9911796707
TMI Blog2014 (3) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. (b) Partial disallowance of deduction claimed u/s. 36(1)(viia) of the Act. 3. The facts relating to the case are stated in brief. The assessee is a cooperative society engaged in banking business. During the year under consideration, the assessee claimed deduction of Rs. 8.92 crores under the head "Depreciation on investments". The Assessing officer noticed that the assessee did not debit the above said amount in the Profit and Loss account, i.e., it had claimed deduction only in the computation of income made for the purpose of Income Tax Act. The assessee substantiated its claim by placing reliance on the decision of the Hon'ble Supreme Court in the case of United Commercial Bank vs. CIT (240 ITR 355). The Assessing officer noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debts in relation to rural branches. In this regard the AO drew support from the decision of Hon'ble Supreme Court in the case of Catholic Syrian Bank Ltd Vs. CIT (343 ITR 270)(SC). Accordingly, he restricted the deduction to Rs.86.87 lakhs as against the claim of Rs. 150.13 lakhs made by the assessee. The Ld. CIT(A) upheld both the additions and hence the assessee has filed this appeal before us. 5. The first issue relates to the claim of deduction of "Depreciation on Investments". It is an admitted fact that the assessee did not debit the said claim in its Profit and Loss account. According to Ld A.R, the assessee has been making such kind of claims in the earlier years also, i.e., it has been making such claims without debiting the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. We have heard Ld D.R also on this issue. According to Ld A.R, the assessing officer has placed reliance on a Circular of RBI, which is not applicable to it. Further, according to Ld A.R, the assessee has been consistently following the practice of claiming "Depreciation on Investments" in the Computation of Income only, without providing for the same in its books of accounts. By placing reliance on the decision of Hon'ble Supreme Court in the case of United Commercial Bank (supra), the Ld A.R contended that there is no necessity to provide for the amount in the books of account and it can be claimed in the Computation of income alone. We notice that the Hon'ble Supreme Court, in the case of United Commercial Bank (supra), had noticed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained by the assessee and that was done by the assessee in the present case." 7. In the instant case, it is required to be seen as to whether the method adopted by the assessee for valuation of investments for Income tax purposes was consistently followed by the assessee in the earlier years also. Though the Ld A.R furnished a copy of order of Ld CIT(A) relating to the assessment year 2007-08, yet the above said question was not examined by the assessing officer. If the assessee has been consistently following a particular method of valuation of investments over the years and the same has also been accepted by the department also, then as per the decision rendered in the case of United Commercial bank (supra), the tax authorities were no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an amount not exceeding seven and one-half per cent of the total income (computed before making any deduction under this clause and Chapter VIA) and an amount not exceeding ten per cent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner." A careful perusal of the above said provision would show that the deduction allowed under this section is two-fold. (a) An amount not exceeding 7-1/2% of the total income computed before making any deduction under this clause and Chapter VIA. and (b) An amount not exceeding 10% of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner. The Assessing officer had taken the view that the first part ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
