TaxTMI 
TaxTMI 
2024 (11) TMI 759
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....debts are not controlled by the proviso to Section 36(1)(vii). 2.2. The learned CIT(A) failed to appreciate the fact that the issue has been decided in favour of the appellant by the Hon'ble Supreme Court in the case of Catholic Syrian Bank Ltd vs CIT [2012] 343 ITR 270 (SC). 2.3. The learned CIT(A) erred in not following the decision of Hon'ble Supreme Court decision in the case of Union of India vs Intercontinental Consultants & Technocrats (P.) Ltd [2018] 91 taxmann.com 67 (SC) in interpreting the words 'such debt' contained in proviso to Section 36(1)(vii). 2.4. The learned CIT(A) erred in concluding that Sections 36(1)(vii) and 36(1)(viia) of the Income Tax Act are not independent items of deduction post Finance Act, 1985. 2.5. The learned CIT(A) failed to appreciate the fact that introduction of Explanation 2 to Section 36(1)(vii) by Finance Act, 2013 has not changed the proposition of law as it existed before introduction of such explanation. 2.5.1. The learned CIT(A) failed to appreciate the fact that Explanation 2 was introduced to prevent double deduction in the case of same debt for which deduction was allowed ....
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....234B & 234D of the Income Tax Act, 1961. For all these and other grounds which may be urged at the time of the hearing of this appeal, the appellant prays that its appeal be allowed." 3. The revenue has raised the following grounds:- "1. The order of the Learned CIT(A) is opposed to law and facts of the case. 2. Disallowance u/s 14A: The CIT(A) has erroneously allowed relief on the ground that the AO failed to record non-satisfaction with regard to the correctness of the claim of the assessee, as envisaged under the provisions of section 14A has not been recorded by the AO before proceeding to make any disallowance. 3. The CIT(A) failed to notice from records that a show cause notice for determining and disallowing expenditure in accordance with section 14A rwr 8D was given to the assessee and this fact has also been explicitly mentioned in the assessment order. 4. The CIT (A) failed to take cognizance of such a proposal given by the Assessing Officer with regard to his dis-satisfaction about the correctness of the claim made by the assessee. 5. The CIT(A) erred in not considering that this would suffice the requirem....
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.... purposes of a rural branch. 14. The CIT (A) failed to appreciate the fact that the advances made during the year are only eligible for deduction and not the advance outstanding, as it amounts to repetitive and duplicate claims during every subsequent year. 15. The CIT(A) erred in deleting the disallowance made u/s 40(a)(ia) on the payments amounting to Rs. 29,95,61,815/- made to NPCL, when the decision of the CIT(A) on this point has not been accepted by the department and an appeal was filed by the department before the Hon High Court of Karnataka in the case of M/s Corporation Bank for the AY 2011-12 86 2012-13 and the said appeal is pending as on date. 16. The CIT(A) erred in not considering the fact that the service provided by the NPCI comes under the explanation provided under Sec 194 J arid accordingly liable for TDS and the failure to adhere to the TDS provisions would attract disallowance u/s 40(a)(ia). 17. For these and any other grounds that may be urged at the time of hearing it is prayed that the order of the CIT(A) may be cancelled and that of the Assessing Officer restored." ITA No.1107/Bang/2024 (Assessee's appeal) 4. Disal....
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....ed as write off u/s 36(1)(vii) of the Act. He also relied upon the decision rendered by Hon'ble Kerala High Court in the case of CIT vs. Hotel Ambassador (2002)(253 ITR 430)(Ker), wherein it was held that the deduction u/s 36(1)(vii) of the Act only if the assessee debits the same into the accounts as irrecoverable. Accordingly, the AO took the view that the amount of bad debts claimed by the assessee was mere provision and not actual write off. Before the AO, the assessee had placed reliance on the decision rendered by Hon'ble Supreme Court in the case of Vijaya Bank vs. CIT (2010)(320 ITR 166 (SC)) to reiterate that it is entitled for deduction u/s 36(1)(vii) of the Act. The AO expressed the view that the issue considered by Hon'ble Supreme Court in the case of Vijaya Bank (supra) related to category of "Loss Assets", which is required to be provided @ 100% of the outstanding amount. He further expressed the view that the Hon'ble Supreme Court did not consider the question viz., Whether the provision for non-performing assets created by the assessee bank by debiting P & L a/c and crediting the provision account would comply with the requirement of actual write off of 'ba....
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....wever, the Ld CIT(A) expressed the view that the PBDD allowed u/s 36(1)(viia) of Act is applicable to both Rural and non-Rural debts. Accordingly, he held that the entire amount of bad debts written off (both rural and nonrural) should be first adjusted against the PBDD a/c allowed u/s 36(1)(viia) of the Act and only the excess should be allowed as deduction. He expressed the view that the decision rendered by Hon'ble Supreme Court in the case of Catholic Syrian Bank (2012)(343 ITR 270)(SC) was rendered under the assumption that the banks would maintain separate PBDD a/c in respect of rural branches and non-rural branches and therefore it is possible to distinguish PBDD as one in respect of rural branches and non-rural branches. The Ld CIT(A) expressed the view that the claim of the bank that the provisions of sec. 36(1)(viia) are distinct and independent of sec. 36(1)(vii) is based on the old circular no. 258 dated 14.6.1979 issued in connection with old law. Accordingly the Ld CIT(A) held that the PBDD allowed u/s 36(1)(viia) of the Act is for single account since its introduction in 1985 and it is for all types of advances including rural advances. He also observed that....
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....e extent it exceeds the provision made u/s 36(1)(viia). If we examine the facts of the present case in the context of aforesaid statutory provision, it will be evident that assessee, though, has written off in the books of account an amount of Rs. 210.74 crore, but, in the computation of total income, the actual deduction claimed u/s 36(1)(vii) is Rs. 209.08 crore representing bad debts written off relating to non-rural/urban advances. The balance amount of bad debts relating to rural advances was not claimed as deduction by assessee in terms with the proviso to section 36(1)(vii) as it has not exceeded the provision for bad and doubtful debts relating to rural advances created u/s 36(1)(viia). Both AO and ld. CIT(A) have misconstrued the statutory provisions while observing that proviso to section 36(1)(vii) would also apply in case of bad debts relating to nonrural 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 ....
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....n (1) of Section 36 to provide for a deduction, in the computation of taxable profits of all scheduled commercial banks, in respect of provisions made by them for bad and doubtful debts relating to advances made by their rural branches. The deduction is limited to a specified percentage of the aggregate average advances made by the rural branches computed in the manner prescribed by the IT Rules, 1962. Thus, the provisions of clause (viia) of Section 36(1) relating to the deduction on account of the provision for bad and doubtful debt(s) is distinct and independent of the provisions of Section 36(11(vii) relating to allowance of the bad debt(s). In other words, the scheduled commercial banks continue to get the full benefit 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 ....
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....so to section 36(1)(vii) applies to bad debts written off relating to rural advances, the same cannot be applied for disallowing deduction claimed on account of write off of bad and doubtful debts relating to non-rural/urban advances. As far as application of explanation to section 36(1)(vii) is concerned, we agree with the ld. AR that its operation will be prospective and will not apply to the impugned AY. For this proposition, we rely upon the decision of the ITAT Mumbai in case of Bank of India Vs. Addl. CIT (supra). Even otherwise also, careful reading of explanation to section 36(1)(vii) would indicate that nowhere it suggests that the proviso to section 36(1)(vii) would apply in respect of bad debt written off relating to nonrural 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 non-rural/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)." 5.4 Following the ab....
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....record. Now the core question that arises is whether the bad debts relating to non-rural branches are also required to be first debited to PBDD a/c and then the excess amount over and above the balance available in PBDD alone could be allowed as bad debts u/s 36(1)(vii) of the Act. 7.8 The provisions of sec. 36(1)(vii) allows deduction as under:- "36(1)(vii) Subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year. Provided that in the case of an assessee to which clause (viia) applies, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account under that clause. ........... Explanation 2 - For the removal of doubts, it is hereby clarified that for the purposes of the proviso to clause (vii) of this sub-section and clause (v) of sub section (2), the account referred to therein shall be only one account in respect of provision for bad and doubtful debts under clau....
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....rvations, the revenue has taken the view that the Hon'ble Supreme Court has rendered its decision on the assumption that the banks would be maintaining two separate PBDD a/c, viz., one for rural branches and another one for non-rural branches. 7.10 It is possible that all banks may not be maintaining two separate accounts, as observed by the Hon'ble Supreme Court. Hence there was an apprehension in the minds of revenue with regard to the effect of the decision rendered by Hon'ble Supreme Court. For instance, if a particular bank is maintaining only a single PBDD a/c for the provision created u/s 36(1)(viia) of the Act and even if that bank is not having any rural branches, then it may try to avail the benefit of decision rendered by Hon'ble Supreme Court and may possibly contend that - (i) the provision allowed u/s 36(1)(viia) shall apply only to rural branches. (ii) since it does not maintain two separate PBDD a/c for rural and non-rural advances, the bad debts relating non-rural branches need not be reduced from the PBDD a/c allowed u/s 36(1)(viia) in terms of sec. 36(2)(v) and the proviso to sec. 36(1)(vii) of the Act. However, the Ld A.R subm....
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....er clauses (b) to (d). In view of the decision rendered in the case of Catholic Syrian bank, it is possible that the assessee's covered by clause (b) to (d) may contend that the bad debts written off by them need not be adjusted against PBDD allowed u/s 36(1)(viia) of the Act, since the bad debts relate to "non-rural debts". Accordingly, we are of the view that the Explanation 2 has been inserted in order to bring the assesses covered by clauses (b) to (d) within the ambit of the proviso to sec. 36(1)(vii) and sec. 36(2)(v) of the Act. Hence, in our view, advances given by rural and non-rural branches mentioned in Explanation 2 shall apply to the assesses covered by clause (b) to (d) of sec. 36(1)(viia) of the Act. 7.12 At this juncture, we may gainfully refer to the "MEMORANDUM EXPLAINING FINANCE BILL 2013", which brings out the intention of the Parliament in inserting Explanation-2 in sec. 36(1)(vii) of the Act. It is extracted below:- "Clarification for amount to be eligible for deduction as bad debts in case of banks:- Under the existing provisions of section 36(1)(viia) of the Income-tax Act, in computing the business income of certain banks and fina....
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....b-clauses do not refer to the rural advances. In fact, foreign banks generally do not have rural branches. Therefore, the provision for bad and doubtful debts account made under clause (viia) of section 36(1) and referred to in proviso to clause (vii) of section 36(1) and section 36(2)(v) applies to all types of advances, whether rural or other advances. It has also been interpreted that there are separate accounts in respect of provision for bad and doubtful debt under clause (viia) for rural advances and urban advances and if the actual write off of debt relates to urban advances, then, it should not be set off against provision for bad and doubtful debts made for rural advances. There is no such distinction made in clause (viia) of section 36(1). In order to clarify the scope and applicability of provision of clause (vii), (viia) of sub-section (1) and sub-section (2), it is proposed to insert an Explanation in clause (vii) of section 36(1) stating that for the purposes of the proviso to section 36(1)(vii) and section 36(2)(v), only one account as referred to therein is made in respect of provision for bad and doubtful debts under section 36(1)(viia) and such account relates to ....
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....s not override the above said interpretation given by Hon'ble Supreme Court. 7.14 In the Memorandum explaining the purpose of introducing Explanation -2 in Sec. 36(1)(vii), it has been acknowledged that only the clause (a) refers to "rural branches". It has also been stated that the foreign banks do not have rural branches. The assesses covered by clause (b) to (d) may not be having rural branches. Hence, the memorandum explains as under with regard to the decision rendered by Hon'ble Supreme Court in the case of Catholic Syrian Bank (supra):- "However, certain judicial pronouncements have created doubts about the scope and applicability of proviso to section 36(1)(vii) and held that the proviso to section 36(1)(vii) applies only to provision made for bad and doubtful debts relating to rural advances." Because of the interpretation so given by Hon'ble Supreme Court, as discussed earlier, there arose a necessity for the Parliament to clarify that the PBDD allowed u/s 36(1)(viia) shall apply to all types of advances including advances made by rural branches. However, as stated earlier, the clause (a) to sec.36(1)(viia) has been held to be applicable to rura....
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....e judgment of Sobha Developers Ltd. reported in [2021] 434 ITR 266 (Karn) and submitted that para no. 6 & 7 is relevant part of the judgment is squarely applicable to the present case on hand which reads as under:- "6. We have considered the submissions made on both sides and have perused the record. Before proceeding further, it is apposite to take note of relevant extract of section 115JB of the Act, which reads as under: 115JB. (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2012, is less than eighteen and one-half per cent of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income tax at the rate of eighteen and one-half per cent. (f) the amount or amounts of expenditure relatable to any income to which section 10 (other than the provisions contained in clause (38) thereof) or sec....
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....ealing with the issue of changeability of interest under sections 234B and 234C of the Act on failure to pay advance tax in respect of tax payable under section 115JA/115JB of the Act and therefore, the aforesaid decision has no impact on the issue involved in this appeal. Similarly, in Maxopp Investment Ltd. (supra) the Supreme Court has dealt with section 14A of the Act and has not dealt with section 115JB of the Act. Therefore, the aforesaid decision also does not apply to the fact situation of the case. In view of preceding analysis, the substantial questions of law framed by a bench of this court are answered in favour of the assessee and against the revenue. In the result, the order passed by the tribunal dated 9-1-2015 insofar as it pertains to the findings recorded against the assessee is hereby quashed." 9. The ld. DR relied on the order of the AO and submitted that the AO has correctly added the disallowance made u/s. 14A for computing income u/s. 115JB. 10. Considering the rival submissions we noted that the AO has calculated the disallowance u/s. 14A of Rs. 14,94,21,888 and this issue was raised before the CIT(A) and the CIT(A) has also decided the issue ....
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....61/Bang/2019 (Revenue's appeal) 14. Ground No.1 & 17 are general in nature. 15. Ground Nos. 2 to 9: Disallowance u/s. 14A: During the course of assessment proceedings the AO noted that the assessee has received certain exempt income but there is no disallowance made by the assessee under section 14A of the Act. During the impugned AY, the assessee had made investment and earned exempt income as under:- A. Investments Tax free bonds Rs. 5 crore Shares Rs.150.44 crores Total investments Rs.155.44 crores B. Exempt income earned Dividend income Rs. 87,05,348 RIDF interest Rs. 30,98,618 Total Rs.118,03,966 16. The AO noted that without utilising the resources and the existing establishment of the applicant it would have been possible to earn the exempt income. The investment made will always have a notional interest and other costs attached to it. The investments made by the assessee are from common pool of funds, therefore the proportional expenditure should have been disallowed by the assessee since the assessee has interest bearing and interest free funds available. The assessee submitted that during the relevant ....
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....nvestments towards earning of exempt income and there is no separate administrative expenditure incurred for earning exempt income. This issued has been decided by the coordinate Bench of Tribunal in assessee's own case for the AY 2016-17 & 2017-18 in ITA No.876 & 877/Bang/2023 in which it has been held as under:- 20. 11. After considering the rival submissions and perusing the material on record, we note that this issue was considered by this Tribunal in the case of Canara Bank (erstwhile Syndicate Bank) in ITA No. 501 & 390/Bang/2023for assessment years 2016-17 & 2017-18 dated 25.10.2023 and it was held as under:- "6. Considering rival submissions, we note that this issue has been settled by the Hon'ble jurisdictional High Court in assessee's own case for AY 2011-12 & 2012-13 in ITA No.258/2020 dated 8.2.2021 observing as under:- "4. Even though four substantial questions of law are raised in the appeal Memorandum cited supra, among them, substantial question of law Nos.2 & 4 are covered by the judgment and are answered by the co-ordinate bench of this court vide judgment dated 31..01.2020 in ITA No.481/2014. Paras 8 to 10 of the said judgment dated 31.01.202....
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....cability of section 14,4 of the Act, there has to be a pay out and return of investment or a pay back is not such a debit item. [See: WALFORT SHARE AND STOCK BROKERS (P) LTD SUPRA as well as M.4XOP INVESTMENTS LTD SUPRA]. In the instant case, the assessee has admittedly not incurred any expenditure. This case pertains to income on dividend, which by no stretch of imagination can be treated to be an expenditure to attract the provisions of Section 14A of the Act. In view of aforesaid enunciation of law by the Supreme Court, the first substantial question of law framed by this court is answered in favour of the assessee and against the revenue. 10. Learned counsel for parties, have fairly admitted that in case this court frames a substantial question of law that whether provisions of Section 115JA apply to the Banking Companies are not the remaining substantial questions of lay,/ would be reduced otiose. This court has already framed a substantial question of law in this regard today. This court by an order passed on 16.01.2020 passed in ITA No.13/2014 has already held that the provisions of Section 115JB do not apply to the banking companies. Therefore, the substantial ques....
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....e. 22. Ground No. 10 to 14 : Briefly stated the facts of the case are that the assessee bank has claimed a sum of Rs. 211.22 crores as deduction u/s. 36(1)(viia) in the computation of income filed. The assessee was asked to justify the claim and the assessee furnished reply as under:- Assessee's written submission of details Deduction u/s 36(1)(viia) Basis of claiming Rs. 211,22,28,835 as deduction u/s 36(1)(viia) of the IT Act The claim u/s 36(1)(viia) has been made on the following basis: (i) 10% of Aggregate Average Rural Advances Rs.127,09,83,333 (ii) 7.50% of the total income Rs. 84,12,45,502 Provision made u/s 36(1)(viia) (against above balance provision Available supra) Rs.211,22,28,835 (iii) Provision for bad and doubtful debts made in the Books Rs. 223,07,13,584 The claim is restricted to minimum of the provision made in the Books and percentage of average advances and total income prescribed under the Section. The method of calculation of aggregate average advances for the purposes of Section 36(1)(viia) is exactly as specified in Rule GABA of the Income Tax Rules. The details of working is furnish....
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....ecent population figures have not been considered for identifying rural branches and the population of many of the rural branches had already exceeded 10,000. b) Further, in several cases it was noticed that the branch is not a rural branch and rather it was situated in urban agglomeration which cannot be considered as a Rural branch. c) Apart from this, while the computing the AAA the assessee bank has taken into account the running balance of the advances made in the previous year as the opening balance of the subsequent year and computed the outstanding balance at the end of last day of each month comprised in the previous year. d) While computing the AAA the assessee bank should have considered the fresh amount of advances made by each rural branch as outstanding at the end of each month comprised in the previous year rather the running balance. In this process, substantial amount of deduction has been claimed over and above the eligible amount. 25. Accordingly the assessee was asked to furnish the working made in respect of AAA made by various branches. Further the AO noted that the rural branches should be defined as per judgment of Hon'ble juris....
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.... Rs.87,49,19,279 03 Deduction allowable u/s 36(1)(viia) Rs. 1,35,00,59,280 04 Deduction claimed u/s 36(1)(viia) Rs.211,22,28,835 05 Disallowance made being excess claim of deduction Rs. 76,21,69,555 Net Disallowance Rs.76,21,69,555/-. 26. Aggrieved from the above order, the assessee filed appeal before the CIT(A) and the ld. CIT(A) relying on following judgments allowed appeal of the assessee:- * Canara Bank v. JCIT, LTU [2017] 60 ITR (Trib) 1 (ITAT Bang) * Vijaya Bank v. JCIT, LTU in ITA No.1252/B/2010 order dt. 5.1.2018 * Nizamabad Dist. Co-op. Central Bank Ltd. v. ITO, 2014 (12) TMI 562 - ITAT, Hyd. * DCIT v. Madurai Dist. Central Co-op. Bank Ltd. [2014] 51 taxmann.com 194 (Chennai Trib) * DCIT v. City Union Bank Ltd. in ITA No.1485/Mds/07 dt. 30.10.2009. 27. The ld. DR relied on the order of AO and submitted that the assessee has wrongly interpreted the provisions of the Act and submitted that the order of the AO should be upheld. 28. The ld. AR submitted that the issue is squarely covered in favour of the assessee by the order of the jurisdictional High Court and in assessee's own case and fur....
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.... had accepted the provision made by the assessee benefit in Canara Bank v. Jt. CIT [2018] 99 taxmann.com 357/[2017] 60 ITR (Trib.) 1 (Bengaluru - Trib.). He further submitted that the said order has been followed by the Tribunal in Vijaya Bank v. Jt. CIT [IT Appeal Nos. 915 & 845 (Bang.) of 2017, dated 5-1-2018] and the said method of making provision has been approved by the Calcutta High Court in Uttarbanga Kshetriya Gramin Bank case. 8. We have carefully considered the rival contentions and perused the records. 9. In Para 7.2 of the impugned order, the Tribunal has recorded thus, "7.2 Before us, the learned Authorised Representative for the assessee reiterated the submission that the language of Rule 6ABA is very clear and does not mandate that only incremental advances has to be considered and nothing can be read into it as has been done by the authorities below. It was submitted that this issue has been considered and decided in favour of the assessee by the co-ordinate bench of this Tribunal in the case of Canara Bank v. JCIT (2017) 60 ITR (Trib) 1 [ITAT (Bang)]" 10. It is further held that the said decision has been followed in Vijaya Bank....
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.... "The instant case is concerned with the assessment for the assessment years 2003-04 and 2004-05. The first day of the previous year for these assessment years would be 1-4-2002 and 1- 4-2003. For the purpose of computing the deduction under section 36(viia) the population figures available prior to 1-4-2002 is to be considered. [Para 6] If the provisional population totals as published on 27-3-2001 and 1-9- 2010 is taken into consideration, then it is the Census figures of 2001, which has to be taken into consideration. If the final population published on December 2003 is taken into consideration, then it would be the final population figure of 1991 Census that has to be taken into consideration. The question is which is the final population total which has to be taken into consideration because as it is clear from the letter written by the Registry of Home Affairs, the provisional population total cannot be relied upon. [Para 7] In respect of any provision for bad and doubtful debts made by the scheduled bank, an amount not exceeding 7 1/2 percentage of the total income computed before making any deduction under this clause and chapter VIA and an amount not e....
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.... year, then the said information is in public domain. Therefore, on that basis one could find whether a branch is a rural branch or not. It is no doubt true that the Census Department initially publishes a provisional population total, probably calling objections from the public and after considering those objections, publishes final population total. The legislature has used the words 'bad and doubtful debts' and the words 'provisional' and 'final' conspicuously missing in the said words. The word 'published' has to be understood as final population as contended by the assessee. If other words are added, it would amount to re-writing which is impermissible in law. Keeping in mind the object, before the bank is entitled to the said benefit, all that is to be seen is whether in that village where the rural branch is situated, population is less than 10,000 or exceeding 10,000. Census is conducted once in ten years. After conclusion of the Census, provisional figure will be published and then final publication is made. If from the date of provisional population totals being published, it has crossed the 10,000 limit as prescribed under the law....
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.... statement request, etc. For this purpose NPCI network which manages national financial switch (NFS), act as intermediary in settling the dues among the banks. NPCI collects charges from the ATM card issuing bank whose customer has done transaction in other bank's ATM and share it with such banks. Apart from these charges, NPCI collects from all the banks 0.50 paise (in our opinion it should be 50 paise) per transaction as switch charges which is retained by it. These charges are debited to current account after netting the amount to be received by the bank for usage of the bank ATM by the customers of other bank. Thus the net amount is credited to the bank account rather than the bank making any payment. The amount so debited to the bank's account is in turn paid to various banks by NPCI only. The assessee also referred to the Notification SO 3069(E) [NO.56/2012 (F. NO. 275/53/2012- IT(B)], DATED 31-12-2012 and NOTIFICATION NO. SO 2143(E) (NO.47/2016 (F.NO.275/53/2012-IT(B), DATED 17-6-2016]. From the written synopsis it was observed that the deductee has reported receipts in their returns of income and furnished a certificate in the prescribed form. However the assessee was unabl....
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....rge s paid to NPCI. The ATM usage charges paid to VISA Worldwide was upheld. Aggrieved from the above, both the parties are in appeal. 32. The ld. AR of the assessee submitted in respect of the ATM Usage charges paid to VISA Worldwide is covered by the judgment of the coordinate Bench of the Tribunal in the assessee's own case for AY 2013-14 in ITA Nos..1906 & 229 Bang/2018 dated 27.12.2021. He further submitted that the issue has been decided by the Hon'ble jurisdictional High Court in the case of CIT v. Karnataka Bank Ltd. reported in 2021 (7) TMI 1411 - Karnataka High Court and the issue has been answered in favour of the assessee as per the question of law no. 4. 33. The ld. DR relied on the order of the AO in respect of payment made to NPCI and in respect of payment made to VISA Worldwide the order of the lower authorities. 34. Considering the rival submissions we noted that the issue has been decided by the coordinate Bench of Tribunal in assessee's own case for AY 2013-14 as relied by the ld. AR of the assessee noted supra. For the sake of convenience we are reproducing the same as under:- "The next issue urged by the assessee relates to disallowance of pay....
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....he disallowance of payments made NPCI and Cash Tree network by following the decision rendered by Hon'ble Supreme Court in the case of CIT vs. Kotak Securities Ltd (2016)(285 CTR (SC) 63) and also the decision rendered in the assessee's own case by ITAT in ITA No.1264 & 1352 (B)/2013 for AY 2011-12. The Ld CIT(A), however, confirmed the addition of VISA charges of Rs. 15,01,663/-. Hence both the parties are in appeal before us. 6.3 We notice that identical issues have been considered by the coordinate bench in the assessee's own case in ITA No.89/PAN/2017 & CO No.07/PAN/2017 relating to AY 2012-13 and the Tribunal, vide its order dated 06.02.2020 has decided the issue as under:- "13. The next issue relates to disallowance made u/s 40(a)(ia) of the Act. The AO noticed that the assessee has claimed a sum of Rs. 75.46 crores as other expenses details of which are given below:- i) ISC for provision of ATMs (Rs.18,14,31,425/-) ii) Payment to NFS Network towards ATM usage charges (Rs.15,04,34,326/- iii) Payment to Cash Tree Network towards ATM usage charges (Rs.99,87,801/-) iv) VISA fees paid to VISA International (Rs.96,87,529/-) ....
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....f the Central Board of Direct Taxes Notification No, 56 of 2012 dated December 31, 2012 : Notification No. S. 0. .3069(E) [No. 56/2012 (F. No. 275/53/2012- ff(B)], dated December 31, 2012' [Superseded by Notification No. S. 0. 2143(E) (No. 47/2016 (F. No. 275/53/2012-11(B), dated June 17, 2016] In exercise of the powers conferred by sub-section (iF) of section 197A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that no deduction of tax under Chapter X1711 of the said Act shall be made on the payments of the nature specified below, in case such payment is made by a person to a bank listed in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), excluding a foreign bank, namely 1. bank guarantee commission; (ii) cash management service charges (iii) depository charges on maintenance of demat accounts (iv) charges for warehousing services for commodities (v) underwriting service charges (vi) clearing charges (MICR charges) (vii) credit card or debit card commission for transaction ben-: the merchant establishment and the acquirer bank. ....