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of <h1>Tribunal decisions: mixed outcomes on appeals, remand for fresh assessment</h1> <h3>Deputy Commissioner of Income Tax, Large Taxpayer Unit, Chennai Versus M/s. Indian Overseas Bank and vice- versa</h3> Deputy Commissioner of Income Tax, Large Taxpayer Unit, Chennai Versus M/s. Indian Overseas Bank and vice- versa - TMI Issues Involved:1. Depreciation on building including land2. Disallowance of bad debts written off relating to rural branches3. Restriction of claim in respect of deduction under section 36(1)(viia)4. Disallowance under section 14A based on Rule 8D5. Allowability of provision for leave encashment6. Depreciation on UPS7. Depreciation on fixed assets taken over from Bank of Tamilnadu Ltd.8. Computation of deduction under section 36(1)(viia)9. Disallowance of contribution to staff welfare fund10. Loss on revaluation of investments11. Disallowance of loss on revaluation of derivative contracts12. Recovery in respect of bad debts written off13. Disallowance of provision towards leave travel allowance14. Disallowance of the claim of debenture redemption reserve15. Grant of double taxation relief16. Applicability of provisions of section 115JBDetailed Analysis:1. Depreciation on Building Including Land:The Tribunal dismissed the assessee's appeal regarding depreciation on building including land, referencing a previous decision against the assessee in ITA No.2412/Mds/2003 for the assessment year 1994-95.2. Disallowance of Bad Debts Written Off Relating to Rural Branches:The Tribunal remanded this issue back to the Assessing Officer for fresh consideration in light of the Supreme Court's judgment in Catholic Syrian Bank Ltd. vs. CIT, which clarified the application of sections 36(1)(vii) and 36(1)(viia) regarding bad debts.3. Restriction of Claim in Respect of Deduction under Section 36(1)(viia):The Tribunal dismissed the assessee's appeal, affirming that the deduction under section 36(1)(viia) is subject to the actual provision made in the books and cannot exceed 7.5% of the gross total income.4. Disallowance under Section 14A Based on Rule 8D:The Tribunal upheld the disallowance under section 14A, emphasizing that from the assessment year 2008-09, Rule 8D mandates the computation of disallowance, even if the assessee claims no expenditure was incurred.5. Allowability of Provision for Leave Encashment:The Tribunal allowed the assessee's appeal, referencing the Calcutta High Court's decision in Exide Industries Ltd. and the Supreme Court's ruling in Bharat Earth Movers Ltd., which held that provisions for leave encashment are deductible.6. Depreciation on UPS:The Tribunal granted partial relief, allowing depreciation on UPS at 60%, treating it as part of computer hardware, in line with the Delhi High Court's decision in Orient Ceramics & Industries Ltd.7. Depreciation on Fixed Assets Taken Over from Bank of Tamilnadu Ltd.:The Tribunal remitted this issue back to the Assessing Officer to reconsider in light of section 2(1B), as previously directed in ITA No.843/Mds/2008.8. Computation of Deduction under Section 36(1)(viia):The Tribunal allowed the Revenue's appeal, consistent with its earlier decision on the same issue in the assessee's appeal.9. Disallowance of Contribution to Staff Welfare Fund:The Tribunal allowed the Revenue's appeal, noting that the liability was not crystallized or contributed towards an approved fund, thus not deductible under section 40A(7).10. Loss on Revaluation of Investments:The Tribunal dismissed the Revenue's appeal, following the Madras High Court's ruling in CIT vs. Karur Vysya Bank Ltd., which allowed depreciation on securities valued at market price.11. Disallowance of Loss on Revaluation of Derivative Contracts:The Tribunal dismissed the Revenue's appeal, aligning with the Mumbai Tribunal's decision in Edelweiss Capital Ltd. and the Special Bench ruling in DCIT vs. Bank of Bahrain & Kuwait, allowing the provision for anticipated loss on derivatives.12. Recovery in Respect of Bad Debts Written Off:The Tribunal dismissed the Revenue's appeal, agreeing with the CIT(A) that the Assessing Officer should verify if the bad debts were previously allowed as deductions.13. Disallowance of Provision Towards Leave Travel Allowance:The Tribunal dismissed the Revenue's appeal, supporting the CIT(A)'s finding that the provision for leave travel allowance and medical benefits, based on actual valuation, is not a prior period expense.14. Disallowance of the Claim of Debenture Redemption Reserve:The Tribunal dismissed the Revenue's appeal, agreeing with the CIT(A) that taxing the reserve would result in double taxation, as it was created from profits already taxed.15. Grant of Double Taxation Relief:The Tribunal allowed the Revenue's appeal, following its earlier decision in DCIT vs. Bharat Overseas Bank Ltd., which held that the Assessing Officer correctly applied the DTAA provisions between India and Thailand.16. Applicability of Provisions of Section 115JB:The Tribunal dismissed the Revenue's appeal, referencing the Hyderabad Bench's decision in State Bank of Hyderabad, which held that section 115JB does not apply to banking companies, except from the assessment year 2013-14.Conclusion:The appeals were partly allowed and partly dismissed, with specific issues remanded for fresh consideration by the Assessing Officer.
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