TaxTMI 
TaxTMI 
2013 (12) TMI 70
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....ned CIT(A) should have sustained the addition on account of broken period interest in view of decision of Hon'ble Supreme Court in the case of Vijaya Bank Ltd. 187 ITR 541 and Board's Circular No. 665". 3. Ground No.2 is with regard to CIT(A) allowing assessee's claim of depreciation or fall in value of investments Held to Maturity ("HTM"). Briefly, the facts are, the assessee is a banking company and subsidiary of State Bank of India, Mumbai. For the assessment year under dispute the assessee filed its return of income on 23.09.2009 declaring income of Rs.694,56,93,348/-. Subsequently, a revised return was filed on 06.11.2009 revising the income to Rs.647,67,91,740/-. During the assessment proceedings, the A.O. on examining the computation of income noticed that the assessee has claimed depreciation of an amount of Rs.27,46,33,636/- on investments in HTM securities by treating them as stock in trade. However, the A.O. while completing the assessment rejected assessee's claim and disallowed the amount of Rs.27,46,33,636/-. 4. The assessee challenged the disallowance made by A.O. in an appeal preferred before the CIT(A). The CIT(A) following the order of ITAT, Hyderabad Bench ....
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....leting the addition made by the A.O. on account of broken period interest. 8. During the assessment proceedings, the A.O. noticed that the assessee has claimed expenditure of an amount of Rs.157,60,72,614/- on account of broken period interest. The A.O. however, disallowed the assessee's claim by treating it as capital expenditure. While deciding assessee's appeal on the issue, the CIT(A) allowed assessee's claim by following the Order of the ITAT in assessee's own case in ITA.No. 578 & 779/Hyd/2010 dated 07.09.2012 for the assessment year 2007-2008. 9. We have heard the parties and perused the material on record. As can be seen from the Order of the Coordinate Bench of this Tribunal while considering this issue in assessee's own case for the A.Y. 2008-09 in ITA. No. 847 & 1002/Hyd/2012 dated 28.03.2012 held as under : "30. We have considered the submissions of the parties. On perusal of the orders of the revenue authorities and materials on record we find that the issue is squarely covered in favour of the assessee by the orders of co-ordinate bench passed in assessee's own for the assessment years 1999- 2000 and 2007-08. The Tribunal in the order for the assessment year ....
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....ble Kerala High Court in case of CIT V/s. Nedungadi Bank (supra), we respectfully follow the same and uphold the order of the CIT (A). The ground raised by the department is dismissed." 10. Respectfully following the aforesaid finding of the Coordinate Bench, we uphold the decision of the CIT(A) and dismiss the ground raised by the department. 11. In the result, ITA.No.666/Hyd/2013 of the department is dismissed. 12. ITA.No.584/Hyd/2013 (Assessee's Appeal) : In this appeal the assessee has raised 4 grounds. Grounds No.1 and 4 are general in nature and therefore, it needs no adjudication. Grounds No. 2.1 to 2.4 are relating to sustaining the disallowance of Rs.1,79,11,875/- by the CIT(A) under section 14A read with Rule 8D of I.T. Rules. 13. Briefly the facts are, during the assessment proceedings the A.O. noticed that the assessee has declared exempt income of Rs.5,11,21,049/-. On further examining the details called for with regard to expenditure incurred for earning the exempt income as well as assessee's explanation to the effect that the total expenditure which could be apportioned towards earning the exempt income is the expenditure incurred by the 'Treasury and In....
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....er the method provided under Rule 8D. In fact, as can be noticed from para 7.4 of the CIT(A) Order, the assessee itself during the proceeding before the CIT(A) has worked out the disallowance to be made in terms with Rule 8D(2) which has been accepted by the CIT(A). In these circumstances, we do not find any reason to interfere with the order of the CIT(A) in this regard. Accordingly, we dismiss the grounds raised by the assessee. 16. The only other issue as raised by the assessee in grounds No. 3.1 to 3.4 is relating to disallowance of claim of provision for bad and doubtful debts relating to rural branches under section 36(1)(viia) of the Act. 17. Briefly the facts are, during the assessment proceedings the A.O. noticed that the assessee had claimed deduction of an amount of Rs.361,58,27,174/- worked out as under : Bad debts written off - Non Rs.46,55,21,925/- Rural advances provision for bad and doubtful debts (7.5% Rs.76,56,95,053/- of total income) Provision for rural branch advances - Deductions u/s. 36(1)(viia) Rs.238,46,10,196 Total Rs.361,58,27,174 18. The Assessing Officer. noticed that as per annual report for the year ending 31.03.2009 t....
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....nce the assessee has not debited any provision for bad and doubtful debts, the claim is not allowable. A reading of the provision contained u/s 36(1)(viia) makes it clear that the assessee is only required to make a provision for bad and doubtful debts in its accounts. It is not required that assessee should make provision to the extent of the amount claimed u/s 36(1)(viia) of the Act. It is also a fact that identical issue in the case of the assessee came up for consideration before the Income-tax Appellate Tribunal for the assessment year 2007-08. The co- ordinate bench of Income-tax Appellate Tribunal in ITA No.578/Hyd/2010 and 779/Hyd/2010 dated 7-9-2012 after considering various decisions of Hon'ble Supreme Court remitted the issue to the file of the Assessing Officer holding as under:- "9. The Apex Court in the case of TRF Ltd(supra) has held that any debt written off as irrecoverable should be allowed as deduction. In the case of Vijaya Bank Ltd(supra), the Apex court has held that if the provision fro bad debts debited to the P&L is netted against the current assets the provisions is an allowable deduction even if individual accounts of the debtors are not wtitten off. I....