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2016 (6) TMI 181 - ITAT KOLKATA

2016 (6) TMI 181 - ITAT KOLKATA - TMI - Disallowance u/s 14A - Held that:- With regard to disallowance under rule 8D(2)(iii) of the Rules is concerned, we find that neither the AO nor the CIT(A) have disputed the correctness of the claim of disallowance as computed by the Assessee but have proceeded to compute the disallowance by applying Rule 8D(2)(iii) of the Rules without objectively examining the claim made by the Assessee. The AO without doing so, disregarded the claim of the assessee and i .....

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t would be that the disallowance under Sec.14A of the Act as made by the Assessee before the AO is directed to be accepted

Disallowance u/s 40 (a)(ia) - non-furnishing of challans for the deposits of TDS - Held that:- The limited prayer of the ld. Counsel for the assessee before us was to remand the matter to the AO to enable the Assessee to produce the balance challans to enable the assessee to claim deduction on actual payment basis. We are of the view that the request made on behal .....

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le to electricity generation companies governed by the provisions of Electricity Act. The Hon'ble Kerala High Court in Kerala State Electricity Board vs Dy. CIT (2010 (11) TMI 127 - Kerala High Court ), has also taken the same view.

Addition on account of amortisation of premium paid for purchase of securities - CIT(A) deleted the addition - Held that:- The assessee and categorized as HTM were purchased at a price which was higher than its redeemable value. The difference between the .....

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premium is claimed by way of amortization of premium over the life of the security. The revenue can have grievance only where the cost price of the investment as recorded in the investment trading account includes premium paid at the time of acquisition and also the same premium is separately claimed in the profit and loss account again as a deduction. The plea of the Assessee that there is no such double claim for same cost has been found to correct by the CIT(A). The order of the AO is silent .....

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against revenue

Fresh claim of deduction u/s.80G in respect of donations allowed by CIT(A)- Held that:- CIT(A) held that the deduction had been claimed by the Assessee at 100% not u/s.80G of the Act but as other expenses in the profit and loss account and therefore the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (2006 (3) TMI 75 - SUPREME Court ) will not apply to the case of the Assessee. The CIT(A) found that the deduction claimed was otherwise allowabl .....

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uthorities under the Act.- Decided against revenue

Provision of section 115JB of the Act are not applicable in the nationalised bank - Decided against revenue

Deduction in respect of club membership fees - Held that:- CIT(A) was justified in deleting the addition made by the AO and allowing the expenses incurred by the Assessee as revenue expenditure as the membership is a corporate membership and not in the name of any individual and that the membership is to be allowed ti .....

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ORDER Per N. V. Vasudevan, JM ITA No.1199/Kol/2012 is an appeal by the Assessee while ITA No.1282/Kol/2012 is an appeal by the Revenue. Both these appeals are directed against the order dated 13.06.2012 of CIT(A) VI, Kolkata relating to AY 2008-09. ITA No.1199/Kol/2012: (Assessee's Appeal) 2. Ground Nos. 1 and 2 raised by the assessee read as follows :- "1. That, on facts as well as on law, the Learned Commissioner of Income tax (Appeal) - VI, Kol has erred in confirming the action of .....

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isallowances amounting to ₹ 276,01,94,417 under section 36(1 )(viia) as referred to in Ground No.1 as above in disregard of the decision of Hon'ble Income tax Appellate Tribunal, Bangalore Bench in the case of Syndicate Bank (78 ITD 103) and relying solely on the CBDT's Instruction No.17 of 2008 dated 26.11.2008." 3. The Assessee is a nationalised bank. In the return of income filed for AY 2008-09, the Assessee claimed a sum of ₹ 544,78,26,226 being deduction for provisi .....

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or a non- scheduled bank or a co- operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, an amount not exceeding seven and one-half per cent of the total income (computed before making any deduction under this clause and Chapter VIA) and an amount not exceeding ten per cent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner : 4. The amount of deduction claimed has .....

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was only ₹ 268,76,31,809/-. The claim of the Assessee before the AO was that although the bank made a provision for bad and doubtful debts amounting to ₹ 268,76,31,809 in the accounts, the bank is eligible for deduction for an amount of ₹ 544,78,26,226 as per calculation made under section 36(1 )(viia). The entitlement for deduction cannot be restricted to the extent of only provision created in the books subject to the upper limits laid down in Sec.36(1)((viia)(a) given as abo .....

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a deduction which is quantified not with respect to the amount provided in the accounts, but with respect to certain percentage of the total income (before making this deduction and deduction under chapter VI-A) and also a certain percentage of aggregate average advances made by the rural branches. In other words, there is a specific deduction given by the statute irrespective of the quantum provided by the assessee in the accounts towards provision for bad and doubtful debts. The Assessee relie .....

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greater than the amount debited to the profit and loss account as provision. 7. Aggrieved by the order of the CIT(A), the Assessee has raised ground No.1 & 2 before the Tribunal. At the time of hearing it was agreed by the parties that identical issue was decided against the Assessee by the Tribunal in Assessee's case for AY 2005-06 & 2006-07 in ITA No.2175& 2176/Kol/2009 order dated 16.3.2016 by following the decision in the case of State Bank of Patiala (supra). Following the s .....

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of making estimate of disallowance amounting to ₹ 46,20,484 offered by the Appellant itself in the revised return of Income filed by the Appellant. 4. That, on facts as well as on law, the Learned Commissioner of Income Tax (Appeal) - VI, Kol has erred in upholding the disallowances under section 14A by invoking Rule 8D amounting to ₹ 4,20,90,323 in total disregard of order of his Learned predecessor in the Appeal No.1 014/CIT(A)-VI/2009-10/Cir-6/Kol dated 15.11.2010 relating Assess .....

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should be excluded in arriving at the total income, the Assessee was bound to compute the disallowance of expenditure u/s.14A of the Act. The Assessee filed its original return of income on 27.09.2008 without any addition in respect of disallowances under section 14A of the Act. Subsequently revised return was filed on 31.03.2010 offering disallowances of ₹ 46,20,484 under section 14A of the Act in the computation of revised total income. The basis of calculation of disallowances under se .....

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estment department and the other is 1 % of tax-free income. 10. The AO was of the view that the Assessee has not denied that it had incurred expenditure in earning exempt income and proceeded to compute the disallowance u/s.14A of the Act by applying Rule 8D of the Income Tax Rules, 1961 (Rules). The AO has not in his order explained the reasons why the aforesaid amount of disallowance under section 14A as offered by the Assessee in its revised return of income should not be accepted. The AO has .....

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as follows: Interest paid X average value of investment average value of assets := 4498,87,95,000 X 841,80,64,657 75301,53,24,500 = 50,29,36,092 From the above calculation, it is evident that out of total interest cost amounting to ₹ 4498,87,95,000, a proportionate part of interest to the extent of ₹ 50,29,36,092 was disallowed under section 14A of the Act. 12. The AO computed disallowance under Rule 8D(2)(iii) of the Rules as follows: ½% of the average investments of ₹ .....

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and tax free bonds as on 31st March 2008 was only ₹ 885.89 crores (i.e. ₹ 376.19 crores + ₹ 224.12 crores + ₹ 285.58 crores). Thus, the investment in tax free instruments was much less than the bank's owned fund as on 31.03.2008. The Assessee pointed out that this fact was very relevant and has not been considered by the AO. Since, the investment in tax free instruments did not exceed the owned fund, there cannot be any presumption that whole or part of such tax free .....

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ovides that the Assessing Officer is empowered to determine the correct amount of expenditure incurred in relation to exempt income in the following situations: (a) Where the Assessing Officer, having regard to the account, is not satisfied with the correctness of the claim of the assessee in respect of expenditure in relation to exempt income. (b) Where the assessee claims that no expenditure has been incurred by him in relation to exempt income. It was argued that as the Assessee had claimed a .....

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e AO has not brought on record any deficiency in the estimate of the amount of disallowance offered by the Assessee and therefore, disallowance of ₹ 54,50,26,415 under section 14A by invoking Rule 8D of the Rules is not sustainable. 15. Reference was made to the decision of the Hon'ble Bombay High Court in the case of Godrej and Boyce Manufacturing Company Limited 328 ITR 81 (Bom) wherein it was held that the provisions of Rule 8D of the Rules apply with effect .from the assessment yea .....

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licable and since the Assessee was unable to substantiate its claim of disallowance u/s.14A as claimed by it, the computation of disallowance has to be made in accordance with Rule 8D of the rules. With regard to the contention of the Assessee that there can be no disallowance of interest under rule 8D(2)(ii) of the rules because the Assessee had sufficient own funds, the CIT(A) in paragraphs 28 to 30 of his order held that the Assessee has not maintained separate accounts to prove that no borro .....

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the order of CIT(A) the assessee has raised ground Nos. 3 and 4 before the Tribunal. The assessee has also raised the following additional grounds on the disallowance u/s 14A of the Act : "That on facts and circumstances and also on law, the Learned CIT (A) and the Learned AO have failed to appreciate that shares, securities, bonds etc., being held as stock-in- trade, the provisions of Rule 8D(2)(ii) and (iii) are not applicable to the appellant bank and only the amount of expenditure direc .....

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Act, 1961 without bringing on record any cogent reason for disregarding and rejecting the estimate including the manner of making estimate of disallowance amounting to ₹ 46,20,484 offered by the Appellant itself in the revised return of Income filed by the Appellant. Ground No.4: Without prejudice to the Additional Ground of appeal as above, that, on facts as well as on law, the Learned Commissioner of Income tax (Appeal) - VI, Kol has erred in upholding the disallowances under section 14 .....

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No.3 and 4 originally raised by the assesse in the grounds of appeal, we permit the assessee to raise the additional ground and modify grounds No.3 & 4 as prayed for by the Assessee. 19. The ld. Counsel for the assessee submitted before us that the Hon'ble Supreme Court in the case of United Commercial Bank vs CIT 240 ITR 355 (SC) has taken a view that all investment held by a bank are stock in trade of business of the assesee. He drew our attention to the decision of the Hon'ble ITA .....

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which shares are held as investments, and that this rule will not have any application when the shares are held as stock in trade It is so for the elementary reason that the one of the variables on the basis of which disallowance under rules 8D(2)(ii) and (iii) is to be computed is the value of "Investments, income from which does not or shall not form part of total income", and, when there are no such investments, the rule cannot have any application. When no amount can be computed i .....

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. 7. However, that does not exclude the application of rule 8 D(2)(i) which refers to the "amount of expenditure directly relating to income which does not form part of total income". In other words, in a case where shares are held as stock in trade and not as investments, the disallowance even under rule 8 D is restricted to the expenditure directly relatable to earning of exempt income. Consequently, while Section 14 A will still apply in the cases whether shares are held as stock in .....

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'ble Bombay High Court has not only held that "the Assessing Officer has to enforce the provisions of sub section (1) of Section 14A, and for that purpose, the Assessing Officer id duty bound to determine the expenditure which has been incurred in relation to income which does not form part of total income under the Act", but further added, while remitting the matter to the Assessing Officer for computation of disallowance under section 14 A, that the Assessing Officer shall examin .....

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be restricted to disallowance of only direct expenses. Revenue thus derives no advantage from invoking rule 8D in such cases; on the contrary, the scope of disallowance is only minimised in such a situation. 9. So far as the case before us is concerned, as will be clearly discernible from the observations of the learned CIT(A) extracted earlier in this order, learned CIT(A) has upheld disallowance under section 14A in respect of even indirect expenditure, but he has merely held that the provisi .....

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ssed by the assessee. Quite to the contrary of what learned Departmental Representative perceives to be advantageous to the Assessing Officer, in case the application of rule 8 D was to be upheld, there would have been no disallowance at all since not only that no investments were held by the assessee, admittedly there are no direct expenses are incurred on earning of the dividends and as such in all the three segments of disallowance under rule 8D(2) i.e. 8D (2) (i), (ii) and (iii), there will .....

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tion 14A are indeed attracted whether or not the shares are held as stock in trade or as investments, even though the provisions of rule 8D(2)(ii) and (iii) cannot be invoked in such a case, and even though the provisions of rule 8D(2)(i) are much narrower in scope than the scope of Section 14 A simplictor. With these observations, we confirm the conclusions of the learned CIT(A) and decline to interfere in the matter." 20. The ld. Counsel accordingly submitted that the disallowance under R .....

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ation to the rival submissions. The provisions of section 14A as originally introduced and as amended from time to time as well as the insertion of Rule 8D was subject-matter of several decisions rendered by various Benches of the ITAT as well as the Hon'ble High Courts. The Hon'ble Delhi High Court in the case of Maxopp Investments Ltd. v. CIT 2011) 203 Taxman 364 (Del) and the Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. 328 ITR 81 (Bom) have taken a vi .....

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ation mode as specified in Rule 8D(2) of the Rules. 22. In the present case, the assessee has taken a stand that a particular amount has to be disallowed as expenditure incurred in earning exempt dividend income. The AO did not agree with the claim of the Assessee and he estimated the disallowance on a different basis. The question is whether it is mandatory for the AO to apply Rule 8D of the Rules, the moment he rejects the basis of disallowance as made by the AO. We are of the view that even i .....

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bsurdities and refrain from invoking the method of disallowance of expenses as prescribed by Rule 8D(2) of the Rules. In other words, it is only when no reasonable and proper parameters for making disallowance can be arrived at, that resort to Rule 8D(2) can be had by the AO. Rule 8D(2) will thus be a last resort when it becomes impossible to arrive at a just conclusion on the amount of expenses that has to be disallowed as attributable or incurred in earning exempt income. The AO, u/s 14A of th .....

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cannot be said that the AO had no jurisdiction to do so and AO ought to resort only to the provision of Rule 8D of the Rules. In other words Rule 8D is not automatic and can be resorted to by the AO only as a measure of last resort. 23. For the reasons given above, we are of the view that the conclusions of the CIT(A) that rule 8D of the rules has to be mandatorily applied in cases relating to AY 2008-09 and subsequent AYs is not correct. We hold accordingly. 24. With regard to the disallowance .....

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). Thus, the investment in tax free instruments was much less than the bank's own fund as on 31.03.2008. Reference in this regard was made to the following decisions for the proposition that overall availability of interest free funds have to be seen before making disallowance u/s.14A of the Act read with Rule 8D(2)(ii) of the rules. (i) CIT Vs. Reliance Utilities and Power Ltd. 313 ITR 340 (Bom); (ii) CIT Vs. UTI Bank (2013) 32 Taxmann.com 370 and (iii) CIT Vs. Gujarat Power Corporation 352 .....

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e AO nor the CIT(A) have disputed the correctness of the claim of disallowance as computed by the Assessee but have proceeded to compute the disallowance by applying Rule 8D(2)(iii) of the Rules without objectively examining the claim made by the Assessee. The AO without doing so, disregarded the claim of the assessee and in invoked Rule 8D of the IT Rules without recording the satisfaction as required by Sec.14A(2) of the Act. The law is well settled by now that with regard to expenditure in re .....

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Hon'ble Calcutta High Court:- "While rejecting the claim of the assessee with regard to expenditure or no expenditure, as the case may be, in relation to exempted income, the AO has to indicate cogent reasons for the same. From the facts of the present case, it is noticed that the Assessing Officer has not considered the claim of the assessee and straight away embarked upon computing disallowance under Rule 8D of the Rules on presuming the average value of investment at ½ % of t .....

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arking on Rule 8D(2) of the rules was not proper and hence the disallowance under rule 8D(2)(iii) of the Rules is also directed to be disallowed. The net result would be that the disallowance under Sec.14A of the Act as made by the Assessee before the AO is directed to be accepted. Thus Ground No.3 & 4 as modified is allowed. 26. Ground No.5 raised by the assessee reads as follows :- "5. That, on facts as well as on law, the Learned Commissioner of Income tax (Appeal) - VI, Kol has erre .....

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ed upon the Assessee to furnish an auditor's certificate as evidence for the deposit of the TDS. The same was not produced before the assessing officer by the Assesseet. Therefore, the Assessing Officer disallowed an amount of ₹ 3,17,32,734/- on account of non-furnishing of challans for the deposits of TDS by observing in his assessment order as follows:- "Disallowance of claim on deposit of TDS The assessee bank has claimed deduction of ₹ 3,17,32,734/- which was disallowed .....

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uditor as an evidence for payment of TDS Accordingly, the said claim for deduction of ₹ 3,17,32,734/- which was disallowed U/S 40(a)(ia) in earlier years is rejected in absence of any evidence for deposit of TDS " 28. Before CIT(A), the Assessee submitted that out of ₹ 3,17,32,734/- in respect of disallowances under section 40(a)(ia), the Assessee is able to produce the necessary challans in respect of amount of expenditure of ₹ 96,38,368/-. The Assessee was however unable .....

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pect of ₹ 96,38,368/-. The appellant has further submitted - at it could not ,produce the balance challans amounting to ₹ 2,20,94,366/-. Therefore, the amount of disallowance is restricted to ₹ 2,20,94,366/- only and the appellant gets relief of ₹ 96,38,366/-. This ground of appeal is partly allowed." 30. Aggrieved by the order of the CIT(A), the Assessee has raised Gr.No.5 before the Tribunal. The limited prayer of the ld. Counsel for the assesse before us was to re .....

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he assessee read as follows :- "6. That, on facts as well as on law, the Learned Commissioner of Income tax (Appeal) - VI, Kol has erred in confirming the application of provision of Section 115JB of the Income Tax Act to the case of the Appellant in disregard of the ratios laid down by the Hon'ble Kerala High Court in Kerala State Electricity Board vs Dy. CIT (2010) 329 ITR 91 (ker), Hon'ble ITAT, Mumbai in Maharashtra State Electricity Board vs JCIT 82 ITD 422, Krung Thai Bank PCL .....

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offered by the Appellant itself under section 14A in computation of the 'Book Profit' under section 115JB." 32. Sec.115JB(1) of the Act provides that notwithstanding anything contained in any other provision of the Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under the Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2007, is less than ten per cent of i .....

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Sec.115JB provides that for the purposes of section115JB of the Act, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by and as reduced by some of the items set out in the set explanation. It was the plea of the Assessee that the provisions of Section 115 JB can only come into play when the assessee is required to prepare its profit and loss account in accordance with the provisions o .....

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he Banking Regulation Act. The provisions of Section 115 JB cannot thus be applied to the case of a banking company. 33. The AO as well as the CIT(A) however did not agree with the submissions made on behalf of the Assesse. The CIT(Appeals) after making a reference to the legislative history of the provisions of Sec.115JB of the Act was of the view that in the light of the purpose for which provisions of Sec.115JB of the Act were introduced, it cannot be said that the provisions of Sec.115JB of .....

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view of the exclusions of various sectors from the operation of MAT and the credit system. The Act has, therefore, modified the scheme of MAT. The existing section 115JA has been made inoperative w.e.f. 1-4-2001. In its place, the Act inserts a new provision, 115JB of the Income-tax Act. 43.2 The new provisions provide that all companies having book profits under the Companies Act, prepared in accordance with Part II and Part III of Schedule VI to the Companies Act, shall be liable to pay a mini .....

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the existing provisions of section 115JA shall get the credit. 43.5 The export profits under sections 10A, 10B, 80HHC, 80HHE and 80HHF are kept out of the purview of this provision as these are being phased out. The new provisions also exempt companies registered under section 25 of the Companies Act. 43.6 Certificate from an auditor has also been prescribed with a view to ascertaining the extent of book profits. 43.7 These amendments will take effect from 1st April, 2001 and will, accordingly, .....

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A No.1460/Kol/13 for AY 2003-04, in Assessee's own case: "15. Aggrieved by the order of the CIT(A), the Assessee is in appeal before the Tribunal. The learned counsel for the Assessee reiterated submissions as were made before the learned CIT(A). The learned counsel for the Assessee also submitted that the provisions of Sec.115JB of the Act were amended with effect from 01.04.2013 making it obligatory, inter alia, for banks to prepare P & L account in accordance with the Banking Reg .....

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. 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. Learned counsel for the assessee, however, contends that the provisions of MAT do not apply to the assessee, and , for this reason, very foundation of impugned reassessment proceedings is devoid of legally sustainable merits. His line of reasoning is this. The provisions of MAT can come into play only when .....

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ion 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 accounts in terms of the provisions of Banking Regulation Act . It is thus contended that the provisions of Section 115 JB do not apply in the case of banking companies which are not required to prepare the profit and loss account as per the requirements of Part II and III of Schedule VI to the Companies .....

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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 plea of the assessee is indeed well taken, and it meets our approval. The provisions of Section 115 JB can only come into play when the assessee is required to prepare its profit and loss account in accordance with the provisions of Part II and I II of Schedule VI to the Companies Act . The starting poin .....

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of a banking company." 17. 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 not applicable to the assessee which is a banking company. The decisions relied upon by the ld. counsel for the assessee, clearly support the plea of the assessee in this regard. Consequently, ground No.6 & 7 raised by the assessee are also allowed. In view of the decision on ground No.6 & &a .....

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ty Board vs JCIT 82 ITD 422(mum) took the view that provisions of Sec.115JB of the Act are not applicable to electricity generation companies governed by the provisions of Electricity Act. The Hon'ble Kerala High Court in Kerala State Electricity Board vs Dy. CIT (2010) 329 ITR 91 (ker), has also taken the same view. In view of the above ground No.6 raised by the assessee is allowed. In view of the decisions in ground no.6 no adjudication is required on ground no.7 raised by the assessee. 36 .....

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by placing reliance on the provisions of Section 115JB of the 1. T.Act, 1961 for deleting the disallowance of ₹ 108,45,17,830/- made while computing taxable income under normal computational provisions." 38. The Assessing Officer in his assessment order dated 30.12.2010 disallowed an amount of ₹ 108,45,17,830/- on account of amortisation of premium paid for purchase of securities by observing in the assessment order as follows:- "The assessee bank debited a sum of ₹ .....

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said investment trading account. Therefore, there is no scope for allowing the amortisation expense charged separately in the accounts, in the computation of income as per Income-tax Act. Therefore, a sum of ₹ 108,45,17,830/- is added back to total income." 39. Before CIT(A), the Assessee submitted that Investments in bank are classified into three categories - (a) Held To Maturity (HTM), (b) Held For Trading (HFT) and (C) Available For Sale (AFS). As per the guidelines of Reserve Ba .....

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curities of the bank are held as trading stock and full depreciation on securities held as trading stock as marked to market on 31st March 2008 has been allowed as per the investment trading account submitted along with the return of income. It was argued that the AO was under impression that full purchase consideration of all the securities was included in the said investment trading account and amortization amount is charged separately in the Profit and Loss Account held that the claim of the .....

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can be seen from the details of the investment trading account filed by the Assessee that the premium in respect of purchase of investments under HTM category has not been included. The Assessee also pointed out that the Ld. Commissioner of Income-tax (Appeals)-VI, Kolkata has already dealt with this issue in the assessment years 2006-07 and 2007-08 vide appeal No. 649/CIT(A)-VI/08- 09/Cir-6 dated 09-11-2009 and appeal No. 1014/CIT(A)-VI/08- 09/Cir-6 dated 15-11- 2010. The Ld. Commissioner of In .....

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loss account by way of amortisation of premium was consistently allowed by the A.O In view of this, I direct the A. O to delete the addition of ₹ 124,23,38,703/-. This ground of appeal is allowed. " The Commissioner of Income-tax (Appeals)-VI, Kolkata. in appeal No. 1014 dated 15.11.2010 in the assessment year 2007-08 has held on the same issue as follows:- "I have considered the above submission of the assessee and the 'investment trading account filed during the appellate p .....

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of such security. The At) has wrongly understood that the premium paid on purchase of these securities has already been debited in the investment trading account. In fact this premium is debited in the P&L Account through this amortization process only. Since the premium paid on purchase of securities is an expenditure incurred by the assessee therefore it has t be allowed to the assessee. The assessee has claimed this amortisation of premium as per the accounting guidelines issued by the R .....

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e order of my learned predecessor i.e. Commissioner of Income-tax (Appeals)-VI, Kolkata. The Finance Act, 2012 has inserted an Explanation 3 under Sub-section 2 of Section 115JB stating that the assessee being a company to which the proviso to sub- section (2) of section 211 of tile Companies Act, 1956 (1 of 1956) is applicable providing that the assessee from assessment year commencing on or before the 1 st day of April, 2012, has an option to prepare its profit and loss account for the relevan .....

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on or before the 1 st day of April, 2012, an option to prepare its profit and loss account for the relevant previous year either in accordance with the provisions of Part Il and Part III of Schedule VI to the Companies Act, 1956 or in accordance with the provisions of the Act governing such company."; (1 of 1956)" 8. The appellant is a public sector bank and is governed by the provisions of the Banking Regulation Act, 1949 and it has prepared its accounts and financial statements in a .....

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Commissioner of Income-tax (Appeals)-VI, Kolkata's appeal No. 1014 dated 15.11.2010 of the assessment year 2007-08, it is held that since the amount charged to Profit & Loss Account by way of amortisation of premium was consistently allowed by the Assessing Officer up to the assessment year 2005-06 and now without any change in law it cannot be suddenly changed. The rule of consistency has to be followed by him. The assessee has claimed this amortisation of premium as per the accounting .....

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ho relied on the order of the AO. The learned counsel for the Assessee relied on the order of the CIT(A). 42. We have considered the rival submissions. The assessee while computing its total income claimed deduction under the head amortization of premium on purchase of securities held to maturity. The assessee in the course of its banking business, to meet the statutory liquidity ratio requirements prescribed by the RBI, has to make investments in Central and State Government securities. As per .....

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were spread over to the life of the investments and proportionate deduction was claimed by the assessee under the head "Amortization of HTM". The further claim of the Assessee was that all the securities held by the Assessee were held as "stock-in- trade" by the Assessee. The face value of the securities held in HTM category is alone shown in the books as cost and the premium is not claimed as cost of the securities, as the premium is claimed by way of amortization of premiu .....

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e claim of the assessee on the assumption that full purchase consideration of all the securities was included in the said investment trading account and amortization amount is charged separately in the Profit and Loss Account again and he therefore held that the claim of the Assessee cannot be allowed in computation of total income. This factual assumption of the AO is wrong as found by the CIT(A) which has not been disputed before us. In these circumstances, we are of the view that the order of .....

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t; 44. The Assessing Officer disallowed an amount of ₹ 7,38,9001- holding that the same was not claimed in the income tax return u/s 80G and 35AC of the Income-tax Act, 1961, by observing as follows:- "The assessee included a sum of ₹ 7,38,900/- paid as donation under the head 'other expenditures '. The assessee bank did not clam deduction u/s 80G either in the original return or in the revised re{urn. During the course of hearing. the assessee bank has informed that the .....

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ction 35AC. The submission of the assessee has been carefully considered. In view of the judgement of the Hon 'ble Supreme Court in the case of Goetze (India) Ltd Vs CIT 284 ITR 323 any new claim in respect to any deduction which is not made in the return of income cannot be allowed without filing a revised return. Deduction u/s 35AC or 80G cannot be allowed at this stage as the assessee has not made any such claim either in the original return or in the revised return. Accordingly, the dona .....

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the AO was directed to allow the claim for deduction. In the grounds of appeal, the revenue does not dispute the fact that the deduction claimed by the Assessee is allowable as found by the CIT(A). We are of the view that the CIT(A) as first appellate authority is entitled to allow the deduction claimed and the restriction laid down in the decision in the case of Goetze (India) Ltd., is applicable only to making claim before AO and not before the appellate authorities under the Act. In view of t .....

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in the nationalised bank, we are of the view that there is no merit in Ground No.4 raised by the revenue and the same is dismissed. 48. Ground No.5 raised by the revenue reads as follows :- "5. That on the facts and circumstances of the case, Ld. CIT(A) erred in law and on facts in allowing the deduction in respect of club membership fees of ₹ 6,78,655/- 49. The Assessing Officer disallowed an amount of ₹ 6,78,655/- paid to Saturday Club regarding renewal of membership subscript .....

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f ₹ 16,959 on account of payment made to clubs by way of subscription/membership fee for various employees of the company. 31. We have heard the parties. It was necessary for the assessee to have membership of clubs in the name of its employees for the purpose of his business. In catena of cases various Benches of Tribunal are allowing such expenditure as necessary business expenditure. A reference is available in ITO vs. Bright Bros. Ltd. (1984) 18 TTJ (Bom) 377 and also in HJ Industries .....

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membership and not in the name of any individual and that the membership is to be allowed till the persons are in job and it will shift in the name of next executive on the superannuation of the earlier executive and was paid for renewal of membership for five years and has not been paid as initial capital membership fee. Taking note of these aspects, the CIT(A) allowed the claim for deduction, holding that the expenditure was revenue expenditure. 51. Aggrieved by the order of the CIT(A) the rev .....

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