The Cosmos Co.op. Bank Ltd., Pune V. Addl.CIT, Range-7, Pune

ITA 925/PUN/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1787 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 26-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K RASTOGI
• Keywords: Business income; Depreciation; Business expenditure; Charitable institution; Cost of acquisition; Bad and doubtful debts; Revenue expenditure
• Section: 37(1); 12A; 32; 28

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . . , # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO.925/PN/2013 % % / ASSESSMENT YEAR : 2009-10 THE COSMOS CO-OPERATIVE BANK LTD. H.O.269, SHANIWAR PETH, PUNE 411030 PAN NO.AAAAT0742K . / APPELLANT V/S ADDL.CIT, RANGE-7, PUNE . / RESPONDENT / ASSESSEE BY : SHRI SUNIL GANOO / REVENUE BY : SHRI S.K. RASTOGI / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 19-10-2012 OF THE CIT(A)-III, PUNE RELATING TO ASS ESSMENT YEAR 2009-10. 2. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESS EE DID NOT PRESS GROUNDS OF APPEAL NO.1, 3 AND 5 FOR WHICH THE LD. D EPARTMENTAL HAS NO OBJECTION. ACCORDINGLY, THE ABOVE GROUNDS ARE D ISMISSED AS NOT PRESSED. / DATE OF HEARING :16.05.2016 / DATE OF PRONOUNCEMENT:20.05.2016 2 ITA NO.923/PN/13 3. GROUND OF APPEAL NO.2 BY THE ASSESSEE READS AS UNDER : WITHOUT PREJUDICE TO THE CONTENTION THAT IT IS A BU SINESS LOSS U/S.28 OF THE I.T. ACT, ALTERNATIVELY, DEPRECIATION MAY BE ALLOWE D AS THE DIFFERENCE BETWEEN ASSETS ACQUIRED AND LIABILITIES TAKEN OVER REPR ESENTS INTANGIBLE ASSETS AS CONTEMPLATED UNDER CLAUSE (II) OF SECTION 32(1) OF I.T. ACT. 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD TAKEN OVER FOUR BANKS, NAMELY, U NION COMMERCIAL COOPERATIVE BANK LTD., AHMADABAD, JARANDESHWAR SAHAKARI BANK LTD., SATARA, NATIONAL COOPERATIVE BANK LTD., AHMADABAD AND SRIRAM SAHAKARI BANK LTD., NIPANI. DURING T HE ASSESSMENT PROCEEDINGS, IT WAS SUBMITTED BY THE ASSESSE E THAT IN CASE OF THREE BANKS NAMELY UNION COMM. CO-OP BANK. LTD . , AHMADABAD, JARANDESHWAR SAH. BANK LTD., SATARA, SHRIRAM SAHAKARI BAN K LTD. NIPANI, THE NET WORTH WAS NEGATIVE AT THE TIME OF MERGER AND THE EXCESS OF LIABILITIES OVER ASSETS OF THESE BANKS IS SHOWN AS 'GOODWILL' IN THE BOOKS OF ACCOUNTS IN TERMS OF RBI CIRCULAR NO. 5/09.16.901/2007-08 DATED 13-07-2007 . THE ASSESSEE ALSO POINTED OUT THAT AS PER THIS CIRCULAR, GOODWILL IS REQUIRED TO BE A MORTIZED WITHIN FIVE YEARS FROM THE DATE OF MERGER AND IN LINE WITH TH IS CIRCULAR; PROVISION AT 20% OF THE TOTAL GOODWILL WAS DEBITED TO THE P ROFIT & LOSS ACCOUNT OF THIS YEAR WHICH IS AS UNDER : SR. NO. BANK GOODWILL ON MERGER CREDIT DEBIT TO GOODWILL AFTER MERGER GOODWILL WRITTEN OFF 2008-09 GOODWILL AMT.C/F 1 UNION COMM. CO - OP BANK LTD., AHMEDABAD 18.38 -- 3.68 14.70 2 JARANDESHWAR SAHAKARI BANK LTD., SATARA 44.71 1.42 9.23 36.90 3 SHRIRAM SAHAKARI BANK LTD., NIPANI 33.93 (1.44) 6.50 25.99 3 ITA NO.923/PN/13 5. JUSTIFYING THE CLAIM, THE ASSESSEE EXPLAINED BEFORE THE AO THAT AS THERE IS NO CONCEPT OF AMORTIZED REVENUE EXPENDITURE UNDER THE INCOME TAX ACT, THE ENTIRE AMOUNT OF GOODWILL OF 96.99 LAKHS IS CLAIMED AS A DEDUCTION IN THE COMPUTATION OF TOTAL INCOME FILE D ALONG WITH THE RETURN OF INCOME. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE. ACCORDING TO HIM, THERE IS NO PROVISION IN THE I.T ACT UNDER WHICH THE GOO DWILL CAN BE CLAIMED OR ALLOWED AS DEDUCTION. THE AO IS OF THE VIEW THAT WHILE COMPUTING THE BUSINESS INCOME, ONLY THOSE EXPENSES/DEDU CTIONS, WHICH ARE PROVIDED UNDER SEC. 30 TO 43D OF THE I.T ACT, CAN BE ALLOWED AS DEDUCTION AND THE GOODWILL IS NOT ONE OF THE IT EMS PROVIDED IN THESE SECTIONS. HE THEREFORE HELD THAT THE AS SESSEE COULD NOT ESTABLISH EITHER LEGALLY OR FACTUALLY THE ADMISSIBILITY OF T HE GOODWILL COST OF MERGED BANKS AS DEDUCTION UNDER THE I.T ACT. HE ACCORDINGLY DISALLOWED THE AMORTIZED GOOD WILL AMOUNT OF RS.19,39,853/- DEBITED TO THE PROFIT & LOSS ACCOUNT AND ADDED THE SAME TO THE TOTAL INCOME. 6. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE AO. THE ALTERNATE CLAIM OF THE ASSESSEE BEFORE CIT(A) WAS THAT IT IS A BUSINESS LOSS UNDER SECTION 28 OF THE I.T. ACT, AND THEREFORE, DEPR ECIATION MAY BE ALLOWED AS THE DIFFERENCE REPRESENTS INTANGIBLE ASSETS A S CONTEMPLATED UNDER CLAUSE (II) OF SECTION 32(1) I . E. ANY BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE. HOWEVER, THE CIT(A) WAS NOT SATISFIED WITH THE ALTERNATE CLAIM ALSO. ACCORDING TO HIM, TH E DIFFERENCE OF LIABILITIES OVER ASSETS DOES NOT REPRESENT ANY BUSINESS OR COMMERCIAL RIGHTS. SECONDLY, AS THE AMALGAMATION IS NOT BY WAY OF PURCHASE, ALLOCATION OF THE CONSIDERATION TO INDIVIDUAL IDENTIFIA BLE ASSETS AND LIABILITIES OF THE TRANSFEROR ON THE BASIS OF THEIR FAIR VALUES 4 ITA NO.923/PN/13 AT THE DATE OF AMALGAMATION DOES NOT EVEN ARISE. IT IS ON LY IN CASE AMALGAMATION BY PURCHASE, ANY EXCESS AMOUNT OF THE CONS IDERATION OVER THE VALUE OF THE NET ASSETS OF THE TRANSFEROR AC QUIRED BY THE TRANSFEREE SHOULD BE RECOGNISED IN THE TRANSFEREE'S FINANC IAL STATEMENTS AS GOODWILL ARISING ON AMALGAMATION. HOWEVER, IN THE PRESENT CASE, AS IT WAS AMALGAMATION BY MERGER, THERE WE RE NO INTANGIBLE ASSETS, EITHER BY WAY OF GOODWILL OR OTHERWISE, W HICH WERE ACQUIRED BY THE ASSESSEE BANK ON ACCOUNT OF MERGER. TH EREFORE, THE ALTERNATE CLAIM OF THE ASSESSEE THAT DEPRECIATION BE ALLOWE D BY TREATING THE EXCESS OF LIABILITIES OVER ASSETS AS 'INTANGIBLE ASSETS ' U/S.32(1)(II) WAS REJECTED BY HIM ON THE GROUND THAT THE SAME IS NO T LEGALLY TENABLE ON THE FACTS OF THE CASE . 7. AGGRIEVED WITH SUCH ORDER OF CIT(A) THE ASSESSEE IS IN A PPEAL BEFORE US. 8. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET DREW THE ATT ENTION OF THE BENCH TO THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2007-08 AND 2008-09 AND SUBMITTED THAT THE TRIBUNA L VIDE ITA NOS. 460 AND 461/PN/2013 ORDER DATED 23-01-2014 HAS ALLOWED THE CLAIM OF DEPRECIATION ON SUCH INTANGIBLE ASSET BEING BUSINE SS OR COMMERCIAL RIGHTS OF SIMILAR NATURE CONTEMPLATED U/S.32(1)(II) OF T HE ACT. 9. THE LD. DEPARTMENTAL FAIRLY CONCEDED THAT THE ISSUE H AS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL. 10. AFTER HEARING BOTH THE SIDES, WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NOS . 460 AND 461/PN/2012 FOR A.YRS 2007-08 AND 2008-09 ORDER DATED 23-01-2 014. 5 ITA NO.923/PN/13 WE FIND THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 11 TO 14 OF THE ORDER READ AS UNDER : 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. SECTION 32(1)(II) PRESCRIBES THAT IN RESPECT OF KNOWHOW, PAT ENTS, COPYRIGHTS, TRADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE, BEING INTANGIBLE ASSETS ACQU IRED ON OR AFTER 01.04.1998 OWNED WHOLLY OR PARTLY BY THE ASSESSEE AND U SED FOR THE PURPOSES OF BUSINESS OR PROFESSION SHALL BE ENTITLED FOR A LLOWANCE OF DEPRECIATION AS PER THE PRESCRIBED RATES. THE CONTROV ERSY BEFORE US IS AS TO WHETHER ON ACCOUNT OF MERGER OF FOUR BANKS ASSESSEE HAS ACQUIRED ANY ASSET WHICH FALLS IN THE MEANING OF EXPRESSION BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE SO AS TO BE ELIGIBLE FOR DEPR ECIATION UNDER CLAUSE (II) OF SUB-SECTION (1) OF SECTION 32 OF THE ACT. 12. BEFORE PROCEEDING FURTHER, IT WOULD BE APPROPRI ATE TO REFER TO THE SCHEME OF MERGER OF RESPECTIVE FOUR BANKS, COPIES OF WH ICH HAVE BEEN PLACED IN THE PAPER BOOK. ALL THE SCHEMES OF THE MER GER ARE SIMILAR AND HAVE BEEN APPROVED BY THE RESERVE BANK OF INDIA IN T ERMS OF THE RESPECTIVE STATUTORY PROVISIONS. THE SCHEME OF MERGER PR OVIDES THAT THE ENTIRE UNDERTAKING, THE ENTIRE BUSINESS, ALL THE PROPE RTIES (WHETHER IMMOVABLE OR IMMOVABLE, TANGIBLE OR INTANGIBLE) ASSET S, INVESTMENTS OF ALL KINDS, ALL CASH BALANCES WITH THE RBI AND OTHER BANKS M ONEY AT CALL OR SHORT NOTICE, LOANS & ADVANCES, ANY OTHER CONTINGENCY RIGHTS OR BENEFITS, LEASE AND HIRE PURCHASE CONTRACTS AND ASSETS, RECEIVABLES , SECURITIZED ASSETS, LICENSES, FIXED ASSETS AND OTHER ASSETS, POWERS, CONSE NTS, REGISTRATIONS, EXEMPTIONS, WAIVERS OF ALL KINDS AND WHER ESOEVER SITUATE BELONGING TO, OR ENJOYED BY THE TRANSFEROR BANK HAVE BEEN TAKEN-OVER BY THE ASSESSEE. THE LIABILITIES TAKEN-OVER MEAN ALL DEBTS, DEMAND DEPOSITS, SAVING BANK DEPOSITS, TERM DEPOSITS, TIME AND DEMAND LI ABILITIES, RUPEE BORROWINGS, BILLS PAYABLE, INTEREST ACCRUED, CAPITAL R ESERVES AND SURPLUSES, WHETHER STATUTORY OR NOT AND ALL OTHER LIABILITIES IN CLUDING CONTINGENT LIABILITIES, DUTIES, UNDERTAKINGS AND OBLIGATIONS OF THE TRANSFEROR BANKS HAVE BEEN TAKEN BY THE ASSESSEE. IN-FACT, THE SCHEME SPE CIFICALLY PROVIDES THAT ALL THE LICENSES/REGISTRATIONS OF THE BANK OR ITS B RANCHES ETC. ISSUED BY RESERVE BANK OF INDIA OR ANY AUTHORITY OF THE STATE/ CENTRAL GOVERNMENT OR OTHER AUTHORITIES CONCERNED, ETC. STAND TRANSFERRED TO THE ASSESSEE BANK. SIMILAR IS THE POSITION WITH REGARD TO THE LIABILITIE S OF THE TRANSFEROR BANK INCLUDING THE SAVINGS BANK ACCOUNT OR CURRENT BANK AC COUNT OR ANY OTHER DEPOSITS OF THE CUSTOMERS. THE SCHEME ALSO ENVISAGED TAKIN GOVER OF ALL THE EMPLOYERS OF THE TRANSFEROR BANK WHO WISHED TO CONTINU E IN SERVICE. IN SUM AND SUBSTANCE, ASSESSEE BANK TOOK OVER THE ENTIRE BUSI NESS APPARATUS OF THE TRANSFEROR BANK, WHICH INCLUDED ITS CLIENT BAS E, OPERATIONAL BRANCHES OF THE BANK AT DIFFERENT PLACES AND ALSO THEI R EMPLOYEES, BESIDES THE LICENSES AND OTHER STATUTORY APPROVALS ENJOYED BY T HE TRANSFEROR BANK. NOW, THE CASE SET-UP BY THE ASSESSEE IS THAT THE AC QUISITION OF HUGE CLIENT BASE, OPERATIONAL BRANCHES OF THE BANKS AND THE ACCESS TO NEW MONEY MARKETS HAS RESULTED IN A BUSINESS ADVANTAGE WHICH IS COVERED WITHIN THE MEANING OF THE EXPRESSION BUSINESS OR COMMER CIAL RIGHTS OF SIMILAR NATURE AS CONTEMPLATED IN CLAUSE (II) OF SUB-SE CTION (1) OF SECTION 32 OF THE ACT. 6 ITA NO.923/PN/13 13. THEREFORE, THE MOOT QUESTION IS AS TO WHETHER THE AFORESAID BUSINESS/ COMMERCIAL ADVANTAGES, NAMELY, TAKING OVER OF HUGE C LIENT BASE, LICENSES, OPERATIONAL BANK BRANCHES IN DIFFERENT AREAS, ETC. CA N BE CONSIDERED TO FALL WITHIN THE EXPRESSION BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE CONTAINED IN SECTION 32(1)(II) OF THE ACT. IN THIS CO NTEXT, ONE MAY REFER TO THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF AREVA T & D INDIA LTD. & ORS. (SUPRA). IN THE CASE BEFORE THE HON BLE HIGH COURT ASSESSEE COMPANY ACQUIRED THE BUSINESS OF THE TRANSFEROR LO CK, STOCK AND BARREL UNDER A SLUMP SALE AGREEMENT. THE AMOUNT OF CO NSIDERATION PAID IN EXCESS OF THE NET VALUE OF TANGIBLE ASSETS TRANSFERRED, WAS CLAIMED AS PAYMENT MADE BY THE ASSESSEE FOR ACQUISITION OF VARIOUS B USINESS AND COMMERCIAL RIGHTS, WHICH COMPRISED OF BUSINESS CLAIMS; BU SINESS INFORMATION; BUSINESS RECORDS; CONTRACTS; SKILLED EMPLOY EES; AND, KNOWHOW. SUCH ACQUISITION WAS CLAIMED TO BE AN ASSET I N THE NATURE OF BUSINESS OR COMMERCIAL RIGHTS CONTAINED IN SECTION 32( 1)(II) OF THE ACT. THE HONBLE HIGH COURT CONCURRED WITH THE ASSESSEE AND HELD THAT THE ASSETS IN QUESTION, BEING INTANGIBLE ASSETS ACQUIRED UNDER SLUMP SALE AGREEMENT WERE IN THE NATURE OF BUSINESS OR COMMERCIA L RIGHTS OF SIMILAR NATURE SPECIFIED IN SECTION 32(1)(II) OF THE ACT AND WERE ACCORDINGLY HELD ELIGIBLE FOR DEPRECIATION. 14. IN THE AFORESAID LIGHT, FACTUALLY SPEAKING, IN TH E PRESENT CASE, IT CAN BE SEEN THAT THE ASSESSEE BY ACQUIRING THE FOUR CO-OPERATIV E BANKS HAS ACQUIRED EXISTING RUNNING BANKING BUSINESSES COMPLETE WI TH THE REQUIRED STATUTORY LICENSES, OPERATIONAL BANK BRANCHES, CUSTOMER S BASE AS ALSO THE EMPLOYEES, BESIDES OTHER ASSETS. THE PLEA OF THE REVENUE IS THAT THE DIFFERENCE PAID BY THE ASSESSEE IN EXCESS OF LIABILITIES OVER THE REALIZABLE VALUES OF THE ASSETS TAKEN-OVER DOES NOT REPRESENT PAYMEN T FOR ANY BUSINESS OR COMMERCIAL RIGHTS IS UNTENABLE. IN-FACT, TH E IMPUGNED SUM REFLECTS THE AMOUNT PAID BY THE ASSESSEE OVER AND ABOVE THE NET WORTH OF THE BANKS WHICH HAVE BEEN TAKENOVER, WHICH OSTENSIBLY IS A REFLECTION OF THE VALUE OF THE AFORESAID INTANGIBLE ADVANTAGES OBTA INED BY THE ASSESSEE. SUCH ADVANTAGES ARE TO BE CONSIDERED IN THE NATURE OF BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE SPECIFIED IN SECTI ON 32(1)(II) OF THE ACT, HAVING REGARD TO THE PARITY OF REASONING LAID D OWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF AREVA T & D INDIA LT D. & ORS. (SUPRA). IN THE CASE OF SKS MICRO FINANCE LTD. (SUPRA), ASSESSEE ACQUIRE D A RUNNING BUSINESS UNDER A SLUMP SALE AGREEMENT AND THE CONSIDERATI ON PAID INCLUDED, SUM PAID FOR ACQUIRING THE CLIENT BASE OF T HE TRANSFEROR. THE ACQUISITION OF RIGHTS OVER THE ASSETS OF THE TRANSFEROR, INCLUSIVE OF ITS CUSTOMERS BASE WAS HELD TO BE AN INTANGIBLE ASSET BEING BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE CONTEMPLATED IN SECTION 32(1)(II) OF THE ACT AND WAS HELD ELIGIBLE FOR DEPRECIATION. FOLL OWING THE AFORESAID DISCUSSION, IN THE PRESENT CASE, THE BUSINESS ADVANTAGES DE TAILED EARLIER, ARE LIABLE TO BE CONSIDERED AS AN INTANGIBLE ASSET, BEI NG BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE CONTEMPLATED U/S 32(1)(II) OF THE ACT. IN OUR CONSIDERED OPINION, THE PLEA OF THE ASSESSEE FOR ALLOWANCE OF DEPRECIATION IN TERMS OF SECTION 32(1)(II) OF THE ACT CANNOT BE FAULTED EITHER IN LAW OR ON FACTS. 11. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSE SSEES OWN CASE IN THE IMMEDIATELY PRECEDING 2 ASSESSMENT YEARS , THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 7 ITA NO.923/PN/13 12. GROUND OF APPEAL NO.4 BY THE ASSESSEE READS AS UNDER : THE LD.CIT(A)-III OF INCOME TAX WAS NOT RIGHT LEGAL LY AS WELL AS FACTUALLY IN NOT HOLDING APPELLANT BANKS HEAD TO MATURITY SECURIT IES AS ITS STOCK IN TRADE. IT MAY PLEASE BE HELD THAT SECURITIES HELD BY THE APPELLANT BANK UNDER HELD TO MATURITY CATEGORY CONSTITUTE ITS STOCK I N TRADE AND CONSEQUENTLY THE LOSS ON VALUATION OF THE SAID SECURITIE S AS ON 31-03-2009 ON THE BASIS OF COST OR MARKET VALUE WHICHEVER IS LOWER (ON THE BASIS OF INDIVIDUAL SCRIP) BE HELD AS AN ALLOWABLE DEDUCTION A ND THE SAME MAY PLEASE BE DIRECTED TO BE ALLOWED. 13. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DURING TH E COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD DEBITED A SUM OF RS . 6,22,16,204/- AS PREMIUM ON INVESTMENTS UNDER THE 'HELD T O MATURITY' (HTM) CATEGORY OF INVESTMENTS. ON BEING QUEST IONED BY THE AO IT WAS CONTENDED THAT THE PREMIUM WAS AMORTIZED OV ER THE RESIDUAL LIFE OF THE PARTICULAR INVESTMENTS AND THAT SUCH A METHOD OF VALUATION OF THE INVESTMENT WAS BEING FOLLOWED BY THE ASSE SSEE BANK CONSISTENTLY IN PURSUANCE OF THE DIRECTIONS OF THE RBI . REFERENCE WAS MADE BY THE ASSESSEE TO THE DECISION OF THE ITAT, MUMBA I IN THE CASE OF BANK OF RAJASTHAN LTD. REFERENCE WAS ALSO MADE BY THE ASSESSEE TO INSTRUCTION NO.17/2008 DATED 26/11/2008 OF THE CBDT TO CONTEND THAT THE PREMIUM ON HTM CATEGORY IS ALLOWABLE AS DEDUCTION . 14. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVE N BY THE ASSESSEE. ACCORDING TO HIM, CLAUSE (VII) OF THE SAID INS TRUCTION CLEARLY SPECIFY THAT DEPRECIATION IN VALUE WAS TO BE CONS IDERED ONLY FOR SECURITIES HELD UNDER HFT AND AFS CATEGORIES WHICH FORMS PART OF STOCK-IN-TRADE WHILE THE INVESTMENTS HELD UNDER THE HTM CATEGORY ARE TO BE CARRIED AT ACQUISITION COST AND IT DOES NOT PROVIDE FOR ANY DEPRECIATION ON SECURITIES HELD UNDER THAT CATEGORY. IN VIEW OF THE ABOVE, THE AO DISALLOWED THE PREMIUM ON SECURITIES UNDER THE HTM CATEGORY WRITTEN OFF AMOUNTING TO RS.6,22,16,204/-. 8 ITA NO.923/PN/13 15. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE AO FOR WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 16. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUB MITTED THAT THE ABOVE GROUND HAS BEEN DECIDED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMME DIATELY PRECEDING ASSESSMENT YEARS. 17. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY CONCEDED THAT THE ABOVE GROUND HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL. 18. AFTER HEARING BOTH THE SIDES, WE FIND THE TRIBUNAL IN AS SESSEES OWN CASE IN ITA NOS. 460 AND 461/PN/2012 ORDER DATED 23-01-2014 FOR A.YRS. 2007-08 AND 2008-09 HAS ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER : 16. THE GROUND OF APPEAL NO. 4 IS WITH REGARD TO T HE ASSESSEES CLAIM THAT THE SECURITIES HELD BY THE ASSESSEE BANK UNDER HELD TO MA TURITY (HTM) CATEGORY CONSTITUTE ITS STOCK-IN-TRADE AND THE CONSEQUE NTIAL LOSS ON VALUATION OF THE SAID SECURITIES AS ON 31.03.2007 ON TH E BASIS OF COST OR MARKET VALUE WHICHEVER IS LOWER (ON THE BASIS OF INDIV IDUAL SCRIP) IS AN ALLOWABLE DEDUCTION. THE SAID CLAIM WAS MADE BY WAY OF AN ADDITIONAL GROUND OF APPEAL BEFORE THE CIT(A), WHICH WAS ADMITT ED BY HIM FOR ADJUDICATION BUT ON MERITS IT HAS BEEN DENIED. BEFORE US, THE CLAIM OF THE ASSESSEE IS THAT THE SECURITIES HELD BY THE ASSESSEE BANK ARE PART OF STOCK- IN-TRADE IRRESPECTIVE OF THEIR CLASSIFICATION AND THAT A SIMILAR MATTER HAS BEEN CONSIDERED BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASES OF LATUR URBAN COOP. BANK LTD. IN ITA NO.778/PN/2011 FOR ASSESSM ENT YEAR 2007- 08 DATED 31.08.2012 AND THE SANGLI BANK LTD. IN ITA NO.846/PN/2006 FOR ASSESSMENT YEAR 2004-05 DATED 30.05.2013 WHEREIN SUCH SEC URITIES ARE ACCEPTED AS STOCK-IN-TRADE. IT WAS CONTENDED THAT THE ISSUE IS COVERED BY THE AFORESAID PRECEDENTS. THE LEARNED DEPARTMENT REPR ESENTATIVE HAS NOT DISPUTED THE AFORESAID FACTUAL MATRIX. 17. IN THIS CONTEXT, WE FIND THAT SO FAR AS SECURITIES H ELD UNDER HTM CATEGORIES ARE CONCERNED, THE PUNE BENCH OF THE TRIB UNAL IN THE CASE OF LATUR URBAN COOP. BANK LTD. (SUPRA) HELD THAT SUCH SEC URITIES HELD BY AN ASSESSEE BANK ARE PART OF ITS STOCK-IN-TRADE. FOLLOWING T HE AFORESAID DECISION WE ARE UNABLE TO UPHOLD THE PLEA OF THE REV ENUE THAT THE SECURITIES HELD BY THE ASSESSEE UNDER THE HTM CATEGORY AR E CAPITAL IN NATURE. THE FOLLOWING DISCUSSION IN THE ORDER OF THE T RIBUNAL IN THE CASE OF LATUR URBAN COOP. BANK LTD. (SUPRA) IS RELEVANT :- 9 ITA NO.923/PN/13 14. WE HAVE HEARD THE PARTIES. THE LD COUNSEL PLACED HIS HEAVY RELIANCE ON THE DECISION OF THE HON'BLE HIGH COURT O F BOMBAY IN THE CASE OF CIT VS. BANK OF BARODA AND IN THE CASE OF UCO BANK VS. CIT, 240 ITR 355 (SC). IN THE CASE OF BANK OF BARODA (SUP RA), THE ISSUE BEFORE THEIR LORDSHIP WAS WHETHER THE ASSESSEE WAS ENTITLE D FOR DEDUCTION ON ACCOUNT OF DEPRECIATION IN THE VALUE O F INVESTMENTS. THE METHOD OF VALUATION FOLLOWED BY THE ASSESSEE BANK WAS TO VALUE INVESTMENTS AT COST OR MARKET VALUE WHICHEVER WA S LOWER. THE ASSESSEE HAD CLAIMED THE DEPREDATION TO THE TUNE OF RS. 11,82,35,007/- AND THE SAID DEPRECIATION WAS CLAIMED AS A DEDUCTION ITA NOS.460 & 461/PN/2012 A.YS. 2007-08 & 2 008-09 10 WHICH WAS DISALLOWED BY THE A.O, BUT THE ASSESSEE BAN K SUCCEEDED BEFORE THE CIT(A). THE TRIBUNAL CONFIRMED THE ORDER OF THE CIT(A). THE REVENUE CARRIED THE ISSUE BEFORE THE HON'BLE HIGH COURT. THE CORE ISSUE WAS THE METHOD OF VALUATION ADOP TED BY THE ASSESSEE BANK FOR VALUING THE STOCK OF THE SECURITIES. TH E HON'BLE HIGH COURT FOLLOWED THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF UNITED COMMERCIAL BANK (SUPRA). 15. IN THE CASE OF UNITED COMMERCIAL BANK (SUPRA), E VEN THE ISSUE OF VALUATION OF THE STOCK IN TRADE OF THE INVESTMENT WAS BEFORE THE HON'BLE SUPREME COURT. IN THE CASE OF THE ASSESSEE, THE ISSUE IS REGARDING ALLOWABILITY OF THE LOSS ON THE SALE OF THE SECURITIES. MERELY BECAUSE THE SECURITIES ARE KEPT UNDER THE HEAD TILL THE MATURITY, THE SAID SECURITY CANNOT BE TREATED AS A PU RELY INVESTMENT. LAW IS WELL SETTLED THAT THE SECURITIES HEL D BY THE BANK ARE IN THE NATURE OF STOCK-IN-TRADE. WE MAY LIKE TO QUOTE HERE THE DECISION OF THE HON'BLE HIGH COURT OF KERALA IN THE CASE OF CIT VS. NEDUNGADI BANK LTD., 264 ITR 545. IN THE SAID CASE, T HE HON'BLE HIGH COURT HAS HELD THAT THE SECURITIES HELD BY THE BA NK ARE IN THE NATURE OF STOCK-IN-TRADE. BOTH THE AUTHORITIES BELOW HAS MERELY GONE ON THE NOMENCLATURE OF THE HEAD UNDER WHICH TH E SECURITIES ARE HELD. IN OUR CONSIDERED VIEW, NOMENCLATURE CANNO T BE DECISIVE FOR THE ASSESSEE BANK. WE, THEREFORE, HOLD THAT THE LOSS ON THE SALE OF THE SECURITIES IS REVENUE IN NATURE AND SAME IS ALLO WABLE. ACCORDINGLY, GROUND NO. 2 IS ALLOWED. 18. FOLLOWING THE AFORESAID PRECEDENT, WE HOLD THAT THE CLAIM OF THE ASSESSEE IN GROUND OF APPEAL NO. 4 IS JUSTIFIED AND IS ALL OWABLE. 19. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BEN CH OF THE TRIBUNAL IN ASSESSEES OWN CASE AND IN ABSENCE OF AN Y CONTRARY MATERIAL BROUGHT TO OUR NOTICE THE ABOVE GROUND BY THE ASSESSEE IS ALLOWED. 20. GROUND OF APPEAL NO.6 BY THE ASSESSEE READS AS UNDER : 6. THE LEARNED CIT(A)-III OF INCOME TAX WAS NOT RIGHT LEGALLY AS WELL AS FACTUALLY IN HOLDING THAT SEC 43 D APPLIES TO THE APPELLANT BANK. THE LEARNED CIT(A)-III OF INCOME TAX HAS OVERLOOKED THE FACT THAT THE 10 ITA NO.923/PN/13 APPELLANT BANK BEING A SCHEDULED BANK , THE RBI DIRECTIONS SHOULD BE APPLIED TO IDENTIFY THE DOUBTFUL DEBTS AS PRESCRIBED U /S 43D.LT I S THEREFORE PRAYED THAT ADDITION SUSTAINED OF RS.6 , 53 , 00 , 000 . 00 ON ACCOUNT OF SEC 43 D MAY BE QUASHED BEING ILLEGAL AND DEVOID OF ANY MERIT . 21. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUB MITTED THAT THE ABOVE GROUND HAS BEEN DECIDED AGAINST THE ASSESSE E BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE. IN VIEW OF THE AB OVE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THE ABOVE GROUND IS DISMISSED. 22. GROUNDS OF APPEAL NO.7 AND 8 BY THE ASSESSEE READ AS UNDER : 7. THE LEARNED CIT ( A)-III OF INCOME TAX WAS NOT RIGHT LEGALLY AS WELL AS FACTUALLY IN SUSTAINING THE DISALLOWANCE OF THE PAYM ENT MADE TO COSMOS FOUNDATION U/S 40 A(2)(B) OF THE INCOME TAX ACT TO T HE EXTENT OF 50 % IN RESPEC T OF OUTSOURCING AND SECURITY CHARGES. THE ADDITION MAD E BY THE LEARNED ADDL . COMMISS I ONER IS ARBITRARY AND WITHOUT ANY VALID BASIS. 8. THE LEARNED CIT(A)-III OF INCOME TAX FAILED TO A PPRECIATE THE FACT THAT THAT THE LEARNED ADDL . COMM . OF INCOME TAX WHILE MAKING THE ADDITION HAS NOT APPLIED HIS MIND NOR SECURED ANY EXPL ANATION OR RECONCILIATION FROM THE ASSESSEE IN THIS MATTER BUT HAS A RRIVED AT THE CONCLUSIONS BASED ON THE STATEMENT RECORDED OF THE TRUST EE OF THE COSMOS FOUNDATION. IT IS PRAYED THAT THE ADDITION SUSTAINED O N THIS ACCOUNT OF RS . 2 , 02 , 75,177.00 BE QUASHED. 23. FACTS OF THE CASE, IN BRIEF ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE BANK HAS MADE PAYMENTS TO M/S. COSMOS FOUNDATION, AN ORGANIZATION COV ERED BY THE PROVISIONS OF SECTION 40A(2) (B) OF THE IT . ACT, UNDER THE FOLLOWING HEADS: A. OUTSOURCING EXPENSES : RS.3,39,13,264/- B. SECURITY CHARGES : RS.51,79,291/- 24. HOWEVER, THE AO NOTED THAT AS AGAINST THE ABOVE, TH E TRUST IN ITS ACCOUNT IS SHOWN TO HAVE RECEIVED AN AMOUNT OF RS.3,31,04 ,100/- UNDER THE HEAD 'OUTSOURCING EXPENSES' AND RS.66,37,090/ - UNDER THE HEAD 'SECURITY CHARGES'. SIMILARLY, IT WAS ALSO NOTED BY TH E AO THAT AS 11 ITA NO.923/PN/13 AGAINST THE TDS SHOWN TO HAVE BEEN MADE BY THE ASSES SEE AT RS.12 , 53,780/-, THE TRUST HAD SHOWN ONLY AN AMOUNT OF RS . L0,88,191/- AS TDS MADE OUT OF THE OUTSOURCING EXPENSES FO R THE A.Y. 2009-10. IN CONNECTION WITH THIS ASPECT, THE STATEME NT OF ONE OF THE TRUSTEES OF COSMOS FOUNDATION, NAMELY, MR. S.B. NHALADE WAS RECORDED BY THE AO BY ISSUING SUMMONS U/S.131 AND OPER ATIVE PORTION OF SUCH STATEMENT RECORDED IS REPRODUCED AT PA GE 8 & 9 OF THE ASSESSMENT ORDER BY THE AO. IN HIS STATEMENT, THE TRUS TEE HAS STATED THAT THE TRUST UNDERTAKES THE PROCESSING JOB OF COSMOS BANK FOR WHICH THEY RECRUIT STAFF FROM UNEMPLOYED YOUTH AND DEPUTE THEM TO THE BANK. THE AO ANALYSED THE NUMBER OF RECRUITMENTS DONE AND D ETAILS OF PAYMENTS RECEIVED FROM THE ASSESSEE BANK BY THE SAID T RUST DURING THE CURRENT AND PRECEDING ASSESSMENT YEARS. HE ALSO ANAL YSED THE DETAILS OF SECURITY CHARGES PAID. 25. ON VERIFICATION OF THE VARIOUS INFORMATION / DOCUMENTS FURNISHED BY THE BANK AND THE TRUST ON THE ISSUE, THE FO LLOWING ASPECTS WERE NOTED BY THE ASSESSING OFFICER: (A) THE ASSESSEE IN ITS WRITTEN SUBMISSION HAS SHOWN TO HAV E PAID A SUM OF RS.3,39,13,264/- TO THE COSMOS FOUNDATION AND AN AMOUNT OF TDS MADE THEREON IS SHOWN AT RS.12,53,780/-. (B) THE COSMOS FOUNDATION, IN ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 HAS SHOWN THE AMOUNT OF ENTIRE TDS IN ITS CASE AT RS.10,88,191/- AND THIS TDS ALSO INCLUDES THE TDS MADE BY OTHER BANK ON ITS DEPOSITS . (C) IN THE HAND WRITTEN STATEMENT OF THE TRUSTEE, THE AMO UNT RECEIVED BY THE TRUST FROM THE COSMOS BANK IN THE YEAR 2008-09 IS SHOWN AT RS . 3,31,04,100/ - . (D) THE TRUST HAD RECEIVED A SUM OF RS.66,37,090/- UND ER THE HEAD SECURITY CHARGES FROM THE ASSESSEE BANK IN THE A.Y. 2 009-10 (WHICH THE BANK HAS SHOWN AT RS. 51,79,291/-). THUS, THERE IS A D IFFERENCE OF RS.14,57,799/- IN THE ACCOUNTS. (E) FOR THE A.Y. 2008-09, A SUM OF RS.58,09,791/- WAS PAID BY THE BANK UNDER THE HEAD SECURITY CHARGES WITHOUT ANY TDS. 12 ITA NO.923/PN/13 (F) FOR THE A.Y. 2010-11, RS.47,14,960/- WAS PAID UND ER THE HEAD SECURITY CHARGES ON WHICH TDS OF RS.85,265/- WAS MADE WHICH IS MUCH LESS THAN THE ACTUAL TDS THAT SHOULD HAVE BEEN MADE. 26. AS PER THE AO, WHAT THE TRUST WAS DOING IS A BUSINESS A CTIVITY WHICH IT SHOULD NOT HAVE DONE BEING A CHARITABLE TRUST. AC CORDING TO HIM, WHAT THE TRUST WAS DOING COULD HAVE EASILY DONE BY THE ASSESSEE ALSO AND THERE WAS NO NEED OF ANY INTERMEDIARY FOR RECRU ITMENT OF STAFF AND SECURITY PERSONNEL . HE FURTHER NOTED THAT THE TRUST HAD NO SUCH INFRASTRUCTURE TO UNDERTAKE THE RECRUITMENT IN A MAJOR SCALE. IN THE OPINION OF THE AO, WHAT THE ASSESSEE WAS DOING WAS DIVERS ION OF ITS RECEIPTS IN THE FORM OF OUTSOURCING/ SECURITY CHARGES TO THE TRUST SO THAT IT CAN CLAIM THE BENEFIT U/S . 37(1) WHILE THE RECIPIENT CLAIMED THE BENEFIT BY WAY OF EXEMPTION U/S .11, WITH A VIEW TO REDUCE TAX LIABILITY. THUS, HOLDING THAT THE PAYMENTS WERE UNREASONABLE, THE A O DISALLOWED 50% OF BOTH THE PAYMENTS, LEADING TO AN ADDITION OF RS.2,02,75,177/- (RS.1,69,56,632 + 33,189,545). 27. BEFORE CIT(A) IT WAS SUBMITTED THAT THE DISALLOWANCE OF EXPENDITURE TO THE EXTENT OF 50% IN RESPECT OF OUTSOURCING AND SECU RITY CHARGES IS ARBITRARY AND WITHOUT ANY BASIS. IT WAS SUBM ITTED THAT THE EXPENDITURE IS LEGITIMATE BUSINESS EXPENDITURE ALLOWABLE AS D EDUCTION U/S.37 OF THE I.T. ACT. 28. HOWEVER, THE LD.CIT(A) WAS ALSO NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT DURING THE ASSESSMENT PROCEEDINGS, STATEMENT OF SHRI S.B . NHALADE, ONE OF THE TRUSTEES OF THE FOUNDATION WAS RECORDED ON 12 . 10.2011 . AS PER THE STATEMENT OF SHRI S.B. NHALADE, THE FOUNDATION RECRUITS TH E BANK STAFF FROM THE UNEMPLOYED YOUTH AND THE PERSONS SO RECRUITED ARE GIVEN 13 ITA NO.923/PN/13 TRAINING BY THE SENIOR MANAGERS OF THE ASSESSEE BANK IN BANKING AND COMPUTER SKILLS. THEREAFTER, A TEST IS TAKEN AND THOSE WHO QUALIFY IN THE TEST ARE APPOINTED BY THE BANK AS PERMANENT STAFF. IT WAS CLAIMED THAT DURING THE YEAR, THE FOUNDATION PROVIDED 4404 EMPLO YEES TO THE ASSESSEE BANK AND OUTSOURCING CHARGES WERE RECEIVED FR OM THE FOUNDATION FOR THE SERVICES SO RENDERED. EXCEPT MAKING S UCH CLAIMS, THE ASSESSEE HAS NOT PROVIDED ANY DETAILS ABOUT THE AC TIVITIES OF THE FOUNDATION , INFRASTRUCTURE AND FACILITIES AVAILABLE WITH THE FOUNDATION TO UNDERTAKE SUCH SERVICES ON BEHALF OF THE ASSESSEE. IT IS ALSO NOT KNOWN WHETHER THE FOUNDATION UNDERTAKES SIMILAR SERVICES FOR OTHER PERSONS AND IF SO WHETHER CHARGES FOR SUCH SERVICES IN C ASE OF THIRD PARTIES ARE COMPARABLE WITH CHARGES RECEIVED FROM THE AS SESSEE. HE NOTICED FROM ANNEXURE K OF THE INCOME & EXPENDITURE A/C O F THE TRUST FOR THE YEAR ENDED 31-03-2009 THAT THE TRUST HAS NOT SHOWN ANY SUCH SERVICE CHARGES FROM THIRD PARTIES. ALL THESE DETAILS ACCO RDING TO LD.CIT(A) ARE ESSENTIAL TO ASCERTAIN THE ACTUAL SERVICES RENDERED BY THE FOUNDATION AND WHETHER THE PAYMENT MADE IS COMMENSURA TE WITH THE SERVICES CLAIMED TO HAVE BEEN RENDERED BY THE FOUNDATIO N. HE FURTHER OBSERVED FROM THE PROCESS CARRIED OUT BY THE ASSESSEE THAT THE TRUST HAS VERY LIMITED ROLE IN THE SELECTION PROCESS OR IMPARTING THE REQUIRED SKILLS TO THE PROSPECTIVE EMPLOYEES , WHICH ARE BASICALLY AND ESSENTIALLY CARRIED OUT BY THE ASSESSEE BANK ITSELF. NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT WHETHER THE TRUST HAD EVEN THE REQUIRED PARAPHERNALIA TO RECRUIT THE MANPOWER ON SUCH A MAJOR SCALE OR EVEN THE NECESSARY INFRASTRUCTURE FOR GIVING TRAINING IN COMPUTE RS ETC. SIMILARLY, IN CASE OF RECRUITMENT OF SECURITY STAFF ALSO, THE AS SESSEE HAS FAILED TO BRING OUT THE PROCEDURE FOLLOWED IN THE SELECTION P ROCESS OR THAT WHETHER ANY BASIC TRAINING PROCESS IS CARRIED OUT B Y THE TRUST 14 ITA NO.923/PN/13 BEFORE SHORT-LISTING THE PROSPECTIVE CANDIDATES. CONSIDERING ALL THESE ASPECTS AND THE FAILURE OF THE ASSESSEE TO BRING OUT TH E EXTENT OF INVOLVEMENT OF THE TRUST IN THE WHOLE PROCESS OF SELECTION, RECRUITMENT AND TRAINING OF THE CANDIDATES BEFORE THEY ARE FORMALLY AB SORBED IN THE MUSTER OR THE ASSESSEE BANK, HE OBSERVED THAT THE QU ANTUM OF CHARGES PAID TO THE TRUST APPEARS TO BE HIGHLY DISPROPORTIONATE AND DO NOT COMMENSURATE WITH THE EXTENT OF SERVICES CLAIMED TO HAVE BEEN RENDERED BY THE TRUST. ACCORDING TO HIM, IT ALSO NEEDS T O BE KEPT IN MIND THAT ALL THE TRUSTEES OF THE TRUST ARE EITHER DIRECT ORS OF THE ASSESSEE BANK OR RELATED TO THE DIRECTORS AND THEREFOR E, THE INFERENCE DRAWN BY THE AO THAT WHAT THE ASSESSEE HAS BEEN DOIN G WAS AN ATTEMPT TO DIVERT PART OF ITS INCOME IN THE GARB OF OUTSO URCING EXPENSE AND SECURITY CHARGES IS NOT UNFOUNDED AS SUCH RECEIPTS WOULD BE EXEMPT FROM TAX IN THE HANDS OF THE RECIPIENT. UNDER THE CIRCUMSTANCES, HE HELD THAT THE DISALLOWANCES MADE BY THE AO OUT OF OUTSOURCING EXPENSES AND SECURITY CHARGES CANNOT BE H ELD TO BE UNJUSTIFIED. IN FACT, THE AO WAS . MORE THAN REASONABLE IN RESTRICTING THE CLAIM ONLY TO THE EXTENT OF 50% OF THE EXPENSES CLAIMED. 29. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT SIMILA R CLAIMS HAVE BEEN ALLOWED IN THE PAST BY THE AO, HE AGREED WITH THE AO THAT THE PRINCIPLES OF RES-JUDICATA ARE NOT APPLICABLE TO INCOME TAX PROCEEDINGS AND THE ALLOWANCE OF A PARTICULAR CLAIM IN A PAR TICULAR YEAR WOULD NOT PRECLUDE THE AO FROM EXAMINING THE NATURE OF SUCH CLAIM AND ITS ADMISSIBILITY AS EXPENDITURE IN THE SUBSEQUENT YEAR. HE ACCORDINGLY REJECTED THE ASSESSEE ON THIS ISSUE. 30. AGGRIEVED WITH SUCH ORDER OF CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 15 ITA NO.923/PN/13 31. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OBJECTED TO THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE PROVISIONS OF SECTION 40A(2)(B) ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. HE SUBM ITTED THAT THE DIRECTOR OF COSMOS FOUNDATION ARE NO DOUBT THE DIRECTOR S OF THE ASSESSEE COMPANY. HOWEVER, THEY ARE NOT SUBSTANTIAL SH AREHOLDERS OF THE ASSESSEE COMPANY. REFERRING TO THE DECISION OF HONB LE DELHI HIGH COURT IN THE CASE OF SHANKER TRADING PVT. LTD. VS. CIT RE PORTED IN 254 CTR 44 HE SUBMITTED THAT THE RATIO LAID DOWN BY THE HON BLE HIGH COURT IS SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEE COMPANY AND THE PROVISIONS OF SECTION 40A(2)(B) ARE NOT APPLICABLE. REFERRI NG TO THE SAID DECISION HE SUBMITTED THAT IN THAT CASE THE ASSESSE E M/S. SHANKER TRADING PVT. LTD. WAS ENGAGED IN THE BUSINESS OF KATHA AND CUTCH AND HAS TAKEN ON LEASE W.E.F. 01-06-1978 A FACTORY BELONGING TO MEHTA CHARITABLE PRAJNALAYA TRUST WHICH WAS ALSO ENGAGE D IN THE BUSINESS OF MANUFACTURING OF THE SAME PRODUCT. 2 OF THE T RUSTEES OF THE SAID TRUST WERE ALSO THE DIRECTORS AND SHAREHOLDERS OF THE ASSESSEE COMPANY. 3 OUT OF 5 DIRECTORS OF THE ASSESSEE COMPANY WERE THE SONS OF TWO TRUSTEES OF THE TRUST. BULK OF THE SHARES OF THE ASSESSEE COMPANY WAS HELD BY THE TRUSTEES OF THE TRUST AND THE IR FAMILY MEMBERS. INITIALLY THE LEASE RENT WAS FIXED AT RS.25,000/- PER MONTH WHICH WAS LATER INCREASED FIRST TO RS.50,000/- PER MONTH AND THEN RS. 1 LAKH PER MONTH. THE SAME WAS SUBSEQUENTLY ENHANCED TO RS.6,75,000/- PER MONTH. THE AO APPLIED THE PROVISIONS O F SECTION 40A(2) AND FURTHER HELD THAT THIS PAYMENT WAS IN THE NAT URE OF CAPITAL EXPENSES. THE CIT(A) UPHELD THE ORDER OF THE AO. THE T RIBUNAL HELD THAT THE ENHANCED LEASE RENT AMOUNTING TO RS.17,25,000/- FOR THE PERIOD FROM JANUARY 1992 WAS A REVENUE EXPENDITURE BUT HELD THAT THE PROVISIONS OF SECTION 40A(2) ARE APPLICABLE SINCE THERE W AS A DIRECT 16 ITA NO.923/PN/13 RELATIONSHIP BETWEEN THE TRUSTEES AND THE DIRECTORS OF T HE ASSESSEE COMPANY. ON FURTHER APPEAL THE HONBLE HIGH COURT HELD T HAT MEHTA CHARITABLE TRUST IS NOT AN ASSOCIATION OF PERSONS WITHIN TH E MEANING OF SECTION 40A(2) OF THE I.T. ACT AND THEREFORE THE AFORES AID PROVISION IS NOT APPLICABLE TO THE TRANSACTION. HE SUBMITTED THAT IN T HE INSTANT CASE ALSO COSMOS FOUNDATION IS A CHARITABLE TRUST AND HA S BEEN GRANTED 12A REGISTRATION, THEREFORE, IN VIEW OF THE DECISION OF THE HONBLE DELHI HIGH COURT THE PROVISIONS OF SECTION 40A(2)(B) A RE NOT APPLICABLE AND THEREFORE DISALLOWANCE MADE BY THE AO AND U PHELD BY THE CIT(A) SHOULD BE DELETED. 32. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND RELIED ON THE ORDER OF THE CIT(A). 33. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SID ES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE DECIS ION RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE. WE FIND IN THE INSTAN T CASE THE AO BY APPLYING THE PROVISIONS OF SECTION 40A(2)(B) DISALLOWED A N AMOUNT OF RS.2,02,75,177/- (BEING 50% OF THE OUTSOURCING EXPENDITURE AMOUNTING TO RS.1,69,56,632/- + 50% OF THE S ECURITY CHARGES AMOUNTING TO RS.33,18,545/-) BEING PAID TO COSMOS FOUNDATION ON THE GROUND THAT ASSESSEE BANK AND COSM OS FOUNDATION ARE THE RELATED PARTIES WITHIN THE MEANING OF S ECTION 40A(2)(B) OF THE I.T. ACT. WE FIND THE CIT(A) UPHELD THE ACTIO N OF THE AO ON THE GROUND THAT WHETHER THE FOUNDATION UNDERTA KES SIMILAR SERVICES FOR OTHER PERSONS IS NOT KNOWN AND IF SO WHETHE R CHARGES FOR SUCH SERVICES IN CASES OF THIRD PARTIES ARE COMPARABLE WIT H CHARGES RECEIVED FROM THE ASSESSEE. ACCORDING TO HIM, THE ASSESS EE WAS 17 ITA NO.923/PN/13 UNABLE TO PROVE THAT THE TRUST HAD THE REQUIRED PARAP HERNALIA TO RECRUIT THE MANPOWER ON SUCH A MAJOR SCALE OR EVEN TH E NECESSARY INFRASTRUCTURE FOR GIVING TRAINING IN COMPUTERS ETC. THERE W AS COMPLETE FAILURE ON THE PART OF THE ASSESSEE TO BRING OUT THE EXTENT OF INVOLVEMENT OF THE TRUST IN THE WHOLE PROCESS OF SELECTION, RECRUITMENT AND TRAINING OF THE CANDIDATES BEFORE THEY ARE FORMALLY ABSORBED IN TH E MUSTER OF THE ASSESSEE BANK. HE FURTHER NOTED THAT TH E QUANTUM OF CHARGES PAID TO THE TRUST APPEARS TO BE HIGHLY DISPROP ORTIONATE AND DID NOT COMMENSURATE WITH THE EXPENDITURE OF SERVICES CLA IMED TO HAVE BEEN RENDERED BY THE TRUST. HE FURTHER EMPHASIZE D ON THE OBSERVATION OF THE AO THAT ALL THE TRUSTEES OF THE TRUST ARE EITHER DIRECTORS OF THE ASSESSEE BANK OR RELATED TO THE DIRECT ORS. HE ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT NO SUCH DISALLOWANCE WAS MADE IN THE PRECEDING YEAR. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE PROVISIONS OF SECTION 40A(2)(B) A RE NOT APPLICABLE SINCE THE ASSESSEE IS A CHARITABLE TRUST AND NO T AN ASSOCIATION OF PERSONS WITHIN THE MEANING OF SECTION 40A(2). WE FIND FORCE IN THE ABOVE ARGUMENTS OF THE LD. COUNSEL FOR THE A SSESSEE. THE PERSONS REFERRED TO IN CLAUSE (B) OF 40A(2) ARE AS UNDER : (I) WHERE THE ASSESSEE IS AN INDIVIDUAL ANY RELATIVE OF THE ASSESSEE; (II) WHERE THE ASSESSEE IS A COMPANY, FIRM, ASSOCIATION OF PERSONS OR HINDU UNDIVIDED FAMILY ANY DIRECTOR OF THE COMPANY, PARTNER OF THE FIRM, OR MEMBER OF THE ASSOCIATION OR FAMILY, OR ANY RELATIVE OF SUCH DIRECTOR, PARTNER OR MEMBER; (III) ANY INDIVIDUAL WHO HAS A SUBSTANTIAL INTEREST IN THE BUSINESS OR PROFESSION OF THE ASSESSEE, OR ANY RELATIVE OF SUCH INDIVI DUAL; (IV) A COMPANY, FIRM, ASSOCIATION OF PERSONS OR HINDU U NDIVIDED FAMILY HAVING A SUBSTANTIAL INTEREST IN THE BUSINESS OR PROFESSION OF THE ASSESSEE OR ANY DIRECTOR, PARTNER OR MEMBER OF SUCH COMPANY, FIRM, ASSOCIATION OR FAMILY, OR ANY RELATIVE OF SUCH DIRECTOR, PARTNER OR MEMBER; (V) A COMPANY, FIRM, ASSOCIATION OF PERSONS OR HINDU U NDIVIDED FAMILY OF WHICH A DIRECTOR, PARTNER OR MEMBER, AS THE CASE MAY BE, HAS A SUBSTANTIAL INTEREST IN THE BUSINESS OR PROFESSION OF THE ASSESSEE; OR A NY DIRECTOR, 18 ITA NO.923/PN/13 PARTNER OR MEMBER OF SUCH COMPANY, FIRM, ASSOCIATION OR FAMILY OR ANY RELATIVE OF SUCH DIRECTOR, PARTNER OR MEMBER; (VI) ANY PERSON WHO CARRIES ON A BUSINESS OR PROFESSION,- (A) WHERE THE ASSESSEE BEING AN INDIVIDUAL, OR ANY RELA TIVE OF SUCH ASSESSEE, HAS A SUBSTANTIAL INTEREST IN THE BUSINESS OR PROFE SSION OF THAT PERSON; OR (B) WHERE THE ASSESSEE BEING A COMPANY, FIRM, ASSOCIATION OF PERSONS OR HINDU UNDIVIDED FAMILY, OR ANY DIRECTOR OF SUCH COMP ANY, PARTNER OF SUCH FIRM OR MEMBER OF THE ASSOCIATION OR FAMILY, OR ANY R ELATIVE OF SUCH DIRECTOR, PARTNER OR MEMBER, HAS A SUBSTANTIAL INTEREST IN THE BUSINESS OR PROFESSION OF THAT PERSON. 34. THEREFORE, WE HAVE TO DECIDE WHETHER THE ASSESSEE T RUST IS COMING WITHIN THE PURVIEW OF ASSOCIATION OF PERSONS SO AS T O GET ATTRACTED UNDER THE PROVISIONS OF SECTION 40A(2). WE FIND A SOMEWHAT SIMILAR ISSUE HAD COME UP BEFORE THE HONBLE DELHI HIGH COUR T CITED (SUPRA). WE FIND THE HONBLE HIGH COURT AFTER CONSIDERING V ARIOUS DECISIONS HELD IN THAT CASE THAT MEHTA CHARITABLE TRUST IS NOT AN ASSOCIATION OF PERSONS WITHIN THE MEANING OF SECTION 40A(2) O F THE I.T. ACT AND THEREFORE THE AFORESAID PROVISION IS NOT ATTRACTE D TO THE TRANSACTION. THE RELEVANT OBSERVATION OF THE HONBLE HIG H COURT FROM PARA 29 ONWARDS READ AS UNDER : 29. THE OBJECTIVE BEHIND SECTION 40-A OF THE ACT IS TO ADDRESS EVASION OF TAX UNDER THE CLOAK OR GUISE OF PERMISSIBLE DEDUCTI ONS BY CHECKING PAYMENTS MADE OR BENEFITS GRANTED MADE TO CLOSELY CONN ECTED PERSONS AND ENTITIES OSTENSIBLY FOR THE GOODS SOLD OR SERVICES REN DERED BY THEM. ADMITTEDLY, MEHTA CHARITABLE PRAJNALAY TRUST IS A CHA RITABLE TRUST AND BY ITSELF THE TRUST DOES NOT HOLD ANY SHARE OF THE ASSESSEE-CO MPANY. THE TRUST IS NOT ENTITLED TO ANY PROFIT OUT OF THE BUSINESS BEING RUN BY THE ASSESSEE-COMPANY. HENCE, THE TRUST DOES NOT HAVE A SUBSTANT IAL INTEREST IN THE BUSINESS OF THE ASSESSEE-COMPANY. 30. THE TRIBUNAL VIDE ITS ORDER DATED 25.02.2002 IN RESPECT OF THE ASSESSMENT YEARS 1994-95 AND 1995-96, HELD THAT CLAUSE-V OF SECTION 40A(2)(B) DEALS WITH THIS TYPE OF SITUATION AND, THERE FORE, THE PAYMENTS MADE BY THE ASSESSEE-COMPANY TO THE TRUST, IF INFLATED O R EXCESSIVE, COULD BE DISALLOWED UNDER THE SAID PROVISION. IT IS NOT IN DI SPUTE THAT AT LEAST SOME OF THE TRUSTEES ARE ALSO DIRECTORS AND SHAREHOLDERS O F THE ASSESSEE- COMPANY. THE TRIBUNAL VIDE ITS ORDER DATED 25.02.200 2 HELD THAT THE MAXIMUM SHAREHOLDING IN THE ASSESSEE-COMPANY WAS OWNED BY THE TRUSTEES AND THEIR RELATIVES AS DEFINED IN SECTION 2(41 ) OF THE ACT. 19 ITA NO.923/PN/13 HOWEVER, CLAUSE (V) OF SECTION 40A (2)(B) OF THE ACT BRINGS ONLY SUCH COMPANIES, FIRMS, HUFS OR ASSOCIATION OF PERSONS WITHIN IT S PURVIEW, DIRECTORS/PARTNERS/MEMBERS OF WHICH HAVE A SUBSTANTIAL I NTEREST IN THE BUSINESS OR PROFESSION OF THE ASSESSEE. THE ITAS 53/2000, 251 /2007, 253/2007, 257/2007, 223/2002 247/2002, 45/2005, 50/ 2005, 1207/2005, INTEREST OF THE RELATIVES OF A DIRECTOR/PA RTNER/MEMBER OF SUCH COMPANY/FIRM/HUF/ASSOCIATION OF PERSONS CANNOT BE TAKEN INTO CONSIDERATION TO ASCERTAIN WHETHER THE DIRECTOR/PARTN ER/MEMBER HAVE SUBSTANTIAL INTEREST IN THE BUSINESS OF THE ASSESSEE OR NOT. THE EXPLANATION PROVIDES THAT A PERSON SHALL BE DEEMED TO HAVE A SUBSTAN TIAL INTEREST IN A BUSINESS IF IN A CASE WHERE THE BUSINESS IS CARRIED ON BY A COMPANY, HE, AT ANY TIME, DURING THE PREVIOUS YEAR, WAS THE BENEFICIA L OWNER OF SHARES CARRYING NOT LESS THAN 20% OF THE VOTING POWER. THE T RIBUNAL HAS NOT GIVEN ANY FINDING WITH RESPECT TO EXACT SHAREHOLDING OF THE TRUSTEES IN THE ASSESSEE-COMPANY DURING THE RELEVANT PREVIOUS YEARS, AND WE HAVE NO MATERIAL BEFORE US TO INDICATE THE EXACT SHAREHOLDING OF THE TRUSTEES IN THE ASSESSEE-COMPANY DURING THE YEARS TO WHICH THESE APPEALS P ERTAIN. 31. SINCE CLAUSE (V) OF SECTION 40A (2) OF THE INCO ME TAX ACT REFERS TO A COMPANY, FIRM, ASSOCIATION OF PERSONS OR HINDU UNDIVIDE D FAMILY AND THE TRUST IS NOT A COMPANY, FIRM OR HUF. THE ONLY QUESTION WHICH COMES UP FOR CONSIDERATION IS AS TO WHETHER IT IS AN ASSOCIATION O F PERSONS WITHIN THE MEANING OF CLAUSE (V) OF SECTION 40A(2)(B) OF THE IN COME TAX ACT? THE TERM 'ASSOCIATION OF PERSONS' HAS NOT BEEN DEFINED IN IN COME TAX ACT, THOUGH IT IS MENTIONED INSECTION 2(31) OF THE ACT WH ICH DEFINES THE EXPRESSION 'PERSON' TO INCLUDE 'AN ASSOCIATION OF PERSONS' . IN CIT V. INDIRA BALAKRISHNA: 1960 (39) ITR 546, THE SUPREME COURT, W HILE ITAS 53/2000, 251/2007, 253/2007, 257/2007, 223/2002 247/2002, 45 /2005, 50/2005, 1207/2005,CONSIDERING WHAT CONSTITUTES AN 'ASS OCIATION OF PERSONS', OBSERVED THAT BY 'ASSOCIATION' MEANS 'TO JOIN A NY COMMON PURPOSE OR TO JOIN AN ACTION'. THEREFORE, ASSOCIATION OF PERSONS WOULD MEAN AN ASSOCIATION IN WHICH TWO OR MORE PERSONS JOIN W ITH A COMMON PURPOSE OR FOR A COMMON ACTION. THOUGH IN VIEW OF TH E EXPLANATION INSERTED BY FINANCE ACT, 2002 W.E.F. 1.4.2002 TO SEC TION 2(31) SUCH ASSOCIATION NEED NOT BE FORMED WITH THE OBJECT OF DER IVING INCOME PROFIT OR GAINS, IT IS DIFFICULT TO SAY THAT EITHER THE TRUSTE ES OR BENEFICIARIES OF A TRUST COME ALTOGETHER AND FORM AN ASSOCIATION FOR A CO MMON PURPOSE OR TO TAKE A COMMON ACTION. AS OBSERVED BY A DIVISION OF THIS COURT IN CIT V. SAE H EAD OFFICE MONTHLY PAID EMPLOYEES WELFARE TRUST (2004) 271 ITR 159, THE BENEFICIARIES DO NOT SET UP A TRUST AND THE TRUSTEES DERIVE THEIR AUTHOR ITY UNDER THE TERMS OF THE DEED OF THE TRUST. THEREFORE NEITHER THE TRUST EES NOR THE BENEFICIARIES COULD BE SAID TO HAVE COME TOGETHER FO R A COMMON PURPOSE. THE BENEFICIARIES MERELY ENJOY THE BENEFIT OF THE TR UST WHEREAS THE FUNCTION OF THE TRUSTEES IS TO ADMINISTER THE TRUST IN T ERMS OF THE PROVISIONS OF THE TRUST DEED. AS OBSERVED BY THIS COURT IN SAE HEA D OFFICE MONTHLY PAID EMPLYEES WELFARE TRUST (SUPRA), THE MERE FACT THA T THE BENEFICIARIES OR THE TRUSTEES ARE MORE THAN ONE, CANNOT LEAD TO A C ONCLUSION THAT THEY CONSTITUTED AN ASSOCIATION OF PERSONS. THIS COURT WAS OF T HE VIEW THAT IN THE ABSENCE OF ITAS 53/2000, 251/2007, 253/2007, 257/ 2007, 223/2002 247/2002, 45/2005, 50/2005, 1207/2005, ELEMENT OF V OLITION ON THE PART OF EITHER THE TRUSTEES OR BENEFICIARIES BY NO STRETCH O F IMAGINATION IT CANNOT BE CONSIDERED TO BE AN 'ASSOCIATION OF PERSONS'. 20 ITA NO.923/PN/13 IN CIT V. HARIVADAN TRIBHOVANDAS (1977) 106 ITR 494 (GUJ.), GUJARAT HIGH COURT WAS OF THE VIEW THAT VOLITION ON THE PART OF T HE MEMBERS OF THE ASSOCIATION IS AN ESSENTIAL INGREDIENT AND MERELY BECAUSE A COMBINATION OF INDIVIDUALS RECEIVES INCOME JOINTLY, WITHOUT ANYTHING FURTHER, THEY CANNOT BE REGARDED AS AN ASSOCIATION OF PERSONS. OBVIOUSLY, SUCH VOLITION IS MISSING IN THE CASE OF TRUSTEES AS WELL AS THE BENEFICIARI ES OF THE TRUST. IN MURUGESAN (G.) & BROTHERS V. COMMISSIONER OF INCOME TAX (1973) 088 ITR 0432, SUPREME COURT, INTER ALIA, OBSERVED THAT ASSOCIATION OF PERSONS CAN BE FORMED ONLY WHEN TWO OR MORE INDIVIDUALS VOLU NTARILY COMBINE TOGETHER FOR A CERTAIN PURPOSE AND HENCE VOLITION ON THE PART OF THE MEMBERS OF THE ASSOCIATION IS AN ESSENTIAL INGREDIENT. IN COMMISSIONER OF INCOME TAX V. VENU SURESH SANJAY TR UST: (1996) 221 ITR 649 (MADRAS), IT WAS HELD THAT IN THE CASE OF A DI SCRETIONARY TRUST, NEITHER THE TRUSTEES NOR THE BENEFICIARIES CAN BE CONSI DERED AS HAVING COME TOGETHER WITH THE COMMON PURPOSE OF EARNING INC OME. IT WAS OBSERVED THAT THE BENEFICIARIES HAVE NOT SET UP THE TR UST AND THE TRUSTEES DERIVE THEIR AUTHORITIES UNDER THE TERMS OF THE TRUST DEED. THEREFORE, NEITHER THE TRUSTEES NOR THE BENEFICIARIES COME TOGETH ER FOR A ITAS 53/2000, 251/2007, 253/2007, 257/2007, 223/2002 247 /2002, 45/2005, 50/2005, 1207/2005, COMMON PURPOSE, THEY AR E MERELY IN RECEIPT OF INCOME. IT WAS FURTHER HELD THAT THE MERE FACT THAT THE BENEFICIARIES OR THE TRUSTEES, BEING REPRESENTATIVE-ASSESSE ES, ARE MORE THAN ONE, CANNOT LEAD TO THE CONCLUSION THAT THEY CO NSTITUTE 'AN ASSOCIATION OF PERSONS'. WE, THEREFORE, HOLD THAT SINCE MEHTA CHARITABLE TRUST IS NOT 'ASSOCIATION OF PERSONS' WITHIN THE MEANING OF SECTION 40(A)(2) OF IN COME-TAX ACT, THE AFORESAID PROVISION IS NOT ATTRACTED TO THE TRANSACTIO N WHICH IS THE SUBJECT- MATTER OF THESE APPEALS. ACCORDINGLY, THE HONBLE HIGH COURT HELD THAT SINCE THE TRUST IS NOT AN ASSOCIATION OF PERSONS THE PROVISIONS OF SECTION 40A(2) OF T HE I.T. ACT ARE NOT ATTRACTED TO THE TRANSACTION WITH THE TRUST B Y THE ASSESSEE COMPANY. 35. SINCE THE FACTS OF THE INSTANT CASE ARE IDENTICAL TO T HE CASE DECIDED BY THE HONBLE DELHI HIGH COURT CITED (SUPRA), THERE FORE, IN ABSENCE OF ANY DISTINGUISHABLE FEATURES BROUGHT TO OUR NO TICE BY THE LD. DEPARTMENTAL REPRESENTATIVE, WE HOLD THAT THE PROVISIO NS OF SECTION 40A(2) (B) ARE NOT ATTRACTED. FURTHER, SIMILAR EXPEN DITURE WAS 21 ITA NO.923/PN/13 ALLOWED IN THE PRECEDING YEARS. IN VIEW OF THE ABOVE DISCUSSION, WE SE T ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO DELET E THE ADDITION. GROUNDS OF APPEAL NO.7 AND 8 BY THE ASSESSEE ARE ACCO RDINGLY ALLOWED. 36. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20-05-2016. SD/- SD/- ( SUSHMA CHOWLA ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; DATED : 20 TH MAY , 2016. LRH'K ' (*+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. % ( ) - THE CIT(A)-III, PUNE 4. % S / THE CIT-III, PUNE 5. ( ++, , , , IQ.KS / DR, ITAT, A PUNE; 6. 0 / GUARD FILE. / BY ORDER , // ( + //TRUE COPY //// 23 + , / SR. PRIVATE SECRETARY ,, IQ.KS / ITAT, PUNE