TaxTMI 
TaxTMI 
2014 (2) TMI 930
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....Act in the case of banks. 3. The first ground of appeal is with regard to depreciation on land. The A.R. for the assessee has fairly conceded that this issue has already been adjudicated by the Tribunal against the assessee in earlier appeal in ITA No.1931/Mds/2000 decided on 31.03.2006 relevant to the assessment year 1997-98. Since, the AR has conceded that the issue is decided by the Tribunal against the assessee, we, respectfully following the decision of the Tribunal in the aforementioned appeal, we dismiss this ground of appeal of the assessee. 4. The second ground of appeal of the assessee relates to bad debts written off. This issue has already been adjudicated by the Tribunal in the appeal of the assessee in ITA No.1146/Mds/2008 relevant to the assessment year 2002-03, wherein the Tribunal has observed as under:- " 33. We have considered the submissions made by the representatives of both the sides. The Hon'ble Supreme Court of India in the case of TRF Ltd (supra) has held as under:- "After the amendment of section 36(1)(vii) of the Income Tax Act, 1961 with effect from 1st April, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become....
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....he A.R pointed out that in the present case this ground of appeal was agitated before the CIT(A). The CIT(A) following the order of his predecessor without specifying reasons has dismissed this ground of appeal of the assessee. Copy of the earlier order passed by the predecessor of the CIT(A) has not been placed on record by either of the parties. The A.R. has placed reliance on the order of the Hyderabad Bench of the Tribunal in the case of State Bank of Hyderabad Vs. DCIT in ITA No.578/Hyd/2010 relevant to the assessment year 2007-08 decided on 7.9.2012, wherein the Tribunal has held that the provisions of section 115JB will not be applicable to the assessee and set aside the assessment made under section 115JB on the assessee bank. The relevant extract of the order of the Tribunal is reproduced herein below:- "13. The provisions of Sec.115JB will be applicable to all companies. However, it is contended that Sec.115JB will be applicable only where the assessee is required to show profit & loss account in accordance with schedule VI of companies act. As the banks are required to prepare balance sheet and profit & loss account in accordance with the Banking Regulation Act, provisi....
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.... 1956. The learned DR further referred to section 2 of The Banking Regulation Act, 1949 which states that the Act is in addition to and not in derogation of the Companies Act, 1956 unless expressly provided. To give impetus to his submissions, the learned DR relied on the following case laws:- i) Indian Overseas Bank Ltd. Vs. CIT., Madras reported as 1970 AIR 1530 ii) IOB Vs. CIT., reported as 63 ITR 733(Mad) iii) CWT Vs. S.P.Shanmugha Kesari reported as 121 ITR 403 (Mad) 23. We have heard the submissions made by both the sides and have perused the orders of the authorities below. We have also examined the judgements/orders referred to by both the sides. The DR has placed reliance on the judgements which are prior to nationalization of banks. After the enactment of the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970 the status of banks have changed and the said judgements have lost their relevance in the post nationalization scenario. The facts of the judgement of the Hon'ble Madras High Court in the case of S.P.Shanmugha Kesari (supra) are entirely different from the case in hand. Therefore, the ratio of the said decision is also not applicable in the inst....
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....pugned order on the ground that the CIT(A) has erred in restricting the claim in respect of deduction under section 36(1)(viia) to the extent of provision made in the books instead of allowing the same based on the eligible amount as per the provisions of the said section. The A.R. fairly conceded that the issue has been decided against the assessee by the Tribunal in ITA No.1191/Mds/2012. The relevant extract of the order of the Tribunal in the said appeal is reproduced herein below:- 7. We have perused the orders and heard the rival submissions. The original claim, which was allowed by the Assessing Officer under Section 36(1)(viia) of the Act, was as follows:- 7.5% of Gross Total Income : Rs. 5,74,07,362 10% of Rural Advances (Rs. 27,26,50,990/-) : Rs. 2,72,65,099 Rs. 8,46,72,461 Thereafter, assessee had moved in appeal against some of the additions made by the Assessing Officer on other issues and pursuant to the relief granted in such appeal, the gross total income which earlier stood at Rs. 76,54,31,493/- came down to Rs. 35,38,65,546/-. As a result of the reduction in gross total income, deduction under Section 36(1)(viia) was also scaled down from Rs. 5,74,07,362/- to Rs....
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....provision for bad and doubtful debts. The debt itself being good, a provision made on good debt cannot be considered as a provision for bad and doubtful debts. May be, the RBI has made a regulation for 10% provision for standard assets also a prudential norm. This can however be considered as a measure prescribed in abundant caution, to deal with a situation where banks are not to suffer shock of sudden delinquency that could happen in future. There is always a possibility that an asset, which is fully recoverable, may not be so at future date. Nevertheless, possibility of happening of such a contingency cannot be a sufficient reason to consider a provision made on standard assets also as a provision for bad and doubtful debts. Therefore, claim of the assessee that provision for standard assets also has to be considered for applying the condition set out under Section 36(1)(viia) is not in accordance with law. If the provision for standard assets is not considered as provision for bad and doubtful debts, the actual provision for bad and doubtful debts made by the assessee in its books Rs. 4,01,44,027/- fall much below the sum of Rs. 5,38,05,015/- allowed by the Assessing Officer. ....
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....The case of the assessee is squarely covered by the Hon'ble Bombay High Court in the case of Godrej & Boyce Manufacturing Co.Ltd., Vs. DCIT., reported as 328 ITR 81(Bom), wherein the Hon'ble Bombay High Court has held that provisions of Rule 8D are applicable from the assessment year 2008-09. We find that the Assessing Officer has wrongly applied the provisions of section 8D in the assessment year 2007-08 in the case of the assessee. We therefore, remit this matter back to the file of the Assessing Officer to decide the issue afresh in accordance with the law. 17. This ground of appeal of the assessee is allowed for statistical purposes. 18. The fifth ground of appeal of the assessee relates to disallowance of the claim of leave encashment amounting to Rs.27,68,00,000/-. The AR submitted that the provisions of section 43B of the Act are not applicable as it is neither a statutory liability nor a contingent liability. The AR submitted that number of days of leave earned cannot be brought within the ambit of section 43B which deals with statutory payments. In order to support his contentions, the AR relied on the judgement of the Hon'ble Calcutta High Court in the case of Exide Ind....
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....ecial reasons were disclosed. Without such reasons the enactment is inconsistent with the original provisions of that section. Although the disclosure of the reasons was not mandatory, but in the interest of justice, it was incumbent upon the legislature to disclose the reasons. The legislature must disclose reasons which would be consistent with the provisions of the Constitution and the laws of the land and not for the sole object of nullifying the Supreme Court decision." The Hon'ble High Court further held that "section 43B(f) was liable to be struck down as arbitrary and inconsistent and de hors the decision of Hon'ble Supreme Court of India in the case of Bharat Earth Movers Ltd. (supra)." 22. In the present case, the assessee has created provisions for leave encashment of Rs.27.68 crores. The learned AR has relied on the judgement of the Hon'ble Calcutta High Court in the case of Exide Industries Ltd. (supra) wherein the Hon'ble Court has struck down the provisions of sub-clause (f) of section 43B. The Hon'ble Supreme Court of India in the case of Bharat Earth Movers Ltd. Vs. CIT reported as 245 ITR 428 answering to the question : "whether, on the facts and in the circumsta....
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....elevant date, is entitled to deduction out of the gross receipts for the accounting year during which the provision is made for the liability. The liability is not a contingent liability. The High Court was not right in taking the view to the contrary. The appeal is allowed. The judgment under appeal is set aside. The question referred by the Tribunal to the High Court is answered in the affirmative, i.e., in favour of the assessee and against the Revenue." The Hon'ble Madras High Court following the judgement of the Hon'ble Supreme Court of India, dismissed the appeal of the Revenue in the case of CIT Vs. Panasonic Home Appliances reported as 323 ITR 344 wherein similar question was involved. In view of the ratio laid down in the above judgements, this ground of appeal of the assessee is allowed. 23. In the sixth ground of appeal the assessee has assailed the impugned order on the ground that the CIT(A) has upheld the findings of the Assessing Officer in charging to tax the surplus arising on account of takeover of Bharat Overseas Bank by the assessee. The AR submitted that the gain arising out of such takeover cannot be treated as business income. However, the gain arising the....
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....ries Ltd., reported as 56 DTR (Del) 397, wherein the Hon'ble High Court has allowed depreciation @ 60% on UPS treating it as part of computer hardware. On the other hand, learned DR relied on the order of the Delhi Bench of the Tribunal in the case of Nestle India Vs. DCIT., reported as 111 TTJ 498 wherein the Tribunal has held UPS at par with plant and machinery and rejected the contention of assessee to treat it as part of computer. 28. We do not agree with the submissions of the AR that the UPS is an energy saving device, therefore, depreciation @ 80% should be granted. However, we are in consonance with the decision of Hon'ble Delhi High Court in the case of Orient Ceramics & Industries Ltd. (supra), wherein the Hon'ble Court has granted depreciation @ 60% by treating UPS as part of computer hardware. Accordingly, we allow depreciation @ 60% on UPS and partly allow the ground of appeal of the assessee. 29. The eighth ground of appeal of the assessee relates to preparation of profit and loss account in accordance with Schedule VI of the Companies Act as provided under the provisions of section 115JB. This issue has been decided in favour of the assessee in ITA No.99/Mds/2010. ....
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....nal. The Tribunal vide order dated 30-11-2004 directed the Assessing Officer to enquire whether there is a DTAA between India and Bangkok. The Assessing Officer in accordance with the directions given by the ITAT enquired all the provisions of the DTAA between India and Thailand and as per Article 23(3) by following the tax credit method whatever tax was paid by the assessee in Thailand was given credit to the assessee. Aggrieved, the assessee carried the matter before the learned CIT(Appeals). The learned CIT(Appeals) hyper technically held that the only job of the Assessing Officer was to see whether there is a DTAA between India and Thailand. We are unable to understand the above conclusion made by the learned CIT(Appeals) that the job of the Assessing Officer is just to see whether there is a DTAA between India and Thailand. If there is a DTAA, the Assessing Officer has to allow the relief claimed by the assessee. That being so, in our opinion, the Tribunal need not refer it to the Assessing Officer as well just to see and pass an order. The Tribunal clearly directed the Assessing Officer to enquire into the existence of a DTAA between India and Bangkok. "Enquiry" means to inve....
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.... first additional ground of appeal raised by the Revenue, is with respect to deletion of disallowance of contribution towards staff welfare fund. The D.R. Submitted that the fund is not recognized one and any contribution made by the employer towards unrecognized welfare fund is not allowable as a deduction. Similar issue has been decided by the Tribunal in ITA No.1146/Mds/2008 relevant to the assessment year 2002-03 in the appeal of the assessee. The findings of the Tribunal in ITA No.1146/Mds/2008 are reproduced herein below:- "37. We have heard the submissions made by both the parties and have perused the orders of the authorities below. As per the contentions of the AR, the liability has arisen out of the agreement between the assessee bank and the employees of trade union and it is a contractual liability. As per the findings of the CIT(A) it is merely a provision and the liability has not been crystallized so far. As per the provisions of section 40A(7) deduction can be allowed in respect of any provision made by the assessee for payment of gratuity to its employees on retirement or termination from employment for any reason, provided the same has been contributed towards ap....
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....eal of the Revenue is allowed for statistical purposes. 44. The third issue raised by the Revenue in additional grounds relates to disallowance of loss on revaluation of investments. This issue has already been dealt by us in ITA No.694/Mds/2001 relevant to the assessment year 1996-97. The relevant extract of the order in the said appeal is reproduced herein below:- "36. The A.R submitted that the issue was covered by the decision of the Hon'ble Madras High Court in the case of CIT vs Karur Vysya Bank Ltd in TCA No.2139 of 2008, order dated 13.7.2009. The DR also agreed with the same. 37. We find that the Hon'ble Madras High Court in the above quoted case has held as under: "2. In so far as the first question of law raised by the revenue is "whether the Tribunal is right in holding that the diminution in the value of the securities held by the bank should be allowed as deduction disregarding the method prescribed in the Reserve Bank of India as per which 'permanent' investments had to be valued only at cost and only 'current 'investments were to be valued at market price at the close of the accounting year". The very same issue came up for consideration before this Court in the....