TaxTMI 
TaxTMI 
TaxTMI 
2022 (8) TMI 1587
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....1)(viii) 1,47,18,276 Withdrawal of interest u/s. 244A 3,02,33,215 Enhancing the income under the following heads: (a) Depreciation in investments (not quantified) (b) Deduction u/s. 36(1) (viia) (not quantified) 2. He failed to appreciate that the revised return was filed on 21.03.2014, within the due date prescribed under the Act and that, therefore, the revised return should have been adopted, in place of the original return. 3. CIT (A) erred in treating the letters received from the AO to the CIT (A) as enhancement petition, without appropriate application of his mind. 4. He erred in not following the decision of the Appellate Authorities in the appellant's own case for the earlier years, in respect of the addition made towards depreciation on investments. 5. He failed to appreciate that the claim made by the appellant u/s. 36(1)(viia) is in accordance with Rule 6(ABA) of the Income-tax Act and that the Calcutta High Court in PCIT, Jalpaiguri Vs Uttarbanga Kshetriya Gramin Bank had favour of the appellant. 6. He also failed to appreciate that the appellant had computed the deduction U/s. 36(1)(viia) in a scientific manner and that the method of computation had....
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....ed interest only on those Non-performing assets which fall und the category of more than 90 days and less than 180 days old levied interest for the period of 180 days only. 7. On the facts and circumstances of the case, the CIT (A) failed to see that no rural debt written off can be claimed u/s 36(1)(viia) if its value is less than the provision made u/s 36(1)(viia) and also failed to appreciate the fact that the debts written off filed by the assessee contains some rural debts also. 8. On the facts and circumstances of the case, the CIT (A) has erred in deleting the disallowance of provision for bad and doubtful debts u/s 36(1)(viia) of the Act quoting the census 2001. 9. On the facts and circumstances of the case, the learned CIT (A) has erred in the issue u/s 36(1)(viia) by considering partly allowed. The CIT (A) has not considered as rural branches, as the population of each of the branches exceeded 10,000 as per the Census of 2011 are to be excluded from the definition of 'rural branches' and the quantum of "Aggregate Average Rural Advances are to be re-worked. 2. As is evident, the subject matter of assessee's appeal is (i) Computation of Deduction u/s 36(viia) and enh....
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....e revenue is in further appeal before us. 5.3 The position noted by Ld. CIT (A) remain uncontroverted before us and therefore, no infirmity could be found in the impugned order, in this regard. The corresponding grounds raised by the revenue stand dismissed. 6. Interest Accrued on Non-performing Accounts: 6.1 As per the RBI guidelines as well as under Indian Companies Act, the assessee was required to maintain books of accounts on mercantile basis. However, the provisions of section 43D clause (a) provides that income by way of interest in respect of bad and doubtful debts shall be chargeable to tax in the previous year in which it is credited by these banks to its Profit & Loss account or in the year in which it has actually been received by the assessee. As per Rule 6EA of Income Tax Rules, if no interest was being paid by the borrower for 6 months, such sticky account was to be treated as bad and doubtful account which is referred to as non-performing account (NPA). The RBI has also issued guidelines for classification of accounts as NPAs. There was no conflict between the RBI guideline for recognizing NPAs and Rule 6EA of the Income Tax Rules till 31.03.2004. However, subse....
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....nbsp; NPA Rs. 45,43,09,975 Floating Provision Rs. 6,12,00,000 Total Provision claimed to be made 51,55,09,975 (h) Least of (c) or (d) claimed as deduction u/s. 36(1)(viiia) 51,55,09,975 7.2 However, Ld. AO revised the same by taking aggregate average of rural branch advances disbursed during the year and computed deduction of Rs. 13.44 Crores as under: (a) Aggregate average rural advances disbursed during this year [Rs. 15,54,64,914 - Rs. 37,28,024] (As the population of Uthmarkoil is above 10,000, the average rural advances disbursed to this branch is disallowed) 15,17,36,890 (b) Deduction allowable on aggregate rural advances [@ 10% of (a)] 1,51,73,689 (c) 7.5% of Gross Total Income before deduction under Chapter VIA {after deduction under 36(1)(viii)} 7.5% (Rs. 164,03,06,140- Rs. 5,02,81,724) = 7.5% (159,00,24,416) 11,92,51,831 (d) Total of (b) and (c) 13,44,25,520 (e) Provision made for Bad and Doubtful Debts by the Bank 51,55,09,975 (f) Least of (d) or (e) allowable as deduction u/s. 36(1)(viia) 13,44,25,520 7.3 During appellate proceedings, Ld. AO proposed enhancement. Accepting the same, Ld. CIT....
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....any provision for bad and doubtful debts made by the scheduled Bank, an amount not exceeding 71/2 percentage of the total income computed before making any deduction under this clause and Chapter VI A and an amount not exceeding 10% of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner are allowed as deduction. It is clear from the said provision that, the distinction has been made between the branches situated in the rural areas and the branches situated outside the rural areas. In respect of rural area, branches have to cater to the requirements of the poor and under privileged section of the society. The chances of recovery by the national bank being weaker by 10% to the aggregate average, advances made in those rural branches is given deduction towards bad and doubtful debts. The Legislature has defined what is "rural branch", as it is clear from the Explanation. They have fixed the population of not more than 10,000 as determining the rural branch and that population of 10,000 should be according to the last preceding census of which the relevant figures have been published before the first day of previous year. Therefore, ....
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.... made. If from the date of provisional population totals being published it has crossed the 10,000 limit as prescribed under the Law, then it does not satisfies the requirements of the rural branch and consequently assessee would not be entitled to the benefit granted to the rural branches. The publication of the final population total is only a formality. If after provisional population total shows more than 10,000 and in the final population total figure shown is less than 10,000 then it will make difference. But in both the provisional population total and the final population total if figure is mentioned above 10,000 it makes no different in the instant case. It is not the case of the assessee though the provisional figure mentioned is above 10,000 and in the final population total it has gone below 10,000. Therefore, provisional population total cannot be acted and in that view of the matter the Tribunal was justified in upholding the order passed by the assessing authority where they have acted on the Census figures of 2001 as reflected in the provisional population totals and denied the benefit to the assessee. We do not find any error committed by the authorities. In that v....
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....52.57 Profit from the above activities 3345.67 20% of the profit 669.13 8.2 However, the same was not acceptable to Ld. AO who held an opinion that the profits derived from eligible business was to be computed before making deduction under this clause. The assessee deducted other income from operating expenses. It would be absurd to assume that to earn other income, there would be no operating expenses. Therefore, it would be more appropriate to apportion the proportionate ratio of entire expenses and deductions that are allowed for calculation of total profit. Therefore, the claim was revised as under: - 1 Average total business of the bank (total of balance sheet) 5,14,77,23,75,500 2 sheet) Average eligible business 6,18,41,87,000 3 Cost of fund as per bank 7.85% 4 Interest expenditure on the eligible business 48,54,58,680 5 Total operating expenses 2,93,71,08,000 6 Provision for bad debts - 7 Total expenses (5+6) 2,93,71,08,000 8 Prop. Operating expenses towards the eligible business (2/1)*7 12,29,56,698 9 Total expenditure towards eligible business 60,84,15,378 10 Total interest income from the eligible business as per assessee ....