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2016 (9) TMI 999 - ITAT MUMBAI

2016 (9) TMI 999 - ITAT MUMBAI - TMI - MAT applicability u/s 115JA/115JB - Held that:- Provisions of section 115JA/115JB are not applicable against the Assessee- Bank. - ITA No. 3639/Mum/2004, ITA No. 3640/Mum/2004, ITA No. 2557/Mum/2011, ITA No. 2364/Mum/2011, ITA No. 2558/Mum/2011, ITA No. 2363/Mum/2011, ITA No. 1432/Mum/2011, ITA No. 1528/Mum/2011, ITA No. 7652/Mum/2011 - Dated:- 12-8-2016 - SHRI R. C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER For The Assessee : Shri F.V .....

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Assessee- Bank filed return of income on 29.11.2000 for relevant AY, declaring total income of Rs NIL. Subsequently, the assessee filed revised return of income on 27.03.2002. In revised return the total income remained the same at Rs. NIL. The return of income was selected for scrutiny. After serving the notice u/s 143(2), the AO framed the assessment order. While framing the assessment, the AO besides certain addition/ disallowance made a disallowance u/s 36(1)(viia) for bad debt, disallowanc .....

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assessee has raised the following Grounds of appeal: The grounds set out below are without prejudice to one another: 1. COMPUTATION OF BOOK PROFITS UNDER SECTION 115JA The Commissioner of Income tax (Appeals) [hereinafter referred to as the CIT-A] erred in upholding determination of the taxable income under Section 115JA at ₹ 39,62,80,321/- being 30% of the alleged Book Profits of Rs.l,32,09,34,402/-. (a) The CIT -A erred in not allowing deduction for the actual write-off of Bad Debts of & .....

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uch addition be deleted. II. COMPUTATION OF TOTAL INCOME UNDER NORMAL PROVISIONS OF THE ACT 1. The CIT -A erred in upholding disallowance of non-rural Bad Debts written off to the extent of ₹ 69,85,05,652/-, since such write-off, together with the write-off of rural bad debts of ₹ 35,06,62,782/- did not exceed the Provision of Rural Debts of ₹ 141,41,99,437/- allowed during the year. (a) The Appellants submit that sub-section (viia) of Section 36(1) allows two distinct deductio .....

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hat deduction for non-rural debts written off during the year can be disallowed only if deduction at 5% of the Total Income referred to in (ii) above had been allowed in the past years in excess of the said write off and the allowance in the past at 2 % / 4% / 10% in respect of rural debts had to be ignored. The Appellants submit that, in view of the fact that only limited deduction, if any, had been allowed at 5% in the past as is apparent from the records, which has been fully set off by the D .....

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195. The Appellants submit that the said payment had been made for services rendered outside India which were not subject to tax in India. In any case, these organisations did not maintain any permanent Establishment, in India and were therefore not liable to tax in India. The Appellants therefore pray that the disallowance made by the DCIT on a wrong understanding of facts and of law be deleted. 3. The CIT -A erred in upholding allocation, on an adhoc basis, interest expense of ₹ 54,44,46 .....

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would rely on the Supreme court's decision in the case of Rajasthan State Warehousing Corporation, [242 ITR 450 (SC)] to support its submission. The Appellants also rely on the Bombay High Court's decision in its own case in connection with adhoc allocation of expenses to dividends under Section 80M of the Act. The Appellants therefore pray that the disallowance of the said allocated expenses on an adhoc basis, of ₹ 56, 10,34,086/- be deleted. In addition to the Grounds of appeal, .....

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/s 115JA/115JB are not applicable against the Banking Companies and relied upon the following decision of ITAT Mumbai and other Benches of the Tribunal: (a) Krung Thai Bank PCL v. JDIT (2011) 16 taxmann.com 239 (Mum), (b) The Union bank of India v. ACIT (ITA No. 4702 to 4706/Mum/10), (c) Times bank Ltd. v. ACIT (ITA No. 4355/Mum/2008) , (d) State bank of Hyderabad v. DCIT (2013) 33 taxmann.com 312 (Hyd. ITAT), (e) Dena Bank v. ACIT (ITA No. 237/M/2002), (f) UCO Bank v. DCIT (2015) 64 taxmann.com .....

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icability of various decisions cited by AR of assessee with regard to additional Ground of appeals, the same was not disputed by him. 4. We have considered the rival contentions of the parties and perused the various decisions cited by ld. AR of the assessee. In the case of Krung Thai Bank (supra), the identical Grounds of appeal was considered by the Coordinate Bench of this Tribunal i.e. the applicability of provisions of Section 115JB and after considering the applicability with regard to sec .....

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

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g and insufficient. We are urged to quash the reassessment proceedings on this short ground. Learned Departmental Representative, on the other hand, vehemently relies upon the orders of the authorities below and submits that there is no specific exclusion clause for the banking companies, and in the absence of such a clause, it is not open to us to infer the same. The submissions of the learned counsel, ITA No. 4355/Mum/2008 M/s. Times Bank Limited, , 8 according to the departmental representati .....

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s account. In the case of banking companies, however, the provisions of Schedule VI are not applicable in view of exemption set out under proviso to Section 211(2) of the Companies Act. The final accounts of the banking companies are required to be prepared in accordance with the provisions of the Banking Regulation Act. The provisions of Section 115 JB cannot thus be applied to the case of a banking company. In view of the above discussions, and following the view taken by a coordinate bench in .....

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similar view was approved by the Co-ordinate Bench in case(s) of Union Bank of India, Times Bank Ltd., State Bank of Hyderabad, Dena Bank and UCO Bank (Supra) by Mumbai Tribunal, and in case of UCO Bank(supra) by Co-ordinate Bench of Kolkata Tribunal, thus the Ground of appeal raised by assessee is allowed. 6. As we have already held that MAT provision u/s 115JA/115JB are not applicable against the assessee, thus the discussions on all Grounds of appeal arising out of the assessment order has be .....

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