TMI Blog2015 (12) TMI 1689X X X X Extracts X X X X X X X X Extracts X X X X ..... 94J - non deduction of tds on clearing house charges/MICR charges paid - human intervention - Held that:- As per this system, the machine recognizes the numeric data printed with magnetic charged ink. This is done with the help of ultraviolet rays which scan the genuineness of cheques. The department has not been able to dispute that MICR clearance of cheques can be possible by a mechanized system only and not through human intervention, keeping in view the processing of bulk cheques. The assessee Bank did not make TDS, since the amount had been paid as share of expenditure incurred by the concerned Bank and apportion to the assessee Bank as its share of that expenditure. No tax was required to be deducted on the amount incurred towards MICR, as mere collection of a fee for use of a standard facility provided to all those who are willing to use it does not amount to fee received for technical services, as wrongly held by the AO. - Decided in favour of assessee. Bari Brahmana Branch of the assessee as eligible for deduction u/s 36(1)(viia) - Held that:- The provisions of section 36(1)(viia) prescribe that in respect of any provision for bad and doubtful debts made by a Scheduled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not applicable, due to which, the provisions of section 40(a)(ia) are also not attracted.- Decided in favour of assessee. - ITA No. 294(Asr)/2013 - - - Dated:- 15-12-2015 - A. D. Jain (Judicial Member) And T. S. Kapoor (Judicial Member) For the Appellant : R. K. Sharda, DR For the Respondent : R. K. Gupta, CA ORDER A. D. Jain (Judicial Member) This is the Department s appeal for the assessment year 2007-08, against the order dated 15.02.2013, passed by the ld. CIT(A), Jammu. The Department has raised the following grounds of appeal: 1. On the facts and circumstances whether the ld. CIT(A) was right in deleting the disallowance made u/s 40(a)(ia) of the Income Tax Act, 1961 on account of processing charges paid to SBI when the processing charges paid are for managing the account and processing charges for the credit facilities of food credit account squarely fail within the ambit of fees for technical services u/s 194J of the Income Tax Act, 1961. 2. On the facts and circumstances whether the ld. CIT(A) was right in deleting the disallowance made u/s 40(a)(ia) of the Income Tax Act, 1961 on account of clearing house charges when the decision of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also been placed on the Tribunal order dated 28/05/2013 in the assessee s case for the assessment year 2008-09 in ITA No.206(Asr)/2013. 5. In this regard, we find no fault with the order passed by the ld. CIT(A). As correctly observed by the ld. CIT(A), the processing charges were collected from the FCI by the SBI for processing of the loan involved. It never went to the assessee s account. The assessee got net of the processing charges i.e., interest exclusively, there being no outflow of expenses. There was no occasion for the assessee to deduct TDS. It was on account of the accounting treatment that the AO was of the view that the TDS was required to be made on the processing charges. In such facts, the provisions of section 194J of the Act are definitely not attracted. So far as the present case is concerned, the payment was for services rendered, i.e., fees for technical services. Now, as per Explanation (b) to section 194J (1), fees for technical services shall have the same meaning as explained in section 9(1)(vii). As per Explanation (2) to section 9(1)(vii) of the Act, fees for technical services means any consideration for rendering of any managerial, technical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house charges/MICR charges paid. The ld. CIT(A) deleted the disallowance. 8. The ld. DR has contended that the ld. CIT(A) has erred in deleting the disallowance by relying on the decision of the Hon ble Supreme Court in the case of CIT vs. Bharti Cellular Ltd. , 234 CTR 146 (SC), particularly when the same is distinguishable in as much as in the present case, some amount of human intervention is involved in clearing of cheques by the clearing house, due to which, the activity constitutes technical services. 9. The ld. counsel for the assessee, on the other hand, placed strong reliance on the impugned order, as also the order of the Tribunal in assessee s own case (supra), for the assessment year 2008-09. 10. Here, it is seen that in the earlier year also, the ld. CIT(A) deleted the disallowance. The Tribunal upheld the order of the ld. CIT(A), holding as follows: 8. We have heard the rival contentions and perused the facts of the case. We concur with the views of the ld. CIT(A) and the arguments made by the ld. counsel for the assessee, Mr. R.K.Gupta that the ld. CIT(A) in the present case has given a pertinent finding that MICR chques are cleared through with the he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent from manual clearing, as it is clearance through machines employing ultraviolet rays to scan the genuineness of the cheques. 12. Moreover, nothing has been brought on record by the department to show that the facts in the present case are any different from the facts before the Tribunal in the assessee s own case for the assessment year 2008-09. The Tribunal order for the AY 2008-09 has also not shown to have upset or stayed on appeal. 13. In view of the above, we hold that the ld. CIT(A) is correct in opining that no tax is required to be deducted on MICR charges and that the AO was not justified in holding that in MICR charges, technical services are attracted, thereby inviting the provisions of section 40(a)(ia) of the Act. 14. For the above discussion, Ground no.2 stands rejected. 15. So far as regards Ground no.3, the AO treated the Bari Brahmana Branch of the assessee as eligible for deduction u/s 36(1)(viia) of the Act. The AO made a disallowance of ₹ 8,17,28,840/- claimed as deduction under the provisions of section 36(1)(viia) of the Act. As per the AO, the assessee was wrong in not treating the Bari Brahmana Branch as a rural branch, on the plea t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been published before the first day of the previous year. 19. In view of the above specific provisions of the Act, the definition of the Rural Branch as a place with population upto 10000, the department is not justified in placing reliance on the Digest of Statistics for 2002-03 published by the Govt. of J K. It is trite that when the Act specifically deals with a particular situation, it is the concerned provisions of the Act, which have to be gone by and no outside material can be resorted to. In the present case, the Bari Brahamana Branch of the Bank is located at village Kartholi, where the population as per the last census was of 314. It is this line of reasoning which has been followed by the Tribunal in the assessee s case for AY 2008-09, following the Tribunal decision in earlier years in the assessee s case. Therefore, the ld. CIT(A) cannot be faulted for following the said Tribunal order. Accordingly, Ground no.3 is rejected. 20. Coming to Ground no.4, the assessee claimed 100% depreciation on wooden partitions, but the AO restricted the allowance to 10%. The ld. CIT(A) allowed the whole claim, following the Tribunal order for the AY 2008-09 in the assessee s o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce on the Tribunal order (supra) in the assessee s case for the assessment year 2008-09. 29. It has not been disputed that Jammu Development Authority stands incorporated by the J K Development Act, 1970. C.B.D.T. Notification no.3489, dated 27.10.1970, issued in pursuance of the provisions of section 194A(3)(f) of the Act, provides that no tax was required to be deducted on interest on deposit paid to a Corporation incorporated under a State Act. The position is not any different so far as regards J.D.A. incorporated under the said State Act, too. Therefore, the provisions of section 194A of the Act are not applicable, due to which, the provisions of section 40(a)(ia) are also not attracted. 30. Moreover, the Tribunal, in the assessee s case (supra) for the assessment year 2008-09, has held as follows on the issue: 15. We have heard the rival contentions and perused the facts of the case. We have perused the order of ITAT Delhi Bench in the case of Chief/Senior Manager, Oriental Bank of Commerce vs. ITO (TDS Survey) (supra) and our earlier orders mentioned hereinabove on the identical facts. In our order in ITA No. 206 to 210(Asr)/2011 dated 24.04.2012 (PB 60 72) i ..... 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