TaxTMI 
TaxTMI 
2023 (11) TMI 1022
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..... 2. The learned CIT(A) erred in upholding the re-opening of the assessment u/s 147 and learned CIT(A) failed to appreciate the fact that the re-opening of Assessment u/s 147 was bad and not tenable in law. 2.1. The learned CIT(A) failed to appreciate the fact that the re- opening was mere change of opinion as such, bad in law. 2.2. The learned CIT(A) failed to appreciate the fact that the re- opening was based on existing material and evidences and not based on any new evidences 2.3. The order of the learned CIT(A) is beyond the provisions of section 147 since no disallowance was made with regard to the recorded reasons. 2.4. The learned CIT(A) failed to appreciate the fact that once an addition is not made with respect to the recorded reasons, no other item can be disallowed without issuing fresh notice. 2.5. The learned CIT(A) failed to appreciate the fact that the re- opening is without obtaining proper approval. 2.6. The learned CIT(A) failed to appreciate the fact that some of the additions are hit by the third proviso to section 147 of the Income Tax Act, 1961. 2.7. The learned CIT(A) failed to appreciat....
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....he learned CIT(A) passed the impugned order without affording an opportunity of hearing through VC, which was specifically requested by the Appellant. The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal, if deemed necessary at the time of hearing of the appeal." 3. The brief facts of the case for AY 2014-15 are that the assessee filed its return of income on 29.11.2014 declaring loss of Rs. 108,96,44,000. The case was selected for scrutiny and assessment u/s. 143(3) was completed on 28.12.2016 assessing total income at Rs. 2028,45,47,130 under the regular provisions of the Act and deemed total income of Rs. 3597,88,20,720 under the MAT provisions. During the scrutiny proceedings u/s. 143(3) for AY 2016-17, the AO noticed that the assessee claimed depreciation on land & building including vacant land @ rate applicable for the building for the previous years and the assessee is claiming excess depreciation. Accordingly, the case was reopened u/s. 147 after due procedure and notice u/s. 148 was issued to the assessee on 24.08.2018. In response, the assessee filed return of income on 10.10.2018 wherein ex....
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....en. He retreated the submissions made before the lower authorities on merits of the case and further submitted in respect of ground No. 03 that the issue is squarely covered in favour of the assessee by the judgement of the jurisdictional High Court in assessee's own case in ITA No.207 of 2019 C/W ITA No. 208/2019 [2023 (1) TMI 243 (Karnataka HC). The assessee has filed written synopsis in respect of ground No. 4 which is as under:- "Ground No. 4 - Applicability of the provisions of section 115JB: 1. Brief facts: 1.1. The Appellant Bank (the Bank) is constituted u/s 3 of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 (Acquisition Act). It is not a Company registered under the Companies Act. It did not compute its income under the provisions of section 115JB of the Income Tax Act, 1961 since according to the Bank, the provisions of section 115JB dealing with Minimum Alternate Tax (MAT) are not applicable to them. The learned Assessing Officer held that the MAT provisions are applicable to the Bank and computed the Book Profit by applying the provisions of section 115JB. He made various additions to the Book Profit. On an appeal b....
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.... of profit and loss,- (i) the accounting policies; (ii) the accounting standards adopted for preparing such accounts including statement of profit and loss; (iii) the method and rates adopted for calculating the depreciation, shall be the same as have been adopted for the purpose of preparing such accounts including 37[statement of profit and loss] and laid before the company at its annual general meeting in accordance with the provisions of section 129 of the Companies Act, 2013 (18 of 2013): Provided further that where the company has adopted or adopts the financial year under the the Companies Act, 2013 (18 of 2013), which is different from the previous year under this Act,- (i) the accounting policies; (ii) the accounting standards adopted for preparing such accounts including statement of profit and loss; (iii) the method and rates adopted for calculating the depreciation, shall correspond to the accounting policies, accounting standards and the method and rates for calculating the depreciation which have been adopted for preparing such accounts including 37[statement of profit and loss] for such financial year or ....
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....hat Act;" 2.12. From the above definition, it can be seen that a Company as per section 3 of the Companies Act 1956 and carrying on the business of banking is a banking company as per the provisions the BR Act. 2.13. Section 3 of the Companies Act 1956 defines the term "Company" as follows: "3. DEFINITIONS OF "COMPANY", "EXISTING COMPANY", "PRIVATE COMPANY" AND "PUBLIC COMPANY" (1) In this Act, unless the context otherwise requires, the expressions "company", "existing company", "private company" and "public company", shall, subject to the provisions of sub-section (2), have the meanings specified below: - (i) "company" means a company formed and registered under this Act or an existing company as defined in clause (ii); (ii) "existing company" means a company formed and registered under any of the previous companies laws specified below : - (a) any Act or Acts relating to companies in force before the Indian Companies Act, 1866 (10 of 1866), and repealed by that Act ; (b) the Indian Companies Act, 1866 (10 of 1866) ; (c) he Indian Companies Act, 1882 (6 of 1882) ; (d) the Indian Companies Act....
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....term corresponding new bank. As submitted above, the Bank does not fall within the definition of the term banking company. However, it is squarely covered by the term corresponding new bank. Even on this count, the second proviso to section 129(1) of the Companies Act 2013 is not applicable to the Bank since the said proviso does not cover the term corresponding new bank. 2.18. Since the second proviso to section 129(1) of the Companies Act 2013 is not applicable to the Bank, the provisions of section 115JB(2) are not applicable to the Bank. 2.19. In this regard, reliance is placed on the following decisions: Sr. No. Name Citation Para No Page No 1 Greater Bombay Co-op. Bank Ltd Versus M/s United Yarn Tex. Pvt. Ltd. & Ors 2007 (4) TMI 679 -SUPREME COURT 10, 11,13, 14,16, 17,18, 19,20, 21 & 25 2 Larsen & Toubro Ltd & Others 2015 (8) TMI 749 -SUPREME COURT 20 - 25 41 - 43 3 ING Vysya Bank Limited [2020] 422 ITR116 (Kar) 6 - 11 50 - 52 4 Punjab National Bank (successor of Oriental Bank of Commerce) ITA No. 740 /Del / 2020 - order dated 31-03-2023 for Asst Year 2016-17 10 217 -227 5 ....
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....e effect of a reference to banking company being construed as reference to a co-operative bank for three reasons: firstly, Section 5 is an interpretation clause; secondly, substitution of 'co-operative bank' for 'banking company' in the definition in Section 5 (c) would result in an absurdity because then Section 5 (c) would read thus: "co-operative bank" means any company, which transacts the business of banking in India; thirdly, Section 56 (c) does define "co-operative bank" separately by expressly deleting/inserting clause (cci) in Section 5. The Parliament in its wisdom had not altered or modified the definition of 'banking company' in Section 5 (c) of the BR Act by Act No.23 of 1965. As noticed above, "Co-operative bank" was separately defined by the newly inserted clause (cci) and "primary co- operative bank" was similarly separately defined by clause (ccv). The meaning of 'banking company' must, therefore, necessarily be strictly confined to the words used in Section 5(c) of the BR Act. If the intention of the Parliament was to define the 'co-operative bank' as 'banking company, it would have been the easiest way for the ....
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....ative banks transacting the banking business are, therefore, covered by the RDB Act in terms of the meaning of "banking company" under Section 2(d) of the Act. Page 18 The RDB Act was passed in 1993 when Parliament had before it the provisions of the BR Act as amended by Act No. 23 of 1965 by addition of some more clauses in Section 56 of the Act. The Parliament was fully aware that the provisions of the BR Act apply to co-operative societies as they apply to banking companies. The Parliament was also aware that the definition of 'banking company' in Section 5 (c) had not been altered by Act No. 23 of 1965 and it was kept intact, and in fact additional definitions were added by Section 56(c). "Co- operative bank" was separately defined by the newly inserted clause (cci) and "primary co-operative bank" was similarly separately defined by clause (ccv). The Parliament was simply assigning a meaning to words; it was not incorporating or even referring to the substantive provisions of the BR Act. The meaning of 'banking company' must, therefore, necessarily be strictly confined to the words used in Section 5(c) of the BR Act. It would have been the easi....
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.... and Financial Institutions Act, 1993 [RDB Act] by invoking the Doctrine of Incorporation are not applicable to the recovery of dues by the co-operatives from their members. 2.22. From the above decision of Hon'ble Supreme Court, it can be seen that when the words are defined in an Act, then, the same should be adopted. In that case also, the definition of the term banking company as per the BR Act vis-à-vis RDB Act was under consideration. The RDB Act defined the term banks to mean, among other things, a banking company as defined in section 5(c) of the BR Act. It was argued before the Hon'ble Supreme Court that the term banking company should also include co-operative banks. However, the Hon'ble Supreme Court after analysing various provisions of the BR Act, decided that the term banking company u/s 5(c) of the BR Act does not include co-operative bank since the term co-operative bank is separately defined u/s 5(cci) of the BR Act. This clause 5(cci) is inserted vide section 56 of the BR Act contained in Part V of the said Act which deals with Co-Operative Banks. The Hon'ble Supreme Court held that since the co-operative banks are defined separately under the BR A....
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....section (2) of section 115JB of the Act, would be rendered wholly unworkable in such a situation. In a well known judgment the Supreme Court in the case of CIT v. B. C. Srinivasa Setty [1981] 128 ITR 294 (SC) had observed that in the Income-tax Act, a charging section and the computing provisions together constitute an integrated code. In a case where the computation provision cannot apply, it would be evident that such a case was not intended to fall within the charging section. ....................." 2.25. Based on the above, it is submitted that the provisions of section 115JB are not applicable to the Appellant Bank and hence it is prayed that the ground of the Department in this regard may please be dismissed. 3. Rebuttal to the learned CIT(A) order and the decision of Hon'ble Mumbai Tribunal in the case of Bank of India in ITA Nos. 1767 & 2048 (Mum) of 2019 - order dated 11-12-2020. 3.1. The learned CIT(A) has relied on the decision of the Hon'ble Mumbai Tribunal in the case of Bank of India (supra). The decision of the Hon'ble Tribunal in the case of Bank of India, with due respect, is per incuriam for the following submissions: â....
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....nk therein is a banking company as per the provisions of the BR Act. The Assessee in that case has argued in detail that it was not a banking company and the arguments have been extracted by the Tribunal in para 22. However, with due respect, the Tribunal negated this argument in para 23 of its decision, purely basing its reasoning on the contextual interpretation of the words. • The following observations of the Hon'ble Tribunal in para 23 are, with due respect, per incuriam, as it is against the settled principle of law declared by the Hon'ble Supreme Court and various High Courts in many decisions. "Nothing, therefore, turns on these definitions. What is to be essentially examined is what was the requirement of the context. The contextual requirement of Section 115JB, for taxation of book profits, was with respect to the companies which were able to distribute dividends on the basis of book profits even though the taxability of their profits, for the income tax purposes, was on a much lower amounts. We are unable to see any reasons as to why in this scheme of taxation of book profits, an assessee like the assessee before us, i.e. a bank distributing dividen....
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....ciple of unlawful enrichment would also apply and since the law will not permit this, the Act needs to be interpreted accordingly. We wholly disapprove of the approach of the High Court. It flies in the face of first principle when it comes to taxing statutes. It is therefore necessary to reiterate the law as it stands. In Partington v. A.G., (1869) LR 4 HL 100 at 122, Lord Cairns stated: "If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. In other words, if there be admissible in any statute, what is called an equitable, construction, certainly, such a construction is not admissible in a taxing statute where you can simply adhere to the words of the statute". 32. In Cape Brandy Syndicate v. IRC, (1921) 1 KB 64 at 71, Rowlatt J. laid down: "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. T....
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....A BANK. ERSTWHILE SYNDICATE BANK) 2023 (5) TMI 543 - ITAT BANGALORE 7. THE KARNATAKA BANK LTD. 2022 (5) TMI 1537 - ITAT BENGALURU 8. UNION BANK OF INDIA, (ERSTWHILE CORPORATIONBANK) 2022 (3) TMI 1131 -ITAT BANGALORE 9. NEW GLOBE LOGISTIK PVT. LTD. (NOW KNOWN AS NEW GLOBE LOGISTICK LLP) 2023 (6) TMI 1064 -ITAT MUMBAI 10. M/s SYNDICATE BANK ITA No. 99 &100/PAN/2017- ITAT BANGALORE 11. M/s CANARA BANK (FOR AMALGAMATED ENTITY SYNDICATE BANK) ITA No. 258 OF 2020- KARNATAKA HIGH COURT 12. Yokogawa India Ltd [2012] 17 taxmann.com 15 (Kar.) 13. Kirloskar Systems Ltd [2013] 40 taxmann.com 124(Karnataka) 14. Syndicate Bank [2015] 54 taxmann.com 292 (Karnataka) 15. Vodafone Essar Gujarat Ltd 2017 (8) TMI 451 - Gujarat High Court 16. Torrent Private Limited 2019 (6) TMI 709 - GUJARATHIGH COURT 17. Gokaldas Images [2020] 429 ITR 526 (Kar) 18. Canara Bank (erstwhile Syndicate Bank) 2022 (1) TMI 124 - ITAT BENGALURU 19. Vireet Investment (P.) Ltd [2017] 165 ITD 27 (Delhi - Trib.) (SB) 8. The ld. DR relied on the orders of lower authorities. She submitted that the disallowance....
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....ra Bank v. Jt. CIT [2018] 99 taxmann.com 357/[2017] 60 ITR (Trib.) 1 (Bengaluru - Trib.). He further submitted that the said order has been followed by the Tribunal in Vijaya Bank v. Jt. CIT [IT Appeal Nos. 915 & 845 (Bang.) of 2017, dated 5-1- 2018] and the said method of making provision has been approved by the Calcutta High Court in Uttarbanga Kshetriya Gramin Bank case. 8. We have carefully considered the rival contentions and perused the records. 9. In Para 7.2 of the impugned order, the Tribunal has recorded thus, "7.2 Before us, the learned Authorised Representative for the assessee reiterated the submission that the language of Rule 6ABA is very clear and does not mandate that only incremental advances has to be considered and nothing can be read into it as has been done by the authorities below. It was submitted that this issue has been considered and decided in favour of the assessee by the co-ordinate bench of this Tribunal in the case of Canara Bank v. JCIT (2017) 60 ITR (Trib) 1 [ITAT (Bang)]" 10. It is further held that the said decision has been followed in Vijaya Bank case. The manner in which the computation has been made has been given ....
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....er:- "13. The assessee-bank had not computed book profit and accordingly not calculated MAT. It was contended that it was under the belief that the assessee-company being a public sector bank is not a company under Companies Act, 1956 as well as Banking Regulations Act, 1949. Therefore, as such provisions of Section 115JB of the Act does not apply to the assessee. However, the Assessing Officer held that provisions of Section 115JB of the Act are applicable to the bank. 13.1 Aggrieved, the assessee filed appeal to the first appellate authority. Before the first appellate authority it was contended that even amended section 115JB of the Act does not apply to the bank as it was of the view that - (i) it does not prepare profit and loss account as per the provisions of the Companies Act, 1956 and (ii) Section 211 of the Companies Act, 1956 does not apply to them as they do not fall under the definition of Banking Companies under Companies Act, 1956. 13.2 The CIT(A) dismissed the assessee's contention by holding that there is no option given to the company u/s 115JB of the Act to exclude itself from the applicability of the provisions of Section 115JB of the ....
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.... Ld CIT(A) should considered the effect of provisions of sec. 51 of BR Act and accordingly he should have appreciated the contentions of the assessee on the definition of "banking company", provisions of sec. 211(2) of the Companies Act etc. Since these aspects go to the root of the issue, in our view, this issue needs to be examined at the end of Ld CIT(A) afresh. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to his file for examining it afresh." 13.6 In view of the co-ordinate Bench order of the Tribunal in assessee's own case for assessment year 2013-2014, we restore this issue to the files of the CIT(A). The CIT(A) shall follow the directions contained in the Tribunal order for assessment year 2013-2014 and shall afford a reasonable opportunity of hearing to the assessee before a decision is taken on the issue. It is ordered accordingly." 12. Respectfully following the above decision and submissions made by both the parties, we remit this issue also to the file of CIT(A) for fresh consideration and decision as per law in the same terms. This ground is allowed for statistical purposes. 13. Ground No.4.3 - Addition to bo....