TaxTMI 
TaxTMI 
2022 (3) TMI 669
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..... In the assessment made under section 143(3), the Assessing Officer, the respondent herein, made several additions and disallowances and determined the income under regular provisions at Rs. 1261,89,70,977/- and raised a demand of Rs. 169,44,47,405/-. In the assessment, the learned Assessing Officer made the following additions to the total income under the regular computation: 4. The Assessing Officer has also assessed tax payable under Section 115JB at Rs. 226,12,56,555/-. However, since the tax payable on the total income computed as above by Assessing Officer was more than 18.5% of the book profits u/s 115JB, Assessing Officer assessed the tax payable as Rs. 169,44,47,405/-. 5. Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), LTU, Bangalore. 6. The Learned Commissioner of Income Tax (Appeals) partially allowed the appeal of the assessee as under: 7. The Learned Commissioner of Income Tax (Appeals) didn't allow the ground of the assessee that Section115JB is not applicable to the them and also the ground relating to levy of interest u/s 234D. 8. Aggrieved by the order of the CIT(A), the Revenue and the....
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....e bench of this Tribunal in assessee's own case (Supra) has held that "9.3 We heard the parties and perused the record. We notice that the co-ordinate bench has considered an identical issue in the assessee's own case for AY 2010-11 in ITA No.1284/Bang/2016 dated 05-01-2018 and it has been decided in favour of the assessee with the following observations:- "5. Ground No.2 - Bad Debts written off u/s.36(1)(vii) 5.1 In this ground (supra), the assessee challenges the disallowance of bad debts written off by it u/s.36(1)(vii) of the Act. In the order of assessment, the Assessing Officer disallowed the assessee's claim as he was of the view that it was only a prudential write off since the individual accounts were not squared off. The Assessing Officer also observed that the write off was not debited to the assessee's profit and loss account. On appeal, the learned CIT (Appeals) rejected the assessee's contentions that the said bad debts are written off by debit in the profit and loss account under the head 'Bad Debts Written Off Account' under the code 163301, as he was of the view that unless the individual debts are squared off, the entries in the books of ....
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....entative contended that the reliance placed by the authorities below on the decision of the Hon'ble Apex Court in the case of Southern Technologies Limited (supra) is not applicable as the facts in this cited case are totally different. It is submitted that the cited decision has been noted by the Hon'ble Apex Court in the assessee's own case (supra) and after noticing the said decision, the Hon'ble Court held that the provision debited to profit and loss account and reduced from advances would amount to write off. 5.3 Per contra, the ld. CIT, DR placed reliance on the findings rendered by the authorities below on this issue. It was contended that since the assessee's bank had not closed the individual debtors accounts at the Branch Level, there cannot be any write off. 5.4 In rejoinder, the learned Authorised Representative for the assessee bank submitted that there is no requirement to close the individual debtors account at the branch books, as has been held by the Hon'ble Apex Court in the assessee's own case. In this regard, the learned Authorised Representative also placed reliance on the decision of the co-ordinate bench of this Tribunal in th....
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....he assessee fails to close each and every individual account of its debtor, it may result in assessee claiming deduction twice over. In this case, we are concerned with the interpretation of s. 36(1)(vii) of 1961 Act. We cannot decide the matter on the basis of apprehensions/desirability. It is always open to the AO to call for details of individual debtor's account if the AO has reasonable grounds to believe that assessee has claimed deduction, twice over. In fact, that exercise has been undertaken in subsequent years. There is also a flipside to the argument of the Department. Assessee has instituted recovery suits in Courts against its debtors. If individual accounts are to be closed, then the debtor/defendant in each of those suits would rely upon the bank statement and contend that no amount is due and payable in which event the suit would be dismissed. 9. Before concluding, we may refer to an argument advanced on behalf of the Department. According to the Department, it is necessary to square off each individual account failing which there is likelihood of escapement of income from assessment. According to the Department, in cases where a borrower's account is writt....
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....nd No.2 of the assessee's appeal is allowed." 9.4 We notice that the Ld CIT(A) has followed the decision rendered by the coordinate bench in assessee's own case and deleted the disallowance of bad debts u/s 36(1)(vii) of the Act. Accordingly we do not find any reason to interfere with his order passed on this issue" 17. Respectfully following the decision rendered by the coordinate bench in assessee's own case, we allow the appeal in favour of the assessee. Accordingly, this ground of the assessee is allowed and the disallowance made u/s.36(1)(vii) is deleted. Disallowance u/s 36(1)(viii) (Ground 4) 18. The assessee had claimed deduction of Rs. 179,56,01,185/- u/s 36(1)(viii) of the Act. The AO disallowed the claim on the ground that the assessee has not transferred the amount to special reserve as required by sec. 36(1)(viii). Before the CIT(A), the assessee contended that the bank had transferred to statutory reserve and capital reserve amounting to Rs. 117,61,72,383/- during the relevant previous year and also during the financial year 2014-15 has transferred Rs. 116,39,42,210/-. Relying on the decision of the Hon'ble Hyderabad Tribunal in the case of Nizambad District ....
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....AT in the case of Nizambad District Cooperative Central Bank Ltd., Vs. ITO where the Tribunal has held that "53. It is the contention of the assessee before us that as per the provisions of section 36(1)(viii) assessee is eligible for deduction for an amount of 79,39,000 whereas deduction to the extent of 14,21,432 has been allowed to assessee, hence, assessee remains eligible to claim deduction u/s 36(1)(viii) to the extent of 65,17,568. On a perusal of section 36(1)(viii) of the Act. it is clear that deduction not exceeding twently percent of the profits derived from eligible business can be allowed in respect of any special reserve created. The expression 'special reserve' has not been defined u/s 36(1)(viii). The only restriction imposed as per proviso to section 36(1)(viii) is aggregate of amount carried to such reserve account should not exceed twice the amount of paid up share capital and general reserve. Therefore, it cannot be said that the items appearing in the miscellaneous reserve cannot be treated as special reserves as there is nothing in the provision to suggest that only statutory reserves can be treated as special reserve. In view of the above, consideri....
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....ancial corporation which is engaged in providing long-term finance for industrial or agricultural development or development of infrastructure facility in India or by a public company formed and registered in India with the main object of carrying on the business of providing longterm finance for construction or purchase of houses in India for residential purposes, an amount not exceeding forty per cent of the profits derived from such business of providing long-term finance computed under the head "Profits and gains of business or profession" (before making any deduction under this clause) carried to such reserve account: Sec. 28(1) Profits and gains of business or profession 28. The following income shall be chargeable to income-tax under the head "Profits and gains of business or profession",- (I) the profits and gains of any business or profession which was carried on by the assessee at any time during the previous year; Sec. 2(34) "Previous year means the previous year as defined in s. 3; Sec. 3 Previous year" defined 3 For the purposes of this Act, 'previous year' means the financial year immediately preceding the assessment year: Sec. 4 Charge of income....
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....f the various decisions also referred to by the Tribunal, we think, no question of law arises in regard to this aspect. We, therefore, decline to refer this question." The observation made by the Hon'ble Delhi High Court in this regard is thus clearly applicable to the instant case under consideration also. 22. We further find that the Special Bench of Tribunal (Chandigarh) in the case of Punjab State Industrial DeveIopmnf rporaioriE. upr is dearly eTia in case of claim under s. 36(1)(viii) of the Act further reserve could be created after closure of the account and AO should offer an opportunity to the assessee to do the same for claiming the deduction under s. 36(1 )(viii) of the Act. 23. Similar view as taken by the apex Court in the case of Karimjee (F) Ltd. (supra) wherein while dealing with deduction under s. 80HHC of the Act, their Lordships observed that creation of reserve after closure of the accounts was construed as complying with the requirement of granting deduction under s. 80HHC of the Act and in this case the timing of creation of reserve was while the matter was being dealt with by the apex Court. 24. Respectfully following the case law (supra) as disc....
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....re carried out without any human intervention. The assessee also submitted that the assessee had sued NPCI to facilitate transaction involving ATMs of other banks by the customers of the assessee to carry out electronic transactions. The CIT(A) rejected the claim of the assessee and observed that the TDS recovery mechanism displayed in NPCI's website and that all banks who were receiving the services before the NPCI were deducting TDS. 28. Aggrieved by the order of the CIT(A), the assessee has now raised this issue before the Tribunal. 29. The ld.AR submitted that an identical issue has been decided in favour of the assessee by the coordinate bench of the Tribunal in ITA No.1838/Bang/2018 dated 28/12/2021 in assessee's own case for the assessment year 2013-14. The ld.DR relied on the written submission. 30. We have heard the rival submissions and perused the materials on record. We noticed that the coordinate bench of this Tribunal in assessee's own case (Supra) allowed this ground of appeal by the assessee and held that - 6.1 We heard the parties and perused the record. The Ld A.R placed his reliance on the decision rendered by the co-ordinate bench on an identical issue in t....
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....decision of the Hon'ble Apex Court in the case of Kotak Securities Ltd. (supra); wherein at paras 8 to 10 thereof the Hon'ble Apex Court has held as under :- " 8. A reading of the very elaborate order of the Assessing Officer containing a lengthy discourse on the services made available by the Stock Exchange would go to show that apart from facilities of a faceless screen based transaction, a constant upgradation of the services made available and surveillance of the essential parameters connected with the trade including those of a particular/single transaction that would lead credence to its authenticity is provided for by the Stock Exchange. All such services, fully automated, are available to all members of the stock exchange in respect of every transaction that is entered into. There is nothing special, exclusive or customised service that is rendered by the Stock Exchange. "Technical services" like "Managerial and Consultancy service" would denote seeking of services to cater to the special needs of the consumer/user as may be felt necessary and the making of the same available by the service provider. It is the above feature that would distinguish/identify a serv....
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....such services in the normal course of trading in securities in the Stock Exchange. Such services, therefore, would undoubtedly be appropriate to be termed as facilities provided by the Stock Exchange on payment and does not amount to "technical services" provided by the Stock Exchange, not being services specifically sought for by the user or the consumer. It is the aforesaid latter feature of a service rendered which is the essential hallmark of the expression "technical services" as appearing in Explanation 2 to Section 9(1)(vii) of the Act. 10. For the aforesaid reasons, we hold that the view taken by the Bombay High Court that the transaction charges paid to the Bombay Stock Exchange by its members are for 'technical services' rendered is not an appropriate view. Such charges, really, are in the nature of payments made for facilities provided by the Stock Exchange. No TDS on such payments would, therefore, be deductible under Section194J of the Act." 12.4.2 Respectfully following the aforesaid decision of the Hon'ble Apex Court in the case of Kotak Securities Ltd. (supra), we hold that the services rendered by NPCI are not technical services and as such, are n....
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.... identical issue was considered by this bench of Tribunal in the case of Canara Bank (ITA No.236/PAN/2018 & ITA 1884/Bang/2018 dated 27-12-2021) and the matter was restored to the file of Ld CIT(A) with the following observations:- 7.1 Before Ld CIT(A) also, the assessee contended that the provisions of sec.115JB will not be applicable to it. It was submitted that the assessee falls under the category of "corresponding new bank" under BR Act. Accordingly it was contended before Ld CIT(A) by the assessee as under:- (a) banking company is defined under BR Act as a "company" which transacts business of banking. (b) "Company" is defined as a company as defined in section 3 of the Companies Act and includes a foreign company within the meaning of sec.591 of that Act. (c) Since the assessee falls under the category of Act of "corresponding new bank", it was contended that it cannot fall under the definition of "banking Company". (d) Clause (b) of sec.115JB(2) is applicable to a banking company, but the assessee is not a banking company as per the definition given in BR Act. Accordingly, it was contended that the assessee is not liable u/s 115JB of the Act. 7.2 The Ld CIT(A)....
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....e us, the Ld A.R reiterated that the provisions of sec.115JB will not apply to the assessee, since it is not formed under Companies Act. He placed his reliance on the decision rendered by Kolkatta bench of Tribunal in the case of Damodar Valley Corporation (2017(8) TMI 1363). On the contrary, the Ld D.R supported the order passed by Ld CIT(A). 7.3 We heard the parties on this issue and perused the record. We notice that the Ld CIT(A) has expressed the view that the assessee would fall under clause (a) of sec.115JB(2). However the case of the assessee is that clause (b) of sec.115JB(2) is made applicable to banking companies, since banking company is included in sec. 211 of the Companies Act. However, it is the contention of the assessee that it is not a 'banking company", i.e., it is a "corresponding new bank". 7.4 We notice that the provisions of sec.51 of the Act specifically states that only certain provisions of BR Act are applicable to "Corresponding new bank". We noticed earlier that the Ld CIT(A) has proceeded to decide this issue by observing that all provisions of BR Act are applicable to the Company. We notice that the Ld CIT(A) did not consider the effect of provisio....
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....cannot be claimed on HTM securities for which he relied on the decision of the Hon'ble Karnataka High Court decision in the case of ING Vysya Bank Ltd. Further, he also observed that the assessee did not debit the depreciation to the Profit & Loss Account and as such, no deduction can be allowed without debiting the same to the Profit & Loss Account. 40. The assessee filed an appeal before the CIT(A) and also made a written submission on the issue. The CIT(A) allowed the appeal in favour of the assessee following the decision of Jurisdictional High court in assessee's own case (ITA No.687/2008) and the decision of coordinate bench of the Tribunal in assessee's own case (Supra) 41. The revenue is in appeal before us against the order of CIT(A) 42. The Ld AR submitted that this issue covered by the decision of the coordinate bench of the Tribunal whereas the Ld DR relied on the written submissions. 43. We heard the rival submissions and perused the material on record. We notice that the coordinate bench of the Tribunal in assessee's own case (supra) has allowed the appeal in favour of the assessee. The Tribnal in this case has held that - 10. The next issue contested by the rev....
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.... 11.3 Before us, the learned Authorised Representative for the assessee submitted that it was only after considering its own decision in the case of ING Vysya Bank (supra) that the Hon'ble Karnataka High Court decided the issue in favour of the assessee in the case of Karnataka Bank Vs. ACIT reported in (2013) 356 ITR 549 (Kar). Following the decision of the Hon'ble Apex Court in the case of UCO Bank Vs. CIT (1999) 237 ITR 889 (SC), the Hon'ble Karnataka High Court held that the investments of the bank are stock in trade and are to be valued at lower of cost or market value and the resultant depreciation is an allowable deduction. The learned Authorised Representative further submitted that the decision n the case of Karnataka Bank (supra), was followed by the Hon'ble Karnataka High Court in the assessee's own case in their order in ITA No.687/2008 which was then followed by the co-ordinate bench of this Tribunal in the assessee's case in the immediately preceding assessment year 2009-10 in order in ITA No.318/Bang/2014 dt.22.7.2016 and for A.Y. 2008-09 in ITA No.578/Bang/2012 dt.27.2.2015. 11.4.1 We have heard the rival contentions, perused and carefull....
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.... for the A.Y. 2005-06, order dated 13.01.2012, wherein the Tribunal had to deal with identical issue as to whether the CIT(A) was correct in deleting the addition made by the AO on account of profit on sale of investments of Rs. 200,77,13,662/- and deleting the action of the AO in disallowing loss claimed on treating investments as stock-in-trade by drawing the investment trading account of Rs. 775,96,55,047. The Tribunal held "16. We have heard both sides and find that the Supreme Court in the case of UCO Bank in 240 ITR 355 has held as under : "In our view, as stated above, consistently for 30 years, the assessee was valuing the stock-in- trade at cost for the purpose of statutory balance-sheet, and for the income-tax return, valuation was at cost or market value, whichever was lower. That practice was accepted by the Department and there was no justifiable reason for not accepting the same. Preparation of the balance-sheet in accordance with the statutory provision would not disentitle the assessee in submitting the Income-tax return on the real taxable income in accordance with the method of accounting adopted by the assessee consistently and regularly. That cannot be disca....
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....ordance with RBI guidelines and CBDT Circular. It was his submission that the later decision of the Hon'ble Karnataka High Court has to be followed. 62. We have given a careful consideration to the rival submissions and are of the view that the contentions put forth on behalf of the assessee deserve to be accepted. The Tribunal in assessee's own case on an identical issue for the A.Y. 2005-06 has upheld the claim of the assessee. The later decision of the Hon'ble High Court of Karnataka is also in favour of the assessee. In such circumstances, we are of the view that the issue raised by the revenue in its appeal is without merit. Consequently, the same is dismissed." 22. The above decision squarely covers the issue in favour of the Assessee. Respectfully following the same, we uphold the order of the CIT(A) and dismiss the relevant grounds of appeal of the Revenue." 34. The above decision squarely covers the issue in favour of the Assessee. Respectfully following the same, we uphold the order of the CIT(A) and dismiss the relevant ground of appeal No.4 of the Revenue." 11.4.2 We find that the decision of the learned CIT (Appeals) in the impugned order is in line....