TaxTMI 
TaxTMI 
2023 (12) TMI 1446
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....his stage. However, he sought liberty to revive the appeal if circumstances do warrant in future. 2.1. The Ld. DR did not object to prayer of assessee. 3. We have perused submissions from both the sides in the light of records placed before us. The Ld. AR has filed the submission which is reproduced below in ITA 391/B/2023:- 3.1. Based on the above submission by the assessee, it is not necessary to analyse the issues raised by the assessee in ITA No.391 as the appeal has become infructuous. However, liberty is granted to assessee to take necessary steps to revive he appeal in the circumstances do warrant in future. Accordingly appeal filed by the assessee in ITA 391 stands dismissed as infructuous. 4. The Ld. AR submitted that ITA 392 & 663 in case of Canara Bank filed by the assessee and revenue, the issues are largely covered by assessee's own case. He has filed a chart wherein the issues raised by the assessee has been summarized. For the sake of convenience, the same is reproduced as under:- Gr.No. ISSUES Contested in 3 & 7 Disallowance u/s. 14A Assessee appeal 4 & 9-10 Applicability of section 115JB Assessee appeal 5 Addition to book profits Assessee appeal '....
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....ustice that being the life-purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that : 1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. ......................................................1.Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period." Considering the submissions by both sides and respectfully ....
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....e CIT(A) after relying on various judgments observed that " In view of the above, I am not inclined to concur with this plea of the appellant that it had held the securities as stock-in-trade, not with the intention to dividend income. The various judicial precedents relied upon by the appellant, on the above issue, are of no avail as the facts of the instant case are distinguished, as elaborated in preceding paragraphs". The Ld. DR further submitted that the department has not accepted the judgment of the jurisdictional High Court and has filed appeal before the Hon'ble Supreme Court and SLP for the AY 2009-10 to 2011-12 is accepted. Therefore, he requested that the issue should be decided in favour of revenue. 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 3....
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....s a pay out. In order to attract applicability 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 11514 do not apply to the banking companies. ....
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....ion of Hon'ble Karnataka High Court has been followed by coordinate bench AY 2016-17 & 2017-18 has considered this issue in ITA 501& 390/Bang/2023 in order dated 25.10.2023 reproduced herein above. Respectfully following above view, we allow Ground No.3 of assessee in terms of the decision hereinabove. 11. Ground No.4 raised by assessee is on applicability of provisions of section 115JB of the Act. The Ld.AR submitted that, the assessee does not fall within definition of banking company as defined under Companies Act, 1956 and therefore it is not covered by proviso to section 211(2) of the Companies Act. The Ld. AR thus submitted that provisions of s. 115JB are not applicable to assessee. In support of this submission, he placed reliance on decision of Hon'ble Delhi High Court in the case of CIT v Punjab National Bank Ltd. (successor of erstwhile Oriental Bank of Commerce) in ITA 594/2023 by order dated 20/10/2023, wherein the question of law considered by the court is proposed in question (e) has been dismissed. The said order of Hon'ble Delhi High Court in the case of CIT v Punjab National Bank Ltd. (successor of erstwhile Oriental Bank of Commerce) (supra) is placed at page 3....
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.... of goodwill. The Supreme Court was of the opinion that it would not be possible to envisage a cost of acquisition of goodwill. Since computation of capital gain cannot be done without ascertaining the cost of acquisition, it was held that no capital gain tax can be levied. " 53. Concluded at page 12 para 21 as under: "27. In the result, we hold that sub-section 115JB as it stood prior to its amendment by virtue of Finance Act, 2012, would not be applicable to a banking company. We answer the question No. 2 in favour of the assessee and against the revenue. In view of this, question of correctness of the order of rectification passed by the Assessing Officer becomes unimportant. Question No. 1 is therefore not answered. All the appeals are dismissed." 54. For the AY 2013-14 and onwards, vide ground no. ground no. 3 of ITA no. 1582/Del/2Q17 (AY 13-14), ITA no. 1583/Del/2017 (AY 14-15) and ground no. 6 of ITA no. 1199/Del/2018 (AY 15-16), the assessee has contended that provisions of section 115JB (MAT) will not apply as the assessee is a Nationalized Bank under the Banking Company (Acquisition and Transfer of Undertaking) Act, 1980. 55. The provisions of section 115JB as ame....
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....culating the depreciation which have been adopted for preparing such accounts including profit and loss account for such financial year or part of such financial year falling within the relevant previous year. " 56. Thus, the understanding of the above amendment to section 115JB is where a company which are not required u/s 211 (129) of the Companies Act to prepare their P&L account in accordance with Schedule - VI of the Companies Act, 1956 profit & loss account prepared in accordance with the provisions of their Regulatory Acts shall be taken as a basis for computing the book profit u/s 115JB. 57. The assessee's contentions for non-applicability of 115JB provisions are: "(i) It is a case of Nationalized Bank, under the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980. (ii) Assessee is not a company incorporated under the Companies Act, 1956, nor recognized under section 3 of the Companies Act. (iii) The second proviso to sub-section (1) of section 129 (earlier provision 211) of the Companies Act, 2013 is not applicable to the assessee. (iv) Under section 11 of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980 provides t....
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....T(A) the claim of assessee u/s.36(1)(viia). The Ld.AR submitted that assessee had made provisions for bad and doubtful debts and claimed the same u/s. 36(1)(viia) of the act. He submitted that the Ld.AO disallowed the amount on two counts being: (i) the Ld. AO held that only advances made during the year has to be considered for calculating aggregate average rural advances; (ii) the Ld. AO treated some of the branches as non-rural and did not allow deduction with respect to such branches. 16. The Ld. AR submitted that the Ld. CIT(A) followed decision of Hon'ble Karnataka High Court in assessee's own case, wherein the view taken by this Tribunal was upheld. 17. On the contrary, the Ld. DR submitted that the decision of Tribunal in assessee's own case cannot be followed in present case and he submitted that the issue may be remanded to Ld. AO for necessary verification. 18. We have perused submissions advanced by both the sides based on the records placed before us. We note that this issue stands squarely covered by the decision of this Tribunal in assessee's own case in ITA 501 & 390/B/2023 by order dated 25.10.2023 and the decision of Karnataka High Court reported in (2023....
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....etween rural advances and other advances. The AO also relied on the judgements of Southern Technologies Vs. CIT reported in 352 ITR 577(SC), M/s Vijaya Bank vs CIT reported in 320 ITR 166 (SC) & CIT vs Hotel Ambassdor [2002] reported in 253 ITR 430 (Ker). Thus, only the excess amount of bad debts written off, remaining after such set off, is admissible for deduction u/s. 36(1)(vii). 7.2 On appeal, the assessee submitted before the CIT(Appeals) that it had written off total amount of Rs. 1296,56,16,023 during the year. The entire sum of Rs. 130,81,22,967 being bad debts written off by rural branches has been charged to provisions account made u/s. 36(1)(viia) and there was no excess amount left. Therefore, no deduction has been claimed towards bad debts written off by rural branches. It claimed a sum of Rs. 1296,56,16,023 being bad debts written off by non-rural branches u/s. 36(1)(vii) as the same need not be charged to the provisions account u/s. 36(1)(viia). The assessee submitted a brief note on system followed for write off of bad debts as under:- "A) Procedure followed for technical write off and branch level write off The appellant bank identifies individual bad debts t....
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....nder section 41(1) of the Act, in the year of recovery. It was pointed out that any recovery made in a loan account which is still live, i.e. not written off, is credited to that loan account only, and not to the Profit and Loss account.. However, recovery made in an account which has been written off, is credited to the profit and loss account. Thus, it was argued that the very fact that the recovery is credited to the Profit and Loss account, shows that the loan account has been written off and that the recovery of Rs. 387,05,52,549/- has been offered to tax under section 41(4) during the year under consideration. 8. The CIT(Appeals) noted that the AO has noted two important factual findings; (i) that the appellant bank has not actually written-off the debts in the individual loan accounts, & (ii) that the appellant did not charge the amount of bad debts written-off to the Provision for bad and doubtful debts account, even though there was sufficient credit balance available in the provisions created for this very purpose. Thus, the AO has made out a case that the deduction of bad debts was not admissible on both these grounds. The assessee has not been able to controvert these....
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....purport of said proviso, Explanation 2 was inserted to section 36(1)(vii) by Finance Act, 2013 w.e.f. 1.4.2014 which clarified that for the purposes of proviso to s. 36(1)(vii) and s. 36(2), the account referred to therein shall be only one account in respect of provision for bad and doubtful debts and such account shall relate to all advances, including advances made by rural branches. Further, the scope and effect of this amendment has been explained in the CBDT Circular No.3 of 2014 dated 24.1.2014. He noted that from the Explanatory Memorandum that Explanation 2 to clause (vii) of section 36(1) was inserted by the Finance Act, 2013 only with a view to clarify the legislative intent of existing provisions which was clear from the words "for removal of doubts" and "it is hereby clarified" in Explanation 2 and hence the amendment was clarificatory in nature and can be applied retrospectively. He relied on the Hon'ble Supreme Court judgment in the case of CIT v. Gold Coin Health Food Pvt. Ltd. (2008) 304 ITR 308 (SC) wherein it was held that if a statute is curative or merely declaratory of the previous law, it has to be applied retrospectively. Thus, the CIT(A) observed that the i....
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....ces, in assessee's own case, the assessee had made provision in similar manner as made in A.Y. 2013-14. A co-ordinate bench of the Tribunal had accepted the provision made by the assessee benefit in CanaraBank 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 CanaraBank v. JCIT (2017....
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.... it to be in the nature of penal in nature. On an appeal before the Ld.CIT(A) the disallowance was upheld. Aggrieved by the order of the Ld.CIT(A) the assessee is in appeal before us now. At the outset it is submitted that a similar disallowance was made in case of Union Bank of India vs. DCIT reported in (2022) (3) TMI 1131 by coordinate bench of this Tribunal. The Ld.AR placed reliance of the observation of the this tribunal in that case of Union Bank of India(supra) and submitted that the matter may be remanded to the Ld.AO for necessary verification in light of the directions therein. The Ld.DR also did not object to the request of the Ld.AR in remanding the issue to the Ld.AO. 21.2 We note that this Tribunal in case of Union Bank of India vs. DCIT (supra) observed and held as under: "16.4 We heard rival submissions and perused the materials on record. We notice that the Mumbai Tribunal in IDBI Bank Ltd., case (Supra) while considering a similar penalty payment to RBI has held that the amount paid by the assessee is not in the nature of penalty. The Hon'ble Mumbai Tribunal in this case has held that - 12.1 In the instant case, as recorded by the AO the assessee has ....
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....respect of the Ld.CIT(A) allowing the claim of assessee u/s. 36(1)(viia). We have already remanded this issue in Ground no.6 while dealing with assessee's appeal hereinabove. Accordingly ground raised by revenue stands partly allowed for statistical purposes. 24. Ground Nos. 3-4 is against allowing the claim of Rs. 17,12,48,543/- by Ld.CIT(A) towards CSR expenditure. The Ld.AO disallowed the expenditure claimed by the assessee by holding that these expenditure were not for the purposes of business and were added back to the total income of assessee. The Ld.CIT(A) held as under: "8.7 I have gone through the facts of the case and material available on record. Since the appellant is not a company, The Companies Act, 2013, is not applicable to him and explanation 2 to section 37(1) is out of picture. However, the allowability of business expenditure has to be decided based on business expediency. The appellant has submitted that these expenditure are incurred by the Assessee based on the CSR directions of the Government of India. Therefore the decision of jurisdictional ITAT in the case of Union Bank of India is directly applicable here. Accordingly, addition of Rs. 17,12,48,543/-....
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....ead institutions in managing and running such institutes. It is in this context that the assessee has contributed a sum of Rs. 3,82,69,960/-. The Revenue authorities took the view that this was in the nature of donation which can be claimed as a deduction only under section 80G of the Act. The decision of the Hon'ble Karnataka High Court on this point is very clear and is to the effect that provisions of section 37(1) and 80G of the Act are not mutually exclusive if the contribution by the assessee in the form of donation of the category specified in section 80G of the Act but if it could be termed as an expenditure of the category falling under section 37(1) of the Act, then the right of the assessee to claim the whole of it as allowance under section 37(1) of the Act cannot be denied but such money must be laid out wholly or exclusively for the purpose of business. The decision of the Hon'ble Calcutta High Court in the case of CIT Vs. Eastern Coalfields Ltd., (supra) where Government of India framed guidelines on corporate social responsibility for central public sector enterprises, such public sector is bound to formulate a policy in terms of the said guidelines and if a....