TaxTMI 
TaxTMI 
2023 (6) TMI 1441
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....efund of Rs. 1473,59,05,472. The return filed by the assessee was selected for scrutiny and statutory notices under section 143(2) as well as section 142(1) of the Act were issued and served on the assessee. The Assessing Officer ("AO"), vide order dated 29/03/2011 passed under section 143(3) of the Act assessed the total income of the assessee at Rs. 22196,46,82,210 after making certain additions/disallowances to the income declared by the assessee. The learned CIT(A) vide impugned order granted partial relief to the assessee. Being aggrieved, both the assessee and Revenue are in appeal before us. ITA no. 3645/Mum./2016 Assessee's Appeal - A.Y. 2009-10 3. In its appeal, the assessee has raised the following grounds:- "The appellant objects to the order of the Commissioner of Income-tax (Appeals) - 5, Mumbai [CIT(A)] dated 29 March 2016 for the aforesaid assessment year on the following among other grounds: 1. Provision for pension of Rs. 1495,50,00,000 The learned CIT(A) erred in upholding the action of the Assessing Officer in disallowing the appellant's claim in respect of provision for pension amounting to Rs. 1495,50,00,000. 2. Depr....
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....rmining the deduction under section 36(1)(viia). 7.2 The learned CIT(A) erred in not appreciating that even in respect of assets that are classified as standard assets, a part of the debts are doubtful of recovery and accordingly qualifies for deduction under section 36(1)(viia). 8. Taxation of interest on non-performing assets (NPAs) of Rs. 17,46,28,278 The learned CIT(A) erred in confirming the action of the Assessing Officer in making an addition of Rs. 17,46,28,278 in respect of interest on sticky advances that had classified as NPAs by the Bank in terms of RBI guidelines. 9. Taxation of non-performing investments (NPIs) of Rs. 11,93,00,000 The learned CIT(A) erred in confirming the action of the Assessing Officer in making an addition of Rs. 11,93,00,000 in respect of interest on NPIs. 10. Contribution to Retired Employees Medical Benefit Scheme (REMBS) 10.1 The learned CIT(A) erred in confirming the action of the Assessing Officer in making disallowance of Rs. 13 crore in respect of payment towards contribution to Retired Employees Medical Benefit Scheme which was disallowed under section 43B by the Bank in the re....
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....ing in ground no. 1, raised in assessee's appeal, is pertaining to the disallowance of provision for pension. 5. The brief facts of the case, pertaining to this issue, are: During the year under consideration, the assessee made a claim for allowing provision of Rs. 1495.50 crores towards pension liability without actually contributing to the fund. During the assessment proceedings, the assessee was asked to furnish complete working of the provision of the liability as per the actuarial valuation done by the assessee. The AO vide order passed under section 143(3) of the Act did not agree with the submissions of the assessee and held that assessee's claim of deduction is not allowable under section 37(1) of the Act on the following basis:- "(a) Since there are specific provisions for allowing Provisional Liabilities of Pension by way of contribution of employer towards pension benefits, i.e. u/s. (36)(1)(iv) and 36(1)(v) where allowability is subject to several conditions, and Sec. 40A(7) & (9), put several restrictions on allowances of certain expenditure relating to the benefits linked to retirement, a "provision" made for expenses of similar nature will not be allowabl....
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....s liability for such benefits actuarially and obtains a valuation report every year and, on basis thereof, makes a provision in accordance with the Accounting Standards. During the year under consideration, the assessee has adopted AS-15 issued by the ICAI. Accordingly, an actuarial valuation was obtained to determine the additional obligation of the assessee towards pension liability. In accordance with the transitional provisions of AS-15, a provision of Rs. 3,724 crores were made based on the actuarial valuation by debiting the revenue reserves. The details are filed by the assessee in its note filed vide note 18.9 (a)(v)(I) of the financial statements at page no. 73 of the Paper Book - I, filed by assessee. 16. We noted that the above amount was debited to revenue reserves, the assessee claimed a deduction for the same separately in the computation of total income and the relevant details are filed by the assessee at Sr. No III.14 of the computation of total income on page 2 of the Paper Book - I filed by assessee. As consideration for availing of the benefit of the services of the employees during the year it in addition to the salary, bonus, allowances, perquisites, ....
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....actual payment of the gratuity was deferred to a later date on the happening of a certain event, namely, death or voluntary retirement of the employee. But, these were not uncertain events. Therefore, the provision made by the assessee for the payment of gratuity under the agreement dated 14-2-1956, was in the nature of a revenue expenditure in respect of the assessment years under reference". 17. Accordingly, a deduction was claimed in respect of provision for pension liability based on the principle laid down by the Courts, as discussed above. The claim was further supported by the Accounting Standard 1 notified by the Central Government in terms of section 145(2) of the Act, which mandates the adoption of a policy of prudence pursuant to which a provision is to be made for every known liability even though the amount cannot be determined with certainty and represents only a best estimate in the light of available information. But, the Revenue before the Tribunal has emphasised on the following contentions: a. expenditure does not relate to the year under consideration; b. Specific provision of sections 36(1)(iv)/36(1)(v) and 40A(7)/40A(9) of the Act ar....
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....d to the approved scheme and the actuarial valuation of such liability. With a view to bridge the gap a provision of Rs. 3,724 crores have been made during the year. The basis of arriving at this amount is referred by the AO at pages 22 and 23 of his assessment order. The provision in the present case is not for making contribution to any Fund, but for payment of pension to employees on their retirement over and above what they will be entitled to claim from the approved scheme. A bare perusal of sections 36(1)(iv)/36(1)(v) of the Act shows that, they would apply when deduction is claimed of any sum paid by an assessee as an employer towards a recognised provident fund or an approved superannuation fund or an approved gratuity fund. The amount of Rs. 3,724 crores are clearly not a contribution towards any recognised provident fund or approved superannuation fund or approved gratuity fund. Similarly sections 40A(7)/40A(9) of the Act would apply to provision made as an employer towards contribution to fund, or trust or any other entity. We also noted that the amount of Rs. 3,724 crore is not a provision made for contribution to any fund or trust or any other entity. Similarly, sectio....
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....o. 4502/Mum/2013 dated 23.12.2016. The findings of the Tribunal are reproduced below: "It is not disputed that the assessee has made the provision on the basis of actuarial valuation towards the pension of the employees in accordance with Accounting Standard 15, which was applicable from the impugned assessment year. The liability has therefore, definitely arisen during the impugned assessment year although it has to be discharged on a future date. The case of the assessee, in our view, is duly covered by the decision of the Hon'ble Supreme Court in the case of Bharat Earth Movers v. CIT [2000] (245 ITR 428) in which it was held as under: "..................... ........................" The provision of section 43B will not apply to the same as this does not represent the sum payable by the assessee as an employer by way of contribution to pension fund. We, therefore, respectfully, following the decision of Hon'ble Supreme Court delete the disallowance" Hence, this issue is also covered by the Tribunal decision in the case of State Bank of Suarashtra (supra), which has merged with the Assessee. 24. The reliance placed by the lea....
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....ial valuation. Further, it would also be contrary to the judgement of the Supreme Court in the case of Metal Box Co. of India (supra) where the Supreme Court observed that contingent liabilities properly discounted were to be allowed as a deduction. In view of the above factual discussion, legal position based on various decisions, we are of the view that this deduction claimed by the assessee is allowable and hence, allowed. This issue of assessee's appeal is allowed." 8. The learned Departmental Representative ("learned DR") could not show us any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in facts and law was alleged in the relevant assessment year. Therefore, respectfully following the judicial precedent in assessee's own case cited supra, we uphold the plea of the assessee and allow the claim of provision for pension. Accordingly, ground no. 1 raised in assessee's appeal is allowed. 9. The issue arising in ground no. 2, raised in assessee's appeal, is pertaining to depreciation on maturity securities. 10. The brief facts of the case, pertaining to this issue, are: It has been the practice of the assessee to make provisio....
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....deemed. It was contended before the A. O. That in some cases, the companies or the State Governments who had issued the relevant securities were not able to pay the amount due on redemption. The appellant treats these securities as non- performing assets and a provision is made at a certain percentage for diminution in their value as in the case of other non-performing assets. There may be some delay on the part of the companies or the State Governments in paying the redemption amount. But, whenever the payment would be made it cannot be expected to be less than the face value. On the date of maturity, the whole of the amount of redemption money becomes due under the mercantile system of accounting followed by the appellant unless a portion of this amount is written off as bad debt. It is a real income and hence has to betaxed as such under the mercantile system followed by the appellant. Reliance in this regard is placed on State Bank of Travancore vs. CIT 158 ITR 102, 155 (SC) which was followed in Western India Oil Distributing Co. Ltd. Vs. CIT 206 ITR 359 (Bom). It was held in this decision that the concept of real income should not be so read as to defeat the provisions of the....
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.... leased assets. 15. The brief facts of the case, pertaining to this issue, are: During the assessment proceedings, referring to the addition made on this issue in the assessment year 2008-09, the assessee was asked to explain as to why the addition should not be made on similar lines in this year. The assessee was also asked to furnish details of leased rentals and apportionment thereof between the principal and finance income. In response thereto, the assessee submitted that the claim of depreciation in the return of income is Rs. 9,43,69,363. The depreciation on these assets as per books of Rs. 24.02 crores has been added back in the computation of total income. The assessee further submitted that the capital recovery component included in the leased rental credited to the profit and loss account and offered for taxation is Rs. 5,89,64,762. The assessee also submitted there is no new lease transaction entered in the year under consideration. The AO vide order passed under section 143(3) of the Act by relying on the discussion made in the assessment order for the assessment year 2008-09 disallowed the depreciation claimed on leased assets. The learned CIT(A), vide impugned orde....
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....s impossible in the facts and circumstances of the case and therefore it was not the real intention of the parties even reflected from the lease agreement. Some of the relevant clauses of the agreement are as under: "1.5 The Acquisition Cost of the equipment shall be the Invoice Value of the Equipment inclusive of levies on important of the Equipment, Customs Duty, Central Excise Duty, Sales Tax, Additional Tax, Surcharge on Sales Tax, Interest Tax, where applicable, Turnover Tax, where payable and all other costs and expenses, as the case may be such as Freight, Octroi, Entry Tax, Erection and Installation Charges, Commissioning Charges, Testing Charges paid or payable in respect of the Equipment or value assessed by the valuers as per clause 2.2. Below whichever is lower. In case the Lessee proposes to avail MODVAT on the specified Excise Duty paid in terms of the Central Excise Rules, 1944, of which due intimation will be given by the Lessee to the Lessor, the acquisition cost will not include Excise duty payable on the equipment. 1.6 The Lessee hereby takes on lease the Equipment for the Fixed period from the Commencement Date as hereinafter referred to subjec....
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....2 Keep the Equipment at all times in the possession and control of the Lessee at the Lessee' s Factory or Premises as indicated in the Proposal and at the address as specified in Part I of the First Schedule hereto and not remove the same from the place so specified where it is installed without the consent in writing of the Lessor: 8.3 notify the Lessor of any change in the Lessee' s address and upon request by the Lessor promptly inform the Lessor of the whereabouts of the Equipment: 8.4 not do or omit to do any act which may result in seizure and/or confiscation of the Equipment by the Central or State Government or Local Authority or any Public Officer or Authority under any law for the time being in force: 8.5 not sell, assign, sub-let, pledge, mortgage, charge, encumber, or part with possession of or otherwise deal with the Equipment or any interest therein nor create or allow to be created any lien on the Equipment whether for repairs or otherwise and in the event of any breach of this sub-clause by the Lessee, the Lessor shall be entitled to call upon the Lessee to have the lien or charge or other encumbrance lifted at its cost and in the event of....
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....takes to comply with and observe at all times all the terms and conditions to be complied with or observed in respect of the use and operation of the Equipment so as to entitle the Lessor to obtain such relief. 8.9 The Lessee irrevocably agrees that if due to incremental taxes whether on account of the impact of the sales tax legislation in the various States as applicable or on account of customs duty or excise duties or any other related and consequential taxes or charges levied or leviable on this transaction now or hereafter as also due to any increase in the purchase price of the Equipment covered by this Agreement on account of purchase tax and/or any other tax or imposition or due to tax on the right to use goods as may be applicable to the Equipment the Acquisition Cost of the Equipment stands increased, then the Lessor reserves the right to increase the Lease rentals proportionate thereto and on such notification by the Lessor to the Lessee, the Lease Rentals shall correspondingly stand increased from the date specified by the Lessor in such notification. 12. Events of Default: An event of default shall occur hereunder, if the Lessee- 12....
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....f the Equipment or any part thereof is affixed to such land or buildings, the Lessor or its employees or agents shall be entitled to server the same therefrom and to remove the Equipment or part thereof so severed and the Lessee hereby agrees that it shall not hold the lessor for any damage done responsible for and to make good at its expense all damage caused to the land or buildings by such removal. 15. Sale of Equipment on termination of the Agreement: Upon the termination of this Agreement unless the Lessee has elected to renew the lease for a further fixed period or secondary period the Lessor shall as the absolute owner of the Equipment be at liberty to sell any or all of the Equipment at a public or private sale or otherwise dispose of, hold, use, operates, lease to others or keep idle such Equipment, all free and clear of any rights of the lessee and without any duty to account to the Lessee for such action or inaction or with respect to any proceeds thereto and if such Equipment is sold the price obtained upon such sale shall not be questioned or challenged by the Lessee more shall the Lessee question or dispute the exercise or non-exercise by the Lessor ....
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.... could not be given effect in practical. For instance, in case of default if the assessee terminates the lease agreement in question then it is not possible for the assessee either to take the possession of the asset in question because of the nature of asset which could not be separated from the railway network or remove the asset from the place of its existence being part of the railway network. Further apart from the lessee the asset cannot be transferred or assigned to anybody else as it is not possible to use only a particular stretch of railway track without connecting or being a part of the entire network. Thus, the terms and conditions as heavily relied upon Ld. AR would not help the case of the assessee to establish that the asset in question could actually be taken in possession by the assessee. Therefore, the assessee cannot exercise the real and actual ownership over the asset keeping in view the facts and circumstances and nature of the asset in question. The Special Bench of this Tribunal in case of IndusInd Bank Ltd. (supra) by following the decision of Hon'ble Supreme Court in case of Asea Brown Boveri Ltd. Vs Industrial Finance Corporation of India (IFCI) 154 Taxma....
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....ease the asset is normally selected by the lessee himself so as to suit his particular requirements. h. Normally an operating lease is non payout whereas a finance lease is full payout. Full payout lease means that the lessor recovers the full value of the leased asset plus the finance cost over the period of first lease. Full payout lease is peculiar to finance lease. On the other hand, a non payout lease is one where the lessor is not interested in recovering his principal investment plus interest from one lessee only because he may lease out the same asset over and over again. Though no single lease recovers the principal amount plus interest component of the lessor but all the leases taken together make it a full payout. That is why the non payout lease is peculiar to operating lease." 22. The Special Bench then analysed the various factors of distinction between operating lease and finance lease in para 5.21-5.23 as under: "5.21 From the above points of distinction between operating lease and finance lease, the salient features of operating lease have become glaring. Now let us ascertain as to whether the above clauses, claimed by the id. AR as amply....
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....ll the factors for and against the operating lease, it can be easily found out that if one has to choose between the finance lease and operating lease, there can be no difficulty in reaching the irresistible conclusion that it is a case of finance lease agreement. In pith and substance this agreement is nothing but a finance lease." 23. In the case in hand the lease is for fix period of 84 months during which the assessee would recover the full value of lease asset with finance cost being interest as agreed between the parties. All the costs regarding loss and obsolences, repairs, maintenance, insurance etc. Are to be born by the lessee. Thus the risk and reward of ownership of the asset vested with the lessee and therefore for all practical purposes the ownership of the asset was vested with the lessee and not with the assessee. The terms of the agreement are designed in a manner so that in any eventuality the assessee would recover the investment (cost of asset) with interest and not the asset in question. As discussed in the foregoing paras the title over the asset as per the lease agreement is only for securing the financial interest of the assessee and not intended to....
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....naging agent or secretary and treasurer] of a company; (c) contracting for public and private loans and negotiating and issuing the same; (d) the effecting, insuring, guaranteeing, underwriting, participating in managing and carrying out of any issue, public or private, of State, municipal or other loans or of shares, stock, debentures, or debenture stock of any company, corporation or association and the lending of money for the purpose of any such issue; (e) carrying on and transacting every kind of guarantee and indemnity business; (f) managing, selling and realising any property which may come into the possession of the company in satisfaction or part satisfaction of any of its claims; (g) acquiring and holding and generally dealing with any property or any right, title or interest in any such property which may form the security or part of the security for any loans or advances or which may be connected with any such security; (h) undertaking and executing trusts; (i) undertaking the administration of estates as executor, trustee or otherwise; (j) establishing and supporting or aiding in the establishment ....
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....hes of the Bank. Para 1 (ii) which is relevant for our purpose reads as under: "(ii) These activities should be treated on par with loans and advances and should accordingly be given risk weight of 100 per cent for calculation of capital to risk asset ratio. Further, the extant guidelines on income recognition, asset classification, asset classification and provisioning would also be applicable to them." Paras 1(v) and (vi) which are also relevant read as under:- "(v) Banks undertaking equipment leasing departmentally should follow prudential accounting standards. The entire lease rental should not be taken to the bank' s income account. It would be recognized that lease rentals comprise two elements a finance charge (i.e. interest charge) and a charge towards recovery of the cost of the asset. The interest component alone should be taken to the income account. The component representing the replacement cost of the asset should be carried to the balance sheet in the form of a provision for depreciation. (vi) As a prudent measure, full depreciation should be provided for during the primary lease period of the asset. The period of lease should not ....
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....ed depreciation on leased asset and also showed full amount of lease rental as income in contravention of para 1(v) of the afore noted RBI Circular. When the Assessing Officer concluded that the instant lease cannot be characterized as finance lease, the assessee requested the A.O. that in case the depreciation on the leased asset to assessee is not to be granted by treating it as a loan transaction, then the capital recovery embedded in the lease rental should not be charged to tax. This issue has been discussed in para 2.30 of the assessment order. Acceding to the assessee's request, the Assessing Officer excluded the portion of capital recoveries from the rental income. Thus it can be observed that the action of the A.O. is fully in consonance with the RBI Circular which states that in case of equipment leasing the entire lease rental should not be treated as bank' s income but only that component of such lease rental which represents finance charges i.e. interest should be recognized as income alone. 5.27 We, therefore, approve the view taken by the authorities below in coming to the conclusion that the lease agreement under consideration is that of finance lease and n....
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....g the decision of Special Bench of this Tribunal in case of Indusind Bank Ltd.. we hold that the transaction in question is finance lease and not operating lease. Accordingly, we uphold the orders of the authorities below qua this issue." 17. We find that the coordinate bench of the Tribunal in assessee's own case in subsequent assessment years rendered similar findings following the decision rendered in the assessment year 1996-97. We find that the Hon'ble jurisdictional High Court vide its order dated 23/08/2016 in ITA no. 271 of 2014 admitted the appeal filed by the assessee on this issue, however, the operation of the order was not stayed. Since a similar issue has already been decided in assessee's own case for the preceding assessment years, therefore, we see no reason to deviate from the view so taken, in absence of any allegation of change in facts and law. Therefore, respectfully following the judicial precedent in assessee's own case cited supra, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. Accordingly, ground no. 4 raised in assessee's appeal is dismissed. 18. The issue arising in ground no. 5, raised in assessee's appeal, ....
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....he provision for bad and doubtful debts accounts made under section 36(1)(viia) of the Act. Further, as per section 36(2)(v) of the Act, where a debt made by the assessee to which section 36(1)(viia) of the Act applies, no deduction shall be allowed unless the assessee has debited the amount of such debt to the provision for bad and doubtful debts account made under section 36(1)(viia) of the Act. On a conjoint reading of the aforesaid provisions, it can be inferred that sections 36(1)(viia) and 36(2)(v) of the Act and the first proviso to section 36(1)(vii) of the Act, apply only to rural advances. 57. We noted that, as reliance placed by assessee, this issue is decided in favour of the assessee by the Supreme Court judgment in the case of The Catholic Syrian Bank Ltd. vs. CIT [2012] 343 ITR 270 (SC). The Supreme Court was concerned with a case where the assessee had claimed a deduction under section 36(1)(vii) of the Act pertaining to urban advances. The deduction was not allowed to the assessee on the basis that deduction under section 36(1)(vii) of the Act can be allowed only to the extent it is in excess of the provisions created and allowed as a deduction under claus....
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.... for interpretation of legislation is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. In the present case, the legislature stipulated a fixed date i.e. 01.04.2014 while inserting Explanation 2 to section 36(1)(vii) of the Act. In view of the above, we are of the view that assessee is entitled to deduction under section 36(1)(vii) of the Act being the amount of bad debts written off (other than in respect of rural advances). This issue of assessee appeal is allowed." 21. The learned DR could not show us any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in facts and law was alleged in the relevant assessment year. Therefore, respectfully following the judicial precedent in assessee's own case cited supra, we uphold the plea of the assessee and allow the claim of deduction under section 36(1)(vii) in respect of non-rural advances. Accordingly, ground no. 5 raised in assessee's appeal is allowed. 22. The issue arising in ground no. 6, raised in assessee's appeal, is pertaining to depreciation on securities. 23. The brief facts of the case, pertaining to this ....
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....ion on this account vide note 24 to the revised return of income. 63. We noted that revenue rejected the claim of the assessee following the decision of the Mumbai Tribunal in the case of Deutsche Bank AG. The CIT(A) upheld the disallowance made by the AO following the earlier years order of CIT(A) for assessment year 2007-08. The Revenue before the Tribunal has emphasised on the applicability of Mumbai Tribunal' s decision in the case of Deutsche Bank AG and that the valuation is as per RBI guidelines. It was contended by the assessee that it is a well settled principle of law that unrealised gains on stock are not to be brought to the tax net. Reliance in this regard is placed on the decision of the Supreme Court in the case of Chainrup Sampatram vs. CIT [1953] 24 ITR 481 (SC), wherein it is held that profit cannot "arise out of the valuation of the closing stock". The relevant extract of the judgement of the Supreme Court is reproduced below: "While we agree with the conclusion that no part of the profits of the firm in the accounting year can be said to have accrued or arisen at Bikaner, the reasoning by which the learned Judges arrived at that conclusion seem....
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....h the assessee has not realised. The relevant extract of the judgement of the Supreme Court is reproduced below: "The valuation of the closing stock at market value invariably will create a problem. For if the market value is higher than cost, the accounts will reflect notional profits not actually 26 stoppel. On the other hand, if the market value is less, the assessee will get the benefit of a notional loss he has not incurred. Nevertheless, as mentioned earlier, the ordinary principles of commercial accounting permit valuation "at cost or market price, whichever is the lower' . [para 27] The proper practice is to value the closing stock at cost. That will eliminate entries relating to the same stock from both sides of the account. To this rule custom recognises only one exemption and that is to value the stock at market value if that is lower. But on no principle can one justify the valuation of the closing stock at a market value higher than cost as that will result in the taxation of notional profits the assessee has not 26 stoppel. [para 28]" 65. In Sanjeev Wollen Mills vs. CIT [2005] 279 ITR 434 (SC), the Supreme Court was concerned with a case whe....
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....t or market price in respect of securities. Accordingly, the method of valuation followed by the assessee is required to be accepted. Reliance in this regard is placed on the following decisions: * CIT vs. Bank of Baroda [2003] 262 ITR 334 (Bombay) * CIT vs. Corpn. Bank Ltd. [1988] 174 ITR 616 (Karnataka) Further, the issue was not disputed upto financial year 2003-04 and hence, the AO is not justified in taking a different view. 68. The assessee also relied on the judgement of the Bombay High Court in the case of Union Bank of India dated 08.02.2016 in ITA 1977 of 2013. The assessee in this case for the purpose of its books was netting off the depreciation in its securities against appreciation in other securities while for tax purpose, the assessee has been claiming gross depreciation that is without netting of the appreciation in other securities held as a part of investment. The Bombay High Court has dismissed the appeal of the Revenue and has decided the issue in favour of the assessee. It is argued that the facts of the present case are exactly same as in the aforesaid case of Union Bank of India. This issue stands covered by the judgement ....
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....id not account for in the financial statement the anticipated/contingent profits from the contracts to the extent not settled as on the last day of the accounting year whereas any loss on such contracts was provided for by a charge in the profit and loss account on the best estimates. The Department brought to tax the profit on such forward exchange contracts and stated that one method for valuation of the entire stock of securities should be followed. This resulted in a situation of taxing appreciation of stock, which goes against the general and settled principle of non-taxation of notional income, as laid by the Supreme Court in the case of Sanjeev Wollen Mills vs. CIT [2005] 279 ITR 434 (SC) and others discussed supra. Hence, we are of the view that this disallowance of depreciation/ reducing of depreciation on appreciation in the value of securities held as available for sale and held for trading category are allowable. We direct the AO accordingly." 25. The learned DR could not show us any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in facts and law was alleged in the relevant assessment year. Therefore, respectfully followin....
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....y, the A.O. disallowed the deduction claimed under section 36(1)(viia) of the Act in respect of provisions on standard assets. 28. The learned CIT(A), vide impugned order dated 29/03/2016, after noting that this issue is recurring in nature dismissed, the appeal filed by the assessee ss by following the findings of its predecessor-in-office in assessee's own case for the assessment year 2007-08. Being aggrieved, the assessee is in appeal before us. 29. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench of the Tribunal in assessee's own case in State Bank of India (supra) for the assessment year 2008-09, vide order dated 03/02/2020, while deciding similar issue observed as under:- "71. We have noted the facts that the assessee has claimed that provision for standard assets should be taken into consideration for computing the deduction under section 36(1)(viia) of the Act. The assessee has also filed the details vide note 17 and Annexure 6 to the revised return of income on pages 8, 9 and 20 of Paper Book - 1 filed by assessee. As per the provisions of section 36(1)(viia) of the Act, a bank is....
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....standard assets, a part of the debts are doubtful of recovery. The fact that a provision is made for standard assets by itself indicates that a part of the standard assets are doubtful of recovery. Accordingly, the entire provision made by the assessee, including in respect of standard assets, is for bad and doubtful debts as envisaged by section 36(1)(viia) of the Act. Thus, in light of above, the assessee is eligible to claim deduction under section 36(1)(viia) of the Act even in respect of the provision made for standard assets. This issue was considered by the ITAT in assessment year 2006-07 in ITA 3145/Mum/2009 dated 6.09.2016, in an appeal against the revision order of the CIT passed under section 263 of the Act, wherein it is held as under: "So, however, we may also clarify that we are in principle in agreement that a provision for bad and doubtful debts cannot include that against standard assets i.e. which the bank (assessee) itself regards as good for receipt and, therefore with the decision by the tribunal in Bharat Overseas Bank Ltd. (supra) relied upon by the Revenue. A provision by definition a charge against profits, while that in respect of an asset, consid....
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....dents in assessee's own case cited supra, we uphold the plea of the assessee and allow the claim of deduction on provisions for standard assets under section 36(1)(viia) of the Act. Accordingly, ground no. 7, raised in assessee's appeal is allowed. 31. The issue arising in ground no. 8, raised in assessee's appeal, is pertaining to the taxation of interest income from Non-Performing Assets ("NPA"). 32. The brief facts of the case, pertaining to the issue, are: During the assessment proceedings, on a perusal of the annual report, it was noticed that the interest income pertaining to NPA comprises of non-performing assets of advances, leases, and investments, however, overdue interest on investment and bills discounted was not recognised on accrual basis. Therefore, the assessee was asked to furnish the details of such interest and an explanation of the above accounting treatment. In response thereto, the assessee submitted that it has computed such income in respect of such NPA not included on the accrual basis in accordance with RBI guidelines. The assessee further submitted that it should also be allowed the relief under section 43B of the Act on the basis of RBI guidelines.....
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....d or doubtful and the rule should be framed having regard to the guidelines; c. without prejudice, a deduction should be allowed of such interest as bad debts. 80. In relation to the above, it was argued that the provisions of section 43D of the Act provide that the categories of bad or doubtful debts would be prescribed having regard to the guidelines issued by the RBI in relation to such debts. In other words, the Legislature envisages that the RBI guidelines are the primary criteria for determining whether a debt is bad or doubtful and the categories prescribed in rule 6EA necessarily have to follow the RBI guidelines. Accordingly, rule 6EA operates in a very narrow scope and has to be read in conjunction with RBI guidelines. 81. We have gone through the case law in American Express Bank Ltd. vs. Addl. CIT [2012] 25 taxmann.com 572 (Mumbai), wherein the Mumbai Tribunal was considering a case where the loans on which interest/principal remained unpaid for 90 days were classified as no-accrual loans. The unpaid interest in respect of such loans was reversed to an account called Reserve for Doubtful Interest (RFDI) account. All subsequent interest accrual....
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....ld not show any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in facts and law was alleged in the relevant assessment year. Therefore, respectfully following the judicial precedents in assessee's own case cited supra, we uphold the plea of the assessee, and the addition made by the AO on this issue is hereby deleted. Thus, ground no. 8, raised in assessee's appeal is allowed. 36. The issue arising in ground no. 9, raised in assessee's appeal, is pertaining to taxation of Non-Performing Investment ("NPI"). 37. The brief facts of the case, pertaining to the issue, are: Since the overdue interest on investments and bills discounted was not recognised on the accrual basis, the assessee was asked to furnish the details of such interest and an explanation on this accounting treatment. In response thereto, the assessee submitted that the interest on performing investment is booked on an accrual basis and is recognised as income at the time it becomes due. It was further submitted that in case the interest is not received within 30 days from the date on which it becomes due, the same is treated as overdue interest which becomes non-perfor....
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....preme Court in the case of Sothern Technologies and held that provisions of other enactment which contain a non obstante clause, would override the provisions of the Act. In view of the above, the Delhi High Court held that the interest on inter corporate deposits recognised as NPA, in terms of the directions of RBI was not taxable. The aforesaid decision of Hon'ble Delhi High Court in the case of Vasisth Chay Vyapar Ltd. (supra) has been affirmed by Hon'ble Supreme Court in thecase of CIT vs. Vasisth Chay Vyapar Ltd. [2019] 410 ITR 244 (SC). 86. In view of the above decision of Hon'ble Delhi High Court in the case of Vasisth Chay Vyapar Ltd. (supra), which was affirmed by Hon'ble Supreme Court, the facts and circumstances are exactly identical in the present case before us and hence, respectfully following the same, we delete the addition of interest income from nonperforming Investments made by the AO. This issue of assessee's appeal is allowed." 40. The learned DR could not show any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in facts and law was alleged in the relevant assessment year. Therefore, respectfully following....
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....on 43B of the Act. Accordingly, the AO held that the assessee was not under any statutory obligation for contribution towards Retired Employees Medical Benefit Scheme, and disallowed the sum paid towards the said Scheme. 43. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee on this issue by placing reliance upon the directions issued by the Dispute Resolution Panel in assessee's own case for the assessment year 2012-13. Being aggrieved, the assessee is in appeal before us. 44. Having heard the submissions of both the sides and perused the material on record, we find that coordinate bench of the Tribunal in assessee's own case for the assessment years 1997-98 and 1998-99 in ITA no. 3823-3824/Mum./2005, vide order dated 29/04/2016, while deciding similar issue observed as under:- "We have heard the rival submissions and perused the materials before us. We find that in the case of State Bank of Travancore(supra), the AO had disallowed the claim of the Bank in respect of the contribution to medical benefit scheme, amounting to Rs. 50.00 lakhs. The AO. Was of the opinion that the provision of section 40A(9) of the Act were applicable and ....
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....ool of Economics ("LSE"). 47. The brief facts of the case, pertaining to this issue, are: During the assessment proceedings, from the perusal of Notes accompanying computation of income with the revised return, it was observed that the assessee has made a claim in respect of amount paid for setting up a chair in LSE from Research and Development Fund account, though in the computation of income, no such claim has been made. Accordingly, the assessee was asked to justify whether the expenses have been incurred wholly and exclusively for the purpose of business. In the absence of a satisfactory reply from the assessee, the AO vide order passed under section 143(3) of the Act treated the amount as not for the purpose of business and accordingly disallowed the claim made by the assessee in the Notes accompanying computation of income. The AO further held that even otherwise the claim is not allowable as the same has not been made in the revised return of income. The learned CIT(A) vide impugned order dismissed the appeal filed by the assessee on this issue by following the decision of its predecessor in assessee's own case for the assessment year 2004-05. Being aggrieved, the assess....
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....India (supra) for the assessment year 2008-09, vide order dated 03/02/2020, while deciding similar issue observed as under:- "88. Brief facts are that during the year under consideration the assessee has recovered bad debts written off in earlier years, in respect of which no claim for deduction was made under section 36(1)(vii) of the Act in the past. The assessee raised an additional ground before the CIT(A) in this regard. But, the CIT(A) has dismissed the additional ground raised on the basis that a similar issue was decided against the assessee by the CIT(A) in assessment year 2007-08 and that the facts of this issue are not verified during the assessment proceedings and appellate proceedings. 89. The Revenue before the Tribunal has emphasized that the claim made for deduction under section 36(1)(viia) of the Act and also under section 36(1)(vii) of the Act, to the extent the write off exceeds the opening credit balance for the provision made for bad and doubtful debts and that even if the assessee has not claimed deduction under section 36(1)(vii) of the Act, but has claimed a deduction under section 36(1)(viia) of the Act, the same will be hit by the provis....
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....nce should have been claimed by the assessee in respect of a loss, expenditure or trading liability. A deduction under section 36(1)(viia) of the Act is not for a loss, expenditure or trading liability, but for a provision for bad and doubtful debts. We noted that the learned CIT Departmental Representative had raised a contention that the CIT(A) and AO have not perused the details and, hence, the matter may be restored back which was opposed. In relation to the above contention, without prejudice to the assessee's objection in the event the matter is proposed to be remanded back to the AO, a direction may be given to the AO to delete the addition, if the recovery of the amount is in respect of a write off claimed and allowed as a deduction under section 36(1)(viia) of the Act and not under section 36(1)(vii) of the Act in the earlier years. 92. In view of the above discussion, we are of the view that principally the assessee is entitled for claim of deduction under section 36(1)(viia) of the Act, which has rightly been claimed. The assessee has not made claim under section 36(1)(vii) of the Act in this regard. Hence, we allow the claim of assessee but the matter is restor....
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....e India is not to be taxed in India in light of the tax treaties between India and the countries where the branches are located, as the income has been subject to tax in foreign countries. The details of the income earned by foreign branches were submitted to the AO vide Annexure 1 of letter dated 19.02.2010 and now enclosed in assessee paper book 1 at page 325. It was contended that the assessee raised an additional ground before the CIT(A) in this regard. However, the CIT(A) dismissed the additional ground raised by the assessee on the basis that a similar issue was decided against the assessee by the CIT(A) in assessment year 200708 and that the facts of this issue are not verified during the assessment proceedings and appellate proceedings. 96. The Revenue before the Tribunal emphasized that no details were filed before the AO in connection with income from foreign branches and that the Notification no. 91/2008 dated 28 August 2008 issued under section 90(3) by the CBDT is Clarificatory in nature and applicable to the assessee for the year. 97. During the course of the hearing, it was pointed out that the details of income earned by foreign branches were submi....
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.... judgment of the Supreme Court. 98. Without prejudice to the above argument made was that even if it held that the above notification is applicable, the same can be said to be applicable prospectively (i.e. from assessment 2009-10 onwards) and, hence, is not applicable for the year under consideration. Reliance in this regard, is placed on the decision of the Supreme Court in case CIT vs. Vatika Township (P.) Ltd. [2014] 367 ITR 466 (SC), wherein it was held that one established rule for interpretation of legislation is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. Similar view has been taken by the Madras High Court in V.R.S.M Firm[1994] 208 ITR 400 (Madras). 99. We noted from the above discussion that this issue is squarely covered by the decision of Bank of India (supra), wherein the co-ordinate Bench held that income attributable to foreign branches being permanent establishment outside India cannot be taxed in India, having regard to the mandate given in Article 7(1) of the DTAA. This view has been affirmed by Hon'ble Bombay High Court. Since, the issue is squarely covered by the deci....
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....the method for elimination or avoidance of double taxation provided in such agreement." 60. Therefore, as is evident from section 90(3) of the Act, the same refers to term used but not defined both in the Act as well as in the tax treaty. Thus, we find no basis in the submission made on behalf of the assessee that the aforesaid notification has no applicability to the tax treaty. Further, the word "term" used in section 90(3) of the Act not only means a word but also means a phrase and thus cannot be restricted to words such as salary, dividend, etc. as claimed by the assessee but also includes phrase such as "may be taxed" as used in the tax treaty. 61. We further find that the aforesaid notification as well as the aforesaid decision of the Hon'ble jurisdictional High Court in Bank of India (supra) was considered by the coordinate bench of the Tribunal in Technimont (P.) Ltd. v/s ACIT, [2020] 116 taxmann.com 996 (Mumbai - Trib.). The coordinate bench of the Tribunal, after taking into consideration the change in legal provisions, i.e. amendment to section 90 of the Act w.e.f. 01/04/2004 and also the decisions rendered in the case of Bank of India for subsequent years, observ....
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....gadan Chettiar's judgment. That is simply unacceptable. While we restrain from making any observations on the conduct of the representatives of the assessee, we find it difficult to believe that a big-4 accounting firm, as the assessee's representative before the DRP, as indeed before us, is, would really be oblivious of the correct legal position and it was anything less than a calculated ignorance, before the DRP, on the basic legal position. Advising the correct legal position and then making whatever aggressive claim one makes is one thing, but not explaining the correct legal position and then hoping to succeed with the claim, by keeping the adjudicator in dark about the statutory developments, is quite another. The path chosen by the assessee could have fallen in the first category if submissions were made before the DRP about the amendment in law by way of Section 90(3) and notification thereunder, and yet the exemption claim was to be justified due to no fresh notification being issued after the substitution of section 90(3) with effect from 1st October 2009. That is not the case. In any case, the DRP decisions cannot fetter our adjudication. 17. We have al....
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....more innovative plea now. He submits that above decision is per incuriam for some other reason, which has not been discussed in any judicial precedent so far, inasmuch as it overlooks the fact that the notification dated 28th August 2008 was not issued in the context of the business income, and, should accordingly not be applicable so far as business income earned abroad, as in this case, is concerned. We see no substance in this plea either. The notification deals with connotations of the expression "may be taxed", appearing in the tax treaties entered into by India, and there is absolutely no basis whatsoever to support the proposition that the effect of the notification has to be restricted in its application to non-business income only. No such differentiation in treatment of business and non-business income is envisaged in the said notification, nor to do we see any justification for inferring the same. Learned counsel does not have any material whatsoever in support of the proposition canvassed by him, nor does this proposition make any sense on the first principles- inasmuch as once the notification is issued without any such specific restriction for application to business ....
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....6(1)(vii) of the Act in terms of the decision of the Hon'ble Supreme Court in the case of Vijaya Bank (supra). During the year, the assessee has created a provision for non-performing assets of Rs. 2000.94 crore (excluding the provision for standard assets of Rs. 566.97 crore). The assessee filed these details vide note no 18.9(k) of the financial statements on page 81 of Assessee Paper Book-I. The assessee had claimed a deduction under section 36(1)(viia) of the Act in the revised computation of total income amounting Rs. 2567 crore. The AO recomputed the deduction under section 36(1)(viia) of the Act on the basis of the assessed income to Rs. 3652 crore. 102. We noted that the assessee now raised an additional ground, to claim a deduction under section 36(1)(vii) of the Act in respect of the provision for bad debts of Rs. 2000.94 crore (excluding the provision for standard assets of Rs. 566.97 crore), in accordance with the decision of the Supreme Court in the case of Vijaya Bank (Supra).The assessee claimed that if the aforesaid claim is allowed, the deduction under section 36(1)(viia) of the Act as allowed by the AO may be withdrawn. In relation to the Departmental rep....
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....d: * 3.01.2014 (in MA. no. 371/M/14) for the assessment year 1996-97 (para no. 5), where the AO has allowed the deduction in the order giving effect to the Tribunal' s order. * 29.04.2016 for the assessment years 1997-98 and 1998-99 (refer para 10 and para 21), where the AO allowed the deduction in the order giving effect to the Tribunal' s order. However, the CIT exercising power of revision under section 263 of the Act, set aside the matter. The appeal filed by the assessee before the Tribunal against the aforesaid order under section 263 of the Act is heard on 14 March 2019 and the Tribunal' s order is awaited. * 31.01.2018 for assessment year 1999-00 (refer para 34 to 36 on page 43 to 45), where the AO is yet to pass the order giving effect to the Tribunal' s order. Moreover, the AO in the assessee's own case, while passing the assessment orders for Ays 2011-12 to 2015-16 has allowed the claim of deduction under section 36(1)(vii) as per Supreme Court' s ruling in the case Vijaya Bank. 106. Hence, we are of the view that this issue needs to be set aside to the file of the AO and AO will decide the issue after examining the facts afresh. Hence....
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....facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no disallowance under section 14A read with Rule 8D(2)(ii) is called for, thereby granting relief to the assessee, overlooking the fact that the AO had correctly made the disallowance, as the assessee could not establish the nexus between its own funds and investments made in tax free income. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to restrict the disallowance u/s. 14A r.w.r 8D(2)(iii) by excluding the long term investments in subsidiary/group concerns relying on the decision of ITAT in the case of Garware Wall Ropes Ltd. (65 SOT 86), without appreciating the fact that the decision of the ITAT has not been accepted by the department and appeal has been admitted by the Hon'ble High Court. 8. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in treating loss on account of depreciation of securities in HTM category/amortization of securities in HTM category without appreciating that no depreciation is to be provided for investment classified under the HTM category. ....
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....e assessee was asked to explain as to why the interest accrued but not due claimed in the computation of income shall not be disallowed and added to its income. In response thereto, the assessee submitted that it is the practice of the assessee to account for the interest on securities on an accrual basis while arriving at the book profit, however, in the return of income, the interest on securities is taxed on due basis. It was further submitted that the right to receive interest on securities arises on the due date only which was after the accounting year and accordingly, it cannot be taxed in the accounting year itself. The AO vide order passed in section 143(3) of the Act did not agree with the submissions of the assessee and held that to arrive at a correct and undistorted profit, the method of accounting of interest on an accrual basis is correct and also falls in line with the RBI guidelines. Therefore, it was held that the assessee is totally incorrect in excluding interest accrued but not due for income tax purposes. The learned CIT(A), vide impugned order, after noting that this issue is recurring in nature, allowed the appeal filed by the assessee on this issue by follow....
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....ng with a covering letter which was taken on record. We find that in the profit & loss account the year ended 31.12.1987, interest on Govt. securities amounting to 7 138,06,30,075/-has been included in the credit side. However, in the computation of total income for income tax purposes, the interest has been reduced from the net profit and interest of 138,06,30,075/- has been included in the coupon date basis. In the assessment order for the A.Y. 1988-89, a copy of which was also filed before us. The Assessing Officer has accepted the above computation made by the assessee. With regard to the contention that the assessee cannot set up a claim in the return of income which is altogether different from the manner in which entries are made in its accounts, we may notice the judgment of the Supreme Court in the case of United Commercial Bank in 240 ITR 355(SC). While reversing the judgment of the Calcutta High Court reported in 200 ITR 68 (Cal), wherein it was held that the assessee cannot prepare the computation of its income fro income tax purposes in a manner different form the method under which it keeps accounts. It was held by the Supreme court that preparation of the ba....
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.... Following the earlier order of this Tribunal, we decide this issue in favour of the assessee and against the revenue." 74. We further find that the Hon'ble jurisdictional High Court vide order dated 01/08/2016 passed in ITA no. 254 of 2014, inter-alia, upheld the findings of the Tribunal. Further, the coordinate bench of the Tribunal in assessee's own case in State Bank of India (supra) for the assessment year 2008-09, vide order dated 03/02/2020 also rendered similar findings. The learned DR could not show us any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in facts and law was alleged in the relevant assessment year. This issue is recurring in nature and has been decided in favour of the assessee in the preceding assessment years. Therefore, respectfully following the judicial precedent in assessee's own case cited supra, we find no infirmity in the impugned order passed on this issue. Accordingly, ground no. 2 raised in Revenue's appeal is dismissed. 75. The issue arising in ground no. 3, raised in Revenue's appeal, is pertaining to the allowability of broken period interest. 76. The brief facts of the case, pertain....
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....al to accounting. The learned CIT(A), vide impugned order, after noting that this issue is recurring in nature, allowed the appeal filed by the assessee on this issue following the judicial precedents in assessee's own case. Being aggrieved, the Revenue is in appeal before us. 77. Having heard the submissions of both sides and perused the material available on record, we find that the coordinate bench of the Tribunal in assessee's own case in State Bank of India (supra) for the assessment year 2008-09, vide order dated 03/02/2020, while deciding similar issue observed as under:- "117. We noted that BPI refers to interest on Government and other approved securities relatable to the period from last due date (upto which interest was paid) till the date of purchase or sale. Thus, when the assessee purchases a security, it pays a price which is calculated having regard to two components, viz., the market price of security plus BPI to the seller. In this case, the assessee treats the BPI paid as expenditure. Similarly, when the assessee sells a security, such interest is treated as income of the assessee. 118. The Revenue before us emphasized on the fact that intere....
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....ge revision made in the revised return of income was disallowed by the AO. During the year, the assessee has not made the claim in the revised return of income. The AO held that the claim made by the assessee by way of note cannot be allowed, being a contingent liability. The AO further noted that in this case the assessee has filed revised return still the above claim has not been made in the computation of income. Accordingly, following the decision of the Hon'ble Supreme Court in Goetze India Ltd (284 ITR 323) rejected the claim for allowability of provision of wage revision made by the assessee only in the notes to computation of income. The learned CIT(A), vide impugned order, allowed the provision for wage revision following the decision of the Hon'ble Delhi High Court in CIT v/s Bharat Heavy Electrical Ltd (2010) 26 taxmann.com 202. Being aggrieved, the Revenue is in appeal before us. 81. Having heard the submissions of both sides and perused the material available on record, we find that the coordinate bench of the Tribunal in assessee's own case in State Bank of India (supra) for the assessment year 2008-09, vide order dated 03/02/2020, while deciding similar issue obse....
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.... * CIT vs. Mahindra Ugine & Steel Co. Ltd. [2000] 245 ITR 428 (SC) (Bom.) [see para 2 on page 2] * CIT vs. United Motors (India) Ltd. [1990] 181 ITR 347 (Bombay) (Bom.) [last para page 3-4] 128. In fact on exact similar issue of deductibility of wage revision relating to the same Agreement, pending finalisation of wage settlement, is also decided in favour of the assessee by the Tribunal in the case of other Bank' s. In the case of Bank of India vs. DCIT [ITA no. 3082/Mum/2015] [Mum. Trib]the assessee had claimed a deduction for provision created toward wage revision arrived at based on indicative increase for assessment year 2009-10. The Mumbai Bench of the Tribunal allowed the claim on the basis that the provision was for services rendered by the employees and there was no doubt that the assessee has to make payment once the negotiations were over. We may mention that Bank of India is also a part of the same Bipartite settlement as in the present case of the assessee. 129. Similarly, in the case of Bank of Baroda [ITA/4619/Mum/2012] [Mum. Trib] the Mumbai Tribunal held that the date of effective commencement of the agreement is relevant and not t....
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....ployees under the Bank's Staff Welfare Scheme and hence the same was treated as part of normal business expenditure. During the assessment proceedings, the assessee also placed reliance upon the decisions rendered by the appellate authorities in its favour. The AO vide order passed under section 143(3) of the Act did not agree with the submissions of the assessee and held that payments are in the nature of outright grants or deposits and the same is not really for the welfare of the staff, what is meant to ensure is that only the Senior officers of the bank are able to secure the children admitted to the top-level schools. Accordingly, the AO disallowed the amount of Rs. 22,33,432 by holding that the same is not the expenditure incurred wholly and exclusively for the purpose of business. The learned CIT(A), vide impugned order, after following the decision of the coordinate bench of the Tribunal in assessee's own case for the assessment year 1996-97 allowed the appeal filed by the assessee on this issue. 85. Having heard the submissions of both sides and perused the material available on record, we find that the coordinate bench of the Tribunal in assessee's own case in State Ba....
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....at in A.Y. 1987-88 this issue arose before the Tribunal and was decided against the assessee for the reason that the assessee did not furnish details of expenditure before the Revenue authorities, however, in the present year, the details of payments were available and referred to the relevant pages of compilation. Accordingly, he contended that the aforesaid decision of the Tribunal was not applicable for the year under consideration. The Id. Counsel, thereafter, placed strong reliance on the decision of the Hon'ble jurisdictional High Court in the case of Mahindra & Mahindra as reported in 261 ITR 501 where the assessee provided donation to an education society which ran a school in which children of the employees of the company were studying and the Hon'ble Court held the same allowable as expenditure incurred for business purposes. The Id. Counsel also contended that Mumbai Tribunal in the following two cases also held so. Indian Oil Corporation Ltd. (ITA Nos. 4923 & 6063/Mum/1989(Mum) pages 23 to 28 of the compilation. Nuclear Power Corporation of India Ltd. (ITA no. 336/Mum/1999 pages 29 to 32 of the compilation. The Id. Counsel also placed ....
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....y as far as the officers subjected to transfer. A similar view has been taken by the Tribunal for the assessment year 1995-96 vide order dated 17.9.2009. Accordingly, following the order of this Tribunal for the assessment year 1992-93, we allow this claim of the assessee." 86. We further find that the Hon'ble jurisdictional High Court vide order dated 01/08/2016 passed in ITA no. 254 of 2014, inter-alia, upheld the findings of the Tribunal. Further, the coordinate bench of the Tribunal in assessee's own case in State Bank of India (supra) for the assessment year 2008-09, vide order dated 03/02/2020 also rendered similar findings. The learned DR could not show us any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in facts and law was alleged in the relevant assessment year. This issue is recurring in nature and has been decided in favour of the assessee in the preceding assessment years. Therefore, respectfully following the judicial precedent in assessee's own case cited supra, we find no infirmity in the impugned order passed on this issue. Accordingly, ground no. 5 raised in Revenue's appeal is dismissed. 87. The issue arising i....
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....d disallowed u/s 14A Rs. 31,33,74,490/- However, after considering the above amount AO had recomputed the disallowance u/s 14A applying Rule 8D and balance amount disallowed by the AO is Rs. 480,77,79,659/-. During the year appellant earned exempt income of Rs. 524,40,42,479/- from foreign currency loans, interest on tax free bonds, dividend income from domestic companies and mutual funds. Here appellant's share capital is Rs. 634.88 crs. and Reserves and Surplus is Rs. 57,312.81 crs. Total own fund of the appellant is share capital plus Rs. 57,947.69 crs and investment in earning exempt income is Rs. 6,559.24 crs. As here appellant's own funds are more than appellant's investment, here there should not be any disallowance of interest u/s 14A r.w.r. 8D(2)(ii) (iii), in view of Bombay High Court decision in the case of CIT v. HDFC Bank 330 ITR 221. With regard to disallowance under Rule 8D(2)(iii) ie. 0.5% of average investment for disallowance under administrative expenses, here AO has directed to compute ) 0.5% of average investment but from this AO has to exclude stock in trade of the appellant in view of the Bombay High Court decision in the case of CIT v. India Adva....
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....ame as stock-in-trade, section 14A of the Act was not attracted and the expenditure could not be disallowed. Thus, we find no infirmity in the directions of the learned CIT(A), vide impugned order, to exclude the investment held as stock in trade. 91. In Maxopp Investment Ltd. (supra), the Hon'ble Supreme Court also rejected the dominant purpose test and therefore we find no merits in the direction of the learned CIT(A) to exclude strategic investment in subsidiaries and fully owned subsidiaries while computing disallowance under Rule 8D(2)(iii) of the Rules. 92. Further, it is the claim of the assessee that only those investments which yielded exempt income during the year should be considered for computation of disallowance under section 14A of the Act. We find that this claim of the assessee is supported by the decision of the Special Bench of the Tribunal in the case of ACIT vs. Vireet Investment (P) Ltd. (2017) 165 ITD 27 (Delhi-Trib.), wherein it was held that only those investments are to be considered for computing average value of investments, which yield exempt income during the year. Accordingly, we direct the AO to only considered those investments for the purpose....
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....ation provided on investments under the HTM category, by way of amortisation of premium is allowable as a deduction like other securities. 96. The AO vide order passed under section 143(3) of the Act held that in respect of HTM securities, the assessee follows two different systems which are inconsistent with each other. If the securities are held as investments, there is no question of allowance of any amount till such time as they are sold or redeemed. Even if the securities are held as stock in trade, as per RBI guidelines, the method of valuation of closing stock adopted in respect of securities in the HTM category is cost price which is one of the recognised methods of valuation. Since the cost price is constant, there is no question of deduction of any amount under the commercial principles even if HTM securities are accepted to be stock in trade of the assessee. The AO further held that whatever losses suffered on the sale of redemption of securities, will constitute the loss of the year in which they are sold or redeemed. Thus, in between no amount can be allowed under the provisions of section 145 of the Act. The AO further held that by claiming amortisation, the assess....
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....ontended that the issue is squarely covered in favour of the assessee by assessee's own case for assessment year 1995-96 by the order of Tribunal dated 17.09.2009, which was followed by the Tribunal in subsequent assessment year 1996-97 vide order dated 26.07.2013. Further, the Bombay High Court on the appeal by revenue in assessment year 1996-97, has upheld the decision of Tribunal, vide its order dated 01.08.2016. 137. We noted that the facts in the year under consideration are same as the facts in the earlier years. In view of the above, this ground of appeal is covered in favour of the assessee vide the aforementioned orders of the Tribunal and Bombay High Court. This issue of Revenue' s appeal is dismissed." 98. The learned DR could not show us any reason to deviate from the aforesaid decision rendered in assessee's own case and no change in facts and law was alleged in the relevant assessment year. This issue is recurring in nature and has been decided in favour of the assessee in the preceding assessment years. Therefore, respectfully following the judicial precedent in assessee's own case cited supra, we find no infirmity in the impugned order passed on this iss....
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....at the same have already been raised in appeals before the Commissioner of Income-tax (Appeals) [CIT(A)]. We accordingly request your Honour to kindly direct the ACIT to allow the revised claim of depreciation on assets at foreign offices of Rs 33,37,94,407 filed vide rectification application dated 1 November 2011." 101. After considering the submissions of the assessee, the learned CIT(A) vide impugned order granted partial relief to the assessee and allowed depreciation of Rs. 33,37,94,407 under section 32(1) of the Act. Being aggrieved, the Revenue is in appeal before us. 102. During the hearing, it was submitted that the assessee has filed a rectification application dated 01/11/2011 before the AO on this issue, which has still not been disposed off. It was further submitted that in the said application it has been claimed that the assessee is entitled to depreciation of Rs. 33,27,94,407. In this regard, the assessee has also furnished the working before the AO. Accordingly, in view of the above, we deem it appropriate to remand this issue to the file of the AO for de novo adjudication after verifying the details filed by the assessee. Accordingly ground no. 9 r....
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....8. The brief facts of the case pertaining to this issue are: During the year under consideration are provision of Rs. 10.41 crore for the Employee Stock Purchase Scheme was added back to the profit while computing the taxable income, however, in the notes appended the assessee has requested for allowing the same. The AO vide order passed under section 143(3) of the Act did not agree with the submission of the assessee and held that the liability is merely contingent and unascertained. The AO further held that the liability in addition to being contingent, is related to an increase in share capital. Accordingly, the AO disallowed the claim made by the assessee. The learned CIT(A), vide impugned order, following the decision of Special Bench of Tribunal in Biocon Ltd v/s CIT 35 Taxmann.com 335 allowed the claim of provision of Employee Stock Purchase Scheme. Being aggrieved, the Revenue is in appeal before us. 109. Having considered the submissions of both parties and perused the material available on record, we find that the coordinate bench of the Tribunal in assessee's own case in State Bank of India (supra) for the assessment year 2008-09, vide order dated 03/02/2020, while de....