TaxTMI 
TaxTMI 
TaxTMI 
2020 (5) TMI 177
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.... agricultural development or development of infrastructure facility in India and development of housing in India. 4. In first appeal, the CIT(A), confirmed the same, by observing as under:- "6.3 Facts being identical, following my own order, I hold that the appellant is entitled to deduction in accordance with the section 36(1)(viii) for the income generated from advancing to (A) industrial or agricultural development (B) Development of infrastructure facility in India only. No deductions shall be allowed to the appellant for amount claimed in respect of advances / loans given for individual houses. Further, the disallowance will be computed with respect to amount claimed by the appellant in its revised return of income. This ground is, therefore, partly allowed." Against the same, both the assessee and Revenue is in appeal before us. 5. After hearing both the sides and perusing the material on record, we are of the opinion that the same issue came for consideration before this Tribunal in assessee's own case for assessment year 2012-2013 in ITA No.215/Coch/2018, wherein the Tribunal vide its order dated 20th March, 2019, observed as under:- "5. The next common ground in ass....
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....g Company, it is clear that the assessee is a Specified entity within Clause (iii) of Explanation (a) to Section 36(1)(viii). 9.1 Next point to be considered is whether the assessee will be entitled to deduction u/s. 36(1)(viii) for income generated by giving loans to their customers for purchase/construction of individual houses. For this we will have to consider Explanation (b) to Section 36(1)(viii). (b) eligible business means - (i) in respect of the specified entity referred to in sub-clause (i) or sub-clause (ii) or sub-clause (iii) or sub-clause (iv) of clause (a), the business of providing long-term finance for - (A) industrial or agricultural development (B) Development of Infrastructure facility in India; or (C ) Development of Housing in India (ii) in respect of the specified entity referred to in sub-clause (v) of clause (a), the business of providing long-term finance for the construction or purchase of houses in India for residential purposes; and 9.2 Here it is quite apparent that a Housing Finance Company will be entitled to the deduction u/s 36(1)(viii) from income generated out of the business of providing long-term finance for the construction or ....
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....e benefits of section 36(1)(viii) on the ground that it is not engaged in the long-term financing for construction or purchase of houses in India for residential purpose. Hence the Act has been amended to provide that corporations engaged in providing long-term finance (including refinancing) for development of housing in India will be eligible for the benefit under section 36(1)(viii). 17.4 Applicability - These amendments will be effective from the 1st April, 2010 and will accordingly apply in respect of assessment year 2010-11 and subsequent assessment years." 9.5 It is true that the Amendment provided the deduction to National Housing Bank. But the amendment also substituted the previous words with words 'Development of Housing' which has to be interpreted in its plain dictionary meaning in absence of any definition given. We cannot read into law anything that is not specifically provided therein. 9.6 The assessee referred to the order of the Tribunal in the case of Ernakulam District Co-Op Bank Ltd. vs. Joint Director of Income tax (TS-7866-IT AT-2017 (Cochin). It is stated that development of housing was not issue for adjudication before the in this case. The IT....
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....using Project loans 2,32,48,158 Small Scale Industrial Projects etc. Other Long Term 4,54,60,679 For purchase of property loan housing (construction of flats / purchase of property for construction of house /flat) Total 50,98,18,515 8.6. From the above discussions, it is clear that the said loans falls under the eligible business of providing long term finance for industrial or agricultural development, development of infrastructure facility in India and development of housing in India and hence is eligible for deduction u/s.36(1)(viii). Accordingly, deduction of Rs. 1, 56,78,943 is allowed to the assessee. 9.2 Aggrieved by the order of the CIT(A), the revenue is in appeal before us. The Id. DR strongly supported the order of the Assessing Officer and contended that the new order of the CIT(A) is a non-speaking order and the same needs to be quashed. The Ld. Counsel for the assessee, on the other hand, reiterated the submission made before the Income Tax Authorities. Joint Director of Income tax {TS-7866-IT AT-2017 (Cochin)- 9.3 We have heard the rival submissions and perused the material on record. As per provisions of section 36(1)(viii) of the IT Act, the....
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....rmity in the order of the CIT(A) in granting relief to the assessee u/s. 36(1)(viii) of the Act with regard to providing long term finance for industrial or agricultural development or development of infrastructure facility in India and the same is confirmed. Thus, this ground of appeals of both the assessee as well as the Revenue are dismissed." 6. In view of the above order of the Tribunal, we are inclined to dismiss the ground raised by the Revenue as well as the assessee. Accordingly, this ground of appeal is rejected. 7. Ground No.2 raised by the assessee is against not allowing deduction u/s 36(1)(viia) in respect of rural branches based on population of ward and instead confirming the order of the A.O. allowing the same based on population of village. 8. The facts of the case in brief are that the Assessing Officer disallowedRs. 47,56,61,323 on account of amount admissible in respect of provision of bad and doubtful debts pertaining to rural branches. The assessee itself has submitted that the said issue is decided against the assessee by the Hon'ble jurisdictional High Court in its own case. In first appeal, the CIT(A) confirmed the same. 9. After hearing both sides and....
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....se of assessment. The Ld. CIT(A) erred in holding that claims made during the course of assessment cannot be allowed even by CIT(A) without appreciating that in a number of judicial decisions that appellate authorities should decide on claims made other than by way of revised return. Accordingly, CIT(A) ought to have decided and allowed the following claims. 4. Deduction u/s 36(1)(vii) The CIT(A) erred in not allowing deduction in respect of bad debts written off amounting to Rs. 97,32,19,596.00 u/s 36(1)(vii) claimed during the assessment period. The CIT(A) ought to have taken cognizance of said claim which appellant was entitled and further as there was no credit balance in the provision for bad and doubtful debts account u/s 36(1)(viia) to be set off against the bad debts written off by virtue of the amended provisions of Sec 36(1)(vii) applicable from AY 2014-15. 5 Disallowance of bad debts written off. The CIT(A) erred in not considering and allowing the claim in respect of bad debts written off of Rs. 97.32 crore since there was no opening credit balance in provision for bad and doubtful debts account u/s 36(1)(viia) computed from 01.04.2013 based on the amended pro....
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....the assessee by way of letter during the course of assessment proceedings, and hence, he rejected the grounds. 13. After hearing both sides and perusing the material on record, in our opinion, the observation of the CIT(A) is not proper as held by the Bangalore Bench of Tribunal in the case of Rakesh Singh v. ACIT in ITA No.1027/Bang/2011 dated 24th August, 2012 relevant to assessment year 2007-2008, wherein the Tribunal observed that the assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. They have the jurisdiction to entertain the new claim. That they may choose not to exercise their jurisdiction in a given case is another matter. The exercise of discretion is entirely different from the existence of jurisdiction. For that purpose, the Tribunal relied on the judgment of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. v. CIT [(2006) 284 ITR 323 (SC)] and remanded the is....
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.... been a need to borrow to that extent from public and other banks. While deciding this matter reliance is placed on the decisions of the following Courts / ITAT :- (i) K.Somasundaram & Bros. Vs. CIT (2381TR 139)(Mad.) (ii)) CIT vs. H.R.Sugar Factory Pvt. Ltd. (187/TR 363)(Alah.) (iii) Consolidated Coffee Vs. State of Kamataka (248 ITR 432)(SC) (iv) ITA T decision in CIT Vs. S. G. Investments (89 ITO 44/Kol.) (v) ITAT decision in CfT Vs. Qanish K Bhatt (91 ITD) (Abad) (vi) ITAT decision in CIT Vs. Everplus Securities & Fin. Ltd.(101 ITO 151) 17. In this context, the decision of the Kerala High Court in assessee's own case in ITA No.730 of 2009 dated 21.10.2010 is of importance. Though this decision pertains to a year before the introduction of Rule 80 (i.e. A. Y.2007-08), the observations of the Hon. High Court is of relevance. The High Court emphasizes that non-maintenance of separate accounts is no excuse for being unable to substantiate its claim of interest bearing funds being used to earn the exempt income. The Court has held that in this circumstance, the A.O. was right in making proportionate disallowances uls.14A for A. Ys. prior to A. Y.2007-08. The High ....
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.... Rule 80 of the Income Tax rules. 6. So far as the disallowance of administrative expenditure is concerned, we feel considering the fact that there is no precise formula for proportionate disallowance, no disallowance is called for, for proportionate administrative cost attributable to earning of tax free income until Rule 80 came into force. We, therefore, dispose of the appeals by setting aside the orders of the Tribunal and that of the first appellate authority on this issue and remand all the assessments back to the Assessing Officer for reworking disallowance under section 14A in the case of each assessee for each assessment year. The proportionate disallowance under Section 14A should be limited to only interest liability and not overheads or administrative expenditure; which should be considered for disallowance under rule 80 from 2007-08 onwards." 5. From the above, in our opinion, it is very clear that the assessment for the assessment year 2010-2011 onwards, the disallowance u/s 14A should be made under Rule 8D by the A.O. In the impugned assessment year, i.e., 2009- 2010, the CIT(A) has rightly upheld the order of the A.O. by following the judgment of the Hon'ble jurisdi....
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.... rule 8D of the Rules and holding that section 14A of the Act would be applicable. The Commissioner (Appeals) disallowed the entire deduction of expenditure. That view of the Commissioner (Appeals) was clearly untenable and rightly set aside by the Tribunal. Therefore, on the facts, the Punjab and Haryana High Court had rightly affirmed the view of the Tribunal, though the theory of dominant intention applied by the High Court was incorrect." 22. Thus, it was observed by the Hon'ble Supreme Court that if an expenditure incurred has no connection with the exempted income, the same would not be considered as related to exempt income and was allowable as business expenses. It was also held that the dominant purpose for which sales are held, was not relevant of section 14A of the Act. It is also observed as long as the exempt income was earned, the expenditure incurred as attributable to earning such exempt income had to be disallowed u/s 14A and also irrespective of the objective of investment in shares when the shares are held as stock-in-trade with a view to earn trading profits or as investment representing controlling interest and in the course if the assessee earned any exempt i....