TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 687
X X X X Extracts X X X X
X X X X Extracts X X X X
....and issues. Grounds raised by the assessee for this assessment year are extracted here as under : ITA No.1204/PUN/2017 for A.Y. 2011-12 1. The ld AO erred in law and on facts and further learned CIT(A)-7 erred in confirming AO's action for disallowing Rs. 39,28,906/- u/s 36(1)(viia) of the ITA, 1961 in respect of provision for bad and doubtful debts. 2. The learned CIT(A)-7, and Ld. AO erred in law and on facts in not appreciating that while calculating disallowance u/s 36(1)(viia) i.e. 7.5% of total income, there is no requisite to have rural advances with the appellant bank. 3. The learned CIT(A)-7 and Ld. AO erred in law and on facts in making disallowance of Rs. 1,27,500/- u/s 37(1) of the ITA, 1961 on account of advertisemen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ia). He also relied on the decision of Co-ordinate Bench of Tribunal in the case of Bhagni Nivedita Sahakari Bank Ltd. Vs. DCIT in ITA No.136/PN/2014, order dated 29.05.2015. In the process, both the authorities below rejected assessee‟s contention. The extent of allowable deduction under this clause (viia) is restricted to a sum of a percentage of total income of the assessee and also a percentage of the Rural advances of the bank. As per Assessing Officer, when there are no rural branches to the bank and therefore, no rural advances for A.Y. 2011-12, no amount of deduction is available to assessee under this clause (viia) of the Act. 5. Aggrieved with the said order of Assessing Officer and CIT(A), the assessee is in appeal before ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order of Tribunal that to the extent of clause (vii), the assessee is entitled to claim the deduction of provision u/s 36(1)(viia) of the Act. 7. On the other hand, ld. DR laboured a lot to demonstrate that the Hon‟ble Supreme Court‟s judgment in the case of Catholic Syrian Bank Ltd. Vs. CIT (supra) applies to the provisions of section clause (viia) of the Act also. He fairly mentioned that the cited decision of Tribunal in the case of Bhagni Nivedita Sahakari Bank Ltd. Vs. DCIT (supra), dated 30.11.2018 is subsequent in nature and was not available to the authorities below at the relevant time. Therefore, he heavily relied on the orders of Assessing Officer and CIT(A). Decision of the Tribunal on clause (viia) 8. We have he....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d issue squarely binds the Tribunal and hence, applying the said ratio, we hold that the assessee is entitled to the claim of deduction under section 36(1)(viia) of the Act to the extent of 7.5% of total income. The assessee co-operative bank do not have any rural branches, hence is not entitled to the second part claim of 10% of advances made by rural branches. The deduction is allowable with a rider to satisfy the provisions of said section i.e. making a provision to that extent in the books of account. The first issue which is raised in the case of different co-operative banks stands decided in favour of assessee." 9. From the above it is clear that the assessee without rural branches / advances, is entitled to deduction u/s 36(1)(viia)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xpenditure is allowable. Moreover, the appellant has admitted during the assessment proceedings that business expediency of such expenditure cannot be substantiated. In other words, the appellant has agreed for additions of Rs. 1,27,500/-. Now at the appellate proceedings the appellant is contending the addition though agreed during the assessment proceedings." 13. Thus, the expenditure incurred on the birthday / victory day celebration qua the erection of Flexies of the politicians, is not an allowable expenditure u/s 37 of the Act. In our considered opinion, the orders of the Assessing Officer / CIT(A) are fair and reasonable. They do not call for any interference. Accordingly, ground 3 of the assessee is dismissed. 14. Ground 4 relates....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd relying on the binding judgment of Hon‟ble Bombay High Court in CIT Vs. Reliance Utilities and Power Ltd. (2009) 313 ITR 340 (Bom), we are of the opinion that ld. Counsel demonstrated the disallowance made by the Assessing Officer is uncalled for under Rule 8D(2)(ii) of the Rules. Accordingly, we direct the Assessing Officer to allow the same. Thus, ground 4 raised by assessee is partly allowed. ITA No.1205/PUN/2017, A.Y. 2012-13 17. The issue raised in grounds 1 and 2 is similar to the issue raised in grounds 1 and 2 in ITA No.1204/PUN/2017. Therefore, our decision in ITA No.1204/PUN/2017 shall apply mutatis mutandis to grounds 1 and 2 in this appeal also. 18. The issue raised in ground 3 is similar to the issue raised in grou....