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2016 (3) TMI 1361 - ITAT CHENNAIDeduction u/s 35D in respect of share issue expenses incurred - “industrial units” - HELD THAT:- As decided in own case [2015 (11) TMI 1519 - ITAT CHENNAI] amendment had been brought about to extend the benefit of deduction u/s 35D to the service sector also. Banks cannot fall under the definition of “industrial units”. If the assessees like banks were to fall under the definition of “Industrial units”, there would not have been any necessity for amending the Act to include service sector. Since the amendment extending the benefit to service sector and made effective only from the assessment year 2009-10 and, the banks are coming under service sector, the benefit can be extended from the assessment year 2009-10 only to the extent of setting up of a new unit for five successive years. Accordingly, we set aside the order passed by the CIT(A) and remit the matter back to the Assessing Officer to examine whether the assessee has set up a new unit or not and if so, he is directed to allow the benefit from 2009-10 onwards. Accordingly, the ground raised by the assessee is allowed for statistical purposes. Income from foreign branches - whether to be included in the total income and only double taxation relief s contemplated as per the agreement is allowable ? - HELD THAT:- As decided in own case [2015 (11) TMI 1519 - ITAT CHENNAI] income of the assessee at Singapore and Colombo would be included in the return of income of the assessee in India and whatever taxes paid by the branches in foreign countries, credit of such taxes shall only be given. Accordingly, the ground raised by the assessee is dismissed. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As decided in own case [2015 (11) TMI 1519 - ITAT CHENNAI] in view of the decision of Godrej & Boyce Mfg. Co. Ltd. v. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] that Rule 8D is applicable from the assessment year 2008-09, when the Act has prescribed a method for quantifying the disallowance, the same cannot be overlooked. Since Rule 8D is not applicable prior to the assessment year 2007-08, the Tribunal has set aside the order passed by the ld. CIT(A) and directed the AO to work out the disallowance @ 2%. However, since Rule 8D is applicable from the assessment year 2008-09 onwards, the disallowance should be made based on the prescribed method quantified by the Act. Since the Assessing Officer has made the disallowance under section 14A and computed under Rule 8D, we confirm the disallowance made by the Assessing Officer. Rate of depreciation on computers - whether Automated Teller Machines are substantially in the nature of computers and hence, are eligible for deduction at the rate of 60% and not at 15% as applicable to other normal plant and machinery? - HELD THAT:- As decided in own case [2015 (11) TMI 1519 - ITAT CHENNAI] we set aside the order passed by the ld. CIT(A) on this issue and direct the Assessing Officer to allow depreciation @ 60% to ATMs. UPS attached to the computers are part of computer systems and eligible for depreciation @ 60%. Advances of the Rural Branch is the criteria for computation of eligible deduction u/s.36(1)(viia) and individual nature of advances cannot be the basis of computation - HELD THAT:- CIT(Appeals) is based on the Budget Speech of the Finance Minister by presenting the budget of 1978-79. We have also gone through the intention under which sec.36(1)(viia) was brought to statute book and there is no intention to support rural branches and being so, only advances made for improving the rural economy to be considered for eligible deduction u/s.36(1)(viia) of the Act. Accordingly, the finding of the AO is upheld and the ground of appeal of the assessee is dismissed. Allowable revenue expenditure - Claims raised against the bank, in the normal course, considering the various circumstances provision is being made by the bank and considering the business risk, such provisions are allowable deductions - HELD THAT:- As decided in own case [2015 (11) TMI 1519 - ITAT CHENNAI] If any expense is required to be allowed, it is for the assessee to prove the nature of the expenditure and its relation to its business. In the present case, the assessee has not able to prove the nature of the expenses. Therefore, we are of the opinion that the ground raised by the assessee is liable to be dismissed. MAT u/s 115JB applicability - HELD THAT:- Provisions of sec.115JB of the I.T. Act are not applicable to the assessee bank as it is not a company under the provisions of Companies Act, 1956 Claim of broken period interest paid on purchase of securities - HELD THAT:- As decided in own case [2015 (11) TMI 1519 - ITAT CHENNAI] interest received by an assessee, from transferees for broken period is included under the head ‘business income’, amounts paid by the assessee to the transferors for broken periods could not have been disallowed. Depreciation on securities at the time of shifting from AFS to HTM - HELD THAT:- As decided in own case [2015 (11) TMI 1519 - ITAT CHENNAI] we uphold the claim of the assessee and direct the AO to allow depreciation / fall in value of investment in Government Securities including those classified under HTM category. No doubt the value in opening stock in the next year would correspondingly be adjusted. This issue is decided in favour of the assessee Claim towards deduction of bad debts written off - HELD THAT:- In the instant case, besides debiting the P&L a/c and creating a provision for bad and doubtful debts, the assessee bank had simultaneously obliterated the said provision from its accounts by reducing the corresponding amount from loans and advances/debtors on the assets side of the balance sheet and consequently, at the end of the year, the figure of loans and advances/debtors was shown as net of the provision - Therefore, assessee is entitled to benefit of deduction u/s 36(1)(vii) - Contention that it is imperative for the assessee-bank to close the individual account of each debtor in its books and a mere reduction in the “loans and advances account” or debtors to the extent of the provision for bad and doubtful debt is not sufficient, is not sustainable - Apprehension that if the assessee fails to close each and every individual account of its debtors, it may result in claiming deduction twice over is not correct - It is always open to the AO to call for details of individual debtor’s account if he has reasonable grounds to believe that the assessee has claimed deduction twice over Deduction u/s. 36(1)(viia) - HELD THAT:- Allowable deduction u/s.36(I)(viia) of the Act is @ 10% of the 'total average aggregate advances' made by the rural branches and not on the incremental average aggregate advances, as contemplated by the Assessing Officer. The assessee's appeals in this regard are allowed Deduction of bad debts - HELD THAT:- Option exercised by the assessee that it can claims deduction on doubtful debts as per option (b) i.e. 7.5% of Gross Total Income and 10% of aggregate average rural advances, the Assessing Officer has rightly worked out the allowable deduction, which is less than that of the provision made by the assessee as doubtful debts, allowed the deduction of bad debts for all assessment years and remaining balance was brought to tax. Accordingly, we reverse the order of the ld. CIT(A) and confirm the addition made by the AO for all the above assessment years.
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