TaxTMI 
TaxTMI 
TaxTMI 
2025 (1) TMI 1470
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....e appellant craves leave to add, alter or vary any of the grounds of appeal." 3. The ground of appeal raised by the assessee in ITA No.824/SRT/2023 (AY.2014-15) are as follows: "(I) Disallowance u/s. 14A of the Act Rs. 7,02,455: (1) On the facts and circumstances of the case and as per law, the learned CIT(A) was not justified in confirming disallowance of Rs. 7,02,455 (2) Without prejudice to the above, disallowance has not been correctly worked out. (II) Investment in Madhavpura Mercantile Bank written off Rs. 7,81,70,034: (1) On the facts and circumstances of the case and as per law, the learned CIT(A) seriously erred in confirming disallowance of Rs. 7,81,70,034 in respect of bad debt of investment in Madhavpura Mercantile Bank, holding as if the claim was for section 36(1)(viia), particularly when the claim pertained to section 36(1)(vii). (2) The appellant submits that the learned CIT(A) totally misconstrued the relevant facts in confirming the disallowance. (III) Miscellaneous: - (1) All of the above grounds are prejudice to one another. (2) The appellant craves leave to add, alter or vary any of the grounds of appeal." 4. The assessee has raise....
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....ns have been settled by Hon'ble Supreme Court in case of Catholic Syrian Bank Ltd. vs. CIT, in Civil Appeal No. 1143 of 2011 where the Hon'ble Court held that a Bank is eligible to claim deduction for bad debts u/s 36(1)(vii) and also claim for provision of bad and doubtful debts u/s 36(1)(viia) of the Act. The Hon'ble Court held that provision for bad and doubtful debts u/s 36(1)(vii) is distinct and dependent of section 36(1)(viia) relating to allowance of bad debts. It has stated that in order to prevent double deduction, the proviso to clause (vii) was inserted which states that in respect of bad debts arising out of rural advances, the deduction on account of actual write off would be limited to the excess of amount written off over the amount of provision allowed under clause (viia). Thereafter, the AO after relying on the decisions of Surat Bench in case of Adinath Co-Op. Bank Ltd., in ITA No.2726/Ahd/2016, dated 02.11.2018 stated that clause (viia) applies only to rural branches. Since assessee has no rural branches, it is not entitled to claim provisions for bad and doubtful debts reserved u/s 36(1)(viia) of the Act. 6. Aggrieved by the order of AO, the assessee filed app....
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....ive Bank Ltd., 72 taxmann.com 205 (Cochin Trib), (ii) ING Vysya Bank, 42 taxmann.com 303 (Bangalore Trib) and (iii) State Bank of Hyderabad, 63 taxmann.com 322 (Hyderabad Trib.). 8. On the other hand, the learned Commissioner of Income-tax - Departmental Representative (ld. CIT-DR) for the revenue has relied on the order of the lower authorities. He submitted that assessee has added "bad and doubtful reserve" and claimed the same u/s 36(1)(viia) of the Act. 9. We have heard both the parties and perused the materials available on record. We have also deliberated on the decisions relied upon by both sides. The only issue is disallowance of Rs. 35,00,000/-, being provision for bad and doubtful debts claimed under section 36(1)(viia) of the Act. We have seen the submission of the assessee and the details furnished vide submission dated 10.01.2024 and 13.11.2024. The computation of total income has been given at page 28 of the paper book of the submission dated 10.01.2024. It is seen therefrom that the assessee has added back 'bad and doubtful reserve' of Rs. 35,00,000/- to the net profit as per P&L account and claimed the same as "Bad and Doubtful Reserve" u/s 36(1)(viia)'. The balan....
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....a Mercantile Co-Op. Bank (MMCB) of Rs. 7,81,70,034/-. In this regard, the appellant has also taken alternate ground that the same is allowable even without provisions of section 36(1)(vii)/36(1)(viia) of the Act. It is seen that the alternate ground raised by the appellant is purely legal in nature and no additional facts are necessary to adjudicate the same. It emerges from the facts available on record before the lower authorities. It also goes to the root of the matter. The Hon'ble Supreme Court in case of National Thermal Power Co. Ltd. vs. CIT, 229 ITR 283 (SC) held that the power of the Tribunal in dealing with appeals is expressed in the widest possible terms. The Hon'ble Court did not find any reason as to why the assessee should be prevented from raising a question before the Tribunal for the first time so long as the relevant facts are on record in respect of that item. It further observed that the power of the Appellate Assistant Commissioner in permitting assessee to raise an additional ground in accordance with law, as held in case of Jute Corporation of India Ltd. vs. CIT, 187 ITR 688 (SC), is also available to ITAT in respect of appeals pending before it. Since the a....
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.... The assessee claimed Rs. 7.81 crore as deduction in its return of income as a write off. Regarding double deduction, Ld. AR submitted that the understanding of the AO is misconceived. There were two debits and one credit, resulting in only one deduction. The entries in the books of accounts were as under: 1. Special Investment Reserve A/c Dr. 2,27,50,000 Special Bad & Doubtful Debts Reserve A/c Dr. 1,47,00,000 Bad & Doubtful Debts Reserve A/c Dr. 3,63,00,000 Contingency Fund A/c Dr. 45,00,000 To Special Investment A/c Cr.7,82,50,000 (Being Special Reserve created for write off of Bad debts) 2. Write off (debited to P & L) A/c Dr. 7,81,70,034 To Investments in MMCB A/c (Being Bad Debts written off by crediting investments in MMCB) 3. Special Investment Fund Dr. 7,81,70,034 To Special Invest. Income. A/c Cr. 7,81,70,034 (Credited to P & L) (Being income booked in the Profit & Loss Account by withdrawing amount equivalent to neutralise the effect in order to comply with provisions of Gujarat Co-....
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.... the invalid tax claims all demonstrate an unsustainable position. The deductions available under the Act are strictly limited to those outlined in Sections 28 to 44, and any deviation from this framework particularly in cases involving financial non-compliance-cannot be justified. Given the need for transparency in the banking sector and the strict standards required when handling public funds, the AO's decision, affirmed by the CIT(A), to disallow the deduction is well-founded and should be upheld by the Tribunal. 16. We have heard both the parties and perused the materials available on record. We have also deliberated the decisions relied upon by the parties. The facts relating to the case are that appellant had FDs with MMCB, aggregating to Rs. 7.81 crore. During the year under consideration, the appellant had written off the deposits. The deposits were ultimately written off by debiting various reserves such as Special Investment Reserve, Special Bad and Doubtful Reserve, Bad and Doubtful Debt Reserve and Contingency Fund. Even though the amount was debited and credited to the P&L account, ultimately, the sum was written off by debiting the above reserves only. According ....
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.... claimed without debiting the P&L account and different treatment can be given for accounting in the books and for the purpose of computing income as per the Act. On the first issue, the FDs can be treated as stock-in-trade if it forms part of banking business. It is seen that as per section 6 of the Banking Regulation Act, 1949 which deals with the form and business in which the banking companies may engage, dealing in funds is a part of banking business. Apart from accepting deposits and lending money, investing in deposits is also a part of banking business. Accepting deposits and giving of loans and advances, making investments, deposits etc. form part of core activity of banking business. Thus, the deposits placed with MMCB was wholly in the course of and for the purpose of business. Therefore, the deposits held by the assessee-bank cannot be treated as capital asset and they formed part of stock-in-trade. This is also fortified by the fact that the interests earned on such deposits are offered to tax and have been taxed by the Department as business income. 17.1 The second issue is whether write off the said deposit is a loss arising in the course of carrying on banking busi....