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2022 (3) TMI 1131 - AT - Income TaxDisallowance u/s 36(1)(vii) in respect of non rural debts written off - assessee has also written off debts relating to its rural branches and the same was adjusted against the provision allowed u/s 36(1)(viia) and reduced the same from the deduction claimed u/s 36(1)(vii) - HELD THAT:- As decided in own case [2022 (1) TMI 1220 - ITAT BANGALORE] 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 representing actual write off in the books of account of bad debts relating to non-rural/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). Depreciation @ 60% on ATM’s by treating the same as the block relating to computer - HELD THAT:- As per M/S NCR CORPORATION PVT LTD [2020 (6) TMI 439 - KARNATAKA HIGH COURT] we hold that the depreciation on ATM should be allowed at the high rate of 60%. The assessee’s appeal on this ground is allowed. Disallowance of CENVAT Credit on capital goods - HELD THAT:- The law does not restrict the duty paid, for which no credit is allowed, as per the Central Excise Rules from being added to the cost of the asset but mandates that any credit availed should be reduced from the capitalized cost of the asset. In the given case assessee has paid an amount of ₹ 1,28,01,784 being 50% of the CENVAT credit which not eligible to claim credit as per the Rule 63B of CENVAT credit Rules 2004 (₹ 20 in our example above). Hence the amount so paid and not eligible for credit should be added to the cost of the asset. Hence, we uphold the order of the CIT(A) in restricting the disallowance to the amount debited to the P&L account as said amount needs to be capitalized and not claimed as an expenditure as per the provisions of Explanation 9 to sec.43 of the Act. Penalty paid to RBI - HELD THAT:-We notice that the Mumbai Tribunal in IDBI Bank Ltd.[2021 (2) TMI 608 - ITAT MUMBAI]while considering a similar penalty payment to RBI has held that the amount paid by the assessee is not in the nature of penalty - As observed by the CIT(A) in the order, the assessee has not furnished the full details of the nature of payment made to RBI. We are of the considered view that the provisions under which these payments are done need to be looked into in detail and it will not be correct to conclude without analyzing the same. We therefore remand the case back to the AO to look into the details of payments made to RBI to see if these are routine payments for a procedural non-compliance or whether they are punitive. We allow the appeal of the assessee for statistical purposes. Prior Period Expenditure - AO disallowed the claim on the ground that no income relating to such transaction was offered to tax during the current asst. year - HELD THAT:- The very basis for allowing the expenditure is the crystallization of the expenditure and in the interest of justice this issue needs to be decided based on evidences and facts. The assessee has not produced and additional evidence before us to substantiate the claim that the expenditure got crystallized during the relevant asst. year. We, therefore, remit the issue back to the AO to look into the details afresh and allow the claim in the relevant asst. year based on the facts. It is needless to say that reasonable opportunity of being heard should be given to the assessee before deciding the case. In the result, the assessee’s appeal is allowed for statistical purposes. Applicability of provisions of section 115JB - HELD THAT:- As relying on assessee own case [2022 (1) TMI 1220 - ITAT BANGALORE] we set aside order of the CIT(A) and restore the same to his file for deciding the case afresh in accordance with law. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As decided in own case it is mandatory for the AO to record dissatisfaction over the claim of the assessee before invoking the provisions of Rule 8D. Accordingly, the Ld CIT(A) deleted the disallowance holding that the AO has not recorded dissatisfaction.We respectfully follow the decision of the coordinate bench of the Tribunal, we set aside the order passed by the CIT(A) on this issue and restore the file to the AO for fresh examination. This ground is allowed in favour of the revenue for statistical purposes. Deduction for Bad and doubtful debts (PBDD) - HELD THAT:- AO removed 79 branches from rural branches list on the ground that population of many of the rural branches already exceeded 10,000 and they are situated in urban agglomeration by relying of the assessment order for AY 2014-15.AO merely quoted the Lord Krishna Bank decision of Kerala High Court but not followed it up to the logical end to bring out the relvant data as to why a particular branch is not a rural branch - The list of such branches given as part of the assessment order does not have the population figures and also the specific reason why they are not rural branches.AO has not pointed out any mistakes in the classification of rural branches made by the RBI AO calculated the AAA by considering only incremental advances made during the year instead of outstanding balances The CIT (A) also observed that this issue is covered by the various Tribual decisions including the decision of the coordinate bench of the Tribunal and deleted the addition made by the AO correctly. Adjustment to Book Profits - Addition on Disallowance u/s.14A and amount debited under provisions & contingencies for NPA - HELD THAT:- Since the issue regarding applicability or otherwise of sec.115JB is restored to the file of Ld CIT(A), this issue is also restored to the file of Ld CIT(A) for examining it afresh. The appeal of the revenue is allowed for statistical purposes. Depreciation on HTM Securities - HELD THAT:- As relying on case of Vijaya Bank [2018 (1) TMI 1575 - ITAT BANGALORE] CIT(A) has allowed the appeal in favour of the assessee following the decisions of jurisdictional High Court and the decision of coordinate bench of the Tribunal, we see no reason to interfere with the decision of the CIT(A) and hence the ground raised by the Revenue is dismissed.
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