TaxTMI 
TaxTMI 
2016 (5) TMI 453
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....ssues are involved in these years except change in figures, they are taken up together and disposed off by this common order for the sake of convenience. 3. The ground no.1 raised by the assessee for the Asst Years 2003-04 and 2004-05 are general in nature and hence not adjudicated herein. 4. DISALLOWANCE OF BAD DEBTS WRITTEN OFF IN RESPECT OF NONRURAL ADVANCES CLAIMED U/S 36(1)(vii) OF THE ACT GROUNDS 2 & 3 - ASST YEAR 2003-04 GROUNDS 2 , 3, 4, 5 & 6 - ASST YEAR 2004-05 GROUND 1 of Assessee Appeal - ASST YEAR 2007-08 The brief facts of this issue is that the assessee claimed deduction towards bad debts written off u/s 36(1)(vii) of the Act. The Learned AO held that the assessee being a bank is entitled for deduction towards provision for bad and doubtful advances in terms of section 36(1)(viia) of the Act and granting deduction u/s 36(1)(vii) of the Act would be overlapping and would result in double deduction. This action of the Learned AO was upheld by the Learned CITA. Aggrieved, the assessee is in appeal before us for the various assessment years on various grounds as listed hereinabove. 4.1. We have heard the rival submissions. The Lear....
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....by the assessee with regard to the claim of deduction u/s 36(1)(vii) of the Act. Accordingly the ground nos. 2 & 3 in ITA No. 1329/Kol/2008 for Asst Year 2003-04 ; ground nos. 2 to 6 in ITA No. 1102/Kol/2008 for Asst Year 2004-05 and ground no. 1 in ITA No. 2286/Kol/2010 for Asst Year 2007-08 are allowed for statistical purposes. 5. DISALLOWANCE OF PROVISION FOR BAD AND DOUBTFUL DEBTS CLAIMED U/S 36(1)(viia) OF THE ACT IN EXCESS OF PROVISIONS CREATED IN THE BOOKS GROUND 1 - ASST YEAR 2005-06 GROUND 1 - ASST YEAR 2006-07 GROUND 2 of Assessee Appeal - ASST YEAR 2007-08 This issue pertains to claim of deduction towards provision for bad and doubtful debts as per the provisions of section 36(1)(viia) of the Act in excess of provision created in the books. It was argued by the assessee that the intention of the legislature while inserting provision u/s 36(1)(viia) of the Act and its scope has to be understood. It was argued that from the provisions of section 36(1)(viia) of the Act, it is evident that for a scheduled bank in order to claim deduction, the essential pre-requisite is the provision for bad and doubtful debts must be created in respect of advances given in its....
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....assessee to which clause (viia) applies, the amount of the deduction relating to any such debt or part thereof 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 that clause" This also clearly shows that making of provision equal to the amount claimed as deduction in the account books is necessary for claiming deduction under section 36(1) (viia) of the Act The Tribunal has distinguished various authorities relied upon by the assessee wherein deductions had been allowed under various provisions which also required creation of reserve after the assessee had created such reserve in the account books before the completion of the assessment It has been correctly pointed out that in all those cases, reserves/provisions had been made in the books of account of the same assessment year and not of the subsequent assessment year In the present case, the assessee has not made any provision in the books of account for the assessment year under consideration, ie, 1985-86, by making supplementary entries and by revising its balance-sheet The provision has been made in the b....
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....e Learned AO however made disallowance u/s 14A of the Act which was also confirmed by the Learned CITA. Aggrieved, the assessee is in appeal before us for the various assessment years on various grounds as listed hereinabove. 8.1. We have heard the rival submissions. The Learned AR argued that the Hon'ble Apex Court in assessee's own case reported in (1999) 240 ITR 355 (SC) had held that the assessee has been holding the shares held as stock in trade and has been valuing the same at cost or market value which is lower for several decades. Based on this finding by the Hon'ble Apex Court, he argued that the shares were not held by the assessee with an intention to earn dividend income and instead the same were held only as stock in trade in order to make business profits out of the same. Accordingly, he argued that the primary intention behind introduction of section 14A of the Act would not get satisfied and hence disallowance contemplated thereon would not be applicable to the assessee herein. In response to this, the Learned DR argued that the disallowance u/s 14A of the Act would be applicable to the assessee as the said section does not bifurcate between an assessee holding t....
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....issue is that the assessee claimed exclusion of profit on sale of investments amounting to Rs. 344,84,22,513/- as well as deduction for loss on sale of investment amounting to Rs. 115,28,84,687/-. The assessee submitted that it has been treating all the investments as stock in trade for income tax purposes and the resultant profit / loss from buying and selling of these securities has been offered to tax as business income. It was also argued that the investments at the end of the year are valued at the lower of cost or market price consistently over several decades and this method of valuation and the status of the assessee holding investments as stock in trade had been approved by the Hon'ble Apex Court in assessee's own case reported in 240 ITR 355 (SC) and any profit / loss arising out of the said valuation at the end of the year has been considered in the books of accounts. It was argued that however, for the purpose of income tax valuation of investments, an investment trading account is prepared in which all the securities are treated as stock in trade and resultant figure of the trading account has been offered to tax. The profit / loss on sale of investments as per books a....
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....income, the entries in a balance sheet required to be maintained in the statutory form may not be decisive or conclusive. In such cases, it is open to the ITO as well as the assessee to point out the true and proper income while submitting the income-tax return. For reasons, the Central Government, in exercise of the powers conferred by section 53 of the Banking Regulation Act, and on the recommendation of the RBI, permitted the assessee not to disclose the market value of its investment in the balance sheet required to be maintained as per the statutory form. But as the assessee was maintaining its accounts on mercantile system, it was entitled to show its real income by taking into account the market value of such investments in arriving at the real taxable income. On that basis, therefore, the Assessing Officer had taxed the assessee. From the various decisions of the Supreme Court, it can be held that (1) for valuing the closing stock, it is open to the assessee to value it at cost or market value, whichever is lower; (2) in the balance sheet, if the securities and shares are valued at cost but from that no firm conclusion can he drawn, a taxpayer is free to e....
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....8 for Asst Year 2003-04 raised by the assessee. 10. TAXABILITY OF DIVIDEND RECEIVED FROM BANK OF BARHAD, MALAYSIA IN TERMS OF DTAA BETWEEN INDIA AND MALAYSIA GROUND NO. 9 OF ASST YEAR 2004-05 The brief facts of this issue is that the assessee derived dividend income of Rs. 16,17,000/- from Bank of Barhad , Malaysia and claimed exemption for the same. The Learned AO disallowed the same on the ground that the said dividend is received from foreign company and exemption u/s 10 (34) read with section 1150 of the Act is applicable only for dividend received from domestic companies. During the first appellate proceedings, the assessee argued that it is enjoying benefit of double taxation relief as per DTAA entered into between India and Malaysia and also pleaded that the said exemption has been granted to the assessee by the revenue in the earlier years and there is no reason to shift the stand during the assessment year under appeal. Not convinced with the arguments of the assessee, the Learned CITA upheld the addition made by the Learned AO. Aggrieved, the assessee is in appeal before us. 10.1. The Learned AR argued that as per the Double Taxation Avoidance Agreement entere....
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....f this Article. 3. The provisions of this Agreement shall have effect: (a) in Malaysia : (i) in respect of Malaysian tax, other than petroleum income tax, to tax chargeable for any year of assessment beginning on or after the first day of January in the calendar year following the year in which tis Agreement enters into force; (ii) in respect of petroleum income tax, to tax chargeable for any year of assessment beginning on or after the first day of January of the second calendar year following the year in which this Agreement enters into force; and (b) in India: In respect of income in any fiscal year beginning on or after the first day of April next following the calendar year in which the Agreement enters into force. 4. The Agreement between the Government of Malaysia and the Government of India for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on income signed at New Delhi , India on the 25th day of October, 1976 shall cease to have effect when the provisions of this Agreement become effective in accordance with the provisions of paragraph 3. From the above, it could be s....
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....ries Ltd vs Union of India reported in 292 ITR 470 (Cal). We find that the revenue had preferred Special Leave Petition before the Supreme Court against the judgement of Calcutta High Court. The Apex Court in Special Leave to Appeal (Civil) CC 12060 / 2008 dated 8.9.2008 had held as under:- "The petition was called on for hearing today. Upon hearing counsel the court made the following Order. Issue Notice. In the meantime, there shall be stay of the impugned judgement, until further orders." Later the Hon'ble Supreme Court in Special Leave to Appeal (Civil) No(s). CC 22889 / 2008 dated 8.5.2009 had held as under:- "The petition was called on for hearing today. Upon hearing counsel the court made the following Order Delay condoned. Leave granted. Pending hearing and final disposal of the Civil appeal, Department is restrained from recovering penalty and interest which has accrued till date. It is made clear that as far as the outstanding interest demand as of date is concerned, it would be open to the department to recover that amount in case Civil Appeal of the department is allowed. We fur....
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.... in favour of the assessee, wherein it was held :- "6.4 In the light of the above discussion, we consider the facts of the case under consideration. There is no dispute that the assessee is entitled to relief under section 91 of the Act. The scheme of the Act is that section 115JB is applicable wherein the case of an assessee, being a company, the income-tax payable on the total income as computed under this Act in respect of any previous year is less than 7.5 per cent of its book profit, 7.5 per cent book profit shall be deemed to be the total income of the assessee. This can be explained by an illustration. Suppose an assessee having income in India is 'x ' and income outside India is 'y'. In normal calculations of income from sections 2!! to 430, the income i.e., 'x' + 'y' is less than the income 'z': as per calculation under section 115JB then income 'z' is to be taken. In the case under consideration 'x' + 'y' is less than 7.5 per cent so income according to section 1151B is taken which is more than income 'x ' + 'y'. On consideration of above guidelines laid down by the Apex Court in the ....