Purvanchal Bank, Gorakhpur V. Dy. CIT, Range - 02, Gorakhpur

MA 4/VNS/2019

AI Insights

The case involves Purvanchal Bank, Gorakhpur, U.P., which filed two Miscellaneous Applications (M.A. No. 03/VNS/2019 and M.A. No. 04/VNS/2019) against the Deputy Commissioner of Income-tax, Gorakhpur, U.P. The applications were related to the disallowance of interest expenses under Section 40(a)(ia) and disallowance under Section 14A read with Rule 8D of the Income-tax Act, 1961 for the assessment years 2010-11 and 2012-13 respectively. The Tribunal had earlier set aside the matter to the file of the Assessing Officer for fresh adjudication regarding the disallowance under Section 40(a)(ia). For the disallowance under Section 14A, the Tribunal recalled its earlier order and restored the grounds of appeal for re-examination. The Tribunal's decision was influenced by the need to verify the compliance with procedural requirements and the substantive application of tax laws concerning the deductions claimed by the bank.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 129847 (ITAT-VARANASI)
• Duration Of Justice: 3 year(s) 6 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-11-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-08-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 06-05-2019
• Other Referred Cases: ACIT vs. Vireet Investment (P) Ltd., South India Bank Ltd. v. CIT, PCIT v. Sintex Industries Limited
• Laws Referred To: Income-tax Act, 1961, Income-tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SINGH
• Assessee Lawyers: SALABH SINGH; MERELY ACCEPTING CONTENTIONS
• Keywords: Gift; Earning of tax free income; TDS; Rule 8D; Set aside
• Section: 2; 14A; 40(a)(ia); 254(2); 44AB; 194A; 194K

Judgement Text

M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 1 IN THE INCOME TAX APPELLATE TRIBUNAL VARANASI CIRCUIT BENCH,VARANASI BEFORE SHRI.VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER Miscellaneous Application (M.A.) No.03/VNS/2019 & 04/VNS/2019 [Arising out of ITA No.256/Alld/2017 & 258/Alld/2017] Assessment Year: 2010-11 &2012-13 Purvanchal Bank NH-28, Kasia Road, Mohaddipur Gorakhpur-273017, U.P. v. The Deputy Commissioner of Income- tax, Range-1 Aayakar Bhawan, Civil Lines Gorakhpur-273001, U.P. PAN: AADCP7587M (Appellant) (Respondent) Appellant by: Mr. Salabh Singh, Advocate Respondent by: Shri A K Singh, Sr. DR Date of hearing: 26.08.2022 Date of pronouncement: 18.11.2022 O R D E R PER: SHRI RAMIT KOCHAR, ACCOUNTANTMEMBER: These two Miscellaneous Application’s bearing MA No. 03/VNS/2019 arising out of ITA no. 256/Alld/2017 for assessment year(ay) 2010-11 and secondly MA No. 04/VNS/2019 arising out of ITA no. 258/Alld/2017 for assessment year(ay) 2012-13 respectively , have been filed by assessee against common appellate order dated 13.12.2018 , inter-alia, in ITA no. 256 &258/Alld/2017 for assessment year’s 2010-11 and 2012-13 respectively passed by Income-Tax Appellate Tribunal, Circuit Bench, Varanasi (hereinafter called “the tribunal”) adjudicating appeals filed by Revenue. 2. First, we shall take up assessee’s MA bearing MA No. 03/Vns/2019 for ay: 2010-11. The assessee has two grievances in the aforesaid MA filed by it with tribunal. The first M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 2 grievance of the assessee in this MA concerns itself with disallowance of Rs. 98,66,949/- u/s 40(a)(ia) of the Income-tax Act, 1961. It so happened that the learned Assessing Officer while framing assessment u/s 143(3)(ii) of the 1961 Act for assessment year 2010-11, made, inter-alia, disallowance of Rs. 98,66,949/- by invoking provisions of Section 40(a)(ia) of the 1961 Act, on the grounds that 23 branches of the assessee’s bank has not obtained Form No. 15G/15H from the depositors, although interest over Rs. 10,000/- on Term Deposit and Special Term Deposit in each account totaling to Rs. 98,66,949/- was paid by these branches , and also that no income-tax was deducted at source (TDS) as is required under the provisions of Section 194A of the 1961 Act under Chapter XVIIB of the 1961 Act, wherein the ld. CIT(A) while adjudicating first appeal filed by the assessee deleted the aforesaid addition as was made by the AO. When the matter reached tribunal at the behest of the Revenue, the tribunal after appreciation of entire material/evidence on record , set aside the matter to the file of AO for fresh adjudication vide appellate order dated 13.12.2018, by holding as under: “9. Coming to disallowance of Rs. 98,66,949/- , a perusal of the assessment order clearly shows that this disallowance was in respect of 23 branches , where no forms 15G/H for the interest paid over Rs. 10,000/- per account were obtained/received nor was the TDS deducted thereon. However, on perusal of the impugned order of the ld. CIT(A), we find that the assessee had raised a contention before him that the Forms 15G/H were obtained by the concerned branches and were dispatched directly by them to the Commissioner of Income- tax . The ld. CIT(A) appears to have accepted this contention of the assessee without examining its veracity. It is notable that no such fact was unfolded by the assessee before the Assessing Officer. Before us also, no such evidence is brought on record on behalf of the assessee to justify the acknowledgment of Form 15G/H or dispatch thereof by the respective branches directly to the Commissioner of Income-tax. Therefore, acceptance of assessee’s contention without any verification , in our considered opinion is not justified. We accordingly think it appropriate in the interest of justice that the matter should go back to the file of Assessing Officer to verify the above contention of the assesse and to decide the issue afresh. In case the receipt of alleged Forms 15G/H and their dispatch directly to the Commissioner is found proved , no disallowance u/s 40(a)(ia) is liable to be made as per various decisions relied on behalf of the assessee. However, if it is found otherwise, the Assessing Officer M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 3 shall be at liberty to decide the issue in accordance with law. The assessee is directed to produce credible evidence as to substantiate its above contention. Needless to say, the assessee shall be given reasonable opportunity of being heard . Accordingly, this ground of appeal is partly allowed for statistical purposes.” Thus, as could be seen that the tribunal restored the matter to the file of the AO for verification of the claim of the assessee as to acknowledgment of receipt of Form No. 15G/15H by the 23 branches or dispatch thereof of Form No. 15G/Form No. 15H by these 23 branches directly to learned Commissioner of Income-tax, wherein interest of Rs. 10000/- per account has been paid on Term Deposit and Special Term Deposit . The AO has recorded categorical finding that these 23 branches have not obtained Form No. 15G / Form No. 15H from the depositors of Term Deposit and Special Term Deposit wherein interest of more than Rs. 10000 per account has been paid aggregating to Rs. 98,66,949/- , nor any income-tax was deducted at source u/s 194A, and hence disallowance was made by AO by invoking provisions of Section 40(a)(ia). The tribunal observed has also observed in its appellate order after appreciating material/evidences on record that the ld. CIT(A) granted relief to the assessee by merely accepting contentions of the assessee that Form No. 15G/Form No. 15H were obtained by these 23 Branches and were directly dispatched by these branches to ld. Commissioner of Income-tax, without verifying evidences on record, and accordingly the tribunal restored the matter to AO for verification of the claim of the assessee as to acknowledgment of receipt of Form No. 15G/15H by the 23 branches or dispatch thereof of Form No. 15G/Form No. 15H by these 23 branches directly to learned Commissioner of Income-tax, wherein interest of Rs. 10000/- per account has been paid on Term Deposit and Special Term Deposit . Now, the assessee is aggrieved by the decision of tribunal on this issue , and this MA is filed u/s 254(2) of the 1961 Act. Before proceeding further, it will be profitable at this stage to reproduce the relevant provisions of the 1961 Act and Income-tax Rules, 1962(as were applicable at relevant times) , which are reproduced hereunder: Section 40(a)(ia) of Income-tax Act, 1961 M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 4 Amounts not deductible. 40. Notwithstanding anything to the contrary in sections 30 to [38], the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession",— (a) in the case of any assessee— **** **** (ia) any interest, commission or brokerage, 70 [rent, royalty,] fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), 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,— (A) in a case where the tax was deductible and was so deducted during the last month of the previous year, on or before the due date specified in sub-section (1) of section 139; or (B) in any other case, on or before the last day of the previous year:] [Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted— (A) during the last month of the previous year but paid after the said due date; or (B) during any other month of the previous year but paid after the end of the said previous year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.] **** **** Section 194A of Income-tax Act, 1961 Interest other than "Interest on securities". 194A.(1) Any person , not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income [by way of interest on securities], shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force : [Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section.] M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 5 [Explanation.—For the purposes of this section, where any income by way of interest as aforesaid is credited to any account, whether called "Interest payable account" or "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.] (2) [Omitted by the Finance Act, 1992, w.e.f. 1-6-1992.] (3) The provisions of sub-section (1) shall not apply— [(i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person referred to in sub-section (1) to the account of, or to, the payee, [does not exceed— (a) ten thousand rupees, where the payer is a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution, referred to in section 51 of that Act); (b) ten thousand rupees, where the payer is a co-operative society engaged in carrying on the business of banking; (c) ten thousand rupees, on any deposit with post office under any scheme framed by the Central Government and notified by it in this behalf; and (d) five thousand rupees in any other case]:] [Provided that in respect of the income credited or paid in respect of— (a) time deposits with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or (b) time deposits with a co-operative society engaged in carrying on the business of banking; (c) deposits with a public company which is formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes [and which is eligible for deduction under clause (viii) of sub-section (1) of section 36] [***], [* * *] the aforesaid amount shall be computed with reference to the income credited or paid by a branch of the banking company or the co-operative society or the public company, as the case may be;] (ii) [***] (iii) to such income credited or paid to— (a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or (b) any financial corporation established by or under a Central, State or Provincial Act, or M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 6 (c) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or (d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or (e) any company or co-operative society carrying on the business of insurance, or (f) such other institution, association or body [or class of institutions, associations or bodies] which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette; [(iv) to such income credited or paid by a firm to a partner of the firm;] (v) to such income credited or paid by a co-operative society [to a member thereof or] to any other co-operative society;] (vi) to such income credited or paid in respect of deposits under any scheme framed by the Central Government and notified by it in this behalf in the Official Gazette; [(vii) to such income credited or paid in respect of deposits (other than time deposits made on or after the 1st day of July, 1995) with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (viia) to such income credited or paid in respect of,— (a) deposits with a primary agricultural credit society or a primary credit society or a co-operative land mortgage bank or a co-operative land development bank; (b) deposits (other than time deposits made on or after the 1st day of July, 1995) with a co-operative society, other than a co-operative society or bank referred to in sub- clause (a), engaged in carrying on the business of banking;] [(viii) to such income credited or paid by the Central Government under any provision of this Act or the Indian Income-tax Act, 1922 (11 of 1922), or the Estate Duty Act, 1953 (34 of 1953), or the Wealth-tax Act, 1957 (27 of 1957), or the Gift-tax Act, 1958 (18 of 1958), or the Super Profits Tax Act, 1963 (14 of 1963), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), or the Interest-tax Act, 1974 (45 of 1974);] [(ix) to such income credited or paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees;] [(x) to such income which is paid or payable by an infrastructure capital company or infrastructure capital fund or a public sector company [or scheduled bank] in relation to a zero coupon bond issued on or after the 1st day of June, 2005 by such company or fund or public sector company [or scheduled bank].] [Explanation 1.—For the purposes of clauses (i), (vii) and (viia), "time deposits" means deposits (excluding recurring deposits) repayable on the expiry of fixed periods. [(4) The person responsible for making the payment referred to in sub-section (1) may, at the time of making any deduction, increase or reduce the amount to be deducted under this section M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 7 for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year.] Section 197A of Income-tax Act, 1961 No deduction to be made in certain cases. 197A.(1) Notwithstanding anything contained in [***] section 194[***] [or section 194EE], no deduction of tax shall be made under any of the said sections in the case of an individual, who is resident in India, if such individual furnishes to the person responsible for paying any income of the nature referred to in [***]section 194[[***] or, as the case may be, section 194EE], a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that [the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil.] [(1A) Notwithstanding anything contained in [section 193 or] section 194A or section 194K, no deduction of tax shall be made under [any] of the said sections in the case of a person (not being a company or a firm), if such person furnishes to the person responsible for paying any income of the nature referred to in [section 193 or] section 194A or section 194K, as the case may be, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil.] [(1B) The provisions of this section shall not apply where the amount of any income of the nature referred to in sub-section (1) or sub-section (1A), as the case may be, or the aggregate of the amounts of such incomes credited or paid or likely to be credited or paid during the previous year in which such income is to be included exceeds the maximum amount which is not chargeable to income-tax.] [(1C) Notwithstanding anything contained in section 193 or section 194 or section 194A or section 194EE or section 194K or sub-section (1B) of this section, no deduction of tax shall be made in the case of an individual resident in India, who is of the age of sixty-five years or more at any time during the previous year [***], if such individual furnishes to the person responsible for paying any income of the nature referred to in section 193 or section 194 or section 194A or section 194EE or section 194K, as the case may be, a declaration in writing in duplicate in the prescribed form 92 and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil.] 93 [(1D) Notwithstanding anything contained in this section, no deduction of tax shall be made by the Offshore Banking Unit from the interest paid— (a) on deposit made on or after the 1st day of April, 2005, by a non-resident or a person not ordinarily resident in India; or (b) on borrowing, on or after the 1st day of April, 2005, from a non-resident or a person not ordinarily resident in India. Explanation.—For the purposes of this sub-section "Offshore Banking Unit" shall have the same meaning as assigned to it in clause (u) of section 2 of the Special Economic Zones Act, 2005 94 .] M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 8 [(1E) Notwithstanding anything contained in this Chapter, no deduction of tax shall be made from any payment to any person for, or on behalf of, the New Pension System Trust referred to in clause (44) of section 10.] (2) The person responsible for paying any income of the nature referred to in sub-section (1) [or sub-section (1A)] [or sub-section (1C)] shall deliver or cause to be delivered to the Chief Commissioner or Commissioner] one copy of the declaration referred to in sub-section (1)[or sub-section (1A)] [or sub-section (1C)] on or before the seventh day of the month next following the month in which the declaration is furnished to him.] Rule 29C of Income-tax Rules, 1962 Declaration by person claiming receipt of certain incomes without deduction of tax. 29C. (1) A declaration under sub-section (1)by an individual or under sub-section (1A) of section 197A by a person(not being a company or firm) shall be in Form No. 15G and shall be verified in the manner indicated therein. (1A) A declaration under sub-section (1C) of section 197A by an individual resident in India, who is of the age of sixty-five or more at any time during the previous year and is entitled to a deduction from the amount of income-tax on his total income referred to in section 88B shall be in Form No. 15H and shall be verified in the manner indicated therein. (2) The declaration referred to in sub-rule (1)or sub-rule (1A) shall be furnished in duplicate tothe person responsible for paying the “interest on securities” or dividend or interest other than “interest on securities” or, income in respect of units or, as the case may be , any amount referred to in clause (a) of sub-section (2) of section 80CCA. (3) The person referred to in sub-rule (2) shall deliver or cause to be delivered to the Chief Commissioner or Commissioner, one copy of the declaration referred to in sub-rule (1) or sub-rule (1A) on or before the seventh day of the month next following the month in which declaration is furnished to him. Explanation –For the purposes of sub-rule (3), the Chief Commissioner or the Commissioner means the Chief Commissioner or Commissioner to whom the Assessing Officer having jurisdiction to assess the person referred to in sub-rule (2) is subordinate.” Perusal of the above relevant provisions of the 1961 Act read with 1962 Rules, makes it amply clear that in case interest exceeding Rs. 10000/- per account is paid by a Branch of a banking company on Term Deposits, there is a requirement of deduction of income-tax at source at prescribed rates under the provisions of Section 194A of the 1961 Act, unless M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 9 the specified person submits Form No. 15G/Form No.15H in duplicate to the person responsible for making payment of interest, and the banking company shall deliver or caused to be delivered one copy of declaration to learned CCIT/CIT to which AO is sub- ordinate on or before seventh day of the month next following the month in which declaration is furnished to it. It is an admitted position in the instant case, that No TDS was deducted u/s 194A of the 1961 Act by these 23 branches of the assessee bank on the aforesaid interest of Rs. 98,66,949/- on Term Deposit or Special Term Deposits. Now, the assessee is claiming that it is not for the AO to find out whether Form No. 15G/Form No. 15H was submitted or not before allowing deduction of interest expenses and Section 40(a)(ia) cannot be invoked by AO , as the said forms are required to be submitted to learned CCIT/CIT. It is also claimed that the bank is not required to produce these Form No. 15G/15H before AO .Thus , it was claimed that the AO has no authority to ask for the Form No. 15G/15H. The ld. Sr. DR on the other hand submitted that Section 40(a)(ia) is a charging provision and the assessee has to demonstrate that either TDS u/s 194A was duly deducted and deposited with Government on interest on Term Deposit or Special Deposit paid by the assessee as is required u/s 194A, or otherwise assessee is required to produce Form No. 15G/Form No. 15H. It was submitted by ld. Sr. DR that onus is on the assessee that it duly complied with provisions of Section 40(a)(ia) read with Section 194A and 197A, as it is the assessee who is claiming the deduction on account of interest expenses. The ld. Sr. DR drew our attention to Rule 29C of the Income-tax Rules, 1962 , as was in force at the relevant time, and submitted that declaration was required to be obtained by Branch of the assessee bank, in duplicate out of which one copy is to be forwarded to learned CCIT/CIT of which AO is subordinate to on or before seventh of the next month when the declaration was received by the branch of the Bank, and one copy is to be retained by the assessee. It was submitted that the assessee never submitted copies of Form No. 15G/Form 15H to learned CCIT/CIT with respect to these 23 branches wherein interest exceeding Rs. 10000 was paid per account on Term Deposit/Special Term Deposit , aggregating to Rs. 98,66,949/- . The ld. Sr. DR reiterated M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 10 that onus was on the assessee which has not been discharged even before tribunal at this stage of MA. It was also submitted by ld. Sr. DR that scope of interference u/s 254(2) is limited to mistake apparent from record, and once tribunal has passed a well reasoned speaking order after appreciating evidence on record, then it cannot be recalled within the limited mandate of Section 254(2) of the 1961 Act. It was submitted that tribunal after considering entire material on record, has rightly set aside the matter to AO for verification of the contentions of the assessee, The ld. Counsel for the assessee submitted that the assessee has not taken form no 15G/15H with respect to these 23 branches. We have observed that the statute prescribe,inter-alia, that before allowing interest expenditure u/s 40(a)(ia), the assessee , inter-alia, is required to comply with provisions of Section 194A read with Section 197A which stipulate that the assessee is required to deduct TDS as provided u/s 194A of the 1961 Act on interest paid on Term Deposits if the interest exceeds Rs. 10,000/-, while Section 197A read with Rule 29C provides that in case the specified deductee furnishes declaration in Form No. 15G/Form 15H in duplicate to the assessee and assessee forward one copy to ld. CCIT/CIT to which AO is sub-ordinate , then no TDS is required to be deducted. Section 197A starts with non obstante clause and stipulates , inter-alia, that notwithstanding anything contained in Section 194A , the deductor shall not be required to deduct TDS if the declaration in prescribed forms namely Form No. 15G and 15H is submitted. The limit of Rs. 10,000/- is required to be computed branch wise for the year under consideration. The said declaration in Form No. 15G/15H is required to be submitted by eligible declarant to the Branch of the Bank where Time Deposit is held by the declarant, and the said declaration is to be submitted in duplicate. Once the branch of the bank receives the declaration in Form No. 15G/15H from eligible declarants , then one copy is to be forwarded by the Branch of the assessee bank to learned CCIT/CIT to which AO is subordinate , by seventh of the next month, and one copy is to be retained by the said Branch of the bank. The assessee is claiming deduction of interest expenses exceeding Rs. 10000/- per account aggregating to the tune of Rs. 98,66,949/- paid on term deposits by these 23 M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 11 branches on which admittedly no TDS u/s 194A was deducted, and the onus is squarely on the assessee to prove that it complied with the relevant provisions of Section 197A of the 1961 Act read with Rule 29C. It is admitted position that payment of interest exceeding Rs. 10000/- per account on Term Deposit was paid aggregating to Rs. 98,66,949/-, by these 23 branches of the assessee, and no TDS as is required u/s 194A was deducted at source by these 23 branches although the same was required to be deducted u/s 194A. Even before us , the ld. Counsel for the assessee is not able to demonstrate any evidence on record to substantiate that the assessee has obtained Form No. 15G/15H with respect to these interest payments aggregating to Rs. 98,66,949/- , or has evidence to substantiate that the same were forwarded by these 23 branches ( or even by Head Office) of the assessee to learned CCIT/CIT to which AO is subordinate, rather the asseessee has admitted before ld CIT(A) in the details(refer page 36 of ld. CIT(A) ) that 23 branches have not taken Form 15G/ Form No. 15h with aggregate interest payment of Rs. 98,66,949/-. The tribunal after appreciating entire material/evidence on record passed the impugned order setting aside matter to the file of the AO for verification, and no fault can be found with the said order. The assessee can always come forward and submit details of Form No. 15G and 15H , before the AO in set aside remand proceedings, and no prejudice is caused to the assessee by the aforesaid order passed by tribunal keeping in view that there is complete absence of evidence to demonstrate as to Form No. 15G/15H with respect to aforesaid interest payments to the tune of Rs. 98,66,949/-. Much is also said by ld. Counsel for the assessee that relief was allowed in earlier years , and keeping in view principles of consistency , the relief should be granted to the assessee. We would like to remind ld. Counsel for the assessee that principles of res judicata are not applicable to tax-proceedings, and there is no estoppel against law. The taxing statutes are to be strictly construed and there is no equity in taxing statute, and if the subject falls within the four corners of taxing statute, the person must be taxed howsoever , the harsh consequences may be. M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 12 The operating part of the order of the tribunal on this issue for the impugned assessment year , is reproduced hereunder :- “9. Coming to disallowance of Rs. 98,66,949/- , a perusal of the assessment order clearly shows that this disallowance was in respect of 23 branches , where no forms 15G/H for the interest paid over Rs. 10,000/- per account were obtained/received nor was the TDS deducted thereon. However, on perusal of the impugned order of the ld. CIT(A), we find that the assessee had raised a contention before him that the Forms 15G/H were obtained by the concerned branches and were dispatched directly by them to the Commissioner of Income- tax . The ld. CIT(A) appears to have accepted this contention of the assessee without examining its veracity. It is notable that no such fact was unfolded by the assessee before the Assessing Officer. Before us also, no such evidence is brought on record on behalf of the assessee to justify the acknowledgment of Form 15G/H or dispatch thereof by the respective branches directly to the Commissioner of Income-tax. Therefore, acceptance of assessee’s contention without any verification , in our considered opinion is not justified. We accordingly think it appropriate in the interest of justice that the matter should go back to the file of Assessing Officer to verify the above contention of the assesse and to decide the issue afresh. In case the receipt of alleged Forms 15G/H and their dispatch directly to the Commissioner is found proved , no disallowance u/s 40(a)(ia) is liable to be made as per various decisions relied on behalf of the assessee. However, if it is found otherwise, the Assessing Officer shall be at liberty to decide the issue in accordance with law. The assessee is directed to produce credible evidence as to substantiate its above contention. Needless to say, the assessee shall be given reasonable opportunity of being heard . Accordingly, this ground of appeal is partly allowed for statistical purposes.” The above order of the tribunal is well reasoned and speaking order, and the assessee is not able to demonstrate any mistake apparent from record in the aforesaid appellate order passed by tribunal, which can call for any interference by us by invoking limited mandate of Section 254(2). Thus, this issue raised by the assessee in MA lacks merit and is dismissed We order accordingly. 3. The second issue raised by assessee in this MA No. 03/Vns/2019 arising out of ITA No. 256/Alld/2017 for assessment year 2010-11, relates to disallowance u/s 14A of the M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 13 1961 Act read with Rule 8D of the 1962 Rules. During assessment proceedings, the AO observed that the assessee made investment in assets being Mutual Funds wherein income earned shall be exempt from tax, to the tune of Rs. 20 crores. The assessee has earned exempt income to the tune of Rs. 1,10,90,000/- being dividend on these investments in Mutual Fund . The AO also observed that the assessee has claimed interest payments to the tune of Rs. 135,56,97,000/- against taxable income. The AO observed that the assessee has own capital to the tune of Rs. 405,05,49,000/- and was having Rs. 3817,91,35,000/- on account of interest bearing funds ( Deposits from Public and Loan from Banks) . The AO was of the view that the assessee has invested interest bearing funds in the investments in the assets capable of generating exempt income. The assessee did not made any suo-motu disallowance of expenditure u/s 14A of the 1961 Act. The AO asked assessee to explain as to applicability of Section 14A, and after considering the reply of the assessee, the AO was of the view that mixed funds were used to invest in assets capable of generating exempt income. The AO invoked Rule 8D of the 1962 Rules, and made total disallowance u/s 14A read with Rule 8D to the tune of Rs. 71,07,275/- , wherein disallowance of Rs. 62,06,305/- was made by invoking Rule 8D(2)(ii) and Rs. 9,00,970/- disallowance was made under Rule 8D(2)(iii) , both read with Section 14A. The assessee being aggrieved by the assessment framed by AO , filed first appeal with learned CIT(A), who deleted the entire addition as was made by AO, by observing that the assessee’s own capital (capital + Reserves and Surplus) was to the tune of Rs. 405.05 crores , while investment in Mutual Funds is only to the tune of Rs. 20 crores, and hence presumption will apply that the assessee has made investment in Mutual Funds having exempt income , out of its own non-interest bearing funds. The ld. CIT(A) also noted that while adjudicating appeal for the immediately preceding year ay: 2009-10, the ld. CIT(A) has deleted the addition as was made by AO u/s 14A read with Rule 8D, and the Revenue has not filed appeal with tribunal against the appellate order passed by ld. CIT(A) for ay: 2009-10. The ld. CIT(A) also observed that similar additions for ay: 2011-12 were deleted by ld. PCIT, and while framing assessment for ay: 2014-15 the AO has himself M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 14 not made any such addition in the assessment order. The ld. CIT(A) relied upon several judicial precedents as stood mentioned in his order at page 42-44, while deleting the entire addition of Rs. 71,07,275/- made by AO u/s 14A read with Rule 8D of the 1962 Rules. The matter reached tribunal at the behest of Revenue, and tribunal set aside the matter to the file of AO for denovo adjudication , by holding as under , vide appellate order dated 13.12.2018 :- “10. Regarding the disallowance u/s. 14A, we observe that during the year, the assessee has claimed exempt income of Rs.1,10,90,000/- but the assessee did not show suo moto disallowance of expenditure towards earning of exempt income. The Assessing Officer has applied section 14A read with Rule 8D and disallowed the expenditure of Rs.71,07,275/- as per formula provided under rule 8D. The contention of the assessee has been that he had sufficient own funds to take care of the investment made. The Assessing Officer appears to have calculated the disallowance as per Rule 8D(2)(iii) observing that interest bearing funds have been diverted to such investment, the income earned from which does not form part of the total income. He also observed that the proportionate amount of expenditure relatable to exempt income must be disallowed u/s. 14A. We however, find that the Assessing Officer while computing the disallowance has considered average total investment appearing on the first day and last day of the financial year, which in our opinion is not justified. These investments may also include such investments from which no exempt income would have been earned by the assessee. As is clear from the Rule itself, the average of only such investments have to be taken into account, which yielded the income not forming part of the total income. Therefore, the AO was required to work out the average of such investment, the income from which did not form part of the total income instead of total value of investment. For this view, we stand fortified by the decision of Special Bench in the case of ACIT vs. Vireet Investment (P) Ltd., (2017) 82 Taxman.com 415 (Delhi Trib.) (SB). None of the parties before us, however, have laid any details to examine as to which of the investments have yielded such income not forming form part of the total income. We, therefore, restore the matter back to the file of the Assessing Officer for calculating the disallowance u/s. 14A read with Rule 8D afresh, in the light of observations made in the body of this order above. Accordingly, the ground relating to this issue deserves to be allowed for statistical purposes. Accordingly, the appeal for the Assessment Year 2010-11 is partly allowed se noted above.” Now, the assessee is aggrieved by the said appellate order dated 13.12.2018 passed by tribunal, and MA has been filed by the assessee. The main contention of the assessee in this MA is that undisputedly it has its own capital (capital+ Reserves and Surplus) of Rs. 405.05 crores which are non interest bearing funds of the assessee, while investment M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 15 made by the assessee in SBI Mutual Fund is to the tune of Rs. 20 crores , on which income by way of dividends are exempt from income-tax. It is claimed that the dividend income earned during the year under consideration from aforesaid Mutual Funds is to the tune of Rs.1,10,9000/- which was claimed exempt and no suo motu disallowance of expenditure u/s 14A was made. It is claimed that when interest free funds available with the assessee are to the tune of Rs. 405.05 crores and investments in Mutual Funds is only to the tune of Rs. 20 crores( which is capabale of generating exempt income) , presumption shall apply that the assessee made investment in such Mutual Funds out of its own interest free funds, and no disallowance of interest expenses u/r 8D(2)(ii) read with Section 14A can be made. It is claimed that the tribunal erred in not considering large number of judicial precedents including decision of Hon’ble Apex Court and Hon’ble High Court apart from co-ordinate Benches of tribunal , while setting aside the matter to the file of AO with directions which are contrary to these judicial precedents.It is claimed that ld. CIT(A) while adjudicating appeal for the immediately preceding year ay: 2009-10, has deleted the addition as was made by AO u/s 14A read with Rule 8D on similar facts, and the Revenue has not filed appeal with tribunal against the appellate order passed by ld. CIT(A) for ay: 2009-10. It is also claimed that similar additions for ay: 2011-12 were deleted by ld. PCIT, and while framing assessment for ay: 2014-15 , the AO has himself not made any such addition in the assessment order, on the similar facts as are prevailing in the year under consideration . It is also claimed that the AO has applied Section 14A read with Rule 8D in an mechanical manner. The ld. Sr. DR relied on Section 14A(3) and submitted that additions were made by AO by invoking Rule 8D(2)(ii) and 8D(2)(iii) read with Section 14A. The ld. Sr DR took us to assessment order to submit that additions were made under Rule 8D(2)(ii) and 8D(2)(iii) read with Section 14A. The ld. Counsel for the assessee relied upon decision of Hon’ble Supreme Court in the case of South India Bank Ltd. v. CIT , reported in (2021) 321 CTR (SC) 465, PCIT v. Sintex Industries Limited (2018) 93 taxmann.com 24(SC)( SLP dismissed against Hon’ble Gujarat High court decision in CIT v. Sintex Industries Limited , (2017) M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 16 78 taxmann.com 171(Guj.)), and other judicial precedents to support its view as per paper book filed with tribunal in these MA proceedings listed at serial no. 23-41.We have observed that ld. CIT(A) while adjudicating appeal on this issue in favour of the assessee have also referred to judicial precedent at page number 42-44 of its appellate order. We have also observed that additions were made by AO under two limbs of Rule 8D(2)(ii) and 8D(2(iii) by invoking provisions of Section 14A , but while adjudicating appeal , the tribunal has only adverted to Rule 8D(2)(iii). Further , tribunal has also not adverted to various case laws relied by ld. CIT(A) while granting relief to the assessee , as tribunal has not adverted in its order as to why presumption will not apply that the assessee has utilized its own interest free funds to make investment in SBI Mutual Fund. The own interest free funds available with the assessee being capital + reserves and surplus were to the tune of Rs. 405.05 crores, and investments in SBI Mutual Fund was to the tune of Rs. 20 crores. The tribunal has , inter-alia, observed in its order that: ‘....The Assessing Officer appears to have calculated the disallowance as per Rule 8D(2)(iii) observing that interest bearing funds have been diverted to such investment, the income earned from which does not form part of the total income....’. The AO in its assessment order/para 6.4 observed that ‘6.4 I have carefully considered the assessee submission and facts of the issue. There is lot of transaction in the accounts of the assessee. There is blending of funds also, therefore claim of the assessee cannot be acceptable that investment are made out of assessee’s own capital..’ . Thus, the AO is speaking of utilization of mixed use funds, while tribunal has observed that interest bearing funds were diverted for making investment in Mutual Funds, the income earned from which does not form part of the total income. If that be so then M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 17 tribunal being last fact finding authority was required to give finding of its own on actual diversion of interest bearing funds for making investment in Mutual Funds , income of which earned shall not form part of the total income. Thus, keeping in view the entire discussion in this order, we hold that there is a mistake apparent from record and tribunal order on issue needs to be recalled . Thus, we recall the order of the tribunal so far as adjudication of disallowance of expenditure u/s 14A of the 1961 Act is concerned , and accordingly restore Ground No. 3 and 4 raised by Revenue in its appeal filed with tribunal. Thus, following grounds of appeal raised by Revenue are restored back to the file of tribunal for fresh adjudication, on merits in accordance with law: “3. The Ld. CIT(A) has erred in law and fact in observing that sufficient surplus fund leads to automatic presumption for investment out of such fund and shifted onus on A.O. to disprove whereas onus was on assessee to prove it. 4. The Ld. CIT(A) has also erred in law and fact in misappreciating that once provision of section 14A is attracted there is no escape route to calculate disallowance Under Rule 8D.” The Registry is directed to issue notice to both the parties in due course fixing the appeal in ITA no. 256/Alld/2017 for 2010-11 , for adjudication afresh of aforesaid grounds of appeal no. 3 and 4 raised by Revenue in its appeal filed with tribunal, on merit in accordance with law. We order accordingly. 4. In the result, MA. No. 03/VNS/2019 arising out of ITA no. 256/Alld/2017, for ay: 2010-11 is partly allowed, in the manner indicated above . We order accordingly. MA No. 4/Vns/2019 arising out of ITA No. 258/Alld/2017 for assessment year 2012-13 M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 18 5. In this MA No. 4/Vns/2019 arising out of ITA No. 258/Alld/2017 for ay: 2012-13 filed by the assessee with tribunal , and only grievance of assessee is with respect to adjudication of issue with respect to disallowance u/s 14A read with Rule 8D. The tribunal while adjudicating appeal for ay: 2012-13 vide common order dated 13.12.2018, has observed as under: “11. Adverting to appeal for Assessment Year 2012-13, the only issue involved in it is respect to disallowance u/s 14A read with Rule 8D, on the identical facts and circumstances as prevailing in appeal for A.Y.2010-11. Therefore, our findings reached in appeal for A.Y. 2010-11 shall apply mutatis mutandis in this appeal too. Accordingly, the matter in this appeal is also restored to the file of Assessing Officer for deciding the same afresh in view of our observations given in appeal for A.Y.2010-11.As a result, the appeal for A.Y. 2012-13 deserves to be allowed for statistical purposes” As could be seen from the order of tribunal for ay: 2012-13, the tribunal has observed that facts so far as disallowance of expenditure u/s 14A read with Rule 8D are concerned are identical in assessment year 2012-13 to the facts as prevailing in assessment year 2010-11, and the decision of tribunal for ay: 2010-11 was held by tribunal to apply mutatis mutandis to the decision for ay: 2012-13. Both the parties before us in this MA have also agreed that facts are identical in the impugned assessment year 2012-13 vis-à- vis facts as prevailing in assessment year 2010-11, so far as disallowance of expenditure u/s 14A read with Rule 8D are concerned. Thus, our decision at para number 3 in this MA order concerning disallowance of expenditure u/s 14A read with Rule 8D for ay: 2010-11 shall apply mutatis mutandis to this MA for ay: 2012-13. Thus, we recall the order of the tribunal in ITA no. 258/Alld/2017 for assessment year 2012-13 so far as adjudication of disallowance of expenditure u/s 14A of the 1961 Act is concerned , and accordingly restore Ground No.2 and 3 raised by Revenue in its appeal filed with tribunal. Thus, following grounds of appeal raised by Revenue in ITA no. 258/Alld/2017 for assessment year 2012-13 are restored back to the file of tribunal for fresh adjudication, on merit in accordance with law: M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 19 “2. The Ld. CIT(A) has erred in law and fact in observing that sufficient surplus fund leads to automatic presumption for investment out of such fund and shifted onus on A.O. to disprove whereas onus was on assessee to prove it. 3. The Ld. CIT(A) has also erred in law and fact in misappreciating that once provision of section 14A is attracted there is no escape route to calculate disallowance Under Rule 8D.” The Registry is directed to issue notice to both the parties in due course fixing the appeal in ITA no. 258/Alld/2017 for 2012-13 , for adjudication afresh of aforesaid grounds of appeal no. 2 and 3 raised by Revenue in its appeal filed with tribunal, on merits in accordance with law. We order accordingly. 6. In the result, MA. No. 04/VNS/2019 arising out of ITA no. 258/Alld/2017, for ay: 2012-13 is allowed, in the manner indicated above . We order accordingly. 7. In the result, MA. No. 03/VNS/2019 arising out of ITA no. 256/Alld/2017, for ay: 2010-11 is partly allowed, while MA. No. 04/VNS/2019 arising out of ITA no. 258/Alld/2017, for ay: 2012-13 is allowed, both in the manner indicated in this order. Order pronounced on 18/11/2022 at Allahabad in accordance with Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963 Sd/-/- Sd/-/- [VIJAY PAL RAO] [RAMIT KOCHAR] JUDICIALMEMBER ACCOUNTANTMEMBER DATED: 18/11/2022 Allahabad/Varanasi, U.P. Copy forwarded to: 1. Appellant –Purvanchal Bank, NH-28, Kasia Road, Mohaddipur , Gorakhpur - 273017, U.P. M.A. No. 03/VNS/2019 arising out of ITA No. 256/Alld/2017 assessment year 2010-11& M.A. No.04/VNS/2019 arising out of ITA No. 258/Alld/2017 assessment year 2012-13 Purvanchal Bank, Gorakhpur, U.P. v. DCIT, Gorakhpur,U.P. 20 2. Respondent –The DCIT, Range-1, Aayakar Bhawan, Civil Lines, Gorakhpur- 273001, U.P. 3. The ld. CIT(A) , Gorakhpur, U.P. 4. the ld. CIT, Gorakhpur, U.P. 5. The ld. Sr.-DR, ITAT, Varanasi, U.P. 6. The Guard File //True Copy// By order Assistant Registrar