TaxTMI 
TaxTMI 
2024 (6) TMI 1592
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....cial pronouncements pointed out by the appellant. 2.2. The CIT(A) failed to appreciate the fact that no disallowance can be made u/s 14A in the case of the Bank based on the facts of the case." 4. After hearing both the parties, we are of the opinion that similar issue came for consideration before the coordinate bench of this Tribunal in assessee's own case for the assessment year 2016- 17 & 2017-18 in ITA Nos. 390 & 501/Bang/2023 the Tribunal vide order dated 25.10.2023 has observed 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 31.01.2020 passed in the aforesaid case, reads as under: "8. We have considered the submissions made b....
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....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. Therefore, the substantial questions of law Nos_3, 4 and 5 and substantial question of law framed in ITA 99/2010 are rendered academi....
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....) failed to appreciate the fact that the interest received by the Appellant Bank for the impugned Asst Year has been offered to tax in the Asst Year 2019-20 and as such, taxing the same again in this impugned Asst Year amounts to double taxation of the same income. 3.3. Without prejudice to the above the learned Assessing Officer may be directed to delete the interest income offered by the Appellant Bank in the Asst Year 2019-20 if the above grounds of the Appellant Bank are decided against the Bank." 6. The issue in these grounds relating to taxing of the interest on income tax refunds. The contention of the ld. A.R. is that though assessee has received the interest on refund of tax vide intimation u/s 143(1) of the Act, however, it has been withdrawn by passing the assessment order u/s 143(3) of the Act. Thus, there was no real accrual of interest refunds to the assessee in the assessment year 2015-16. As such it was finally offered for taxation when the assessee has actually received it in assessment year 2019-20. Thus, he submitted that in the assessment year under consideration i.e. 2015-16, it should not be taxed. 7. We have heard the rival submissions and peru....
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..... 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 35-37 of the PB. The Ld.AR further relied on decision of Hon'ble Delhi Tribunal in the case of Oriental Bank of Commerce v. ACIT reported in [2022] TIOL 331 ITAT-DEL. The Ld.AR submitted that, the provisions of section 115JB, as it stood prior to its amendment by virtue of Finance Act, 2012, would not be applicable to a banking company. He submitted that coordinate Bench of Delhi Tribunal considered this issue by observing as under :- "51. This issue is no longer res-judicata following judgments of the tribunals and the High Courts wherein it is categorically held that MAT provision u/s 115JB will not apply to a Banking Company: - Canara Bank vs JCIT, LTU in ITA No. 530/Bng/2010 & other dtd. 30.03.2016 = 2016-TIOL-1120-HC-P&H-IT - M/s. Canara Bank vs CIT(LTU) In ITA No. 305/Bang/2011 dtd. 18.06.2012 - Krung Thai Bank PCI vs Joint Director of Income Tax (ITAT) (Mumbai) in ITA No.3390/Mum/09 dtd. 30.09.2010 reported in (2010) 45 DTR 218 - Union Bank of India vs ACIT....
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....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 amended by the Finance Act, 2012 w.e.f. 1.4.2013, inserting clause (a) and clause (b) in sub-section (2) to section 15JB are 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 ]]. (2) [Every assessee,- (a) being a company, other than a company referred to in clause (b), shall, for the purposes of this section, prepare its profit ....
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....essee 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 that "for the purposes of the Income-tax Act, 1961, every corresponding new bank shall be deemed to be Indian company and a company in which public is substantially interested". (v) It is settled principle of law where deeming fiction is created by the legislature it has to be confined to the purpose for which it is created. CIT, Panji vs Dempo Company Limited reported in (2016) 74 TAXMAN.com 15 (SC) = 2016-TIOL-164-SC-IT. Therefore, the Income- tax Act must recognize such banking company for the purpose section 115JB in order to make the provisions applicable. (vi) When the charging section and the computing provision together would constitute an integrated code. In case charging section does not apply then the computation section fails. CIT vs B C Shrinivas Setty 128 ITR 294 = 2....
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....r: "11. We have heard the rival submissions and perused the material on record. We notice that the from the decisions of the coordinate Bench quoted by the assessee in ITA No. 1885/Bang/2018 for AY 2014-15 (supra) in its own case, the issue has been decided in favour of the assessee as under :- "12.3 We have heard rival submissions and perused the material on record. We notice that the CIT(A) had expressed the view that provision allowed u/s 36(1)(viia) of the Act would apply to non-rural advances also. An identical issue has been examined by the Hyderabad Bench of the ITAT in the case of State Bank of Hyderabad v. DCIT in ITA No. 450/Hyd/2015, ITA No. 498 and 499/Hyd/2015 (order dated 14.08.2015) wherein the Tribunal had not accepted the above said view expressed by the CIT(A). The Bangalore Bench of the Tribunal in assessee's own case for assessment year 2013-2014 by following the Hyderabad Bench order of the Tribunal in the case of State Bank of Hyderabad (supra), had set aside the view expressed by the CIT(A) that proviso to section 36(1)(vii) which requires adjustment of bad debts against the provisions allowed u/s 36(1)(viia) would apply to non-rural adv....
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....ng 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 non-rural 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 is extracted hereunder for convenience. "26. The Special Bench of the Tribunal had rejected the contention of the Revenue that proviso to s. 36(1)(vii) applies to all banks and with reference to the circulars issued by the Board, held that a bank would be entitled to both deductions, one under cl. (vii) of s. 36(1) of the Act on the basis of actual write off and the other on the basis of cl. (viia) of s. 36(1) of the Act on the mere making of provision for bad deb....
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.... 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 rural advances, a deduction would be allowed even in respect of a mere provision without insisting on an actual write off However, this may result in double allowance in the sense that in respect of same rural advance the bank may get allowance on the basis of clause (viia) and also on the basis of actual write off under clause (vii). This situation is taken care of by the proviso to clause (vii) which limits the allowance on the basis of the actual write off to the exces....
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.... 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 non-rural 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 nonrural/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)." 6.5 Following the above said decision, we hold that the view expressed by Ld CIT(A) is not legally correct. Accordingly, we set aside the order passed by Ld CIT(A) with regard to his alternative decision, i.e., the view that the proviso to sec. 36(1)(vii) which requires adjustment of bad debts against provision allowed u/s 36(1)(viia) would apply to non-rural advances also. Accordingly, we direct the AO to delete the disallowance of Rs. 1258.47 crores." 12.4 In view of the above co-....
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....see will be entitled for double benefit because provisions in respect of 10% of the bad debt of provisions of Rs.l Crore towards bad debt was already made as on 31.03.201'. Therefore, if the same amount is carried forward for the next F.Y., the assessee will be entitled for the double benefit because would be making a provision for Rs.l Crore in addition to the 10% to the bad debt made in the relevant F.Y. 7. Shri Suryanarayana, adverting to the Para 7 of the impugned order, submitted that in identical circumstances, in assessee's own case, the assessee had made provision in similar manner as made A-Y. 2013-14. A co-ordinate bench of the Tribunal had accepted the provision made by the assessee benefit in Canara Bank Vs. JCIT (2017) 60 ITR (Trib) 1. He further submitted that the said order has been followed by the Tribunal in Vijaya Bank and Others vs. Joint Commissioner, Bangalore ITA No.915 & 845/Bang/2017 dated 05.01.2018 and the said method of making provision has been approved by the Calcutta High Court in Uttarabanga Kshetriya Gramin Bank case. 8. We have carefully considered the rival contentions and perused the records. 9. In Para 7.2 of th....
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....ue. 16. Ground No.4 & 5 of the revenue's appeal reads as follows: "4. The ld. CIT(A) erred in law by allowing depreciation claimed on held to maturity (HTM) securities. 5. The Ld. CIT(A) erred in law by ruling that depreciation on the value of stocks/securities Held to Maturity (HTM) is an eligible business expenditure, ignoring the filet that valuation of securities is done as per the norms provided in the Banking Regulation Act by the RBI and the said laws do not deal with permissible deductions or exclusion under the Income Tax Act." 17. After hearing both the parties, we are of the opinion that similar issue was considered by the Hon'ble Karnataka High Court in assessee's own case in assessment year 2013-14 reported in 147 Taxmann.com 171 (Karn), wherein the issue is decided in favour of the assessee in question No.3. Further, coordinate bench of the Tribunal in ITA No.1881, 1882, 1889 & 1900/Bang/2017 dated 28.9.2018 in assessee's own case considered similar issue and held as under: 8.5.1 We have heard the rival contentions, perused and carefully considered the material on record; including the judicial pronouncements cited. We ....
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.... considered as stock-in-trade. The Hon'ble High Court finally concluded that 30% of the rised investments can be clothed to the character of stock-in-trade and that the remaining Einate amounts will be investments and therefore diminution in their value cannot be allowed as ink in a deduction. 59. The Id. counsel for the assessee, however, submitted that in the assessee's own on case for the A. Y. 2005-06, this Tribunal has confirmed the order of the CIT(A), deleting identical addition made by the AO. Our attention was also drawn to the order of the e the Tribunal in assessee's own case in ITA No.492/Bang/2009 for-the A. Y. 2005-06, order also dated 13.01.2012, wherein the Tribunal had to deal with identical issue as to whether the lid be CIT(A) was correct in deleting the addition made by the AO on account of profit on sale of investments of Rs.200,77,13,662/- and deleting the action of the AO in disallowing loss claimed on treating investments as stock-in-trade by drawing the investment trading account of Rs.775,96,55,047. The Tribunal had "16. We have heard both sides and find that the Supreme Court in the case of IJCO Bank in 240 IT R 355 has held as under ....
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....income-tax purposes. The Hon'ble Court took the view that all investments held by a bank are to be regarded as stock-in-trade. 61. The Id. counsel for the assessee further drew our attention to a very recent decision of the Hon'ble High Court of Karnataka rendered on 11.03.2013 in the case of CIT v. Vijaya Bank, ITA No.687/2008. The Hon'ble High Court of Karnataka in the aforesaid case followed its own decision rendered in the case of Karnataka Bank Ltd. v. CIT in ITA No. 172/2009 rendered on 11.01.2013, wherein the Court took the view that depreciation claimed on investments 'held on maturity' by a bank has to be treated as stock- in-trade in accordance with RBI guidelines and CBDT Circular. It was his submission that the later decision of the Hon'ble Karnataka High Court haye to be followed. 62. We have given a careful consideration to the rival submissions and are of the view that the contentions put forth on behalf of the assessee deserve to be accepted. The Tribunal in assessee's own case on an identical issue for the A. Y. 2005-06 has upheld the claim of the assessee. The later decision of the Hon'ble High Court of Karnataka i....
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....sue was considered by coordinate bench in the case of Bank of Baroda in ITA No.321/Bang/2019 and ITA No.528/Bang/2019 reported in (2023) (4) TMI 1169 (ITAT Bang.) dated 25.4.2023, wherein held as under: "33. Ground No.5 : During the course of assessment proceedings, on perusal of Form 3CD audit report, the AO noted that "no sum in the form penalty in nature is debited to Profit & Loss Account" but AO observed from the published report that Rs.5.16 lakhs is in the nature of penalty levied by RBI paid during the year, therefore the AO did not allow it u/s. 37(1) observing that it is a violation of any law for the time being in force. The assessee filed appeal before the CIT(A) and submitted that Rs.5.16 lakhs as penalty to RBI was paid for deficiencies in exchange of notes and coins / remittance sent to RBI / operations of currency chest etc. It is further submitted that levy of penalty by RBI is not due to any offences prohibited by law or for infringing of any statute. It is only an additional burden imposed on the bank branches to provide better customer services to members of public with regard to exchange of notes and coin, therefore it is not in the nature of penalty a....
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....orities below as well as from the submissions made by the ld. AR of the assessee. In view of this, we think it fit to remit the issue to the AO for determination of the nature of violation of Banking Regulation Act / RBI directions and decide the issue as per law. The assessee is directed to provide necessary details. Accordingly this issue is allowed for statistical purposes." 18.2 In view of the above order of the Tribunal, we decide this issue in favour of the assessee and against the revenue. Ground taken up by the revenue is dismissed. 19. Next ground Nos.8 & 9 of the revenue's appeal reads as follows: "8. The ld. CIT(A) has erred in law by deleting addition and thereby allowing deduction u/s 36(1)(viii). 9. The ld. CIT(A) has not appreciated the fact that on the same set of facts the jurisdictional ITAT, Bangalore has restored the case to the file of ld. AO in the ITA Nos.321 & 528/Bang/2019 dated 25.4.2023 in the case of Bank of Baroda." 20. After hearing both the parties, we are of the opinion that similar issue came for consideration before this Tribunal in the case of Bank of Baroda in ITA No.1834/Bang/2018 and ITA No.1839/Bang/2018 for the ....