TMI Blog2016 (12) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... - Decided in favour of assessee - ITA No. 2316/Del/2013 - - - Dated:- 25-11-2016 - Sh. N. K. Saini, AM and Smt. Beena Pillai, JM For The Assessee : Sh. Piyush Kaushik, Adv. For The Revenue : Smt. Paramita Tripathy, CIT DR ORDER Per N. K. Saini, AM: This is an appeal by the assessee against the order dated 19.02.2013 of ld. CIT, Moradabad. 2. Following grounds have been raised in this appeal: 1. That on the facts and circumstances of the case and in the Law, the CIT has grossly erred in assuming jurisdiction u/s 263 for directing the Assessing Officer ('AO') to re-examine the claim of assessee u/s 36(1)(viia). 2. That the assumption of jurisdiction u/s 263 by the CIT is highly improper unjustified as the AO framed the original order u/s 143(3) after conducting adequate comprehensive enquiries on the aspect of claim of deduction u/s 36(1)(viia) which is well sufficient to curtail the assumption of jurisdiction u/s 263 on part of CIT on the facts and circumstances of the case and in the law. 3. That the CIT has in assuming jurisdiction u/s 263 grossly failed to appreciate that it is not permissible for the Commissioner un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court of India in the case of SOUTHERN TECHNOLOGIES LTD VS. JOINT COMMISSIONER OF INCOME TAX (2010) 228 CTR (SC) 440 which was decided on 11th January, 2010. In this decision the Hon'ble Court at page No.446 has held as under:- ..........thus line of business operations of NBFC's and banks are quite different. It is for the reason, apart from social commitments which banks undertake, that allowance of the nature mentioned in sections 36(i)(viia) and 43D are open restricted to banks and not to NBFC's. Lastly even in the case of banks the provisions for NPA has to be added back and only after such add back that deduction under s. 36(i)(viia) can be claimed by the banks. Therefore, even in the case of the banks, there is an element of add back, however, by way of special provisions banks are allowed to claim deduction under s. 36(i)(viia). One more aspect needs to be mentioned, apart from the fact that NBFC's and Banks are two different entities, under s. 36(i)(viia) then, Court will be under taking judicial legislation which is not allowed........... In view of the above facts/reasons, we have revised return of income of Bank for A.Y. 2009- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of State Bank of Patiala Vs CIT Others reported at (2005) 272 ITR 54. The ld. CIT mentioned in the impugned order that the assessee claimed that the issue under consideration was covered by the judgment of the Hon ble Supreme Court in the case of Southern Technologies Ltd. Vs JCIT reported at (2010) 320 ITR 567 wherein it was held as under: Section 36(1)(vii) provides for a deduction in the computation of taxable profit for the debt established to be a bad debt. Section 36(1)(viia) provides for a deduction in respect of any provision for bad and doubtful debt made by a Scheduled Bank or Non- Scheduled. Bank in relation to advances made by its rural branches of a sum not exceeding a specified percentage of the aggregate average advances of such branches. Having regard to the increasing social commitment, Section 36(1)(viia) has been amended to provide that in respect of provision for bad and doubtful debt made by a scheduled bank or a non scheduled bank, an amount not exceeding a specified percent of the total income or a specified percent of the aggregate average advances made by rural branches, whichever is higher, shall be allowed as deduction in computing the taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k which is a copy of order sheet entry dated 01.11.2011 wherein the AO required the assessee to furnish various details with respect to the following: i. Brief note on the modus operand of the business activities; ii. Computation of deduction u/s 36(1)(viia); iii. Working of provision for bad debts and claim of bad debts; iv. Bills for fixed assets purchased during the year; v. Reasons for loss; vi. Details of branches; vii. Contingent liabilities - details - whether debited to P L a/c; viii. Confirmation for unsecured loans received / squared during the year; ix. Details of Doubtful Loss assets; x. Computation of total income; xi. Break up of other expenses; xii. Repair maintenance - nature. 8. On the basis of above, the ld. Counsel for the assessee submitted that the AO had raised queries on as many as 12 points including the issue addressed by the ld. CIT vide his show cause notice u/s 263 of the Act and that the assessee vide its submission dated 16.11.2011 stated as under: i. Working of claim of deduction u/s 36(1)(viia) of ₹ 80,15,60,000 was submitted (page 14 PB); ii. Br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s 36(1)(viia) is a specific deduction given by the statute irrespective of the quantum provided by the assessee in its accounts towards provision for bad and doubtful debts. Thus, it is crystal clear from the above that there were deliberations with the AO in the course of scrutiny assessment proceedings u/s 143(3) on all the points as raised by the CIT vide its notice u/s 263. 9. The ld. Counsel for the assessee further submitted that the assessee vide its submissions dated 22.11.2011 stated that the ITAT Bangalore in the case of Syndicate Bank Vs DCIT reported at 78 ITD 103 clearly held that u/s 36(1)(viia) of the Act a specific deduction has been given by the statute irrespective of the quantum provided by the assessee in its accounts towards provision for bad and doubtful debts. Therefore, there were deliberations with the AO in the course of scrutiny assessment proceedings u/s 143(3) of the Act. It was emphasized that in the assessee case the ld. CIT himself could not point out that certain specific branches are non rural branches and that there was anything wrong with rural advances given by the assessee or claim made u/s 36(1)(viia) of the Act or under a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn u/s 36(1)(viia) of the Act. Therefore, the ld. CIT was fully justified in holding that the assessment order passed by the AO was erroneous as well as prejudicial to the interests of the Revenue. 13. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed that the assessee is a subsidiary of Syndicate Bank and its case was selected for scrutiny. The AO framed the assessment u/s 143(3) of the Act on 13.12.2011. Thereafter, the ld. CIT by invoking the provisions of Section 263 of the Act held vide order dated 19.02.2013 that the assessment framed by the AO was erroneous and prejudicial to the interest of Revenue. 14. It is trite that an order can be revised only and only if twin conditions of error in the order and prejudice caused to the Revenue co-exist. The subject of 'revision under section 263' has been vastly examined and analyzed by various Courts including Hon'ble Apex Court. The revisionary power conferred on the Ld. CIT vide section 263 of the Act is of vide amplitude, it enables the Ld. CIT to call for and examine the records of any proceeding under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neous, than the said section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice for the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interest of the revenue and if the Assessing Officer has adopted one of the courses permissible under law or where two views are possible and the Assessing Officer has taken one view which the CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the Assessing Officer is unsustainable under the law. (vi) If while making the assessment, the Assessing Officer examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income, the CIT, while exercising his power under section 263 of the Act, is not permitted to substitute his estimate of income in place of the income estimated by the Assessing Officer. (vii) If the Assessing Officer exercises quasi-judicial power vested in him in accordance with law and ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es as well as guidelines and policies of its principal i.e. Syndicate Bank. 2. The computation of deduction u/s 36(i)(viia) of Income Tax Act'1961 was filed alongwith the return of income. The reasons for filing revised return are given in the letter filed alongwith the revised return. It is, however, submitted that the revised return was filed to claim proper admissible deduction u/s 36(1)(viia) of the I.T. Act which is a, statutory deduction. Further, the revised return is covered u/s 139(5) of the I.T. Act. The working of claim of deduction u/s 36(1)(viia) at ₹ 80,15,60,000/- is given in the sheet of Computation of Income filed alongwith the revised return. Further the branch wise details of computation of deduction u/s 36(1)(viia) of ₹ 80,15,60,000 is also enclosed herewith. The relevant adjustments in this regard in the computation of income being self explanatory from the computation as are follows: Firstly, the provision for bad doubtful debts of ₹ 14,18,27,000 are added back i.e. offered to tax. Thereafter, the aforesaid amount of ₹ 80,15,60,000 is claimed as a deduction u/s 36(1)(viia). Please note, the aforesaid adjust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Monthly average of agricultural advances outstanding in rural branches F.Y. 2008-09 AMT IN 000 1. Moradabad 1104553 2. Rampur 1389390 3. Thakurdwara 847040 4. Amroha 1729725 5. Sambhal 1662607 6. A.P. Chopla 1282308 Total 8015623 18. In the present case, the assessee had given the break-up of each branch (copies of which are placed at page nos. 15 to 28). In the instant case, the assessee in its computation of revised total income/loss (copy of which is placed ate page no. 1 of the assessee s paper book) clearly mentioned that deduction u/s 36(1)(viia) of the Act was claimed @ 10% of average agricultural advances of ₹ 801.56 crores. Thereafter, the AO a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s International Travel House Ltd. (2012) 344 ITR 554 (Del) held as under: Assessing Officer had duly applied his mind and was satisfied with the explanation offered by the assessee and did not make any addition in that regard. The Assessing Officer had not incorporated the facts in detail in the order but that would not mean that there had been no application of mind. The Tribunal noted the fact that the details of tax deducted at source during the financial year had been shown and the income that was shown as commission income was reflected in detail in the show cause and in the books of account. The Assessing Officer had already examined this aspect but the Commissioner had directed a re-inquiry for merely a change of opinion which was impermissible under section 263 of the Act. He was required to arrive at a definite conclusion but he had not done so. 23. In the present case also the ld. CIT had directed the AO to re-examine the claim u/s 36(1)(viia) of the Act of the assessee which the AO had already examined and on being satisfied, allowed the same. Therefore, the impugned order passed by the ld. CIT is not sustainable. 24. On a similar issue, the Hon ble Jur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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