ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, JAMMU, SRINAGAR V. MESERS JAMMU & KASHMIR BANK LIMITED , SRINAGAR

ITA 790/ASR/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 2969 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2022
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 26-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Earning of tax free income; Non-deduction of tax; Difference of opinion; Revenue expenditure; Capital expenditure; TDS; Rule 8D
• Section: 139; 14A; 40(a)(ia); 201; 194J

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 790/Asr/2017 Assessment Year: 2013-14 Asstt. CIT-Circle-1, Jammu (Appellant) Vs. M/s The Jammu & Kashmir Bank Ltd, Corporate Headquarters, M.A. Road, Srinagar. [PAN: - AAACT6167G] (Respondent) I.T.A. No. 296 & 297/Asr/2014 Assessment Year: 2005-06 & 2006-07 Dy. CIT-Circle-1, Jammu (Appellant) Vs. M/s The Jammu & Kashmir Bank Ltd, Corporate Headquarters, M.A. Road, Srinagar. [PAN: - AAACT6167G] (Respondent) I.T.A. No. 637/Asr/2017 Assessment Year: 2012-13 Asstt. CIT-Circle-1, Jammu (Appellant) Vs. M/s The Jammu & Kashmir Bank Ltd, Corporate Head quarters, M.A. Road, Srinagar. [PAN: - AAACT6167G] (Respondent) I.T.A. Nos. 319 to 320/Asr/2018 I.T.A. No. 790/Asr/2017 & Others appeals 2 Assessment Years: 2014-15 & 2015-16 Asstt. CIT-Circle-1, Jammu (Appellant) Vs. M/s The Jammu & Kashmir Bank Ltd, Corporate Head quarters, M.A. Road, Srinagar. [PAN:- AAACT6167G] (Respondent) I.T.A. Nos. 329& 330/Asr/2018 Assessment Years: 2014-15& 2015-16 M/s The Jammu & Kashmir Bank Ltd, Corporate Headquarters, M.A. Road, Srinagar. [PAN: - AAACT6167G] (Appellant) Vs. Dy. CIT-Circle-1, Jammu (Respondent) Appellant by Sh. Rohit Sharma, CIT. DR. Respondent by Sh. Joginder Singh, CA Date of Hearing 11.07.2022 Date of Pronouncement 26.09.2022 ORDER Per: Bench: The batch of appeals were filed both by the revenue and assessee against the order of the ld. Commissioner of Income Tax(Appeals), Jammu, [in brevity the CIT(A)], the order passed u/s 250(6) of the IT Act 1961, [in brevity the Act] for I.T.A. No. 790/Asr/2017 & Others appeals 3 different assessment years. The impugned order was emanated from the order of the ld. Assistant Commissioner of Income, Circle-1, Jammu, order passed u/s 143(3) of the Act ( in brevity the Act). The ld. Counsel stated at the outset that, the relevant factual backdrop as well as the issues involved in all the cases are identical. Out of all appeals, in case of the revenue’s appeal the ITA No. 790/Asr/2017 is being taken as lead case and in case of assessee’s appeal ITA No. 329/Asr/2018 is being taken as lead case. 2. The ground in ITA No. 790/Asr/2017 of the revenue which reads as under: - “1. The Ld. CIT(A), Jammu has erred in deleting the addition of Rs. 9,84,41,850/- u/s 40(a)(ia) on account of non-deduction of interest paid to JDA by relying on the submission of the assessee that no tax was required to be deducted on interest of FDR of JDA which has been incorporated by Govt, of J&K under J&K development Act and ignoring the fact that JDA is a taxable entity assessee as local authority and is liable to tax. 2. The Ld. CIT(A), Jammu has erred in deleting the addition of Rs. 5,52,429/-on account of clearing house charges u/s 40(a)(ia) of the Act by relying on the Apex court decision in case of CIT Vs. Bharti Cellular ltd. (2010) 234 CTR (SC) 146 which is different from the present case as technical services are involved. I.T.A. No. 790/Asr/2017 & Others appeals 4 3. The Ld. C1T(A), Jammu has erred in deleting the addition of Rs. 74,31,428/- on account of depreciation of Wooden Partition by relying on the decision of the Hon’ble Supreme court in case of CIT Vs. Madras Auto service Pvt. Ltd. 233 ITR 468 (SC) which is different from the present case as in that case issue of construction of New Building in place of old building was involved. Moreover in the present case the assessee has himself claimed this expenditure as Capital expenditure. 4. The Ld. C1T(A), Jammu has erred in deleting the addition of Rs. 92,60,468/- u/s 40(a)(ia) on account of short deduction of TDS by relying on the Hon’ble ITAT Kolkata-B Bench in case of DCIT Circle-33 Vs. M/s S.K. Teriwal and ignoring the jurisdictional ITAT, Amritsar Order dated 02.02.2017 in ITA No. 74 ad 137 (Asr)/2015 for the A. Y. 2010.11 and 2011-12 in case of this assessee. 5. The Ld. CIT(A), Jammu has erred in restricting the disallowances to Rs. 13,80,754/- instead of Rs. 12,88,06,654/- u/s 14A(3) read with Rule 8D of the Act. The appellant craves to amend or add any one or more grounds of appeal.” 3. The grounds in ITA No. 329/Asr/2018 of the assessee is as follows: “1) That the Ld. CIT(A) Jammu has confirmed the action of the Ld AO with regard to disallowance of deduction claimed by I.T.A. No. 790/Asr/2017 & Others appeals 5 the appellant Bank u/s 36(i)(viia) of the Act, in respect of Bari Brahmna Branch by respectfully following the decision of Hon’ble High Court of J&K in assessee’s own case vide order dated 15.09.2017 in ITA NO; 7/2007. The decision of the Hon’ble High Court is not acceptable to the assessee Bank and the appellant has filed SLP before Hon’ble Apex Court of India vide No: 2153/2018. 2) That the appellant craves to leave to add, amend, modify, delete any of the ground of appeal before or at the time of hearing and all the above grounds are without prejudice to each other.” 4. Brief fact of the case is that assessee is a banking company.During the assessment year 2013-14 assessee has declared gross receipt of Rs.66,20,52,74,000/- and net profit as per Profit and Loss A/c was declared amount to Rs.10,55,09,82,000/-. The assessing authority had added back in different heads related u/s 40(a) (ia) for non-deduction TDS, interest paid to JDA (J & K Development Authority). for non-deduction of TDS disallowance u/s 40(a)(ia) amount to Rs.5,52,429/-, claim of depreciation on wooden partition deducting @ 100%, and disallowance section 14A read with rule 8D of the Income Tax Rule, 1962 for expenses related to exempt income. I.T.A. No. 790/Asr/2017 & Others appeals 6 5. On the other hand the assessee filed appeal in relation to addition for disallowance of section 36(1) (viia) of the Act. Aggrieved assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) had allowed the appeal partly. But the ld. CIT(A) upheld the disallowance u/s 36(1) (viia) in respect to addition by the ld. AO. 6. Being aggrieved both assessee and revenue filed cross appeals before us. 7.Ground No. 1 of the revenue: 1. The Ld. CIT(A), Jammu has erred in deleting the addition of Rs. 9,84,41,850/- u/s 40(a)(ia) on account of non-deduction of interest paid to JDA by relying on the submission of the assessee that no tax was required to be deducted on interest of FDR of JDA which has been incorporated by Govt, of J&K under J&K development Act and ignoring the fact that JDA is a taxable entity assessee as local authority and is liable to tax. 7.1. The ld. CIT-DR argued and mentioned that the payment is gross violation of section 40(a)(ia) of the Act. 7.2. The ld. Counsel only relied on the order of CIT(A) in page-100, point n0-5 which is extracted as below. “Ground no. 5 is relating to disallowance of Rs.98441850/- made u/s 40(a)(ia) of the Income Tax Act, 1961 in respect of interest paid to Jammu Development Authority. I.T.A. No. 790/Asr/2017 & Others appeals 7 The A.O. disallowed under sec. 40(a)(ia) of the Act a sum of Rs. 98441850/- for non- deduction of tax on interest on deposits paid by 5 branches of the appellant bank to Jammu Development Authority. The appellant, in his submission made during the appellate proceedings, has stated that no tax is required to be deducted on interest on FDRs of Jammu Development Authority which has been incorporated by the Govt, of J&K under the J&K Development Act (Act no. XIX of 1970). In term of notification no. 3489 of the CBDT, dated 27.10.1970was issued in pursuance to the provisions of sec. 194A(3)(iii)(f) of the Income Tax Act, 1961, no tax was required to be deducted on interest on deposit paid to a corporation, incorporated under State Act. It has been argued before me that the issue is squarely covered by the orders of Hon'ble ITAT, Amritsar bench passed against the orders of ITO, TDS, Jammu in respect of Shalamar, Gandhi Nagar&Jammu branches of the appellant bank. The relevant part of the order of ITAT, Amritsar Bench ITA No-206/Asr/2013 date of order 28/05/2013 is reproduced as under: "Thus, respectfully following the aforesaid order of the ITAT, Delhi Bench ‘I’ we dismiss the appeal filed by the Revenue by holding that the Jammu Development Authority is in exempted category where the provisions of section 194(1) are not applicable. We also hold the exception 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 condition at Entry No. 39 of the said notification and we hold that no tax was deductible on accrued interest on FDRs of Jammu I.T.A. No. 790/Asr/2017 & Others appeals 8 Development Authority with J&K Bank Ltd. Keeping in view the above discussions, we hold that no interference is called for in the well-reasoned impugned order passed by the Ld. First appellate authority and accordingly we uphold the same. Hence, the appeal of the Revenue in ITA No. 206(ASR)/2011 is dismissed". Since the Hon'ble ITAT, Amritsar Bench, has already held that the Bank was not required to deduct any tax at source on its interest payments to Jammu Development Authority, the AO was not justified in applying the provisions of section 40(a)(ia) on these payments. Similar type of disallowance has been deleted by my predecessor in the assessment years 2008-09, 2009-10, 2010-11 & 2011-12. Since, the facts in the appeal under consideration are similar to that of appeal decided by the Hon'ble ITAT in earlier years, I delete the addition of Rs.98441850/-.” 7.3. We heard the rival submission and thoughtfully considered the order of different benches. The ld. CIT(A) had discussed the issue & delivered a speaking order. The issue is well settled in law. We are not interfering in the issue. Ld. CIT- DR did not bring any contrary fact against the order of the CIT(A). Accordingly, the ground of the revenue is dismissed. 7.4. In the result Ground-1 of revenue is dismissed. 8.Ground No. 2 of the revenue 2. The Ld. CIT(A), Jammu has erred in deleting the addition of Rs. 5,52,429/-on account of clearing house charges u/s I.T.A. No. 790/Asr/2017 & Others appeals 9 40(a)(ia) of the Act by relying on the Apex court decision in case of CIT Vs. Bharti Cellular ltd. (2010) 234 CTR (SC) 146 which is different from the present case as technical services are involved. 8.1. Before adjudicating the issue, the observation of CIT(A)in page-81 in point- 5is reproduced as below: - “5. Determination: 1. Disallowance u/s 40(a) (ia) of the Income Tax Act,1961amounting to Rs.552429/- in respect of Clearing House charges: “The A.O. has disallowed a sum of Rs. 552429/- u/s 40(a)(ia) of the Income Tax Act,1961 for non-deduction of tax u/s 194J of the Income Tax Act,1961 on MICR charges paid in respect of Clearing House expenses by various branches of the bank. The appellant, in his submission during the appellate proceedings, has stated as under;- "The Ld. A.O. is unjustified in disallowing a sum of Rs. 552429/- u/s 40(a)(ia) of the Income Tax Act, 1961 for non-deduction of tax u/s 194J of the Income Tax Act, 1961 on MICR charges paid. In fact, no tax is required to be deducted on amount incurred towards MICR as mere collection of a fee for use of a standard facility provided to all those who are willing to use it does not amount to the fee having been received for technical services. In MICR centre there is mechanized I.T.A. No. 790/Asr/2017 & Others appeals 10 processing of cheques leading to speedier clearance of cheques and no technical or professional service is being provided. The Hon'ble Apex court in the case of CIT vs Bharti Cellular Ltd. (2010)234CTR(SC) 146 had concluded services to be falling under sec. 194J of the Income Tax Act,1961 to be technical services where any human intervention was involved in the activity. The apex court observed that wherever there was human intervention requiring examination of technical data, the same would fall within the definition of technical services and in absence thereof; the same would not partake the character of technical services. Now, since MICR cheque clearing (MICR stands for Magnetic Ink Character Recognition which means that the machine recognizes numeric data printed with magnetic charged ink) is being different from manual clearing, it is done with the help of ultraviolet rays which scans the cheques genuineness as such stands covered by the decision of apex court. Accordingly, the Id. A.O. is incorrect to state that these charges are liable for deduction of tax at source u/s 194J of the Act and therefore the disallowance made by him is incorrect. Similar type of disallowance has been deleted by your predecessor in the assessment years 2006-07, 2007-08, 2008-09, 2009-10,2010-11 & 2011-12 on I.T.A. No. 790/Asr/2017 & Others appeals 11 merits. The Hon'ble IT AT, Amritsar Bench has upheld this decision that no tax is required to be deducted on MICR charges payments. The copies of the orders passed by the Hon'ble ITAT for the assessment years 2007-08 & 2008-09 are enclosed as an annexure "A"." I have carefully considered the issue. Similar type of addition has been deleted by my predecessor in earlier assessment years. While deleting the disallowance for the assessment year 2011-12 in appeal no.472/13-14 my predecessor has held as under:- "The A.O. has not brought on record any basis on which he is of the view that tax is required to be deducted on MICR charges. MICR cheque clearing (MICR stands for Magnetic Ink Charter Recognition which means that the machine recognizes numeric data printed with magnetic charged ink) is being done with the help of ultraviolet rays which scans the genuineness of cheques. It appears that no human intervention is required in MICR clearing of cheques by way of examining technical data, analysing 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 of bulk cheques. Therefore, following the principle laid down by Hon'ble Supreme Court in the case of CIT vs. Bharti Cellular Ltd. (2010)234CTR(SC)146, I am of the considered opinion that no tax is required to be deducted on MICR charges and the A.O. is not justified in holding that in MICR charges, technical services are attracted. Accordingly, the provisions of section 40(a)(ia) are not attracted. Similar type of disallowance 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 allowed." I.T.A. No. 790/Asr/2017 & Others appeals 12 The Hon'ble ITAT, Amritsar vide its order No.ITA No. 294 (Asr.)/2013 for the A.Y 2007-08 dated 15.12.2015 has upheld the decision of the LD. CIT (A) that no tax is required to be deducted on MICR charges payments. Thus, I find no reason to differ with the order of my Ld. Predecessor and the Hon'ble ITAT. Thus, the addition made on this ground is deleted and the appeal is allowed.” 8.2. We heard the rival submission, thoughtfully considered the order of different benches& respectfully considered the order of apex court. The ld CIT(A) had discussed the issue & delivered a speaking order. The Hon’able High Court of Punjab and Haryana,in the case ofCommissioner of Income-taxv.Chief Manager, State Bank of India, [2012] 21 taxmann.com 506 (Punjab & Haryana)has taken the different view in this factual aspect & also considered the order of Bharti Cellular Ltd , supra.The observation of High Court is reproduced as below:- “9. The primary basis whereby the apex Court had concluded services to be falling under s. 194J of the Act to be technical services that whether any human intervention was involved in the activity or not. The apex Court observed that wherever there was human intervention requiring examination of technical data, the same would fall within the definition of technical services and in the absence thereof, the same would not partake the character of technical services. The apex I.T.A. No. 790/Asr/2017 & Others appeals 13 Court in that case had remitted the matter to the AO to examine the technical expert and after examining him adjudicate the matter afresh. In the present case as well from the perusal of the orders of the authorities below, it is not discernible whether there was any intervention of the human element in the services provided to the assessee. 10. Accordingly, while setting aside the order of the authorities below, the matter is remitted to the AO to examine afresh in the light of the observations made by the apex Court in Bharti Cellular Ltd.'s case (supra) noted above. 11. The appeals stand disposed of accordingly.” The issue is well settled in law. Ld. CIT-DR had only relied on the order of ld. AO. The Hon’able Apex had observed issue & had set-aside to examine for human intervention. Accordingly, the ground of the revenue is sending back to ld. CIT(A) for examine the human intervention in the process of clearing house charges. 8.3. In the result Ground-2 of the revenue is allowed for statistical purpose. 9.Ground No. 3 of the revenue: - 3. The Ld. C1T(A), Jammu has erred in deleting the addition of Rs. 74,31,428/- on account of depreciation of Wooden Partition by relying on the decision of the Hon’ble Supreme court in case of CIT Vs. Madras Auto service Pvt. Ltd. 233 ITR 468 (SC) which is different from the present case as in that case issue of construction of New Building in place of old building was I.T.A. No. 790/Asr/2017 & Others appeals 14 involved. Moreover in the present case the assessee has himself claimed this expenditure as Capital expenditure. 9.1. Before adjudicating the issue, the observation of CIT(A) in page-93 in point-3 of the order of CIT(A) is reproduced as below: - “Ground no.3 regarding allowability ofdepreciation rate at 10% as against 100% depreciation rate claimed on wooden partitions. The A.O. has disallowed a sum of Rs.7431428/-by allowing depreciation at the rate of 10% instead of 100% as claimed by the assessee on wooden partitions. The counsel of the assessee argued that the issue is covered by the orders for the assessment years 2002-03, 2003-04, 2007-08, 2008-09, 2009-10, 2010-11 & 2011- 12. The submissions made by the A/R of the appellant are reproduced as under: - "The Ld. A.O. is not justified in disallowing Rs. 7431428/- by following the past history of the case in restricting the depreciation rate from 100% to 10% on the alleged ground that the wooden partitions installed are permanent partitions and are not susceptible to dismantling in the immediate near future and are not purely temporary erections. This action of the Ld. A.O. is purely imaginary and not supported by any relevant material. He has assumed on his own that this expenditure is of enduring nature whereas the appellant Bank has correctly I.T.A. No. 790/Asr/2017 & Others appeals 15 charged depreciation @ 100% on wooden partition as these are purely temporary erections carried out in leasehold (tenanted) premises. The expenditure consisted of dividing the big hall by wooden partition to make 'it more suitable for the purpose of business. Appendix-I to the Income Tax Rules allows depreciation @ 100% on such purely temporary wooden structures. These are not permanent wooden partition as observed by ld. A.O and no advantage of enduring nature has been acquired. The partitions are temporary and have been redesigned time and again to suit the business needs. The wooden partitions are transient and do not become the property of the assessee at the end of the lease. In any case these do not create any tangible asset for which a value can be attributed. In view thereof, the law has provided 100% depreciation on such wooden partitions and the assessee has claimed the same correctly. Without prejudice to the above submissions, expenses booked under this head are also otherwise allowable as these are revenue in nature and no tangible asset has come into existence. In this connection your attention is invited to direct case law on the point. The Hon'ble Delhi High Court in 149 ITR 52 has held that converting of hall in leasehold premises into cabins by putting partitions is an allowable expenditure as it facilitates business. Hon'ble Supreme Court in the case of CIT Vs. Madras Auto Service Pvt. Ltd. (1998) 233 ITR 468 (SC) has held that expenditure I.T.A. No. 790/Asr/2017 & Others appeals 16 on construction on leasehold land is to be treated as revenue expenditure. Therefore, viewed from any angle the expenditure on wooden partition on leasehold premises is to be treated as revenue expenditure. The Ld. A.O. without bringing any material on record to controvert the facts/details has restricted the depreciation rate from 100% to 10% which is incorrect and needs to be corrected by your good self. Similar type of addition stands deleted by your predecessors in the earlier assessment years & this decision has been upheld by Hon'ble ITAT Amritsar Bench." I have carefully considered the issue. This issue has been decided in favour of assessee in the earlier assessment years. In appeal no. 456/2005-06 dated 28.03.2006 pertaining to assessment year 2002-03 the issue was decided in favour of the appellant by holding as under: Without prejudice to the above submission, it is pleaded that expenses booked under this head are also otherwise allowable as these are revenue in nature as no tangible asset has come into existence. In this connection reliance is placed on the judgment of Hon'ble Delhi High Court in 149-ITR-52 wherein it has been held that converting of hall of leased premises into cabins by putting partitions is an allowable expenditure as it facilitates business. The Hon'ble Supreme Court in the I.T.A. No. 790/Asr/2017 & Others appeals 17 case of CIT Vs. Madras Auto Services Pvt. Ltd. (233 ITR 468(SC)) has also held that the expenditure on construction of lease hold land is to be treated as revenue expenditure. Therefore, viewed from any angle the expenditure on wooden portion on lease hold premises is to be treated as revenue expenditure. It is also submitted that the Ld. A.O. without controverting the said case laws and without bringing any material on record to controvert the facts/details has restricted the depreciation rate from 100% to 10% which is incorrect and need to be corrected. During the appellate proceedings, the A.O. was directed to verify whether the wooden portion made by the appellant was on its own land or on lease/rented accommodation. The A.O. after verification has confirmed that the wooden partitions were on lease/rented accommodation. Keeping in view these facts and legal position emerging from the judgments (supra), in my considered opinion, the appellant is entitled to 100% deduction in respect of expenditure incurred. I have gone through the material on record and find myself in agreement and hold that assessee is entitled to 100% deduction on this count." Since, similar type of disallowance has been deleted by my predecessor in the assessment years 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 & 2011- 12 and his decision has been upheld by Hon'ble ITAT, Amritsar Bench, Amritsar and since the facts are identical in the appeal under consideration, as such, I hold I.T.A. No. 790/Asr/2017 & Others appeals 18 that appellant is entitled to 100% depreciation on wooden partition and the addition of Rs. 7431428/- is hereby deleted.” 9.2. We heard the rival submission and thoughtfully considered the order of ITAT benches. The ld. CIT(A) had discussed the issue & delivered a speaking order. The issue is well settled. We are not interfering in the issue. Ld. CIT-DR did not bring any contrary fact against the order of the CIT(A). Accordingly, the ground of the revenue is dismissed. 9.3. In the result Ground-3 of the revenue is dismissed. 10. Ground no. 4 of the revenue 4. The Ld. C1T(A), Jammu has erred in deleting the addition of Rs. 92,60,468/- u/s 40(a)(ia) on account of short deduction of TDS by relying on the Hon’ble ITAT Kolkata-B Bench in case of DCIT Circle-33 Vs. M/s S.K. Teriwal and ignoring the jurisdictional ITAT, Amritsar Order dated 02.02.2017 in ITA No. 74 ad 137 (Asr)/2015 for the A. Y. 2010.11 and 2011-12 in case of this assessee. 10.1. The observation of CIT(A) in page-97 in point-4of the order of CIT(A) is reproduced as below: - I.T.A. No. 790/Asr/2017 & Others appeals 19 “4. Ground no.4 is regarding proportionate disallowance of expenditure u/s 40(a)(ia) for short deduction of tax. The A.O. has made proportionate disallowance of Rs.9933098/- u/s 40(a)(ia) of the Income Tax Act,1961 for short deduction of tax as reported in annexure "J' of the Tax Audit Report of the Bank. The appellant, in his submission, has stated as under: - "The proportionate disallowance of expenditure amounting to Rs. 9933098/- u/s 40(a)(ia) of the Income Tax Act, 1961 for short deduction of tax has been made after ignoring the fact that the provisions of sec.40(a)(ia) of the Act can be invoked only in the event of non deduction of tax and not for lesser deduction of tax. As per the provision of sec.40 (a) (ia), it is provided that in respect of any sum, as referred to in this section, tax has either been not deducted or after deduction has not been paid on or before the due date specified in sub-section (1) of sec. 139 of the Act, such sum shall be disallowed as deduction while computing the income of the assessee for the previous year relevant to the assessment year under consideration. The Hon'ble ITAT Kolkata "B" bench in the case of Deputy CIT, Circle-33 vs. M/s S.K.Teriwal (ITA no. 1135/Kol/2010 has held that: "We are of the view that the conditions laid down in sec.40(a)(ia) for making addition is that tax is deductible at source and such tax has not been deducted. If both the conditions are satisfied then such payment can be disallowed under I.T.A. No. 790/Asr/2017 & Others appeals 20 sec.40(a)(ia) of the Act but where tax is deducted by the assessee, even under bona fide wrong impression, under wrong provisions of TDS, the provisions of sec.40(a)(ia) of the Act cannot be invoked. Here in the present case before us, the assessee has deducted tax under sec. 194C(2) of the Act 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 sec.40(a)(ia) has two limbs, one is where, inter alia, the 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 this section to treat, inter alia, the assessee as defaulter where there is a shortfall in deduction. With regard to the shortfall, it cannot be assumed that there is default as the deduction is not as required by or under the Act; but the fact is that this expression, 'on which tax is deductible at source under chapter XVII-B and such tax has not been deducted or after deduction has not been paid on or before the due date specified in sub-section (1) of sec.139. This sec.40(a)(ia) of the Act refers only to the duty to deduct tax and pay to the Govt, account. If there is any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under the various TDS provisions, the assessee can be declared to be an assessee in default u/s 201 of the Act and no disallowance can be made by invoking the provisions of sec.40(a)(ia) of the Act be made by invoking the provisions of sec.40(a)(ia) of the Act.” I.T.A. No. 790/Asr/2017 & Others appeals 21 The Hon'ble High Court of Kolkata refused to admit the appeal of the Revenue against this order. Similar type of disallowance has been deleted by your predecessor in the assessment years 2009-10,2010-11 & 2011-12. This decision have been upheld by the Hon'ble ITAT, Amritsar Bench(Circuit Bench, Jalandhar) vide order dated 28.02.2017 in ITA Nos. 74(Asr)/2015 & 137(ASR)/2015 pertaining to assessment years 2010-11 & 2011-12 respectively. The copy of the order passed by Hon'ble ITAT is enclosed as an annexure "B". The copy of the order passed by worthy CIT(A) for the assessment year 2011-12 is also enclosed." A/R. Similar type of disallowance has been deleted by my predecessor in the assessment years 2009-10, 2010-11 & 2011-12. The decision stands upheld by the Hon'ble ITAT, Amritsar vide order dated 28.02.2017 in ITA nos.74 & 137(SR)/2015 pertaining to the assessment years 2010-11 & 2011-12. consideration are similar, the disallowance of Rs. 9933098/- is hereby deleted.” 10.2. We heard the rival submission and thoughtfully considered the order of ITAT benches. The ld. CIT(A) had discussed the issue & delivered a speaking order. The issue is well settled. Further, we have opinion that in case of short deduction of TDS, disallowance under section 40(a)(ia) of the Act cannot be made and the correct course of action would have been to invoke Section 201 of the Act. On similar facts, the Hon’able Calcutta High Court in CIT vs S.K.Tekriwal [2012 I.T.A. No. 790/Asr/2017 & Others appeals 22 SCC Online CAL 12147]. We are not interfering on the ld CIT(A). Ld. CIT-DR did not bring any contrary fact against the order of the CIT(A). Accordingly, the ground of the revenue is dismissed. 9.3. In the result Ground-4 of the revenue is dismissed. 11. Ground No. 5 of the revenue 5. The Ld. CIT(A), Jammu has erred in restricting the disallowances to Rs. 13,80,754/- instead of Rs. 12,88,06,654/- u/s 14A(3) read with Rule 8D of the Act. 11.1. The observation of CIT(A) in page-75 of the order of CIT(A) is reproduced as below: - “The additions made by respective Id. A. Os in the assessment years 2009- 10,2010-11 & 2012-13 stand deleted by your predecessor. The findings of worthy CIT(A) while deleting this disallowance in the assessment year 2009-10 are reproduced as under:- "I have considered the argument of the appellant. It has been held in appellant's own case in earlier years that no disallowance u/s 14A is required to be made in respect of interest or management cost. There is no doubt that the facts and figures I.T.A. No. 790/Asr/2017 & Others appeals 23 for the year under consideration has not undergone any change from the earlier years. However if any disallowance is to be made the AO has to disprove the method of 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 disprove the contention of the assessee. Now, here the appellant has offered whole of its income to tax and it has been held in earlier years 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 satisfaction before invoking Rule 8D and make additional disallowance of Rs.3,71,92,908/- 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 Officer 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 Officer, 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 relation 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 has been earned are being treated as stock in trade and not I.T.A. No. 790/Asr/2017 & Others appeals 24 as an investment. Thus, in view of this fact although income from dividend of Rs.1,18,21,078/- being exempt u/s 10(34) yet the appellant bank treating these investments as stock in trade has offered whole of the amount to tax and not claimed exemption on this income under respective section. Now, sec.l4A is applicable to income which does not form part of total income whereas the facts in this case are entirely different. The appellant has offered this income to tax and has not considered this income as not form of total income. Thus, in my considered opinion it was not required from AO to invoke the provisions of sec. 14A. Rather, this aspect of the appellant bank is in the interest of Revenue. Had the appellant claimed this income exempt even then the facts and figures do reveal that these are exactly the same as in the previous years wherein those years the appellate authorities including myself have given a finding that in view of own funds there cannot be any disallowance for interest cost and in view of the fact that management cost is fixed whether or not this exempt income is earned there cannot be any management cost related to earn this exempt income. Under such facts and circumstances, I am not in agreement with the AO to make disallowance u/s 14A by applying Rule 8D." Further, the orders passed by the worthy CIT(A) for the assessment years 2010-11 & 2011-12 have been upheld by the Hon'ble ITATAmritsar Bench(Circuit Bench, Jalandhar) vide order dated 28.02.2017 in ITA Nos. 74(Asr)/2015 & I.T.A. No. 790/Asr/2017 & Others appeals 25 137(ASR)/2015 respectively.The Hon'ble ITAT in ITA N0.74/Asr/2015 has held as under 20. In this connection, it is seen that the Id. CIT(A) held that; as held in the earlier years, disallowance u/s. 14A can be made only if the AO disapproves the method of accounting of the assessee, being not satisfied with the assessee's claim; that section 14A(3) empowers the AO to work out the disallowance as per the prescribed method, even if it is stated that no expenditure was incurred to earn the exempt income; that in this case, the assessee has offered the whole of its income to tax and in the earlier years, it has been held that there is no related cost which can be said to have-been incurred 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 record his satisfaction as to the 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 investment; that not claimed exemption on this income; that as such, the assessee offered its income and had not considered the income to be part of its total income; - at therefore, section 14A of the Act was not applicable 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 was held that in view of the assessee's own funds, no disallowance of interest cost could have been made I.T.A. No. 790/Asr/2017 & Others appeals 26 and that in view of the fact that management cost is fixed, whether or not this is exempt income as earned, there cannot be any management cost relating to this exempt income earned; and that a similar disallowance has been deleted by him [the Id. CIT(A)] in the assessee's case for AY 2009-10. 21. The facts are not disputed. For AY. 2002-03, the Tribunal, vide order (APB 23 to 42) dated 31.12.2012, in IT A No.l36/Asr/2010 and CO No. 09/ Asr/2010 and for A.Ys. 2003-04 & 2004-05, vide order (APB43 to 66), dated 23.01.2013, in IT A Nos. 43,53,85, 86 and 418/Asr/2012 and CO Nos. 4 to 6 & 33/Asr/2012, the CIT(A)'s orders, which are on similar lines as those in the year under consideration, were upheld. As contended, the assessee's own funds being used, no interest cost is incurred which 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, again, the CIT(A), vide order (APB67 to 115) dated 12.02.2014, deleted the similar 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 said CIT(A)'s orders for A.Y. 2005-and 2006-07. Then, obviously; as held by the 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 Rules cannot exceed the exempt income. Moreover, no interest expenditure disallowance I.T.A. No. 790/Asr/2017 & Others appeals 27 made in relation to dividend received from trading in shares is sustainable in law, as held by the Mumbai Bench of the Tribunal in the case of "DCIT vs. India Advantage Securities Ltd.", in ITA No. 6711/Mum/2011, vide order (APB121-127), dated 14.09.2012". In view of aforesaid, the action of Id. AO for making disallowance of Rs.l2,74,25,900/-is unjustified and unlawful and needs to be deleted.” 11.2. We heard the rival submission and thoughtfully considered the order of ITAT benches. The ld. CIT(A) had discussed the issue & delivered a speaking order. The issue is well settled. The coordinate bench has taken view in favour of assessee under same factual matrix. We are not interfering in the order of the ld. CIT(A). Ld. CIT-DR did not bring any contrary fact against the order of the CIT(A). Accordingly, the ground of the revenue is dismissed. 11.3. In the result Ground-5 of the revenue is dismissed. 12. Ground No. 1 of the assessee “1) That the Ld. CIT(A) Jammu has confirmed the action of the Ld AO with regard to disallowance of deduction claimed by the appellant Bank u/s 36(i)(viia) of the Act, in respect of Bari Brahmna Branch by respectfully following the decision of Hon’ble High Court of J&K in assessee’s own case vide order dated 15.09.2017 in ITA NO; 7/2007. The decision of the I.T.A. No. 790/Asr/2017 & Others appeals 28 Hon’ble High Court is not acceptable to the assessee Bank and the appellant has filed SLP before Hon’ble Apex Court of India vide No: 2153/2018. 12.1. The observation of CIT(A) in page-21 of the order of CIT(A) is reproduced as below: - “So, respectfully following the order of the Honourable High Court of Jammu and Kashmir in the case of the appellant bank itself, the addition of Rs.41,33,61,283/- made by the Assessing Officer in this case on account of disallowance of deduction claimed by the appellant bank under section 36(l)(viia) of the Act in respect of its Bari Brahmana Brach is, therefore, upheld for statistical purposes as the Assessing Officer has not made any separate addition on this issue to the returned income of the appellant bank since the appellant bank has claimed deduction of Rs.236,69,30,664/ under section 36(l)(viia) of the Act as against allowable deduction at Rs 757,83,01,533/-. Even after disallowing the claim of Rs.41,33,61,283/ in respect of I/C Bari Brahamna, the eligible claim of deduction will be at Rs 716,49,40,250/- as against which the appellant bank has claimed deduction amounting to Rs 236,69,30,664/- only. In the result, the ground No. 2 of appeal taken by the appellant bank is dismissed for statistical purposes as the Assessing Officer has not made any separate addition on this account.“ I.T.A. No. 790/Asr/2017 & Others appeals 29 12.2. We heard the rival submission and respectfully considered the order of Jurisdictional High Court at Jammu. The ld. CIT(A) had discussed the issue & delivered a speaking order. The bench of ITAT, Amritsar in the case of The Hoshiarpur Central Cooperative Bank Ltd, ITA No-625/Asr/2019, Date of order 25/08/2022 has taken view not favour of assessee & the matter is remanded back. We respectfully follow the order of Hon’able Jammu & Kashmir High Court at Jammu as it is well settled in factual matrix. We are not interfering in the order of the ld. CIT(A). Ld. CIT-DR relied on the order of the ld. CIT(A). Accordingly, the ground of the assessee is dismissed. 13.3. In the result Ground-1 of the assessee is dismissed. 14. In the result order was passed in above terms as indicated above. Order pronounced in the open court on 26.09.2022 Sd/- Sd/- (Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order