Banking tax precedent confirms deductions, depreciation, section 14A treatment, and MAT inapplicability follow binding earlier rulings.

The note consolidates settled ITAT and jurisdictional precedent on banking-tax issues: deduction under section 36(1)(viia) read with Rule 6ABA, notional gains on foreign exchange forward revaluation, CSR and trust-related outgo under section 37(1), 60% depreciation on ATMs, section 14A read with Rule 8D, depreciation on HTM/HFT/AFS securities, section 36(1)(viii) special reserve computation, timing of tax on interest on securities, and inapplicability of section 115JB to banking companies. It emphasises that, where identical issues in the assessee's own case are already covered by binding precedent and no distinguishing facts or contrary authority are shown, the same view governs and the Revenue's objections fail.

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Issues: (i) deduction under section 36(1)(viia) and Rule 6ABA on rural branch advances and branch profits; (ii) taxability of unrealized gains on revaluation of foreign exchange forward contracts; (iii) allowability of corporate social responsibility expenditure and trust-related expenses under section 37(1); (iv) depreciation on ATMs, note-counting machines and electronic weighing machines; (v) disallowance under section 14A read with Rule 8D; (vi) depreciation on HTM, HFT and AFS securities; (vii) deduction under section 36(1)(viii) in respect of special reserve; (viii) taxability of interest on securities only when due; and (ix) applicability of section 115JB to banking companies.

Issue (i): Whether deduction under section 36(1)(viia) and Rule 6ABA was correctly allowed on the assessee bank's claim computed on the basis of aggregate average advances and eligible branch profits.

Analysis: The claim had already been accepted in the assessee's own case for earlier assessment years on identical facts. The computation dispute raised by the Revenue on the treatment of rural branch advances and overseas branch profits stood covered by prior co-ordinate bench decisions, and no contrary material or distinguishing fact was shown.

Conclusion: The deduction was rightly allowed and the Revenue's objection failed.

Issue (ii): Whether unrealized gains on revaluation of foreign exchange forward contracts were taxable in the year under consideration.

Analysis: The same issue had been decided in the assessee's favour by the jurisdictional Tribunal and affirmed by the jurisdictional High Court in the assessee's own case. In the absence of any change in facts or any contrary authority, the addition on account of notional revaluation gain could not survive.

Conclusion: The deletion of the addition was upheld in favour of the assessee.

Issue (iii): Whether CSR expenditure and trust-related expenditure were allowable under section 37(1).

Analysis: The disallowance had been made by invoking section 135 of the Companies Act, 2013 and Explanation 2 to section 37(1). The appellate authority followed the earlier decision in the assessee's own case, and the Revenue did not show any material change in facts or law.

Conclusion: The expenditure was held allowable and the disallowance was not sustained.

Issue (iv): Whether depreciation on ATMs was allowable at 60% and whether the same rate applied to note-counting machines and electronic weighing machines.

Analysis: Binding jurisdictional precedent treated ATMs as computers eligible for depreciation at 60%. The same functional equivalence was not extended to note-counting machines and electronic weighing machines, which remained in the plant and machinery category.

Conclusion: Depreciation at 60% on ATMs was correctly allowed, and the Revenue's challenge failed.

Issue (v): Whether disallowance under section 14A read with Rule 8D was warranted on the assessee's exempt income and investments.

Analysis: The appellate authority applied settled principles that interest disallowance is not justified where own funds exceed investments, and directed verification on that aspect. It also relied on the banking-specific position regarding investments and the requirement to examine the character of SLR and non-SLR holdings for administrative disallowance.

Conclusion: No infirmity was found in the appellate order and the section 14A disallowance did not survive as made by the Revenue.

Issue (vi): Whether depreciation on HTM, HFT and AFS securities was allowable as business expenditure.

Analysis: The issue had already been decided in the assessee's favour by co-ordinate benches and by the jurisdictional High Court in the assessee's own case. The Revenue did not bring any distinguishing precedent or factual change.

Conclusion: The deletion of the disallowance was upheld.

Issue (vii): Whether deduction under section 36(1)(viii) was available in respect of special reserve and the method of recomputation adopted by the appellate authority was erroneous.

Analysis: The appellate authority followed the earlier tribunal view on the method of computation and also held that a reserve created in a later year could not substitute the statutory requirement that the reserve be created out of relevant year profits. The Revenue failed to show any error in that approach.

Conclusion: The relief granted by the appellate authority was sustained.

Issue (viii): Whether interest on securities was taxable only on the specified dates when it became due.

Analysis: The question stood covered by the jurisdictional High Court in the assessee's own case, and the principle had been affirmed by the Supreme Court in the context of broken-period interest. Interest not yet due could not be brought to tax merely on accrual notions contrary to that binding position.

Conclusion: The assessee's treatment was upheld and the Revenue's ground failed.

Issue (ix): Whether section 115JB applied to banking companies.

Analysis: The issue was already decided against the Revenue in the assessee's own case by co-ordinate bench decisions. No contrary authority or legislative change was shown to dislodge that view.

Conclusion: Section 115JB was held inapplicable to the assessee bank.

Final Conclusion: All disputed additions and disallowances were rejected, the appellate relief granted to the assessee was sustained, and the Revenue's appeal did not succeed.

Ratio Decidendi: Where an identical issue in the assessee's own case has been conclusively decided by binding jurisdictional precedent and no distinguishing fact or contrary authority is shown, the same view must be followed; in banking matters, CSR disallowance, depreciation claims, section 14A computation, securities valuation, special reserve deduction, interest-tax timing, and MAT applicability all turn on the settled precedent applicable to the assessee's business model and statutory framework.

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