TaxTMI 
TaxTMI 
2019 (3) TMI 1002
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.... of Rs. 196,10,00,010/-. Subsequently, it was revised on 27.03.2008 at a total income of Rs. 196,10,11,010/- and again it was revised on 19.06.2009 at a total income of Rs. 1,72,55,93,283/-. Against the said return of income, the assessment was completed by the Asst. CIT, Corporate Circle-1, Thiruchirapalli (hereinafter called as 'AO') vide order dated 31.12.2009 passed u/s. 143(3) of the Income Tax Act, 1961 (in short 'the Act') at a total income of Rs. 320,83,80,764/-. While doing so, the AO has made the following disallowances: Additions 1. Depreciation on securities 59,27,74,569 2. Broken period interest 9,98,67,263 3. Brokeragepaid 28,000 4. Expenditure for earning tax free income 13,65,488 5. Ex-gratia payment 6,26,71,637 6. Right issues 22,62,934 7. Pooja expenses 8,84,725 8. Speculative loss on derivative transaction 6,43,030 9. Interest receivable but not due 22,21,14,416 10. Baddebts written off 8,24,47,532 11. Loss on sale of HTM category of securities 1,39,30,565 12. Unclaimed balance 1,12,00,000 13. Entertainment expense 1,34,000 3. Being aggri....
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.... the expenditure is not wholly and exclusively for the purpose of business. The issue of allowance u/s. 36(i)(viia) of the Act was remitted to the file of AO for the purpose of verifying the average advances. Thus, the appeal filed by the assesseebank came to partly allowed by the ld. CIT(A). Being aggrieved by that part of the ld. CIT(A) order, which is against the assessee-bank, the assessee filed an appeal bearing ITA No.1342/Chny/2013 and the Revenue is in appeal in ITA No.1497/Chny/2013. Now, we shall take up the assessee's appeal in ITA No.1342/Chny/2013. 4. The assessee raised the following grounds of appeal in ITA No.1342/Chny/2013 are as under: "1) The order of the CIT (A) in so far as it is against the assessee is contrary to law erroneous and unsustainable on the facts of the case 2% Disallowance of expenses on exempted income. 2) The CIT (A) erred in confirming 2% disallowance of expenses on exempted income. 3) The CIT(A) failed to appreciate that for the Assessee Bank, securities are stock- in-trade and Section 14A has no application to securities/shares held as stock-in- trade as per the Karnataka High Court decision in CCI Ltd vs. CIT (206 Taxman 563) ....
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....s, but disallowed as it was not for the purpose of business, the CIT (A) ought to have allowed the same. 15) The CIT (A) ought to have followed the decision of the Tribunal in the assessee's own case in this regard and allowed the same. (ITA No. 930/2011 - A Y 2004-05: ITA No. 907/2010 - A Y 2005-06: ITA No. 931/2011 - A Y 2006- 07: ITA No. 905/2010 - A Y 2002-03) Additions: Speculative Loss on Derivative transactions 16) The CIT (A) erred in confirming the addition on account of "interest paid on Derivative transactions". 17) The CIT (A) failed to note that the regulator of Banks "RBI" had allowed these transactions and the RBI cannot and will not allow banks, which are dealing in public money to go in for speculative business. Further IRS (Interest Rate Swap) transactions are not of any speculative nature. 18) The CIT(A) failed to note that Mumbai ITAT had allowed IRS (Interest Rate Swap) as revenue expense in the case of J.P.Morgan Chase Bank Vs ADIT [2010-TI I-I 85-ITAT-DEL-INTL] 19) The CIT(A) failed to note that Mumbai ITAT special Bench in the case of DCIT VS Bank of Bahrain & Kuwait (132 TTJ 505) allowed the same following the above judgement. 20) The C....
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.... the reasons stated in the above grounds of appeal and additional grounds and arguments that may be adduced at the time of hearing, the additions/disallowances may be deleted." 5. Grounds of appeal No.1 & 13 are general in nature and do not require any adjudication. The Grounds of appeal No.2 to 4 challenges the disallowance of 2% of exempt income under the provisions of s. 14A of the Act. The AO made a disallowance of Rs. 13,60,438/- invoking the provisions of s. 14A of the Act r/w. Rule 8D of the Income Tax Rules rejecting the contention of the appellant that no expenditure was incurred to earn the exempt income as the employees, who are employed to carry out banking activity are used in the activities related to the earning of the exempt income. Further, the AO observed that the disallowance of 2% of exempt income in the case of Lakshmi Vilas Bank have been upheld by the Tribunal. Even, on appeal before ld. CIT(A), the same came to be confirmed vide para 4.3 of the ld. CIT(A) order. Being aggrieved, the appellant is before us in the present grounds of appeal contending that the provisions of s. 14A of the Act has no application to the shares and stock held as stock in trade. ....
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....h of the AO in making a disallowance @ 2% of exempt income was also approved by the Hon'ble jurisdictional High Court in the case of Simpson & Co. Ltd. in T/C. No.2621 of 2006 dated 15.10.2012. 5.2. Since, the orders of lower authorities are in conformity law laid down by the Jurisdictional High Court, we do not find any merit in the grounds of appeal raised by the assessee-bank. 5.3. In the result, the ground of appeal No.2 raised by the assessee is dismissed. 6. Ground No.3 challenges the addition of ex-gratia payment of Rs. 6,26,71,637/-. The assessee-bank made a claim for deduction of exgratia payment of Rs. 6,26,71,637/- made to the employees excluded from the purview of the payment of bonus act, the incentives were paid to these employees on the completion of 90 years of the existence. The AO disallowed the claim placing reliance on the provisions of s. 36(1)(ii) of the Act, which lays down that any sum paid to an employee as a bonus for services rendered, where the same would not have been payable to the employee as profit or dividend, if it is not paid as a bonus or commission shall be allowed as a deduction. Further, the AO opined that the assessee-bank circum....
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.... of Tribunal in assessee's own case in ITA Nos.2325 & 2326 for AY 2010-11 & 2011-12 dated 29.03.2017 held as follows: "14. Aggrieved, the assessee moved in appeal before the CIT(Appeals). Ld. CIT(Appeals) was of the opinion that the actual amount of deduction computed by the assessee as well as the Assessing Officer was very same. As per the Ld. CIT(Appeals), the ground was purely academic, since, according to him, for the impugned assessment year, the Assessing Officer though he followed a different method of computation, it did not effect the taxable income of the assessee." 6.4 In the light of the above discussion, we are of the considered opinion that the claim for deduction of ex-gratia payment of Rs. 6,26,71,637/- should be allowed, accordingly, we direct the AO to allow the same as a deduction. 6.5 In the result, Ground of appeal No.3 filed by the assessee is allowed. 7. Ground of appeal No.4 challenges the addition on disallowance of expenditure incurred on bonus shares. The AO disallowed the same holding to be a capital expenditure. The assessee had incurred a total expenditure of Rs. 6,97,00,934/- on the right issue, out of which a sum of Rs. 22,62,934/- was c....
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.... whereas In the present case, we were concerned with the issue of right shares. Thus, this ground of appeal filed by the assessee is dismissed. 7.4 In the result, ground of appeal No.4 filed by the assessee is dismissed. 8. Ground No.5 challenges the disallowance of Pooja expenses. The AO disallowed a sum of Rs. 8,84,725/- by holding that the expenditure, was not incurred wholly and exclusively for business purpose. Even, the ld. CIT(A) confirmed the same. 8.1. Being aggrieved, the assessee is in appeal before us in the present appeal. 8.2 It is submitted before us that the similar expenditure was allowed in the assessee's own case in the AY 2004-05, 2005-06 and 2006-07 by this Tribunal, following the decision of Hon'ble High Court of Madras in the case of CIT v. Aruna Sugars Ltd. [1981] 132 ITR 718 (Mad.). The decision of the Tribunal was accepted by the Revenue by not filing any further appeal. These submissions of the ld. Authorized Representative of assessee were not controverted by the ld. Sr. Departmental Representative. In the circumstances, following the decision of this Tribunal in assessee's own case, we direct the AO to allow the same as a deduction. 8.3 I....
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....l before us in the present appeal. 10.2 It is contended that in the case of banking company all the investments are treated as a trading assets. The loss arising on the sale of such securities should be allowed as a trading loss. Reliance in this regard was placed on the decision of Hon'ble Jurisdictional High Court in the case of CIT v. Karur Vysya Bank Ltd. [2005] 273 ITR 510 (Mad.) and the decision of Hon'ble Supreme Court in the case of United Commercial Bank v. CIT [1999] 273 ITR 510 (SC). Therefore, the resultant profit or loss on the sale of such securities are to be treated as a business profit / loss. In the present case, the claim was made in the original return of income, but wrong amount of Rs. 24,78,54,994/- was claimed. It is only during the course of assessment proceedings that this revised claim was made before the AO. But it is bounden duty of the AO to work out the correct profits and the income tax proceedings are not adversely proceedings and therefore, the AO should have allowed the claim. Reliance was made in this regard in the case of CIT v. McMillan & Co. [1958] 33 ITR 182 (SC), SN Namasivayam Chettiyar v. CIT [1960] 38 ITR 579 (SC) and CIT v. British....
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....penditure on the ground that a certain portion of the expenditure may not be relating to the business. The ld. CIT(A) also confirmed the same. 11.1 Being aggrieved, the assessee is in appeal before us in the present appeal. 11.2 It is submitted that the issue is covered in favour of the assessee-company in its own case by the decision of this Tribunal for the AY 2010- 11 (Para 47 at page 116 of the order), wherein the Tribunal deleted the addition on the ground that there was nothing on the record to show that any expenditure was incurred for the benefit of the employees. The ld. CIT(A) had not controverted above submissions. Therefore, we allow this ground of appeal. 11.3 In the result, appeal filed by the assessee in ITA No.1342/Chny/2013 stands partly allowed. Revenue Appeal in ITA No.1497/Chny/2013 for AY 2007-08: 12. The Revenue raised the following grounds in ITA No.1497/Chny/2013 for AY 2007-08: "01.The CIT(A) failed to appreciate the fact that the ssessee is claiming the debts written off as urban debts only before CIT(A) and no remand report was called for and rule 46(1) was violated. 02.The CIT(A) failed to see that no rural debt writtn off can be cla....
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....the outset, there is delay in filing the appeal by 10 days. The Revenue had prayed for condonation of delay. It is submitted that the delay in filing the appeal had occurred on account of change of incumbent and thus, it was prayed that the delay is not deliberate. It is stated that under these circumstances, the delay of 10 days may be condoned. The ld. Counsel for the assessee-bank had no serious objection for the condonation of delay. Considering the rival submission, we condone the delay of 10 days in filing the present appeal and admit the appeal. 13.1 Grounds No.1 & 2 challenges the direction of ld. CIT(A) deleting the addition made u/s. 36(1)(vii) of the Act for Rs. 8,24,47,532/-. The AO made addition by disallowing the claim for deduction u/s. 36(1)(vii) of the Act solely on the ground that the credit balance available in the account of provision for bad and doubtful debts more than the amount claimed as a bad debts. On appeal before the ld. CIT(A), the CIT allowed the claim considering the fact that the bad debts were written off in the books of account, the provision of s. 36(1)(vii) of the Act are different from s. 36(1)(viia) of the Act. Both the provisions are separ....
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....tually written off, which do not arise out of the rural advances, are not affected by the proviso to cl. (vii) and that only those bad debts which arise out of rural advances are to be deducted under s. 36(1)(viia) in accordance with the proviso to cl. (vii). Finally, the matter, in respect of the appellant- Bank, was ordered to be placed before the AO and with respect to other banks, before the concerned Benches of the Tribunal. The order of the Special Bench of the Tribunal was implemented by the Department and was never called in question. It may be noticed here that in relation to earlier assessments, i.e. right from 1985-86 to 1987-88 in a similar case, different banks came up for hearing in appeal before a Division Bench of the Kerala High Court in the case of South Indian Bank Ltd. (supra) wherein, as mentioned above, while discussing the scope of ss. 36(1)(viia) and 36(2)(v) of the Act, the High Court set aside the order of the Tribunal in that case and held that the assessee was entitled to the deduction under cl. (vii) irrespective of the difference between the credit balance in the provision account made under cl. (viia) and the bad debts written off in the books of acco....
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....(viia) which reads as under: "6ABA. Computation of aggregate average advances for the purposes of clause (viia) of sub-section (1) of section 36 - For the purposes of clause (viia) of sub-section (1) of section 36, the aggregate average advances made by the rural branches of a scheduled bank shall be computed in the following manner, namely : (a) the amounts of advances made by each rural branch as outstanding at the end of the last day of each month comprised in the previous year shall be aggregated separately ; (b) the sum so arrived at in the case of each such branch shall be divided by the number of months for which the outstanding advances have been taken into account for the purposes of clause (a) ; (c) the aggregate of the sums so arrived at in respect of each of the rural branches shall be the aggregate average advances made by the rural branches of the scheduled bank. Explanation : In this rule, rural branch and scheduled bank shall have the meanings assigned to them in the Explanation to clause (viia) of sub-section (1) of section 36." From a bare reading of the above rule it is crystal clear that the said rul....
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.... advances. While assessee has made such working by considering the entire outstanding advances at the end of each month, AO has worked out by considering the aggregate average rural advances of each month and not on the entire outstanding advances. However, a perusal of the provision contained u/s 36(1)(viia) and rule 6ABA, would make it clear that the 10% of aggregate average advances has to be worked out on the entire outstanding advances and not the advances of that month alone. That being the case, we agree with the view held by ld. CIT(A). 9. Now coming to the quantum of deduction claimed u/s 36(1)(vii) and 36(1) (viia), law is well settled that an assessee can claim deduction under both the clauses subject to the condition imposed under the proviso to 36(1)(vii). As can be seen from the working submitted by ld. AR, the provision created during the year u/s 36(1)(viia) read with rule 6ABA, amounts to Rs. 16,35,55,829.00 whereas assessee has claimed deduction of Rs. 5,16,46,976, which is well within the provision permissible under section 36(1)(viia). Therefore, there cannot be any doubt with regard to the allowability of deduction claimed by the assessee u/s 36(1)(vii....
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....or the purpose of calculating the deduction u/s. 36(1)(viia) of the Act. The direction of the ld. CIT(A) are in consonance with the law enunciated the above. Therefore, we do not find any reason to interfere with the order of ld. CIT(A) on this issue. 14.3 In the result, grounds of appeal No.3 & 4 filed by the Revenue are dismissed. 15. Ground of appeal No.5 challenges the direction of ld. CIT(A) to allow the loss of fall in the value of the securities held by the bank. The AO has disallowed the claim for deduction of loss on account of HTM category of securities held by the assessee-bank on the ground that the notional profit made on account of AFS and HFT securities categories cannot be brought to tax. 15.1 Being aggrieved, an appeal was preferred before the ld. CIT(A), who vide impugned order had directed the AO to allow the deduction following the law laid down by the Hon'ble Supreme Court in the case of UCO Bank, Universal Bank Ltd. 248 ITR 355 and the order of the Chennai Tribunal in the case of Bharat Overseas Bank and Indian Bank. On the other hand, the ld. Departmental Representative placed reliance on the orders of the lower authorities. 15.2 On the other ....
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.... the previous year relevant to assessment year under consideration is not a material fact in deciding the issue in the present appeal. In the earlier years, the same was claimed as stock-in-trade and the resultant loss or gain on account of following the principle cost or market price whichever is less, is recognized for income-tax purpose. In this context, it is apt to reproduce circular No. 18/2015: 'Circular No. 18 of 2015, dated November 02, 2015. Subject : Interest from Non-SLR securities of Banks-reg. It has been brought to the notice of the Board that in the case of Banks, field officers are taking a view that, "expenses relatable to investment in non-SLR securities need to be disallowed under section 57(i) of the Act as interest on non-SLR securities is income from other sources". 2. Clause (id) of sub-section (1) of section 56 of the Act provides that income by way of interest on securities shall be chargeable to incometax under the head "Income from other sources", if, the income is not chargeable to income-tax under the head "Profits and gains of business and profession". 3. The matter has been examined in light of the judicial decisions on this issue.....
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....ssee-bank following the principle of consistency. Even the Hon'ble Apex Court in the case of UCO Bank (supra) only laid down principle that where the investments are forming part of stock-in-trade, loss arising on account of fall in value of the securities should be recognized and allowed as a deduction. But the above case cited supra does not come to the rescue of the assessee-bank for the reason that the assessee-bank, even in the books of account, has treated the investments as stock-in-trade from the assessment year 2005-06 onwards. Therefore, the question boils down to the one issue whether the change of method of accounting is bona fide or not. It is not the case of the revenue that the assessee-bank changed for a casual period to suit its own purpose. Therefore, the bona fide of the assessee-bank in changing the method of accounting cannot be doubted. Now, it is well settled that the assessee is entitled to change regular method of accounting irrespective of the fact, it results in loss to revenue. Therefore, having regard to the spirit of the circular cited supra and the fact that investments are shown as stock-in-trade in the books of account, loss/depreciation on acco....
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....erest for the purchase of securities. The AO is of the opinion that the interest paid for a broken period for the securities purchased during the year should be treated as a part of acquisition of HTM securities as the HTM securities were investments in the case of the assessee bank. Accordingly, the AO disallowed a sum of Rs. 9,98,67,263/- being the interest paid on broken period of the HTM securities purchases. On appeal before ld. CIT(A) he allowed the same following the reasoning that the HTM securities were stock in trade in the case of the assessee bank. 17.1 Being aggrieved, the Revenue is in appeal before us contending that the broken period should not be allowed as a deduction in respect of HTM securities as HTM securities are investments and they are capital in nature. On the other hand, the assessee placed reliance on the decision of Hon'ble Supreme Court in the case of City Bank 2008 TMI 766 and the decision of Hon'ble Jurisdictional High Court of Madras in the case of Karur Vysya Bank in 2009 TMI 1210. The Hon'ble Supreme Court had laid down in the case of City Bank (supra) that where the securities were forming part of the stock in trade the broken period i....
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.... of Hon'ble Supreme Court in the case of T.V. Sundaram Iyengar (supra) cannot be applied to the present claim. In the light of the above decision, we do not find any merit in the grounds of appeal No.8 filed by the Revenue. 18.3 In the result, the appeal filed by the Revenue in ITA No.1497/Chny/2018 is dismissed. ITA NOs.1343 & 1498/Chny/2013 for AY 2008-09 (Cross appeals): 19. The return of income for the AY 2008-09 was filed disclosing total income of Rs. 264,24,12,542/-. Against said return of income, the assessment was completed by Asst. CIT, Company Range-I(i/c.), Trichy vide order dated 31.12.2010 passed u/s. 143(3) of the Act. While doing so, the AO made the following additions: Additions: 1. Appreciation in value of securities Rs. 2,66,12,12,542/- 2. (i) Provision for leave encashment 8,24,21,094/- (ii) Provision for medical leave 9,21,95,063/- 3. Amortisation expenses 14,80,00,000/- 4. Broken period interest 27,63,14,889/- 5. Ex-gratia payment 17,93,38,338k 6. Pooja expenses 4,46,29,688/- 7. Entertainment expenses 10,29,851/- 8. Bad debts written off 2,08,211/- 9. Interest on Derivatives ....
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.... the case. Provision for Leave Encashment 2) The CIT(A) erred in confirming the addition on account of provision for leave encashment. 3) The CIT(A) failed to appreciate that the said provision was created by way of implementing the mandate notified by the Government in its gazette on 27th March, 2008 (GOl GSL No:212 (E) dated 27th March, 2008) and hence there was no justification for conforming the disallowance. 4) The CIT(A) further failed to appreciate that being an ascertained liability in terms of actuarial valuation and that too by way of implementing the government notification, the claim of the assessee was sustainable in law. 5) The CIT(A) ought to have allowed the assessee's claim in the light of the decision in Exide Industries (292 ITR 470) and Panasonic Home Appliances case (323 ITR 344) (Mad) Medical Leave Encashment 6) The CIT(A) erred in confirming the addition on account of Medical leave. 7) The assessee craves leave to adopt ground nos: 3 to 5 in this regard. Ex-gratia payment 8) The CIT(A) erred in confirming the disallowance of ex-gratia payment. 9) The CIT(A) failed to appreciate that such payment was made out commercial expedie....
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....rgan Chase Bank Vs ADIT [2010-TlI-185-ITAT- DEL-INTL] 20) The CIT (A) failed to note that Mumbai ITAT special Bench in the case of DCIT VS Bank of Bahrain & Kuwait (132 TTJ 505) allowed the same following the above judgement. 21) The CIT (A) failed to observe that ITAT Mumbai had given a favourable decision to ABN Amro Securities India Pvt Ltd Vs ITO. Further in the above cited cases, the loss arising on year end valuation of IRS swap was allowed. 22) In ABN Amro Securities India Pvt Ltd Vs ITO case, in Para 5 (Last 3 lines) it is stated that depending on whether the amount is receivable or payable under the interest rate swap contract, the amounts are booked as income or expenditure in the Profit and Loss account. There are no issues with regard to the income so disclosed or the expenditure so claimed for deduction. 23) The appellant Bank had not claimed any loss on revaluation of IRS. But only claimed interest received and paid. So, based on the judgments cited, the CIT (A) ought to have allowed the same. 2% Disallowance of expenses on exempted income 24) The CIT (A) erred in confirming 2% disallowance of expenses on exempted income. 25) The CIT (A) failed to....
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....n the case of Bharat Earth Movers v. CIT [2000] 245 ITR 428 (SC). Even, the decision of Hon'ble Madras High Court in the case of CIT v. Panasonic Home Appliances [2010] 323 ITR 344 (Mad.) is also before enactment of clause (f) to s. 43B of the Act. Further, the appellant has placed reliance on the order of Co-ordinate Bench of Tribunal, Chennai in the case of Indian Overseas Bank [2013] (4) TMI 751 - ITAT, Chennai, we find that this decision was rendered in relation to AY 1994- 95, which is prior to the enactment of the provision of s. 43B(f) of the Act. Therefore, the case laws relied upon by the ld. Counsel cannot come to the rescue of the assessee-bank. The decision Hon'ble High Court of Calcutta in the case of Exide Industries Ltd. v. Union of India [2007] 292 ITR 470 (Cal.) striking down the provisions of clause (f) of s. 43B of the Act on the grounds of arbitrariness is stayed by Hon'ble Supreme Court in SLP(Civil) No.CC.12060 dated 08.09.2008 therefore, the provisions of clause (f) to s. 43B of the Act are in force in the light of the stay order granted by the Hon'ble Apex Court. In this context, we can rely on the decision of Hon'ble High Court of Kerala in the case of ....
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.... expenses of ` 2,08,211/- as a deduction. Accordingly, this ground of appeal stands allowed in favour of the assessee-bank. 26.1 In the result, ground of appeal No.6 filed by the assessee is allowed. 27. Ground No.7 challenges the addition on account of loss on derivatives transactions of Rs. 26,73,301/-. This issue in this ground of appeal was decided by the Mumbai Special Bench, in the case of Bank of Baharain & Kuwait [2010] 5 ITR 301 (Mum.), wherein it was held that edging against the future losses cannot be treated as a speculative loses and the ratio of this decision was followed by Hon'ble High Court of Bombay in the case of CIT v. Badridas [2003] 261 ITR 256 and the decision of Hon'ble Gujarat High Court in the case of Jayesh Raichand Shah v. ACIT [2013] 29 taxmann.com 151 (Guj.). Therefore, respectfully following the above decisions, we hold that the loss incurred for derivative transaction is allowable as a business deduction. Accordingly, we direct the AO to allow the same as deduction. 27.1 In the result, ground of appeal No.7 filed by the assessee is allowed. 28. Ground No.8 challenges the addition of Rs. 3,88,882/- invoking the provision of s. 14A of the A....
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....thout restricting the deduction to the incremental advance made during the year. The CIT(A) failed to appreciate the fact that income for each year is required to be computed separately as each accounting year is a separate unit for assessment purpose and therefore deduction was available only on incremental rural advance during the year and not on total outstanding at the end of the accounting year. 04.The CIT(A) failed to see that the section 36(1)(viia) reads as 'aggregate average advances made by the rural branches of such bank' not as 'aggregate average advances outstanding in the rural branches of such bank'." 31. At the outset, there is delay in filing the appeal by 10 days. The Revenue had prayed for condonation of delay. It is submitted that the delay in filing the appeal had occurred on account of change of incumbent and thus, it was prayed that the delay is not deliberate. Under this circumstance, it is prayed for the condonation of delay of 10 days. The ld. Counsel for the assessee-bank had no serious objection for condone the delay. Considering these circumstance, we condone the delay of 10 days in filing the present appeal and admit the appeal. 32. Grounds No....
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.... filed disclosing total income of Rs. 38,14,78,560/-. Against the said return of income, the assessment was completed by the Jt. CIT, Special Range, Thiruchirapalli vide order dated 15.03.2000 passed u/s. 143(3) of the Act admitting total income of Rs. 60,95,05,620/. While doing so, the AO has made the several disallowances with which we are not concerned. Subsequently, the appellant made a petition u/s. 154 of the Act vide letter dated 23.06.2003 requesting the AO that wrong amount of provision for depreciation as per the books of account of Rs. 5,77,05,335/- was added. The AO vide his order dated 06.08.2004 rejected the petition. 37. Being aggrieved, an appeal was preferred before ld. CIT(A), who vide impugned order directed the AO to verify the claim and allow the same as deduction after due verification. Being aggrieved, the Revenue is in appeal before us in the present appeal. 38. On behalf of the Revenue, it is contended that the ld. CIT(A) ought not have entertained the appeal, inasmuch as, the application filed by the assessee-bank is beyond the period of limitation u/s. 154 of the Act. He further argued that the ld. CIT(A) ought not have allowed the claim in the abse....
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....er of the concerns for the relevant year and not the certificates by private parties. The ITAT, Chennai had rejected this contention and simply directed the appellant Bank to produce the Chartered Engineer and Chartered Accountant certificate to the Assessing Officer and comply with Rule 46 A in its order dated 20-01-2006 cited supra It is to be noted that the appellant had submitted the PAN Number and Registered office and other details, even one week before the regular assessment on 03-03-1998 itself. It is worth mentioning about the case of CIT Vs Ranchhod Jivabhai Nakhava (2012) 121 taxmann.com 159 (Guj), here. This case relates to Sec 68. The Gujarat High Court had held as "Whether once assessee has established that he has taken money by way of account payee cheques from lenders who are all income tax assesses whose PAN have been disclosed, initial burden under section 68 is discharged and then, it is Assessing Officer's duty to ascertain from Assessing Officer of those lenders, whether in their respective returns they have shown existence of such amount of money and have further shown that those amount of money had been lent to assessee". The ratio laid down in the a....
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....hs and the same was sold to the assessee on 17.02.1994 for a total consideration of Rs. 800 lakhs and no depreciation was claimed by M/s. Prakash Industries. The assessee company also produced a certificate from M/s. Sunil Anil Associates Chartered Accountant Delhi certifying that no depreciation was claimed by M/s. Prakash Industries, the WDV of this asset in the books of account of Prakash Industries was Rs. 832 lakhs on 18.12.1994. Further, two certificates given by M/s. Goyal and company, Chartered Engineers dated 14.12.1994 filed certifying the total weight and value of the machinery and these two certificates were not produced during the course of original assessment proceedings but produced during the course of proceedings before ld. CIT(A). The AO denied the claim for allowance of depreciation on the ground that the issue whether M/s. Prakash Industries had claimed depreciation or not is required to be verified from the assessment record of the M/s. Prakash Industries and not by the certificate issued by the Charted Accountants and Charted Engineers. As regards to the depreciation on the assets purchases and leased back M/s. Renewal Energy Systems Ltd. he accepted the claim....
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....laim for depreciation on unjustified grounds. The Hon'ble High Court of Madras in the case of Annamalai Finance Ltd. (supra) has laid down certain parameters for allowance of depreciation in the case of sale and leased back of transaction. 48. Nothing is brought on record to say that the above parameters are not met by the assessee and therefore, in the light of the decision of Hon'ble High Court of Madras in the case of Annamalai Finance Ltd. (supra), we direct the AO to allow the depreciation as claimed by the appellant. 49. In the result, the appeal filed by the assessee is allowed. Revenue's appeal in ITA No.1394/Chny/2013 for AY 1989-90: 50. This is an appeal filed by the Revenue directed against the common Order of the Learned Commissioner of Income Tax (Appeals), Tiruchirapalli (hereinafter called as 'CIT(A)') dated 25.03.2013 for the Assessment Year (AY) 1989-90. 51. The Revenue raised the following grounds of appeal: "1. The order of the CIT(A) is contrary to law, facts and in the circumtances of the case. 2. The CIT(A) failed to see that the statute clearly says that the section 1 15J is applicable to all companies except those which are engaged in th....
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....cts of the case as culled out from the orders of the ld. CIT(A) are as under: 52.1 The Assessing Officer his assessment order has calculated tax u/s 115J, whereas from the beginning had adopted normal tax method u/s 143 (1), 143(3), 143 (3) r w s 147 and argued that when both tax workings were available from the original return itself, change of opinion after 19 years, and selecting tax under section 115 J through order dated 31-03-2008 is not correct. This is done in spite of the fact that MAT (Minimum Alternate Tax) is not applicable to Banking Companies. 52.2 The appellant bank filed its return of income for assessment year 1989-90 on 29.12.1989. The income returned in the normal course claiming deduction and relief was Rs. 1,55,760. The profit as per books was Rs. 1,05,03,038. The appellant bank as per the provisions of the Income tax prepared and submitted its tax liability as per 1 15J (deemed income) also. Both the income as per section 115J and the income returned in normal course were available to assessing authority while he passed an order u/s 143(3) on 31.3.92. 52.3 The assessing officer assessed the income returned under section 143(3) without allowing the ded....
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....15J of the Act placing reliance on the following decisions: a) Krung Thai Bank PCL Vs Joint Director of IT - International Taxation (Mumbai ITAT - ITA No. 3390/Mum/09 Order dated 30-09-2010 for AY 2004-05). a) Canara Bank Vs CIT (LTU) (ITAT-Bangalore in ITA No.05/Bang/201 I Order dt. 18-07-2012 for AY 2005-06). b) Union Bank of India Vs ACIT (ITA No. 4702 & 4706/2010 dt. 30-06-2011) c) Indian Bank Vs Addi CIT (ITA No. 469/Mds/2010 Order dt. 03-08-2011 - for A Y 2000-01). d) Indian Bank Vs AddI CIT (ITA No. 470 to 472/Mds/2010 Order dt. 11-06-2012 - for AY 2004-05 to 2006-07) Being aggrieved, the Revenue is in appeal before us in the present appeal. 53. The only issue involved in the present appeal is whether the banking concern is liable to tax under the provisions of s. 115J of the Act. This issue is settled in favour of the assessee-bank by several judicial decisions. The recent decision of Co-ordinate Bench of Tribunal, Bangalore in the case of Canara Bank v. JCIT 60 ITR 1 vide para 13 at Page No.33 held as follows: "13. Ground of appeal No.5 is on the applicability of the provisions of section 115JB of the Act. This issue had come up before the coordinat....