TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 231
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....ee and the Revenue in ITA No.738/Chny/2017 and ITA No.650/Chny/2017 respectively for assessment year 2014-15 are against the order of the Commissioner of Income Tax (Appeals)-6, Chennai in ITA No.491/CIT(A)-6/2016-17 dated 30.06.2017 for assessment year 2014-15. 2. As the issues in all these appeals of the assessee and the Revenue are inter-connected and identical, all these appeals are disposed off by this common order. 3. Shri Sanjeev Aditya represented on behalf of the Assessee and Shri S.Bharath represented on behalf of the Revenue. 4. At the outset, ld.AR submitted that Revenue's appeal in ITA No.650/Chny/17 assessee"s appeal in ITA No.738/Chny/2017 for assessment year 2012-13 contained all the issues, which were common in respect of all other cross appeals pertaining to assessment years 2013-14 & 2014-15. Consequently, the cross appeals in ITA No.738/Chny/2017 and ITA No.650/Chny/2017 are taken up for disposal first. 5. In the Revenue's appeal in ITA No.650/Chny/2017, it was fairly agreed by both the sides, the issue in Ground No.1 consisting of grounds 1.1 to 1.5 was against the action of ld.CIT(A) in allowing the assessee's claim of broken period interest paid on purcha....
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....Mumbai High Court, since Special leave petition filed by the Department against such decision in the case of Union Bank of India (supra) was dismissed by Hon'ble Apex Court. Thus, this issue is decided in favour of assessee." 49. Further, we also find that the Hon'ble Jurisdictional High Court in assessee's own case in T.C.(A) No. 417 of 2008 vide order dated 11.02.2014 decided the above issue in favour of the assessee. Respectfully, following the above decision of the Coordinate Bench of the Tribunal as well as the decision of the Hon'ble Jurisdictional High Court, we set aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer to delete the disallowance made. Accordingly, the ground raised by the assessee is allowed." In view of this, this ground raised by the Revenue is dismissed." 6. As it is noticed that the issue raised in assessee's appeal is identical, and the Co-ordinate Bench of this Tribunal in assessee's own case cited above has already adjudicated on this issue, respectfully following the decision of Co-ordinate Bench of Chennai Tribunal in assessee's own case referred to supra, the findings of ld.CIT(A) on this issue stands confirmed. Co....
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....d against the said order. 5. After hearing the parties and perusing the record, we find that the issue under consideration is squarely covered by the decision of the coordinate bench of ITAT, Hyderabad in assessee's own case for AY 2006- 07wherein the coordinate bench held as follows: "50. We are of the opinion that the assessee Bank is holding various Government Securities in order to comply with the statutory liquidated ratio. The bank would have to hold requisite percentage of deposits in the form of cash, gold, government or approved securities. The government securities held for the purpose of comply with the SLR has been held to be stock in trade and therefore value of the same as on 31st March has to be made and there is any depreciation the same should be allowed as a revenue deduction. However, the RBI has issued Circular wherein they have classified the investment made to comply with SLR requirement as `Held to maturity' (HTM), `Available for sale' (AFS) and `Held for Trade' (HFT). Based on the RBI Circular lower authorities came to the conclusion that investment in Government Securities which are classified under the head HTM cannot be considered as stock in trade an....
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....n its appeal is that the CIT(Appeals) is erred in allowing the assessee's claim towards deduction of bad debts written off. 27. After hearing both the parties, we are of the opinion that similar issue was considered by the Tribunal in assessee's own case in ITA No.880/Mds/2010. Vide its order dated 30.11.2015, the Tribunal observed as under : "44. We have heard both sides, perused the materials on record and gone through the orders of authorities below. The Tribunal, while deciding the group cases of the assessee in I.T.A. Nos. 470 to 472/Mds/2010 for the assessment years 2004-05 to 2006-07 vide order dated 11.06.2012, has followed its own decision in I.T.A. No. 1082/Mds/2003 dated 30.06.2011, wherein, the issue stands settled in favour of the assessee by the decision of the Hon'ble Supreme Court in the case of Vijaya Bank v. CIT 323 ITR 166 and the Tribunal in its order dated 11.06.2012 has held as under: "11. We have perused the orders of lower authorities and heard the rival contentions. We find that the issue regarding allowance of bad debts written off on technical reasons stand decided in favour of assessee by this Tribunal in ITA No.1082/Mds/2003 for Assessment Year ....
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....nd advances or debtors account, it would result in escapement of income from assessment if the borrower repays the loan in the subsequent years as the assessee would credit the repaid amount to loans and advances account and not to the P&L a/c has no merit - In such circumstances the amounts are duly offered for tax and the AO is sufficiently empowered to tax such subsequent repayments under s. 41(4)." Hence this issue stands decided in favour of the assessee." Respectfully following the decision of Co-ordinate Bench of this Tribunal, we are inclined to allow the claim of assessee. This issue is decided in favour of assessee." 45. Respectfully following the above decision of the Coordinate Bench of the Tribunal, wherein the decision of the Hon'ble Supreme Court is followed, we set aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer to delete the disallowance made on this issue. Thus, the ground raised by the assessee is allowed." Respectfully following the above order of the Tribunal, this ground raised by the Revenue is dismissed." 10. The Tribunal has followed the decision of Co-ordinate Bench of this Tribunal in assessee's own case in ITA No....
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.... of Co-ordinate Bench of Chennai Tribunal in ITA No.1877/Chny.2015 referred to supra, the findings of ld.CIT(A) on this issue stands confirmed. Consequently Ground No.4 consisting of grounds 4.1. to 4.3 stands dismissed. 13. In respect of Ground No.5 consisting of grounds 5.1 to 5.2, it was fairly agreed by both the sides that the issue was against the action of ld.CIT(A) in holding that adjustments as done in computing Minimum Alternate Tax (MAT) u/s.115JB of the Act was not permissible. It was fairly agreed by both the Counsels that the issue raised in this ground was squarely covered by the decision of Coordinate Bench of this Tribunal in assessee's own case for assessment year 2011-12 in ITA No.1877/Chny/2015 vide order dated 11.13.2016 wherein it has been held as follows:- "19. The next ground raised by the assessee in its appeal is that the CIT(Appeals) failed to appreciate that the provisions of sec.115JB of the I.T. Act are not applicable to the assessee bank as it is not a company under the provisions of Companies Act, 1956. Without prejudice to the above contention that the provisions of Section 115JB are not applicable, having held that the provisions are applicable, ....
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....e final accounts of the banking companies are required to be prepared in accordance with the provisions of the Banking Regulation Act. The provisions of s. 115JB cannot thus be applied to the case of a banking company." 8. Further, it may be noted that the authority for advance ruling in the case of The Timken Company, In re [2010-TII-25-ARA-INTL and Praxair Pacific Ltd In re [2010-TII-25-ARA-INTL] has held that MAT provisions are applicable to a foreign company that does not have a physical presence in India, as such, companies are not required to prepare its accounts as per Companies Act. Therefore, respectfully following the above cited decisions of the Tribunal, we set aside the orders of the lower authorities and allow the appeal of the assessee on the ground that the bank is not required to prepare its profit and loss account in accordance with the provisions of Part II and Part III of Schedule VI to the Companies Act and therefore, the provisions of MAT in section 115JB is not applicable to the assessee." Respectfully following the decision of the Co-ordinate bench, we hold that the provisions of Sec.115JB could not be applied on the assessee. In the result, this issue s....
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....Mds/2012 & Others, cited supra, wherein the Tribunal followed the decision of Mumbai Benches in the case of Bank of Baroda vs. ACIT in ITA No. 2927/Mum/2011 dated 25.7.2014 and observed as under : "94. In view of the above decision of the Mumbai Benches of the Tribunal, we are of the considered view that the decisions rendered in assessee's own case prior to assessment year 2004-05 will not have binding precedence in the assessment year 2009-10 or subsequent years. Accordingly, we hold that the income of the assessee at Singapore and Colombo would be included in the return of income of the assessee in India and whatever taxes paid by the branches in foreign countries, credit of such taxes shall only be given. Accordingly, the ground raised by the assessee is dismissed." In view of the above, we dismiss this ground of appeal raised by the assessee." 18. As it is noticed that the issue has been held against the assessee in assessee's own case for assessment year 2011-12 in ITA No.1877/Chny/2015 referred to supra, the findings of the ld.CIT(A) on this issue stands confirmed. Consequently, Ground No.2 consisting of grounds (a) & (b) stands dismissed. 19. In respect of Ground No....
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....t (P) Ltd Vs.C.I.T (supra), respectfully following the same, the Assessing Officer is directed to restrict the disallowance u/s.14A read with Rule 8D to the extent of the exempted income earned. Consequently, the Ground No.3 consisting of grounds (a) & (b) is partly allowed. 22. In respect of Ground No.4, it was fairly agreed by both the sides that the issue was against the action of ld.CIT(A) in holding that for the purpose of Section 36(1)(viia) of the Act, the advances made to Rural branches is to be taken as criteria for computation of eligible deduction and not an individual nature of advances. It was fairly agreed by both the sides that the issue raised in this ground was squarely covered by the decision of Co-ordinate Bench of this Tribunal in assessee's own case in ITA No.1877/Chny/2015 vide order dated 11.13.2016 wherein it has been held as follows:- "13. The facts of the case are that the asesessee in its return of income claimed a deduction of Rs. 698,32,76,000/-. As per the assessee, the allowable deduction u/s.36(1)(viia) is Rs. 849,57,75,715/-, as under : On gross total income @ 7.5% - Rs. 184,72,24,910 On rural advances @ 10% - Rs. 664,85,50,805 (rural adva....
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....T(Appeals) relied on the decision of the Tribunal in the case of Lakshmi Vilas Bank in ITA No.551, 552 & 553/Mds/2009 dated 18.12.2009 and held that the allowable deduction u/s.36(1)(viia) of the Act is @ 10% of the 'total average aggregate advances, as contemplated by the Assessing Officer. Accordingly, the CIT(Appeals) directed the AO to allow deduction u/s.36(1)(viia) of the Act @ 10% of the 'total average aggregate advances made by the rural branches and not on the incremental average aggregate advances. 15. We have heard both the parties and perused the material on record. The contention of the ld. AR is that all the loans advanced by the rural branches are eligible for deduction u/s.36(1)(viia) of the Act, irrespective of the purpose for which the loans are advanced. On the other hand, the AO observed that only those loans which are advanced by the rural branches for the purpose of improving the rural economy, like agricultural loans, agro based industrial loans and other loans given to the villagers for their needs in the villages etc. are eligible for deduction u/s.36(1)(viia) of the Act. The CIT(Appeals) discussed this issue in para 4.12.6 of his order, which is as below....
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....tute book and there is no intention to support rural branches and being so, only advances made for improving the rural economy to be considered for eligible deduction u/s.36(1)(viia) of the Act. Accordingly, the finding of the AO is upheld and the ground of appeal of the assessee is dismissed." 23. We have heard the submissions of both the parties and perused the material available on record. Respectfully following the decision of Co-ordinate Bench of this Tribunal in assessee's own case in ITA No.1877/Chny/2015 referred to supra, disallowance confirmed by the ld.CIT(A) on this issue stands confirmed. Consequently, Ground No.4 of assessee stands dismissed. 24. In respect of Ground No.5, it was fairly agreed by both the sides that the issue was against the action of ld.CIT(A) in holding the computation of average advances made by the Assessing Officer by restricting the advances for the current year alone. This issue was in respect of computation by interpretation of provisions of Rule 6ABA for the purpose of Section 36(1)(viia) in so far as computing the deduction only the outstanding rural advances ought to be considered and not the incremental advances made by rural branches. ....
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.... 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 rules prescribe three steps for computing AAA in the following manner: Step One - In respect of each rural branch, note down the amounts of advances outstanding at the end of the last day of each month comprised in the previous year and aggregate the amounts so noted. Step Two- Divide the aggregate amount arrived at in Step One by the number of months for which the outstanding amounts have been taken into account for the purpose of Step One. Step Three- Aggregate the amounts arrived at unde....
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....iew 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)(viia). Accordingly, we do not find any infirmity in the order of ld. CIT(A) in deleting addition of Rs. 3,88,25,673. However, as far as deduction of Rs. 18,79,704 is concerned, the same cannot be allowed u/s 36(1)(vii) considering the fact such amount has not exceeded the provision for bad and doubtful debts u/s 36(1)(viia). At the same time, alternative claim of the assessee that it is to be allowed u/s 37(1), in our view, is acceptable. On a perusal of the assessment order and the facts and materials available on record, it is ....
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....irected to recompute the deduction u/s.36(1)(viia) of the Act for considering only the outstanding rural advances and not incremental advances made by the Rural Branches. The Ground No.5 of assessee is partly allowed. 26. In respect of Ground No.6, it was fairly agreed by both the sides that the issue was against the action of ld.CIT(A) in not granting the assessee the benefit of MAT Credit entitlement on the amalgamation of IndFund Management Ltd., with the assessee's bank. It was fairly agreed by both the sides that the issue raised in this ground was squarely covered by the decision of Co-ordinate Bench of this Tribunal in the case of Suraj Agro Infrastructure Vs. DCIT ITA No.1554/Chny/2011 vide order dated 06.06.2012 wherein it has been held as follows:- "2. It is the case of the assessee that the Commissioner of Income-tax(Appeals) has erred in concluding that the assessee company is not entitled for credit u/s.115JAA in respect of the taxes paid by the amalgamating companies. It is the case of the assessee that the assets and liabilities on the date of amalgamation of the amalgamating company would become assets and liabilities of the amalgamated company and, therefore, th....
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....ever agreed by both the sides, the issue may be restored to the file of Assessing Officer for applying correct principle of computing the 20% of the profit derived from the eligible business. 29. A perusal of the provisions of section 36(1)(viii) of the Act shows that the words used therein are "an amount not exceeding twenty per cent of the profits derived from eligible business computed under the head "Profits and gains of business or Profession" subject to other conditions specified therein. The interest earned in respect of the said eligible business is specifically available. Once this is available, the total expenditure incurred by the assessee is also available, and obviously, the total income of assessee is also available. When these figures are very much available, then expenditure incurred on pro-rata basis for the purpose of earning the said interest income in respect of the eligible business can easily be quantified. The same is to be reduced from the said interest expenditure earned and that would give the profits derived from the eligible business, out of which 20% deduction would be the eligible deduction u/s.36(1)(viii) of the Act subject to the compliance of the o....
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....at this ground No.4 consisting of 4.1. to 4.3 in respect of depreciation on ATMs is identical to ground No.4 of Revenue's appeal for assessment year 2012-13 in ITA No.650/chny/2017. Both ld.A.R and ld.D.R reiterated similar arguments as submitted for assessment year 2012-13. 38. Since the facts and circumstances for assessment year 2012-13 in Revenue's appeal are same for the year under consideration, respectfully following the decision reached by us in Ground No.4 in ITA No.650/chny/2017, the findings of ld.CIT(A) on this issue stands confirmed. Consequently Ground No.4 consisting of grounds 4.1 to 4.3 stands dismissed. 39. It is observed that this ground No.5 consisting of 5.1. to 5.2 in respect of applicability of provisions 115JB of the Act is identical to ground No.5 of Revenue's appeal for assessment year 2012-13 in ITA No.650/chny/2017. Both ld.A.R and ld.D.R reiterated similar arguments as submitted for assessment year 2012-13. 40. Since the facts and circumstances for assessment year 2012-13 in Revenue's appeal are same for the year under consideration, respectfully following the decision reached by us in Ground No.5 in ITA No.650/chny/2017, the findings of ld.CIT(A) on....
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.... 36(1)(viia) in so far as computing the deduction only the outstanding rural advances ought to be considered and not the incremental advances made by rural branches. Both the parties have fairly stated that the issue involved in this ground No.4 is similar with the issue involved in Ground No.5 of Assessee's appeal in ITA No.738/chny/2017 for assessment year 2012-13. 48. Since the facts and circumstances for assessment year 2012-13 in assessee's appeal are same for the year under consideration, respectfully following our conclusion drawn in Ground No.5 in ITA No.738/chny/2017, the Assessing Officer is directed to recompute the deduction u/s.36(1)(viia) of the Act for considering only the outstanding rural advances and not incremental advances made by the Rural Branches. The Ground No.4 of assessee is partly allowed. 49. Both the parties have fairly stated that the issue was against the action of ld.CIT(A) in upholding the computation of deduction u/s.36(1)(viii) of the Act as made by the Assessing Officer. Both the parties have fairly agreed that the issue involved in this ground No.5 is similar with the issue involved in Ground No.7 of Assessee's appeal in ITA No.738/chny/2017 f....
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..../2017. Both ld.A.R and ld.D.R reiterated similar arguments as submitted for assessment year 2012-13. 57. Since the facts and circumstances for assessment year 2012-13 in Revenue's appeal are same for the year under consideration, respectfully following the decision reached by us in Ground No.3 in ITA No.650/chny/2017, the findings of ld.CIT(A) on this issue stands confirmed. Consequently Ground No.3 consisting of grounds 3.1 to 3.4 stands dismissed. 58. Since the Ground No.4 consisting of grounds 4.1 to 4.4 in respect of claiming of depreciation on ATM at 60% as against the eligible depreciation at 15% is identical to Ground No.4 of Revenue's appeal in ITA No.650/chny/2017 for assessment year 2012-13, both ld.A.R and ld.D.R reiterated similar arguments as submitted for assessment year 2012-13. 59. Since the facts and circumstances for assessment year 2012-13 in Revenue's appeal are same for the year under consideration, respectfully following the decision reached by us in Ground No.4 in ITA No.650/chny/2017, the findings of ld.CIT(A) on this issue stands confirmed. Consequently Ground No.4 consisting of grounds 4.1 to 4.4 stands dismissed. 60. It is observed that this ground No....