TaxTMI 
TaxTMI 
2023 (11) TMI 1146
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.... 2. The learned CIT(A) erred in upholding disallowance 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....
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....T(A) erred in considering only the incremental advance for the purpose of arriving at the deduction u/s 36(1)(viia). 4.2. The learned CIT(A) failed to appreciate the fact that for the purpose of arriving 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....
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....all grounds of appeal, if deemed necessary at the time of hearing of the appeal." 3. The brief facts of the case for AY 2016-17 are that the assessee filed its return of income on 28.11.2016 declaring total income of Rs. 101,07,97,040. The case was selected for scrutiny and assessment u/s. 143(3) was completed on 27.03.2018 assessing total income at Rs. 675,71,81,077/- under the 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 w....
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....can be ascertained only after considering the expenses related to it and such expenses are disallowable under the provisions of section 14A of the Act. Without utilizing the resources and adjusting establishment of assessee bank, it would not have been possible to earn the exempt income and the investment made on shares/bonds/mutual funds etc. for earning exempt income will always have 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 jurisdictiona....
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....this Act. (3) The provisions of sub-Section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in rei-3tion to income which does not form part of the total income under this Act. Provided that nothing contained in this Section shall empower the Assessing Officer either to reassess under Section 147 or pass an order enhancing the assessment or reducing 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 ....
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....rders in assessee's own case, it is submitted that substantial questions of law 1 and 3 become academic and need not be answered by this Hon'ble Court. Therefore, it is most humbly prayed that this Hon'ble Court may be pleased to take the memo on record and pass appropriate orders in the interests of justice and equity." 6. As per the Memo, question Nos.1 & 3 would only be treated as academic and hence, not answered. in view of the same, in 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 ....
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....ly the excess amount of bad debts written off, remaining after such set off, is admissible for deduction u/s. 36(1)(vii). 7.2 On appeal, the assessee submitted before the CIT(Appeals) that it had written off total amount of Rs. 1296,56,16,023 during the year. The entire sum of Rs. 130,81,22,967 being bad debts written off by rural branches has been charged to provisions account made u/s. 36(1)(viia) and there was no excess amount left. Therefore, no deduction has been claimed 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 w....
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....t loan account only, and not to the Profit and Loss account.. However, recovery made in an account which has been written off, is credited to the profit and loss account. Thus, it was argued that the very fact that the recovery is credited to the Profit and Loss account, shows that the loan account has been written off and that the recovery of Rs. 387,05,52,549/- has been offered to tax under section 41(4) during the year under consideration. 8. The CIT(Appeals) noted that the AO has noted two important factual findings; (i) that the appellant bank has not actually 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....
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....ii) and s. 36(2), the account referred to therein shall be only one account in respect of provision for bad and doubtful debts and such account shall relate to all advances, including advances made by rural branches. Further, the scope and effect of this amendment has been explained in the CBDT Circular No.3 of 2014 dated 24.1.2014. He noted that from the Explanatory Memorandum that Explanation 2 to clause (vii) of section 36(1) was inserted by the Finance Act, 2013 only with a view to clarify the legislative intent of existing provisions which was clear from the words "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, th....
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....issue has been decided in favour of the assessee as under:- "12.3 We have heard rival submissions and perused the material on record. We notice that the CIT(A) had expressed the view that provision allowed u/s 36(1)(viia) of the Act would apply to non-rural advances also. An identical issue has been examined by the Hyderabad Bench of the ITAT in the case of State Bank of Hyderabad v. DCIT in ITA No.450/Hyd/2015, ITA No.498 and 499/Hyd/2015 (order dated 14.08.2015) wherein the Tribunal had not accepted the above said view expressed by the CIT(A). The Bangalore Bench of the Tribunal 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 ....
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....sconstrued the statutory provisions while observing that proviso to section 36(1)(vii) would also apply in case of bad debts relating to non-rural advances. The Hon'ble Supreme Court in case of Catholic Syrian Bank Vs. CIT (supra) while analyzing provisions of section 36(1)(vii) and 36(1)(viia) have observed that section 36(1)(viia) applies only to rural advances. The observations made by Hon'ble Apex Court in this regard in paras 26 & 27 of the judgment is extracted hereunder for convenience. "26. The Special Bench of the Tribunal had rejected the contention of the Revenue that proviso to 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 ....
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....t of the write off of the irrecoverable debt(s) under Section 36(1)(vii) in addition to the benefit of deduction for the provision made for bad and doubtful debt(s) under section 36(1)(viia). A reading of the Circulars issued by CBDT indicates that normally a deduction for bad debt(s) can be allowed only if the debt is written off in the books as bad debt(s). No deduction is allowable in respect of a mere provision for bad and doubtful debt(s). But in the case of rural advances, a deduction would be allowed even in respect of a mere provision without insisting on an actual write off However, this may result in double allowance 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 i....
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....g to non-rural advances. In the aforesaid view of the matter, we hold that assessee would be eligible to avail deduction of an amount of Rs. 209.94 crore representing actual write off in the books of account of bad debts relating to nonrural/urban advances in terms with section 36(1)(vii), as proviso to the said section would not apply to non-rural advances. Accordingly, we delete the addition made by AO and confirmed by ld. CIT(A)." 6.5 Following the above said decision, we hold that the view expressed by Ld CIT(A) is not legally correct. Accordingly, we set aside the order passed by Ld CIT(A) with regard to his alternative decision, 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)....
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....d of the last day of each month separately and divided the resultant figure by the number of months comprised therein and this method of working is as per Rule 6ABA and the method adopted by the AO is not in accordance with law. The assessee relied on the following decisions:- 1. Uttarbanga Kshetriya Gramin Bank (2018) (408 1TR 393) (Cal) 2. Canara Bank (2017) (60 ITR (Trib.) 1) (Trib.-Bangalore) 3. Nizamabad District Cooperative Central Bank Ltd Vs /TO (2014)(12 TMI 562)(Trib.-Hyderabad) 4. DCIT Vs Madurai District Central Co-operative Bank Ltd (2014)(51 taxmann.com 194) (Chennai-Trib.) 5. DCIT Vs City Union Bank Ltd in 1TA No 1485/Mds/07 order 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 branch....
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....iod of months for which the advances have been outstanding. This average figure shall be the amount of average advance made by that particular rural branch. In the third step, the average advances of all rural branches (computed separately for each rural branch) have to be aggregates and that total figure shall be the aggregate average advances made by the rural branches. Accordingly, for the first step, the fresh advances made by each rural branch only have to considered. The outstanding amounts against such fresh advances have to aggregated month wise, and then the average of the aggregated sum has to be taken for the period of months for which the advance was outstanding. The process of averaging 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 outstandin....
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.... jurisdictional Assessing Officer (JAO) to consider the effect of jurisdictional High Court ruling in the appellant's own case, as mentioned above, and re-compute, if found necessary, the admissible quantum of deduction in respect of the provisions made by the appellant bank towards bad and doubtful debts under section 36(1)(viia) in that light after providing a reasonable opportunity to the appellant to adduce the supporting evidence in support of its claim. The CIT(Appeals) therefore partly allowed this issue. 15. The ld. AR submitted/reiterated the submissions made before the lower authorities and further submitted that the issue is covered in assessee's own case in ITA No. 208/Bang/2019 & in 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 sett....
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.... 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 in the case of Vijaya Bank Case. Order passed by the Tribunal in Canara Bank's case followed in Vijaya Bank case has attained finality and the Revenue has not challenged the said order. Further, the High Court of Calcutta, while considering an identical situation as recorded thus, "Mr. Khaitan, learned senior Advocate appeared on behalf of the assessee and submitted that the computation to be made as prescribed by rule 6ABA is for the purpose of fixing the limit of the deduction available under section 36(1)(viia). Clauses (a) and (b) in rule 6ABA cannot be given the restricted interpretation. 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 a....
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..... He made various additions to the Book Profit. On an appeal by the Bank, the learned CIT(A) held that the provisions of section 115JB are applicable to the Bank. Further, he also held that the various additions made by the learned Assessing Officer to the Book Profit are as per the provisions of section 115JB and upheld the same. The Appellant Bank has filed an appeal against the order of the learned CIT(A) challenging his decision on the applicability of MAT provisions and also adjustment made to the Book Profit. 2. Our Submissions: 2.1. Issue & the decisions prior to 01-04-2013: Section 115JB(2) of the Income Tax Act, 1961 before its amendment by the Finance Act 2012 w.e.f. 01-04-2013 read as follows: "(2) Every assessee, being a company, 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 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 Ban....
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....statement of profit and loss] for such financial year or part of such financial year falling within the relevant previous year. Explanation. 1 ...................." 2.4. From the above amended section, it can be seen that the provisions of sub clause 2(a) are not applicable to the Bank as decided by various appellate authorities and the High Court. 2.5. Sub clause 2(b) is applicable to a Company to which the second proviso to sub section (1) of section 129 of the Companies Act, 2013 is applicable. It is the submission of the Bank that the second proviso to section 129(1) of the Companies Act 2013 is not applicable to the Bank. 2.6. The second proviso to Section 129(1) of the Companies Act, 2013 reads as follows: "Provided further that nothing contained in this sub-section shall apply to any insurance or banking company or any company engaged in the generation or supply of electricity, or to any other class 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 ba....
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....1882 (6 of 1882) ; (d) the Indian Companies Act, 1913 (7 of 1913) ; (e) the Registration of Transferred Companies Ordinance, 1942 (54 of 1942) ; and (f) any law corresponding to any of the Acts or the Ordinance aforesaid and in force- (1) in the merged territories or in a Part B States (other than the State of Jammu and Kashmir), or any part thereof, before the extension thereto of the Indian Companies Act, 1913 (7 of 1913) ; or (2) in the State of Jammu and Kashmir, or any part thereof, before the commencement of the Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), insofar as banking, insurance and financial corporations are concerned, and before the commencement of the Central Laws (Extension to Jammu & Kashmir) Act, 1968 (25 of 1968), insofaras other corporations are concerned ; and (g) the Portuguese Commercial Code, insofar as it relates to "sociedades anonimas" ....................." 2.14. Based on the above, it can be seen that only a Company registered under the Companies Act 1956 or any other previous Companies Act can be called a Company. 2.15. The Bank is not registered either u....
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.... dated 31- 03-2023 for Asst Year 2016-17 10 217 -227 5 Indian Overseas Bank 2020 (3) TMI 897 - ITAT CHENNAI 29 - 30 181 - 182 6 Damodar Valley Corporation 2017 (8) TMI 1363 - ITAT KOLKATA 4 - 6 104 - 106 7 Rajasthan Financial Corporation 2023 (1) TMI 623 - ITAT JAIPUR 12 199 - 201 2.20. In the case of Greater Bombay Co-Op. Bank Ltd vs United Yarn Tex. Pvt Ltd. & Ors - 2007 (4) TMI 679 SUPREME COURT, the Apex Court was considering a question whether the Recovery of Debts due to banks and Financial Institutions Act, 1993 (the RDB Act) is applicable to certain Co-operative Banks established in Maharashtra & Andhra Pradesh. After analysing various provisions of the BR Act, RDB Act, the Hon'ble Supreme Court held as under: "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 A....
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.... 'banking company, it would have been the easiest way for the Parliament to say that 'banking company' shall mean 'banking company' as defined in Section 5(c) and shall include 'cooperative bank' and 'primary co-operative bank' as inserted in clauses (cci) and (ccv) in Section 5 of Act 23 of 1965." Page 11 The provisions of the RDB Act, which are relevant, are referred to in the following paragraphs. Section 2(d) defines "banks" to mean (i) a banking company; (ii) a corresponding new bank; (iii) State Bank of India; (iv) a subsidiary bank; or (v) a Regional Rural Bank. In terms of clause (e) "banking company" shall have the meaning assigned to it in clause (c) of Section 5 of the BR Act. Page 12 Mr. S. Ganesh, learned Senior Advocate appearing on behalf of the appellant in Civil Appeal Nos.432 to 434 of 2004, vehemently contended that the High Court of Bombay completely failed to appreciate the meaning of "banking company" as defined in Section 5(c) of the BR Act which clearly and indisputably does not cover or include a 'co- operative bank' registered under the MCS Act, 1960 or the MSCS Act, 2002. He s....
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....ction 5(c) of the BR Act. It would have been the easiest thing for Parliament to say that 'banking company' shall mean 'banking company' as defined in Section 5 (c) and shall include 'cooperative bank' as defined in Section 5 (cci) and 'primary co-operative bank' as defined in Section 5 (ccv). However, the Parliament did not do so. There was thus a conscious exclusion and deliberate commission of co-operative banks from the purview of the RDB Act. The reason for excluding co-operative banks seems to be that cooperative banks have comprehensive, self- contained and less expensive remedies available to them under the State Co-operative Societies Acts of the States concerned, while other banks and financial institutions did not have such speedy remedies and they had to file suits in civil courts.(* emphasis applied) Page 20 The language of the Sections in these enactments defining 'banking company' is plain, clear and explicit. It does not admit any doubtful interpretation as the intention of the legislature is clear as afore-said. It is well-settled that the language of the Statutes is to be properly understood. The usual pres....
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....ative banks are defined separately under the BR Act, they cannot be included in the definition of the banking company contained in the said Act. 2.23. The above decision of the Hon'ble Supreme Court squarely applies to the facts of this case also. In this case also, the Appellant Bank is separately defined u/s 5(da) of the BR Act as "corresponding new bank" and therefore, it cannot be included within the term "banking company" as per the said Act. 2.24. Without prejudice to the above, even assuming, but not admitting, that the Appellant Bank has to be treated as a company covered u/s 115JB(2)(b), then, also, the provisions are not applicable since the computation of Book Profit fails. As per first proviso to section 115JB(2), the Assessee has to follow the same accounting policy, accounting standards and method and rates adopted for calculating depreciation as have been adopted for the purpose of preparing a Profit & Loss Account and laid down at its Annual General Meeting in accordance with the provisions of Section 210 of the Companies Act, 1956. In this case, the Bank does not prepare any Profit & Loss Account which is laid down as per the provisions of Section....
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....iam for the following submissions: * The decision has mainly relied on the deeming fiction contained in section 11 of the Acquisition Act. It has been clearly established that the deeming fiction deems the Bank as a company for the purpose of Income Tax Act and not more than that. Therefore, unless the Bank is a banking company as per the provisions of the BR Act, then, it is not covered by the second proviso to section 129(1) of the Companies Act 2013 and as such, it is not covered by section 115JB(2)(b). With due respect, this fact has been overlooked by the Hon'ble Tribunal. * In para 29 of the said decision, the Hon'ble Tribunal has extracted the observations of the Hon'ble Bombay High Court in the case of Union Bank of India (supra). In the said decision, the Hon'ble High Court has noted the second proviso to section 129(1) of the Companies Act 2013. It also noted that the second proviso refers to insurance or banking companies or companies engaged in the generation or supply of electricity or to any other class of company in which form of financial statement has been specified in or under the Act governing such class of company. The Court did not make any ob....
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....tributing dividends on the basis of books profits but paying tax on a substantially lower amount of taxable profits, should be excluded. It is a corporate entity treated as such for the purposes of Income Tax Act 1961 by the virtue of specific legal provisions to that effect, it pays dividends, its taxable profits are substantially lower than book profits, and, therefore, in our humble understanding, there is no good reason not to treat it as a company- at least no good reasons are shown to us. All that has been said is that there is a drafting error in the legislation, by not specifically including the nationalized banks- as for the purpose of some other deduction provisions, but then what this argument overlooks is that definition provision is not the same thing as charging provision or even computation provision, and that the statutory definitionson account of specific provision to that effect in the definition itself, have to yield to the contextual meanings." * In any case, the above observations, based on which the Tribunal concluded its decision, are per incuriam as it runs counter to the interpretation given by the Hon'ble Supreme Court in the case of Greater Mumba....
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....tendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." 33. This Court has, in a plethora of judgments, referred to the aforesaid principles. Suffice it to quote from one of such judgments of this Court in Commissioner of Sales Tax Commissioner, Uttar Pradesh v. Modi Sugar Mills, 1961 (2) SCR 189 at 198: - "In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any assumed deficiency." (*) 34. We are, therefore, of the view that this appeal must be allowed and the judgment of the High Court of Kerala is, accordingly set aside and that of the learned Single Judge restored." (* emphasis applied) 3.3. Base on the above, it is submitted that the decision rendered in the....
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....ssee-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 Act on the ground that it d....
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....e 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." 22.1 The Tribunal has remitted this issue to the CIT(Appea....
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....remental advance for the purpose of arriving at the deduction u/s 36(1)(viia). 3.2. The learned CIT(A) failed to appreciate the fact that for the purpose of arriving 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. 3.3. The learned CIT(A) failed to follow the binding decisions of the jurisdictional High Court and Tribunal. 3.4. 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. 3.5. The disallowance made by the learned Assessing Officer and upheld by the learned CIT(A) is based on surmises and conjunctures. 4. The learned CIT(A) erred in upholding disallowance u/s. 14A of the I.T. Act r.w. Rule 8D, a sum of Rs. 16,69,17,498/- being expenditure incurred towards earning exempt income. 4.1. 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 ....
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....ppellant Bank. 7.1. The learned CIT(A) failed to appreciate that provisions of Section 115JB of the Income Tax Act, 1961 are not applicable to the appellant and as such, is not liable to pay tax under the said provisions. 7.2. Without prejudice to the above, the learned CIT(A) erred in adding various items to arrive at the book-profit which are beyond the scope of the section. 7.3. The learned CIT(A) failed to appreciate the fact that the various items added to the book profits are not covered by the Explanation to Section 115JB 7.3.1. Provision for Bad & Doubtful debts of overseas branches of Rs. 57,25,47,706/- 7.3.2. Provision for investments doubtful of recovery in India of Rs. 1030,64,22,258/- 7.3.3. Provision for depreciation on investments in India of Rs. 158,44,76,728/- 7.3.4. Provision others of Rs. 6,52,75,820/- 7.3.5. Depreciation on ATM of Rs. 20,45,99,668/- 7.4. The learned CIT(A) erred in adding the depreciation on Fixed Assets as per Books and allowing the depreciation as per Income Tax Act, 1961. 7.5. The learned CIT(A) erred in adding an amount of Rs. 18,52,88,935/- being disal....
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....2017-18 also. 31. The assessee raised ground No.5 on the disallowance of Rs. 3,00,00,000 paid to RBI. The AO noted from the tax audit report [col.21(a)] that the assessee bank had debited to the P&L account an amount of Rs. 3.00 crores being expenditure by way of penalty for violation of RBI directions. The assessee admitted that the RBI had imposed this penalty on the bank for lapses on the part of the bank in adhering to KYC norms and deficiencies in internal control mechanism. The AO held that the penalty imposed by the RBI being the regulatory authority for violation of its guidelines was an expenditure for purposes prohibited by law, accordingly he disallowed this sum of Rs. 3.00 crores as per Explanation 1 o section 37. 32. On appeal before the CIT(Appeals), the assessee submitted that penalty was imposed by RBI for non-compliance of certain procedural guidelines and it was in the nature of civil liability and was not for infraction of any law and no criminal prosecution was prescribed for such violations. Therefore, penalty was admissible expenditure u/s. 37. 33.1 The CIT(Appeals) observed that the assessee has merely taken a plea that the penalty was for a civil wr....