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M/s ING Vysya Bank Ltd. Versus Addl. Commissioner of Income-Tax Circle-11 (4) , Bangalore

2015 (8) TMI 173 - ITAT BANGALORE

Disallowance of claim made u/s.10(23G) - failure to produce the necessary certificate required under the said section - assessee is a scheduled bank and carries on banking business - Held that:- The limited request of the learned counsel for the assessee was that the necessary approvals from the CBDT is available and will be provided to the Assessing Officer. He prayed that the order of the Assessing Officer may be set aside and the assessee allowed opportunity of providing the necessary approva .....

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lly following the decisions of the Hon'ble High Court of Karnataka in the case of IBM India Ltd. (2013 (10) TMI 1225 - KARNATAKA HIGH COURT ) and the coordinate bench of this Tribunal in the assessee's own case for Assessment Year 2001-02 we hold that the expenditure incurred by the assessee for purchase of application software is revenue in nature - Decided in favour of assessee.

Disallowance of expenditure incurred for employee stock option plan - Held that:- We set aside the orders .....

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ncome of ₹ 3,53,58,063/-, from business, which amount was arrived at after adding back the inadmissible operating expenditure, which inter alia included the rights issue expenditure of ₹ 1,38,98,183/-. In other words, when the AO made an addition of ₹ 1,65,83,020/-. The result was that what was already suo motu added back by the assessee was once again aggregated, as pointed out by the Ld. AR. This had resulted in a double disallowance. Hence, the disallowance of ₹ 1,38,1 .....

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ity - whether the banking companies were not required to prepare their accounts in accordance with Parts II & III of the Companies Act, 1956? - Held that:- On a perusal of the cited decision in the assessee's own case for Assessment Year 2002- 03, we find that the issue of whether or not the provisions of section 115JB of the Act are applicable to Banks has been considered and held in favour of the assessee to hold that provisions of section 115JB of the Act are not applicable to the assessee wh .....

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tments under the AFS/HFT categories - Decided in favour of assessee.

Depreciation on conversion of securities - CIT(A) allowed claim - Held that:- In view of the clear-cut guidelines of the RBI the claim of the assessee towards provision of depreciation on account of transfer of securities from AFS category to HTM category is allowed.- Decided in favour of assessee.

Disallowance of insurance premium paid on housing loans of customers - CIT(A) deleted addition - Held that:- .....

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um on the housing products is also not capital in nature. Once the expenditure is accepted to be revenue in nature and incurred for the purposes of business, then it is allowable in the year in which it is incurred. Thus we concur with the finding of the learned CIT (Appeals) that the expenditure incurred as insurance premium in connection with their housing loan scheme is revenue in nature and is eligible for deduction - Decided in favour of assessee.

Addition made for broken period .....

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ntant Member These are appeals filed by assessee and Revenue respectively against an order dt 28.09.2012 of CIT(A)-I, Bangalore. 02. Appeal of assessee is taken up first for disposal. Apart from 8 grounds raised originally, assessee has also moved an application for admission of an additional ground which assails disallowance of excess provision made for wage arrears. Ld. Counsel for the assessee at the outset submitted that he is not pressing the additional ground. Therefore, the additional gro .....

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d under the said section. Ld. Counsel for assessee, submitted that this Tribunal in its own case for A. Y. 2005- 06 had considered this issue at para 5 of its order dt 06.02.2015. According to him, for the impugned assessment year also, the assessee's limited request was for remitting the issue back to the file of AO since the assessee was now having the necessary approvals from the CBDT. 5. Per contra, Ld. DR supported the orders of authorities below. 6. We have heard the rival submissions .....

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23G). The AO, however, found that some of the entities did not have approval from the competent authority for claiming exemption. The assessee had furnished a list of such companies, where the approval was yet to be received. Interest from these parties totaling to ₹ 2,82,53,262 as tabulated below, was therefore brought to tax by the AO denying exemption u/s. 10(23G). Sl. No. Party Amount 1. Gujarat Industries Power Co. Ltd. 1,15,25,477 2. Lanco Kondapalli Power Corpn. Ltd. 46,26,609 3. Sa .....

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may be set aside and the assessee allowed opportunity of providing the necessary approvals for grant of exemption u/s.10(23G) of the Act. We are of the view that it would be just and appropriate to set aside the addition made by the Assessing Officer in this regard and allow opportunity to the assessee to produce the required certificate which will enable the assessee to claim exemption u/s.10(23G) of the Act. For statistical purpose, the ground of appeal is treated as allowed. Accordingly we r .....

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me. As per Ld. AR, these were all application software which had short shelf-life. Ld. AR also pointed out that this Tribunal in assessee's own case for A. Y. 2007-08 had allowed similar claim of expenditure on software. 8. Per contra Ld. DR supported the orders of authorities below. 9. We have perused the materials on record and considered the rival submissions. There is no dispute that the claim of expenditure was on application software. In assessee's appeal for A. Y. 2007-08 (ITA.898 .....

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in the assessee's own case for Assessment Year 2001-02 in ITA Nos.733 & 748/Bang/2011 dt.28.8.2014, has held these expenses to be revenue in nature. The relevant portion thereof, is extracted here under :- "7.3 On consideration of the material on record, we find that similar issue had arisen in the case of IBM India Ltd., and the jurisdictional High Court, vide judgment dated 10-4-2013 at para.9 has held as under: "9. The second substantial question of law relates to applicatio .....

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is not with a view to bringing into existence any asset, the same cannot be always classified as capital expenditure. The test to be applied is, is it a part of company's working expenses or is it expenditure laid out as a part of process of profit earning. Is it on the capital layout or is it an expenditure necessary for acquisition of property or of rights of a permanent character, possession of which is condition on carrying on trade at all. The assessee in the course of its business acqu .....

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ftware, though there is an enduring benefit, it does not result into acquisition of any capital asset. The same merely enhances the productivity or efficiency and hence to be treated as revenue expenditure. In fact, this Court had an occasion to consider whether the software expenses is allowable as revenue expenses or not and held, when the life of a computer or software is less than two years and as such, the right to use it for a limited period, the fee paid for acquisition of the said right .....

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uctivity or efficiency and therefore, it has to be treated as revenue expenditure. In that view of the matter, the finding recorded by the Tribunal is in accordance with law and do not call for any interference. Accordingly, the second substantial question of law is answered in favour of the assessee and against the Revenue." Respectfully following the decision of the jurisdictional High Court on similar set of facts, we hold that the expenditure incurred by the assessee for computerization .....

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allowed." Following the above, we allow ground 3 of the assessee. 10. Vide its ground 4, grievance of the assessee is that expenditure of 62,68,139/- incurred for employee stock option plan (ESOP for short) was disallowed by the AO, which disallowance was confirmed by the CIT (A). 11. Ld. AR submitted that the write-off of ESOP expenditure was in accordance with guidance note on Employee Stock Option Scheme based payments, issued by ICAI and was not a contingent liability as considered by t .....

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39;s own case for A. Y. 2005- 06. This Tribunal had held as under at paras 20 -22 of its order : "20. Ground No.7 reads as follows:- 7. Expenditure incurred on Employee Stock Options (ESOP) amounting to ₹ 1,04,46,542 7.1 The learned CIT (A) has erred on facts and in law by confirming the disallowance made by the learned AO of a sum of ₹ 1,04,46,542 relating to employee compensation expenses. 7.2 The learned CIT (A) ought to have appreciated that the observation in the tax audit .....

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ur notice by both the parties that identical issue was also considered by this Tribunal in assessee's own case for A.Y. 2004-05 (supra) and this Tribunal held as follows:- "67. Ground no.10 raised by the assessee reads as follows : "10. Liability relating to employees compensation cost - ₹ 97,73,232 : Learned CIT(A) has erred in law and on fact by confirming the disallowance made by the AC on the ground that employees compensation cost of ₹ 97,73,232 is an unascertained .....

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owable as revenue expenditure. 69. Before CIT(A), the Assessee submitted that the treatment adopted by the Assessee is in accordance with the SEBI guidelines and that the expenditure is not a contingent liability and allowable revenue expenditure. Further the Assessee placed reliance on the decision of the Madras Tribunal in the case of SSI Ltd. V DCIT (85 ITJ 1049) wherein it was held that such expenditure was allowable as revenue in nature. The CIT(A) however upheld the order of the AO. Aggrie .....

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ction 37(1), spread equally over vesting period of years, on basis of SEBI Guidelines and accounting principles, the AO cannot disallow the same holding it to be contingent liability. It was further held that the mere fact that quantification is not precisely possible and time of incurring liability is not certain would not make an ascertained liability a contingent. The Special Bench further held that where liability in respect of ESOP is incurred at end of each year, which is quantified at end .....

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im of the assessee for deduction has to be allowed in principle. We, however, remand the issue to the Assessing Officer for considering quantification of the deduction to be allowed in the light of the observations made by the Special Bench in this regard." 22. We are of the view that it would be just and appropriate to direct the AO to consider the claim of assessee for deduction afresh in the light of directions given in para 71 of the order of Tribunal for A.Y. 2004-05. ITA No.288 & .....

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1,38,19,183/-, being expenditure relating to rights issue and disallowance of claim of ₹ 27,63,837/-, u/s.35D of the Act. 15. Ld. AR fairly admitted that the claim u/s.35D of the Act on rights issue expenditure was held to be not allowable by this Tribunal in the case of Andhra Bank v. DCIT (ITA.1644/Hyd/2008, dt 30.04.2013). However, according to him, the sum of ₹ 1,38,19,893/- was suo motu added back by the assessee in its computation of income and therefore, further addition made .....

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as amortisation of expenditure incurred for rights issue in an earlier year which was capitalised in such earlier year. In other words, for the impugned assessment year, assessee had claimed expenditure incurred for rights issue during the relevant previous year as well as amortisation of deferred revenue expenditure of earlier year u/s.35D of the Act. AO disallowed both the claims. According to him, these were in the nature of capital expenditure and Section 35D of the Act applied to a banking .....

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e profit of ₹ 9,05,65,482/-. The breakup of this has been given as schedule B to the computation and such break-up included in it a sum of ₹ 1,38,19,183/-. In the computation of total income done by the AO in the assessment order, he has started from a sum of ₹ 5,37,45,182/-. The said sum of ₹ 5,37,45,182/- comprised of 3 items, namely, Income from house property - Rs.1,38,87,120/- Income from business - Rs.3,53,58,063/- Income from capital gains - ₹ 45,00,00/- Thus .....

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aggregated, as pointed out by the Ld. AR. This had resulted in a double disallowance. Hence, the disallowance of ₹ 1,38,19,183/- is deleted. However, in respect of the balance amount of ₹ 27,63,837/-, as admitted by the Ld. AR in the case of Andhra Bank (supra), this Tribunal had held that amortisation of rights issue u/s.35D of the Act in the years prior to A. Y. 2009-10 was not allowable. Therefore, the disallowance to the extent of ₹ 27,63,837/- has been rightly made and is .....

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applicable for banking companies. 20. Per contra Ld. DR supported the orders of authorities below. 21. We have perused the materials on record and considered the rival submissions. Whether Section 115JB of the Act can be applied to the assessee, which is a banking company was an issue before this Tribunal in assessee's own case for A. Y. 2007-08, in ITA.898/Bang/2013, dt.06.02.2015. This Tribunal had held as under at para 7.5.1 and 7.5.2 of its order : 7.5.1 We have heard the rival contentio .....

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e. The relevant portion of the order at pages 20 and 22 thereof are extracted hereunder :- "20. Ground No.5 raised by the assessee reads as follows:- 5. Ground 5 - Section 115JB not applicable 5.1 The adjustment on account of Minimum Alternative tax provisions under section 115JB is bad in law in as much as the provisions of MAT were never applicable to the appellant company. 21. The issue raised in the aforesaid ground is the question as to whether the provisions of section 115JB are appli .....

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1956 but being a bank governed by the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and deemed as a company under the latter Act could not be construed as a company for the purposes of charging MAT in the light of a decision of Mumbai Bench of the Tribunal in the case of Maharashtra State Electricity Board vs. JCIT reported in 82 ITD 422 and therefore should not have to be subjected to the MAT." 89. The assessing officer rejected the computation o .....

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aking) Act, 1970. It had prepared the profit and loss account as per the latter Act, and not in accordance with the provisions of the Companies Act. However, in view of the requirements of section 115JB(2), it had redrawn the profit and loss account in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act. Therefore, the MAT computed in accordance with the redrawn profit and loss account was in order. 90. Before the CIT(Appeals), the assessee stated that the asse .....

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book profit. On 16.02.2010, the assessee filed an additional ground of appeal, questioning the applicability of section 115JB, while the other adjustments made by the assessing officer in computing the book profit under that section were challenged in the original grounds. 91. On the applicability of section 115JB, the assessee placed reliance on the decision of the Mumbai Bench of the Hon'ble ITAT in the case of Maharashtra State Electricity Board Vs. JCIT [2002] 82 ITD 422, where it was h .....

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f an annual general meeting was alien to the Electricity Board and the reference to section 616(c), which was relevant to a company engaged in the generation or distribution of electricity. 93. The assessee bank does conduct annual general meetings, declares dividends, and is not engaged in generation or distribution of electricity. The Mumbai bench of the Hon'ble ITAT has, in the case of Union Bank of India Vs. JCIT in their order dated 25.07.2006 in ITA Nos. 5493-5495/Mum/2000 for assessme .....

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declared in the profit and loss account prepared under the Banking Companies (Acquisition and Transfer of Undertakings) Act, he relied on the decision of the Hon'ble Supreme Court has, in case of Apollo Tyres Ltd. Vs. CIT [2002] 255 ITR 273, wherein it was held that the assessing officer had no power to rework the book profit if the profits were computed in accordance with Parts II and II of Schedule VI to Companies Act. Accordingly, he referred to his own order dated 15.01.2010 in ITA No. R .....

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the Banking Regulation Act. Following the same reasoning, the CIT(A) directed that computation of MAT may be done on the basis of the profit and loss account redrawn by the assessee in accordance with the Companies Act. The assessee was directed to furnish the profit and loss account redrawn in accordance with Schedule VI of Companies Act. 94. Aggrieved by the order of the CIT(A), the assessee has raised ground No.3 before the Tribunal. 95. At the time of hearing, it was submitted by the ld. DR .....

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#39; Bench in the case of Union Bank of India; and (3) Order dated 03.08.2011 in ITA No.469/2010 passed by the ITAT 'C' Bench, Chennai in the case of Indian Bank, did not adjudicate on the applicability of section 115JB, but following an earlier order in the assessee's own case for earlier years (at which point of time the above Tribunal's decisions were not available), restored the matter to the Assessing Officer to compute book profits based on recast P & L account prepared .....

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derabad in the case of State Bank of Hyderabad dated 07.09.2013 in ITA No. 578/Hyd/2010 and ITAT Mumbai in the case of ICICI Lombard General Insurance Co. Ltd. dated 10.10.2012 in ITA No.2398/Mum/2009. 97. The learned DR relied on the order of the CIT(A). 98. We have considered the rival submissions of the ld. counsel for the assessee. We find that this issue was considered by the Mumbai Bench of the Tribunal in the case of Krung Thai Bank (supra) and on the above issue held as follows:- "5 .....

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required to prepare its profit and loss account in terms of the provisions of Part II and II I of Schedule VI to the Companies Act. Unless the profit and loss is so prepared, the provisions of Section 115 JB cannot come into play at all. However, the assessee is a banking company and under proviso to Section 211 (2) of the Act, the assessee is exempted from preparing its books of accounts in terms of requirements of Schedule VI to the Companies Act , and the assessee is to prepare its books of .....

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eassessment proceedings on this short ground. 6. Learned Departmental Representative, on the other hand, vehemently relies upon the orders of the authorities below and submits that there is no specific exclusion clause for the banking companies, and in the absence of such a clause, it is not open to us to infer the same. The submissions of the learned counsel, according to the departmental representative, are clearly contrary to the legislative intent and plain wordings of the statute. 7. The pl .....

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t applicable in view of exemption set out under proviso to Section 211 (2) of the Companies Act. The final accounts of the banking companies are required to be prepared in accordance with the provisions of the Banking Regulation Act . The provisions of Section 115 JB cannot thus be applied to the case of a banking company." 99. We are of the view that in the light of the decision of the Mumbai Bench of the Tribunal, we have to necessarily hold that provisions of section 115JB of the Act are .....

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ibunal in the assessee's own case for Assessment Year 2002-03 (supra) quoted above, we hold that the provisions of section 115JB of the Act are not applicable to the assessee. Consequently, Ground No.4 raised by the assessee is allowed." Accordingly we allow ground 6 of the assessee. ITA.319/Bang/2013 - Revenue's appeal : 22. Now we take up appeal of the Revenue. Revenue has altogether taken 15 grounds of which, grounds 1, 14 and 15 are general needing no adjudication. Vide its grou .....

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ated net script wise depreciation could be claimed. 24. Per contra Ld. AR supported the orders of authorities below. 25. We have perused the materials on record and considered the rival submissions. Investment portfolio of banks including the SLR and non-SLR securities as per RBI's circular has to be classified under three categories, namely, Held to Maturity (HTM); Available for Sale (AFS); and Held for Trading (HFT). All securities classified as AFS and HFT were shown as stockin- trade by .....

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ration Bank in ITA. Nos.794 & 795/Bang/2011, dt. 18.06.2012 for allowing the claim of the assessee. 26. We find that this issue stands covered in favour of the assessee by virtue of the decision off this Tribunal in assessee's own case of A. y. 2007-08 in ITA.967/Bang/2013, dt.06.02.2015. At paras 16.1 to 16.3.3 it was held as under by this Tribunal. "16.1 In the course of assessment proceedings, the Assessing Officer observed that the assessee has claimed diminution in the value of .....

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appreciation of value of other scrips, the Assessing Officer disallowed the assessee's claim of deduction of ₹ 6,05,64,289 on account of diminution in value of investments under the AFS/HFT categories. 16.2 On appeal, the learned CIT (Appeals) allowed the assessee's claim for deduction of ₹ 6,05,64,289 on diminution in the value of investments under the AFS/HFT categories by following the decision of the co-ordinate bench of this Tribunal in the case of Corporation Bank in IT .....

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s ignored; this is as per the accounting treatment mandated by RBI Guidelines. 16.3.2 For the purposes of tax computation, the assessee treats the scrip as stock-in-trade and values the same at cost or market price, whichever is lower. It is the contention of the assessee that this system of accounting is consistently followed and is in tune with the provisions of section 145 of the Act. It was also submitted that the difference between the sale price and the price at which the investments are r .....

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le Apex Court in the case of UCO Bank Ltd., in 240 ITR 355 (SC). The relevant portion of the above cited decision of the co-ordinate bench at paras 11 and 12 thereof are extracted here under :- "11. After considering the submissions of both the parties and the material available on the record, it is noticed that a similar issue having identical facts has been decided in favour of the assessee vide the aforesaid referred to order dated 31.05.2011 in ITA No.710/Bang/2010 for the A.Y. 2007-08 .....

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ve also heard the learned DR and considered the facts and materials on record. 06. In our considered opinion, the decision of the coordinate bench of this Tribunal in assessee's own case is binding on us, facts and circumstances being the same. In the said decision cited above, the Tribunal in para nos.14 to 16 has held as under : "14. We are of the considered view that the decision of the Hon'ble Supreme Court in the case of United Commercial Bank v. Commissioner of Income-tax repo .....

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o be deducted on the basis of accounting system regularly maintained by the assessee. 15. Further, the method by which the assessee Bank is valuing securities is in accordance with the accounting principles by treating such securities as stock-in-trade. Moreover, the revenue itself is treating the profit on maturity of such security as business income and, therefore, such securities cannot be treated as capital assets. 16. Considering the facts and circumstances of the case before us and respect .....

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angalore Bench 'B' in ITA No.253/Bang/2007, dated 24.1.2008 in the case of ACIT (LTU), Bangalore v. Vijaya Bank." 07. Following our above decision, this issue is decided in favour of the assessee by dismissing the grounds of appeal raised by the Revenue." 12. So respectfully following the aforesaid referred to order dated 31.05.2011 in ITA No.710/Bang/2010 for the A.Y. 2007-08 in assessee's own case, the issue stands covered in favour of the assessee, we therefore do not se .....

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13 are dismissed." Following the above, we are of the opinion that the CIT (A) was justified in allowing the claim of the assessee. Grounds 2 to 4 stands dismissed. 27. Vide its grounds 5 to 7, Revenue is aggrieved that the CIT (A) allowed the assessee's claim of depreciation on conversion of securities. 28. Ld. DR submitted that assessee could claim capital loss or gain on sale of securities which was classified as HTM. However, according to him, the impact of depreciation/appreciatio .....

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base and not the depreciated value. 29. Per contra, Ld.AR submitted that Department had not correctly appreciated the way the assessee had accounted the depreciation while shifting the investment from one category to the other. According to the Ld. AR, there was considerable balance in provisions carried forward from earlier year and it was against such provision that the adjustments were done. It was for this reason that the amount did not enter the profit and loss account. However, the provisi .....

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iew that switching having been made from AFS to HTM category and since the securities were under HTM category, assessee could claim only capital gain/loss on sale. The claim of depreciation was not allowable. In other words, as per the AO, such depreciation was allowable only in AFS and HTS categories. In assessee's appeal before the CIT (A), Ld. CIT (A) had taken a view that the depreciation claimed was considered in the books of account and this was mentioned in the 75th Annual Report of t .....

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the assessee during the relevant previous year was after deducting the excess provision. Therefore, the view taken by the AO that the depreciation loss was not considered in the books appears to be incorrect. In the case of State Bank of Mysore v. DCIT (ITA.647 & 706/Bang/2008, dt 29.05.2009) (33 SOT 7), this Tribunal had considered the issue at paras 7.2 to 7.5 of the order and held as under : 7.1 On the other hand, the learned Departmental Representative had vehemently argued that the CIT( .....

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zing the RBI guidelines and also extensively quoting various judicial pronouncements on which both the parties have placed their reliance, the Hon'ble Tribunal has observed thus- "15. From the above, it is clear that the assessee is treating the securities held under the category 'held for maturity' as stock-in-trade. If there is appreciation in the market value as compared to the market value at the opening of the year and such appreciation is also accounted for. It is not clai .....

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ts. 16. Special Bench, Delhi in the case of New India Industries Ltd. vs. Asstt. CIT (2007) 112 TTJ (Del)(SB) 917 : (2008) 1 DTR (Del)(SB)(Trib) 247 : (2007) 18 SOT 51 (Del) (SB) 2007-TIOL-389-ITAT-DEL-SB: had an occasion to consider the binding nature of RBI guidelines. The Special Bench held that RBI guidelines in respect of provision for NPA are not binding in the computation of income under the IT Act. Income is to be assessed as per the provision of the IT Act. The Madras High Court in the .....

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ceedings before us, the learned Authorised Representative has filed the assessment order in the case of the assessee for the asst. yrs. 2000-01 to 2002-03. The depreciation claimed in all these asst. years has not been disallowed .Thus, the Revenue is consistently accepting that depreciation is allowable. This Bench in the following cases has allowed such depreciation on the valuation of the securities held by the bank : (1) Karnataka Bank Ltd. vs. Jt. CIT ITA No. 50/Bang/1997, dt. 27th July, 20 .....

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IT (LTU) vs. Vijaya Bank (supra), has held that- "16. Considering the facts and circumstances of the case before us and respectfully following the decision of the Hon'ble Supreme Court in the case of United Commercial Bank vs. CIT referred supra, it is held that the assessee bank is entitled to value all the investment at cost prices or market value whichever is lower by treating such stock-in-trade........." 7.4 In RBI's master circular, under the caption 2 classification, it .....

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ries/joint ventures, and (f) other (CP mutual fund units, etc.). (ii) Banks should decide the category of the investment at the time of acquisition and the decision should be recorded on the investment proposals. 2.3 Shifting among categories : (i) Banks may shift investments to/from held to maturity category with the approval of the board of directors once a year. Such shifting will normally be allowed at the beginning of the accounting year. No further shifting to/from this category will be al .....

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s called for. Grounds 5 to 7 of the Revenue stand dismissed. 32. Vide its grounds 8 to 10, grievance of the Revenue is that insurance premium of ₹ 9,16,88,855/- paid on housing loans of customers which was disallowed by the AO as non-revenue in character, was allowed by the CIT (A). 33. Ld. AR pointed out that this issue had come up before the Tribunal in assessee's own case in ITA.967/Bang/2013, dt.06.02.2015, wherein it was held as under at paras 17.2.1 to 17.2.3 of the order : " .....

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nt of expenditure was claimed as deduction. The Assessing Officer did not concur with this claim of the assessee and restricted the deduction to the extent of amortization as made by the assessee in its books of account. 17.2.2 According to the assessee, this expenditure is directly related to the business of the assessee and is liable to be allowed as deduction. It was submitted that the provisions of sections 30 to 36 of the Act covers specific expenses and section 37 of the Act is a residuary .....

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ation of the facts of the matter, we concur with the finding of the learned CIT (Appeals) in the impugned order that the expenditure incurred on insurance premium on housing loan are revenue in nature and is an allowable deduction. It is not the case of the Assessing Officer that these expenses are not for the purposes of the assessee's business or that they are capital in nature. These expenses are related to the housing products which are very much a part of the assessee's business act .....

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with the finding of the learned CIT (Appeals) that the expenditure of ₹ 2,39,38,811 incurred as insurance premium in connection with their housing loan scheme is revenue in nature and is eligible for deduction. It is ordered accordingly. Consequently revenue's grounds at S.Nos.14 to 17 are dismissed." Following the above, we dismiss grounds 8 to 10 raised by the Revenue. 34. Vide its grounds 11 to 13, grievance raised by the Revenue is that addition of ₹ 6,07,37,440/- made .....

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our of the assessee. 37. We have perused the materials on record and considered the rival submissions. On the issue of broken period interest, this Tribunal in assessee's appeal for A. Y. 2007-08 (ITA.967/Bang/2013) had held as under at paras 12.3.1 to 12.3.3: "12.3.1 We have heard both the learned Authorised Representative of the assessee and the learned Departmental Representative for revenue on the issue before us and carefully perused and considered the material on record. The brief .....

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ercantile Basis of Accounting, an amount cannot be charged to tax under it constitutes income and as the broken period income does not constitute income, it is therefore not chargeable to tax. 12.3.2 We find that this issue has been considered and decided in favour of the assessee in several cases cited by both the Hon'ble Karnataka High Court and the co-ordinate bench of this Tribunal, including the decision in the case of State Bank of Mysore in ITA No. 1401/Bang/2003 dt.17.4.2009 relied o .....

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ccrued, it is liable to tax. The word 'accrued' has defined the legal connotation. The interest that becomes due or liable to be payable whether or not it is paid, the interest is accrued or deemed to have been accrued. If the interest does not become due and not liable to pay such part of the interest arise, it cannot be said that the interest has become accrued. It appears form the facts of the case that the assessee is a bank. For its accounting purpose, it has shown the proportionate .....

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