TaxTMI 
TaxTMI 
2013 (1) TMI 841
X X X X Extracts X X X X
X X X X Extracts X X X X
....b) Disallowance made u/s 40A(9) - Rs.1,50,00,000/- (c) Disallowance of claim of broken period interest - Rs.35,41,07,219/- (d) Disallowance made u/s 40(a)(ia) - Rs.3,22,58,963/- (e) Ad hoc disallowance from 'sundry expenses' - Rs.10,00,00,000/-. (f) Addition of Excess provision for bad and doubtful debts written back Rs.60 crores. 4. The assessee is a public sector bank. It filed its return of income declaring a total income of ₹ 232.93 lakhs. The AO completed the assessment by determining the total income at ₹ 484.23 lakhs after making various additions. The appeal filed by the assessee before Ld CIT(A) against the impugned assessment order was partly allowed. Aggrieved by the order passed by Ld CIT(A), both the parties are in appeal before us. 5. We shall first take up the appeal filed by the assessee. The first issue relates to the disallowance of claim of prior period expenses. The assessee submitted before the assessing officer that the liability to pay the said expenses arose during the instant year and hence they should be treated as the current year's expenditure. However, the assessee could not furnish relevant details before the AO. In the letter da....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., in the assessee's case. However, the AO held that the said letter does not also approve the stand taken by the assessee. Accordingly, the AO did not accept the adjustment of excess payment of TDS against the liability of the current year and accordingly took the view that the assessee has failed to deduct tax at source on payments relating to such adjustment. Accordingly, the AO disallowed a sum of ₹ 3,22,58,963/-. 6.1 Before Ld CIT(A), the assessee contended that the CBDT has approved the adjustment made by the assessee and hence such adjustment tantamount to remittance of TDS. The Ld CIT(A) held as under in this regard:- "On perusal of facts, I find merit in appellant's case and hence direct the AO to give effect to this order as per instruction of the CBDT conveyed to the Department". The assessee is contending before us that the Ld CIT(A), after recording a finding that there is merit in the appellant's case, should not have remitted the matter to the file of the AO. The revenue is challenging the decision of the Ld CIT(A) in deleting the disallowance. 6.2 The assessee has filed a copy of letter dated 11.11.2005 issued by the CBDT, referred above. For the sake of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Hence, in our view, this issue requires reconsideration at the end of the AO. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the assessing officer with the direction to examine the issue afresh by considering the discussions made supra and take appropriate decision in accordance with the law. 7. The next issue in the appeal of the assessee relates to the disallowance of bad debt claim of ₹ 62,34,95,370/-. The revenue has taken a ground relating to excess provision of Bad and doubtful debts written back. We prefer to address both the issues together. The assessing officer has disallowed the claim of bad debts of ₹ 62.34 crores under the heading "Bad debts written off relating to Rural branches". According to the AO, the assessee did not comply with the provisions of sec. 36(1)(vii) and 36(2)(v) of the Act. The Ld CIT(A) upheld the said addition. Aggrieved, the assessee is in appeal on this point. 7.1 The assessee had credited a sum of ₹ 60.00 crores in its profit and loss account under the head "Excess provision of bad and doubtful debts written back". In the computation statement, it reduced the above said amo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ein. In view of the same, it is provided in sec. 36(2)(v) that the bad debts should first be debited to the said "Provision for bad and doubtful debts". It is further provided in the proviso to sec. 36(1)(vii) of the Act that the claim of bad debt shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made under sec. 36(1)(viia) of the Act. 7.5 In the instant case, the assessee has stated that the bad debts have first been debited to the "Provision for bad and doubtful debts" account, meaning thereby, the assessee has been claiming deduction of the said "provision for bad and debts account" u/s 36(1)(viia) of the Act. While advancing the argument for the disallowance of ₹ 60.00 crores, it is stated that the "Provision for bad and doubtful debts" was not treated as expenditure. Both the contentions of the assessee contradict with each other. Before us, the assessee did not furnish the account copies of "Provision for bad and doubtful debts" and the "Bad debts account". Hence, we are unable to appreciate the contentions raised by the assessee. 7.6 As stated earlier, the provision created....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rs that the assessee did not press the ground relating to the above said disallowance and hence the Ld CIT(A) also confirmed the said disallowance. 8.1 Before us, the Ld A.R submitted that the assessing officer initially allowed the entire amount of wage arrears in the succeeding assessment year, i.e., assessment year 2006-07. The assessee, in good faith, brought this fact to the notice of Ld CIT(A). However, subsequently, the AO has disallowed the claim by re-opening the assessment u/s 147 of the Act. Accordingly, it was submitted that the assessee is constrained to challenge this addition before the Tribunal. Accordingly, it was prayed that this issue may be set aside to the file of the Ld CIT(A) for fresh consideration. However, Ld D.R stood by the order passed by the first appellate authority. 8.2 We have heard the rival contentions. Before us, the assessee has explained the circumstances under which it did not press the impugned ground in good faith. However, in the changed scenario, i.e., due to withdrawal of the deduction in the reopened assessment pertaining to the assessment year 2006- 07, the assessee was constrained to agitate this issue. Hence, in the interest of natu....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 9.2 We have heard the rival contentions. We notice that the Ld CIT(A) has confirmed this addition by stating that the assessee has failed to furnish the details. However, the main contention of the assessee was that the assessing officer has accepted the change in the method of accounting in the immediately preceding year and also in the immediately succeeding year and hence there was no justification in not accepting the change in the instant year alone. We notice that the ld CIT(A) has failed to address this contention of the assessee. Accordingly, in our view, this issue require fresh examination at the end of Ld CIT(A). Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to his file with the direction to examine the issue by duly considering the various contentions raised by the assessee and take appropriate decision in accordance with the law. 10. The last issue in the appeal of the assessee relates to the claim of exemption u/s 10(23G) of the Act. The AO denied the said exemption on the ground that (a) the assessee did not fall in the category of institutions mentioned in sec. 10(23G) of the Act and (b) the proof that the borrowers are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the said decision may kindly be followed. 11.2 We have heard the rival contentions and perused the record. As pointed out by Ld A.R, this bench of the Tribunal, vide its order dated 29-03-2012, has decided an identical issue in favour of the assessee in the assessee's own case relating to the assessment year 2004-05 in ITA No.406/Coch/2009. For deciding so, the Tribunal has followed the decision rendered by the Tribunal on 19-09- 2006 in the assessee's own case relating to the assessment year 2000-01 in ITA No.295/Coch/2003. 11.3 The department, in its grounds of appeal, has placed reliance on the decision rendered by the Hon'ble jurisdictional Kerala High Court in the assessee's own case relating to the assessment year 2003-04 in ITA No.174 of 2010. However, both the parties have failed to produce copy of the said order of the High Court. Further, we notice that the jurisdictional High Court has taken a view about the provisions of sec.14A of the Act in the case of CIT Vs. Catholic Syrian Bank Ltd & Ors reported in (2011) (237 CTR (Ker) 164) (344 ITR 259) and the said decision was rendered way back on 21-10-2010. We notice that the said binding decision of the jurisdictional....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessment year 2002-03 in ITA No.861 (Coch)/2005 by its order dated 08-08-2007, wherein it is held as under:- "In our further considered opinion, the bonafide contribution made by the assessee as an employer to the fund set up as a part of the agreement between the assessee bank and its executive employees is not hit by subsection (9) of section 40A." It was not shown to us that the above said decision was reversed in any of the higher forum. Under these circumstances, we are inclined to follow the decision of the co-ordinate bench referred supra. Accordingly, we uphold the decision reached by Ld CIT(A) on this issue. 13. The next issue relates to the disallowance of broken period interest of ₹ 35.41 crores. The assessee has placed reliance on the decision dated 22-05- 2003 of the jurisdictional High Court in the assessee's own case in ITA No.23 of 2000 for the assessment year 1992-93. On the contrary, the Ld D.R placed reliance on the decision of Hon'ble Rajasthan High Court in the case of CIT Vs. The Bank of Rajasthan reported in 316 ITR 391 (Raj). Since the decision of the jurisdictional High Court is binding on us, we follow the said decision and accordingly hold that....