TMI Blog2014 (2) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) has confirmed the disallowance following the disallowance made in assessment year and nothing has been placed on record as to what has happened to the said disallowance - Whether it was challenged before the appellate authorities or it was accepted by the assessee – as per advice of the RBI provision of the investment is possible during the first three years - its provision cannot be allowed without any further instruction of the RBI - The assessee has claimed provision during the assessment year without any advice of the RBI against the provisions of the Income-tax Act - the claim raised by the assessee is not in accordance with the law and the CIT(A) is justified in disallowing the same – the order of the CIT(A) upheld – Decided against Assessee. - ITA No.20/LKW/2012 - - - Dated:- 7-8-2013 - Sunil Kumar Yadav And Pramod Kumar, JJ. For the Appellant : Shri K R Rastogi, CA For the Respondent : Shri K M Dixit, CIT (DR) ORDER:- PER : Sunil Kumar Yadav This appeal is preferred by the assessee against the order of the ld. CIT(A) on the following grounds:- 1. The Learned Commissioner of Income Tax (Appeals) I, Lucknow (hereinafter called CIT (Appeals)) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t amounted to double deduction inasmuch as part of the expenses were claimed in computation of income from house property. 3. Aggrieved the assessee preferred an appeal before the ld. CIT(A) with the submission that disallowance made by the Assessing Officer is without any basis, arbitrary excessive and deserves to be deleted. The ld. CIT(A) re-examined the issue and confirmed the disallowance having observed that the entire amount of Rs. 1,73,877 claimed as building maintenance expenses in respect of building at Lucknow needs to be disallowed and not just Rs. 64,497 since the claim of deduction for maintenance of Lucknow building already stands allowed under section 24 of the Act. 4. Now the assessee has preferred an appeal before the Tribunal with the submission that building maintenance expenses as claimed by the assessee should be allowed while computing the income from house property. 5. The ld. D.R., on the other hand, has submitted that the income from house property is to be computed as per provisions of sections 22 and 24 of the Act. According to section 24 of the Act, certain deductions are to be allowed while computing the income from house property. As per claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the owner and used by the assessee for himself and not for any business or profession, shall be chargeable to tax under the head "income from house property". The annual value of the property is to be determined as per provisions of section 23 of the Act. Section 24 of the Act allows standard deduction while computing the income from house property. For the sake of reference, we reproduce the sections 22, 23 and 24 of the Act as under:- "22. Income from house property.--The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax, shall be chargeable to income-tax under the head "Income from house property". 23. Annual value how determined.-(1) For the purposes of section 22, the annual value of any property shall be deemed to be- (a) the sum for which the property might reasonably be expected to let from year to year ; or (b) where the property or any part of the property is let and the actual rent received or receivable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... head "Income from house property" shall be computed after making the following deductions, namely :- (a) a sum equal to thirty per cent. of the annual value ; (b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital : Provided that in respect of property referred to in sub-section (2) of section 23, the amount of deduction shall not exceed thirty thousand rupees : Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed **within three years from the end of the financial year in which capital was borrowed, the amount of deduction under this clause shall not exceed one lakh fifty thousand rupees. Explanation.-Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17,60,000 debited under the head "Investment Depreciation Reserve" and made addition of the same to the total income of the assessee. 9. During the course of assessment proceedings, the Assessing Officer noticed that in the profit and loss account the assessee Bank has debited Rs. 1,17,60,000 under the head "Investment Depreciation Reserve" this year also. Relying upon the assessment order for assessment year 2006-07, the Assessing Officer has made disallowance of the same after having observed that the bad debts in banking or money lending business can be deducted only if it represents money given as loan in ordinary course of money lending business in the light of the judgment of the Hon'ble Supreme Court in the case of Amar Chand Sobha Chand vs. CIT, 82 ITR 591 (SC). While making disallowance, the Assessing Officer has also observed that as per Audit Certificate, the investment was squarely against the rules and regulations laid down under section 59(C) and 32(D) of the Reserve Bank of India Act, 1934 and the Resolution No.6637 dated 23.3.1995 which only approved for opening of a Current Demand Account in City Cooperative Bank and not for making the investment. 10. Aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Having heard the rival submissions and from a careful perusal of record, we find that the Assessing Officer has made disallowance following his earlier order for assessment year 2006-07, which was later on upheld by the ld. CIT(A) and following the same the ld. CIT(A) has also confirmed the disallowance. During the course of hearing of the appeal, a specific query was raised from the ld. counsel for the assessee as to what has happened with regard to the disallowance made in assessment years 2006-07 and 2007-08, but the ld. counsel for the assessee could not furnish a specific reply. On a careful perusal of record, we find that the assessee has made reference to the Resolution and the letter written by the RBI in September, 2003 appearing at page 10 of the compilation of the assessee, according to which the assessee was advised to make necessary provisions for Rs. 5.88 crores during the current financial year and if it is not possible in one year, it may be done in two or three years. This advise was received in the month of September, 2003, therefore, the assessee could have made provision pursuant to the direction of the RBI during the financial year 2003-04 relevant to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra) by holding that the RBI Act, 1934 was incorporated for specific purpose and section 45Q categorically brings out the intention of the Legislature inasmuch as it states that Chapter III-B shall override other provisions. 16. In the case of CIT vs. The Lord Krishna Bank Ltd. (supra), the Hon'ble Kerala High Court has held that the RBI being the apex body issuing guidelines to the banks for valuation of unquoted Government securities, its guidelines are the rational basis which assessee was bound to adopt. 17. In the light of the aforesaid various judicial pronouncements, there is no controversy with regard to the overriding effect of the guidelines issued by the RBI over the provisions of the Income-tax Act. But in the instant case, we have to examine carefully as to what guidelines have been issued to the assessee by the RBI for making provisions of investment made in the City Cooperative Bank which has become irrecoverable. In this regard, a letter dated 6th September, 2003 written by the RBI to the assessee is very crucial document to resolve the present controversy as to whether provision was made by the assessee as per the directions/ advice/ guidelines of the RBI. This ..... X X X X Extracts X X X X X X X X Extracts X X X X
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