TaxTMI 
TaxTMI 
2018 (6) TMI 1770
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....s.2011-12 & 2012-13 : 3. The learned CIT (A) erred in holding that the brought forward loss should be adjusted to arrive at Total Income before computing the deduction u/s.36(1)(viia). A. Y. 2012-13 : 4. The learned CIT (A) erred in not adjudicating the Grounds relating to various additions made while computing the book profit which are not covered by the Explanation 1 to section 115JB(2). 02. Brief facts are, the assessee is carrying on the business of banking. The return of income was filed by the bank for AY 2011- 12 declaring taxable income of Rs. 558,39,58,312/- under the regular provisions and declaring a book-profit of Rs. 986,79,76,722/- u/s.155JB of the Act. Thereafter a revised return was filed declaring the income under the normal provisions as well as u/s.115JB of the Act. The assessment of the assessee was completed u/s.143(3), whereby the AO has made disallowances which are the subject matter of appeal in the form of ground nos.2 and 3. 03. We shall first deal with ground no.2 relating to provision of bad debts u/s.36(1)(viia) of the Act. In this regard, the AO in the assessment order at pages 3 to 15 has dealt with the issue meticulously and has after relyin....
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....ceed 7.5% of the gross total income and 10% of aggregate average advances made by rural branches 5.11 The Hon'ble Punjab & Haryana High Court in the case of State Bank of Patiala Vs. CIT 272 ITR 53 held as under: "The deduction allowable u/s 36(1)(viia) of the IT Act 1961, is in respect of the provision made. Therefore, making of a provision for bad and doubtful debt equal to the amount mentioned in this section is a must for claiming such deduction. The proviso to clause (vii) of section 36(1) also shows that making of provision equal to the amount claimed as deduction in the account books is necessary for claiming deduction u/s 36(1)(viia)." Therefore, as held by the Hon'ble High Court the assessee's claim for deduction of provision over and above what is debited in the books of accounts and shown in the statement of computation of business income cannot be allowed as deduction. 05. The Ld. AR has fairly submitted that the issue had been decided by the Bangalore Tribunal in the case of the assessee as maintained by the CIT (A) in para 5.10, reproduced hereinabove. 06. On the other hand the Ld. DR relies upon the order passed by the Tribunal in ITA.681 & ....
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....ules of Income-tax Rules. In the present case, the controversy is regarding the interpretation of term 'total income'. 'Total income' has been defined to mean total income before making any deduction under section 36(1)(viia) and Chapter VIA. 8.6 The Constitution Bench of the Apex Court, in the case of Distributors (Baroda) (P.) Ltd. v. Union of India [1985] 155 ITR 120/22 Taxman 49 in the context of interpreting the provisions of sec. 80M held that deduction u/s 80M has to be calculated with reference to the amount of dividend income computed in accordance with the provisions of the Act. While coming to such conclusion, Hon'ble Apex Court taken note of its earlier decision in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 wherein the Hon'ble Apex Court held that for the purpose of allowing deduction under the said provision, it was necessary to first compute total income of the assessee in accordance with other provisions of the Act i.e. in accordance with all the provisions except sec. 80E. Earlier decision of the Hon'ble Apex Court in the case of Cloth Traders (P.) Ltd. v. CIT [1979] 118 ITR 243/1 Taxman 335 was over....
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....unt from time to time exceeds twice the amount of the paid-up share capital and of the general reserves of the corporation or, as the case may be, the company, no allowance under this clause shall be made in respect of such excess.' From a plain reading of the above, it is clear that the amount of deduction is to be calculated with reference to income computed under the head 'profits and gains of business or profession'. The provisions governing the brought forward and set-off business loss are not part of the provisions governing the computation of profits under the head 'profits and gains of business'. Therefore, reliance of the learned counsel for the assessee-bank on the decisions cited above is totally misplaced. Even the decision of the coordinate bench in the assessee's own case in ITA No. 291/Bang/1998 rests on the above decision. The co-ordinate bench had not considered the decision of Hon'ble Supreme Court cited supra. In the circumstances, the decision rendered by coordinate bench in the assessee-bank's case is per incuriam. Therefore, these decisions cannot be held to be applicable to the issue on hand. Hence, we hold that the met....
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....placed on the' following decisions: * State Bank of Hyderabad vs DCIT [20131 58 SOT 278 (Hyderabad Trib.) * ICICI Lombard General Insurance Co Ltd vs ACIT [2012] 27 taxmann.com 326 (Mum) 11.4 The Hon'ble ITAT, Bangalore in Syndicate bank's case decided the issue in favour of the appellant for AY 2007-08 in ITA No. 669/B/2010. Further the amendment by the Finance Act, 2012 is applicable from the assessment year 2013-14 as held in the case of State Bank of Hyderabad vs DCIT [2013] 58 SOT 278 (Hyderabad Trib.) and ICICI Lombard General Insurance Co Ltd vs ACIT [2012] 27 taxmann.com 326 (Mum.). Respectfully following the binding decision of the Hon'ble ITAT, Bangalore, the appeal on this ground is allowed. 14. The grievance of the Ld. AR before us is that the CIT (A) while deciding this basic issue with respect to computation of book profit u/s.115JB of the Act, had held in favour of the assessee after relying upon the coordinate bench decision in the matter of the assessee for AY 2007-08. As the amendment was brought into effect on account of Finance Act 2012, the same is applicable from AY 2013-14. However the submission of the assessee , before us was , that t....