TaxTMI 
TaxTMI 
2023 (7) TMI 1500
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....ase and in law, the Ld. CIT(A) erred in deleting the additions of non cash write back amounting to Rs. 19,35,46,838/-". 4. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the AO relating to interest expenses directly attributable to earning the income u/s. 10(23G) of the I.T. Act". 5. "On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in directing the AO to re-compute the exemption claimed on tax free interest u/s. 10(15) of the I.T. Act". 6. "On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in deleting the additions of depreciation on leased assets amounting to Rs. 232,25,76,303/- 7. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing the deduction u/s. 80M of the I.T. Act amounting to Rs. 156,34,12,743/- 8. "On the facts and in the circumstances of the case and in law, the "Ld. CIT(A) erred in deleting the notional interest taken for the purpose of determining the annual value u/s. 23(l)(a) of the I.T. Act amounting to Rs. 1,14,90,085/-". 9. "On the facts and in the circumstances of the case ....
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....e after accounts of the assessee are audited and finalized. He further observed that the action of the assessee Bank appears to be an after thought exercise to reduce tax liability. Thus, the Assessing Officer disallowed assessee's claim of bad debts written off of erstwhile AFL to the tune of Rs. 49,62,08,864/-. The Assessing Officer has also disallowed assessee's claim of write off of fees amounting to Rs. 62,09,66,661/-. Thus, the Assessing Officer made addition made in respect of bad debts written off aggregating to Rs. 769,57,10,766/-. Aggrieved by the addition made in assessment order dated 28/02/2006, the assessee carried the issue in appeal before CIT(A). The CIT(A) following the order of his predecessor in assessment years 2000-01, 2002-03 and 2004-05 deleted the addition, summarily. 5. Shri P.C. Chhotaray representing the Department made exhaustive submissions assailing the findings of CIT(A) in respect of bad debts written off . The Ld. Departmental Representative submitted that the assessee has failed to substantiate that the bad debts written off had indeed become "Bad". The ld. Departmental Representative in a manner similar to detailed discussion made by the Assessi....
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....d valuable. - Loan secured against assets and guarantees. - Debts assigned to ARCIL. - Debts written off casually and in an arbitrary manner without justification. - No evidence to show that the debts had become bad. 8. In respect of bad debts written off of erstwhile AFL, the ld. Departmental Representative submitted that the assessee made claim of write off of bad debts to the tune of Rs. 49.62 crores of erstwhile AFL in the revised return. The claim was made after the accounts of the Bank were audited u/s. 44AB of the Act. The Auditors had not made any observation that the amounts were written off in the accounts as irrecoverable. The details of expenses does not indicate that the bad debts written off have been debited to P&L Account. The Assessing Officer has categorically observed that there is nothing to show that such huge amount of debts involving such a large number of parties is a bad debt. The ld. Departmental Representative strongly supported the findings of Assessing Officer in rejecting assessee's claim. 9. With regard to fee written off, the ld. Departmental Representative submitted that the claim was made in the revised return on the ground that it was in....
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....lations, pressure on liquidity leading to non-payment of wages or statutory dues, continued cash losses for more than one year, negative networth, unrealizable securities, stagnation in business, adverse market conditions, etc. She submits that before writing off the amounts as irrecoverable the assessee Bank makes an evaluation of individual borrower's account. There is a bonafide assessment of each borrower. Wherever loans become bad, either suit is filed before the Debt Recovery Tribunal or winding up petitions are filed before Hon'ble Court. Where loans are advanced for larger projects, the assessee bank was part of the consortium of lenders, the loan is secured by the assets and in case of default or where the situation arises leading to sale of assets, the assessee gets is prorate share as part of consortium. She further submitted that even if the loans are secured in some cases it becomes difficult to liquidate assets of the borrower on account of lengthy procedures or obsolete deteriorated machinery. In case of consortium lending sometimes all constituents of the consortium does not concur to the sale of the asset. The ld.Counsel for the assessee pointed that in some of....
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....ecision in the case of Vijaya Bank (supra). In the order giving effect, the Assessing Officer fully allowed bad debt written off by the assessee. The ld.Counsel for the assessee further referred to CBDT Circular No. 12/2016 dated 30/05/2016. She submitted that CBDT referred to the decision in the case of TRF(supra) and clarified that claim of any debt or part thereof in any previous year shall be admissible u/s. 36(1)(vii) of the Act, if it is written off as irrecoverable in the books of account of the assessee for that previous year and it fulfills the conditions stipulated in sub-section (2) of section 36 of the Act. She emphasized that CBDT Circular has clarified that no appeals are to be filed by the Department on this ground and appeals filed may be withdrawn/not pressed. 15. We have heard the submissions made by rival sides and have examined the orders of authorities below. We have also perused the decisions on which both sides have placed reliance in support of their respective arguments. 16. At the outset it is observed that the assessee has written off bad debts to the tune of Rs. 1503,06,07,093/- u/s. 36(1)(vii) of the Act. The Assessing Officer while analyzing the debt....
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....)(vii) of the Act, it is not necessary for assessee to establish that the debt, in fact has become irrecoverable; it is enough if bad debt is written off as irrecoverable in the books of accounts of assessee" 4. In view of the above, claim for any debt or part thereof in any previous year, shall be admissible under section 36(l)(vii) of the Act. if it is written off as irrecoverable in the books of accounts of the assessee for that previous year and it fulfills the conditions stipulated in sub section (2) of sub-section 36(2) of the Act. 5. Accordingly, no appeals may henceforth be filed on this ground and appeals already filed, if any, on this issue before various Court/Tribunals may be withdrawn/not pressed upon." 17. The main plank of arguments by the ld. Departmental Representative is that the assessee has failed to establish that debts that have been written off had in fact become bad. In support of this contention the ld. Departmental Representative has placed reliance on various case laws. The requirement to establish that the debts have become bad was done away vide amendment effective from 1st April, 1989. Under the old provisions of section 36(1)(vii) of the Act as w....
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....r selectively rejected assessee's claim of losses from ICICI Information Technology Fund Rs. 140.05 and ICICI Technology Incubator Fund Rs. 1.13 crores. The CIT(A) after examining the details furnished by the assessee allowed the claim. 20. We have heard the submissions made by rival sides and have examined orders of authorities below. A perusal of documents on record reveals that the assessee had furnished audit report in Form No. 64 before the Assessing Officer. The audit report in Form -64 for ICICI Information Technology Fund is at pages 48 to 56 of the paper book and audit report in Form-64 for ICICI Technology Incubator Fund is at page-57 to 63 of the paper book. The CIT(A) has given a categoric finding that the Assessing Officer has selectively considered Form -64 furnished by the assessee for respective funds. The Assessing Officer has ignored various losses under respective heads of income and has taken only short-term capital gain of Rs. 32.00 lacs from ICICI Technology Incubator Fund. There is no justification for adopting such selective approach by the Assessing Officer. The CIT(A) after examining the documents on record allowed assessee's claim on the basis of Form-64....
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.... No. 4826/Mum./2004, dated 31st January 2017, has restored the matter back to the file of the Assessing Officer for considering afresh. In fact, in assessment year 2002-03 also in assessee's own case, the Tribunal while deciding identical issue in ITA No. 836/Mum./2008 and ITA No. 392/Mum./2008 dated 7th July 2017, has restored the issue to the Assessing Officer for considering afresh keeping in view the directions of the Tribunal in the preceding assessment year. Therefore, consistent with the view expressed by the Tribunal in the preceding assessment year as referred to above, we restore the issue to the file of the Assessing Officer for considering afresh with similar direction and only after reasonable opportunity of being heard to the assessee. Ground No. 4, raised by the Revenue is allowed for statistical purposes." In light of above order of Tribunal, we restore this issue back to the file of Assessing Officer with similar directions. In the result, ground No. 3 of appeal is allowed for statistical purposes. 24. The grounds No. 4,5 & 7 of the appeal are inter connected, hence, taken up together for adjudication. The ld. Departmental Representative submitted that the issue ....
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....es. The breakup of exempt income is as under: (i) Interest income Rs. 408.63 crores. (ii) Guarantee Commission Rs. 6.16 crores (iii) Fee income Rs. 13.01 crores (iv) Future Interest Flow Rs. 93.30 crores Total Rs. 520.11 crores The Assessing Officer proportionately allocated the expenditure to the gross receipts in earning tax free income and made addition of Rs. 70.90 crores. The Assessing Officer further made addition of Rs. 9.95 crores in respect of income exempt from tax u/s. 10(15) of the Act. We find that similar issue had come up for consideration before the Co-ordinate Bench in assessee's own case in appeal by the Revenue for Assessment Year 2004-05 in ITA No. 6137/Mum/2008. The Tribunal decided the issue as under: "7. We have further noted that the learned Commissioner (Appeals) while issuing fresh direction to the Assessing Officer regarding computation of net exempt income under section 10(23G) of the Act has followed his order in assessee's own case for assessment year 2001-02. However, the Tribunal, while deciding the appeal of the Revenue in ITA No. 393/ Mum./2008, dated 2nd March 2016, has restored the matter back to the file of the Assessing Officer for....
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.... restored the issue to the Assessing Officer for considering afresh. In view of the aforesaid, we are inclined to restore the issue to the file of the Assessing Officer for deciding afresh keeping in view the directions of the Tribunal in the preceding assessment year. Thus, ground No. 2, raised by the Revenue corresponding to ground No. 3, raised by the assessee are allowed for statistical purposes." The facts in the present appeal being similar to Assessment Year 2004-05, we see no reason to take a contrary view. The grounds No. 4, 5 & 7 are allowed for statistical purposes in similar terms. 27. In ground No. 6 of appeal, the Revenue has assailed the findings of CIT(A) in deleting addition of depreciation on lease assets. The ld.Counsel for the assessee stated at the outset that this is a recurring issue, The Tribunal in assessee's own case for Assessment Year 2004-05 and 2005-06 has allowed the claim of depreciation. The CIT(A) has allowed claim of assessee by following the order of Tribunal in earlier Assessment Years . 28. The Ld. Departmental Representative vehemently supporting the assessment order submitted that depreciation on leased assets was disallowed by the Assessi....
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....a) of the Act. The Assessing Officer has made the addition by following the order of Tribunal in the case of Tivoli Investment& Trading Co. Pvt. Ltd. vs. ACIT, 90 ITD 163 (Mum). The ld.Counsel for the assessee supporting the order of CIT(A) stated that only the actual rent received or receivable has to be taken into consideration and not the notional value. The CIT(A) has deleted the addition by following earlier orders. The ld.Counsel for the assessee further placed reliance on the order of Tribunal in its own case for Assessment Year 2004-05 and the decision of Hon'ble Bombay High Court in the case of CIT vs. Tip Top Typography, 368 ITR 330 (Bom). 31. Both sides heard. We find that in assessee's own case for Assessment Year 2004-05, the Assessing Officer had made addition on account of notional rent on deposit while determining annual value u/s. 23(1)(a) of the Act. The CIT(A) deleted the addition. The Revenue carried the issue in appeal before the Tribunal. The Co-ordinate Bench following its own order on identical issue in the case of ICICI Ltd for Assessment Year 2002-03in ITA No. 836/Mum/2008 decided on 07/07/2017 upheld the findings of CIT(A) in deleting the addition. F....
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....il 2003 and ending before 1st April 2005, the deduction allowable in terms of proviso 1 to section 36(1)(viia) of the Act is 10% instead of 5%. In view of the above, we do not find any infirmity in the order of the learned Commissioner (Appeals) on this issued. Accordingly, we uphold the order of the learned Commissioner (Appeals) by dismissing ground No. 10 raised by the Revenue." No contrary material has been placed before us to distinguish the order of Tribunal in assessee's own case on this issue for Assessment Year 2004-05. In the absence of any contrary material we see no reason to take a different view. Thus, following the decision of Co-ordinate Bench in assessee's own case, the ground No. 9 of the present appeal is dismissed being devoid of any merit. 35. The ground No. 10 & 11 of appeal are general in nature, hence, require no separate adjudication. 36. In the result, appeal by the Revenue is partly allowed for statistical purpose. ITA No. 8420/Mum/2010-A.Y. 2003-04 : Assesssee's Appeal. 37. The assessee in appeal has raised six grounds. The ground No. 1 and 6 are general in nature, hence, require no adjudication. 38. In ground No. 2 of appeal, the assessee has....