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2016 (4) TMI 1392 - AT - Income TaxDisallowance of guest house expenses - HELD THAT:- Identical issue has been decided by the Tribunal against the assessee in the earlier years. We find that while deciding the appeal for the AY 1996-97 [2013 (8) TMI 520 - ITAT MUMBAI] - Ground No. 1 is decided against the assessee. Interest credited to interest suspense account taxed in earlier years - HELD THAT:- During the course of hearing before us, representatives of both the sides conceded that issue stands decided in favour of the assessee subject to verification by the AO with respect to the earlier years. Disallowance in respect of payment for scientific research - HELD THAT:- AR agreed that assessee had not challenged the order for the year 1996-97 before the Tribunal. As the assessee had accepted the order of the FAA for the earlier year, we are of the opinion that there is no need to disturb the order of the CIT(A) for the current year as facts for both the years are identical- except that the amounts involved are different. Confirming the order of the FAA Ground No. 3 is decided against the assessee. Exemption u/s. 10(15)(iv)(h) - assessee had claimed entire interest received on tax free securities exempt u/s. 10(15)(iv)(h) - as per assessee expression “income” meant “net income” i. e. receipt minus expenditure - HELD THAT:- AO had allowed expenditure to the extent of ₹ 25. 43 crores and had disallowed expenditure of ₹ 45. 51crores on proportionate basis, that the FAA directed the assessee to furnish details to prove that borrowed funds were not used for making investment yielding exempt income, that the assessee had admitted that it was not possible to co-relate the investment with own funds, the assessee had claimed that its own funds including reserves and surpluses were about ₹ 30, 000 crores for the year under consideration. The AO had applied the provisions of section 14A of the Act. In our opinion law relating to allowing expenditure with regard to exempt income has evolved since the appeal was decided by the FAA for the year under consideration. The AO/FAA did not have the benefit of the cases dealing with the provisions of section 14A, while making the assessment /deciding the appeal. Matter needs further verification/investigation. Therefore, in the interest of justice we are restoring back the issue the file of the AO for fresh adjudication. He is directed to afford reasonable opportunity of hearing to the assessee . Ground No. 4 is decided in favour of the assessee in part. Reduction u/s. 80M - HELD THAT:- As decided in M/S. MODERN TERRY TOWELS LTD., [2012 (8) TMI 776 - BOMBAY HIGH COURT] the provisions of section 80HHC of the Income-tax Act, 1961, are entirely different from those of sections 80M and 80AA. There is no basis for importing the provisions of section 80HHC for interpreting section 80M. That would not lead to a satisfactory computation of the net dividend under section 80M. Tribunal was justified in law in allowing special deduction under section 80M in respect of gross dividend without deducting estimated expenses therefrom. Disallowance of depreciation on leased assets - HELD THAT:- In the case of bank it is not permitted under the Banking Regulation Act to engage in the business of leasing of equipments. Following the decision of Special Bench of this Tribunal in case of IndusInd Bank Ltd. [2012 (3) TMI 212 - ITAT MUMBAI] we hold that the transaction in question is finance lease and not operating lease. Accordingly, we uphold the orders of the authorities below qua this issue - Decided against assessee. Un-earned interest on doubtful advances as per sec. 43D - AR stated that the amount in question had already been disallowed in the past, that there cannot be disallowance of the same amount in two years - HELD THAT:- We find that the claim made by the assessee of double disallowance of the same amount has not been considered. Therefore, in the interest of justice we are reverting back the issue to the file of the AO to decide the issue afresh after affording reasonable opportunity of hearing to the aa. Gr. No. 7 stands partly allowed in favour of the assessee. Deduction for provision for bad and doubtful debts u/s. 36(1)(viia) - HELD THAT:- FAA after considering the assessment order and the assessee’s order held that section 36(1)(viia) prescribed upper limit for deduction in respect of provision for bad and doubtful debts, that the assessee could not allow deduction for any amt exceeding the limit even if the provision had been created as per the directions of the RBI. During the course of hearing before us, representatives of both the sided agreed that issue stand decided against the assessee by the Tribunal in own case [2013 (8) TMI 520 - ITAT MUMBAI] - When the allowable claim has been accepted by the AO under the provision of section 36(1)(viia) then merely the provision made on the basis of RBI guidelines does not become allowable for deduction in contravention of the provision of section 36(1)(viia). It is pertinent to note that when the claim of deduction specifically provided u/s 36(1)(viia) then the same cannot be allowed by applying any other provision. - Decided against assessee. Contribution to SBI Retired Employees Medical Fund - Addition u/s 40A - HELD THAT:- Tribunal was of the opinion that provisions of section 40A(9) should not make any harm to the expenditure incurred bonafide, that the contribution by the assessee bank was not disputed by the AO, stating that the same was not bonafide, that the funds were not controlled by the assessee banks, that the bonafide contribution made by the assessee as an employer was not hit by section 9 of section 40A of the Act. In the case under consideration, there is no doubt about genuineness of payment nor it is the case of the AO or FAA that Trust was not bonafide or the expenditure was not incurred wholly and exclusively for the employees. Considering these facts of the case and following the judgment of State Bank of Travancore [1986 (1) TMI 1 - SUPREME COURT] Ground No. 9 is decided in favour of the assessee. Write off bad debts u/s. 36 (1) (iii), Recovery of bad debts written off u/s. 41(4) and Income earned from foreign branches - HELD THAT:- Remitting back all the three issue to the file of the AO for fresh adjudication. AO may afford a reasonable opportunity of hearing to the assessee. Disallowance of depreciation on matured investments - HELD THAT:- Identical issue has been decided by the Tribunal against the assessee in the earlier years. We find that while deciding the appeal for the AY 1996-97 [2013 (8) TMI 520 - ITAT MUMBAI] - Ground No. 1 is decided against the assessee. Loss on revaluation of permanent category investments - HELD THAT:- A security capital is employed, it is a part of normal course of business of a bank and the money which was not lend to the borrower but was invested in the form of deposits in another bank cannot be said to have become ceased to be part of stock in trade of bank. Keeping in view the ratio of these judicial pronouncements, we hold that the investment in question very much represented stock in trade of the baking business of the assessee and the loss on the revaluation thereof is allowable as deduction. Accordingly, the impugned order of the ld. CIT(A) on this issue is set aside and the A. O. is directed to allow the deduction claimed by the assessee on account of loss on revaluation of investment.
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