TaxTMI 
TaxTMI 
TaxTMI 
2013 (11) TMI 1696
X X X X Extracts X X X X
X X X X Extracts X X X X
....nces of the case, the order passed by the ld. CIT(A) is bad in law and bad on fact. 2) That on the facts and in the circumstances of the case, the ld. CIT(A) erred in upholding the addition of Rs. 1081779/- being Provision for Standard Assets Rs. 68000/-, Provision for NPA Rs. 5,80,900/- and Provision for Impaired Assets Rs. 432879/- holding that provision made in accordance with the RBI Guidelines are not provision for doubtful debts. The same may kindly be deleted. 3) That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in upholding the disallowance of Rs. 19,57,916/- being Provision for investment depreciation reserve without assigning any reason for the same. The same may kindly be deleted. 4) That the peti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve Bank, an amount not exceeding seven and half percent of the total income computed before making any deduction under this clause and Chapter VIA and an amount not exceeding 10% of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner. On analysis of the provision, it can be said that the first condition to become eligible for deduction is that there should be a "provision for bad and doubtful debts" whereas, in the appellant's case, the appellant has made provision for "non performing asset" (NPA) and it cannot be said that it was a provision for bad and doubtful debts. Classification of assets in accordance to RBI guidelines for prudential norms by the bank is for the purpose of show....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecision of the Hon'ble Supreme Court in case of Southern Technologies Ltd, vs. JCIT, reported in 320 ITR 577 which states that there is deviation between RBI directions, 1998 and Companies Act in presentation of financial statement, recognization of the income and particularly in creating a provision for all NPAs summarily as against creating a provision only when the debt is doubtful of recovery under the norms of the accounting standard issued by the ICAI. Thus, it can be said that the provision for NPA is not equal to provision for bad and doubtful debts. The provision for bad and doubtful debts means the debt is either become bad or its recovery is doubtful, whereas, Classification of NPA as per RBI guidelines means that recover of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....truction No.17/2008) Decision relied on 1. The Vellore District Central Cooperative Bank Ltd. vs. CIT [ITAT Chennai Bench ITA No.914/Mds/2013 dated 17/07/2013] [PB page 22 - 32 (31 - 32) G.A. No.3 AO Order page 1 - 2 CIT(A) Order 4 - 5 Para 5.2.2 (Discussion only No Conclusion finding) PB 7 - 11 (WS CIT(A)), 20 - 21 (CBDT Instruction No.17/2008) Decision relied on 1. M/s Krishna Gramin Bank vs. Addl. CIT in ITA No.146/Bang/2011 dated 15/06/2012 [PB page 33 - 42 (39-42)]" 9. On the other hand, ld. Departmental Representative has supported the finding of the ld. CIT(A). 10. After circumspecting the entire records vis-à-vis the oral submissions, we are of the considered opinion that ground no.2 stands covered in favour of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w of the above, we find that the assessment order dated 09.09.2010 is neither erroneous nor prejudicial to the interest of the Revenue. The impugned order of CIT passed u/s. 263 is set aside and the appeal of the assessee is allowed." 11. Therefore, by respectfully following the ratio decidendi of the above Tribunal Order we allow ground no.(2) of this appeal in favour of the assessee. These provisions which are in line with the RBI guidelines become allowable. 12. The facts apropos ground no.(3) are that the A.O. has disallowed the provision for investment depreciation reserve for Rs. 19,57,916/- merely because the same is a provision and not an actual expenditure. The assessee bank made non-SLR trade investment in these mutual fund for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....08 helps the case of the assessee. We reproduce this instruction as under :- "As per RBI guidelines dated 16th October, 2000, the investment portfolio of the banks is required to be classified under three categories viz. Held to Maturity (HTM), Held for Trading (HFT) and Available for Sale (AFS). Investments classified under HTM category need not be marked to market and are carried at acquisition cost unless these are more than the face value, in which case the premium should be amortized over the period remaining to maturity. In the case of HFT and AFS securities forming stock-in-trade of the bank, the depreciation/appreciation is to be aggregated scrip-wise and only net depreciation, if any, is required to be provided for in the account....