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2016 (1) TMI 135 - ITAT KOLKATA

2016 (1) TMI 135 - ITAT KOLKATA - TMI - Applicability of provisions of section 115JB on the assessee being a banking company - Held that:- This issue is squarely covered by the co-ordinate bench decision of this tribunal in the case of UCO Bank vs DCIT [2015 (12) TMI 300 - ITAT KOLKATA] held that the provisions of section 115JB of the Act are not applicable in the case of the assessee bank and further held that the amendment brought in section 115JB of the Act read with Explanation 3 thereon by .....

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e this issue to the file of the Learned AO , to decide this issue afresh in accordance with law. The assessee is directed to produce evidence of remittance of TDS on the subject mentioned expenditure to the satisfaction of the Learned AO - Decided in favour of assessee by way of remand

disallowance u/s 14A - whether could be added to the book profits u/s 115JB ? - Held that:- The provisions of section 115JB of the Act per se would not be applicable to the assessee bank for the Asst Ye .....

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his , the assessee is not in appeal before us. Hence we find that the revenue should not be aggrieved at all in the instant case. In any case, the figures obtained from the website www.magicbricks.com cannot be treated as a reliable evidence. Hence we find no infirmity in the order of the Learned CIT-A.- Decided in favour of assessee.

Expenditure incurred towards debit cards - revenue v/s capital expenditure - CIT(A) held as revenue - Held that:- issuance of ATM cum Debit Cards to th .....

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by the revenue before us. Though the principle of res judicata does not apply to income tax proceedings, in our opinion the principle of consistency cannot be given a go bye. Reliance in this regard is placed on the decision of the Hon’ble Apex Court in the case of Radhasaomi Satsang (1991 (11) TMI 2 - SUPREME Court ) . Hence we find no infirmity in the order of the Learned CIT(A).- Decided in favour of assessee.

Disallowance u/s 40(a)(ia) - violation of provisions of section 194A i .....

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eposits which is much less as compared to the term deposit interest rate. Moreover, the term deposits on maturity becomes repayable by the assessee on demand and gets automatically converted into a demand deposit. The provisions of section 194A (3)(vii) are very clear that the provisions of section 194A(1) shall not apply to demand deposits and hence the assessee bank is not liable to deduct tax at source on interest provided on those demand deposits. Hence in these circumstances, we find that t .....

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ome. Moreover, the Learned AO had not brought on record any nexus between borrowed funds and amount invested by assessee. There are plethora of judgements in favour of the assessee on the impugned issue. Hence the addition deleted by the Learned CIT(A) in respect of ₹ 13,10,65,100/- by invoking Rule 8D(2)(ii) of the Rules does not require any interference - Decided in favour of assessee. - ITA No. 1916/Kol/2012, ITA No. 113/Kol/2013 - Dated:- 30-12-2015 - Shri Mahavir Singh, Judicial Membe .....

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the Act ). Both the appeals are taken up together and disposed off by this common order for the sake of convenience. ITA No. 1916 / Kol/2012- Assessee s Appeal by United Bank of India 2. The ground no. 1 raised by the assessee is general in nature and does not require any adjudication. 3. The first issue to be adjudicated in this appeal is as to whether the provisions of section 115JB of the Act are applicable to the assessee being a banking company for the Asst Year 2009-10. 3.1. The Learned AR .....

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for the Asst Year 2002-03. The Tribunal while rendering this judgement duly appreciated the relevant provisions of section 211 of Companies Act, 1956, Insertion of Explanation 3 to section 115JB of the IT Act, 1961, with effect from 1.4.2013 , relevant provisions of section 2(5) of the Companies Act, 1956, definition of company under Banking Regulation Act, 1949, definition of company under Companies Act, 1956, Notes to Clauses to Finance Act, 2012 on the subject of Minimum Alternate Tax (MAT) .....

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taxmann.com 312 (Hyderabad - Tribunal) vide order dated 7.9.2012 *Maharashtra State Electricity Board vs JCIT reported in (2002) 82 ITD 422 (Mumbai Tribunal) vide order dated 6.8.2001 *Kerala State Electricity Board vs DCIT reported in (2010) 329 ITR 91 (Ker) * Indian Bank vs Addl CIT in ITA No. 469 / Mds / 2010 dated 3.8.2011 for Asst Year 2000-01 * Kurung Thai Bank vs JCIT reported in (2012) 49 SOT 12 (Mumbai Tribunal) * Union Bank of India vs ACIT in ITA No. 4702 to 4706 / Mum / 2010 for the .....

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Act read with Explanation 3 thereon by the Finance Act 2012 is applicable only with effect from Asst Year 2013-14 onwards in line with the Notes to Clauses of Finance Act 2012 . 3.3. Respectfully following the co-ordinate bench decision of this tribunal in the case of UCO Bank (supra), we also hold accordingly. Hence the ground no. 2 raised by the assessee in this regard is allowed. 4. The next ground to be decided in this issue is that whether in the facts and circumstances of the case, disallo .....

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of deduction u/s 40(a)(ia) of the Act which was also upheld by the Learned CIT(A). Aggrieved, the assessee is in appeal before us on the following ground:- 3. For that on the facts of the case, ld.CIT(Appeals) was wrong in not considering the fact and confirming previous year s expenditure amounting to ₹ 15,16,519.00, although the T.D.S on the said expenditure was duly deposited in the present financial year, moreover in the assessment year 2008-09 the said expenditure was disallowed u/s. .....

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es of this case, we deem it fit and appropriate , in the interest of justice and fair play, to set aside this issue to the file of the Learned AO , to decide this issue afresh in accordance with law. The assessee is directed to produce evidence of remittance of TDS on the subject mentioned expenditure to the satisfaction of the Learned AO. Accordingly, the ground no. 3 raised by the assessee is allowed for statistical purposes. 5. The next issue to be decided in this appeal is whether disallowan .....

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section 115JB of the Act per se would not be applicable to the assessee bank for the Asst Year 2009-10 and hence there is no question of making any addition to the book profits u/s 115JB towards disallowance u/s 14A of the Act. Accordingly, the ground no. 4 raised by the assessee is allowed. 6. The other ground is with regard to charging of interest u/s 234 B and 234 D of the Act which is only consequential in nature and does not require any adjudication. 7. In the result, the appeal of the asse .....

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ed the details of municipal valuation of the subject mentioned properties at ₹ 13,84,554/- and stated that the higher of the municipal valuation or actual rent should be adopted as income from house property. The Learned AO during the course of assessment proceedings substituted the same by adopting the annual value of the property based on average rental rates available in the website www.magicbricks.com. Accordingly the Learned AO arrived at the rental figure of ₹ 2,61,58,020/- and .....

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rred in law in holding that municipal valuation for rent is accepted to be appropriate reasonable and reliable as evidence. 8.2. The Learned DR vehemently supported the order of the Learned AO. In response to this, the Learned AR argued that the subject mentioned properties are old properties and are let out to different tenants for the last 30 years. In all the earlier assessment years, the income declared by the assessee bank from the subject mentioned properties were accepted by the departmen .....

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al valuation for determination of rental income from subject mentioned properties. We also find that the municipal valuation is higher than the actual rent received in the instant case. For the sake of convenience, let us get into the provisions of section 23 which is reproduced below:- Section 23 - Annual value how determined Annual value how determined. 23. (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 reaso .....

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than the sum referred to in clause (a), the amount so received or receivable : The computation of annual value in accordance with the provisions of section 23 of the Act could be better understood in the following manner:- A = Actual rent received - ₹ 15,062/- B = Fair Rent - ₹ 2,61,58,020/- C = Standard Rent - Not Applicable and hence Rs Nil D = Municipal value - ₹ 20,44,361/- Annual Value (Z) = Higher of B or D = 2,61,58,020/- Expected Rent (Y) = Lower of Z or C = Nil Gross A .....

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we find no infirmity in the order of the Learned CITA. Accordingly, the ground no.1 raised by the revenue is dismissed. 8. The next issue to be decided in this appeal is as to whether the expenditure incurred towards debit cards to the tune of ₹ 69,23,167/- be treated as revenue expenditure in the facts and circumstances of the case. 8.1. The brief facts of this issue is that the assessee incurred a sum of ₹ 69,23,167/- towards issuance of debit cards to its customers which are valid .....

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The Learned DR vehemently supported the order of the Learned AO. In response to this, the Learned AR argued that the incurrence of the expenditure towards issuance of debit cards neither results in any capital asset nor any enduring benefit to the assessee in the capital field. These debit cards are issued free of cost to the customers of the assessee bank. He further argued that the same has been allowed as a normal business expenditure by the department in the earlier years under scrutiny ass .....

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th regard to the impugned issue warranting the department to take a different stand. This fact has not been controverted by the revenue before us. Though the principle of res judicata does not apply to income tax proceedings, in our opinion the principle of consistency cannot be given a go bye. Reliance in this regard is placed on the decision of the Hon ble Apex Court in the case of Radhasaomi Satsang reported in 193 ITR 321(SC) . Hence we find no infirmity in the order of the Learned CIT(A). A .....

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o the tune of ₹ 21,66,00,000/- without deduction of tax at source. According to the assessee, the said interest does not fall under the ambit of section 194A of the Act as the term deposits on maturity becomes payable to the customer on demand and hence it gets converted into a demand deposit and attracts interest only at savings bank interest rate as per RBI guidelines. The assessee argued that admittedly, the provisions of section 194A of the Act are applicable only in respect of interes .....

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rcumstances of the case, ld.CIT(A) erred in law in holding that provisions of Sec 194A rws 40(a)(ia) is not applicable on payment of interest on matured term deposits. 9.2. The Learned DR vehemently supported the order of the Learned AO. In response to this, the Learned AR reiterated the arguments advanced by the assessee before the Learned AO. In addition to that, he argued that no disallowance on this account was made by the department in the earlier years. In support of this contention, he pl .....

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section 51 of that Act). 9.3.1. Hence it is very clear that the provisions of section 194A of the Act does not apply to deposits other than time deposits on or after 1.7.1995. Now the short point that arises for our consideration is as to what would be the nature of deposit in respect of matured term deposits . In this regard, it would be pertinent to look into the relevant guidelines issued by RBI which are as below:- Master Circular on Cash Reserve Ratio (CRR) and Statutory Liquid Ratio (SLR) .....

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, credit balances in the Cash Credit account and deposits held as security for advances which are payable on demand. Money at call and Short Notice from outside the Banking System should be shown against liability to others. 9.3.2. From the above meaning as clarified in RBI guidelines, it could be safely inferred that the once a term deposit gets matured, if the customer does not approach the bank for either withdrawing or renewing the matured term deposit, the bank cannot suffer interest applic .....

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to demand deposits and hence the assessee bank is not liable to deduct tax at source on interest provided on those demand deposits. Hence in these circumstances, we find that the Learned CITA had rightly granted relief to the assessee bank in this regard. Accordingly, the ground no. 3 raised by the revenue is dismissed. 10. The last issue to be decided in this appeal is as to whether disallowance u/s 14A of the Act read with Rule 8D(2)(ii) of the Rules could be made applicable to the assessee ba .....

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