9911796707
TMI Blog2017 (1) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... see has claimed depreciation on investments in HTM (Held to Maturity) securities, AFS (Available for sale)and HFT(Held for trading) securities. The A.O. observed that in the books of accounts, the assessee is following the accounting policy for investments for valuation of HMT category investments i.e. at acquisition cost or market value whichever is lower, and that the securities held under AFS/HFT category were valued scrip-wise i.e. at market / estimated realizable value and are aggregated classification wise and the net depreciation under each group of classification, if any, is fully provided for, while net appreciation is ignored. But for the purposes of income tax, the assessee has valued all the three categories of investments i.e. HMT, AFS and HFT at cost or market value whichever is lower, treating them as stock-in-trade and claimed the fall / depreciation in the value of securities as deduction from the gross total income in the computation statement. Therefore, the A.O was of the opinion that the assessee is not justified in adopting different methods of valuation of investments in its books of account and for the purpose of income tax computation. The assessee was ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are placed in the paper book filed by the assessee. 6. Having regard to the rival contentions and the material placed on record, we find that the coordinate bench of this tribunal in ITA No. 666/Hyd/2015 and 584/Hyd/2015 for the assessment year 2009-10, vide order dated 29-11-2013 at Para 5 of its order has held as under: "5. Having considered the submissions of the parties and perused the materials on record, we are of the view that the issue is squarely covered in favour of the assessee not only by virtue of decision of the jurisdictional High Court in assessee's own case reported in 151 ITR 703 but by atleast three separate orders of the ITAT, Hyderabad Bench in assessee's own case for different assessment years. The Coordinate Bench in its latest order passed in ITA.No.847/Hyd/2012 and 1002/Hyd/2012 dated 28.03.2013 relating to assessment year 2008-2009 while deciding the issue held as under : "28. We have considered the rival submissions and perused the material on record. The Hon'ble jurisdictional High Court in assessee's own case (151 ITR 703 ) held that main business of the banking company being to accept deposits to advance loans to appropriate pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as under: "8. During the assessment proceedings, the A.O. noticed that the assessee has claimed expenditure of an amount of Rs. 157,60,72,614/- on account of broken period interest. The A.O. however, disallowed the assessee's claim by treating it as capital expenditure. While deciding assessee's appeal on the issue, the CIT(A) allowed assessee's claim by following the Order of the ITAT in assessee's own case in ITA.No. 578 & 779/Hyd/2010 dated 07.09.2012 for the assessment year 2007-2008. 9. We have heard the parties and perused the material on record. As can be seen from the Order of the Coordinate Bench of this Tribunal while considering this issue in assessee's own case for the A.Y. 2008-09 in ITA. No. 847 & 1002/Hyd/2012 dated 28.03.2012 held as under : "30. We have considered the submissions of the parties. On perusal of the orders of the revenue authorities and materials on record we find that the issue is squarely covered in favour of the assessee by the orders of co-ordinate bench passed in assessee's own for the assessment years 1999- 2000 and 2007-08. The Tribunal in the order for the assessment year 2007-08 in ITA No.578 and 779/Hyd/10 dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in case of CIT V/s. Nedungadi Bank (supra), we respectfully follow the same and uphold the order of the CIT (A). The ground raised by the department is dismissed." 10. Respectfully following the aforesaid finding of the Coordinate Bench, we uphold the decision of the CIT(A) and dismiss the ground raised by the department." Respectfully following the same, we see no reason to interfere with the order of the CIT(A) and the revenue's ground of appeal in both the appeals is rejected. 10. During the assessment proceedings, the A.O also disallowed the proportionate expenditure on exempted income u/s 14A of the Act. On appeal, the CIT(A) restricted the disallowance to two months salary of the treasury benches as directed by the tribunal in the assessee's own case for the earlier assessment years. Aggrieved by the part relief granted by CIT(A), the revenue is in appeal before us. 11. The ld. DR submitted that the CIT(A) has followed the ITAT order in the case of Corporation Bank in ITA No. 1310/B/ 2012, dated 19-09-2014 and Andhra Bank in ITA No. 31/Hyd/2015, dated 24-04- 2015 for the assessment years 2010-11and 2011-12 respectively whereas, in the assessee's own case for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance to Rs. 3,94,23,918/-. The assessee challenged the disallowance in an appeal preferred before the CIT(A). 14. During the hearing of appeal before the CIT(A), the assessee contended that as per the view of the ITAT, establishment charges incurred in the form of salary of Officers and Staff working in the investment division, incurred for a period of two months could be allocated as expenditure incurred for earning dividend income. However, considering the introduction of Rule 80D of the I.T. Rules, the assessee submitted a work out before the CIT(A) computing the disallowance under Rule 8D(2) for an amount of Rs. 1,93,23,450/-. The CIT(A) after considering the submissions of the assessee vis-à-vis the computation submitted by the assessee working out the disallowance in terms with Rule 8D(2) accepted the assessee's claim by restricting the disallowance to Rs. 1,79,11,875/- (Rs.1,93,23,450 - Rs. 14,11,575/-). 15. Having considering the submissions of the parties and on perusal of the materials on record, we do not find any infirmity in the order passed by the CIT(A) on this issue. After introduction of Rule 8D into the Income Tax Rules from A.Y. 2008-09 disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e books of account. 5.4 The appellant contends that claim u/s 36(1)(viia) of the Act is made in accordance with law and decisions rendered by courts. 5.5 Without prejudice to the above, the appellant contends that the provision u/s 36(1)(viia) of Act in respect of rural branch advances 436.70 & 526.89 crores for AYs 2010-11 & 2011-12 respectively is allowable as the appellant did not claim bad debts 13.39 & 16.52 crores for AYs 2010-11 & 2011-12 in respect of rural advances. Bad debts in rural advances are required to be set-off against provision allowable in respect of rural advances only and out contention is based on the law and the decisions of the courts. 6. The appellant therefore contends that the Assessing Officer be directed not to set-off other debts against deduction u/s 36(1)(viia) of the Act allowed to the Bank in respect of rural advances." 16. The CIT(A), however, confirmed the order of the A.O. with regard to restricting the deduction under section 36(1)(viia) of the Act only to the extent the provision made by the assessee in its books of account bu also observed that the claims under section 36(1)(vii)) and 36(1)(viia) of the Act operate in independent fiel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act to the extent provided for in the section. We find that this issue is covered by the decision of the Hon'ble Punjab & Haryana High Court in the case of the State Bank of Patiala Vs CIT cited (supra), wherein it has been held that the claim u/s 36(1)(viia) can be allowed only to the extent of provision made by the assessee in its books of accounts. The formula on the limit prescribed under section 36(1)(viia) is the maximum provision which can be allowed and is not a standard deduction as claimed by the assessee. We find that the CIT(A) has therefore, restricted the claim u/s 36(1)(viia) to the extent of provision made by the assessee in its books of account. Therefore, we see no reason to interfere with the order of the CIT(A) on this issue. Further, as rightly pointed by the ld DR, the A.O has already allowed the claim of deduction u/s 36(1)(vii) of the Act, and there can be no other grievance of the assessee and therefore the ground of appeal No. 6, raised by the assessee before the CIT(A) is without any basis and the CIT(A)'s observation at Page - 9 of her order is also not warranted. Therefore, the ground of appeal No. 6 in the case of the revenue is allowed and the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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