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2022 (2) TMI 25
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....as erroneous and prejudicial to the interest of the Revenue as there was failure on the part of the A.O. in not taking into cognizance the following, while computing the book profit u/s 115JB of the I.T.Act :- (i) Depreciation on investment portfolio of Rs. 3028.32 crore disallowed in the regular computation. (ii) Disallowance u/s 14A of Rs. 58.58 crore made in the regular computation. (iii) Provision for Non Performing Assets of Rs. 1438.11 crore. 3. The assessee-bank filed written submission, objecting to the proposed revision u/s 263 of the I.T.Act. The Pr.CIT, however, rejected the objections of the assessee and passed order u/s 263 of the I.T.Act on 28.03.2018 by setting aside the assessment order u/s 143(3) of the I.T.Act. The CIT directed the A.O. to redo the assessment afresh after making detailed examination of the relevant facts relating to the aforesaid issues for the purpose of computation of book profits u/s 115JB of the I.T.Act. 4. Aggrieved by the order passed u/s 263 of the I.T.Act, the assessee has filed this appeal before the Tribunal. The grounds raised by the assessee reads as follow:- "1. The order of the learned Pro Co....
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....2019 (6) TMI 709 Gujarat High Court (ii) Reliance Welfare Association Circle 2018(1) TMI 885 - ITAT Mumbai. Disallowance u/s 14A of the I.T.Act (ground 4) (i) Gujarat Flurochemicals Ltd. 2019 (7) TMi 541 - Gujarat High Court. (ii) Tata Sons Limited v. ACIT 2018 (12) TMI 916 ITAT Mumbai. (iii) Vireet Investment (P). Ltd. (2017) 165 ITD 27 (Delhi Trib) (SB) Provision for NPA (ground 5) (i) Yokogawa India Ltd. (2012) 17 taxmann.com 15 (Kar.) (ii) Kirloskar Systems Ltd. (2013) 40 taxmann.com 124 (Karnataka) (iii) Vodafone Essar Gujarat Ltd. (2017) (8) TMi 451 Gujarat High Court. (iv) Telco Construction Equipment Co. Ltd. (2016)_ (6) TMI 651 - Karnataka High Court. 6. The learned Departmental Representative has filed a brief written submission essentially supporting the order of CIT passed u/s 263 of the I.T.Act. 7. We have heard rival submissions and perused the material on record. We shall adjudicate the issues on merits as under: Depreciation on Investment Portfolio (Rs. 3028.32 crore) (ground 3) 7.1.1 The assessee-bank before the CIT contended that depreciation of Rs. 3028.32 crore ....
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.... ....................... 24. In the light of the above discussion, no infirmity can be found in the view adopted by the Tribunal so as to warrant interference. The question, therefore, is answered in the affirmative, that is, in favour of the assessee and against the revenue. It is hereby held that the Income Tax Appellate Tribunal was justified in deleting the disallowance of provision for diminution in value of investment of Rs. 13,85,00,000/- while computing book profit under section 115JB of the Income Tax Act, 1961. The appeal, therefore, fails and is, accordingly, dismissed." 7.1.5 Similar view has been held by the Mumbai Bench of the Tribunal in the case of ACIT v. M/s.Reliance Welfare Association Circle (supra), wherein it was held as follows:- "8. We find that considering the above facts a debit of Rs. 46,94,62,365/- appearing in Profit & Loss Account is not a provisions set aside for diminution in value of investment but a actual charge to the Profit & Loss account which has been written off against the value of the current asset. Therefore, we are of the considered view that debit of Rs. 46,94,62,365/- appearing in Profit & Loss Account is not....
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....er a case where the assessee made a provision for bad or doubtful debt. With insertion 14 ITA No5976/M/12 A.Y.2008-09 of clause (i) to the explanation with retrospective effect, any amount or amounts set aside for provision for diminution in the value of the asset made by the assessee, would be added back for computation of book profit under section 115JB of the Act. However, if this was not a mere provision made by the assessee by merely debiting the Profit and Loss Account and crediting the provision for bad and doubtful debt, but by simultaneously obliterating such provision from its accounts by reducing the corresponding amount from the loans and advances on the asset side of the balance sheet and consequently, at the end of the year showing the loans and advances on the asset aside of the balance sheet as net of the provision for bad debt, it would amount to a write off and such actual write off would not be hit by clause (i) of the explanation to section 115JB. The judgment in the case of Deepak Nitrite Limited (Supra) fell in the former category whereas from the brief discussion available in the judgment it appears that case of Indian Petrochemicals Corporation Ltd. (Supra) ....
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....in the case of Commissioner of Income-tax v. Gujarat State Fertilizers & Chemicals Ltd., reported in (2013) 358 ITR 323 (Gujarat) Where this court has held in paragraph Nos.7 to 6.5 this court has observed as under :- 6. So far as the fourth question is concerned, it pertains to the addition of Rs. 1,14,43,040 under section 115JB of the Act being the expenditure estimated on earning of dividend income under section 14A of the Act. 6.1 The Assessing Officer on referring to the said provision of section 115JB(2) of the Act added the said amount considering that any amount of expenditure relatable to the income exempted under section 10 of the Act shall need to be added in the profit shown in the "Profit and loss account". 6.2 When the matter travelled to the Commissioner of Income-tax (Appeals), since it deleted the addition of Rs. 1,14,43,040 while deciding question No. 1, it consequently deleted such addition under section 115JB of the Act on the ground that this would not serve any purpose. 6.3 The Tribunal decided the said issue as follows (page 576 of 1 ITR (Trib)-OL : "We have considered the rival submissions and we find that a simil....
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.... been followed by ITAT, Mumbai in the cases referred to in para 5 of the impugned order without appreciating that the above decision in the case of Goetze (India) Ltd. was rendered by the ITAT, Delhi Bench on completely distinguishable set of facts, peculiar to the said case?" ..................... 4. So far as question (b) is concerned, the impugned order of the Tribunal followed its decision in M/s. Essar Teleholdings Ltd. Vs. DCIT in ITA No. 3850lMuml20 1 0 to held that an amount disallowed under section 14A of the Act cannot be added to arrive at book profit for purposes of Section 115JB of the Act. The Revenue's Appeal against the order of the Tribunal in Mis. Essar Teleholdings (supra) was dismissed by this Court in Income Tax Appeal No.438 of 2012 rendered on 7th August, 2014. In view of the above, question (b) does not raise any substantial question of law. 24. Respectfully following the above decision, we hold that no addition in the book profit would be made on the basis of calculations worked out under section 14A of the Act. We allow this ground of appeal in both the years and delete the additions. 23. We take notice of the fact t....
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....tted before the CIT that provision for NPA as per RBI Prudential norms is not covered by item (i) to Explanation to section 115JB(2) of the I.T.Act since it is not a provision but a write off. This provision is reduced from the gross advances while preparing the balance sheet. Therefore, it was contended that it has to be treated as write off and not a provision. In this context, the assessee relied on the following judicial pronouncements:- (i) Vijaya Bank v. CIT (2010) 190 Taxman 257 (SC) (ii) CIT v. Yokagawa India Ltd. (2012) 17 taxmann.com 15 (Kar.) (iii) CIT v. Kirloskar Systems Ltd. (2013) 40 taxmann.com 124 (Kar.) (iv) CIT v. Telco Construction Equipment Co. Ltd. 2016 (6) TMI 651 Karnataka High Court. (v) CIT v. Vodafone Essar Gujarat Ltd. (2017) 397 ITR 55 (Guj. FB). 7.3.1 The objections of the assessee was rejected by the CIT by observing as under:- "7.4. The Assessee's contention that provision for NPA is an actual write off should have been examined by the AQ which has not been done. It is further noted that in case of another leading bank assessed with the same AO, the said Bank has on its own has added the pr....