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Income Tax Appellate Tribunal, ‘C’ BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K & MS. PADMAVATHY S
IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND MS. PADMAVATHY S, ACCOUNTANT MEMBER
ITA No.1109/Bang/2019 & ITA No.1680/Bang/2018 Assessment year : 2015-16 & 2014-15
Union Bank of India, Vs. The Dy. Commissioner of Income-tax, (Erstwhile Corporation Bank), Circle-2(1), Vidhan Bhavan Marg, Mangaluru. Nariman Point, Mumbai-400 021. PAN – AAACC 724 5 E APPELLANT RESPONDENT
ITA No.164/Pnj/2019 & 235/Pan/2018 Assessment year : 2015-16 & 2014-15
The Dy. Commissioner of Income-tax, Vs. Union Bank of India, Circle-2(1), (Erstwhile Corporation Bank), Mangaluru. Vidhan Bhavan Marg, Nariman Point, Mumbai-400 021. PAN – AAACC 7245 E APPELLANT RESPONDENT
Assessee by : Shri Ananthan, C.A & Smt. Lalitha Rameshwaran, C.A Revenue by : Shri Pradeep Kumar, CIT(DR)
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Date of hearing : 21.02.2022 Date of Pronouncement : .03.2022
O R D E R Per Padmavathy S, Accountant Member
These two sets of cross appeals are directed against the order of the CIT(A), Mangaluru for the asst. year 2015-16 and 2014-15
Since common issues are raised in these cross appeals, they were heard together and are being disposed of by this consolidated order
We shall first adjudicate the cross appeals ITA No. 1109&164/Bang/2019 concerning the assessment year 2015-16 as the number of issues raised in this appeal are more and covers most of the issues raised in the cross appeal for the assessment year 2014-15
The brief facts of the case 3. The assessee is a nationalized bank in which majority of shares are held by Central Government. It filed its Return of Income for the A.Y 2015-16 on 28-11-2015 which was subsequently revised on 04-03- 2017. The assessee had declared a loss of Rs. 883.67 Cr in revised return under normal provisions.
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The assessment was completed u/s 143(3) was completed on 12- 12-2017 by The Deputy Commissioner of Income tax, Circle - 2(1) (AO), Mangalore. In the assessment made under section 143(3), the learned AO made several additions and disallowances and determined the income under regular provisions at Rs. 3208,32,31,415/-. In the assessment, the learned Assessing Officer made the following additions to the total income under the regular computation:
The learned AO also computed the income of the appellant bank u/s 115JB of the Act by adding various provisions
Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), LTU, Mangalore.
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The learned Commissioner of Income Tax (Appeals) allowed the appeal of the assessee bank in respect of the following issues:
The learned Commissioner of Income Tax (Appeals) however, did not allow the grounds of the assessee bank on the following issue:
In relation to applicability of provisions of Section 115JB, the learned Commissioner of Income Tax (Appeals) didn't allow the ground of the assessee bank that Section 115JB of the Act is not applicable to the assessee.
Aggrieved by the order of the CIT(A) both Revenue and assessee have filed these cross appeals before us.
We shall first adjudicate the appeal filed by the assessee.
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ITA No.1109/Bang/2019
The assessee has raised 8 grounds before us. Ground No.1 is general in nature and no specific adjudication is called for hence rejected. The assessee did not press Ground No 4 pertaining to disallowance of Club expenses and hence the same is dismissed. The rest of the Grounds are decided in the following paragraphs
Disallowance u/s 36(1)(vii) (Ground No 2)
The assessee has claimed a deduction of Rs.1619.82 crores u/s 36(1)(vii), in respect of non rural debts written off. The assesee has also written off debts relating to its rural branches amounting to Rs.1.77 crores and the same was adjusted against the provision allowed u/s 36(1)(viia) and reduced the same from the deduction claimed u/s 36(1)(vii). The details of deduction claimed u/s 36(1)(vii) are as under:-
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13.1. The AO disallowed the claim of the assessee on the ground that the assessee bank has not debited the amount to the P&L account and the non-rural debts written off were not adjusted with provisions allowed a/c. u/s.36(1)(viia) in view of the first provisio to section 36(1)(vii) r.e.s. 36(2)(v)
13.2. Aggrieved by the order of the AO, the assessee filed an appeal before the CIT(A), who confirmed the order of the AO. The CIT(A) on the ground that the bad debts both rural and non rural written off u/s 36(1)(vii) should be debited to provisions allowed u/s 36(1)(viia) first time and only the amount which exceeds the credit balance in the previous year should be allowed as deduction u/s 36(1)(vii) of the Act.
13.3. The assessee is before us against the order of the CIT(A).
13.4. The ld.AR submitted that the issue is covered by the decision of the co-ordinate Bench of the Bangalore Tribunal in assessee’s own case in ITA No. 1678/Bang/2018 vide order dated 11.01.2022 for the asst. year 2013-14. Ld DR relied on the written submissions
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13.5. We have heard the rival submissions and perused the materials on record. We noticed that the coordinate bench of this Tribunal in assessee’s own case (Supra) has held that 5.1 We notice that an identical issue has been examined by the co- ordinate Bench of this Tribunal in the case of M/s Canara Bank in ITA No.1884/Bang/2018 dated 27-12-2021 for the asst. year 2013- 14, wherein It has been held that the view taken by the CIT(A) is not legally correct and the order passed by the CIT(A) was set aside with regard to his view that the Explanation 2 to sec.36(1)(vii), which requires adjustment of bad and doubtful debts against provision allowed u/s 36(1)(viia), would apply to non-rural bad debts also. The relevant observations made by the Tribunal are extracted below:- 6.3 The Ld CIT(A), however, proceeded to examine this aspect from another angle, i.e., he took the view that the AO has not examined the claim of write off ‘non-rural bad debts” of Rs.1258.47 crores in terms of the proviso to sec. 36(1)(vii) read with sec. 36(1)(viia) of the Act. Before Ld CIT(A), the assessee submitted that the provision allowed u/s 36(1)(via) of the Act is related to rural debts only and hence, only rural debts written off as bad should be adjusted against the provision allowed u/s 36(1)(via) of the Act. However, the Ld CIT(A) expressed the view that the PBDD allowed u/s 36(1)(viia) of the Act is applicable to both Rural and non-Rural debts. Accordingly, he held that the entire amount of bad debts written off (both rural and non-rural) should be first adjusted against the provision allowed u/s 36(1)(viia) of the Act and only the excess should be allowed as deduction. He expressed the view that the decision by Hon’ble Supreme Court in the case of Catholic Syrian Bank (2012)(343 ITR 270)(SC) was rendered under the assumption that the banks would maintain separate PBDD a/c in respect of rural branches
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and non-rural branches and therefore it is possible to distinguish PBDD as one in respect of rural branches and non-rural branches. The Ld CIT(A) expressed the view that the claim of the bank that the provisions of sec. 36(1)(viia) are distinct and independent of sec. 36(1)(vii) is based on the old circular no. 258 dated 14.6.1979 issued in connection with old law. Accordingly the Ld CIT(A) held that the provision allowed u/s 36(1)(viia) of the Act is for single account since introduction in 1985 for all types of advances including rural advances. Accordingly, the Ld CIT(A) held that the bad debts pertaining to non-rural advances should also be first adjusted against PBDD allowed u/s 36(1)(viia) of the Act. During the year under consideration, the opening credit balance in the PBDD account stood at Rs.4365.90 crores. Since it is more than the bad debts pertaining to non-rural branches of Rs.1258.47 crores, the Ld CIT(A) held that the bad debts claim of non-rural branches is not allowable as deduction u/s 36(1)(vii) of the Act. 6.4 We heard the parties on this issue and perused the record. We notice that the Ld CIT(A) has expressed the view that the provision allowed u/s 36(1)(viia) of the Act would cover bad debts pertaining to non-rural advances also. An identical issue has been examined by Hyderabad bench of ITAT in the case of State Bank of Hyderabad vs. DCIT (ITA No.450/Hyd/2015, ITA No.498 and 499/Hyd/2015 dated August 14, 2015), wherein the Tribunal has not accepted the above said view expressed by Ld CIT(A). The relevant observations made by the Tribunal are extracted below:- “19. We have considered the rival submissions and perused the materials on record as well as the orders of revenue authorities. As could be seen from the finding of AO as well as ld. CIT(A), only reason for which claim of deduction for Rs. 209,07,50,831 representing actual write off of bad debts
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relating to non-rural advances u/s 36(1)(vii) was denied is, assessee having already availed deduction u/s 36(1)(viia), it is not eligible to claim deduction u/s 36(1)(vii) as it will amount to double deduction. In our view, both AO as well as ld. CIT(A) have committed fundamental error by mixing up provisions of sections 36(1)(vii) and 36(1)(viia). While 36(1)(vii) speaks of actual write off of bad debts in the books of account, section 36(1)(viia) even allows provision made towards bad and doubtful debts in respect of rural advances to the extent of provision made in the books of account subject to the ceiling fixed under clause (viia) of section 36(1). Proviso to section 36(1)(vii) operates only in a case where deduction is also claimed under section 36(1)(viia). In other words, proviso to section 36(1)(vii) applies to write off of bad debts relating to rural advances to the extent it exceeds the provision made u/s 36(1)(viia). If we examine the facts of the present case in the context of aforesaid statutory provision, it will be evident that assessee, though, has written off in the books of account an amount of Rs. 210.74 crore, but, in the computation of total income, the actual deduction claimed u/s 36(1)(vii) is Rs. 209.08 crore representing bad debts written off relating to non-rural/urban advances. The balance amount of bad debts relating to rural advances was not claimed as deduction by assessee in terms with the proviso to section 36(1)(vii) as it has not exceeded the provision for bad and doubtful debts relating to rural advances created u/s 36(1)(viia). Both AO and ld. CIT(A) have misconstrued the statutory provisions while observing that proviso to section 36(1)(vii) would also apply in case of bad debts relating to non-rural advances. The Hon'ble Supreme Court in case of Catholic Syrian Bank Vs. CIT (supra) while analyzing provisions of section 36(1)(vii) and 36(1)(viia) have observed that section 36(1)(viia) applies only to rural advances. The observations made by Hon'ble Apex Court in this regard in
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paras 26 & 27 of the judgment is extracted hereunder for convenience. "26. The Special Bench of the Tribunal had rejected the contention of the Revenue that proviso to s. 36(1)(vii) applies to all banks and with reference to the circulars issued by the Board, held that a bank would be entitled to both deductions, one under cl. (vii) of s. 36(1) of the Act on the basis of actual write off and the other on the basis of cl. (viia) of s. 36(1) of the Act on the mere making of provision for bad debts. This, according to the Revenue, would lead to double deduction and the proviso to s. 36(1)(vii) was introduced with the intention to prevent this mischief. The contention of the Revenue, in our opinion, was rightly rejected by the Special Bench of the Tribunal and it correctly held that the Board itself had recognized the position that a bank would be entitled to both the deductions. Further, it concluded that the proviso had been introduced to protect the Revenue, but it would be meaningless to invoke the same where there was no threat of double deduction. 27. As per this proviso to cl. (vii), the deduction on account of the actual write off of bad debts would be limited to excess of the amount written off over the amount of the provision which had already been allowed under cl. (viia). The proviso by and large protects the interests of the Revenue. In case of rural advances which are covered by cl. (viia), there would be no such double deduction. The proviso, in its terms, limits its application to the case of a bank to which cl. (viia) applies. Indisputably, cl. (viia)(a) applies only to rural advances."
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Concurring with the aforesaid majority view, Hon'ble CJI, S.H. Kapadia, as the then he was, held as under: "2. Under Section 36(1)(vii) of the ITA 1961, the tax payer carrying on business is entitled to a deduction, in the computation or taxable profits, of the amount of any debt which is established to have become a bad debt during the previous year, subject to certain conditions. However, a mere provision for bad and doubtful debt(s) is not allowed as a deduction in the computation of taxable profits. In order to promote rural banking and in order to assist the scheduled commercial banks in making adequate provisions from their current profits to provide for risks in relation to their rural advances, the Finance Act, inserted clause (viia) in subsection (1) of Section 36 to provide for a deduction, in the computation of taxable profits of all scheduled commercial banks, in respect of provisions made by them for bad and doubtful debts relating to advances made by their rural branches. The deduction is limited to a specified percentage of the aggregate average advances made by the rural branches computed in the manner prescribed by the IT Rules, 1962. Thus, the provisions of clause (viia) of Section 36(1) relating to the deduction on account of the provision for bad and doubtful debt(s) is distinct and independent of the provisions of Section 36(11(vii) relating to allowance of the bad debt(s). In other words, the scheduled commercial banks continue to get the full benefit of the write off of the irrecoverable debt(s) under Section 36(1)(vii) in addition to the benefit of deduction for the provision made for bad and doubtful debt(s) under section 36(1)(viia). A reading of the Circulars issued by CBDT indicates that normally a deduction for bad debt(s) can be allowed only if the debt is written off in the books as bad debt(s). No deduction is allowable in respect of a mere provision for bad and doubtful debt(s). But in the case of rural advances, a deduction would be allowed even in
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respect of a mere provision without insisting on an actual write off However, this may result in double allowance in the sense that in respect of same rural advance the bank may get allowance on the basis of clause (viia) and also on the basis of actual write off under clause (vii). This situation is taken care of by the proviso to clause (vii) which limits the allowance on the basis of the actual write off to the excess, if any, of the write off over the amount standing to the credit of the account created under clause (viia). However, the Revenue disputes the position that the proviso to clause (vii) refers only to rural advances. It says that there are no such words in the proviso which indicates that the proviso apply only to rural advances. We find no merit in the objection raised by the Revenue. Firstly, CBDT itself has recognized the position that a bank would be entitled to both the deduction, one under clause (vii) on the basis of actual write off and another, on the basis of clause (viia) in respect of a mere provision. Further, to prevent double deduction, the proviso to clause (vii) was inserted which says that in respect of bad debt(s) arising out of rural advances, the deduction on account of actual write off would be limited to the excess of the amount written off over the amount of the provision allowed under clause (viia). Thus, the proviso to clause (vii) stood introduced in order to protect the Revenue. It would be meaningless to invoke the said 1 proviso where there is no threat of double deduction. In case of rural advances, which are covered by the provisions of clause (viia), there would be no such double deduction. The proviso limits its application to the case of a bank to which clause (viia) applies. Clause (viia) applies only to rural advances. This has been explained by the Circulars issued by CBDT. Thus, the proviso indicates that it is limited in its application to bad debt(s) arising out of rural advances of a bank. It follows that if the amount of bad debt(s) actually written off in the
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accounts of the bank represents only debt(s) arising out of urban advances, the allowance thereof in the assessment is not affected, controlled or limited in any way by the proviso to clause (vii)." Thus, considered in light of principle laid down as referred to above, when the proviso to section 36(1)(vii) applies to bad debts written off relating to rural advances, the same cannot be applied for disallowing deduction claimed on account of write off of bad and doubtful debts relating to non-rural/urban advances. As far as application of explanation to section 36(1)(vii) is concerned, we agree with the ld. AR that its operation will be prospective and will not apply to the impugned AY. For this proposition, we rely upon the decision of the ITAT Mumbai in case of Bank of India Vs. Addl. CIT (supra). Even otherwise also, careful reading of explanation to section 36(1)(vii) would indicate that nowhere it suggests that the proviso to section 36(1)(vii) would apply in respect of bad debt written off relating to non-rural advances. In the aforesaid view of the matter, we hold that assessee would be eligible to avail deduction of an amount of Rs. 209.94 crore representing actual write off in the books of account of bad debts relating to non- rural/urban advances in terms with section 36(1)(vii), as proviso to the said section would not apply to non-rural advances. Accordingly, we delete the addition made by AO and confirmed by ld. CIT(A).” 5.2 We have heard both the parties and perused the materials on record. Following the decision rendered by the co-ordinate bench of this Tribunal in the case of M/s Canara Bank cited supra, we set aside the order passed by the ld.CIT(A) and direct the AO to delete the disallowance of Rs.707.83 crores. 13.6. Respectfully following the decision rendered by the coordinate bench in assessee’s own case, we allow the appeal in favour of the
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assessee. Accordingly, this ground of the assessee is allowed and the disallowance made u/s.36(1)(vii) is deleted.
Depreciation on ATM (Ground No 3)
The assessee installed ATM machines and claimed depreciation @ 60% on ATM’s by treating the same as the block relating to computer. The AO during the course of asst. restricted the depreciation claimed to 15% by treating the ATM as plant & Machiner and disallowed a depreciation to the extent of Rs.3,45,32,511/- relying on the decision of Karnataka High Court in the case of Diebold Bold Systems Pvt. Ltd vs Commissioner of commercial Taxes (2006) 144 STC 59
14.1. Aggrieved by the order of the AO, the assessee filed an appeal before the CIT(A) contending that ATM was covered under the definition of computer system and eligible for depreciation at the rate of 60% based on various judicial pronouncements. The CIT(A) upheld the disallowance made by the AO relying on the decision of this Tribunal in the case of State Bank of Mysore (ITA No.1063/Bang/2014). Before the CIT(A), the assessee also made an alternate plea that the opening WDV should be reworked and the depreciation should be allowed on the reworked WDV. The CIT(A) did not consider the plea of the assessee.
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14.2. Aggrieved by the order of the CIT(A), the assessee is in appeal before us.
14.3. Before us, the ld.AR submitted that in the case of CIT Vs. NCR Corporation Ltd (2020) 15ITR OL 482 (Kar), the Karnataka High Court has dealt with a similar issue and held against the revenue to hold that the ATMs are eligible for deprecation at a higher rate of 60%. The ld.AR also submitted that the decision of the ITAT in the case of State Bank of India (Supra) has been reversed by the Hon’ble Karnataka High Court following the decision of the NCR Corporation Pvt. Ltd., (Supra).
14.4. The ld.DR relied on the orders of the lower authorities.
14.5. We have heard rival submissions and perused the materials on record. We notice that the Jurisdictional High Court in the case of NCR Corporation Pvt. Ltd., (Supra) held that - “8. This takes us to the second substantial question of law whether ATMs are computers and are eligible for 60% depreciation. It is pertinent to note that provisions of the Karnataka Sales Tax Act, 1957 and provisions of Income-tax Act, 1961 are not pari materia provisions. The classification of goods has been provided only for the purposes of sales tax whereas, the provisions of the income tax levy tax on income. It is pertinent to mention here that Appendix 1 to Income- tax Rules, the computer has been treated as plant and machinery. Therefore, the decision relied upon by the revenue in Diebold Systems (P.) Ltd. supra has no application to the fact situation
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of the case. The Tribunal by placing reliance on the decision of Bombay High Court in Dy. CIT Vs. Datacraft India Ltd. [2010]40 SOT 295 (SB) has so long as functions of the computers are performed with other functions and other functions are dependant on the functions of the computer, ATMs are to be treated as computers and are entitled to higher rate of depreciation. It has further been held that computer is integral part of ATM machine and on the basis of information processed by the computer in ATM machine only, the mechanical function of the dispensation of cash or deposit of cash is done. Therefore, it was held that ATMs are computers and are entitled to higher rate of depreciation. The aforesaid finding of fact has been recorded on correct analysis of the material available on record and by placing reliance on decision of the Bombay High Court.”
14.6. We also notice that the decision of NCR Corporation Pvt. Ltd., (Supra) is followed in the case of State Bank of India where the Court held that
“7. Admittedly, the substantial question of law Nos.2 and 3 have been answered in favour of the assessee by a division bench of this court in 'CIT VS. NCR CORPORATION (P) LTD.,(2020) 117 TAXMANN.COM 252 (KAR) and therefore, for the reasons assigned in the aforesaid judgment, the ATMs are held entitled for depreciation at the rate of 60% as computers. The substantial question of law Nos.2 and 3 are answered accordingly.”
14.7. Respectfully following the decision of jurisdictional High Court, we hold that the depreciation on ATM should be allowed at the high rate of 60%. The assessee’s appeal on this ground is allowed.
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Disallowance of CANVAT Credit on capital goods (Ground No. 5)
The assessee has availed CENVAT credit of Service Tax and Excise Duty paid on the capital goods. The details of the amount availed and debited to Profit & Loss account are as follows
Particulars Claimed as Claimed as Total Amount CENVAT Credit CENVAT credit & Not debited to & debited to Profit & Loss Profit & Loss Account account as payment Service Tax 1,28,01,783 1,28,01,784 2,56,03,567 Excise Duty 2,11,18,716 0 2,11,18,716 Total 3,39,20,499 1,28,01,784 4,67,22,283
15.1. The AO during the course of assessment noticed an observation made in the Tax Audit Report saying that the assessee had not followed the provisions of section 145A of the Act with regard to CENVAT Credit of Servce Tax and Excise Duty on capital goods. Basis this the AO added a sum of Rs.4,67,22,283/- towards CENVAT credit of excise duty out of capital goods & Service Tax..
15.2. Aggrieved by the order of the AO, the assessee preferred an appeal before he CIT(A) where it was submitted that section 145A of
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the Act with regard to CENVAT credit is not applicable to capital goods. The CIT(A) accepted this contention of the assessee and deleted the addition made by the AO to the extent of CENVAT credit of excise duty out of capital goods Rs.2,11,19,716. However, the CIT(A) restricted the addition to Rs.1,28,10753/- debited by the assessee to the P&L account.
15.3. Aggrieved by the order of the CIT(A) the assessee has filed the appeal before the Tribunal for the addition to Rs.1,28,10753/- debited by the assessee to the P&L account.
15.4. The ld.AR made the following submissions
(i) It is undisputed fact that CENVAT credit availed by the assessee is relating to capital goods. (ii) The assessee had filed CENVAT credit based on provisions CENVAT credit Rule 2004 and as per Rule 63B of said rules 50% CENVAT credit availed on input & input services has to be paid back by a bank. (iii) Therefore, the assessee paid Rs.1,28,10783/- being 50% of a CENVAT credit. (iv) As per Explanation 9 to sec. 43 of the Act any CENVAT credit availed as per the relevant rules cannot be added to the capital cost
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(v) Hence 50% CENVAT credit paid is debited to P&L account and claimed as expenditure.
15.5. The ld.DR relied on the written submission.
15.6. We have heard the rival submissions and perused the materials on record. As submitted by the AR it is undisputed fact that CENVAT credit availed by the assessee is relating to capital goods. Therefore the issue to be decided here is whether the 50% of the CENVAT Credit paid is to be debited to the Profit & Loss account or should be added to the cost of the capital good. We will look into the provision of Explanation 9 to sec.43 of the Act in this regard which reads as follows:- Section 43 – Explanation - 9 “For the removal of doubts, it is hereby declared that where an asset is or has been acquired on or after the 1st day of March, 1994 by an assessee, the actual cost of asset shall be reduced by the amount of duty of excise or the additional duty leviable under section 3 of the Customs Tariff Act, 1975 (51 of 1975) in respect of which a claim of credit has been made and allowed under the Central Excise Rules, 1944.” 15.7. We notice that the explanatory memorandum explain the provisions of the Finance Bill 1998 whereby the above explanation clearly stated that “Where duty leviable under the Customs Tariff Act 1975, and duty leviable under the Central Excise Rules 1944 has been paid and has been included in the actual cost of the asset acquired on or after 1st
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March 1994, such duty shall be excluded as and when any credit by way of MODVAT is allowed to the assessee under the Central Excise Rules 1944”
15.8. The plain reading of the explanation and the intention of the legislature from explanatory memorandum makes it very clear that the actual cost of the assets is to be reduced in respect of any CENVAT credit made and allowed under the Central Excise Rule 1994 where the duty paid has already been included in the cost of the asset. Therefore the contention of the assessee that as per the explanation 9 to section 43, there is a restriction to add the amount paid towards CENVAT credit to the cost of the asset is not correct. We will explain this with an example where a capital asset is purchased for Rs. 100 which includes Rs.30 towards duty leviable (Original Cost Rs.70 and Duty amount Rs.30). The eligible CENVAT credit of excise duty of this purchase is Rs.10. What the explanation to 9 envisages is if the asset is capitalized for an amount of Rs.100, the credit allowed subsequently i.e. Rs.10 need to be reduced from the cost of the asset. The actual cost in this case is Rs.90 (Rs. 70 of original cost plus Rs.20 of duty not eligible for credit). The law thus, does not restrict the duty paid, for which no credit is allowed, as per the Central Excise Rules from being added to the cost of the asset but mandates that any credit availed should be reduced from the capitalized cost of the asset. In the given case assessee has paid an amount of Rs.1,28,01,784 being 50% of the CENVAT credit which not eligible to claim credit as per the Rule 63B
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of CENVAT credit Rules 2004 (Rs.20 in our example above). Hence the amount so paid and not eligible for credit should be added to the cost of the asset. Hence, we uphold the order of the CIT(A) in restricting the disallowance to the amount debited to the P&L account as said amount needs to be capitalized and not claimed as an expenditure as per the provisions of Explanation 9 to sec.43 of the Act.
15.9. In the result, the assessee’s appeal on this ground is dismissed.
Penalty paid to RBI (Ground No. 6)
The assessee has paid a sum of Rs.13,63,463/- as penalty to Reserve Bank of India for non compliance of RBI guidelines which are general guidelines. The AO disallowed the claim on the ground that it is penal in nature. The assessee preferred an appeal before the CIT(A) who upheld the order of the AO on the ground that the assessee has not filed any details with regard to the penalty to prove that the I is not for infraction of law.
16.1. Aggrieved by the order of the CIT(A) the assessee is in appeal before us. 16.2. Before us, the ld.AR submitted that the penalty paid to RBI is in the nature of fine for non-compliance of the RBI Guidelines and not for infraction of any law. Hence the Ld AR prayed that the same needs
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to be allowed as an expenditure. The ld.AR submitted that reliance in this regard is placed on the decision of IDBI Bank Ltd – 2021(2) TMI 608 where the ITAT Mumbai Bench has allowed the appeal in favour of the assessee for penalty imposed by RBI.
16.3. The ld.DR supported the decision of the lower authorities.
16.4. We heard rival submissions and perused the materials on record. We notice that the Mumbai Tribunal in IDBI Bank Ltd., case (Supra) while considering a similar penalty payment to RBI has held that the amount paid by the assessee is not in the nature of penalty. The Hon’ble Mumbai Tribunal in this case has held that – 12.1 In the instant case, as recorded by the AO the assessee has claimed expenses on account of penalty of Rs.15,00,000/- imposed by the RBI u/s 47A of the Banking Regulation Act, 1949 and Rs. 94,200/- for non-compliance of guidelines on customer service, guidelines in respect of exchange of coins and small de-nomination notes and mutilated notes. The ratio laid down in the decisions mentioned at para 12 is squarely applicable to the instant case instead of the decision in ANZ Grindlays Bank (supra) relied on by the Ld. DR.
Therefore, following the decisions mentioned at para 12 above, we delete the disallowance of 15,94,200/- levied by the AO. Accordingly, the 2nd ground of appeal is allowed.”
16.5. We notice that the Hon’ble Mumbai Tribunal in the above case has analysed the provisions of the Banking Regulation Act to
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understand the nature of fine / penalty paid before coming to the conclusion that the amount claimed are routine fines or penalties and that they are compensatory' in nature not punitive. We further notice as observed by the CIT(A) in the order, the assessee has not furnished the full details of the nature of payment made to RBI. We are of the considered view that the provisions under which these payments are done need to be looked into in detail and it will not be correct to conclude without analyzing the same. We therefore remand the case back to the AO to look into the details of payments made to RBI to see if these are routine payments for a procedural non-compliance or whether they are punitive. We allow the appeal of the assessee for statistical purposes.
Prior Period Expenditure (Ground No.7) 17. The assessee had claimed a sum of Rs.3,41,81,547/- as service charges paid to Bajaji Finance Ltd., pertaining to earlier years. The AO disallowed the claim on the ground that no income relating to such transaction was offered to tax during the current asst. year. The assessee availed an appeal before the CIT(A) on the ground that the expenditure was crystallized during the financial year relevant to asst. year 2015-16 and hence eligible for deduction. The CIT(A) confirmed the disallowance on the basis that the assessee is not having any evidence in support of its claim that the expenditure got crystallized during the relevant previous year.
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17.1. Aggrieved by the order of the CIT (A) the assessee is not in appeal before the Tribunal.
17.2. The ld.AR reiterated the submissions made before the CIT(A) whereas the ld.DR supported the claim of the lower authorities.
17.3. We have heard the rival submissions and perused the materials on record. The very basis for allowing the expenditure is the crystallization of the expenditure and in the interest of justice this issue needs to be decided based on evidences and facts. The assessee has not produced and additional evidence before us to substantiate the claim that the expenditure got crystallized during the relevant asst. year. We, therefore, remit the issue back to the AO to look into the details afresh and allow the claim in the relevant asst. year based on the facts. It is needless to say that reasonable opportunity of being heard should be given to the assessee before deciding the case. In the result, the assessee’s appeal is allowed for statistical purposes.
Applicability of provisions of section 115JB (Ground 8)
The assessee in the return of income for the relevant assessment year did not compute book profit u/s.115JB as the assessee was of the opinion that the assessee being a public sector bank, the requirement to compute book profit is not applicable to the assessee.
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18.1. The AO computed the income of the assessee u/s 115JB holding that section 115JB is applicable to the assessee. The assessee filed an appeal before the CIT(A) on the ground that even amended sec. 115JB does not apply to assessee as (i) it does not prepare profit & loss account as per the provisions of Companies Act 1956 (ii) section 211 of the Companies Act 1956 does not apply to the assessee as they did not fall under the definition of Banking
18.2 The CIT(A) dismissed the assessee’s appeal by holding that there is no option given to the company u/s 115JB to exclude it from the applicability of the provisions of sec.115JB on the above grounds.
18.3. Aggrieved by the order of the CIT(A), the ld.AR submitted that tise issue is covered by the decision of the coordinate bench in assessee’s own case (Supra) where the Hon’ble Tribunal has held that the provisions of sec.115JB is not applicable to the assessee.
6.3 We notice that an identical issue has been examined by the co- ordinate Bench of this Tribunal in the case of M/s Canara Bank in ITA No.1884/Bang/2018 dated 27/12/2021 for the asst. year 2013- 14, wherein the identical issue has been sent back to the file of Ld CIT(A) with the following observations:- 7.1 Before Ld.CIT(A) also, the assessee contended that the provisions of sec.115JB will not be applicable to it. It was
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submitted that the assessee falls under the category of “corresponding new bank” under BR Act. Accordingly it was contended before Ld CIT(A) by the assessee as under:-
(a) banking company is defined under BR Act as a “company” which transacts business of banking. (b) “Company” is defined as a company as defined in section 3 of the Companies Act and includes a foreign company within the meaning of sec. 591 of that Act. (c) Since the assessee falls under the category of Act of “corresponding new bank”, it was contended that it cannot fall under the definition of “banking Company”. (d) Clause (b) of sec.115JB(2) is applicable to a banking company, but the assessee is not a banking company as per the definition given in BR Act. Accordingly, it was contended that the assessee is not liable u/s 115JB of the Act. 7.2 The Ld CIT(A), however, did not accept the above said contentions. The view expressed by Ld CIT(A) has been summarised below:-
(a) Sec. 115JB(1) is the charging section and it overrides all other provisions of the Act. It provides that the provisions of this section are applicable in case of “every company”. It does not carve out any exception. (b) Sec. 2(17) defines the word “company”. According to this section company “means” any Indian Company. (c) Explanatory Note to Finance Act, 2012 has explained that Minimum Alternative Tax (MAT provisions u/s 115JB) shall apply to a banking company.
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(d) Assessee is a “company” as per the deeming provisions of sec.11 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, which reads as under:- “11. Corresponding new bank deemed to be an Indian Company:- For the purposes of the Income tax Act 1961 (43 of 1961), every corresponding new bank shall be deemed to be an Indian Company and a company in which public are substantially interested.” (e) The assessee itself is filing its return of income under the status of “company”. (f) The shares of assessee bank are listed in the Stock exchange and traded. (g) The assessee is a banking company under Banking Regulations Act, since the definition of the term “banking company” in BR Act is a functional definition. The assessee is following all the rules and regulations of the BR Act which are applicable to other private banks. The assessee bank is constitutionally defined as “corresponding new bank” in BR Act. However, the BR Act does not say that ‘corresponding new bank’ is not a Banking Company. (h) It is not the case of the assessee that being a ‘corresponding new bank’ and not registered under Companies Act, 1956, the assessee is not governed by BR Act. (i) It is highly unfortunate on the part of a reputed public sector bank to resort to such unwarranted, hyper technical, hair splitting of the definitions under various Acts only to avoid the payment of due taxes. (j) Assuming that the assessee is not a Banking Company, then the provisions of sec.115JB(2)(a) will be applicable to the assessee, as it is an Indian Company as per section 11 of the
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Banking Companies (Acquisition and Transfer of Undertaking) Act 1980. (k) Various decisions relied upon by the assessee relate to the period prior to the amendment made by Finance Act 2012.
7.3 Before us, the Ld A.R reiterated that the provisions of sec.115JB will not apply to the assessee, since it is not formed under Companies Act. He placed his reliance on the decision rendered by Kolkata bench of Tribunal in the case of Damodar Valley Corporation (2017(8) TMI 1363). On the contrary, the Ld D.R supported the order passed by Ld CIT(A).
7.4 We heard the parties on this issue and perused the record. We notice that the Ld CIT(A) has expressed the view that the assessee would fall under clause (a) of sec.115JB(2). However the case of the assessee is that clause (b) of sec.115JB(2) is made applicable to banking companies, since banking company is included in sec. 211 of the Companies Act. However, it is the contention of the assessee that it is not a ‘banking company”, i.e., it is a “corresponding new bank”. 7.5 We notice that the provisions of sec.51 of the Act specifically states that only certain provisions of BR Act are applicable to “Corresponding new bank”. We noticed earlier that the Ld CIT(A) has proceeded to decide this issue by observing that all provisions of BR Act are applicable to the Company. We notice that the Ld CIT(A) did not consider the effect of provisions of sec.51 of the BR Act upon the assessee. Hence the decision taken by him under the impression that all the provisions of BR Act are applicable to the assessee is faulted one. In our view the Ld CIT(A) should considered the effect of provisions of sec. 51 of BR Act and accordingly he should have appreciated the contentions of the assessee on the definition of “banking company”, provisions of sec.211(2) of the Companies Act etc. Since these aspects go to the root of the
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issue, in our view, this issue needs to be examined at the end of Ld CIT(A) afresh. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to his file for examining it afresh.” 6.4 We have heard both the parties and perused the materials on record. Following the decision rendered by the co-ordinate bench of this Tribunal in the case of M/s Canara Bank cited supra, we set aside the order passed by the Ld. CIT(A) on this issue and restore the same to his file for deciding it afresh in accordance with law. 18.4. Considering the binding decision of the coordinate bench, we set aside order of the CIT(A) and restore the same to his file for deciding the case afresh in accordance with law.
18.5. In the result, the assessee appeal is partially allowed for statistical purposes.
ITA No.164/Pan/2019 19. We shall now take up the appeal filed by the revenue. The revenue raised 24 grounds. Ground No.1 & 25 are general in nature not requiring separate adjudication and hence dismissed. The rest of the grounds are adjudicated in the following paragraphs. Disallowance u/s.14A (Ground No 2 to 8) 20. The assessee earned tax free income of Rs.36,59,37,026 and the assessee voluntarily disallowed an amount of Rs.1,83,60,509 as expenditure relating to earning tax free income. The assessing office
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arrived at a sum of Rs.53,70,68,940 as the amount disallowable u/s.14A r.w. rule 8D(2)(ii) & 8D(2)(iii) and after adjusting the amount voluntarily disallowed arrived at the final disallowance of Rs.51,87,08,431. The AO took the view that the assessee is not in a position to prove its claim that the own funds were used for earning the exempt income
20.1. The CIT(A) considered the submissions of the assessee and noted that this issue has been decided in favour of the assessee by the decision of co-ordinate bench of this Tribunal rendered in the assessee’s own case in ITA No.1264 and 1352/Bang/2013 for the assessment year 2011-12 and ITA No.206/PAN/2016 for assessment year 2012-13. Before Ld CIT(A), the assessee contended that the AO has not recorded dissatisfaction over the disallowance made by the assessee. The Ld CIT(A) accepted the said contentions by taking support of the decision rendered by Hon’ble Supreme Court in the case of Godrej & Boyce Manufacturing Company Ltd Vs. DCIT (2017) (81 Taxmann 111) (SC). Accordingly, he observed that it is mandatory for the AO to record dissatisfaction over the claim of the assessee before invoking the provisions of Rule 8D. Accordingly, the Ld CIT(A) deleted the disallowance holding that the AO has not recorded dissatisfaction.
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20.2. The Ld AR submitted that the issue is covered by the decision of the coordinate bench of the Tribunal is assessee’s own case (supra) where the Tribunal upheld the order of the CIT(A). The Ld DR relied on the written submissions
20.3. We heard the parties on this issue and perused the record. We notice that the coordinate bench of the Tribunal in assessee’s own case (supra) has held as under
8.3 We heard the parties on this issue and perused the record. A perusal of the observations made by the AO on this issue in the assessment order would show that the AO was not satisfied with the claim of the assessee, even though he has not expressly mentioned so. In our view, his dissatisfaction is discernible from the assessment order. However, the AO has not made any specific observation over the disallowance of Rs.2.74 crores made by the assessee out of administrative expenses. Further, it is the claim of the assessee that the interest free funds available with the assessee is more than the value of investments and hence interest disallowance is not called for as per the decision rendered by the jurisdictional Hon’ble Karnataka High Court in the case of Micro Labs (383 ITR 490)(Kar). This aspect has also not been examined by the AO. Further, it has been held in the case of Vireet Investment (165 ITD 27) by Delhi Special bench that only those investments, which has yielded dividend income should be considered for computing average value of investments. Before us, the Ld A.R also relied on certain decisions in order to contend that the provisions of sec.14A
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itself are not applicable to banks. Thus, we notice that various contentions are involved in this issue and hence we are of the view that this issue requires fresh examination at the end of AO. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO for examining it afresh.
20.4. We respectfully follow the decision of the coordinate bench of the Tribunal, we set aside the order passed by the CIT(A) on this issue and restore the file to the AO for fresh examination. This ground is allowed in favour of the revenue for statistical purposes.
Deduction u/s.36(1)(viia) (Ground No 9 to 13)
The assessee had made provision and claimed a deduction for Bad and doubtful debts (PBDD) of Rs.992,48,04,092.
21.1. The AO during the course assessment contented that (i) Population of many of the rural branches had already exceeded 10,000 (ii) In several cases it was not rural branche but rather it was situated in urban agglomeration (iii) The assessee calculated Aggregate Average Advances by considering outstanding balances (including advances made in the earlier years) instead of taking incremental advances made during the year
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The AO therefore restricted the deduction to Rs.444,42,67,702 and disallowed the balance claim of Rs.548,05,37,200.
21.2. Before the CIT(A) the assessee submitted that the classification of rural branches is primarily made based on the data furnished by Reserve Bank of India (RBI). Further RBI classified branches as ‘rural’ based the census data in which the population is less than 10,000 21.3. The Ld CIT(A) observed that (i) the AO removed 79 branches from rural branches list on the ground that population of many of the rural branches already exceeded 10,000 and they are situated in urban agglomeration by relying of the assessment order for AY 2014-15 (ii) AO merely quoted the Lord Krishna Bank decision of Kerala High Court but not followed it up to the logical end to bring out the relvant data as to why a particular branch is not a rural branch (iii) The list of such branches given as part of the assessment order does not have the population figures and also the specific reason why they are not rural branches (iv) The AO has not pointed out any mistakes in the classification of rural branches made by the RBI (vi) The AO calculated the AAA by considering only incremental advances made during the year instead of outstanding balances
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The CIT (A) also observed that this issue is covered by the various Tribual decisions including the decision of the coordinate bench of the Tribunal and deleted the addition made by the AO.
21.4. We heard the parties and perused the record. We notice that the Ld CIT(A) has rendered his decision on this issue following the decision rendered by co-ordinate bench of ITAT in the following cases on an identical issue. (i) Canara Bank vs JCIT LTU (2017) 60ITR (Trib) 1 (ITAT Beng) (ii) Vijaya Bank vs JCIT LTU in ITA No. 1252/Bang/2016 vide order dated 05.01.2018
Accordingly, we do not find any reason to interfere with the decision rendered by Ld CIT(A) on this issue. This ground raised by the revenue is dismissed for statistical purposes
Inadmissible Capital Expenses (Ground No 14 to 16) 22. This ground is raised by the revenue against the decision of the CIT to delete the addition made by the AO towards the CENVAT Credit on Excise Duty and Service Tax. The Ld AR submitted that the said disallowance made by the AO is not routed through the P&L account and the same pertains to capital goods. The Ld DR relied on the written submissions
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22.1. We see merit in the argument of the Ld AR. Further in the ground raised by the assessee (Ground 5) pertaining to the same matter where the AO has disallowed the amount debited to the P&L account towards CENVAT credit, we held that the amount needs to added to the cost of the capital asset and upheld the addition by the AO and CIT(A) (refer Para 14.8 above). In the similar lines, the amount of CENVAT credit not routed through the P&L account is to be treated as part of capital asset and the AO is not corrected in making this addition towards the same. We therefore see no reason to interfere with the decision of the CIT(A), and dismiss the ground raised by the revenue in this regard
Provisions for wage arrears (Ground 17 to 19) 23. The assessee had suo moto disallowed a sum of Rs.198 crores towards provision made for wage arrears. The AO did not disturb the assessee’s computation. However before the CIT(A) the assessee raised a fresh ground with the regard to the claim of deduction of Rs.198 crores as deduction against the provision made for wage arrears. 23.1. The CIT(A) admitted this additional ground and allowed the claim of the assessee by relying on the decision of the coordinate bench of the Tribunal in the case of Syndicate Bank for the assessment year 2009-10 (ITA No.709 & 998 / Bang/2012 order dated
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13.06.2014). The CIT(A) has also considered the issue on merits and held that “16.5. The submissions of the appellant were carefully considered. The liability of the appellant to pay increased wages is certain but what was pending was only quantification. The estimate of the appellant bank was based on the previous settlements and also considering expectd DA increase, increase in number of employees and other factors. Accordingly the Bank had made provision for wage revision of Rs.198crore during the FY 2014-15. Respectfully following the Hon’ble jurisdictional ITAT decision on the issue : direct the AO to allow the deduction of Rs.198 crores towards wage arrears both under regular computation and 115JB. The additional ground on the issue is allowed”
23.2. The CIT(A) has followed the decision of the coordinate bench of the Tribunal and has also considered the merits in assessee’s submission to decide the issue in favour of the assessee. Hence we do not see a reason to interfere with the decision of CIT(A). This ground of the revenue is dismissed for statistical purposes.
Adjustment to Book Profits (Ground No 20 to 22) 24. The next ground of the revenue is with regard to specific addition made to book profit as per sec. 115JB of the Act, i.e. Disallowance u/s. 14 and amount debited under provisions &
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contingencies for NPA. The AO made these additions stating that these are liable to be added to net profit u/s 115JB of the Act. However the CIT(A) deleted these additions and now revenue is in appeal against the order of CIT(A). Since the issue regarding applicability or otherwise of sec.115JB is restored to the file of Ld CIT(A), this issue is also restored to the file of Ld CIT(A) for examining it afresh. The appeal of the revenue is allowed for statistical purposes
Disallowance u/s.40(a)(ia) (Ground No.23 to 24)
The assessee has made ceratin payments to National Payments Corporation of India (NPCI) being ATM usage charges, switch fees etc. The AO disallowed the payments made for Rs.2,39,64,549 u/s.40(a)(ia) stating that the assessee has not deducted the TDS on such payments to NPCI. The CIT(A) allowed the appeal in favour of the assessee and deleted the disallowance on the ground that the issue is covered by the decision of the coordinate bench of the Tribunal is assessee’s own case (ITA No.1264 & 1352/Bang/2013) for the assessment year 2011-12. 25.1. We have heard both the parties on this issue and perused the materials on record. Since the Ld CIT(A) has rendered his decision on this issue following the decision rendered the coordinate bench of this Tribunal, we do not find any reason to interfere with the order passed by the CIT(A) on this issue.
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In the result, the Revenue’s appeal is partially allowed for statistical purposes.
ITA No.1680/Bang/2018
In this appeal the assessee has raised 6 grounds of appeal. Ground No.1 is general in nature and does not require separate adjudication, hence dismissed. Ground No.4 relating to disallowance of club expenses is not pressed by the assessee and hence dismissed. The rest of the grounds are adjudicated in the following paragraphs.
Deduction u/s 36(1)(vii) (Ground No.2)
This ground relating to issue of deduction u/s 36(1)(vii) is adjudicated by us in ITA No.1109/Bang/2019 for the assessment year 2015-16 for the reasons stated herein above in paragraphs 13.1 to 13.6 Since the issue in this ground is the same, we allow the ground of the assessee and the disallowance u/s 36(1)(vii) is deleted.
The depreciation on ATM (Ground No.3) 29. This ground relating to issue of depreciation on ATM is adjudicated by us in ITA No.1109/Bang/2019 for the assessment year 2015-16 for the reasons stated herein above in paragraphs 14.1 to
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14.7. Hence this ground of the assessee also is allowed and the hold that the depreciation on ATM is to be allowed at the higher rate of 60%
The applicability of provisions of sec. 115JB (Ground No.4)
This ground relating to issue of applicability of provisions of sec. 115JB is adjudicated by us in ITA No.1109/Bang/2019 for the assessment year 2015-16 for the reasons stated herein above in paragraphs 18.1 to 18.5. Considering the fact that this ground also pertains to the same issue we set aside order of the CIT(A) and restore the same to his file for deciding the case afresh in accordance with law
Specific addition to book profit (Ground No. 5)
The assessee bank in its computation of book profit u/s 115JB, had added provision for funded interest loan (FITL) to book profit and provision for interest sacrifice. On becoming aware of the error, the assessee bank claimed before the CIT(A) that provision for FITL and provision for interest sacrifice being debits in profit and loss account is not covered under any of the items mentioned in Section 115JB and, therefore, the same needs to be reduced from book profit. Disregarding the contentions of the assessee, the CIT(A) dismissed the appeal by holding that such provision would get covered under clause (i) to Explanation 1 of Section.
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31.1. This ground relating to issue of specific addition to book profit is adjudicated by us in ITA No.1109/Bang/2019 for the assessment year 2015-16 for the reasons stated herein above in paragraph 24. Following the same decision this ground is restored back to the file of CIT(A) as the issue regarding applicability or otherwise of sec.115JB is restored to the file of Ld CIT(A).
In result the appeal of the assessee is allowed for statistical purposes
ITA No.255/Bang/2010
We will now take Revenue appeal in ITA No.255/Bang/2010 for the asst. year 2014-15. In this appeal, the revenue has raised 16 grounds. Ground No.1 and 6 are general in nature and does not require separate adjudication, hence dismissed. Rest of the grounds are decided in the following paragraphs.
Depreciation on HTM Securities (Ground No.2 to 4) 34. The assessee while arriving at the income deducted profit on sale of investment as per books amounting to Rs.3,14,07,67,825.44 and added back depreciation amounting to Rs.5,37,32,18,540 and securities amounting to Rs.77,23,58,057.22 which were debited to P&L account. The assessee claimed an investment on trading loss of
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Rs.30,28,32,07,135 based on the investment trading account prepared for the purpose of Income-tax Act. This based on the fact that, for the purpose of Income-tax, the assessee treated the entire investment (other than shares, mutual funds and venture capital) as stock-in-trade and the interest income and the profit on sale of investment under the head ‘profits and gains from business or profession’. The AO relying on the Reserve Bank of India (RBI) Circular dated 02/09/2003 and also CBDT Circular held that the entire investment portfolio cannot be treated as stock-in-trade. He further held that no depreciation in the case of HTM securities be allowed and in the case of Available for sale & Held that for trading only the net depreciation debited to profit and loss account can be allowed. The AO further observed that the loss claimed under the head loss on sale of investment as per trading accounting is in violation of method of accounting and the valuation of investment portfolio prescribed by the RBI guidelines. The AO, therefore, disallowed the loss as per the investment trading account amounting to Rs.30,28,32,07,135/-. 34.1. Aggrieved by the order of the AO, the assessee filed an appeal before the CIT(A) who allowed the appeal in favour of the assessee by placing reliance on the order of the Tribunal in assessee’s own case in ITA No.1264 and 1352/Bang/2013 for the asst. year 2011-12. The CIT(A) also relied on the jurisdictional High Court of Karnataka’s decision that the case of Vijaya Bank in ITA No.687/Bang/2008 dated 11/3/2013 and in the case of Karnataka Bank in ITA
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No.172/Bang/2009 dated 11/1/2013. Since the CIT(A) has allowed the appeal in favour of the assessee following the decisions of jurisdictional High Court and the decision of coordinate bench of the Tribunal, we see no reason to interfere with the decision of the CIT(A) and hence the ground raised by the Revenue is dismissed.
Disallowance u/s 14A (Ground Nos. 5 to 10)
This ground relating to issue of disallowance u/s 14A is adjudicated by us in ITA No.1109/Bang/2019 for the assessment year 2015-16 for the reasons stated herein above in paragraphs 20.1 to 20.4. Accordingly this issue is restored back to the file of the AO for fresh examination. This ground is allowed in favour of revenue for statistical purposes.
Deduction u/s 36(1)(viia) (Ground No. 11 to 15)
This ground relating to issue of deduction u/s 36(1)(viia) is adjudicated by us in ITA No.1109/Bang/2019 for the assessment year 2015-16 for the reasons stated herein above in paragraphs 21.1 to 21.4. Since the issue raised by the revenue is same, we do not find any reason to interfere with the decision rendered by Ld CIT(A) on this issue. Hence this ground is dismissed for statistical purposes.
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In the combined result, with regard to assessee’s appeal in ITA No.1109/Bang/2019 is partly allowed and the assessee’s appeal in ITA No.1680/Bang/2018 is fully allowed for statistical purposes. The Revenue’s appeal in ITA No.164/Pan/2019 & 235/Pan/2018 are partly allowed for statistical purposes.
Order pronounced in court on 15th March, 2022
Sd/- Sd/- (GEORGE GEORGE K) ( PADMAVATHY S) Judicial Member Accountant Member Bangalore, Dated, 15th March, 2022 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order
Asst. Registrar, ITAT, Bangalore
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Date of Dictation …………………………………… 2. Date on which the typed draft is placed before the dictating Member ……………………. 3. Date on which the approved draft comes to Sr.P.S .……………………………. 4. Date on which the fair order is placed before the dictating Member ……………….. 5. Date on which the fair order comes back to the Sr. P.S. ………………….. 6. Date of uploading the order on website…………………………….. 7. If not uploaded, furnish the reason for doing so ………………………….. 8. Date on which the file goes to the Bench Clerk ………………….. 9. Date on which order goes for Xerox & endorsement…………………………………… 10. Date on which the file goes to the Head Clerk ……………………. 11. The date on which the file goes to the Assistant Registrar for signature on the order ………………………………. 12. The date on which the file goes to dispatch section for dispatch of the Tribunal Order …………………………. 13. Date of Despatch of Order. ……………………………………………..