STATE BANK OF INDIA,MUMBAI vs. ADDL CIT RG 2(2), MUMBAI

आदेश / O R D E R

महावीर ससुंह, उपाध्यक्ष / PER MAHAVIR SINGH, VP:

These cross appeals are arising out of the order of the Commissioner of Income Tax (Appeals)-5, Mumbai in Appeal No. IT-11/10-11 dated 08.03.2016. The Assessment was framed by the Asst. Commissioner of Income Tax, Circle 23(1) Mumbai (in short ACIT/ITO/ AO) for AY 2008-09 vide dated 29.03.2010, under section 143(3) read with section 147 of the Income-tax Act, 1961 (hereinafter ‘the Act’). 2. At the outset it is to be mentioned that these cross appeals were fixed for hearing before “G” Bench and “G” Bench adjourned this matter on 25th March, 2019. Consequent to this adjournment, the Revenue moved a petition for transfer to this matter from “G” Bench to any other Bench because “G” Bench was not functioning during that week. Hence Revenue moved transfer petition and early hearing petition before the Vice President, ITAT, Mumbai. The relevant text of the letter dated 20.03.2019 reads as under: - “Appeal Nos. – ITA 3680/M/17, ITA 3882/M/17 ITA 3644/M/16, ITA 3645/M/16 ITA 4563/M/16, ITA 4564/M/16

3 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 Sir,

It is brought to your kind notice that hearing in the above mentioned matters was fixed by the Hon'ble Members of the G-Bench, ITAT for the 25th and 27th of March, 2019. However, it is learnt that the G Bench is not functioning on the above mentioned dates. You are hence requested to kindly transfer the above mentioned appeals to an appropriate bench of the honourable Tribunal so that the above appeals are heard on 25th March, 2019. I shall be obliged for kind consideration of this request.”

“ITA Nos. 3680, 3882/Mum/2017, 3644, 3645, 4563 & 4564/Mum/2016

State Bank of India

For the assessee: K.K. Ved

For the Revenue: Satish Chandra Rjore

4 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 The appeals had come up last for hearing before ‘G’ Bench on 20th March 2019. It is explained by the parties before us that certain clarifications were to be obtained by the assessee bank and, accordingly, the then Bench adjourned the matter to 25th March 2019, as consented by the parties.

Presently, Revenue has filed an application dated 20th March 2019 pointing out that the exercise of listing the appeals on out of turn basis would be rendered infructuous by posting the matter on 25th March 2019 since ‘G’ Bench is not functioning in the next two weeks. Therefore, it has been requested that the appeals fixed on 25th March 2019 be transferred and assigned to another Bench, so as to facilitate early adjudication. The learned representative appearing for the Bank does not dispute the factual matrix asserted by the learned DR.

Considering the aforesaid, it is deemed fit that the appeals listed before ‘G’ Bench in the case of Sate Bank of India in ITA Nos. 3680, 3882/Mum/2017 and 3644, 3645, 4563 & 4564/Mum/2016 are transferred to come up for hearing before ‘A’ Bench on 25th March, 2019.

5 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 Above was announced in the court.

Sd/- Sd/- (MS) (GSP) JM VP”

In terms of the above, these appeals were heard after the consent of the parties.

“1. Provision for pension of ₹3724,00,00,000/-.

The learned CIT(A) erred in upholding the action of the Assessing Officer in disallowing the appellant’s claim in respect of provisions for pension amounting to Rs.3724,00,00,000.”

6 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 revenue reserves. The assessee claimed these amounts under Section 37(1) of the Act. During the course of scrutiny assessment proceedings, the AO noted and set out the defined benefit Pension Plan and Gratuity Plan required under AS 15. The relevant portion reads as under: -

Particulars Pension Gratuity Plans Change in the present value of the defined benefit obligation Opening defined benefit obligation at 15929.00 3527.00 1st April, 2007 Current Service Cost 423.14 126.15 Interest Cost 1290.00 285.00 Actuarial losses (gains) 219.62 (72.97) Benefits paid (1051.76) (321.00) Closing defined benefit obligation at 16810.00 3544.18 31st March, 2008 Change in Plan Assets Opening fair value of plan assets at 12205.26 3527.00 1" April, 2007 Expected Return on Plan assets 976.42 269.72 Contributes by employer 884. 14 5.00 Benefit Paid (1051.76) (321.00) Actuarial gains 7074 63.46 Closing fair value of plan assets at 13084.80 3544.18 31st March, 2008 Reconciliation of present value of the obligation and fair value of the plan assets Present value of Funded obligation at 16810.00 3544.18 31st March, 2008 Deficit (Surplus) 13084.80 3544.18 Unrecognized Past Service Cost Nil Nil New Liability/(Asset) 3725.20 Nil Amount Recognised in the Balance Nil Sheet

7 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 Liabilities 3725.20 Nil Assets Nil Nil Net Liability/(Asset) recognized in 3725.20 Nil Balance Sheet Net Cost recognized in the Profit and Loss Account Current Service Cost 423.14 126.15 Interest Cost 1290.00 285.00 Expected return on plan assets (976.42) (269.72) Net actuarial losses (Gain) recognized 148.88 (136.43) during the year Total costs of defined benefit plans 885.60 5.00 included in Schedule 16 “payment to and provisions for employees” Reconciliation of expected return and actual return on Plan Assets Expected Return on Plan Assets 976.42 269.72 Actuarial gain/(loss) on Plan Assets 70.74 63.46 Actual Return on Plan Assets 1047.16 333.18 Reconciliation of opening and closing net liability/(asset) recognized in Balance Sheet Opening Net Liability as at 1st April, 3723.74 Nil 2007 Expenses as recognized in profit and 885.00 5.00 loss account Net liability (Asset) recognized in 3725.20 Nil Balance Sheet 6. The AO, after discussing provisions of Sections 36(1)(iv), 36(1)(v), 40A(7) and 40(9) of the Act, noted that since these specific provisions are applicable for allowability of the above noted expenditure and expenditure of similar nature, they cannot be allowed under the general provisions of section 37(1) of the Act. The AO further noted that even the conditions as per Section 43B of the Act would be applicable to similar expenditure. The AO, finally after discussing elaborately,

8 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 disallowed the claim towards pension benefit by observing on the following 4 issues: -

“a. In view of the language of Section 37(1) itself, it is clear that it is a residual section for allowability of various expenses in the computation of income if there is no other specific provision relating to allowance of any expenditure u/s 30 to 36 of the I.T. Act.

b. Otherwise also, it is an established principle that the general provision (like section 37(1)) will not be applicable to such an item falling within the ambit of any specific provision. c. Further the expenditure should be relatable to the previous year. d. In the mercantile system the liability shall be an accrued liability and not a provisional liability to be allowed. Provisions of section 36 (1) (iv) and 36 1(v) allow provisional liabilities but they are subject to certain including applicability of section 438 of the I.T. Act. However, similar provisional liabilities cannot be allowed u/s 37(1) of the I.T. Act. In any case, the liability should be relatable to the revenue realized during the year.”

9 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 7. In view of the above, the AO noted that the provision for pension relates to accumulated impact of services of employees till 31.03.2007 as a result of change in accounting policy adopted by the assessee bank. According to the AO, these so called expenses claimed by the assessee represents accumulated liability of earlier years which cannot be matched with the current year’s revenue and the assessee itself has taken to Reserves account and not to the Profit & Loss Account. According to him, the same indicates that the management and the Auditor itself considered that these liabilities relate to earlier years. The AO further noted that even otherwise these liabilities are dependent on other relevant events, conditions and other statutory conditions or events to happen and hence are contingent in nature. The AO noted that allowance of these liabilities or provision of similar nature is actually made under the specific provisions by the Statute under Sections 36(1)(iv) and 36(1)(v) of the Act subject to other conditions as prescribed in the provisions of Section 40A(7) and 40A(9) of the Act. He noted that since these specific provisions are applicable to the assessee bank’s case, the allowability of pension benefit expenditure, which is of similar nature, they cannot be allowed under the general provisions of Section 37(1) of the Act. Accordingly, he noted that the assessee has created these transitional liabilities as a result of adoption of revised AS-15. Hence, he disallowed the defined benefit Pension Plan claim by the assessee of Rs. 3724/- crores. Aggrieved assessee preferred appeal before the CIT(A).

10 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 8. The CIT(A), after considering the submission of the assessee and the detailed discussion carried out by the AO in the assessment order and also the decision of the DRP for A.Y. 2012-13 vide para 62, extracted hereunder, affirmed the order of the AO: -

"The assessee has made a provision of 1663.41 crores towards pension liability. The plea of the assessee is that the said provision is allowable under section 37(1) of the Act. We are unable to accede to this plea of the assessee. Though it had been claimed the said provision was on actuarial valuation, it could not be ascertained before this Panel as to how it is an ascertained liability which has been ascertained at the time it has been debited to the books and it is not contingent in nature. We have no hesitation in agreeing with the contention that if a business liability has arisen in the relevant year, a deduction has to be allowed though the liability may be actually discharged at a later date. But then the onus is on the tax payer to demonstrate that how the said liability had arisen in the relevant year. We also agree with the view taken by the AO in this regard that when there are specific provisions dealing with the contribution to welfare funds, the same are allowable under the general provision of 37(1)”.

11 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 Aggrieved, assessee is in appeal before the Tribunal.

(i) The liability is not for the relevant year rather it relates to earlier year.

(ii) If at all it is allowable it falls under Section 40A (4/5) and 40A(7)/(9) of the Act.

(iii) Even this provision can be allowed subject to condition of payment as prescribed under Section 43B of the Act.

12 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 provision of AS-15 issued by the ICAI, the assessee has computed the pension benefit, i.e. defined employees benefit which was estimated on actuarial basis as per the valuation certificate issued by the Valuer and the provision for the same was made in the books of account by the assessee bank. He stated that no deduction on account of such provision was claimed in the earlier years and this expenditure was booked during the year under consideration, because of change in the accounting method AS-15 issued by the ICAI. He stated that the said expenditure in the previous year as a liability was quantified and as accrued during the year notwithstanding the fact that the same had to be discharged at a later date.

13 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 “37. (1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession".

“The law is settled: if a business liability has definitely arisen in the accounting year, the

14 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in praesenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain.

In Metal Box Company of India Ltd. v. Their Workmen (1969) 73 ITR 53 (SC), the appellant-company estimated its liability under two gratuity schemes framed by the company and the amount of liability was deducted from the gross receipts in the profit and loss account. The company had worked out on an actuarial valuation its estimated liability and made provision for such liability not all at once but spread over a number of years. The practice followed by the company was that every year the company worked out the additional liability incurred by it on the

15 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 employees putting in every additional year of service. The gratuity was payable on the termination of an employee’s service either due to retirement, death or termination of service- the exact time of the occurrence of the later two events being not determinable with exactitude before hand. A few principles were laid down by this court, the relevant of which for our purpose are extracted and reproduced as under:-

(i) For an assessee maintain his accounts on the mercantile system, a liability already accrued, though to be discharged at a future date, would be proper deduction while working out the profits and gains of his business, regard being had to the accepted principles of commercial practice and accountancy. It is not as if such deduction is permissible only in the case of amounts actually expended or paid;

(ii) Just as receipts, though not actual receipts but accrued due are brought in for income-tax assessment, so also liabilities accrued due would be taken into account while working out the profits and gains of the business;

16 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 (iii) A condition subsequent, the fulfilment of which may result in the reduction or even extinction f the liability, would not have the effect of converting that liability into a contingent liability;

(iv) A trader computing his taxable profits for a particular year ay properly deduct not only the payments actually made to his employees but also the present value of any payments in respect of their services in that year to be made in a subsequent year if it can be satisfactorily estimated.

So is the view taken in Calcutta Co. Ltd. v. cit (1959) 37 ITR 1 (SC) wherein this court has held that the liability on the assessee having been imported, the liability would be an accrued liability and would not convert into a conditional one merely because the liability was to be discharged at a future date. There may be some difficulty in the estimation thereof but that would not convert the accrued liability into a conditional one; it was always open to the tax authorities concerned to arrive at a proper estimate of the liability having regard to all the circumstances of the case.

17 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 Applying the abovesaid settled principles to the facts of the case at hand we are satisfied that the provision made by the appellant company for meeting the liability incurred by it under the leave encashment scheme proportionate with the entitlement earned by employees of the company, inclusive of the officers and the staff, subject to the ceiling on accumulation as applicable on the relevant date, is entitled to deduction out of the gross receipts for the accounting year during which the provision is made for the liability. The liability is not a contingent liability. The High Court was not right in taking the view to the contrary.

The appeal is allowed. The judgement under appeal is set aside. The question referred by the Tribunal to the High Court is answered in the affirmative, i.e., in favour of the assessee and against the Revenue.”

18 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 or profession” or “income from other sources” is required to be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. The assessee bank has followed mercantile system of accounting and in terms of the guidelines of the RBI, the assessee bank was required to follow AS-15 from financial year 2007-08 relevant to A.Y. 2008- 09. He argued that the provision made on account of pension liability may relates to earlier years but it is well settled principle in law that such liabilities are allowable in the year in which they are crystallized. In the present case the liability in respect of pension has been crystallized in the relevant previous year 2007-08 relevant to A.Y. 2008-09 pursuant to adoption of AS-15 and accordingly allowable as a deduction. He stated that assessee’s case is also covered by the decision in the case of State Bank of Saurashtra in ITA NO. 4949/Mum/2013 dated 23.12.2016 for A.Y. 2009-10, which has since merged with assessee bank and referred to Para 18.1 of the order. He then took us through the decision of the Hon'ble Delhi High Court in the case of CIT vs. Ranbaxi Laboratories Ltd 334 ITR 341 (Del) and stated that the issue is covered by the decision of the Hon'ble Delhi High Court because wherein a superannuation claim of its employees was under litigation and the Hon'ble Delhi High Court has noted that this claim was non funded and applicable to the managerial employees and hence the liability on account of superannuation of its employees for financial year 2001-02 was provided following AS-15 based on actuarial valuation and this provision was disallowed by the AO by

19 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 invoking provisions of Section 43B(b) of the Act on the ground that even if it was an ascertained liability the deduction should not be allowed in the provision to pension fund. The Hon'ble Delhi High Court also held that where the liability on account of pension accrued from year to year, which were payable on retirement of eligible employees and the same cannot be disallowed under Section 43B of the Act.

20 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 assessee for payment of gratuity to its employees on their retirement or on termination of their employment for any reason except provision made by the assessee for the purpose of payment of a sum by way of contribution towards an approved gratuity fund, or for the purpose of payment of any gratuity that has become payable during the previous year. Sec 40A(9) of the Act also puts several restrictions on allowing several expenses incurred by an assessee as an employer except in accordance with provision of Sec.36(1)(iv) and (v) of the Act. Under these circumstances, the assessee's claim of deduction for provision for meeting the similar liabilities under section 37(1) of the Act is not acceptable because the section itself bars expenses of the nature provided under section 30 to 36 of the Act. Otherwise, such action will circumvent these specific provisions. It may be mentioned that it is a well established legal principle that special provision prevail over general provision. It is submitted that in a recent judgement in the case of Pricol Limited, the Hon’ble Madras HC has explain the definition of the word "gratuity" by borrowing from the Hon'ble SC's decision AIR 2004 SC 1426 and stated that gratuity is a gratuitous payment given to an employee on discharge superannuation or death. Thus, the Hon'ble court has brought out the encompassing nature of the word "gratuity." The Court in the present case was deciding on the allowability of "provision for service weightage of the employees." The Court held that such provision, which is in effect, a scheme for gratuity, is only a mere arrangement between the employer

21 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 and the employee and hence stands clearly hit by provisions of Section 40A (7) (a) of the Act. He argued that the assessee bank has made a provision for pension on the basis of an "actuarial valuation" and has also submitted during the course of hearing that the valuation is based on the number of years served by the employee and similar criteria. He stated that the provision for "pension" as claimed by the assessee is nothing but provision made for a gratuitous payment and is hit by 40A(7) of the Act. Without prejudice to the above, the provision for pension made by the assessee is hit by Section 40A(9) of the Act.

22 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 benefit plan. The provision is in respect of the agreed benefits payable to its employees on retirement in respect of the services rendered by the said employees. The assessee has been measuring its liability for such benefits actuarially and obtains a valuation report every year and, on basis thereof, makes a provision in accordance with the Accounting Standards. During the year under consideration, the assessee has adopted AS-15 issued by the ICAI. Accordingly, an actuarial valuation was obtained to determine the additional obligation of the assessee towards pension liability. In accordance with the transitional provisions of AS-15, a provision of Rs. 3,724 crores were made based on the actuarial valuation by debiting the revenue reserves. The details are filed by the assessee in its note filed vide note 18.9 (a)(v)(I) of the financial statements at page No. 73 of the Paper Book – I, filed by assessee.

23 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 determined based on an actuarial valuation. The assessee explained this by an example stating that, if as per employee policy an amount of Rs. 250/- is payable to each employee towards pension and there are 10,000 employees, the total pension payable would be Rs. 25,00,000/-. However, based on actuarial valuation, which takes into consideration entry into service, length of service and date of retirement of all employees, attrition before retirement, etc. the pension liability amounts to Rs. 18,00,000/-. Accordingly, a provision of Rs. 18,00,000/- is required to be created in the books. Therefore, the pension liability has definitely arisen during the year as the services of the employees are already availed, and they are eligible for the said pension. It is also possible to estimate the pension liability with reasonable certainty. Hence, the provision made is for a present actual liability, payable in future, and not a contingent liability. It is clearly an ascertained liability and has been recognised in the books of account on a scientific basis, based on actuarial valuation. The Supreme Court in the case of Metal Box Co. of India (supra) and Bharat Earth Movers (supra) and several other cases, have held that if a business liability has definitely arisen in the accounting year, a deduction should be allowed if the liability could be reasonably estimated though actually discharged at a later date. Also, the Delhi High Court in the case of Delhi Flour Mills Vs. CIT [1974] 95 ITR 151 (Delhi), while allowing the provision for gratuity, observed as under:

“The gratuity payable to an employee represented a part of the emoluments payable

24 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 to him for rendering service during each year. The right to receive gratuity accrued to the employee as soon as he completed one year of service and, as a corollary, the liability to pay the gratuity to the employee arose to the assessee at the end of each year. The amount of the liability was also ascertainable and there was no question in the instant case of the discounted present value of the liability being not ascertainable. It was no doubt true that the actual payment of the gratuity was deferred to a later date on the happening of a certain event, namely, death or voluntary retirement of the employee. But, these were not uncertain events. Therefore, the provision made by the assessee for the payment of gratuity under the agreement dated 14-2-1956, was in the nature of a revenue expenditure in respect of the assessment years under reference”.

25 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 represents only a best estimate in the light of available information. But, the Revenue before the Tribunal has emphasised on the following contentions: a. expenditure does not relate to the year under consideration; b. Specific provision of sections 36(1)(iv)/36(1)(v) and 40A(7)/40A(9) of the Act are applicable to the pension liability. Further, the same should only be allowed on payment basis as per section 43B of the Act. Hence, a general provision like section 37(1) of the Act cannot apply.

26 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 created as in consequence of an adoption of the revised accounting standard.

27 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 arriving at this amount is referred by the AO at pages 22 and 23 of his assessment order. The provision in the present case is not for making contribution to any Fund, but for payment of pension to employees on their retirement over and above what they will be entitled to claim from the approved scheme. A bare perusal of sections 36(1)(iv)/36(1)(v) of the Act shows that, they would apply when deduction is claimed of any sum paid by an assessee as an employer towards a recognised provident fund or an approved superannuation fund or an approved gratuity fund. The amount of Rs. 3,724 crores are clearly not a contribution towards any recognised provident fund or approved superannuation fund or approved gratuity fund. Similarly sections 40A(7)/40A(9) of the Act would apply to provision made as an employer towards contribution to fund, or trust or any other entity. We also noted that the amount of Rs. 3,724 crore is not a provision made for contribution to any fund or trust or any other entity. Similarly, section 43B of the Act deals with contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees. The amount of Rs. 3,724 crores are not a contribution to a pension fund and is a provision towards pension liability. We are of the view that only the prescribed items can be disallowed in terms of section 43B of the Act. Therefore, the above provisions are clearly not applicable in the present case.

28 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 represents the liability arising on account of the availment of services during the tenure of the employment recognized as a consequence of the transitional provisions of AS-15. The aforesaid provision does not represent contribution to any pension fund, and hence, the provisions of sections 36(1)(iv)/36(1)(v) or 40A(7)/40A(9) or 43B of the Act are not applicable.

29 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 23. The issue is also squarely covered by the decision of the Hon’ble Bench of the Mumbai Tribunal in the case of erstwhile State Bank of Suarashtra (which has merged with the Assessee) vs. DCIT in ITA No. 4502/Mum/2013 dated 23.12.2016. The findings of the Tribunal are reproduced below:

“It is not disputed that the assessee has made the provision on the basis of actuarial valuation towards the pension of the employees in accordance with Accounting Standard 15, which was applicable from the impugned assessment year. The liability has therefore, definitely arisen during the impugned assessment year although it has to be discharged on a future date. The case of the assessee, in our view, is duly covered by the decision of the Hon’ble Supreme Court in the case of Bharat Earth Movers v. CIT [2000] (245 ITR 428) in which it was held as under:

“…………………

……………………”

The provision of section 43B will not apply to the same as this does not represent the sum payable by the assessee as an employer by way of contribution to pension fund. We, therefore, respectfully, following the decision of

30 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 Hon’ble Supreme Court delete the disallowance”

Hence, this issue is also covered by the Tribunal decision in the case of State Bank of Suarashtra (supra), which has merged with the Assessee. 24. The reliance placed by the learned Departmental Representative at the time of the hearing on the decision of the Madras High Court in the case of Pricol Limited is completely misplaced since the same deals with a case of disallowance of provision towards gratuity which was squarely covered by the provision of section 40A(7) of the Act. Further, it is clarified that section 40A(9) of the Act will not be applicable since the provision is not towards contribution to any pension fund. We are of the view that sections 36(1)(iv) and 36(1)(v) of the Act specifically deal with contribution to a recognized provident fund or an approved superannuation fund or an approved gratuity fund. The said sections do not deal with providing for a liability vis-à-vis pension or any other retirement benefits. Thus, the aforesaid provision for pension made on the basis of an actuarial valuation ought to be allowed as a deduction under section 37(1) of the Act. Since there are specific provisions dealing with contribution to pension fund/ gratuity fund, etc., the provision for pension (which doesn’t represent any contribution to fund) falls under the purview of section 37(1) of the Act and ought to be allowed as deduction. Reliance in this regard is placed on the decision of the Supreme Court in the

31 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 case of CIT vs. Kalyanji Mavji & Co. [1980] 122 ITR 49 (SC), wherein it was held that if expenditure incurred by the assessee was not covered by the specific provision under section 10(2)(v) of the Act, then, benefit should be given to the assessee under the residuary clause i.e. section 10(2)(xv) of the Act. Moreover, Instruction No. 17/2008 dated 26.11.2008, relied upon by the CIT DR is also not applicable to the facts of the case. As regards, para ix of the aforesaid instruction, it is applicable to deduction towards contribution to provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees. Whereas the provision for pension of Rs. 3,724 crore is not towards contribution to any fund, but it is payable to the employees directly. Also, Sr. no. xi of the aforesaid instruction states that contingent liability cannot constitute deductible expenditure. As elaborated above, provision towards pension of Rs. 3,724 crore is not a contingent liability. It is an ascertained liability and has been provided for in the books of account on a scientific basis, as per the actuarial valuation. Further, it would also be contrary to the judgement of the Supreme Court in the case of Metal Box Co. of India (supra) where the Supreme Court observed that contingent liabilities properly discounted were to be allowed as a deduction. In view of the above factual discussion, legal position based on various decisions, we are of the view that this deduction claimed by the assessee is allowable and hence, allowed. This issue of assessee’s appeal is allowed.

32 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 25. The next common issue in these cross appeals is as regards to the order of CIT(A) restricting the disallowance on account of provision for other employee benefit. For this assessee has raised the following ground No.2: -

“2. Provision for other employee benefits

2.1 The learned CIT(A) erred in not allowing the deduction of ₹471,31,00,000 for provision on account of transactional provisions of accounting standard 15 in respect of other employee benefits comprising of leave travel & home travel concession, sick leave and casual leave.

2.2 The learned CIT(A) erred in not allowing the deduction of ₹41,50,00,000/- for provision for the year under construction in respect of other employee benefits comprising of leave travel & home travel concession, sick leave and casual leave.

2.3 The learned CIT(A) erred in holding that the aforesaid provisions were covered under clause(f) of section 43B without appreciating that the provisions in respect of casual leave and sick leave is not encashable.”

Revenue has raised the following ground No. 4: -

33 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 “4. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in allowing the provision for other long term employee benefits, holding that these are employee costs which are not disallowable under section 43B, without appreciating that these expenses are in fact contingent in nature and hence not allowable as enunciated in the decision of the Hon. Supreme court in the case of CIT vs. Gemini Cashew Sales Corporation [65 ITR 643].”

“6.1 According to the appellant, during the assessment year 2008-09, the Bank had adopted Accounting Standard (AS) 15 - Employee Benefits (Revised 2005) issued by the Institute of Chartered Accountants of India. In accordance with the transitional provisions of AS 15 (Revised 2005), the Bank has based on actuarial valuation provided Rs. 3,724 crore towards pension benefits and Rs 532.70 crore towards other employee benefits by debiting the revenue reserves. The said amounts have been claimed as deduction by the Bank under section 37(1) in the year under consideration.

34 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 The AO disallowed the provisions of pension and other employees benefits of Rs. 3,724 crore and Rs. 532.70 crore respectively on the ground that liability relates to earlier years and therefore not allowable and hence the provisions are applicable under section 43B, only it is allowed if it is paid and further according to AO it is in the nature of contingent liabilities.

6.2 ……………………………….. With regard to Other employees benefits which are as under:

Sr. Long Term Employee’s Benefits Amount No. (In crore) 1. Privilege Leave (Encashment) including leave 88.00 encashment at the time of retirement 2. Leave Travel and Home Travel Concession 25.12 (Encashment/ Availament) 3. Sick Leave 18.4 4. Silver Jubilee Award 1.22 5. Resettlement Expenses on superannuation 3.73 6. Casual Leave (2.02) 7. Retirement Award (1.05) 8. Total 133.40 There was direction of DRP for the A.Y. 2012- 13 which is reproduced as under:

We have considered the matter. We agree with the contention of the assessee that only prescribed items can be disallowed under section 43B of the Act. The items that have been disallowed by the AO being provision

35 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 made towards employee benefits, silver jubilee awards etc. are part of employee cost and none of these items are disallowable under section 43B of the Act. The AO is directed to delete the proposed disallowance under section 43B

6.3 In the direction of the DRP they have allowed claim of benefits for silver jubilee awards and only retirement award. Regarding other disallowance i.e. leave travel and home travel, sick leave, casual leave, this will come under section 43B(f) where deduction is not allowed, any sum payable by assessee as an employer in lieu of any leave at the credit of his employee. As three of the claim like leave travel and home travel, sick leave, casual leave are in lieu of the leave and which come under the purview of section 43B, hence claim of the appellant is disallowed. Only as per DRP direction silver jubilee awards, resettlement expenses on superannuation and retirement award is allowed. Ground of appeal is partly allowed.”

Aggrieved, assessee as well as revenue came in appeal before Tribunal.

36 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 material placed before us including assessment order, order of CIT(A) and case laws. We noted that the assessee in accordance with the transitional provisions of AS-15, made provision of Rs. 532.70 crore based on actuarial valuation by debiting the revenue reserves. The details of other employee benefits are as under [see page 23 of the assessment order]:

Sr. Particulars Amount No. (Rs. In crore) 1. Leave Travel and Home Travel 232.64 Concession (Encashment/ Availment) 2. Silver Jubilee Award 9.66 3. Resettlement Allowance 35.89 4. Sick Leave 208.00 5. Retirement Award 15.84 6. Casual Leave 30.67 TOTAL 532.70

37 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 dealing with contributions to employee welfare funds, the same cannot be allowed under section 37(1) of the Act and the provisions of section 43B of the Act are applicable. We were taken to the facts of the case and noted that out of the sum of Rs. 532.70 crore, the CIT(A) allowed items mentioned at Sr. Nos. 2, 3 & 5 aggregating Rs. 61.39 crore and upheld the disallowance of items mentioned at Sr. Nos. 1, 4 & 6 aggregating Rs. 471.31 crore. The assessee challenges CIT(A)’s order where by provision in respect of other employee benefits comprising of leave travel and home travel concession, sick leave and casual leave aggregating Rs. 471.31 crore stands disallowed. 29. We have gone through the facts and noted that assessee has also made provisions for various long term employee benefits, which were debited to the profit and loss account – the details whereof are given hereunder [see page 33 of the assessment order]:

Sr. Particulars Amount (Rs. No. In crore) 1. Privilege Leave (encashment) 88.00 2. Leave Travel and Home Travel Concession 25.12 3. Sick Leave 18.40 4. Silver jubilee award 1.22 5. Resettlement expenses on Superannuation 3.73 6. Casual Leave (2.02) 7. Retirement award (1.05) TOTAL 133.40

38 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 30. The assessee claimed a deduction for the items mentioned at Sr. Nos. 2,3,4 and 5 above in the computation of total income and offered to tax the write back for items at Sr. Nos. 6 and 7. The assessee filed the details vide note No. 9 to the revised return of income on page 7 of the Paper Book – I. The AO disallowed these provisions on the basis that the same cannot be allowed under section 37(1) of the Act and the provisions of section 43B of the Act are applicable.

39 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 during the year. The above category of leave can only be availed by them and cannot be encashed. Therefore, these provisions are also not in lieu of any leave, but in respect of services of the employees utilised in respect of the leave not availed by the employees and which leave will be availed in future.

40 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 employees for the travel cost incurred by them on availment of the leave entitled to employees. The same is not towards any leave encashment, and hence it cannot be considered as a sum payable in lieu of any leave to which alone section 43B(f) of the Act applies. As stated above, the provision in respect of unavailed casual leave and sick leave is not encashable and, hence, is not covered by section 43B(f) of the Act. Reliance in this regard is placed by the assessee on the decision of the Bangalore Bench of the Tribunal in the case of Robert Bosch Engineering & Business Solutions Ltd. v/s. DCIT [ITA No. 336/Bang/2014 dated 21.04.2017. Further, the provision made is for an ascertained liability based on an actuarial valuation and is to be allowed as a deduction under section 37(1) of the Act while computing the total income. It is provided towards an ascertained liability, based on actuarial valuation, on a scientific basis and is not contingent in nature. In view of the above factual discussion, legal position based on various decisions, we are of the view that this deduction claimed by the assessee is allowable and hence, allowed. This issue of assessee’s appeal is allowed and that of the revenue is dismissed.

“3. Provision for privilege leave encashment of Rs.88,00,00,000

41 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 The learned CIT(A) ought to have allowed the deduction of Rs.88,00,00,000 in respect of provision for privilege leave encashment.”

 Exide Industries Ltd vs. UOI [2007] 292 ITR 470 (Calcutta)

 Bharat Earth Movers v/s. CIT [2000] 245 ITR 428 (SC)

42 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 aforesaid claim as and when the Supreme Court decides this issue in the case of Exide Industries Ltd, in accordance with the Supreme Court’s ruling. We direct the AO accordingly on this issue. This issue of assessee’s appeal is set aside and allowed for statistical purposes.

“4. Disallowance under section 14A

4.1 The learned CIT(A) erred in not specifically directing the Assessing Officer to compute disallowance under section 14A in respect to tax-free bonds, shares (other than strategic investment) and units of mutual funds as nil, as these investments of the Bank are stock-in-trade.

4.2 The learned CIT(A) in holding that the disallowance shall not be below the amount disallowed by the appellant himself in the computation of total income.

4.3 Without prejudice to the above, the learned CIT(A) erred not accepting the claim of

43 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 the appellant that only 1% of the exempt interest and dividend income is to be disallowed under section 14A. 4.4 Without prejudice to the above, the learned CIT(A) erred in not appreciating that income of yielding any exempt income during the year will not be considered for the purpose of computing disallowance under section 14A.”

Revenue has raised the following ground No. 7 & 8 as under: - “7. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no disallowance under section 14A read with Rule 8D(2)(ii) is called for, there by granting relief to the assessee, overlooking the fact that the AO had correctly made the disallowance, as the assessee could not establish the nexus between its own funds and investments made in tax free income.

44 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 Ropes Ltd. (65 SOT 86), without appreciating the fact that the decision of ITAT has not been accepted by the department and appeal has been admitted by the Hon’ble High Court.”

Since both the grounds of Assessee and Department are dealing with the same issue of disallowance under section 14A of the Act relating to the disallowance of expenses relatable to exempt income, and submissions in respect of both the appeals are dealt with together.

45 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 assessee are Rs. 49,032.66 crore and investment earning exempt income is Rs. 8755 crore i.e. owned funds are more than investments and hence, no disallowance under Rule 8D(2)(ii) of the Rules can be made. In this regard, the CIT(A) relied on the decision of the Bombay High Court in the case of CIT vs. HDFC Bank (2014) 366 ITR 505 (Bom). In respect of disallowance made by the AO as per rule 8D(2)(iii) of the Rules, the CIT(A) directed the AO to re-compute the disallowance by excluding the investments held as stock-in-trade and strategic investments in subsidiaries and fully owned bank subsidiary. However, the CIT(A) also directed that the disallowance cannot go below the suo-moto disallowance made by the assessee in the revised computation of total income. Aggrieved, assessee as well revenue came in appeal before Tribunal.

46 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 of rule 8D(2)(iii) of the Rules. Reliance is placed on the following decisions:

 ACIT vs. Vireet Investments (P.) Ltd. [2017] 58 ITR(T) 313 (Delhi - Trib.) (SB)

 Cox and Kings Ltd. vs. ACIT [ITA No. 2066/Mum/2017 dt. 3.01.2019] [Mumbai Tribunal]

47 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 upholding the findings of the Tribunal, has approved that pursuant to giving effect to an appellate order, the assessed income can go below the returned income. Similar view was taken by Hon’ble Bombay High Court in the case of Nirmala L. Mehta vs. CIT (2004) 269 ITR 1 (Bom).

 CIT v. India Advantage Securities Ltd [380 ITR 471] [Bombay High Court]

 State Bank of Patiala [78 taxmann.com 3] [Punjab and Haryana High Court] [see pages 647 to 657 of Paper Book – I It was stated by Ld Counsel for the assessee that the appeal filed by the department has been dismissed by the Supreme Court in the case of Maxopp Investment Ltd. v/s. CIT [402 ITR 640]

48 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016  Punjab National Bank v/s. ACIT [ITA No. 1519/ Del/ 2016 dt. 28.11.2018] [Delhi Tribunal]  In this case, the Delhi Tribunal relying on the findings given by the Supreme Court in the case of Maxopp Investment Ltd. & State Bank of Patiala has specifically held that where the assessee is a Bank, shares are held as stock-in-trade and therefore it becomes business activity of assessee. Hence, these investments made by Bank should not be considered for calculating disallowance in terms of rule 8D(2)(iii) of the Rules– [refer para No. 8 on page No. 7 of the aforesaid Order]  State Bank of Hyderabad [63 taxmann.com 322] [Hyderabad Tribunal] [see pages 634 to 646 of Paper Book – I]

 It was stated that the Supreme Court has also recalled the decision in the case of ACIT v/s. Jamnalal Sons Pvt. Ltd. wherein the appeal filed by the Department was initially dismissed on the issue of disallowance under section 14A of the Act on investments which are held as stock- in-trade. The said issue has also been

49 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 decided in favour of the assessee by the Mumbai Tribunal in [ITA NO. 3789/Mum/2013] [erstwhile State Bank of Saurashtra which has since merged with the assessee] vide its Order dated 23.12.2016 for AY 2008-09 (see pages 613 to 623 of the Paper Book - I)

 Reliance is also placed on the CBDT Circular No. 18/2015 dated 2.11.2015, wherein it is discussed that investments made by a banking concern are part of the business of banking and therefore, the income arising from such investments is attributable to business of banking falling under the head 'Profits and gains of business and profession”.

 CIT vs. Reliance Industries Limited [Civil Appeal No. 37 of 2019] [ Supreme Court]  CIT vs. HDFC Bank Ltd. (2016) 383 ITR 529 (Bom.)

 CIT vs. HDFC Bank (2014) 366 ITR 505 (Bom.)

50 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 The following decisions laying down the same principle have been referred to in the tabulation filed before the Tribunal on 25.03.2019:  PCIT vs. Spanco Ltd. [ITA No. 488/2016 dt. 26.11.2018] [Bombay High Court]  PCIT vs. JSW Power Trading Co. Ltd. [ITA No. 1075/2015 dt. 14.02.2018] [Bombay High Court]  CIT vs. Tin Box Co. [2003] 260 ITR 637 (Delhi)  Gujarat State Fertilizers & Chemicals Ltd [Tax Appeal No. 82 of 2013] [Gujarat High Court]  CIT vs. UTI Bank Ltd. [2013] 32 taxmann.com 370 (Gujarat)  JCIT vs. Pudumjee Industries Ltd. [ITA No. 1933/Mum/2018 dt. 13.03.2019]  Cox and Kings Ltd. vs. ACIT [ITA No. 2066/Mum/2017 dt. 3.01.2019] 46. Alternatively, also it was argued that where there are mixed funds consisting of own funds and customer’s funds/borrowed fund, it cannot be assumed that a payment for investment purpose came out of borrowed funds and not out of own funds. Reliance in this regard is placed on the following decisions:

51 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016  CIT vs. Reliance Utilities & Power Limited [2009] 313 ITR 340 (Bombay)  Woolcombers of India Ltd. vs. CIT [1982] 134 ITR 219 (Calcutta)  Reckitt & Coleman of India vs. CIT [1982] 135 ITR 698 (Calcutta)  India Explosives Ltd. vs. CIT [1984] 147 ITR 392 (Calcutta)  Alkali & Chemical Corporation of India Ltd. vs. [1986] 161 ITR 820 (Calcutta)  British Paints (India) Ltd. vs. CIT [1991] 190 ITR 196 (Calcutta)  Consolidated Investments Ltd. vs. DCIT [1996] 57 ITD 286 (Madras)  Durametallic (India) Ltd. vs. IAC [1991] 38 ITD 211 (Madras)

 East India Pharmaceutical Works vs. CIT [1997] 224 ITR 627 (SC)

52 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 comply with the SLR requirements. Accordingly, the expense incurred in relation to earning of the interest income should not be disallowed under section 14A of the Act. Reliance in this regard is placed on the decision of the Cochin Tribunal in the case of State Bank of Travancore [318 ITR (AT) 171]. The argument to exclude investment made in subsidiaries/strategic investments while computing disallowance u/s 14A of the Act is decided against the assessee by the decision of the Supreme Court in the case of Maxopp Investment Ltd. (supra). The assessee contended that those strategic investments which have not yielded any exempt income during the year ought to be excluded for the purpose of computing average value of investment, as elaborated above.

53 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 assessee in view of the decision of Supreme Court in the case of Maxopp Investment Ltd. (supra). However, it is to clarify that those strategic investment which have not yielded any exempt income during the year are to be excluded for the purpose of computing average value of investment. Even otherwise, now the law is settled that the investment which are giving exempt income during the year are to be considered for the purpose of disallowance u/s 14A of the Act read with Rule 8D(2)(iii) of the Rules, i.e. the administrative expenses for the purpose of computing average value of investment. We direct the AO accordingly. The AO will go into the details and will compute the disallowance in view of these observations. This issue is remanded back to the file of the AO.

“5. Depreciation on leased assets of ₹18,72,80,782

5.1 The learned CIT(A) erred in upholding the action of the Assessing Officer in disallowing the appellant’s claim in respect of deprecation of ₹18,72,80,782/- on leased assets.”

54 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 various parties whereby assets were granted on lease to them. In certain cases, the transactions were in the nature of sale and lease back i.e. the parties sold the assets to the Bank and in turn the Bank leased the assets to the parties. The Bank is the owner of the assets given on lease to the aforementioned parties. Accordingly, the Bank had claimed depreciation to the tune of ₹19,03,43,315/- in respect of such assets given on lease. The AO disallowed the assessee's claim of Rs. 18,72,80,782/- in respect of depreciation on leased assets and CIT(A) also confirmed the same on the ground that bank had not assumed any risk of ownership of the leased assets and was therefore not the owner, held as under: -

“12.3 I have considered the appellant's submissions. This is a recurring issue and this issue was considered by CIT(A) in appellant's own case for A.Y. 2007-08 and by ITAT for A.Y. 1996-97 which are reproduced as under:

It is noticed that identical issue had arisen in earlier years. On the issue, in AY 2006- 07, the relevant part of the observation finding of my predecessor CIT(A), as contained in order dated 30.03.2013 in appeal No. IT-241/09-10, is reproduced hereunder:

No new leases have been entered during the year. Some of the leases have expired

55 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 during the year and some of the leases have been renewed on the same terms and conditions. In r/o the leases which have expired the appellant has stated that the same have been transferred to the lessee on residual value. During the course of appeal proceedings, the appellant was required to produce any documentary evidence of the Registered Valuer to show the market value of the underlying assets at the time of expiry of the lease/renewal of the lease. No such documentary evidence of the Registered Valuer to show the market value of the alleged leased assets on the date of expiry of the lease/ renewal of the lease could be produced by the appellant during the appellate proceedings. It is thus clear that the lessor had no intention to recover and repossess the assets after the end of the lease period. The assets were never re possessed. The lease was certainly not an operating lease. As held in the case of Asea BrownBover Ltd V/s Industrial Finance Corporation of India (2006) 154 Taxman 512 (Supreme Court) and confirmed in Indus Ind Bank 135 lTD 165

56 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 (Special Bench) - in the appellant's case, the assets were user specific/risk and rewards incident to ownership were passed on to the lessee. The lessee bore the risk of obsolescence. The lessor was interested only in his rentals not in the asset The lease was non-cancellable. The lessor entered into the transaction only as a financier, lie did not bear the cost of repairs/ maintenance or operations. The lessor is typically a financial institution and cannot render specialized service in connection with the asset. A perusal of the aforesaid facts and the earlier year's assessment orders/ appellate orders gives to the inescapable conclusion that the lessee was the real owner. A simple loan transaction was made to adorn the garb of lease to avoid the rightful tax due to the exchequer. The lessee is the actual or real owner, the lessor assessee is only nominal or symbolic or the so called perceived owner. The law permits tax planning and not tax avoidance. If within the four corners of law a person arranges its affair in such a way that his overall tax liability is

57 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 reduced, there cannot be any embargo on such tax planning. If however dubious means are adopted to reduce the incidence of tax by artificially inflating expenses or reducing income, it cannot be described as anything other than tax avoidance. The law permits only tax planning and not tax avoidance. When we consider the reality of the situation in the present case, it becomes abundantly manifest that a simple loan transaction was made to adorn the garb of lease to avoid the rightful tax due to the exchequer. Therefore, genuineness of the so called lease agreement itself is not proved and was a sham agreement to give the colour of finance lease. In the appellant's case it was not even a case of finance lease. The facts and circumstances of the case show' that it was a case of mere advancing of loan by the assessee. As such under the present facts and circumstances of the case, when the genuineness of the lease agreement itself is not proved and was a shorn agreement to give the colour of finance lease to mere advancing of loans by the

58 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 assessee - the ratio laid down and relied upon by the appellant in the case of M/s ICDS Ltd. V/s CIT Mysore Et. Another Civil Appeal No. 3282 of 2008 (Supreme Court) shall not apply to the facts of the case. There was no genuine leasing. Accordingly, no depreciation is admissible to the assessee lessor.

The issue has been decided against the assessee by CIT(A) in assessment years AY 1999-2000 to 2006-07. Disallowance were confirmed even in the years prior to that. The decision of Hon’ble ITAT for AY 1996-97 in ITA No. 5470/Mum/2002 [order dated 26.07.2013] on the issue is also against the assessee. Following that, the disallowance of Rs.+++/- on account of deprecation on leased assets is confirmed. This ground of appeal is therefore dismissed.”

59 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 of the Act since these assets are owned by the assessee. In the earlier years, certain lease agreements were considered as finance transaction and hence, depreciation was disallowed on these assets in the earlier years. In the year under consideration, the AO has disallowed the depreciation in respect of leased assets, where depreciation was disallowed in earlier years. The CIT(A) upheld the disallowance made by the AO following the earlier years. It was fairly agreed that this issue is decided against the assessee in its own case by the ITAT in following Orders:

“Order dated 26.07.2013 for assessment Year 1996-97 [ITA 5470/Mum/2002] [see pages 450 to 496 of the Paper Book - II]

Order dated 29.04.2016 for assessment years 1997-98 and 1998-99 [ITA 3823- 24/Mum/2005] [see pages 501 to 528 of the Paper Book - I]”

60 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 54. The next issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of AO in disallowing deduction claimed by assessee under section 36(1)(vii) of the Act being the amount of Bad Debts written off (other than in respect of rural advances). For this assessee raised the following ground No. 6: -

“6. Deduction under section 36(1)(vii) of ₹1026,23,30,375/-

6.1 The learned CIT(A) erred in not allowing deduction of ₹1026,23,30,375 under section 36(1)(vii) being the amount of bad debts written-off (other than in respect of rural advances)

6.2 The learned CIT(A) erred in relying on explanation 2 to section 36(1) as inserted by the Finance Act, 2013 which is applicable from assessment years 2014-15 onwards.”

61 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 limited to excess of the amount written off over the credit balance of provision for bad and doubtful debts under section 36(1)(viia) of the Act. The CIT(A) confirmed the disallowance following the order of the CIT(A) for the assessment year 2007- 08, wherein the CIT(A) had held that Explanation 2 to section 36(1)(vii) of the Act inserted w.e.f 01.04.2014 which states that the proviso to section 36(1)(vii) of the Act and section 36(2)(v) of the Act relates to all types of advances i.e. rural and non- rural advances, is clarificatory in nature. Accordingly, the CIT(A) held that the assessee cannot be allowed double deduction i.e. one on provision basis and then again on actual write-off basis. The CIT(A) observed as under: -

“14.3 I have considered the appellant's submissions. This is a recurring issue and this issue was considered by CIT(A) in appellant's own case for A.Y. 2007-08 which are reproduced as under: "3.11.1 This is also a recurring issue and has been decided by the CFI(A) in AY 2002-03 to 2006-07 against the assessee. The decision dated 30.03.2013 of CIT(A) for AY 2006-07 in appeal no IT-241/09-10 is placed on record. As discussed therein, the Finance Act, 2013 has inserted explanation-2 to Sec 36(1) which reads as under the removal of doubts it is hereby clarified that for the purposes of the

62 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 proviso to clause (vii) of this sub section of clause (v) of sub-section 2 the account referred to therein shall be only one account in r/o provision of bad and doubtful debts under clause (viiia) and such account shall relate to all types of advances including advances made by rural branches". This explanation, though inserted w.e.f. 01.04.2014, is "clarificatory" in nature. It states that proviso to clause (vii) and clause(v) of sub-section2 shall relate to all types of advances including advances made by rural branches. The proviso to clause (vii) of Sec.36(1) therefore shall limit the application to both rural advances and non-rural advances. Therefore, there cannot be double deduction i.e. one on provision basis and then again on actual write-off basis separately and independently. The disallowance is accordingly confirmed. This ground of appeal is dismissed."

14.4 In view of the above decision of CIT(A), claim of the appellant is disallowed. This ground of appeal is disallowed.”

63 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 Before us Revenue has emphasised that deduction under section 36(1)(viia) of the Act is available to both rural and non- rural debts and accordingly, the restriction as per the proviso to section 36(1)(vii) of the Act is also applicable. The learned Counsel argued that as per the provisions of section 36(1)(viia) of the Act, a bank is eligible to avail deduction in respect of provision made for bad and doubtful debts, of an amount not exceeding 7.5% of total income and of an amount not exceeding 10% of the aggregate average advances made by the rural branches of the bank. Accordingly, the assessee is eligible to claim deduction of an amount lower of the provision made for bad and doubtful debts or the amount calculated as per the prescribed methodology. As per the proviso to section 36(1)(vii) of the Act, deduction under section 36(1)(vii) of the Act is limited to excess of the amount written off over the credit balance in the provision for bad and doubtful debts accounts made under section 36(1)(viia) of the Act. Further, as per section 36(2)(v) of the Act, where a debt made by the assessee to which section 36(1)(viia) of the Act applies, no deduction shall be allowed unless the assessee has debited the amount of such debt to the provision for bad and doubtful debts account made under section 36(1)(viia) of the Act. On a conjoint reading of the aforesaid provisions, it can be inferred that sections 36(1)(viia) and 36(2)(v) of the Act and the first proviso to section 36(1)(vii) of the Act, apply only to rural advances.

64 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 judgment in the case of The Catholic Syrian Bank Ltd. vs. CIT [2012] 343 ITR 270 (SC). The Supreme Court was concerned with a case where the assessee had claimed a deduction under section 36(1)(vii) of the Act pertaining to urban advances. The deduction was not allowed to the assessee on the basis that deduction under section 36(1)(vii) of the Act can be allowed only to the extent it is in excess of the provisions created and allowed as a deduction under clause (viia). The Supreme Court held that if the bad debts actually written off in the accounts of the assessee-bank represents only debts arising out of urban advances, allowance thereof is not affected, controlled or limited in any way by the proviso to section 36(1)(vii) of the Act. The relevant extract of the judgement of the Supreme Court is reproduced below:

“41. To conclude, we hold that the provisions of Sections 36(1)(vii) and 36(1)(viia) of the Act are distinct and independent items of deduction and operate in their respective fields. The bad debts written off in debts, other than those for which the provision is made under clause (viia), will be covered under the main part of Section 36(1)(vii), while the proviso will operate in cases under clause (viia) to limit deduction to the extent of difference between the debt or part thereof written off in the previous year and credit balance in the provision for bad and doubtful debts account made under clause

65 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 (viia). The proviso to Section 36(1)(vii) will relate to cases covered under Section 36(1)(viia) and has to be read with Section 36(2)(v) of the Act. Thus, the proviso would not permit benefit of double deduction, operating with reference to rural loans while under Section 36(1)(vii), the assessee would be entitled to general deduction upon an account having become bad debt and being written off as irrecoverable in the accounts of the assessee for the previous year. This, obviously, would be subject to satisfaction of the requirements contemplated under Section 36(2).” 58. Reliance in this regard is also placed on the following decisions, wherein the aforesaid issue has been decided in favour of the assessee:

 CIT vs. City Union Bank Ltd. [2007] 291 ITR 144 (Madras)  DCIT vs. Karnataka Bank Ltd. [2012] 349 ITR 705 (SC)  Punjab & Sind Bank vs. ACIT [2008] 23 SOT 103 (Delhi)

66 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 rural advances, is Clarificatory in nature. In this regard, reliance is placed on the decision of the Supreme Court in case CIT vs. Vatika Township (P.) Ltd. [2014] 367 ITR 466 (SC), wherein it was held that one established rule for interpretation of legislation is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. In the present case, the legislature stipulated a fixed date i.e. 01.04.2014 while inserting Explanation 2 to section 36(1)(vii) of the Act. In view of the above, we are of the view that assessee is entitled to deduction under section 36(1)(vii) of the Act being the amount of bad debts written off (other than in respect of rural advances). This issue of assessee appeal is allowed. 60. The next issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of AO in disallowing deduction claimed by assessee on account of reducing depreciation/ taxing appreciation in the value of securities held as Available For Sale(AFS) and Held For Trading(HFT) category. For this assessee has raised the following ground No. 7: - “7. Depreciation on securities

The learned CIT(A) erred in upholding the action of the Assessing Officer in reducing deprecation/ taxing appreciation in the value of securities held as Available for Sale (AFS) ad Held for Trading (HFT) category.”

67 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 61. Brief facts are that as per assessee from FY year 2004-05 the Bank has been valuing investments in 'Available for Sale' (AFS) and 'Held For Trading' (HFT) in books after netting off classification-wise depreciation and appreciation, computed scrip-wise and providing for net deprecation in each classification while ignoring net appreciation, as required by RBI guidelines. However, for tax purposes, investments in AFS and HFT categories are being valued scrip wise and depreciation, if any, was provided scrip wise while ignoring appreciation. Valuation of investments in AFS and HFT categories has consistently been done scrip-wise for tax purposes in earlier years. Therefore, for tax purposes valuation is done on the basis of lower of cost or market value computed scrip-wise and providing for depreciation in each classification while ignoring any appreciation. The assessee has claimed the deduction by way of notes to the computation of total income. The AO, however, has rejected the claim of the assessee. The CIT(A) also confirmed the action of the AO by observing as under: -

15.3 I have considered the appellant's submissions. This is a recurring issue and this issue was considered by CIT(A)in appellant's own case for A.Y. 2007-08 which are reproduced as under: …………………………..

68 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 15.4 In view of the above decision of CIT(A), claim of the appellant is disallowed. This ground of appeal is disallowed. 62. Before us it was argued that from the financial year 2004- 05, the assessee has been valuing investments in ‘Available for Sale’ (AFS) and ‘Held for Trading’ (HFT) in books after netting off classification-wise depreciation and appreciation, computed scrip-wise and providing for net deprecation in each classification while ignoring net appreciation, as required by RBI guidelines. However, for tax purposes, investments in AFS and HFT categories are being consistently valued scrip wise and depreciation, if any, was provided scrip wise while ignoring appreciation. Valuation of investments in AFS and HFT categories has consistently been done scrip-wise for tax purposes in earlier years. The same has also been accepted by the AO upto assessment year 2004-05 i.e. prior to the change in the treatment given in books of account. Therefore, for tax purposes valuation is done on the basis of lower of cost or market value computed scrip-wise and providing for depreciation in each of the scrip, while ignoring any appreciation. The assessee has claimed a deduction on this account vide note 24 to the revised return of income.

69 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 assessment year 2007-08. The Revenue before the Tribunal has emphasised on the applicability of Mumbai Tribunal’s decision in the case of Deutsche Bank AG and that the valuation is as per RBI guidelines. It was contended by the assessee that it is a well settled principle of law that unrealised gains on stock are not to be brought to the tax net. Reliance in this regard is placed on the decision of the Supreme Court in the case of Chainrup Sampatram vs. CIT [1953] 24 ITR 481 (SC), wherein it is held that profit cannot "arise out of the valuation of the closing stock". The relevant extract of the judgement of the Supreme Court is reproduced below:

“While we agree with the conclusion that no part of the profits of the firm in the accounting year can be said to have accrued or arisen at Bikaner, the reasoning by which the learned Judges arrived at that conclusion seems to us, with all respect, to proceed on a misconception. It is wrong to assume that the valuation of the closing stock at market rate has, for its object, the bringing into charge any appreciation in the value of such stock. The true purpose of crediting the value of unsold stock is to balance the cost of those goods entered on the other side of the account at the time of their purchase, so that the cancelling out of the entries relating to the same stock from both sides of the account would leave only the

70 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 transactions on which there have been actual sales in the course of the year showing the profit or loss actually realised on the year's trading.

….. While anticipated loss is thus taken into account, anticipated profit in the shape of appreciated value of the closing stock is not brought into the account, as no prudent trader would care to show increased profit before its actual realisation. This is the theory underlying the rule that the closing stock is to be valued at cost or market price whichever is lower, and it is now generally accepted as an established rule of commercial practice and accountancy. As profits for income-tax purposes are to be computed in conformity with the ordinary principles of commercial accounting, unless of course, such principles have been superseded or modified by legislative enactments unrealised profits in the shape of appreciated value of goods remaining unsold at the end of an accounting year and carried over to the following year's account in a business that is continuing are not brought into the charge as a matter of practice, though, as already stated, loss due to a fall in price below cost is allowed even if such loss has not been actually realised.

71 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 …. Again, it is a misconception to think that any profit "arises out of the valuation of the closing stock" and the sites of its arising or accrual is where the valuation is made. As already stated, valuation of unsold stock at the close of an accounting period is a necessary part of the process of determining the trading results of that period, and can in no sense be regarded as the "source" of such profits.”

“The valuation of the closing stock at market value invariably will create a problem. For if the market value is higher than cost, the accounts will reflect notional profits not actually realised. On the other hand, if the market value is less, the assessee will get the benefit of a notional loss he has not incurred. Nevertheless, as mentioned earlier, the ordinary principles of commercial accounting permit valuation 'at cost or market price, whichever is the lower'. [para 27]

72 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 The proper practice is to value the closing stock at cost. That will eliminate entries relating to the same stock from both sides of the account. To this rule custom recognises only one exemption and that is to value the stock at market value if that is lower. But on no principle can one justify the valuation of the closing stock at a market value higher than cost as that will result in the taxation of notional profits the assessee has not realised. [para 28]”

73 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 principle laid down by the Supreme Court in the aforementioned judgements.

74 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 price in respect of securities. Accordingly, the method of valuation followed by the assessee is required to be accepted. Reliance in this regard is placed on the following decisions:

 CIT vs. Bank of Baroda [2003] 262 ITR 334 (Bombay)  CIT vs. Corpn. Bank Ltd. [1988] 174 ITR 616 (Karnataka) Further, the issue was not disputed upto financial year 2003-04 and hence, the AO is not justified in taking a different view.

75 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 change in the method of valuation. Also, in that case, sugar was valued differently by bifurcating the stock into 'levy sugar' and 'free sugar'. The Court’s conclusion is based on the fact that there was no justification for bifurcation of sugar between free and levy sugar. The Mumbai Tribunal in the case of DCIT vs. Majestic Holdings And Finvest (P.) Ltd. [2010] 2 ITR(T) 407 (Mumbai) has noted that the reliance of the Departmental Representative on the judgement of the Bombay High Court in the case of Harinagar Sugar Mills Ltd. is misconceived inasmuch as in that case there was nothing to show the bifurcation of the closing stick of sugar into levy sugar and free sugar and hence, the assessee was obligated to value the entire stock at one value. In the assessee’s case as well, each scrip is different and therefore requires independent valuation. The CIT DR placed reliance on the decision of the Mumbai Tribunal in the case of JCIT vs. Dena Bank [2012] 20 taxmann.com 278 (Mumbai). In the aforementioned case, the security was purchased in year 1 at Rs. 100 and the market price at the end of the year was Rs. 90. Accordingly, the stock was valued at market price of Rs. 90 being lower than the cost. In year 2, the market price went upto Rs. 95. Accordingly, the stock was valued at market price of Rs. 95 being lower than the cost. However, suppose in year 3, the market value rises to Rs. 120, in such a situation, the stock would be valued at cost i.e Rs. 100, being lower than the market price. The Mumbai Tribunal held that excess of appreciation over the cost price would not be considered for valuing the closing stock. In the present case, we are not

76 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 concerned with a scenario where in the later year the depreciation provided in earlier years is reduced. Further, the decision of the Mumbai Tribunal in the case of Deutsche Bank A.G vs. DCIT [2003] 86 ITD 431 (Mumbai), relied by the AO is in connection with valuation of foreign exchange forward contracts. In this case the assessee did not account for in the financial statement the anticipated/contingent profits from the contracts to the extent not settled as on the last day of the accounting year whereas any loss on such contracts was provided for by a charge in the profit and loss account on the best estimates. The Department brought to tax the profit on such forward exchange contracts and stated that one method for valuation of the entire stock of securities should be followed. This resulted in a situation of taxing appreciation of stock, which goes against the general and settled principle of non-taxation of notional income, as laid by the Supreme Court in the case of Sanjeev Wollen Mills vs. CIT [2005] 279 ITR 434 (SC) and others discussed supra. Hence, we are of the view that this disallowance of depreciation/ reducing of depreciation on appreciation in the value of securities held as available for sale and held for trading category are allowable. We direct the AO accordingly.

77 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 “8. Deprecation under section 36(1)(viia) of Rs.566,96,68,537 8.1 The learned CIT(A) erred in holding that the provision for standard assets amounting to Rs.566,96,68,537 is to be excluded for determining the deduction under section 36(1)(viia). 8.2 The learned CIT(A) erred in not appreciating that even in respect of assets that are classified as standard assets, a part of the debts are doubtful of recovery and accordingly qualifies for deduction under section 36(1)(viia).” 70. Brief facts are that the assessee is claiming deduction under section 36(1)(viia) of the Act for provision for bad and doubtful debts including provision made for standard assets of Rs. 566,96,68,537/-. The AO has held that the provision for standard asset amounting to Rs. 566,96,68,537/- is to be excluded for determining the deduction under section 36(1)(viia) of the Act. The CIT(A) also confirmed the action of the AO by observing as under: - “16.3 I have considered the appellant's submissions. This is recurring issue and this issue was considered by CIT(A) in appellant's

78 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 own case for A.Y. 2007-08 which are reproduced as under:

The issue is considered. The arguments and the plea so raised by the assessee is misplaced. The section 36(J)(viia) is for providing provision in respect of bad and doubtful debts only and not in respect of the standard assets. In view thereof, it is held that the AO has rightly excluded the amount of provision of Rs. 589,18,98,060 onto standard assets out of the claim made by the assessee under section 36( l)(viia). The addition is accordingly confirmed.

16.4 In view of the above decision of CIT(A) In view of the above decision of CIT(A), claim of the appellant is disallowed. This ground of appeal is disallowed.”

79 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 the rural branches of the bank. The provision is created by the assessee on the basis of RBI Guidelines. The assessee is required to create provision on non-performing assets on the basis of the classification of assets into the four prescribed categories i.e. loss assets, doubtful assets, substandard assets and standard assets [refer para 5.1.2 of the RBI Guidelines].

80 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 provision made on any loan assets is a provision for ‘bad and doubtful debts’ irrespective of the category in which the loan falls. This is to provide for the inherent risk of loan losses which the bank may suffer in subsequent years.

“So, however, we may also clarify that we are in principle in agreement that a provision for bad and doubtful debts cannot include that against standard assets i.e. which the bank

81 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 (assessee) itself regards as good for receipt and, therefore with the decision by the tribunal in Bharat Overseas Bank Ltd. (supra) relied upon by the Revenue. A provision by definition a charge against profits, while that in respect of an asset, considered good, would be more in the nature of an appropriation of profit i.e. a reserve. This is precisely what the Tribunal in Bharat Overseas Bank Ltd. (supra) means when its states of the deduction being not in the nature of a standard allowance. No contrary judgement by the Tribunal or a higher court has even otherwise been brought to our notice. At the same time, the provision as per RBI guidelines – which are contended to have been followed / adopted, provide for the minimum provision, and the bank is free to make a higher provision, i.e., than that prescribed by the RBI norms. Provisioning, it may be noted, is a management function, made reflecting its risk assessment qua different assets. If therefore, the assessee-bank is able to satisfy the assessing authority that the provision as made is justified with reference to the debts considered by it as bad and doubtful, we see no reason as to why the same cannot be allowed. The matter is accordingly restored back to the

82 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 file of the A.O. for fresh determination by issuing definite findings of fact. Even as the primary onus would be on the assessee, the A.O. cannot substitute his own judgement with regard to the risk assessment qua a particular asset and, correspondingly, the provision in its respect. His purview would be to examine the reasonableness of the assessee’s claim in light of the facts and circumstances qua each asset/s in respect of which provision is made. In arriving at our decision, we have taken a holistic view of the matter, placing due emphasis on the words ‘provision’ preceding the words ‘for bad and doubtful debts’ as well as the words ‘not exceeding’ occurring in the section, and which stand highlighted for the purpose. We decide accordingly.”

83 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 addition of interest on non-performing assets(NPAs). For this assessee raised the following Ground No. 9: -

“9. Taxation of interest on non-performing assets (NPAs) of ₹ 11,37,42,857/-

The learned CIT(A) erred in confirming the action of the Assessing Officer in making an addition of ₹11,37,42,857/- in respect of interest on sticky advances that had been classified as NPAs by the Bank in terms of RBI guidelines.”

84 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 a. in which it is credited by the scheduled bank to its profit and loss account; or b. in which it is actually received by the bank; whichever is earlier.

85 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 79. The Revenue before the Tribunal has emphasized on the applicability of the criteria prescribed as per rule 6EA and that the interest on NPAs cannot fall under the exception provided in clause (e) of rule 6EA. But, the assessee argued that the action of the lower authorities cannot be sustained due to the following three reasons viz.,

a. section 43D of the Act would not apply in cases where interest is neither received nor credited to the profit and loss account; b. RBI guidelines are the primary criteria for determining whether a debt is bad or doubtful and the rule should be framed having regard to the guidelines; c. without prejudice, a deduction should be allowed of such interest as bad debts.

86 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 81. We have gone through the case law in American Express Bank Ltd. vs. Addl. CIT [2012] 25 taxmann.com 572 (Mumbai), wherein the Mumbai Tribunal was considering a case where the loans on which interest/principal remained unpaid for 90 days were classified as no-accrual loans. The unpaid interest in respect of such loans was reversed to an account called Reserve for Doubtful Interest (RFDI) account. All subsequent interest accruals of such loans were credited to RFDI account and not to the profit and loss account. The assessee offered to tax the net amount credited to the RFDI account i.e. the interest accruals in the RFDI account net of recoveries. However, it was argued that such tax treatment leads to offering interest on non-accrual loans to tax on accrual basis, even if the same is not credited to the profit and loss account. The Mumbai Tribunal held that where the AO has not contested that the policy adopted by the assessee is not in accordance with RBI guidelines, the incidence of taxation of interest on bad and doubtful debts will be either when the same is credited to the profit and loss account for the year or in the year in which it is actually received. Mere crediting of the interest to a reserve cannot be said to be an incidence by which the said interest could be charged to tax. The aforesaid decision has been affirmed by the Bombay High Court in the case of DIT vs. American Express Bank Ltd [2015] 235 Taxman 85 (Bombay). In the present case the assessee argued that there is no credit entry in the books of the account in respect of the interest on such NPAs and, accordingly, the addition made cannot be sustained. Hence according to

87 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 assessee the issue stood covered by the first proposition in terms of the Bombay High Court in assessee’s favour and hence, no further submissions were made on other two propositions.

“10. Taxation of non-performing investments (NPIs) of Rs.12,97,00,000

88 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 The learned CIT(A) erred in confirming the action of the Assessing Officer in making an addition to ₹12,97,00,000 in respect of interest on NPIs.”

89 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 above, the Delhi High Court held that the interest on inter corporate deposits recognised as NPA, in terms of the directions of RBI was not taxable. The aforesaid decision of Hon’ble Delhi High Court in the case of Vasisth Chay Vyapar Ltd. (supra) has been affirmed by Hon’ble Supreme Court in the case of CIT vs. Vasisth Chay Vyapar Ltd. [2019] 410 ITR 244 (SC).

“11. Recovery of bad-debts written off in earlier years

11.1 The learned CIT(A) erred in not allowing the claim of the Bank in respect on non- taxability of recovery of bad debts written off in earlier years.

90 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 11.2 The learned CIT(A) erred in not directing the Assessing Officer to not to tax the recovery of bad debts written off in terms of section 41(4), as the appellant had not claimed a deduction under section 35(1)(vii).

11.3 The learned CIT(A) erred in not directing the Assessing Officer to verify and allow the claim of the appellant.”

91 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 41(4) of the Act. In relation to the above, the assessee argued that the provisions of section 41(4) of the Act are applicable only when the recovery of bad debts are in relation to a debt for which a deduction under section 36(1)(vii) of the Act is allowed. The assessee has been allowed a deduction in relation to provision made for bad debts under section 36(1)(viia) of the Act in the earlier years. This provision, as if by a fiction deems something to be income, has to be strictly construed. Therefore, the provisions of section 41(4) of the Act, do not apply.

92 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 Nectar Beverages (P.) Ltd. vs. DCIT [2009] 314 ITR 314 (SC) wherein the Supreme Court has dealt with the specific section 41(2) of the Act for taxing balancing charge versus taxing the same under section 41(1) of the Act and has concluded that section 41(1) of the Act shall not be applicable.

93 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 92. In view of the above discussion, we are of the view that principally the assessee is entitled for claim of deduction under section 36(1)(viia) of the Act, which has rightly been claimed. The assessee has not made claim under section 36(1)(vii) of the Act in this regard. Hence, we allow the claim of assessee but the matter is restored back to the file the AO for verification purposes. This issue of assessee’s appeal is allowed for statistical purposes.

“12. Non-taxability of income from foreign branches

12.1 The learned CIT(A) erred in not allowing the claim of the Bank in respect of non- taxability of income earned by its foreign branches.

12.2 The learned CIT(A) erred in not directing the Assessing Officer to not tax the income earned by the foreign branches of the appellant, based in countries with whom India has entered into a tax treaty.

94 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 12.3 The learned CIT(A) erred in not directing the Assessing Officer to verify and allow the claim of the appellant. 12.4. The learned CIT(A) erred in observing that no facts were on record, without appreciating that the claim of Double Taxation Relief was verified by the Assessing Officer and hence significant facts were available on record.” 94. Brief facts are that the income earned by the foreign branches of the assessee should not be liable to tax in India in terms of the relevant tax treaties in light of various judicial pronouncements. Assessee claimed before CIT(A) that necessary directions may be given to the AO to not tax income of foreign branches based in countries with which India has a tax treaty. The CIT(A) held as under:-

“23.2.4 I have considered the appellant's submissions. Here the additional ground filed by the appellant is considered in view of decision of Mumbai High Court in the case of Pruthvi Brokers vs. CIT 349 ITR 336. In the above case, it is clearly held that if the facts are verified by the AO, this legal claim may be considered in the appellant's case. Regarding this issue the appellant had not submitted any facts and quantified the amount which falls

95 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 under this category and what is the amount received by the appellant and this amount was neither verified by the AO during the assessment proceedings nor the facts are not placed before me, claim of the appellant cannot be allowed. Similar issue was decided against the Bank by the CIT(A) for AY 2007-08.”

96 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 Clarificatory in nature and applicable to the assessee for the year.

97 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 section 90(3) empowers the Central Government to define any term which is not defined in the Income-tax Act, 1961 or in the relevant tax treaty. The legal meaning of ‘term’ is any expression or phrase which has a fixed or known meaning in art, science, or profession. Accordingly, it is submitted that sale, transfer, gift, etc. could be regarded as terms; however ‘may be taxed’ cannot be regarded as a term. Hence, the said notification, is not applicable The Notification does not define any ‘term’; it only gives a result / clarification. Section 90(3) empowers the Central Government to define any term which is not inconsistent with the provisions of the Income- tax Act, 1961 or the tax treaty. As the Supreme Court has already interpreted the meaning of the phrase ‘may be taxed’ in the case of CIT v/s. PAVL Kulandagan Chettiar [267 ITR 654], the notification cannot give a meaning to ‘may be taxed’ which is inconsistent with the views of the Supreme Court. The Notification cannot survive as it directly contradicts the judgment of the Supreme Court.

98 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 98. Without prejudice to the above argument made was that even if it held that the above notification is applicable, the same can be said to be applicable prospectively (i.e. from assessment 2009-10 onwards) and, hence, is not applicable for the year under consideration. Reliance in this regard, is placed on the decision of the Supreme Court in case CIT vs. Vatika Township (P.) Ltd. [2014] 367 ITR 466 (SC), wherein it was held that one established rule for interpretation of legislation is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. Similar view has been taken by the Madras High Court in V.R.S.M Firm [1994] 208 ITR 400 (Madras).

99 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 Vijaya Bank Vs. CIT [2010] 323 ITR 166 (SC). For this, assessee raised additional ground.

100 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 Bombay High Court in the case of Ultratech Cement Ltd. Vs. ACIT [2018] 408 ITR 500 (Bombay), the Ld. Counsel of assessee argued that whether or not to allow an additional ground to be raised before the appellate authority is to be decided by the appellate authority in exercise of its discretion considering the facts and circumstances of the case before it.

 debit to profit and loss account; and  reduction of loans and advances from the asset side of balance sheet

101 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 both of which conditions are satisfied in the assessee’s case.

 3.01.2014 (in MA. No. 371/M/14) for the assessment year 1996-97 (para No. 5), where the AO has allowed the deduction in the order giving effect to the Tribunal’s order.  29.04.2016 for the assessment years 1997-98 and 1998-99 (refer para 10 and para 21), where the AO allowed the deduction in the order giving effect to the Tribunal’s order. However, the CIT exercising power of revision under section 263 of the Act, set aside the

102 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 matter. The appeal filed by the assessee before the Tribunal against the aforesaid order under section 263 of the Act is heard on 14 March 2019 and the Tribunal’s order is awaited.  31.01.2018 for assessment year 1999-00 (refer para 34 to 36 on page 43 to 45), where the AO is yet to pass the order giving effect to the Tribunal’s order. Moreover, the AO in the assessee’s own case, while passing the assessment orders for AYs 2011-12 to 2015-16 has allowed the claim of deduction under section 36(1)(vii) as per Supreme Court’s ruling in the case Vijaya Bank.

“2. On the facts and circumstances of the case, in law, the Ld. CIT(A) has erred in allowing the assessee’s plea that the interest

103 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 income on securities has to be taxed on the due basis only without appreciating that as per the mercantile system of accounting followed by the assessee, interest on securities has to be taxed on accrual basis.”

104 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 “4.3 In the case of the appellant, the facts are discussed above. Here appellant had offered the income based on the principle of right to receive interest on securities. In the case of securities there are two coupon dates on which interest is received i.e 3oth June & 3151 December. As the bank has to close its books on 313t March, there is accrued interest on securities from 15, January to 31St March. Bank had not offered interest which has to be received on 301h June as it has no right to receive any income tax return, but while calculating the book profit bank had offered the interest on accrual basis. However, AO had assessed the total interest due to the bank in the A.Y. This issue is recurring in nature which has arisen in appellants own case in A.Y. 1999- 00 to 2007-08 and also ITAT's order in appellant's own case for the A.Yrs 1991-92 to 1996-97 which are in favour of the appellant and which are as under:

…………………………………….

4.4 In view of the above decision of CIT(A) and ]TAT, claim of the appellant is allowed. This ground of appeal is allowed.

Aggrieved, revenue came in appeal before Tribunal.

105 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 109. We have heard rival contentions and gone through the facts and circumstances of the case. We noted that interest on securities is payable six-monthly on the coupon date i.e. on 30th June and 31st December. While closing the books as on 31st March, there is interest on securities of 3 months i.e. from 1st January to 31st March is accounted for. However, the assessee is not eligible to receive such interest on 31st March, as the payment of interest accrues and becomes due only on the coupon date i.e. 30th June. It is the practice of the assessee to account for the interest on securities for the period upto 31st March while arriving at the book profit on the basis that interest accrues from day to day for accounting purposes. However, in the return of income filed for tax purposes, the interest on securities is taxed on accrued and due basis since the right to receive interest on securities arises on the due date only which falls after the accounting year.

106 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 1991-92 to 1994-95 by the order of Tribunal dated 19.05.2008, which is filed in Assessee Paper Book- II, which was followed by the Tribunal in the subsequent assessment years. Moreover, the Hon’ble Bombay High Court on appeal by Revenue for assessment year 1996-97 has upheld the decision of Tribunal vide its order dated 01.08.2016.

107 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 facts are not applicable to the present issue as in the said cases there was no dispute that as per the terms of contract between the parties, income had accrued but the dispute was with respect to its taxability based on the financial difficulty of the debtor parties. However, in the present case, the issue is with respect to whether the interest has become due and payable as per the terms of securities. The present is not a case wherein the right to receive the interest on securities exists and there is improbability of realisation of such interest. Even in such a case, the courts have held that no real income has accrued to the assessee. Reliance in this regard is placed on the decision of the Supreme Court in the case of CIT vs. Excel Industries Ltd. [2013] 358 ITR 295 (SC), wherein the benefit of an entitlement to make duty free imports could not be taken until the goods are imported and made available for clearance, also there was no liability on part of the other party to pass on the benefit to the assessee and, hence, it was held that only hypothetical income had accrued to the assessee. The Court has equated the right to receive with a corresponding liability to pay which does not exist in the present case as the obligation of the issuer to pay arises only on the coupon date. The learned CIT DR also relied on the decision of the Bombay High Court in the case of Taparia Tools Ltd. Vs. JCIT [2003] 260 ITR 102 (Bombay). It is to be clarified that the matching concept theory referred by the CIT DR in the decision of the Bombay High Court in the case of Taparia Tools Ltd. (supra) has been reversed by the Supreme

108 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 Court in the case of Taparia Tools Ltd. Vs. JCIT [2015] 372 ITR 605 (SC).

“3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the broken period of interest holding that it is revenue in nature and in the process failing to appreciating that it is in the nature of cost of securities and therefore, capital in nature.”

109 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 a security, it pays the market price of security plus BPI to the seller, because seller is entitled to interest till the date of sale. This is an old practice in the Government securities market. The purchasing banker treats the BPI paid as expenditure and the selling banker treats the BPI received as income. According to the assessee, this is as per Accounting Standards 9 and 13 framed by the ICAI. However, AO had disallowed BPI claim deduction of the assessee for Rs.2150,10,16,116/- for the year under consideration on the ground that this goes against the theory of real income as well as matching concept which are fundamental to the accounting. The CIT(A) allowed the claim by observing as under: -

5.3 The facts of the case are discussed above. Here AO had disallowed claim of deduction of Rs.2150,10,16,116/- for the year under consideration on the ground that it is against the theory of real income as well as matching concept which are fundamental to the accounting. This issue is recurring in nature in as per CIT(A)'s order in appellants own case in A.Yrs. 1997-98 to 2007-08 and also ITAT's order in appellant's own case for the A.Yrs. 1991-92 to 1996-97 which are in favour of the appellant and which are as under: ………………………….

110 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 5.4 In view of the above decision of CIT(A) and ITAT, claim of the appellant is allowed. Disallowance in relation to BPI is against the law and question of making any addition in relation to BPI either protective or substantive does not arise. This ground of appeal is allowed.

111 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 01.08.2016. From these facts we noted that this issue is covered in favour of assessee and hence, this ground is decided against Revenue. This issue of Revenue’s appeal is dismissed.

“4. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in allowing the provisions for other long term employee benefits, holding that these are employee costs which are not disallowable under section 43B, without appreciating that these expenses are in fact contingent in nature and hence not allowable as enunciated in the decision of the Hon. Supreme Court in the case of CIT vs. Gemini Cashew Sales Corporation [65 ITR 643].”

112 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 amounting to Rs. 61.39 crore and net provision of Rs. 3.90 crore (after considering write back of retirement award of Rs. 1.05 crore). Silver jubilee award is a benefit payable to the employees as per the employment guidelines on completion of 25 years of service with the assessee. Resettlement allowance is payable to the employees as per the employment terms in cases where the employees are posted from one jurisdiction to other. Retirement award is a benefit payable to the employees as per the employment guidelines on retirement. The provision towards these employee benefits is created on the basis of actuarial valuation and in accordance with the Accounting Standards.

113 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 liability, determined based on reasonable certainty and hence, clearly allowable. Reliance in this regard is placed on the decision of the Supreme Court in the case of Bharat Earth Movers Vs. CIT [2000] 245 ITR 428 (SC), wherein it is held that the liability is not a contingent one if the liability has been incurred during the accounting year and an estimate with reasonable certainty can be made, even if the liability is to be discharged at a future date. We accordingly, dismiss this issue of revenue’s appeal.

“5. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in allowing the provision for wage revision without appreciating that provision in respect of an unascertained liability which has not be quantified or a liability which has not accrued, does not qualify for deduction and such additions are covered under the CBDT Inst. No. 17 of 2008 dated 26/11/2008.”

114 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 with the All India Unions of Workmen expired on 31st October 2007. The employees union had placed a fresh charter of demands before the management of the Bank for inter alia, revision of wages. Discussions had taken place between the Government, IBA, the Bank and Employees Unions/Associations. The Bank is required to revise the wages of its employees from 1st November 2007. For this assessee bank had claimed for wage revision for Rs.575 crores which AO has disallowed on the ground that quantification of liability will be done later and agreement is not finalized till the date of passing assessment order and the claim of assessee is merely based on certain expectations and not on the basis of any definite material and the employees are not in position to claim the upward wage from the bank till the above process is complete. The CIT(A) allowed the claim of assessee by observing as under: -

“8.4 I have considered the appellant's submission. This identical issue had come up before Delhi High Court in the case of CIT v. Bharat Heavy Electrical Limited (2010) (26 taxmann.com 202) which is reproduced as under: -

"The Tribunal had noticed that there was no dispute as regards the terms of employment of the workers and officers. The only question was the exact quantification of the compensation or wage revision. The Tribunal also held that

115 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 provision for wage revision was based on past experience, interim Pay Commission of Government employees, previous Pay Commission's reports of public sector employees, union demands and other relevant factors. The Tribunal also held that with the expiry of one wage settlement or agreement, invariably, there is a time lag when deduction cannot be termed as contingent vision or rates of revision would be …………………..the quantification, however, had not happened. In view of these facts, this Court holds that there is no infirmity with the reasoning of the Tribunal about the deduction claimed on account of wage revision being permissible. In the above case Delhi High Court held that though it is not fully quantified, liability cannot be considered as contingent and provision for wage revision was based on past experience, interim Pay Commission of Government employees, previous Pay Commissions reports of public sector employees, union demands and other relevant factors. The Tribunal also held that with the expiry of one wage settlement or agreement, invariably, there is a time lag when another fresh wage revision agreement is

116 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 negotiated and entered. Though it is not fully quantified, this amount is real in nature and claim of the organization has to be allowed. In view of the above decision of Delhi High Court, provision for wage revision of Rs. 575 Crs is allowed. This ground is allowed.”

117 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 representative Unions, Associations of workmen & officers, following which a 17.5% wage increment was decided to be given to the employees.

 CIT vs. Mahindra Ugine & Steel Co. Ltd. [2000] 245 ITR 428 (SC) (Bom.) [see para 2 on page 2]  CIT vs. United Motors (India) Ltd. [1990] 181 ITR 347 (Bombay) (Bom.) [last para page 3-4]

118 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 wage settlement, is also decided in favour of the assessee by the Tribunal in the case of other Bank’s. In the case of Bank of India vs. DCIT [ITA No. 3082/Mum/2015] [Mum. Trib] the assessee had claimed a deduction for provision created toward wage revision arrived at based on indicative increase for assessment year 2009-10. The Mumbai Bench of the Tribunal allowed the claim on the basis that the provision was for services rendered by the employees and there was no doubt that the assessee has to make payment once the negotiations were over. We may mention that Bank of India is also a part of the same Bipartite settlement as in the present case of the assessee.

119 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 account of disallowing the staff welfare expenses. For this revenue has raised the following Ground No. 6: -

“6. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the disallowance of Rs. 32,51,664/- incurred by the assessee on reservation of seats in the schools for the children of the bank officers without appreciating the amount was not incurred wholly and exclusively for the purposes of its business.”

“10.3 I have considered the appellant's submissions. This is a recurring issue and this issue was considered by CIT(A)in appellant's

120 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 own case for A.Y. 2007-08 and by ITAT for A.Y. 1996-97 which are reproduced as under:

…………………………

10.4 In view of the above decisions of CIT (A) and ITAT, following the Rule of consistency, AC's disallowance is deleted and claim of the appellant is allowed. This ground of appeal is allowed.”

- Order dated 17.09.2009 for assessment year 1995-96 - Order dated 26.07.2013 for assessment year 1996-97 - Order dated 31.01.2018 for assessment year 1999-00

121 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 assessee’s Staff Welfare Scheme and hence, should be allowed as normal business expenditure. This issue is also covered by the decision in the case of Mahindra and Mahindra Ltd. vs. CIT [2003] 261 ITR 501 (Bombay), wherein it was held that payment made to schools where children of its employees studied were incurred predominantly for staff welfare and consequently, is an allowable business expenditure. Hence, this issue of Revenue’s appeal is dismissed.

“9. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in treating loss on account of depreciation of securities in HIM category/amortization of securities in HIM category without appreciating that no depredation is to be provided for investment classified under the HIM category.”

122 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 purchase price is higher than the face value, the premium should be amortised over the remaining period of maturity of the security. The AO disallowed the aforesaid provision on the basis that RBI guidelines do not decide taxability. The CIT(A) deleted the disallowance made by the AO following the Tribunal order in assessee’s own case for AYs 1995-96 to 1996-97 and the CIT(A) order for AYs 2002-03 to 2007-08. The Revenue before the Tribunal emphasised that there is no section under the Act that allows deduction for such amortisation of premium on securities.

123 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 Option. For this revenue has raised the following Ground No. 10:-

“10. On the facts and circumstances of the case, the CIT(A) has erred in allowing the discount on issue of Employee Stock Purchase Scheme in accordance with the principle laid down by the Bangalore Special Bench in the case of Biocon Ltd. (IIA No. 368 to 371 & 1206/Ban/2010), when the decision has not been accepted and further appeal has been filed before the Karnataka High Court on this issue.”

124 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 and further relying the Supreme Court's ruling in the case of Goetz (India) Ltd. Vs. CIT [2006] 284 ITR 323 (SC) denied the claim as the claim is made only in the note to the return. The CIT(A) allowed the claim by observing as under:-

“20.3 I have considered the appellant's submissions. In this case Bank adopted the Employees Share Purchase Scheme as per the approval of Central Government and accordingly approved the offer of 86,17,500 equity shares of Rs.10 each at a premium of Rs.1580/-. For this bank had claimed a deduction of Rs. 11 Crore which was disallowed by the AO on the round that it was claimed only in the note to the return in view in view of Supreme Court's ruling in the case of Goetz India Ltd. (284 ITR 323) and also AO considered it as merely a contingent liability. Appellant has placed reliance on decision of Madras High Court in the case of CIT v. PVP Ventures Ltd. (23 taxmann.com 286) wherein it is held as under:

As far as the Employees Stock Option Plan is concerned, as rightly pointed out by the Tribunal, the assessee had to follow SEBI direction and by following such direction, the assessee claimed the ascertained

125 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 amount as liability for deduction. We do not find that there exists any error to disturb the order of the Tribunal and in turn the Assessing Authority. In the circumstances, we agree with the submission of learned senior counsel appearing for the assessee in this regard by upholding the order of the Tribunal.

and also decision of the Bangalore Tribunal Special Bench in the case of Biocon Ltd v. CIT (35 taxmann.com 335) wherein it was held as under:

'It is a trite law that deduction is permissible in respect of an ascertained liability and not a contingent liability. From the stand point of the company, the options under ESOP vest with the employees at the rate of 25 per cent only on putting in service for one year by the employees. Unless such service is rendered, the employees do not qualify for such options. In other words, rendering of service for one year is sine qua non for becoming eligible to avail the benefit under the scheme. Once the service is rendered for one year, it

126 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 becomes obligatory on the part of the company to honour its commitment of allowing the vesting of 25 per cent of the option. It is at the end of the first year that the company incurs liability of fulfilling its promise of allowing proportionate discount, which liability would actually be discharged at the end of the fourth year when the options are exercised by the employees.

20.4 In view of the above two decisions, here the claim of the appellant for provision of Employee Stock Purchase Scheme is allowed.”

127 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 not challenge the findings of the CIT(A) admitting the additional claim made by the assessee at the time of the assessment. Hence, the said contentions of the learned Department Representative ought to be rejected. 141. It was contended that the discount on Employee Stock Purchase Scheme is an allowable deduction under section 37(1) in view of the Special Bench decision of the Bangalore Tribunal in the case of Biocon Ltd. v/s. DCIT [2013] 25 ITR(T) 602 (Bangalore - Trib.) (SB). As this issue is squarely covered in favour of assessee and against Revenue, we find no infirmity in the order of CIT(A). This issue of Revenue’s appeal is dismissed. 142. In the result, the appeal of the assessee is partly allowed and the appeal of the Revenue is dismissed, as indicated above. Order pronounced in the open court on 03.02.2020. Sd/- Sd/- (महावीर स िंह /MAHAVIR SINGH) (जी. मंजुनाथ /G MANJUNATHA) (लेखा दस्य / ACCOUNTANT MEMBER) (उपाध्यक्ष / VICE PRESIDENT) मुिंबई, ददनािंक/ Mumbai, Dated: 03.02.2020. स दीप सरकार, व.ननजी सधिव / Sudip Sarkar, Sr.PS

128 | P a g e State Bank of India ITA Nos.3644&4563/Mum/2016 आदेश की प्रनिसलपप अग्रेपिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A) 4. आयकर आयुक्त / CIT 5. ववभागीय प्रनतननधर्, आयकर अपीलीय अधर्करण, मुिंबई / DR, ITAT, Mumbai 6. गार्ा फाईल / Guard file.

आदेशान सार/ BY ORDER, त्यावपत प्रनत //True Copy// उप/सहायक पुंजीकार (Asstt. Registrar) आयकर अपीलीय अधिकरण, मुिंबई / ITAT, Mumbai