2022 (3) TMI 134 - AT - Income Tax

Tribunal directs reassessment of tax issues in appeal outcomes

The appeal filed by the assessee was partly allowed, and the appeal filed by the Revenue was partly allowed for statistical purposes. The Tribunal ... Deduction u/s 36(1)(viia) - assessee calculated deduction based on Aggregate Average Rural Advances (AAA) computed as per Rule 6ABA of the Income-tax Rules, 1962 - AO held that the deduction should be restricted to actual provision made in the books - A.O. disallowed the entire deduction u/s 36(1)(viia) by holding that the sum is debited to the profit and loss account and for income tax computation, the same is added back as it is only a provision which is not an allowable deduction - HELD THAT:- It has been fairly admitted by the learned AR that the issue in question is covered against the assessee by the order of the Tribunal in assessee’s own case for assessment year 2009-2010 [2014 (6) TMI 1052 - ITAT BANGALORE] Deduction u/s 36(1)(vii) - assessee-bank had written off bad debts out of which debts written off by rural branches was adjusted against the provision claimed u/s 36(1 )(viia) and balance was claimed as deduction u/s 36(1 )(vii) - HELD THAT:- We notice that the CIT(A) had expressed the view that provision allowed u/s 36(1)(viia) of the Act would apply to non-rural advances also. An identical issue has been examined by the Hyderabad Bench of the ITAT in the case of State Bank of Hyderabad [2015 (8) TMI 836 - ITAT HYDERABAD] wherein the Tribunal had not accepted the above said view expressed by the CIT(A). The Bangalore Bench of the Tribunal in assessee’s own case for assessment year 2013-2014 [2022 (1) TMI 124 - ITAT BANGALORE] by following the Hyderabad Bench order of the Tribunal in the case of State Bank of Hyderabad (supra), had set aside the view expressed by the CIT(A) that proviso to section 36(1)(vii) which requires adjustment of bad debts against the provisions allowed u/s 36(1)(viia) would apply to non-rural advances also.nce, we direct the A.O. to delete the disallowance made by the CIT(A). It is ordered accordingly. Applicability of provisions of Section 115JB to assessee bank - HELD THAT:- The Tribunal in assessee’s own case for assessment year 2013-2014 [2022 (1) TMI 124 - ITAT BANGALORE] had restored the issue to the files of the CIT(A). The CIT(A) was directed to examine whether the assessee being a banking company would be liable for book profits u/s 115JB - Thus we restore this issue to the files of the CIT(A). Disallowance u/s 14A r.w.r. 8D - HELD THAT:- A perusal of the assessment order, it is clear that the A.O. has recorded the satisfaction and has rejected the assessee’s disallowance u/s 14A of the Act while filing the return of income (the satisfaction can be inferred indirectly). The learned AR also fairly admitted that the matter can be restored to the files of the CIT(A) for de novo consideration. The Tribunal in assessee’s own case for assessment year 2013-2014 had restored the issue of disallowance u/s 14A of the Act to the files of the CIT(A). By following the co-ordinate Bench order of the Tribunal in assessee’s own case, we restore the issue to the files of the CIT(A). Addition u/s 40(a)(ia) - Non deduction of TDS - amount paid to NPCI as charges towards using of ATM of other banks - HELD THAT:- The Tribunal on identical facts in assessee’s own case for assessment year 2013-2014 had held that the assessee is not liable for TDS, and hence, the provisions of section 40(a)(ia) of the Act does not have application in respect of payments made to NPCI - we confirm the CIT(A)’s order and delete the disallowance made by the A.O. by invoking the provisions of section 40(a)(ia) of the Act. Issues Involved:1. General nature of the appeal.2. Deduction under section 36(1)(viia) of the I.T. Act.3. Deduction under section 36(1)(vii) of the I.T. Act.4. Applicability of provisions of section 115JB of the I.T. Act.5. Additions to the book profit under section 115JB of the I.T. Act.6. Disallowance under section 14A of the I.T. Act.7. Disallowance under section 40(a)(ia) of the I.T. Act.8. Deletion of PBDD from book profits.9. Addition of provision for wage arrears to the book profit.10. General grounds regarding relief granted by CIT(A) in computing book profit under section 115JB of the I.T. Act.Detailed Analysis:1. General Nature of the Appeal:The first ground raised by the assessee was of a general nature and did not call for specific adjudication. Hence, it was rejected.2. Deduction under Section 36(1)(viia) of the I.T. Act:The assessee, a nationalized bank, created a provision for bad and doubtful debts amounting to Rs. 936,90,65,332 and claimed a deduction under section 36(1)(viia). During assessment, the assessee revised the claim to Rs. 1494,99,64,784 based on Aggregate Average Rural Advances (AAA). The A.O. restricted the deduction to the actual provision made in the books and disallowed the entire claim. The CIT(A) allowed the claim but restricted it to the provision created in the books. The Tribunal upheld the CIT(A)'s decision, noting that the issue was covered against the assessee by previous Tribunal orders and the jurisdictional High Court.3. Deduction under Section 36(1)(vii) of the I.T. Act:The assessee wrote off bad debts amounting to Rs. 1,024.60 crore, claiming Rs. 1,008 crore under section 36(1)(vii). The A.O. disallowed the claim, citing the Supreme Court's decision in Southern Technologies. The CIT(A) partially allowed the claim but required adjustments against provisions under section 36(1)(viia). The Tribunal, following precedent from the Hyderabad Bench and its own prior decisions, set aside the CIT(A)'s view that the proviso to section 36(1)(vii) applies to non-rural advances and directed the A.O. to delete the disallowance.4. Applicability of Provisions of Section 115JB of the I.T. Act:The assessee contended that section 115JB did not apply to it as a public sector bank. The A.O. and CIT(A) disagreed, applying section 115JB. The Tribunal restored the issue to the CIT(A) for fresh examination, directing consideration of whether the assessee, as a banking company, falls under the purview of section 115JB, following its decision in the assessee's case for the previous year.5. Additions to the Book Profit under Section 115JB of the I.T. Act:The A.O. made various additions to the book profit under section 115JB. Since the applicability of section 115JB was restored to the CIT(A), the Tribunal also restored the examination of these additions to the CIT(A).6. Disallowance under Section 14A of the I.T. Act:The A.O. disallowed Rs. 64,59,79,000 under section 14A, which the CIT(A) deleted, citing lack of A.O.'s dissatisfaction with the assessee's claim. The Tribunal restored the issue to the CIT(A) for de novo consideration, following its decision in the assessee's case for the previous year.7. Disallowance under Section 40(a)(ia) of the I.T. Act:The A.O. disallowed Rs. 87,91,40,567 paid to NPCI for ATM usage charges, citing non-deduction of TDS under section 194C. The CIT(A) deleted the disallowance, following the Tribunal's decision in Corporation Bank's case. The Tribunal confirmed the CIT(A)'s order, noting that the issue was covered by its decision in the assessee's case for the previous year.8. Deletion of PBDD from Book Profits:The CIT(A) granted relief by deleting PBDD from book profits. The Tribunal restored this issue to the CIT(A) for fresh examination, along with the applicability of section 115JB.9. Addition of Provision for Wage Arrears to the Book Profit:The CIT(A) deleted Rs. 240 crore provision for wage revision from book profits. The Tribunal restored this issue to the CIT(A) for fresh examination, along with the applicability of section 115JB.10. General Grounds Regarding Relief Granted by CIT(A) in Computing Book Profit under Section 115JB of the I.T. Act:The general grounds raised by the Revenue regarding relief granted by the CIT(A) in computing book profit were also restored to the CIT(A) for fresh examination, along with the applicability of section 115JB.Conclusion:The appeal filed by the assessee was partly allowed, and the appeal filed by the Revenue was partly allowed for statistical purposes. The Tribunal directed the CIT(A) to re-examine several issues, particularly the applicability of section 115JB and related additions to book profits, while following the directions and precedents set in the assessee's previous cases.