SECTION 115JB OF THE ACT AND ALSO INCOME UNDER NORM AL PROVISIONS OF THE ACT AS THE INCOME UNDER NORMAL PR OVISIONS OF THE ACT IS MORE HE ADOPTED THE SAID INCOME. THE AS SESSEE ALSO CHALLENGED AGAINST THE ACTION OF THE ASSESSING OFFICER IN COMPUTING BOOK PROFITS UNDER SECTION 115JB CONTENDI NG THAT PROVISIONS HAVE NO APPLICATION TO ITS BANK. HAVING GONE THROUGH THE DECISION OF THE CO-ORDINATE BENCH IN A SSESSEES OWN CASE IN ITA NO.1757/MDS/2011 DATED 2.4.2013, W E FIND THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE AS SESSE. RESPECTFULLY FOLLOWING THE SAID DECISION, WE UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND REJ ECT THE GROUNDS RAISED BY THE REVENUE ON THIS ISSUE. RESPECTFULLY FOLLOWING THE SAID DECISION, WE REJECT THE GROUND OF APPEAL OF THE REVENUE ON THIS ISSUE 31. IN THE RESULT, THE APPEAL OF THE ASSESSEE AS WELL AS APPEAL OF REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 03 RD APRIL, 2017, AT CHENNAI. SD/ - SD/ - ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! ' ) (CHANDRA POOJARI) # / ACCOUNTANT MEMBER / CHENNAI / DATED: 03 RD APRIL, 2017. K S SUNDARAM ! # $% &% / COPY TO: 1 . '( / APPELLANT 3. ) () / CIT(A) 5. %+, # - / DR 2. #.'( / RESPONDENT 4. ) / CIT 6. ,/ 0 / GF