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2020 (3) TMI 713 - AT - Income TaxDisallowance made u/s. 14A - assessee has not incurred any expenditure for earning tax free income - HELD THAT:- As relying on MAXOPP INVESTMENT LTD. [2018 (3) TMI 805 - SUPREME COURT] and STATE BANK OF PATIALA [2017 (2) TMI 125 - PUNJAB AND HARYANA HIGH COURT] No disallowance u/s. 14A is permissible in terms of Rule 8D where the assessee’s are engaged in banking business. Since, the assessee is engaged in the business of banking, therefore, following the above decisions we hold that no disallowance can be made u/s. 14A and hence allow the assessee’s appeal. The corresponding grounds of the assessee are allowed. Disallowance of claim u/s. 36(1(vii) - method of computation adopted by the assessee for claiming the deduction u/s. 36(1)(viia) - CIT(A) enhancing the disallowance of the assessee’s claim u/s. 36(1)(vii) by substituting the computation of income from eligible business without pointing out any defects in method adopted by the assessee - HELD THAT:- A O while finalising the assessment did not agree with the method of computation adopted by the assessee for claiming the deduction u/s. 36(1)(viia) and he adopted a different method of computation. On appeal, the Ld. CIT(A) held that by adopting the different method, the AO arrived at the same figure of ₹ 90.08 crores as an allowable amount. Therefore, he held that the asseesee’s appeal is purely academic having no tax impact. He also held that the computation of average aggregate advances made by the assessee bank’s “Rural Branches” have not been properly computed in as much as some of the branches claimed as “Rural Branch” do not clearly fall within the definition of “Rural Branch” given in Explanation (ia) to section 36(1)(viia) - it was found that even after the advances made to such non “Rural Branches” are excluded from the average advances made by the “Rural Branches” claimed by the assessee, the claim of the assessee at ₹ 19,08,77,607/- would still be admissible. CIT(A) has not decided the issue on merits. Aggrieved against that decision, the assessee is on appeal before us. In the facts and circumstances, since the matter has been not dealt by the Ld. CIT(A), we remit this issue back to the Ld. CIT(A). The assessee shall lay all relevant material on which it relies in support of its contentions before the Ld. CIT(A) and shall comply with his requirements in accordance with law - CIT (A) after giving effective opportunity to the assessee /A O , as the case may be, decide the issue in accordance with law. Thus, the corresponding grounds of the assessee as well as Revenue are treated as partly allowed. Provision on leave encashment - HELD THAT:- CIT(A) apart from relying on the Supreme Court order in the case of M/s. Exide Industries Ltd. [2008 (9) TMI 921 - SC ORDER] held that the assessee’s original claim was correct in as much as it had on its own disallowed the provision for leave encashment on retirement to the extent of ₹ 6,81,00,000/- and had claimed deduction on actual payment basis. Therefore, the Ld. CIT(A) held that there is no merit in the assessee’s claim of additional sum - Therefore, we do not find any reason to interfere with the order of the Ld. CIT(A) and hence the corresponding grounds of the assessee are dismissed. Disallowance on stale draft account - "Depositor Education and Awareness Fund Scheme, 2014”of the RBI guideline - HELD THAT:- AR correctly supported the order of the Ld. CIT(A) and relied on this tribunal decision in its case in THE KARUR VYSYA BANK LTD. VERSUS ADDL. COMMISSIONER OF INCOME TAX (VICE-VERSA) [2019 (3) TMI 1002 - ITAT CHENNAI] - Decided against revenue. Disallowance of ex-gratia payment - HELD THAT:- As relying on KARUR VYSYA BANK LTD. VERSUS ADDL. COMMISSIONER OF INCOME TAX (VICE-VERSA) [2019 (3) TMI 1002 - ITAT CHENNAI] we do not find merit in the Revenue’s appeal, therefore, the corresponding grounds are dismissed . Disallowance on interest accrued on NPAs - HELD THAT:- As relying on M/S. VASISTH CHAY VYAPAR LTD. [2018 (3) TMI 56 - SUPREME COURT] and THE KARUR VYSYA BANK LTD. [2017 (4) TMI 566 - ITAT CHENNAI] held that interest income cannot be said to have been accrued to the assessee on the NPA accounts. Accordingly, we direct the AO to delete the addition
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