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2014 (3) TMI 536 - AT - Income TaxDeduction u/s 36(1)(viia) of the Act – Claim for provision for bad & doubtful debts - Held that:- As decided in assessee’s own case for the previous assessment years, it has been decided that the disallowance to the extent of Rs.243,28,84,423/- claimed u/s 36(1)(viia) of the Act requires to be restored – Decided in favour of Revenue. Admissibility of additional grounds – Held that:- As decided in assessee’s own case for the previous assessment years, it has been decided that the additional grounds sought to be raised by the Revenue cannot be admitted for adjudication - The deduction under the first proviso to sec. 36(1)(viia)(a) of the Act is in addition to what is allowed under sec. 36(1)(viia)(a) of the Act and the assessee is given the option to claim deduction under the proviso - In a nut-shell, in conformity with the findings of the earlier Bench on the issue of admissibility of identical additional grounds, the Revenue's applications for seeking permission for raising the additional grounds are rejected or in other words they cannot be admitted for adjudication – Decided against Revenue. Claim of interest reversed on NPA – Held that:- The decision in CIT v. Industrial Finance Corporation of India Limited [2011 (7) TMI 87 - DELHI HIGH COURT] followed - The un-amended section 36(1)(viii) allowed the deduction to a financial institution for an amount not exceeding 40 per cent of the total income carried to a special reserve - It is clear from the reading of the provisions of clause (viii) of sub-section (1) of s. 36 that the words 'and maintained' were inserted only by way of amendment made w.e.f. 1.4.1998 - As per the un-amended provision which is applicable, only requirement was for creation of reserve equivalent to Rs.40 per cent of total income by debit to the profit and loss account – thus, the order of the CIT(A) upheld – Decided against Revenue. Claim of deduction u/s 35D of the Act - Claim being 1/5th of public issue and bond issue expenses – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been decided that, the provisions of section 35D of the Act were applicable only when the expenses are incurred after commencement of business in connection with expansion of industrial undertaking or in connection with setting up of a new industrial unit - the assessee was not an industrial under-taking - the capital raised by issue of shares is for meeting the working capital requirement or otherwise, will not be a relevant consideration – thus, the CIT (A) was not justified in deleting the addition made by the AO - the claim of the assessee is allowable u/s 37(1) of the Act as expenditure wholly and necessarily incurred in connection with the business of the assessee - The assessee has claimed only 1/5th of the total expenses and has amortized the claim of expenses for the period of the bond – thus, the order of the CIT (A) is upheld partly – Decided against Revenue. Interest on securities on accrual basis – Held that:- The decision in CIT v. Tamil Nadu Mercantile Bank Ltd [2007 (1) TMI 128 - MADRAS High Court] followed - the assessee has been following the method of offering interest on securities to tax on receipt basis on maturity and the same has been accepted by the Revenue in the past – thus, there is no reason to interfere in findings of the CIT(A) Decided against Revenue. Loss on re-valuation of investments – Trading in securities - Held that:- As decided in assessee;s case for the earlier year's, the claim has been decided in favour of Assessee - thus, there is no need to interfere in the findings of the CIT(A) - Decided against Revenue. Disallowance under section 14A of the Act - Expenditure related to the earning of exempt income – Held that:- As decided in assessee’s own case for the earlier assessment years, it has been decided that, The decision in GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] followed – the Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act - The Assessing Officer can adopt a reasonable basis for effecting the apportionment - While making that determination, the Assessing Officer should provide a reasonable opportunity to the assessee of producing its accounts and relevant or germane material having a bearing on the facts and circumstances of the case –there is no infirmity in the order of CIT(A) – thus, the applicability of the provisions of section 14A of the Act to the assessee's case is upheld – thus, the matter is remitted back to the AO for fresh adjudication of applicability of Rule 8D – Decided in favour of Assessee. Applicability of section 115JB of the Act - Banking company – Held that:- The decision in Krung Thai Bank PCL Versus Joint Director of Income Tax - International Taxation, Mumbai [2010 (9) TMI 18 - ITAT, MUMBAI] followed - The provisions of Section 115 JB can only come into play when the assessee is required to prepare its profit and loss account in accordance with the provisions of Part II and I II of Schedule VI to the Companies Act - The starting point of computation of minimum alternate tax under section 115 JB is the result shown by such a profit and loss account - In the case of banking companies, however, the provisions of Schedule VI are not applicable in view of exemption set out under proviso to Section 211 (2) of the Companies Act - The final accounts of the banking companies are required to be prepared in accordance with the provisions of the Banking Regulation Act. The provisions of Section 115 JB cannot thus be applied to the case of a banking company – thus, the provisions of section 115JB of the Act are not applicable to the assessee which is a banking company – Decided in favour of Assessee.
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