9911796707
TMI Blog2014 (2) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed by Learned A.O. and confirmed by CIT. c) Because Building repair & maintenance relating to other building (other than let out portion) is Rs.121714.00 (Rs.173877.00 - 52163.00) which is an allowable business expenditure. d) Because the observation of Learned CIT (Appeals) is not correct that double deduction has been allowed to the appellant in the present case. 2. The Learned CIT (Appeals) has erred on facts & in law in confirming disallowance of Rs. 11868000.00 Claimed as bad debts in respect of amount invested with City Cooperative Bank on the basis of disallowance made in A.Y 2006-07/2007-08, in the present case, alleging that no reserve was to be created, to increase the profit in the present case. 3. The Learned CIT (Appeals) has erred on facts and in law not passing order relating to adjustment of Rs.977268.00 representing advance tax paid by the appellant on 30th October, 2007 against the assessed income, resulting in excess interest charged U/s 234B & 234C of I. T. Act, 1961 in the present case. 4. The Learned CIT- (Appeals) did not allow proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rusal of record, we find that the assessee Bank let out approximately 1/3 of its premises at Lucknow and Moradabad and rental income derived therefrom is being computed under the head "income from house property" and deduction under section 24 of the Act was claimed @ 30%. Besides, the assessee has debited a sum of Rs. 1,93,491 under the head "building maintenance expenses" for maintenance of Lucknow building. The Assessing Officer, however, restricted the disallowance to 1/3 of the expenses claimed. But while confirming the disallowance, the ld. CIT(A) has observed that the entire expenses claimed at Rs. 1,73,877 as building maintenance expenses needs to be disallowed and not just Rs. 64,497. Though the ld. CIT(A) has observed that the entire expenses claimed by the assessee are to be disallowed while computing the income from house property, but he has restricted the disallowance upto Rs. 64,496. This finding of the ld. CIT(A) are not questioned by the Revenue, but the additions sustained by the ld. CIT(A) is challenged by the assessee before us. Therefore, the issue open before us for examination is whether the assessee is entitled to claim maintenance expenses against rental in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to in clause (a), the amount so received or receivable : Provided that the taxes levied by any local authority in respect of the property shall be deducted (irrespective of the previous year in which the liability to pay such taxes was incurred by the owner according to the method of accounting regularly employed by him) in determining the annual value of the property of that previous year in which such taxes are actually paid by him. Explanation.-For the purposes of clause (b) or clause (c) of this subsection, the amount of actual rent received or receivable by the owner shall not include, subject to such rules as may be made in this behalf, the amount of rent which the owner cannot realise. (2) Where the property consists of a house or part of a house which- (a) is in the occupation of the owner for the purposes of his own residence ; or (b) cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed as deduction under any other provision of this Act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years. ** Provided also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan. ** Explanation.- For the purposes of this proviso, the expression "new loan" means the whole or any part of a loan taken by the assessee subsequent to the capital borrowed, for the purpose of repayment of such capital." 7. In the instant case, admittedly 1/3 portion of the properties at Lucknow and Moradabad were let out, therefore, the income from house property is to be computed with respect to the said 1/3 property let out to different tenants and while allowing standard deduction as per clause (a) of section 24 of the Act, 30% of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making the investment. 10. Aggrieved the assessee preferred an appeal before the ld. CIT(A) with the submission that investment of Rs. 5.88 crores with City Co-operative Bank has become irrecoverable and the RBI had issued directions to create requisite provisions against the same and if it was not possible to make provision in one year, it could be made in two or three years. Since the assessee has transferred Rs. 1,18,68,000 to "Investment Depreciation Reserve" account as per the directions of the RBI, the claim made by the assessee deserves to be allowed. Being not convinced with the explanations of the assessee, the ld. CIT(A) has confirmed the disallowance following his own order passed in assessee's own case for assessment year 2007-08. 11. Now the assessee is before us and has reiterated its contentions as raised before the ld. CIT(A). Besides, the assessee has also placed reliance upon the order of the Tribunal in the case of TEDCO Investment & Financial Services Pvt. Ltd. vs. DCIT, 87 ITD 298 (Delhi); judgment of the Hon'ble Uttaranchal High Court in the case of CIT vs. Nainital Bank Limited, 309 ITR 335 and the judgment of Hon'ble Kerala High Court in the case of CIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l year 2003-04 relevant to the assessment year 2004-05. If the provision of the entire amount is not possible in the current financial year, it could have been done in 2 or 3 years i.e. in assessment years 2005-06 and 2006-07, but nothing has been placed before us as to how the assessee has acted as per advise of the RBI in assessment years 2004-05; 2005-06 and 2006-07. In any case, the lower authorities have made reference to the disallowance made by the Assessing Officer in earlier years i.e. assessment year 2006-07 and 2007-08 which was later on upheld by the ld. CIT(A). But nothing has been placed before us as to what has happened thereafter. Whether the ld. CIT(A)'s order has attained finality or it was challenged in the appellate court. If the aforesaid letter of the RBI is properly read, we would find that the assessee was advised to make provisions of a sum of Rs. 5.88 crores which was invested in City Co-operative Bank and has become irrecoverable in the current financial year. If the entire amount cannot be adjusted in one year, provision can be made for two or three years. Even if we take maximum time given by the RBI i.e. three years, the provision could have been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce/ guidelines of the RBI. This letter is appearing at page 10 of the compilation of the assessee and on its careful perusal, it appears that the assessee has sought advice/guidelines from the RBI vide its letter dated 8th August 2003 with regard to the investment made with the City Cooperative Bank Limited, Lucknow which has become irrecoverable and the RBI has advised the assessee vide letter dated 6th September, 2003 to make necessary provision of the entire amount of Rs. 5.88 crores and if the provision of entire amount of Rs. 5.88 crores is not possible in one year, it should be ensured that the provision be made within two or three years. The contents of the letter are in Hindi and are reproduced as under for the sake of reference:- 18. This letter was written by the RBI to the assessee in September, 2003, therefore, as per advice of the RBI, the assessee was required to make provision of the entire investment of Rs. 5.88 crores which has become irrecoverable, within the current financial year relevant to the assessment year 2004-05. If provision of the entire amount is not possible within one year, it should ensure that it is done within two or three years, meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X
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