TaxTMI 
TaxTMI 
2023 (3) TMI 852
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..... (A) was wrong in not considering the merit of the case, therefore, the order passed by the Ld. C.I.T. (A) is completely arbitrary, unjustified and illegal. 3. For that on the facts of the case, the Ld. C.I.T. (A) was wrong in not considering the facts that in reopening the assessment u/s. 148 (r.w.s. 147) which is mere change of opinion and against requirement of law, as such his finding is completely arbitrary, unjustified and illegal. 4. For that on the facts of the case, the A.O. was wrong in treating the status as A.O.P. which is confirmed by the Ld. CIT(A), therefore, the order should be quashed. 5. For that on the facts of the case, the Ld. CIT(A) was wrong in dittoing the order of the A.O. and confirming the disallowance of carry forward loss set off of brought forward losses an amounting to Rs.3,52,68,36,000/- which is completely arbitrary, unjustified and illegal. 6. For that on the facts of the case, Ld. CIT(A) was wrong in dittoing the order of the A.O. and confirming the addition of Rs. 1,52,02,200/- under head "provision for fraud" which is completely arbitrary, unjustified and illegal. 7. For that on the facts of the case....
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....rming the addition of Rs.49,000/- as expenses for penalty which is allowable expenditure u/s. 37, therefore, the order of the Ld. CIT(A) is completely arbitrary, unjustified and illegal. 8. For that on the facts of the case, Ld. CIT(A) was wrong in dittoing the order of the A.O. and confirming the addition Rs.4,000/- from the head Provision for Contingencies' which is completely arbitrary, unjustified and illegal. 9. For that on the facts of the case, Ld. CIT(A) was wrong in dittoing the order of the A.O. and confirming the addition of Rs.384,000/- from the head Provision for FBT' which is completely arbitrary, unjustified and illegal. 10. For that the appellant reserves the right to adduce any further ground or grounds, if necessary, at or before the hearing of the appeal." 3. We first take up the appeal for Assessment Year 2007-08. Brief facts of the case are that the assessee is a Regional Rural Bank and declared loss of Rs.22,65,00,000/- in the return filed for Assessment Year 2007-08 on 31/10/2007 and claimed brought forward loss to be set off at Rs.352,68,36,000/-. Return was processed u/s 143(1) of the Act on 07/03/2008. Based on an info....
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....mently argued supporting the orders of both the lower authorities. 6. We have heard the rival contentions and perused the material on record placed before us. 7. Ground Nos. 1, 2 & 3, raised by the assessee, challenge the reopening of assessment proceedings by issuance of notice u/s 148 of the Act. We notice that the return of the assessee was processed u/s 143(1) of the Act. There was specific information of amalgamation of erstwhile five Rural Banks with the assessee bank. Proper reasons were recorded before selecting the case for scrutiny. Based on this specific information, reopening was initiated which, in our view is valid. Thus, ld. CIT(A) has rightly held the re-assessment proceedings as valid. Hence, no interference is called for. Accordingly, Ground Nos. 1, 2 & 3, raised by the assessee are dismissed. 8. Through Ground No. 4, validity of the assessment order is challenged stating that ld. Assessing Officer was wrong in treating the status as A.O.P. We fail to find any merit in this ground because in the assessment order also the ld. Assessing Officer has mentioned the status as Regional Rural Bank and since no other submissions were made on this ground before us,....
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....ompany or companies with any other Government company under a scheme sanctioned and brought into force by the Central Government under section 16 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972), the accumulated loss and the unabsorbed depreciation of such banking company or companies or amalgamating corresponding new bank or banks or amalgamating Government company or companies shall be deemed to be the loss or, as the case may be, allowance for depreciation of such banking institution or amalgamated corresponding new bank or amalgamated Government company for the previous year in which the scheme of amalgamation was brought into force and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly. Explanation.-For the purposes of this section,- (i) "accumulated loss" means so much of the loss of the amalgamating banking company or companies or amalgamating corresponding new bank or banks or amalgamating Government company or companies under the head "Profits and gains of business or profession" (not being a loss sustained in a speculation business) which suc....
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....ng Government company or companies shall be deemed to be the loss or, as the case may be, allowance for depreciation of such banking institution or amalgamated corresponding new bank or amalgamated Government company for the previous year in which the scheme of amalgamation was brought into force and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly. 9.2. Further we observe that Section 45(7) of the Banking Regulation Act, 1949, provides that, the scheme shall thereafter be placed before the Central Government for its sanction and the Central Government may sanction the scheme without any modifications or with such modifications as it may consider necessary, and the scheme as sanctioned by the Central Government shall come into force on such date as the Central Government may specify in this behalf: Provided that different dates may be specified for different provisions of the scheme. Also, a banking company means any company which transacts the business of banking in India. We find that the said merger of five rural banks with the assessee bank has been carried out under the directions of the Centra....
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..... Accordingly, Ground No. 6 is allowed. 11. Ground No. 7 relates to disallowance on payment of gratuity at Rs.99,00,000/-. Both the lower authorities have denied the claim stating that the assessee has not made any payment. We, however, fail to find any merit in this finding since the payment of gratuity is an ascertained liability and it has been held time and again and also clarified that the Central Board of Direct Taxes (CBDT) that provisions for payment of gratuity that has become payable during the previous year is allowable. Our view is further fortified by the decision of this Tribunal in the case of DCIT, CIR-I, KOLKATA, Kolkata v. M/s Reliance Jute Mills International Ltd., Kolkata. ITA 897/KOL/2014; Assessment Year 2008-2009. Accordingly, Ground No. 7 raised by the assessee is allowed. 12. Ground No. 8 is disallowance of expenditure of Rs.6,000/- for provision of contingencies. This being an adhoc disallowance and ignoring the fact that banking companies are required to make provisions for true and fair financials of the bank, ought to be allowed as an expenditure. Hence, we set aside the findings of the ld. CIT(A) on this issue and allow this ground. Accordingly, ....