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2013 (9) TMI 235 - ITAT DELHIClaim of bad debts - Banking company - Restriction on Provision for bad debts - Rural branches versus non rural branches - Section u/s 36(i)(viia) – Held that:- Assessee has submitted working for claim u/s 36(i)(viia), to demonstrate that assessee had set off bad debts relating to non rural branches against the opening provision u/s 36(i)(viia). In the same statement, assessee had claimed bad debts relating to rural branches amounting to Rs. 10,38,51,000/-. Considering the entirety of facts, the claim of assessee needs to be examined afresh in the light of decision of Hon’ble Supreme Court in the case of Catholic Syrian Bank [2012 (2) TMI 262 - SUPREME COURT OF INDIA] - If on verification, the AO finds that no separate bad debts had been written off in respect of non rural branches, then the same is to be allowed after due verification – Decided in favor of Assessee. Exemption u/s 10(23G) - whether Banking company to be considered as Infrastructure capital funds/company - long term finance made available to infrastructure capital funds/company – Held that:- Assessee company had earned interest on long term loan given to Gujarat State Energy Generation Ltd. which is notified as engaged in the business of infrastructure development within the meaning of sec. 80(i)(a) sub-section (4) clause (iv) sub clause (a) of the Act vide CBDT’s notification dt. 29/06/2006 - Assessee had provided long term finance to an eligible undertaking – Reliance has been placed upon the judgment in the case of Jammu & Kashmir Bank [2008 (2) TMI 533 - ITAT AMRITSAR], wherein it has been held that assessee is a banking company. The essential feature of the business of a banking company is to mobilize resources from the public and lend it on interest to various sectors. The Revenue has not denied that assessee had indeed made investment in shares and providing long term finance to enterprises engaged in infrastructural facility. Therefore, all the conditions laid down for claiming exemption u/s 10(23G) are fulfilled by the assessee. It is not proper to take a narrow view of the issue when the assessee had in fact made investments in shares and financed the enterprises engaged in providing infrastructure facilities on long term basis. It is not necessary that the ‘infrastructure capital company’ should be formed solely for the purpose of mobilizing resources for financing infrastructure facilities. If it includes one of the objects of the banking business, the same should be sufficient to entitle the assessee to claim exemption of its income u/s 10(23G). The above view also finds support from the fact that subsequently this benefit of sec. 10(23G) has been extended to co-operative banks, though such banks have also not been set up for the purpose of mobilizing resources for financing the infrastructure facilities. Therefore, in the present case, the assessee falls in the category of ‘infrastructure capital company’ entitled to exemption u/s 10(23G). The view that banks are entitled to exemption of its income falling in the nature mentioned u/s 10(23G) is reinforced by the news item which appeared in The Economic Times dt. 19.01.2008 - Explanation 1A to sec. 10(23G) of the Act, defining infrastructure capital company does not exclude banking companies so long as banking company is a company and has made investment in providing long term finance to an enterprise wholly engaged in the infrastructure business and approved by the Central Government – Decided in favor of Assessee. Depreciation on Computers - LAN and WAN, a part of computer system in banks – Depreciation @ 60% or at normal rate of 20% only - Held that:- LAN and WAN, both formed integral part of computer system as computer could not be utilized without there devises for assessee’s business purposes and, therefore, assessee was entitled to depreciation @ 60% - Decided in favor of Assessee.
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