THE GOZARIA NAGRIK SAHAKARI BANK LTD.,MEHSANA vs. THE INCOME TAX OFFICER, WARD-4, PATAN

This appeal by the Assessee is preferred against the order of the Ld. CIT(A), Gandhinagar, Ahmedabad dated 15.09.2014 pertaining to A.Y. 2011-12.

Facts relating to this grievance show that the assessee is engaged in banking activities. During the course of the scrutiny assessment proceedings, the A.O. noticed that in its balance sheet, the assessee has treated securities for Rs. 26.86 crores as investment and not as stock in trade. The A.O. was of the opinion that the assessee cannot claim any provision for depreciation for the value of investment of securities. The A.O. further was of the opinion that the assessee was holding investment in Government Securities and following the guidance issued by RBI. The investment Held to be Maturity are investment of the bank and other two categories such as Held for Trading and Available for Sale are stock in trade of the bank. Considering the guidelines qua the facts, the A.O. disallowed the provision on depreciation of Government Securities for Rs. 13,37,050/- and added back to the income of the assessee.

Assessee carried the matter before the ld. CIT(A) and reiterated its claim of the provision.

After considering the facts and the submissions, the ld. CIT(A) agreed with the claim of the assessee and directed the A.O. to delete the disallowance so made. However, while deleting the disallowance the First Appellate Authority inadvertently has mentioned the amount of Rs. 4,84,830/- being Government Securities Premium written off where as Rs. 13,37,050/- should have been mentioned. Since the assessee has already got relief from the First Appellate Authority, there remains only a typographical error of the amount and

The second substantive grievance relates to the disallowance of an amount of Rs. 6,22,600/- claimed as provision on standard assets.

While scrutinizing the return, the A.O. noticed that the assessee has debited an amount of Rs. 6,22,600/- on account of provision on standard assets. The A.O. found that the assessee has heavily relied upon on the RBI guidelines. The A.O. was of the opinion that RBI directive have nothing to do with the taxability of the entities governed by those directions and taxable income of the assessee is required to be determined in accordance with the provisions of the Income-tax Act.

We find that an identical issue was considered by the Tribunal in assessee’s own case in A.Y. 2010-11 in ITA No. 3077/Ahd/2013 wherein the Co-ordinate Bench has restored the matter to the files of the A.O. The relevant findings of the Co-ordinate Bench read as under:- 9. We have heard the rival submissions. We find that the Hon'ble Apex Court in the case of Southern Technologies Ltd.(supra) has clearly observed that by way of special provision under s.36(l)(viia), the banks are allowed to claim deduction subject to a ceiling or a limit. As per section 36(l)(viia), the banks are entitled to claim deduction certain prescribed percentages of the average advance made by the rural branches of such banks. However, relevant facts about the advance by the rural branch requires to be verified in the light of section 36(l)(viia) read with Rule 6ABA of the Income Tax Rules, 1963. Accordingly, we consider it expedient that the issue is revisited by the AO de novo in accordance with law in the light of

Respectfully following the findings of the Co-ordinate Bench (supra), we restore this issue to the files of the A.O. with similar directions. This grievance is treated as allowed for statistical purpose.

The last substantive grievance relates to not granting depreciation of 60% on certain furniture fixed with computers and air-conditioners and restricting the claim of depreciation up to 15% only.

The A.O. found that the assessee has claimed depreciation @ 60% on furniture fixed with computers on which depreciation as allowable @ 15%. The A.O. therefore disallowed excess claim of depreciation of Rs. 24,007/-.

The assessee agitated the matter before the ld. CIT(A) but without any success.

A perusal of the order of the authorities below shows that the assessee has claimed depreciation @ 60% on furniture, fixtures and air-conditioners treating the same as part of or attachment to Computer accessories. In our considered opinion, the action of the assessee does not entitle it to claim depreciation @ 60%. The allowable rate on such asset is 15% and therefore the A.O. has rightly disallowed the excess claim of depreciation of Rs. 24,007/-. No interference is called for. This grievance is accordingly dismissed.