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2016 (4) TMI 429 - ITAT BANGALORE

2016 (4) TMI 429 - ITAT BANGALORE - TMI - Addition made u/s 36(1)(viia) - manner of computation of the amount of deduction - Held that:- The amount of deduction is to be calculated with reference to income computed under the head ‘profits and gains of business or profession’. The provisions governing the brought forward and set off business loss are not part of the provisions governing the computation of profits under the head ‘profits and gains of business’. Hence, we hold that the method of ca .....

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t of business of the banking company and therefore, the income arising from such investments is treated as part of business income falling under the head ‘profits and gains of business’. Though the circular was issued in the provisions of sec.80P of the Act, the said principle was equally made applicable to other banks and commercial banks to which Banking Regulation Act, 1949 applies. Therefore, by virtue of the above said circular, investments made by the banking company should be treated as a .....

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herefrom should also be treated as business income. The provisions of section 45(2) cannot be applied to the facts of the present case, as in the earlier years, for the purpose of income-tax proceedings, the investments were treated as stock-in-trade.

Addition made on account of write off of investments - Held that:- The submission of the learned counsel for the assesseebank that securities of M/s Pennar Aluminium Ltd., were acquired during the normal course of business of assessee-ba .....

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ct. Therefore, it is only a capital loss and cannot be allowed as a deduction. We uphold the order of the ld.CIT(A) and the ground of appeal filed by the assessee is dismissed.

Deduction on account of bad debts - Held that:- Similar issue had come up before the Hon’ble Apex Court in the case of Vijaya Bank vs. CIT (2010 (4) TMI 46 - SUPREME COURT ) wherein it was held that debiting the profit and loss account by an amount of provision for bad debts, reducing provision for bad and doub .....

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o the conclusion that it amounts to write off and the claim was allowed. - Decided against revenue

Disallowance u/s 14A - Held that:- The AO had not given any finding as to how the claim of the assessee-bank that no expenditure was incurred to earn exempt income was incorrect. In the absence of such finding, resort cannot be had to the provisions of sub-rule(2) of rule 8D. a. Furthermore, it is undisputed fact that exempt income is earned from securities which are held as a part of st .....

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14A of the Act. - Decided in favour of assessee

Disallowance of contribution made to Disability Trust - Held that:- Undisputedly, impugned contribution was made by the assessee-bank pursuant to the order passed by the Hon’ble Supreme Court in the case of Devkala Consultancy Service (2004 (4) TMI 73 - SUPREME Court ). Needless to say, breach of the directions of the Hon’ble Supreme Court is not in the business interest of the assesseebank. Furthermore, what is paid in the form of cont .....

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d as deduction while computing profits and gains of business. In such an event, any subsequent realization out of assets of erstwhile LCB cannot be brought to tax. We do not find any fault with the reasoning of the ld.CIT(A) in deleting the addition.- Decided in favour of assessee

MAT applicability - Held that:- Provisions of sec.115JB are not applicable to the banking company - ITA No. 530/Bang/2010, 479/Bang/2009, 793/Bang/2011, 693/Bang/2012, 601/Bang/2010, 530/Bang/2009, 813/Bang/ .....

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by way of this consolidated order. For the sake of convenience and clarity, facts for assessment year 2006- 07 are taken as lead matter. ITA No.479/2009 is assessee-bank s appeal and ITA 530/Bang/2009 is the revenue s appeal for assessment year 2006-07. 3. The assessee-bank raised the following grounds of appeal in ITA No.479/Bang/2009 for the assessment year 2006-07: 1) The order of the learned CIT(A) is against the law and facts of the case. 2) The learned CIT(A) erred in confirming the deduc .....

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come. 6) The learned CIT(A) erred in confirming that there is a change in the method of valuation in the relevant assessment year in respect of investments.. 7) The learned CIT(A) erred in confirming the disallowances of public issue expenses u/s 35D of an amount of ₹ 1,92,50,000/-. 8) The learned CIT(A) erred in confirming the write off of investments of an amount of ₹ 24,00,000/- 9) For all these and other grounds that may be urged at the time of hearing the Appellant request that .....

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e assessment was completed on a total income of ₹ 1326,82,33,656/- by the Addl.CIT, LTU, Bangalore, vide order dated 29/2/2008 passed u/s 143(3) of the Act. While doing so, Assessing Officer (AO), made the following disallowances: a) Deduction u/s 36(1)(viia) was restricted to ₹ 476,97,51,958/- as against the claim of ₹ 498,51,70,108/- thereby resulting in addition of ₹ 21,54,18,149/-. b) Bed debts claim of ₹ 903,37,86,609/- on the ground that the amounts were not w .....

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e above disallowances, assesseebank preferred an appeal before the ld. CIT(A) who, vide impugned order, confirmed the addition of ₹ 21,54,18,149/- under the provisions of section 36(1)(viia) of the Act holding that the AO was justified in adopting the total income after setting off of brought forward loss for the purpose of calculating deduction under the said provision. 5.1 As regards the disallowance of bad debts written off, the ld. CIT(A) after considering the material filed before him .....

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ted back to the file of the AO, on the same lines, the issue was remitted back to the AO for fresh adjudication. 5.3 With respect to disallowance of expenditure for earning exempt income of ₹ 16,77,57,498/-, the ld. CIT(A) following the decision of this Tribunal in assessee s own case for assessment years 2002-03 and 2003-04 in ITA Nos.310 & 311/Bang/2011 held that no expenditure can be disallowed on estimate basis and therefore deleted the total addition made under the provisions of s .....

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hs holding that the loss is on capital account. 5.7 In respect of addition made on account of broken period interest of ₹ 45,17,75,000/-, the ld. CIT(A) deleted the addition holding that even in a case where accrual or mercantile system of accounting is followed, interest becomes due only when holder of the securities get a right to receive interest and following the decision of this Tribunal in assessee-bank s case for earlier years, directed the AO to delete the addition. 5.8 As regards .....

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r of the assessee in ITA No.530/Bang/2009. 7. Now, we shall take up the appeal filed by the assesseebank (ITA No.479/Bang/2009). The assessee-bank has raised totally 8 grounds of appeal. Ground No.1 is general in nature and does not require adjudication. 8. Ground Nos.2 and 3 challenge the addition made u/s 36(1)(viia) of the Act as confirmed by the ld. CIT(A). 8.1 Brief facts surrounding this issue are as under: The assessee-bank made a claim for deduction of ₹ 498,51,70,108/- u/s 36(1)(v .....

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ee-bank that for the purpose of provisions of section 36(1)(viia) total income means total income before set off of brought forward business loss. In support of this contention, assessee-bank relied upon the decision of the Hon ble Kerala High Court in CIT vs. Kerala State Industrial Development Corporation Ltd.(182 ITR 67), CIT as confirmed by the Hon ble Supreme Court reported in 96 Taxman.641, vs. Bihar State Financial Corporation (142 ITR 518). Following these decisions, co-ordinate bench of .....

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see-bank has reiterated the same submissions made before the lower authorities. 8.3 On the other hand, ld.CIT(DR) vehemently argued that total income means income computed under the provisions of the Act before allowing deduction under the provisions of section 36(1)(viia) as well as deductions under Chapter VIA. 8.4 We heard rival submissions and perused material on record. There is no dispute as to the eligibility of the assessee bank for deduction u/s 36(1)(viia) but the bone of contention be .....

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ion under this clause and Chapter VIA) and an amount exceeding 34[ten] per cent of the aggregate average ad made by the rural branches of such bank computed in prescribed manner: Provided that a scheduled bank or a non-scheduled referred to in this sub-clause shall, at its option, be allowed any of the relevant assessment years, deduction in respect of any provision made by it for any assets classified by the Reserve Bank of India as doubtful assets or loss assets in accord the guidelines issued .....

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referred to in this sub-clause shall, at its option, be allowed a further deduction in excess of the limits specified in the foregoing provisions, for an amount not exceeding the income derived from redemption of securities in accordance with a scheme framed the Central Government: Provided also that no deduction shall be allowed under the t proviso unless such income has been disclosed in the return of income under the head "Profits and gains of business or profession. Explanation.-For th .....

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s of such bank. The manner of computing advances is laid down in rules of Income-tax Rules. In the present case, the controversy is regarding the interpretation of term total income . Total income has been defined to mean total income before making any deduction under section 36(1)(viia) and Chapter VIA. 8.6 The Constitution Bench of the Apex Court, in the case of Distributors (Baroda) Pvt. Ltd vs Union Of India (155 ITR 120), in the context of interpreting the provisions of sec.80M held that de .....

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of the Act i.e. in accordance with all the provisions except sec.80E. Earlier decision of the Hon ble Apex Court in the case of Cloth Traders Pvt. Ltd. (118 ITR 243) was overruled. Further, the Hon ble Apex Court, following its decision in the case of Distributors (Baroda) Pvt. Ltd (supra) held in the case of H.H. Sir Rama Verma vs. CIT (205 ITR 433) held that in the context of deduction u/s 80E long term capital loss brought forward from earlier years has to be first set off against long term g .....

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provisions of sec.36(1)(viia) and Chapter VIA is alone to be considered for the purpose of calculating amount of deduction under the said provision. The reliance placed by the learned counsel for the assessee-bank on the decision in the case of Kerala State Industrial Development Corporation (96 taxman 641) and Bihar State Financial Corporation (142 ITR 518) is misplaced. Those decisions were rendered in the context of provisions of sec.36(1)(viii). 8.7 The language employed in sec.36(1)(viii) .....

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ure facility in India or by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes, an amount not exceeding forty percent of the profits derived from such business of providing long-term finance (computed under the head "Profits and gains of bus profession" before making any deduction under this clause to such reserve account: Provided that w .....

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governing the brought forward and set off business loss are not part of the provisions governing the computation of profits under the head profits and gains of business . Therefore, reliance of the learned counsel for the assessee-bank on the decisions cited above is totally misplaced. Even the decision of the co-ordinate bench in the assessee s own case in ITA No.291/Bang/1998 rests on the above decision. The co-ordinate bench had not considered the decision of Hon ble Supreme Court cited supra .....

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his issue are dismissed. 9. Ground Nos.4 and 5 relate to direction of the CIT(A) deleting the addition made on account of depreciation in the value of Held to Maturity (HTM) category of investments. The background facts surrounding this issue are as under: 9.1 In the return of income, the assessee-bank claimed deduction of an amount of ₹ 460,71,28,270/- on account of depreciation in the value of HTM category of investments. The undisputed fact about this category of investments is that the .....

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BI guidelines governing SLR investments, though they are treated as investments in the books of account, they should be treated as part of the business assets. Following this dictum, the assessee-bank has treated them as stock-in-trade for income-tax purposes. The assessee-bank valued these securities following the principle of cost or market price whichever is less. Therefore, when there is a fall in the value of securities, the same is recognized as depreciation and debited to P&L Account. .....

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racts the provisions of sec.45(2). The CIT(A) also taken notice of the fact that the assessee had no working regarding depreciated value of assets and capital gains on sale of assets. In the absence of such working, the CIT(A) confirmed the addition. 9.3 Being aggrieved, the assessee-bank is in appeal before us. The learned counsel for the assessee-bank submitted that notwithstanding the treatment given in the books of account of investments of a banking company, should be treated as business as .....

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1/3/2013)(Kar.) e. Vijaya Bank (ITA Nos.660, 596 & 747/2011 (ITAT, Bang) 9.4 On the other hand, ld.CIT(DR) argued that the circular No.18/2015 of CBDT was issued only in the context of provisions of section 80P of the Act. The same cannot be applied to the commercial banks. He relied on the orders of the lower authorities. 9.5 We heard the rival submissions and perused the material on record. The short issue in this ground of appeal is whether fall in value of investments made pursuant to SL .....

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e investments whether stock-in-trade or not. In the present case, undisputedly, assessee-bank has changed its method of accounting by classifying the investments from investments to stock-in-trade. In such a situation, provisions of sec.45(2) of the Act are attracted. The said provisions of the Act read as under: 45(2)Notwithstanding anything contained in sub-section (1), the profits or gains arising from the transfer by way of conversion by the owner of a capital asset into, or its treatment by .....

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nts are shown as investments in the books of account, for income-tax purposes, the same was shown as stock-in-trade. Therefore, assessee-bank changed its method of accounting during the previous year relevant to assessment year under consideration is not a material fact in deciding the issue in the present appeal. In the earlier years, the same was claimed as stock-in-trade and the resultant loss or gain on account of following the principle cost or market price whichever is less, is recognized .....

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b-section (1) of section 56 of the Act provides that income by way of interest on securities shall be chargeable to income-tax under the head Income from other sources , if, the income is not chargeable to income-tax under the head Profits and gains of business and profession . 3. The matter has been examined in light of the judicial decisions on this issue. In the case of CIT v. Nawanshahar Central Co-operative Bank Ltd. [2007] 160 Taxman 48 (SC), the apex court held that the investments made b .....

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ight of the Supreme Court s decision in the matter, the issue is well settled. Accordingly, the Board has decided that no appeals may henceforth be filed on this ground by the officers of the Department and appeals already filed, if any, on this ground before Courts/Tribunals may be withdrawn/not pressed upon. This may be brought to the notice of all concerned. (Sd.) . . . . . . . . . . . . . . . D. S. Chaudhry, CIT (A&J), CBDT, New Delhi. From the reading of the above circular, it is clear .....

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, investments made by the banking company should be treated as a business asset of the banking company or stock-in-trade. It is well settled in law that CBDT circulars are binding upon the officers who are entrusted with the responsibility of executing the provisions of the Act. 9.6 The jurisdictional High Court, in the case of Karnataka Bank (supra), after referring to the judgment of the Apex Court in the case of Southern Technology (320 ITR 577) and UCO Bank (237 ITR 889) held that the direct .....

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d supra does not come to the rescue of the assessee-bank for the reason that the assessee-bank, even in the books of account, has treated the investments as stock-intrade from the assessment year 2005-06 onwards. Therefore, the question boils down to the one issue whether the change of method of accounting is bona fide or not. It is not the case of the revenue that the assessee-bank changed for a casual period to suit its own purpose. Therefore, the bona fide of the assesseebank in changing the .....

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also be treated as business income. The provisions of section 45(2) cannot be applied to the facts of the present case, as in the earlier years, for the purpose of income-tax proceedings, the investments were treated as stock-in-trade. Thus, grounds of appeal Nos.4, 5 & 6 are disposed of. 10. Ground of appeal No.7 relating to disallowance of expenditure on public issue of ₹ 1,92,50,000/- is not pressed by the assessee-bank, hence dismissed as such. 11. Ground of appeal No.8 challenges .....

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anced to M/s.Pennar Aluminium of ₹ 24 lakhs was converted into securities and he same is held as stock-in-trade. Since the value is found to be nil, same is written off in the books of account and claimed as a deduction in the return of income. The AO disallowed the claim by holding that writing off of investments cannot be allowed as a deduction. 11.1 On appeal before the ld.CIT(A), the ld.CIT(A) after taking into consideration the submissions of the assessee-bank that these were converte .....

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essee-bank submitted that these investments are acquired during the course of business of the assessee-bank and therefore, they should be treated only as stock-in-trade. Therefore, depreciation on account of fall in value of securities should be allowed as a revenue loss while computing profits and gains of business of assessee-bank. 11.4 On the other hand, ld.CIT(DR) relied on the orders of the lower authorities. 11.5 We heard rival submissions and perused material on record. The submission of .....

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e fall in value of securities should be allowed as a capital loss in the year of sale of such securities as supported under the said provisions of the Act. Therefore, it is only a capital loss and cannot be allowed as a deduction. We uphold the order of the ld.CIT(A) and the ground of appeal filed by the assessee is dismissed. 12. In the result, the assessee-bank s appeal is partly allowed. ITA No.530/Bang/2009 : (Appeal by the revenue for assessment year 2006-07): 13. The revenue raised the fol .....

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ppreciated the fact that the said decision of the ITAT has not been accepted by the department and an appeal has been filed in the Honorable High Court of Karnataka. 3) The CIT(A) has erred in directing the Assessing Officer to allow the deduction of ₹ 16,77,57,498/- being expenditure for earning exempt income relying on the decision of the ITAT for assessment year 2003-04 in the assessee own case. The CIT(A) ought to have appreciated the fact that the department is in appeal against the a .....

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may be urged at the time of hearing of appeal it is humbly prayed that the order of the CIT(A) be set aside and that or AO restored. 6) The appellant craves to add/ alter/ amend and / or delete any of the grounds on or before the hearing of the appeal. 13.1 Grounds No.1, 5 and 6 are general in nature and do not require any adjudication. 13.2 Ground No.2 challenges the direction of the ld.CIT(A) directing the AO to allow deduction of ₹ 903,37,86,609/- on account of bad debts. 13.3 AO disal .....

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reduced from opening balance of the provisions claimed u/s 36(1)(vii) of the Act as required by the proviso to sec.36(1)(vii) of the Act. In effect, bad debts relating to non rural branches alone was claimed as deduction. The ld.CIT(A) allowed the claim following the decision of the co-ordinate bench in the assessee s own case for assessment year 2004-05. Being aggrieved, revenue is in appeal before us. 13.4 The ld.CIT(DR) relied on the orders of the lower authorities and submitted that the ld.C .....

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ITR 270) and the jurisdictional High Court in ITA No.1011/2008 in the assessee-bank s case. He further relied on the following decisions: Bank of India: (i) (27 Taxman 335)(ITAT,Mum) (ii)ITA 3422 & 3437/2013, 1498/2011- ITAT,Mum. (ii)ITA 2781 & 3534/2010 - ITAT, Mum. (iii) 5 TMI 929/2014 Indian Bank: (i)TA 470 to 472/2010 - ITAT, Chennai (ii) ITA 131, 388/2001, 984, 1082/2003 -ITAT, Chennai (iii) ITA 880/2010, 1395 to 1397/2014 - ITAT Chennai 13.6 We heard the rival submissions and peru .....

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isions of sec.36(2) of the Act. The case of the AO is that the assessee-bank had not written off bad debts in the books of account as it is only a mere provision and therefore, disallowed the claim. Then the question as to what is meant by write off. Similar issue had come up before the Hon ble Apex Court in the case of Vijaya Bank vs. CIT (323 ITR 166) wherein it was held that debiting the profit and loss account by an amount of provision for bad debts, reducing provision for bad and doubtful d .....

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conclusion that it amounts to write off and the claim was allowed. Since the findings of the ld.CIT(A) are in line with the law laid down by the Hon ble Apex Court, we uphold the order of the ld.CIT(A) and dismiss the grounds of appeal (No.2) filed by the revenue. 14. Ground No.3 challenges the direction of the ld.CIT(A) directing the AO to delete addition of ₹ 16,77,57,498/- made on account of expenditure to earn exempt income. 14.1 During the course of assessment proceedings, AO noticed .....

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isions of sec.14A of the Act. 14.2 On appeal before the ld.CIT(A), the ld.CIT(A) applying law laid down by the Hon'ble jurisdictional High Court in the case of Maharashtra Apex Corporation vs. CIT (286 ITR 585) held that no notional expenditure can be attributed to exempt income and deleted the addition. Being aggrieved, revenue is in appeal before us in the present appeal. 14.3 The ld.CIT(DR) relied on the orders of the AO and submitted that no income can be earned without incurring any exp .....

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harashtra (ITA 637/2008) ITAT, Pune Learned counsel for the assessee-bank submitted before us that since interest exempt was earned from securities which was held as stock-in-trade, provisions of sec.14A have no application. In this connection, he has relied on the decision of the Hon ble Bombay High Court in the case of HDFC Bank Ltd. vs. DCIT (366 ITR 505) and CIT vs. India Advantage Securities Ltd. (IT Appeal No.1131 of 2013 dated 30/04/2014). 14.5 We heard the rival submissions and perused m .....

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ns of sec.14A of the Act state that no deduction shall be allowed in respect of an expenditure incurred by an assessee in relation to income which does not form part of the total income under the Act. Under the provisions of sub-sec.(2) of 14A of the Act, the AO is required to examine the accounts of the assessee and only when he is not satisfied with the correctness of the claim of the assessee in respect of expenditure in relation to exempt income, AO can determine the amount of expenditure wh .....

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TURE IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME 8D(1) Where the Assessing Officer having regard to the accounts of the assessee of the previous year, is not satisfied with- (a) the correctness of the claim of expenditure made by the assessee ; or (b) the claim made by the assessee that no expenditure has been incurred in relation to income which does not form part of the total income under the Act for such previous year, he shall determine the amount of expenditure in relation to such .....

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ce with the following formula, namely :............................... 14.6 Sub-rule(1) of rule 8D extracted above states that, the AO having regard to accounts of the assessee and not being satisfied with the correctness of the claim of expenditure made by the assessee or claim that no expenditure was incurred in relation to income which does not form part of the total income can go on to determine disallowance under sub-rule (2) to rule 8D of the IT Rules. Sub-rule (2) does not come into opera .....

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b-rule(2) of rule 8D as held by the Hon ble High Court in the cases cited supra. Furthermore, it is undisputed fact that exempt income is earned from securities which are held as a part of stock-in-trade. The Hon ble Bombay High Court in the case of India Advantage Securities Ltd (supra) held that provisions of sec.14A have no application in case assets are held as stock-in-trade. Therefore, provisions of sec.14A cannot be applied in the present case. Furthermore, in the assessee s own case, the .....

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The revenue raised the following additional grounds of appeal: May it please to your honours: The appellant seeks permission to raise the following additional grounds for the kind and favorable consideration of the Hon'ble Tribunal; 1. Assessee's claim of deduction u/s 36(1)(vii) of ₹ 903.37 Cr is not in accordance with the provisions under the Act where bad debt written off was not debited into the profit and loss account. 2. The provision of NPA for both rural and non rural branc .....

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claimed under the said provision. Therefore, the additional grounds do not emerge out of the assessment order. The revenue cannot seek relief beyond the assessment order. If the revenue feels that the order passed by the AO is erroneous, remedy is available under other provisions of the Act. Thus the additional grounds of appeal filed by the revenue are dismissed. 17. In the result, the appeal filed by the revenue is dismissed. ITA No.530/Bang/2010 (Appeal by the assessee-bank for assessment yea .....

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HTM is held to be allowable. Accordingly, we allow ground Nos.2 to 4 of the assessee-bank and direct the AO to allow deduction of ₹ 553,50,00,000/- while computing income for the assessment year 2005-06. 20. Ground Nos.5 & 6 raised by the assessee-bank relate to disallowance of write off of investments of non-performing assets of an amount of ₹ 67,85,29,990/-. A similar ground has been raised by the assessee for assessment year 2006-07. Since the facts are identical to the facts .....

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require adjudication. 23. Ground No.2 challenges the direction of the ld.CIT(A) allowing bad debts of ₹ 1049,68,59,925/-. A similar ground is raised by the revenue for the assessment year 2006-07 in its appeal ITA No.530/Bang/2009 and has been dealt by us vide para.13. Since the facts are identical to the facts in assessment year 2006-07, for the detailed reasons given in our order in para.13, we dismiss the ground of appeal filed by the revenue. 24. Ground No.3 challenges the direction of .....

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e claim of deduction u/s 36(1)(viia) of the Act. The AO had allowed the amount of deduction as claimed by the assessee-bank. The AO neither doubted the allowability of the deduction nor disputed the amount of deduction. No grounds of appeal can be filed beyond assessment order. Additional grounds of appeal do not emerge out of the assessment order, hence, dismissed as such. 26. In the result, appeal of the revenue is dismissed. ITA No.793/Bang/2011 (Appeal by the assessee-bank for assessment yea .....

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depreciation on the value of HTM investments of ₹ 309,73,59,173/-. Accordingly, these grounds of appeal are allowed. 29. Ground No.5 challenges the disallowance of contribution made to Disability Trust as per directions of the Hon ble Supreme Court in Interest Tax case of Devkala Consultancy Services Ltd. 29.1 Brief facts are that the Hon ble Supreme Court while dealing with public interest litigation case in the case of Indian Banks Association vs. Devkala Consultancy Service & other .....

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f a trust for benefit of disabled persons covered by the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 and that the excess tax so recovered as well as contributions from concerned bank and credit institutions as the Fund. Pursuant to these directions of the Hon ble Supreme Court, assessee-bank contributed a sum of ₹ 2.5 crores towards that fund and the AO disallowed it by holding that it is not an expenditure incurred for business pu .....

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ch of the Tribunal in the case of State Bank of Indore vs. ACIT in ITA Nos.376 & 479/Ind/2012 dated 16/5/2013. 29.4 On the other hand, learned CIT(DR) relied on the orders of the lower authorities. 29.5 We heard rival submissions and perused material on record. Undisputedly, impugned contribution was made by the assessee-bank pursuant to the order passed by the Hon ble Supreme Court in the case of Devkala Consultancy Service (supra). Needless to say, breach of the directions of the Hon ble S .....

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of appeal of the assessee is allowed. 30. In the result, the appeal by the assessee-bank is allowed. ITA No.813/Bang/2011 (Appeal by the revenue for assessment year 2007-08): 31. The revenue has raised seven grounds of appeal out of ground Nos.1, 6 and 7 are general in nature and do not require adjudication. 32. Ground No.2 challenges the direction of the ld.CIT(A) directing the AO to allow bad debts claim of ₹ 744,60,46,532/-. For the detailed reasons given by us in para.13, while dealin .....

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ngly, this ground of appeal by the revenue is dismissed. 34. Ground No.4 raised by the revenue challenges the direction of the ld.CIT(A) directing the AO to delete the addition made on account of depreciation on assets leased to M/s.Rajinder Steels and M/s.Kedia Group of Companies of ₹ 15,68,546/-. Brief facts surrounding this issue are as under: AO disallowed claim of depreciation in respect of assets leased to M/s.Rajinder Steels and M/s.Group of companies. It may be worth mentioning her .....

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n taken for earlier assessment years. Thus this ground of appeal is partly allowed. 35. Ground No.5 challenges the direction of the ld.CIT(A) to delete the addition made on realization of assets of erstwhile Lakshmi Commercial Bank (LCB) Ltd., of ₹ 60,92,288/-. Brief background of the issue is that LCB was merged with the assessee-bank in the year 1985. On merger, there was excess of liabilities over assets. Consequently there was a loss of ₹ 21.75 crores and the same was claimed as .....

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n out of assets of LCB does not arise. The AO has not concurred with the assesseebank s contention and made the addition. On appeal before the ld.CIT(A), the ld.CIT(A) concurred with assessee-bank and directed the AO to delete the addition. Against this finding of the ld.CIT(A), revenue is in appeal before us in the present appeal. We heard rival submissions and perused material on record. It is undisputed fact that in the year of merger of LCB with assessee-bank, excess of liabilities over asse .....

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rounds do not arise out of assessment order and dismissed as such. ITA No.693/Bang/2012 (Assessee s appeal for assessment year 2008-09): 37. The assessee raised five grounds of appeal. Ground No.1 is general in nature and does not require any adjudication. 38. Ground Nos.2 and 3 challenge applicability of provisions of sec.115JB to the assessee-bank. It is the contention of the assessee-bank that provisions of sec.115JB are not applicable to banking company as no accounts are drawn up as per req .....

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of the co-ordinate bench, we hold that provisions of sec.115JB are not applicable to the banking company. Hence, this ground of appeal of the assessee is allowed. 39. Ground Nos.4 and 5 relate to depreciation in the value of investments HTM. Since in the earlier years we held that depreciation on value of HTM investments are allowable, similarly for the same reasoning, appreciation on the value of investments HTM should be taxable. Hence, this ground of appeal of the assessee is dismissed. 40. .....

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