TMI Blog2014 (3) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... this aspect also requires verification at the end of the AO – thus, the order of the CIT(A) set aside and the matter remitted back to the AO for fresh adjudication – Decided in favour of Assessee. Restriction of deduction claimed u/s 36(1)(viia) of the Act – Held that:- The word(s) defined under the Act should be assigned the same meaning and hence no other meaning can be ascribed to it - when the section specifically states the amount of deduction is required to be computed at a figure not exceeding 7-1/2% of the total income, the AO was not justified in computing the amount of deduction at 7-1/2% of the income generated out of the rural advances - CIT(A) was also not justified in confirming the action of the AO – thus, the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered by Hon ble Supreme Court was related to the assessment year 1982-83, during which period there did not exist any specific Guideline issued by RBI with regard to the valuation of investments. However, for the year under consideration, the RBI had issued guidelines for classification and valuation of investments made by the Banks. The AO noticed that the one of the conditions specified in the Guide lines was that the amount provided for Depreciation on investments is required to be debited to the Profit and Loss account. Since the assessee did not debit the amount provided for Depreciation on investments in the Profit and Loss account, the Assessing officer disallowed the claim of Rs. 8.92 crores made by the assessee. 4. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of claims in the earlier years also, i.e., it has been making such claims without debiting the amount provided for depreciation on investments to the Profit and loss account. The ld A.R also furnished a copy of order dated 06.02.2013 passed by Ld CIT(A), Kozhikode in the hands of the assessee for the assessment year 2007-08 and submitted that the similar disallowance made in that year has since been allowed by Ld CIT(A) and the department did not prefer any appeal against the said order. He further placed reliance on the decision of Hon ble Supreme Court in the case of United Commercial Bank (supra) and submitted that the method consistently followed for income tax purposes should not be disturbed. The Ld Counsel also submitted that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice that the Hon ble Supreme Court, in the case of United Commercial Bank (supra), had noticed that the assessee has been following the different methods of valuation for book purposes and for income tax purposes for the past 30 years and the same has been accepted by the revenue in the past years. Under these circumstances, the Hon ble Apex Court has expressed the following view:- In our view, as stated above, consistently for 30 years, the assessee was valuing the stock-in-trade at cost for the purposes of statutory Balance Sheet, and for the income tax return, valuation was at cost or market value, whichever was lower. That practice was accepted by the Department and there was no justifiable reason for not accepting the same. Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as per the decision rendered in the case of United Commercial bank (supra), the tax authorities were not justified in rejecting the said claim during the instant year. However, as stated earlier, this aspect has not been examined by the assessing officer. Further, since the assessee has been claiming deduction only for income tax purposes (without making appropriate entries in the books of account), the assessee would be entitled to claim deduction of only the incremental amount of provision. Before us, the assessee has not furnished any details to show that the claim of Rs.8.92 crores made by it represents only the incremental amount of provision for depreciation on investments. Hence, in our view, this aspect also requires verification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of such bank computed in the prescribed manner. The Assessing officer had taken the view that the first part of the deduction of 7-1/2% of the total income shall be computed on the income generated out of the rural advances . We are unable to agree with the said view since it is very clear from the reading of the provision that the amount of deduction shall be @ 7-1/2% of the total income. Further, the term total income is defined u/s. 2(45) of the Act as under: (45) total income means the total amount of income referred to in section 5, computed in the manner laid down in this Act. It is a settled proposition of law that the word(s) defined under the Act should be assigned the same meaning and hence no other meaning can b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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