TaxTMI 
TaxTMI 
2013 (3) TMI 307
X X X X Extracts X X X X
X X X X Extracts X X X X
....available to the appellant and the amount of investment made whose income is exempt, no disallowance could be made u/s 14A read with rule 8D of the IT Rules. 3.1The learned Assessing Officer erred in not allowing Rs. 276.39 crores u/s 36(1)(viia) of the Act. 3.2 The learned Assessing Officer is not correct in holding that the provision u/s 36(i) (viia) of the Act is allowed to the appellant bank subject to making provisions in the books of account which we contend contradict the spirit of law. 3.3 The learned Assessing Officer failed to note that the appellant bank being government undertaking participating in the public policies, rural development programs is allowed additional allowance u/s 36(1)(viia) of the Act without creating provisions in the books of account. 3.4 The appellant contends that claim u/s 36(i) (viia) of the Act is made in accordance with law and decisions rendered by courts. 3.5 Without prejudice to the above, the appellant contends that the provision u/s 36(i) (viia) of the Act in respect of rural branch advances Rs. 276.39 crores is allowable as the appellant n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(A), the AR of the assessee submitted that the assessee had claimed the entire amount of Rs.276.39 crores worked out as per the limits prescribed in section 36(1)(viia) and apart from this has also claimed an amount of Rs.102.15 crores u/s 36(i) (vii) being loans from non rural branches actually written off. The AR of the assessee further submitted that the bad debts of Rs. 6.07 crores actually written off out of the rural advance were not being claimed, since the provision of Rs.279.39 crores was much higher than the amount written off. After considering the submissions of the assessee, the CIT(A) held that the Assessing Officer was correct in holding that the claim u/s 36(1)(viia) is to be restricted to the amount of provision made in the books. Since the provision made in the books Rs.46.00 crores only, the CIT(A) held that the provisions of Rs.46.00 crores can be considered under the provisions of section 36(1)(viia) and not the amount of Rs.276.39 crores . 7. On further appeal before us, the learned counsel Shri Kalyan Das reiterated the contentions made before the CIT(A). The learned counsel relied upon the decision of the Catholic Syrian Bank Ltd. Vs. CIT, 343 ITR 270 (SC) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f and another on the basis of clause (viia) in respect of mere provision. Further to prevent to double deduction, proviso to clause (vii) was inserted which says that in respect of bad debts arising out of rural advances the deduction on account of actual write off would be limited to the excess of the amount written off over the amount of the provision allowed under clause (viia) . It follows that deduction u/s 36(1)(viia) is to be allowed only on the amount of provision made for bad and doubtful debts subject to the maximum on the basis of rural advances/ income prescribed under that section. The allowance u/s 36(1)(viia) cannot be in excess of provision for bad debts actually made in the accounts. 11. In view of the very clear principles laid down by the Apex Court in the above judgements , we deem it fit to set aside the issue to the file of the Assessing Officer to decide the issue in the light of the decisions of the Apex Court in the cases of (a) TRF Ltd (323 ITR 397) (b) Vijaya bank Ltd (323 ITR 166) and (c) Catholic Syrian Bank Ltd (343 ITR 270). 12. The next issue is regarding the applicability of provision of Sec.115JB to the assessee bank. The contention of the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eal is regarding disallowance of broken period interest of Rs.58.51 Crores . The bank which have purchased government securities have paid Rs.58.51 Crores towards interest in respect of securities purchased for the broken period from the preceding due date for payment of interest upto the date of purchase. The bank had also received interest of Rs.36.84 Crores in respect of securities sold by them for the broken period from the preceding due date for payment of interest upto the date of the sale. The assessee claimed the amount of interest paid for the broken period upto the date of purchase as deduction on the ground that the securities were held stock in trade. The AO however rejected the appellant's claim holding that the appellant's contention that the securities constituted stock in trade. It has not been accepted since it was found that the securities held in the category of HTM (held to maturity) did not form part of the stock. However, the CIT(A) allowed the claim on the ground that the same was in stock in trade and hence the interest for the broken period is an allowable deduction, following the decision of ITAT Hyderabad dated 18/03/05. Aggrieved Revenue is on appeal. We....