TaxTMI 
TaxTMI 
2019 (9) TMI 231
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.... year 2013- 14. The cross appeals of assessee 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 assess....
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....erest has to be allowed. We would prefer to follow the decision of the Hon'ble 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 ....
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.... vide order dated 04/04/2013. The learned DR neither controverted the submission of the learned counsel nor brought any contrary decision on record 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 low....
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....unal in assessee's own case for assessment year 2011-12 in ITA No.1992/Chny/2015 vide order dated 11.13.2016 wherein it has been held as follows:- "26. The next ground taken by the Revenue in 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 auth....
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....ays open to the AO to call for details of individual debtor's account if he has reasonable grounds to believe that the assessee has claimed deduction twice over - Contention that where a borrower's account is written off by debiting P&L a/c and crediting loans and 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 thi....
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....unal in assessee's own case, we allow this ground of appeal raised by the assessee." 12. The Co-ordinate Bench of this Tribunal has followed the decision of Co-ordinate Bench of this Tribunal in assessee's own case in ITA No.880/Mds/2010, vide its order dated 30.11.2015. Consequently, respectfully following the decision 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(A....
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....ired to prepare its P&L a/c in accordance with the provisions of Parts II and III of Sch. VI to the Companies Act. The starting point of computation of MAT under s. 115JB is the result shown by such a P&L a/c. In the case of banking companies, however, the provisions of Sch. VI are not applicable in view of exemption set out under proviso to s. 211(2) of the Companies Act. The 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....
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....greement is allowable. (b) the Commissioner of Income-tax(Appeals) ought to have appreciated that in view of the provisions regarding business profits contained in the Double Taxation Avoidance Agreements, business profits earned through permanent establishment situated in foreign country is not to be included in the total income at all." 5. We find that this issue was considered in assessee's own case by the Tribunal in ITA No.1871/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. Accordin....
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....n of Hon"ble Supreme Court in the case of C.I.T Vs. Chettinad Logistics reported in (2017) 95 taxmann.com 250(SC), the disallowance u/s.14A r.w.Rule 8D may be restricted to the amount of exempted income earned. 21. We have heard the submissions and perused the material available on record. As it is noticed that this issue is now squarely covered by the decisions of Hon"ble Jurisdictional High Court in the case of Chettinad Logistics (supra) and Hon"ble Delhi High Court in the case of Joint Investment (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 squ....
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....nk, is eligible for deduction of not exceeding 10% of the "aggregate average advances made by the rural branches of the banks computed in the prescribed manner." Further, the CIT (Appeals) observed that the statutes clearly contain that the deduction is available on the aggregate average advances made by the rural branches, and not on the incremental advances only. Therefore, according to the CIT(Appeals), that assessee is entitled for deduction only on the incremental average aggregate advances of the rural branches, is not in accordance with the provisions of the Act. The CIT(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 l....
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....of the aggregate average advances made by the rural branches. This measure will result in a revenue loss of Rs. 12 crores during 1979-80 but it will be in a good cause. ...................................................................... ............................................................................." 16. We have carefully gone through the above findings of the CIT(Appeals). In our opinion, the finding of the CIT(Appeals) is based on the Budget Speech of the Finance Minister by presenting the budget of 1978-79. We have also gone through the intention under which sec.36(1)(viia) was brought to statute 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 c....
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....ean 'branch of schedule bank situated at place with population not exceeding 10,000 according to last census'. Rule 6BA of the Income-tax Rules provides the procedure for computing AAA for the purpose f provisions of section 36(1)(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 t....
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.... deduction of provision made for bad and doubtful debts as per the prescribed conditions. As has been correctly observed by ld. CIT(A), the only dispute between assessee and department is in respect of working out 10% of aggregate average rural 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 ....
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....y held that the method of taking the loans and advances made during the year only is not correct. 14.2 Therefore, in view of the above legal position, we direct the AO to consider only the outstanding rural advances not the incremental advances made by the rural branches for 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." 25. As it is noticed that this issue is now squarely covered by the decision of Co-ordinate Bench of this Tribunal in the case of Karur Vysya Bank referred to supra, 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.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 ben....
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....vided by total interest income. It was a submission that as the assessee's business income included interest income from Government security also, the Assessing Officer had held that the computation was erroneous and consequently re-computed the deduction u/s.36(1)(viii) of the Act by excluding the interest on the Government securities. On a specific query from the Bench, as to when the interest income from eligible business was specifically available and quantified why the formula was applied as percentage of the business income, and not applied the rate of 20% on the said profits, being the interest from the eligible business, after reducing the pro rata expenditure in respect of earning of the said interest from eligible business? It was submitted by the ld.AR that the method had been followed right from the beginning. It was however 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 d....
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....eached by us in ITA No.650/chny/2017 applies to Ground No.2 of Revenue's appeal in ITA No.648/chny/2017. Hence, the issue raised in Ground No.2 of this appeal stands dismissed. 35. It is observed that this ground No.3 consisting of 3.1. to 3.4 in respect of bad debts technical write off is identical to ground No.3 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. 36. 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. 37. It is observed that 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 ye....
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....olved in Ground No.3 of Assessee's appeal in ITA No.738/chny/2017 for assessment year 2012-13. 46. 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.3 in ITA No.738/chny/2017, the Assessing Officer is directed to restrict the disallowance u/s.14A r.w.Rule 8D to the extent of the exempted income earned. Consequently, the Ground No.3 consisting of grounds (a) & (b) is partly allowed. 47. 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 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. 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 ....
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.... depreciation of investment on securities at the time of shifting from available for sale to held to maturity. Both the parties have fairly agreed that the issue involved in this ground No.2 is similar with the issue involved in Ground No.2 of Revenue's appeal in ITA No.650/chny/2017 for assessment year 2012-13. 55. We have heard the rival contentions. Since the facts and circumstances for assessment year 2012-13 in Revenue's appeal are same for the year under consideration, respectfully following our conclusion drawn in Ground No.2 in ITA No.650/chny/2017, the findings of ld.CIT(A) on this issue stands confirmed. Consequently Ground No.2 consisting of grounds 2.1. to 2.4 stands dismissed. 56. It is observed that this ground No.3 consisting of 3.1. to 3.4 in respect of bad debts technical write off is identical to ground No.3 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. 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 Grou....
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....eal under consideration is partly allowed for statistical purposes. 65. In respect of Ground No.3, the issue was against the action of ld.CIT(A) in confirming the action of Assessing Officer holding that income from foreign branches are to be included in the total income and only double taxation relief as contemplated as per the agreement is allowable. 66. Both the Counsels agreed that there is a similar ground bearing Ground No.2 raised by the assessee in ITA No.738/Chny/2017 for assessment year 2012-13. We have already held in paragraph Nos. 17 to 18 of this order, that the issue has been held against the assessee. For the very same reasons mentioned in the said paragraphs, the Ground No.3 of assessee's appeal under consideration is dismissed. 67. In respect of Ground No.4, consisting of grounds 4(a) & 4(b), the issue was against the action of ld.CIT(A) in confirming disallowance u/s.14A r.w.Rule 8D. 68. Both the Counsels agreed that there is a similar ground bearing Ground No.3 raised by the assessee in ITA No.738/Chny/2017 for assessment year 2012-13. We have already held in paragraph Nos.19 to 21 of this order, that respectfully following the decisions of Hon"ble J....