INDIAN OVERSEAS BANK,CHENNAI vs. DCIT, CHENNAI

आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:

The appeals filed by the assessee bank are directed

against different orders of the Commissioner of Income Tax –Large Taxpayer Unit, dt 12.02.2015 for the assessment years 2010-2011

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and 2011-12 passed u/s. 263 and 250 of the Income Tax Act, 1961

(herein after referred to as ‘the Act’). Since the issues in these appeals

are common in nature, hence these appeals are combined, heard

together, and disposed off by this common order for the sake of

convenience.

We take up Appeal No.496/Mds/2015 of assessment year 2.

2010-2011 for adjudication and the assessee raised the following

grounds of appeal:- 2.The CIT erred by invoking revisionary powers u/s 263 of the Income Tax Act, by adopting his own interpretation of 'obiter dicta' in the Apex court decision in Catholic Syrian Bank (343 lTR 270), and restricting claim u/s 36( 1)(viia)only for provision for rural debts and consequently disallowing claim for deduction of provision made of in accordance with the provision of sec 36( I )(viia). 3.The Commissioner of lncome tax erred in restricting the deduction of provision made under section 36(l)(viia) to Rs. 38.07 Crores as against the claim of the assessee of ₹810.60 Crores. 4. The Commissioner of Income tax ought to have appreciated that provisions of section 36(l)(viia) are very clear permitting the deduction in respect of both 7.5% of gross total income as well as 10% of the aggregate advance of the rural branches and there is nothing in the said clause that deduction under that Section should be restricted only to provision for doubtful debts pertaining to rural advances. 5. The CBDT Circular No.464 dated 18.07.1986 and Circular No. 13 of 2014 dated issued in this connection, clearly spell out that deduction u/s.36(1)(viia) should be granted as sum of both amounts viz., 7.5% of gross total income and 10% of the advances on rural branches. As there is no amendment to section 36( 1 )(viia) nor Circular as referred to above has been withdrawn as modified, the decision of the CIT restricting the claim under Section 36( 1 )(viia) is erroneous and contrary to the provisions of statute as explained by the CBDT Circular. 6.Interpretation placed by the CIT in the certain observations of the Apex Court in the case of Catholic

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Syrian Bank Vs CIT reported in 343 ITR 270 is out of context and erroneous. The issue before the Apex Court in that case was regarding allowance or deduction under Section 36(1 )(vii) in the light of the provision of provisions of Explanation (v) to sec 36(2) read with Section 36(1)(viia). The issue of quantum of deduction u/s 36(1 )(viia) was neither before the Apex Court nor was it decided in that decision. 7.The Apex Court, after having held that the provisions under Section 36(1 )(viia) and Circular No. 464 clearly explained the intent of the legislature, cannot be said to have held that deduction provided under Section 36(1)(viia) has to be restricted to only one limb of that section. 8.The CIT failed to appreciate that an obiter dicta in the case of Catholic Syrian Bank does not in any manner alter the or restrict the quantum of deduction allowable u/s 36(l)(viia) and in any case has no force of a binding authority. Therefore, CIT grossly erred in overlooking the plain wordings of the statute in sec 36(1)(viia), and order of the CIT restricting the allowance under section is patently against the plain provision of that section. 9.The CIT ought to have appreciated that deduction in respect of non rural debt is being claimed ever since the introduction of the said clause, and allowed by the department after examining specific provision in section 36(1) (viia), the clarification issued by CBDT and the subsequent amendment made by Finance Act, 2013 and could not have changed her view as to the ambit of said clause all of a sudden based on an obiter dicta and terming the deduction claimed and allowed as erroneous and therefore prejudicial to the Revenue. 10.The CIT ought to have appreciated that the true purport and legislative intention having being clarified by the clarificatory amendment in the said section to dispel the doubt over the tenability of said obiter dicta of the Apex Court, the disallowance by the CIT ignoring the clarified legislative intent is unreasonable and unwarranted. 11.The Commissioner of Income tax ought to have appreciated that very issue of deduction under Section 36(1)(viia) for the current assessment year was subject matter of appeal before the CIT(A), who had decided the quantum of deduction under that section. Under the circumstances, the order of the Assessing officer on this issue merged with that of the First Appellate Authority, and the CIT erred in assuming jurisdiction for revision the same issue. 12.The CIT failed to appreciate IT A T (Bang) in DCIT v ING Vysya Bank Ltd (2014) 149 ITD 61 I (Bang) held that observation of Apex Court in Catholic Syrian Bank case, would not lead to disallowance of claim of deduction under section 36(1)(viia) in respect of non rural debt, and permitted such deduction. When there

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are two views in regard to a particular issue revision under sec 263 will not lie. 13.Without prejudice to above, the appellant had demonstrated that the impugned revisionary order is not prejudicial to interest of revenue. The provision made if held as not allowable u/s 36(1 )(viia) is allowable u/s 36(1 )(vii) in view of the decision of the Apex Court in Vijaya Bank's case. In such a circumstance the net deduction allowable u/s 36( I )(viia) would be Rs. 879.88 Cr as against Rs 718.45 Cr proposed to be withdrawn in the revisionary order and hence the order of AO was not eventually prejudicial to revenue. 14.The CIT ought not to have rejected the above alternate plea contending that provision for NPA did not tantamount to provision for Bad and Doubtful debt overlooking the jurisdictional ITAT decision in Tamil Nadu State Apex co-operative Bank Ltd v ACIT (2014)43 taxmann.com III (Chen) holding that taxonomy of provision had been done by assessee to keep it in line with RBl and NABARD guidelines, but in pith and substance where provision had been created for 'Bad and Doubtful Debts', deduction was claimed in accordance with section 36(1 )(viia) and assessee was entitled to benefit of same. 15.Without prejudice to the above the deduction u/s.36(l)(vii) and under section 36(1)(viia) be allowed in respect of "bad and doubtful debts relating to all debts regardless whether "rural" or "non rural debts" - in accordance with the provisions of the Act as amended by a declaratory amendment by the Finance Act, 2013’’.

The Brief facts of the case the assessee bank is a Scheduled 3.

Bank assessable as a company for the purpose of Income Tax and in

the business of bank. The return of income was filed on 29.9.2010

declaring Nil income. The return was processed u/s.143(1) of the Act

and the case was selected for scrutiny under CASS and notice

u/s.143(2) of the Act was issued. In compliance to notice, the ld.

Authorised Representative appeared on various dates and filed

information. The Assessing Officer considered the submissions and

material before finalization of assessment. The ld. Assessing Officer

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made other disallowances alongwith issue in dispute of Disallowance

u/s.36(1)(viia) of the Act. The Assessing Officer found that the

assessee has made provision for Bad and Doubtful debts in the books

of accounts �886,39,17,850/- and also deduction u/s.36(1)(viia) was

claimed considering 7.5% of Gross total income and 10% of rural

advances and worked out eligible claim of �810,60,18,384/- as the

deduction u/s.36(1)(viia) being on the lower side compared to the

debit made in the Profit and Loss. On verification the assessee

company has submitted detailed working for calculation of 10% of

rural branches advances and filed details and computation specified

under Rule 6ABA of the Income Tax Rules alongwith name and

address of rural branch and population census and worked out eligible

deduction �763,57,40,400/- being 10% on rural advances. While

calculating, the scheduled bank has to follow the procedure as per

Rule 6ABA. ‘’6ABA. For the purposes of clause (viia) of sub-section (1) of section 36, the aggregate average advances made by the rural branches of a scheduled bank shall be computed in the following manner, namely :— (a) t the amounts of advances made by each rural as outstanding at the end of the last day of each comprise comprised in the previous year shall be separated separately ; (b) the sum so arrived at in the case of each such branch shall be divided by the number of months for which the outstanding advances have been taken into account for the purposes of clause (a) ; (c) the aggregate of the sums so arrived at in respect of each of the rural branches shall be the

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aggregate average advances made by the rural branches of the scheduled bank. Explanation : In this rule, “rural branch” and “scheduled bank” shall have the meanings assigned to them in the Explanation to clause (viia) of sub-section (1) of section 3650.]’’ and also calculation shall be supported with details of outstanding

balance of advance of rural branches. The calculation of assessee

bank also included balances of previous year giving rise to double

deduction for calculation in Rule 6ABA. As per the directions the

assessee bank furnished details of number of branches and also the

population as per census. On further verification, the Bank has

calculated the deduction in respect of 49 rural branches were the

population figure exceed the threshold figure of ten thousand. The

assessee bank also furnished detailed submissions by justifying

deduction u/s.36(1)(viia) of the Act. The ld. Assessing Officer

considered the provisions of law, material evidences and explanations

as per Rule 6ABA has calculated revised deduction u/s.36(1)(viia) of

the Act on account of advances made by the rural branches referred at

page no.4 of order:-

� Aggregate advances of all rural 4635,91,84,794 branches as per Annexure-I Less:- Advances of rural branches not 473,15,50,064 eligible as per Annexure-II Balance 4162,76,34,730 Average thereof for 12 months – 346,89,69,560 Rule 6ABA(6) Deduction u/s.36(1)(viia) @10% 34,68,96,956

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Since the bank has made provisions for Bad and Doubtful debts in the

books of accounts including standard asset and country-wise risk. As

per the provisions it cannot be part and parcel of debts and excluded

the value of �6,50,57,148/- and allowed deduction as per calculation in

the assessment order �162,49,74,682/- and assessee filed appeal

against the order with Commissioner of Income Tax (Appeals).

(Appeals), the Assessing Officer passed consequential order and the

matter pending against the order of Commissioner of Income Tax

(Appeals) before the Tribunal. Meanwhile, Commissioner of Income

Tax found on perusal of records of assessment found the assessee

claimed deduction u/s.36(1)(viia) �810,60,18,384/-. Further, the

Assessing Officer by verifying the claim has restricted the deduction

u/s.36(1)(viia) to �162,49,74,682/- by order u/s.143(3) dated

31.01.2013 were the Assessing Officer recomputed average rural

advances by adopting incremental advances of rural branches and

excluded the branches were population is more than ten thousand as

per latest census and also held that the standard advances cannot

made part of provision for bad and doubtful debts for which deduction

u/s.36(1)(viia) was claimed. The assessee bank has filed an appeal

with Commissioner of Income Tax (Appeals) upheld the view of

Assessing Officer in respect of re-classification of rural branches and

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also exclusion of standard advances from bad and doubtful debts and

the deduction u/s.36(1)(viia) was reworked to �756,52,13,950/- after

giving effect to the directions of Commissioner of Income Tax

(Appeals). Against that order, the Assessee and Department are in

Cross-appeals before the Tribunal. The ld. Commissioner of Income

Tax found the order passed by the Assessing Officer is prejudicial to

the interest of Revenue. The ld. Assessing Officer has not considered

the calculation u/s.36 (1)(viia) and 36(1)(vii) of the Act in the Apex

Court decision of Catholic Syrian Bank vs. CIT 343 ITR 270. The

Commissioner of Income Tax verified the circular issued by board in

relation to Section 36(1)(viia) and 36(1)(vii) and statement of objects

and reasons to the Finance Act, 1986, and also legislative intention

behind introduction of Sec.36(1)(viia) to encourage rural advances and

to creation of provision for bad debts and further the High Court has

decided the case based on the Apex Court decision in the case of

Vijaya Bank vs. CIT 323 ITR 166 and Southern Technologies vs. Jt. CIT

320 ITR 577 and also accounting standard AS29 and board’s circulars

and relevant provisions of law. The ld. Commissioner of Income Tax

observed principles laid down by Catholic Syrian Bank in para 4.6 at

page no.5 as under:-

‘’The principles laid down by the decision in Catholic Syrian bank can be summarized as under:-

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Deduction u/s.36(1)(viia) is allowable in the computation of taxable profits of all scheduled commercial banks, in respect of provisions made by them for bad and doubtful debts relating to advances made by their rural branches.

In respect of bad debts actually written off relating to rural advances, the assessee is eligible for a deduction u/s 36(1)(vii) .However, the proviso to 36(1)(vii) ensures that in respect of the same rural advances, the bank does not get double deduction, initially on the basis of clause (viia) and again on the basis of actual write -off under clause (vii)

Proviso to clause (vii) refers only to rural advances as clause (viia) applies only to rural advances.

In respect of bad debts actually written off in the accounts relating to urban advances ,the assessee is entitled to the general deduction u/s 36(1)(vii).This deduction is not affected by the proviso to clause (vii a) because it was not to be allowed on provision basis. Thus, with respect to urban debts as well as rural debts there is no scope to allow double deduction’’.

As per the directions and decision of Apex Court the assessee bank is

eligible to claim deduction u/s.36(1)(viia) to the extent of provisions

made by it in the Books of Accounts of the assessee bank in respect of

bad and doubtful debts pertaining to rural branches. The

Commissioner of Income Tax found that the Assessing Officer has not

called for details regarding provisions made for rural debts and non

rural debts included in the provision in the Books of Accounts

pertaining to bad debts �886,39,17,650/- in the light of the decision of

Supreme Court in the case Catholic Syrian Bank (supra). On the basis

of records, the assessee has submitted the provision of �38.07 crores

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for bad and doubtful debts of rural branches considered in the books.

The Commissioner of Income Tax is of the opinion that the deduction

granted u/s.36(1)(viia) of the Act being 7.5% of total income and 10%

of aggregate average rural advances which is excessive as against the

eligible deduction of �38.07 crores being provision for rural bad and

doubtful debts and the deduction cannot be granted in excess of

provisions made in the books and relied on the decision of Punjab &

Haryana High Court in the case of State Bank of Patiala vs. CIT 272

ITR 54 where it was held that making provision for bad and doubtful

equal to the amounted in Sec.36(1)(viia), the condition precedent for

allowing deduction. Though the Assessing Officer failed to examine the

issue on the principles of Apex Court decision of Catholic Syrian Bank

(supra) and allowed deduction 36(1)(vii) claimed without examining

the same and considered it as order erroneous and prejudicial to the

interest of the Revenue. In response to show cause notice, the

assessee filed reply dated 05.01.2015 objecting to the proposed

provisions and key objections are ‘’Apex Court's decision in Catholic Syrian Bank is no longer applicable in view of the clarificatory amendment to the relevant section Decision of the Apex Court is on deduction u/s 36(l)(vii) and not on 36(1)(viia) The action of the AO in not restricting the deduction to the provision made towards rural bad debts cannot be taken as 'erroneous' in view' of the clarificary amendment

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Since 'Advances' are stated 'net of provisions' in the balance sheet, going by the Apex Court decision in Vijaya bank(323 ITR 166), provisions are to be considered as 'write off 'eligible for deduction u/s 36(1)(vii)’’.

the assessee bank filed detailed submissions at para nos. 7.1 to 7.4.2

at page nos.7 to 9 of Commissioner of Income Tax order. The

decision of Catholic Syrian Bank is not applicable as per Explanation 2

to Sec. 36(i)(vii) of the Act as effective from Finance Act, 2013 w.e.f.

01.04.2014 and there cannot be retrospective amendment. The

Supreme Court in the case of Govinda Das vs. ITO 103 ITR 123 it was

a settled rule of interpretation is that unless the terms of a statute

expressly so provide or necessarily require it, retrospective operation

shall not be given to a statute and similarly as held by Jurisdictional

High Court in the case of Varadharaja Theaters 250 ITR 523 and also

Finance Bill 2013 is very clear that amendment to Sec. 36(1)(vii) will take effect from 1st April, 2014 and shall apply from assessment year

2014-2015 onwards. Further, Explanations to Sec.36(1)(vii) of the Act

is very clear that this is not retrospective and also clarification was

sought in Finance Bill, 2013 to substantive with the provision is

prospective but the provisions of law has a legislative intention and

explanations are clear that they are prospective in nature and cannot

be applied prior to 01.04.2014. The assessee’s contention and

objections are rejected by the Commissioner of Income Tax. Similar

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view was taken in several decisions relying on the ratio of Catholic

Syrian Bank (supra) much after insertion of Sec. 36(1)(vii) of the Act

and the High Court of Kerala in the case of South India Bank Ltd vs.

CIT 223 Taxman 260 where the substantial question of law was raised

on deciding the issue of write off bad debts .

’Whether on the facts and in the circumstances of the case the Tribunal is correct in law and fact in holding that the bad debt relating to the non rural branches in excess of the credit balance of the provisions for bad debts created under section 36(1)(viia) alone is admissible for deduction under section 36(1)(vii)?’’

Similarly in another decision of CIT VS. Canara Bank of Karnataka

decided on 13.10.2014 in ITA No.1011 of 2013 thus issue was

rendered on the principle and ratio relating to Bad Debts decided in

Catholic Syrian Bank. The issue in dispute in assessee’s own case in

the assessment years 1999-2000 to 20002-03 and assessment years

2006-07 and 2007-08, the Tribunal has remitted the file back to the

Assessing Officer to decide the issue of bad debts afresh after taking

into consideration the decision of Catholic Syrian Bank and TRF Ltd

and the contentions of the assessee that the decision of Catholic

Syrian Bank does not apply to earlier years. Similar ratio of the

decision is followed in HDFC Bank, Federal Bank were no rural

branches and no claim of deduction u/s.36(1)(viia) of the Act. On the

first issue of objection that the amendment does not apply to earlier

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years and applicable from 01.04.2013 cannot be accepted and the next

ground of dispute whether decision of Supreme Court in Catholic

Syrian Bank (supra) is applicable in respect of deduction/s.36(1)(vii)

and not in respect of the deduction u/s.36(1)(viia) of the Act. On this

issue of question of law, the Apex Court at para 40 of order of Catholic

Syrian Bank observed as under:-

‘’The proviso to section 36(1)(vii) and Section 36(1)(viia) and 36(2)(v) have to be red and construed together. They form a complete scheme for deductions and prescribe the extent to which such deductions are available to a scheduled bank in relation to rural loans etc.,

The Commissioner of Income Tax has observed that the assessee is

trying to limit the scope and implementation of the decision of Apex

Court. The Hon’ble Supreme Court has dealt extensively on the issue

of rural debt, urban debt, inadmissibility of double deduction without

specific provision, standards, circulars issued by the Board and the

provisions applicable to the rural branches and decision of the High

Courts and Apex Court. On this issue, objection has been rejected.

The Commissioner of Income Tax on perusal of the profit and loss

account has found that the assessee has been making provision

u/s.36(1)(viia) of the Act for both rural debts and urban debts in a

consolidated account. The assessee has been claiming double

deduction for past several years by not set off bad debts written off

against the provisions made to Sec.36(1)(vii) of the Act. Hence, both

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conditions u/s.36(1)(viia) for the provisions made and Sec. 36(1)(vii)

on actual write off is being claimed by the assessee on the same bad

debt. So there is no provision to allow double deduction for bad debts.

Further as per chart no.1 at page 14 the assessee has been claiming

deduction u/s.36(1)(viia) of the Act in respect of provisions made for

bad debts of both rural and non rural branches.

not erroneous. On the issue of validity of proceedings, the ld.

Commissioner of Income Tax has relied on the decision of Apex Court

in the case of Malabar Industrial Co. Ltd vs. CIT 243 ITR 83, it has

been held that CIT within his jurisdiction to set aside the order if it is

passed without examination of the relevant details and provision of

law. On the decision of Apex Court also the objection of the assessee

are not acceptable. Finally alternate contention of the assessee

being applicability of Supreme Court decision in Vijaya Bank (supra).

The contention of the assessee being the provision made by it towards

bad and doubtful debts (urban debts) is added as disallowed, it should

be allowed as write off in view of the decision of Apex Court case in

Vijaya Bank(supra) as the entries passed in the books and the

presentation of the balance sheet. According to the assessee

provisions made should be construed as write off and allowed

u/s.36(1)(vii) though disallowed u/s.36(1)(viia) of the Act and the

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Commissioner of Income Tax has examined the materials and also

case laws considered in while passing the Vijaya Bank decision. The ld.

Commissioner of Income Tax has analyzed the Vijaya Bank case and

applied the ratio on consideration of the NPA referred in the Annual

Report as per the decision of Catholic Syrian Bank when the rural bad

debts is written off, the same has to be first debited to the provision

account made for rural advances. The bad debts written off during the

year would be adjusted against the opening balance in the previous

account and balance deduction u/s.36(1)(vii) is limited to the amount

of provision already allowed under clause (viia). The Assessing Officer

has not done his exercise and considering submissions referred at 13.2

para as under:-

Provision made for bad Bad debts and doubtful advances written off during the year Rural 38.07 Rural 6.71 Non rural 948.32 Non rural 382.16 Total 886.39 Total 388.87

Considering this, the assessee assailed an appeal before the Tribunal

The only substantive ground being deduction u/s.36(1)(viia) of the Act.

submitted that the Assessing Officer has allowed deduction for

provisions non rural advances also. The decision of the Catholic Syrian

Bank is in respect of bad debts and also deduction u/s.36(1)(viia). The

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contention being all debts should be considered for deduction

u/s.36(1)(viia) and he relied on the decision of DCIT vs.ING Vysya

Bank Ltd 42 Taxmann.Com 303 and also ITAT Co-ordinate Bench

decision in ITA No.1949/Mds/2012 and ITA No.1803/Mds/2011 in

assessee’s own case for earlier years allowed deduction. The

assessee’s alternative claim of Vijaya Bank at para 6. The provisions

require in respect of advances and also circular of CBDT dated

24.01.2013 at para no.11.1 & 11.6 were referred. The contention

being Catholic Syrian Bank decision is not applicable to the present

assessment and therefore the order of the Commissioner of Income

Tax is bad in law.

Contra, the ld. Departmental Representative submitted 7.

judicial decisions, circulars and notification and read the provisions of

Sec. 36(1)(viia) of the Act on the issue of foreign bank was also

considered. The misconception of the bank on that provision of bad

debts as per Sec. 36(1)(viia) of the Act. The decision of Catholic

Syrian Bank is on the basis of Sec.36(1)(vii) and Sec.36(1)(viia) for the

purpose of rural branches only. The Apex Court has considered the

rural advances benefit given without writing off in the books of

accounts and also submitted the relevant para of the decisions relied

and Finance Act and prayed for dismissal of the appeals.

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record and judicial decisions, circulars, provisions and also bank

regulations. The assessee has raised various grounds in respect of

one substantive issue that the Commissioner of Income Tax order is

bad in law and also deduction u/s.36(1)(vii) and 36(1)(viia) shall be in

respect of both bad and doubtful debts irrespective of rural or urban

debts. The legislative intention of decision of Catholic Syrian Bank

was to protect the rural farmers and also benefit given without actual

write off in the actual Books of Accounts though the principle was

considered in the earlier years and the Department has accepted and

passed the order. On the decision of the allowability of

Sec.36(1)(viia) we relied on the Co-ordinate decision of Lakshmi Vilas

Bank in ITA Nos.1205 to 1209/Mds/2014 dated 29.01.2016, where it

has been held in detail at para 90 to 93 in page no. 60 to 63

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• Provisions of sections 36(1) (vii) and 36(1)(viia) of the Act are distinct and independent items of deduction and they operate in their respective fields. • A scheduled bank may have both urban and rural branches. It may give advances from both branches with separate provision accounts for each. In the normal course of its business, an assessee bank is to maintain different accounts for the rural debts and for non-rural/urban debts. Maintenance of such separate accounts would not only be a matter of mere convenience but would be the requirement of accounting standards. • 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 (viia). • In case of rural advances which are covered by clause (viia), there would be no double deduction. The proviso, in its terms, limits its application to the case of a bank to which clause (viia) applies. Indisputably, clause (viia) applies only to rural advances. • If the amount of bad debt actually written off in the accounts of the bank represents only debt arising out of urban advances, the allowance thereof in the assessment is not affected, controlled or limited in any way by the proviso to clause (vii). • A statue is not normally construed to provide for a double benefit unless it is specifically so stipulated or is clear from the scheme of the Act. • Proviso to sec 36(1)(vii) 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. 91. A number of cases decided by the Hon'ble High Courts and also by the Apex Court are cited / referred to in the above judgement. Cases of Vijaya Bank Vs. CIT (323 ITR 166) and Southern Technologies Vs JCIT (320 ITR 577) are referred to

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therein. Accounting standard AS29 and also the effect of Board's Circular's have also been discussed at length in the order along with the subject of interpretation and construction of the relevant sections. Thus, the judgement is a comprehensive one which has considered the ratios laid down by various courts, the implications of Board's circulars and accounting standards.

has been restricted to the extent of rural branches only. We confirm

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the findings of the Commissioner of Income Tax on the issue of rural

branches following the Catholic Syrian Bank decision and uphold the

order of the Commissioner of Income Tax. Accordingly, the appeal of

the assessee in ITA No. 496/Mds/2015 is dismissed.

Consequently, the appeal of the assessee in ITA 9.

No.497/Mds/2015 is also dismissed.

In the result, the assessee appeals ITA Nos.496 & 10.

497/Mds/2015 are dismissed.

Order pronounced on Tuesday, the 23rd day of February, 2016, at Chennai.

Sd/- Sd/- (चं� पूजार�) (जी. पवन कुमार) (G. PAVAN KUMAR) (CHANDRA POOJARI) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य /ACCOUNTANT MEMBER

चे�नई/Chennai �दनांक/Dated:23.02.2016 KV आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�त (अपील)/CIT(A) 5. �वभागीय ��त�न�ध/DR 2. ��यथ�/Respondent 4. आयकर आयु�त/CIT 6. गाड� फाईल/GF