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Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: SHRI N.K.BILLAIYA & SHRI PAWAN SINGH
Revenue by : Shri S.S. Kemwal (DR) Assessee by : Shri C. Naresh Date of hearing : 01.12.2015 Date of Pronouncement : 08.01.2016 O R D E R PER PAWAN SINGH, JM: 1. These two cross appeals are directed against the order dated 18.12.2013 passed by CIT(A)-24, Mumbai which are related to Assessment Year(AY) 2010-11. The issue raised in appeals in respect of following grounds: 2. The assessee raised the following ground in its appeal:-
(i) Disallowance made u/s 14A. (ii) Restricting the deduction claimed u/s 36(1)(viii). 3. The revenue is in appeal in respect of following grounds:
(i) Bad-debts written off. (ii) Allowing deduction u/s 36(1)(viii). (iii) Deduction claimed u/s 36(1)(viia). (iv) Deletion of computation of book profit u/s 115JB. (v) About the deletion of addition u/s 14A.
4. The brief fact of the case are that the assessee is a public sector Bank and filed its return of income on 29.09.2010 declaring total income of Rs. 1054,85,28,225/-. The return of income was processed u/s 143(1) and while making computation, the Assessing Officer (AO) made various addition under the different head vide assessment order dated 18.02.2013, against the addition made in the assessment order dated 18.02.2013, the assessee-Bank filed an appeal before the CIT(A) wherein the appellate authority granted partial relief to the Bank.
5. Aggrieved by the order of CIT(A) both the parties filed appeal before us in respect of the issues/addition decided against each of them as stated above.
6. First we shall take up the appeal filed by the assessee being Appeal No. 1627/Mum/2014, wherein the assessee has assailed the order of CIT(A) in confirming the expenditure of Rs. 57,49,13,477/- under Rule 8D.
7. The Authorised Representative (AR) of the assessee has argued that the similar issue has already been remanded to the file of AO in the assessee’s own case for AY 2008- 09,in wherein it was observing as under: “Thus, we notice that the AO has proceeded to compute the disallowance as per rule 8D of IT Rules without satisfying himself that the claim of the assessee was not correct by having regard to the accounts of the assessee. Hence, the disallowance computed by the AO and that confirmed by Ld CIT(A) was not in accordance with the mandate of law.
11. In view of the above, we are of the view that this issue requires fresh examination at the end of the assessing officer. Accordingly, we set aside the order of Ld CIT (A) on this issue and restore the same to the file of the AO with the direction to examine this issue afresh. The assessee is free to urge all the contentions, which it may deem it necessary before the AO in respect of this issue. After affording necessary opportunity of being heard, the AO may take appropriate decision in accordance with the law”.
We respectfully following the direction of co-ordinate bench also remand this issue to the file of AO to consider this issue in accordance with the direction in ITA No. 4678/Mum/2013.
The next issue for our consideration is claim/deduction u/s 36(1) (viii) of I.T.Act.
The AR of the assessee has argued that similar issue was raised by the assessee-Bank in respect of AY-2008-09 and the same was restored to the file of AO with the following direction in ITA No. 4678/Mum/2013. “Hence, in our view, the workings given by the assessee, AO and Ld CIT(A) on approximate basis cannot be approved. Accordingly, in our view, this issue also requires reconsideration at the end of the assessing officer. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore this matter to the file of the AO for his reconsideration. The assessee is directed to cull out the interest income actually earned from out of eligible advances. From the gross interest income so culled out, the assessee is directed to deduct the cost of funds and expenses on a reasonable basis and then work out the deduction u/s 36(1)(viii) of the Act. The assessee is also directed to furnish all the explanations and information to the assessing officer in order to enable him to satisfy himself with the workings furnished by the assessee. Accordingly, after affording necessary opportunity of being heard to the assessee, the assessing officer may take appropriate decision on this issue in accordance with the law”. 11. Hence keeping in view the principle of consistency, this issue is also restored to the file of AO to consider in accordance with the direction contained in ITA No. 4678/Mum/2013. 12. Now we shall take up the grounds raised
in M/ 2014, filed by the revenue, the revenue has raised five issues in its appeal. The first ground/issue is relating to allowing deduction on account of Bad-debts written off, the AR of the assessee has argued that in assessee’s own case in AY- 2007-08 the similar issue was raised by the revenue and the same was decided by this Tribunal against the revenue, hence, this ground is squarely covered by the finding given in para 17 of the Tribunal order in ITA No. 4842/Mum/2013, wherein it is observed: “We notice that the Tribunal has allowed identical claim in the assessee's own case in AY 2007-08, vide its order dated 18.1.2003 passed in ITA Nos.6631/Mum/2010 & 6349/Mum/2010. We notice that the Tribunal has followed the decision rendered by the Hon'ble Supreme Court in the case of Catholic Syrian Bank (343 ITR 270) and also in the case of CIT Vs. Karnataka Bank Ltd (2012)(349 ITR 705). We also notice that the new Explanation 2, which covers both rural and non-rural advances, has been inserted under sec. 36(1)(vii) of the Act by the Finance Act, 2013 w.e.f. 1.4.2014 only and hence it cannot have retrospective effect, since it affects substantive rights of the assessees. Accordingly, we are of the view that there is no reason to interfere with the decision of Ld CIT(A) on this issue”.
13. Hence, we are of the opinion that the similar ratio are applicable for this order and the same is squarely covered by the finding of ITA 4842/M/13 further keeping in view the principle of consistency, this issue is decided in favour of assessee and against the revenue .
The next issue for our consideration is deduction u/s 36(1)(viii). As we have observed in para(s) 10-11 above in appeal of assessee-Bank and this issue is already restored to the file of AO.
The next ground for our consideration is allowing deduction u/s 36(1)(viia) of the Act. The AR of the assessee has argued that identical issue was considered by this coordinate bench of Ahmadabad Tribunal in considering the similar issue has held as under: “A reading of section 36(1)(viia) will show that the distinction is very clear that the provision is required to be made but need not be in the same previous year for which the deduction under section 36(1)(viia) is claimed, since the words ‘in the accounts for the previous year’ does not appear in the said section, whereas, it specifically appears in relation to the deduction under section 36(1)(viia). Thus, it is clear that it is the intention of the legislature that the provision should be made specifically for this purpose but did not however require that the provision needs to be made only in the relevant previous year as could be clearly seen on comparative reading of section 36(1)(vii) and 36(1)(viia).” “It is clear that the provisions for bad and doubtful debts should be allowed under section 36(1)(viia), to the extent of provision made and available in the books of account, whether made in the current previous year or in the preceding previous years as none of the lower authorities i.e. either Assessing Officer or the Commissioner (Appeals) has examined the issue under consideration from this angel and as the entire facts are not available for us to adjudicate the issue. In the interest of substantial justice, the orders of the lower authorities are to be set aside and the matter is remanded back to the file of Assessing Officer”.
Hence, keeping in view the principle of consistency, we also restored this issue to the file of AO to decide the same in accordance with the direction contained in order dated 30/05/2014 in ITA No. 779/Ahd/2011.
The next ground for our consideration is in respect of applicability of provision of section 115JB of the Act. The AR of the asseessee has argued that in assessee’s own case for AY 2007-08, the same issue was raised. 18. The ld. AR for the revenue has drawn our attention to the para 21 and 22 of the order of this Tribunal in and 6349/M/2010, which are reproduced here;
“21. We find that in the case of Kurung Thai Bank PCL) in for A.Y. 2004-05 it has been held as follows: “In view of the above discussions, and following the view taken by a coordinate Bench in the case of Maharashtra State Electricity Board Vs JCIT (82 ITD 422), which holds that provisions of MAT cannot be applied to electricity companies for mutually similar reason we uphold the plea of the assessee. The provisions of Sec. 115JB do not apply to the assessee, and, as such, the AO was in error in concluding that income had escaped