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2023 (2) TMI 1005 - ITAT MUMBAIProvision for Standard Asset qua deduction u/s 36(1)(viia) - AO noted that assessee bank has claimed deduction for provisions under section 36(1)(viia) of the Act in respect of bad and doubtful debts, though is available in respect of 7.5% of the total income and 10% of the rural branches - HELD THAT:- As relying on STATE BANK OF INDIA case [2020 (2) TMI 1350 - ITAT MUMBAI] the issue in appeal in the case of the assessee is squarely covered by the said decision. Therefore, following the decision of the co-ordinate bench, we direct the Assessing Officer to allow the claim of deduction of the assessee under section 36(1)(viia) in respect of standard assets. This ground of appeal of the assessee is allowed. Disallowance of bad debt from credit card business u/s 36(1)(vii) - HED THAT:- As relying on ICICI Bank Ltd [2022 (12) TMI 1373 - ITAT MUMBAI] case we direct the Assessing Officer to allow the claim of deduction under section 36(1)(vii) read with section 36(2) in respect of bad debts claimed on credit cards. Addition u/s 43D - interest in respect of NPAs on receipt basis - AO observed that as per guidelines of RBI, non performing assets are recognized for a default of 3 months or more, however, as per the I.T. Rules, the period of 3 months has not been recognized anywhere - HELD THAT:- As relying on ICICI Bank Limits vs ACIT [2022 (8) TMI 1346 - ITAT MUMBAI] we direct the Assessing Officer to allow the claim of deduction under under section 43D r.w.r. 6EA of I.T. Rules in respect of interest on NPAs. Disallowance of Administrative expenses u/s 14A r.w.r. 8D(2)(iii) - HELD THAT:- We direct the Assessing Officer to disallow 0.5% of the average value of investment excluding strategic investments for the making of disallowance as directed in the decision of ITAT in assessee’s own case 2019 (11) TMI 853 - ITAT MUMBAI for A.Y.2013-14 & 2014-15. This ground of the assessee is partly allowed. Disallowance under rule 8D(2)(ii) of Interest expenses - HELD THAT:- Assessee had share capital and reserves which was far in excess of the investments made by the assessee in the instruments yielding exempt income. Therefore, following the decision of HDFC Bank Ltd [2016 (3) TMI 755 - BOMBAY HIGH COURT] and decision in the case of Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] a presumption would come into play that the investment in the instruments yielding exempt income has been made out of own funds. Therefore, disallowance under rule 8D(2)(ii) cannot be made and on following the decision of the co-ordinate bench in assessee’s own case. Therefore, we do not find any infirmity in the decision of the Ld.CIT(A). Therefore, this ground of appeal of the Revenue stands dismissed. Nature of expenditure - broken period interest on HTM (held to maturity) - revenue or capital expenditure -HELD THAT:- As decided in 2019 (11) TMI 853 - ITAT MUMBAI the closing balance has been shown in the balance sheet. The interest income on Government securities and the profit / loss has been offered in the return of income for the current year. Similar treatment is consistently offered by the assessee in earlier years. The assessee also relied on the CBDT Circular No.18/2015 dated 02.11.2015. The Ld CIT(A) accepted the contention of the assessee granted relied to the assessee by relying on the CBDT circular and on the decision of Citi Bank NA [2008 (8) TMI 766 - SUPREME COURT] and American Express International Banking Corporation [2002 (9) TMI 96 - BOMBAY HIGH COURT] We have noted that this issue is also covered in favour of the assessee. Expenditure incurred on ESOP - AO noticed that assessee has claimed an amount on the ground that the liability on account of ESOP has been crystallized in the year when the ESOP have been exercised during the year under assessment - AO was of the view that it cannot be claimed as an expenditure wholly and exclusively laid out or expended for the purpose of trade - HELD THAT:- As decided in assessee own case 2019 (11) TMI 853 - ITAT MUMBAI we dismiss the ground of the Revenue.
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