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2023 (11) TMI 1146
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....ce u/s. 14A of the I.T. Act r.w. Rule 8D, a sum of Rs. 45,95,01,000/- being expenditure incurred towards earning exempt income. 2.1. The learned CIT(A) failed to appreciate the fact that the investments held by the Appellant bank are stock in trade and hence no disallowance u/s 14A can be made. 2.2. The learned CIT(A) failed to appreciate the fact that, as per Section 14A, for justifying a disallowance under that section, a finding on the incurring of expenditure for earning the exempt income is absolutely necessary on the part of the Assessing Officer. The learned Assessing Officer has not brought out any specific expenditure which has been incurred by the Appellant Bank for earning of exempt income. Under these circumstances, the addition now made is liable to be deleted. 2.3. The learned CIT(A) erred in invoking the provisions of Rule 8D without pointing out any defect in the computation of the disallowance made by the Appellant bank. 2.4. The learned CIT(A) failed to appreciate the fact that the application of Rule 8D is neither automatic nor mandatory. 2.5. The learned CIT(A) erred in holding that exempt income will always have a notional interest cost attached to it....
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....ving at the Aggregate Average Advances as per Rule 6ABA, the outstanding balance at the end of each month needs to be considered and not the incremental advances. 4.3. The learned CIT(A) failed to follow the binding decisions of the jurisdictional High Court and Tribunal. 4.4. The learned CIT(A) failed to appreciate the fact that the deduction u/s 36(1)(viia) has to be allowed on the basis of the calculation as provided in the section and not with reference to the amount of provision made in the books of account. 4.5. The disallowance made by the learned Assessing Officer and upheld by the learned CIT(A) is based on surmises and conjunctures. 5. The learned CIT(A) erred in upholding the disallowance of Rs. 14,64,961/- being the loss on surrender of leased premises. 5.1. The learned Assessing Officer failed to appreciate the fact that the loss is a business loss and not a capital loss. 5.2. The learned Assessing Officer erred in holding that the lease is a capital asset of the Appellant bank. 6. The learned CIT(A) erred in disallowing a sum of Rs. 1,38,637/- being the club expenses. 6.1. The learned CIT(A) erred in holding that the club expenses are not for business ....
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....regular provisions of the Act and deemed total income of Rs. 696,42,91,164 under the MAT provisions. The assessee filed appeal before the CIT(Appeals) which was partly allowed. Aggrieved, the assessee is in appeal before the Tribunal. 4. Ground No.1 is general in nature. 5. Ground 2 is regarding disallowance of Rs. 45,95,01,000 u/s. 14A r.w.s. Rule 8D being expenditure incurred towards earning exempt income. The AO noted that the assessee has claimed exemption u/s. 10(34) towards dividend of Rs. 6,52,31,200 and interest of Rs. 19,78,29,636 on tax free bonds u/s. 10 totaling to Rs. 26,30,60,836. The assessee made an adhoc disallowance of Rs. 5,44,496 in relation to income not forming part of total income under 'proportionate expenditure of treasury department in terms of section 14A'. The assessee was asked to furnish details in this regard and under Rule 8D. The assessee submitted that securities held by the bank are stock in trade. The interest income and profit on redemption and profit on sale of investments are offered to tax under the head business income, therefore no disallowance can be made u/s. 14A in respect of investments held as stock in trade. It was also submitted th....
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....a notional interest part attached to it. The AO further noted that the submission made by the assessee are contradictory. Finally the AO observed that in the absence of direct nexus between assessee's own funds and investments, the investments will be treated from common pool of account having both borrowed as well as own funds of the assessee. The AO also relied on various judgments and calculated the disallowance u/s. 14A of Rs. 45,95,01,000. 5.1 During the course of arguments, the ld. AR of the assessee submitted that this issue has been settled by the jurisdictional High Court in assessee's own case in favour of the assessee for AYs 2005- 06 to 2012-13 and has observed that no disallowance u/s. 14A can be made to the assessee. The has provided the list of judgement of the Hon'ble jurisdictional High Court which is placed on record. 5.2 On the other hand, the ld. DR relied on the order of lower authorities and further submitted that the CIT(A) after relying on various judgments observed that " In view of the above, I am not inclined to concur with this plea of the appellant that it had held the securities as stock-in-trade, not with the intention to dividend income. The variou....
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....ing a refund already made or otherwise increasing the liability of the assessee under Section 154, for any assessment year beginning on or before the 1st day of April 2001. 9. From perusal of Section 14A of the Act, it is evident that for the purposes of computing the total income under this chapter, no deduction shall be allowed in respect of the expenditure incurred by the assessee in relation of the income which does not form part of his total income under the Act. The expenditure, the return of investment and cost of requisition are distinct concepts. Therefore the word 'incurred' in Section 14A of the Act have to be read in the context of the scheme of the Act and if so read, it is clear that it disallows certain expenditures incurred to earn exempt income from being deducted from other incomes which is includable in the total income for the purposes of chargeability to the Lax. It i4 equally well settled that expenditure is a pay out. In order to attract applicability of section 14,4 of the Act, there has to be a pay out and return of investment or a pay back is not such a debit item. [See: WALFORT SHARE AND STOCK BROKERS (P) LTD SUPRA as well as M.4XOP INVESTMENTS ....
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....terms of the order dated 31.01.2020, the substantial questions of law Nos.2 & 4 are answered in favour of the assessee and in terms of the aforesaid judgment." 6.1 Respectfully following the above judgment, we decide the issue in the above terms of the judgment. The ld. DR has submitted that the Hon'ble Apex court has admitted the SLP filed by the revenue but the status of the same could not be furnished by the ld. DR, accordingly, we are bound by the order of the Jurisdictional High Court 7. Ground No.3 is regarding disallowance of Rs. 1296,71,17,882 u/s. 36(1)(vii) in respect of bad debts written off by the bank. 7.1 The AO noted that the assessee claimed deduction of bad debts u/s. 36(1)(vii) without actually writing-off the debts as irrecoverable in the individual accounts of the debtors concerned. The assessee was asked to clarify the procedure followed while writing off at H O level and branch level. The assessee submitted reply. The AO from the submissions observed, majority of the write off is Prudential Write Off (PWO) done at the Head Office level actually with a view to write create provision for NPAs in the books of accounts as per RBI guidelines. The fact of write o....
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....laimed towards bad debts written off by rural branches. It claimed a sum of Rs. 1296,56,16,023 being bad debts written off by non-rural branches u/s. 36(1)(vii) as the same need not be charged to the provisions account u/s. 36(1)(viia). The assessee submitted a brief note on system followed for write off of bad debts as under:- "A) Procedure followed for technical write off and branch level write off The appellant bank identifies individual bad debts that are to be written off. The bad debts are written off by the branches and also at the HO level after obtaining the requisite permission from the respective authorities. The write off carried out at the branch level is called actual write off in which case the customer account is written off and closed forever. However, the write off under taken at HO level is called Technical/Prudential write-off in which case, the customer account still appears in the branch books, though the same is written off at HO level. In both cases, (write off at branch level) as well as at HO level, the actual amount written off is reduced from the loans and advances of the bank. The working in this regard is enclosed as Annexure-C. It is also pertin....
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....ually written-off the debts in the individual loan accounts, & (ii) that the appellant did not charge the amount of bad debts written-off to the Provision for bad and doubtful debts account, even though there was sufficient credit balance available in the provisions created for this very purpose. Thus, the AO has made out a case that the deduction of bad debts was not admissible on both these grounds. The assessee has not been able to controvert these factual findings in his submission made during the appellate proceedings, but relied on certain judicial precedents and stated that both the above issues are covered in favour of the assessee. 8.1 The CIT(A) observed that from the provisions of section 36(1)(vii), it is evident that clause (vii) of Section 36(1) allows deduction in respect of any bad debt or part thereof which is actually written off as irrecoverable in the accounts of the assessee during the year. The clause (viia) of section 36(1) allows deduction in respect of any provision for bad and doubtful debts made by certain banks and financial institutions up-to the limits specified therein. In order to prevent the possibility of double deduction, proviso to the clause (v....
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.... "for removal of doubts" and "it is hereby clarified" in Explanation 2 and hence the amendment was clarificatory in nature and can be applied retrospectively. He relied on the Hon'ble Supreme Court judgment in the case of CIT v. Gold Coin Health Food Pvt. Ltd. (2008) 304 ITR 308 (SC) wherein it was held that if a statute is curative or merely declaratory of the previous law, it has to be applied retrospectively. Thus, the CIT(A) observed that the import of Explanation 2 refer to only one account of provision for bad and doubtful debts, relating to all types of advances including advances made by rural branch. Thus, the amount of deduction of bad debts actually written off shall be subject to the amount by which such debts exceed the provisions for bad & doubtful debts, without making any distinction between rural advances and other advances. Therefore, the banks cannot claim double deduction, one on provisioning basis and again on actual write off basis for the same amount, separately and independently. Therefore, the contentions of the assessee were rejected. 8.4 He noted that the question whether the credit balance referred in the said proviso of the Act refers to opening or clo....
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....unal in assessee's own case for assessment year 2013-2014 by following the Hyderabad Bench order of the Tribunal in the case of State Bank of Hyderabad (supra), had set aside the view expressed by the CIT(A) that proviso to section 36(1)(vii) which requires adjustment of bad debts against the provisions allowed u/s 36(1)(viia) would apply to non-rural advances also. The relevant finding of the Bangalore Bench of the Tribunal in assessee's own case for assessment year 2013- 2014 reads as follows:- "6.4 We heard the parties on this issue and perused the record. We notice that the Ld CIT(A) has expressed the view that the provision allowed u/s 36(1)(viia) of the Act would cover bad debts pertaining to non-rural advances also. An identical issue has been examined by Hyderabad bench of ITAT in the case of State Bank of Hyderabad vs. DCIT (ITA No.450/Hyd/2015, ITA No.498 and 499/Hyd/2015 dated August 14, 2015), wherein the Tribunal has not accepted the above said view expressed by Ld CIT(A). The relevant observations made by the Tribunal are extracted below:- "19. We have considered the rival submissions and perused the materials on record as well as the orders of revenue authorities....
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.... s. 36(1)(vii) applies to all banks and with reference to the circulars issued by the Board, held that a bank would be entitled to both deductions, one under cl. (vii) of s. 36(1) of the Act on the basis of actual write off and the other on the basis of cl. (viia) of s. 36(1) of the Act on the mere making of provision for bad debts. This, according to the Revenue, would lead to double deduction and the proviso to s. 36(1)(vii) was introduced with the intention to prevent this mischief. The contention of the Revenue, in our opinion, was rightly rejected by the Special Bench of the Tribunal and it correctly held that the Board itself had recognized the position that a bank would be entitled to both the deductions. Further, it concluded that the proviso had been introduced to protect the Revenue, but it would be meaningless to invoke the same where there was no threat of double deduction. 27. As per this proviso to cl. (vii), the deduction on account of the actual write off of bad debts would be limited to excess of the amount written off over the amount of the provision which had already been allowed under cl. (viia). The proviso by and large protects the interests of the Revenue. ....
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.... in the sense that in respect of same rural advance the bank may get allowance on the basis of clause (viia) and also on the basis of actual write off under clause (vii). This situation is taken care of by the proviso to clause (vii) which limits the allowance on the basis of the actual write off to the excess, if any, of the write off over the amount standing to the credit of the account created under clause (viia). However, the Revenue disputes the position that the proviso to clause (vii) refers only to rural advances. It says that there are no such words in the proviso which indicates that the proviso apply only to rural advances. We find no merit in the objection raised by the Revenue. Firstly, CBDT itself has recognized the position that a bank would be entitled to both the deduction, one under clause (vii) on the basis of actual write off and another, on the basis of clause (viia) in respect of a mere provision. Further, to prevent double deduction, the proviso to clause (vii) was inserted which says that in respect of bad debt(s) arising out of rural advances, the deduction on account of actual write off would be limited to the excess of the amount written off over the amou....
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....on, i.e., the view that the proviso to sec. 36(1)(vii) which requires adjustment of bad debts against provision allowed u/s 36(1)(viia) would apply to non-rural advances also. Accordingly, we direct the AO to delete the disallowance of Rs. 1258.47 crores." 12.4 In view of the above co-ordinate Bench order of the Tribunal in assessee's own case for assessment year 2013- 2014 (supra), we hold that the view expressed by the CIT(A) is not correct. Therefore, the alternative decision taken by the CIT(A) (i.e. the proviso to section 36(1)(vii) which requires adjustment of bad debts against provision allowed u/s 36(1)(viia) would apply to non-rural advances also) is hereby set aside. Hence, we direct the A.O. to delete the disallowance made by the CIT(A). It is ordered accordingly." 11.1 Similar issue has also been decided by the coordinate Bench of the Tribunal in the case of Bank of Baroda v. Addl. CIT, LTU, in ITA No.321/Bang/2019 dated 25.4.2023 in favour of the assessee. The ld. DR has submitted that the Hon'ble Apex court has admitted the SLP filed by the revenue but the status of the same could not be furnished by the ld. DR, accordingly, we are bound by the order of the Jurisdi....
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....er dated 30.10.2009 13.1 The assessee has also submitted that section 36(1)(viia) is a beneficial provision, allowing deduction to banks having rural branches, with a view to promote rural banking. It is settled position of law that beneficial provisions should be interpreted liberally so that the intended benefits can be passed on the eligible assessee. The appellant has also claimed that the 37 branches excluded by the AO, should also be regarded as rural branches, as population of these branches is less than ten thousand as per 2011 Census. 14. The CIT(Appeals) after considering the submissions of the assessee and material facts on record, observed that clause (viia) of section 36(1) provides that any provision for bad and doubtful debts (PBDD) made by certain category of banks shall be allowed as deduction in computing business incomes, subject to the limit specified therein. The deduction of PBDD is subject to the upper limit of 7.5% of total income and 10 percent of the AAA made by the rural branches of such bank computed in the prescribed manner. The method of computation of AAA made by the rural branches of a scheduled bank has been prescribed under rule 6ABA. The moot po....
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....veraging out would take care of the fluctuating balance in a particular account due to repayments and further advances. This construction of the rule is aligned with the legislative intent namely to encourage rural banking. If outstanding loans at the end of each month for a rural branch were to be considered (as the appellant has claimed), this would lead to an anomaly in a situation where a particular rural branch does not make any fresh advance during the entire year, but does have outstanding loans brought forward from earlier years. In such an event, the rural branch in example would continue to report the same amount of aggregate advances year after year, without having made any fresh advances all these years. Hence, this construction of the rule would clearly defeat the very purpose of enactment of clause (viia), namely to encourage rural banking, as this would enable the banks to claim deduction of provisions made for bad and doubtful debts, without making any efforts to increase their exposure to rural loans. The primary idea of permitting deduction for a provision, which is normally not admissible, in case of certain banks is to create a fiscal incentive for generating ru....
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....n ITA NO. 227 to 229/Bang/2023 in favour of the assessee. 16. The ld. DR relied on the order of the CIT(Appeals). 17. After considering the rival submissions, we find that this issue was considered by this Tribunal in the latest judgement in assessee's own case for AYs 2014-15 & 2015-16 in ITA Nos.388 & 389/Bang/2023 by order dated 26.09.2023 and it was held as under:- "9. After considering rival contentions, we note that the issue of allowance u/s. 36(1)(viia) has been settled by the Hon'ble jurisdictional High Court of Karnataka in the case of CIT, LTU v. Canara Bank, [2023] 147 taxmann.com 171 (Karnataka)[05-12-2022] in which it has been held as under:- "6. Insofar as question No. 4 is concerned, adverting to section 36(1)(viia) of the Income-tax Act, 1961, Shri Aravind submitted that the word used in the statute is aggregate average advances "made" by the rural branches. To quote an example, he submitted that for A.Y. is 2013-14 (F.Y. 2012-13) if the bad debt as on 31-3-2012 is considered to be as Rs. 1 Crore by virtue of making provisions subsequently, the assessee will be entitled for double benefit because provisions in respect of 10% of the bad debt of provisions of R....
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....tation. The amounts of advances as outstanding at the last day of each month would be a fluctuating figure depending on the outstanding as increased or reduced respectively by advances made and repayments received. The assessee might provided for bad and doubtful debts but the deduction would only be allowed at the percentage of aggregate average advance, computation of which is prescribed by rule 6ABA. We find from the amended direction made by the Tribunal that such direction is in terms of rule 6ABA. The ITO has made the computation of aggregate monthly advances taking loans and advances made during only the previous year relevant to assessment year 2009-10 as confirmed by CIT(A). The Tribunal amended such direction, in our view, correctly applying the rule." 11. In view of the above, these appeals with regard to question No. 4 must fail and it is also answered in favour of the assessee and against the Revenue." 10. Respectfully following the above judgment of the jurisdictional High Court, we hold that while calculating average aggregate advances of rural branches under section 36(1)(viia), both advance outstanding as well as fresh advances are to be considered. Ground No....
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....its statement of profit and loss for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 (1of 1956)" 2.2. The Bank was subjected to MAT provisions by the learned Assessing Officer based on the provisions of section 115JB(2) as existed upto 31- 03-2013 for the Asst Years upto 2012-13. The Bank disputed the decision of the learned Assessing Officer and obtained favourable orders from the higher appellate authorities. Infact, various High Courts including the jurisdictional Bombay High Court in the case of CIT vs Union Bank of India reported in [2019] 13 ITR-OL 655 (Bom) held that the provisions of section 115JB(2) are not applicable to Banks. 2.3. Dispute after 01-04-2013: There was an amendment to section 115JB(2) by the Finance Act, 2012 w.e.f. 01-04-2013. The amended section reads as follows: " Every assessee,- (a) being a company, other than a company referred to in clause (b), shall, for the purposes of this section, prepare its statement of profit and loss] for the relevant previous year in accordance with the provisions of Schedule III to the the Companies Act, 2013 (18 of 2013) ; or (b) Being a....
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....ass of company for which a form of financial statement has been specified in or under the Act governing such class of company." 2.7. The proviso uses the term "banking company". Therefore, unless the Bank is covered by the term banking company, as defined in the Companies Act 2013, the second proviso will not be applicable to it. 2.8. Since the provisions of the Companies Act 2013 have been referred to in section 115JB(2), as per the principles of interpretation, the words defined in the said Act are to be adopted. Companies Act 2013, defines the term banking company. In section 2(9), of the Companies Act 2013, the term banking company is defined as follows: "(9) ―banking company means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949);" 2.9. Since the Companies Act 2013 refers to the definition of the term banking company as defined in the Banking Regulation Act, 1949 (BR Act), the definition contained in the said Act needs to be considered. 2.10. Section 5(c) of the BR Act defines the term banking company as follows: "(c) "banking company" means any company which transacts the business of banking[in India];" ....
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....ed a Company. 2.15. The Bank is not registered either under the Companies Act 1956 or under any other previous Companies Act. It is constituted by an Act of Parliament being the Acquisition Act. It does not owe its existence to the Companies Act 1956. Therefore, it is not a Company as per the provisions of the Companies Act. If it is not a Company as per the provisions of the Companies Act, then, it cannot be termed as a Banking Company as per the provisions of the BR Act and as a consequence, it is not a Banking Company for the purpose of the Companies Act. Therefore, the second proviso to section 129(1) of the Companies Act 2013 is not applicable to the Bank. 2.16. It is submitted that the Bank is defined separately in the BR Act. Section 5(da) of the BR Act, defines the Bank as under: "(da) "corresponding new bank" means a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980)" 2.17. It is settled principle of law that once a term is defined in an Act specifically, then, that sh....
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.... 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. 2.21. Certain observations and arguments in the said decision, which are relevant to the present case are extracted herein below: Page 10 & 11 "The Parliament has thus consistently made the meaning of 'banking company' clear beyond doubt to mean 'a company engaged in banking, and not a co-operative society engaged in banking' and in Act No. 23 of 1965, while amending the BR Act, it did not change the definition in Section 5 (c) or even in 5(d) to include co-operative banks; on the other hand, it added a separate definition of 'co-operative bank' in Section 5 (cci) and 'primary co-operative bank' in Section 5 (ccv) of Section 56 of Part V of the BR Act. Parliament while enacting the Securitisation Act created a residuary power in Section 2(c)(v) to specify any other bank as a bank for the purpose of that Act and in fact did specify 'cooperative banks' by Notification dated 28.01.2003. The context of the interpretation clause plainly excludes the effect of a reference to ....
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....for all intents and purposes Act No.23 of 1965 merely extends the application of the provisions of the BR Act to 'a cooperative bank' even though it is not a 'banking company' as defined in Section 5(c). Page 16 ................He then submitted that the co-operative bank will have to be included in the definition of the term "banking" as defined in Section 2(d) of the RDB Act as Section 5(c) of the BR Act cannot be read in isolation ignoring Section 56 of the Act......... Page 17 In the last, the learned counsel supported the judgments and orders of the High Court of Bombay and the High Court of Andhra Pradesh holding that as the co-operative banks are transacting banking business, they are covered by the definition of "banking company" under Section 5(c) of the BR Act, therefore, the Tribunal constituted under Section 3 of the RDB Act has jurisdiction and power under Section 17 to decide claims of all banks including the co-operative banks. Mr. U. U. Lalit, learned Senior Advocate appearing on behalf of the respondent .................... Co-operative banks transacting the banking business are, therefore, covered by the RDB Act in terms of the meaning of....
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....e of interpretation of the Statute is that the words used in the Section must be given their plain grammatical meaning. Therefore, we cannot afford to add any words to read something into the Section, which the Legislature had not intended. Finally, it could not be said that Amendments in Chapter V, Section 56 of the RDB Act by Act No. 23 of 1965 inserting "co-operative bank" in Clause (cci) and "primary co-operative bank" in Clause (ccv) either expressly or by necessary intentment apply to the co-operative banks transacting business of banking. Page 24 "Co-operative banks" established under the Maharashtra Co-operative Societies Act, 1960 [MCS Act, 1960]; the Andhra Pradesh Co-operative Societies Act, 1964 [APCS Act, 1964]; and the Multi-State Co-operative Societies Act, 2002 [MSCS Act, 2002] transacting the business of banking, do not fall within the meaning of "banking company" as defined in Section 5 (c) of the Banking Regulation Act, 1949 [BR Act]. Therefore, the provisions of the Recovery of Debts Due to Banks 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 thei....
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.... Act is not applicable to the Bank. Therefore, even assuming but not admitting that, the charging section of 115JB is applicable to the Bank, the computation would fail since it would not be possible for the Bank to prepare a Profit & Loss Account as per section 115JB(2). It is a settled principle of law that if the computation fails, the charge fails. In the case of Union Bank of India, the Hon'ble Bombay High Court by applying this principle, held that the provisions of section 115JB are not applicable. This decision is reported in [2019] 13 ITR-OL 655 (Bom). This decision was followed by the Hon'ble Karnataka High Court in the case of CIT vs ING Vysya Bank Ltd [2020] 422 ITR 116 (Kar.). The Hon'ble Bombay High Court held in para 11 as under: "11. This legal dichotomy emerging from the provisions of subsection (2) of section 115JB particularly having regard to the first proviso contained therein in the case of a banking company, would convince us that machinery provision provided in subsection (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....
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...."Interestingly, it was not even plea of the assessee, and rightly so, that section 115JB will have no application on the assessee because the assessee could not be treated as a company for the purposes of Section 115JB." * The above observation is not applicable to this case. It is our submission that the Assessee is not a banking company for the purpose of 115JB. What is to be seen is whether the Assessee is a banking company or not. Whether the Assessee is a company or not is not to be seen for the purpose of section 115JB(2)(b). * In para 31, the Tribunal concluded as follows: "The plea of the assessee, with respect to non-applicability of section 115JB to the banking companies like the assessee before us, is, therefore, rejected." * The above conclusion of the Tribunal, with due respect, is per incuriam. There is no finding in the order of the Tribunal that the Assessee Bank 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 decis....
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.... also, the banking company and the corresponding new bank are defined separately and as such, corresponding new bank cannot be treated as a banking company. Since the bank is a corresponding new bank, it cannot be treated as a banking and as such, the provisions of section 115JB are not applicable to the Bank. 3.2. The decision of the Hon'ble Tribunal is per incuriam, with due respect, to the settled principle interpretation by the Hon'ble Supreme Court with respect to taxing statutes. In this regard, reliance is placed on the following observations of the Hon'ble Supreme Court in the case of Shabina Abraham and others vs CCE&C - 2015 (10) SCC 770. The relevant observations of the Apex Court are extracted hereunder: "31. The ................................. Apart from this, the High Court went into morality and said that the moral principle 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., (18....
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....IT vs Vegetable Products Ltd [1973] 88 ITR 192 (SC) also the Hon'ble Karnataka High Court in the case of S N. Builders & Developers 2021 (11) TMI 430 - KARNATAKA HIGH COURT. 4. It is humbly submitted that the grounds of the Appellant Bank be allowed by holding that the provisions of section 115JB are not applicable to the Appellant Bank." 20. The ld. AR further relied on the following case laws:- 1. Greater Bombay Co-op. Bank Ltd. v. United Yarn Tex. P. Ltd. 2007 (4) TMI 679 Supreme Court 2. Larsen & Toubro Ltd. & Ors. 2015(8) TMI 749 Supreme Court 3. ING Vysya Bank Ltd. [2020] 422 ITR 116 (Kar) 4. Punjab National Bank (successor of Oriental Bank of Commerce) ITA No.740/Del/2020 dated 31.3.2023 AY 2016- 17 5. Damodar Valley Corporation 2017 (8) TMI 1363 ITAT Kolkatta 6. Rajasthan Financial Corporation 2023(1) TMI 623 ITAT Jaipur 21. The ld. DR relied on the order of lower authorities. He further submitted that the revenue has not accepted the judgement of the Hon'ble SC regarding applicability of MAT provision to the banking companies and has filed the SLP which is accepted by the Supreme Court. 22. This issue also considered by this Tribunal in the latest ju....
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....ssessment year 2013-2014 an identical issue was considered and the matter was remitted back to the CIT(A). It was submitted by the ITA No.1885/Bang/2018 & 237/PAN/2018 M/s.Canara Bank (Erstwhile Syndicate Bank) 16 learned AR that since the facts being identical, a similar view may be taken by the Tribunal for this assessment year also. 13.4 The learned DR was duly heard. 13.5 We have heard rival submissions and perused the material on record. The Tribunal in assessee's own case for assessment year 2013- 2014 (supra) had restored the issue to the files of the CIT(A). The CIT(A) was directed to examine whether the assessee being a banking company would be liable for book profits u/s 115JB of the Act. The relevant finding of the Tribunal in assessee's own case, reads as follows:- "7.4 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....
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....JB are not covered by Explanation to section 115JB. Therefore, these additions are not tenable as per law. Since the issue regarding applicability of section 115JB is already restored to the CIT(A), this issue is also restored to the CIT(A) for decision as per law. We also note that in assessee's own case for AY 2014-15 (supra) at para No.14, the Tribunal has restored the issue to the CIT(A) for fresh consideration, 24. Since we have decided all the grounds raised, Ground No.9 is academic. AY 2017-18 25. The assessee has raised the following revised grounds:- "1. The order of the learned CIT(A) is against the law and facts of the case. 2. The learned CIT(A) erred in upholding the disallowance of Rs. 2764,48,53,742/- u/s 36(1)(vii). 2.1. The learned CIT(A) erred in holding that the Appellant bank had not written off bad debts. 2.2. The learned CIT(A) failed to appreciate the fact that this issue which was decided in favour of the Appellant has been accepted by the Department. 2.3. The learned CIT(A) failed to appreciate the fact that the Appellant bank had written off bad debts by debiting to Provision account and reducing the same from the Gross Loans & Advances. 2.4....
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....ant bank. 4.4. The learned CIT(A) failed to appreciate the fact that the application of Rule 8D is neither automatic nor mandatory. 4.5. The learned CIT(A) erred in holding that exempt income will always have a notional interest cost attached to it. 4.6. The learned CIT(A) erred in not appreciating the fact that no disallowance towards interest can be made on the facts of the case. 4.7. Without prejudice to the above, the learned CIT(A) failed to appreciate that with effect from AY 2017-18, no disallowance of indirect interest expense can be made. 4.8. The learned CIT(A) erred in not following the decision of the Hon'ble Supreme Court applicable to the facts of the case. 4.9. Without prejudice to the above, the learned CIT(A) failed to appreciate the fact that the disallowance u/s 14A cannot exceed the exempt income. 5. The learned CIT(A) erred in disallowing Rs. 3,00,00,000/- paid to RBI. 5.1. The learned CIT(A) failed to appreciate the fact that the amount paid to RBI is not towards violation of any legal provisions. 6. The learned CIT(A) erred in disallowing a sum of Rs. 1,05,495/- being the club expenses. 6.1. The learned CIT(A) erred in holding that the clu....
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....ich became bad debts (NPA) for the first time during the FY 2016-17 (non-rural) 396,70,85,881 2. Incremental write off of debts which became bad debts (NPA) for the first time during the FY 2015-16 (non-rural) 1037,29,14,905 3. Prudential Write Off of debts (non-rural) Debts written off at the Branch level (non-rural) 1330,48,02,956 4. Total amount claimed as deduction u/s. 36(1)(vii) 2764,48,53,742 5. Rural debts written off adjusted against provision u/s. 36(1)(viia) and not claimed as deduction u/s. 36(1)(viia) 162,71,98,271 27.1 The CIT(Appeals) for similar reasons for AY 2016-17 dismissed this ground of the assessee. 28. After considering the rival submissions, we note that this issue has already been decided for AY 2016-17 in favour of the assessee and the same decision applies mutatis mutandis for AY 2017-18 also. This ground is allowed. 29. Ground No.3 is regarding disallowance u/s. 36(1)(viia) of the Act made by the AO on similar reasons as in AY 2016-17. The CIT(Appeals) on similar reasoning as in AY 2016-17, dismissed this ground of the assessee. 29.1 After considering the rival submissions, we note that this issue has already been decided for AY 2016-17....