TMI Blog2013 (1) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... on claimed u/s 10(23G) Rs.9,66,85,358/- 3. The revenue is in appeal before us in respect of the following issues:- (a) Disallowance made u/s 14A Rs.96,55,067/- (b) Disallowance made u/s 40A(9) Rs.1,50,00,000/- (c) Disallowance of claim of broken period interest Rs.35,41,07,219/- (d) Disallowance made u/s 40(a)(ia) Rs.3,22,58,963/- (e) Ad hoc disallowance from sundry expenses Rs.10,00,00,000/-. (f) Addition of Excess provision for bad and doubtful debts written back Rs.60 crores. 4. The assessee is a public sector bank. It filed its return of income declaring a total income of ₹ 232.93 lakhs. The AO completed the assessment by determining the total income at ₹ 484.23 lakhs after making various additions. The appeal filed by the assessee before Ld CIT(A) against the impugned assessment order was partly allowed. Aggrieved by the order passed by Ld CIT(A), both the parties are in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, it was found that the tax is not deductible on the interest payable to ESIC and hence TDS amount remitted on 06.4.2004 resulted in excess payment. The assessee adjusted the said excess payment against its TDS liability arising for the months of November 2004, December 2004, January 2005 and February 2005. The AO opined that the Income tax Act does not permit such an adjustment as the one made by the assessee. The assessee placed its reliance on a letter dated 11.11.2005 in F.No.385/53/2005/IT(B) issued by the CBDT to The Chief Commissioner of Income tax, Delhi-III, in the assessee s case. However, the AO held that the said letter does not also approve the stand taken by the assessee. Accordingly, the AO did not accept the adjustment of excess payment of TDS against the liability of the current year and accordingly took the view that the assessee has failed to deduct tax at source on payments relating to such adjustment. Accordingly, the AO disallowed a sum of ₹ 3,22,58,963/-. 6.1 Before Ld CIT(A), the assessee contended that the CBDT has approved the adjustment made by the assessee and hence such adjustment tantamount to remittance of TDS. The Ld CIT(A) held as under i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the assessee. As contended by the assessee, the decision taken by ld CIT(A) is contradictory to his own observation. At the same time, we are unable to agree with the contention of the assessee that the CBDT has approved the adjustment made by the assessee on its own. In our view, the CBDT has left the matter to the discretion of the assessing officer. However, we notice that the AO has decided the issue against the assessee placing reliance on technicalities. In our view, this issue needs to be addressed by considering the spirit of the letter dated 11.11.2005 referred supra. Hence, in our view, this issue requires reconsideration at the end of the AO. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the assessing officer with the direction to examine the issue afresh by considering the discussions made supra and take appropriate decision in accordance with the law. 7. The next issue in the appeal of the assessee relates to the disallowance of bad debt claim of ₹ 62,34,95,370/-. The revenue has taken a ground relating to excess provision of Bad and doubtful debts written back. We prefer to address both the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be treated as the income of the assessee, since it did not treat the provision for bad and doubtful debts as expenditure in the earlier years. 7.3 On the other hand, the ld D.R submitted that the assessee did not furnish the required details as to the compliance of proviso to sec. 36(1)(vii) and 36(2)(v) of the Act. The Ld D.R further submitted that the assessee did not furnish the details with regard to the deduction of write back of provisions amounting to ₹ 60.00 crores. 7.4 We have heard the rival contentions. As per the provisions of sec. 36(1)(viia) of the Act, the provision for bad and doubtful debts created by a bank specified in that section is allowed as expenditure subject to the limits prescribed therein. In view of the same, it is provided in sec. 36(2)(v) that the bad debts should first be debited to the said Provision for bad and doubtful debts . It is further provided in the proviso to sec. 36(1)(vii) of the Act that the claim of bad debt shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made under sec. 36(1)(viia) of the Act. 7.5 In the instant case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with the law. 8. The next issue relates to the disallowance of provision for wage arrears. The AO noticed that the assessee had claimed a sum of ₹ 50.00 crores as expenditure under the head Provision in respect of salary arrears to staff . The AO further noticed that the agreement between the assessee and its employees was entered in this regard only on 02.6.2005 and the assessee paid the wage arrears in the month of July 2005. Since the date of agreement as well as the date of payment fell in the succeeding year, the AO took the view that the provision of ₹ 50.00 crores made by the assessee could not considered as accrued during the instant year and accordingly disallowed the said claim. Before Ld CIT(A), it appears that the assessee did not press the ground relating to the above said disallowance and hence the Ld CIT(A) also confirmed the said disallowance. 8.1 Before us, the Ld A.R submitted that the assessing officer initially allowed the entire amount of wage arrears in the succeeding assessment year, i.e., assessment year 2006-07. The assessee, in good faith, brought this fact to the notice of Ld CIT(A). However, subsequently, the AO has disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 07, the assessing officer accepted the said change and hence no addition was made. Accordingly, it was submitted that there is no justification in estimating the income from NPA and adding the same during the instant year alone. In the alternative, it was submitted that the estimate of income at ₹ 18.21 crores is a high pitched one without any scientific basis. The Ld A.R further submitted that the assessee has quantified the interest income from NPA recoveries at ₹ 1.98 crores and the same was also disclosed in the notes to the accounts. On the contrary, the Ld D.R submitted that the assessing officer was constrained to make the addition in the absence of relevant details including the compliance of Rule 6EA of the Income tax Rules. 9.2 We have heard the rival contentions. We notice that the Ld CIT(A) has confirmed this addition by stating that the assessee has failed to furnish the details. However, the main contention of the assessee was that the assessing officer has accepted the change in the method of accounting in the immediately preceding year and also in the immediately succeeding year and hence there was no justification in not accepting the change in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of sec. 14A curb the practice to claim deduction of expenses incurred in relation to exempt income as against the taxable income. On the contrary, the Ld A.R submitted that the Ld CIT(A), in para 2.10 of his order, has given a specific finding that the assessee was in possession of interest free funds to the tune of ₹ 6324.81 crores and the investment made in assets earning tax free funds was only ₹ 48.04 crores. Accordingly, he submitted that the provisions of sec. 14A are not attracted since the investments have been made out of interest free funds. In the written submissions, it is stated that the Tribunal has decided the issue in favour of the assessee in the immediately preceding year in ITA 406/Coch/09 and accordingly, it is prayed that the said decision may kindly be followed. 11.2 We have heard the rival contentions and perused the record. As pointed out by Ld A.R, this bench of the Tribunal, vide its order dated 29-03-2012, has decided an identical issue in favour of the assessee in the assessee s own case relating to the assessment year 2004-05 in ITA No.406/Coch/2009. For deciding so, the Tribunal has followed the decision rendered by the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by the jurisdictional High Court. There should not be any doubt that the decision rendered by the jurisdictional High court is binding till it is reversed by the Hon ble Supreme Court. Accordingly, we set aside the order of Ld CIT(A) and restore the same to the file of the AO with the direction to examine the issue afresh in terms of the decision rendered by the Hon ble Kerala High Court in the case of Catholic Syrian Bank (supra). 12 The next issue in the appeal of the revenue relates to the disallowance of contribution made to retired employees medical benefit scheme amounting to ₹ 1.50 crores u/s 40A(9) of the Act. This issue has been decided in favour of the assessee by the co-ordinate bench of the Tribunal in the assessee s own case relating to the assessment year 2002-03 in ITA No.861 (Coch)/2005 by its order dated 08-08-2007, wherein it is held as under:- In our further considered opinion, the bonafide contribution made by the assessee as an employer to the fund set up as a part of the agreement between the assessee bank and its executive employees is not hit by subsection (9) of section 40A. It was not shown to us that the above said decision was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms for incurring the expenses and all the branches are subjected to audit. 14.3 We have heard the rival contentions and perused the record. We notice that the assessing officer has made an adhoc disallowance of ₹ 10.00 crores for want of break up details. In the written submission filed before us, the assessee has given the break up details on a broad manner. There should not be any dispute that it is the responsibility of the assessee to furnish the details that may be called for by the assessing officer. At the same time, the assessing officer also should take into account the back ground of the assessee, the operational difficulties, time factor etc. while taking any decision. The Ld Counsel submitted that the assessee could not furnish the details for want of time. Hence, we are of the view that the assessee may be provided one more opportunity to furnish the necessary details. Accordingly, this issue requires fresh examination at the end of the assessing officer. Accordingly, we set the order of Ld CIT(A) on this issue and restore the same to the file of the assessing officer with the direction to examine this issue afresh and take appropriate decision in accordance w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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