TMI Blog2017 (9) TMI 1289X X X X Extracts X X X X X X X X Extracts X X X X ..... inds that the assessee had duly deducted TDS and paid the same before filing of the return no disallowance should be made in the income of the assessee. In case the AO feels that the assessee has partly committed default under section 40(a)(ia) the AO should restrict the disallowance to that extent only. Thus, this ground is allowed for statistical purposes. Set off of opening balance of doubtful debts created in respect of advances made by the rural branches - revision u/s 263 - Held that:- We set aside the order of the CIT and direct the AO not to make any disallowance on setting off of opening balance for bad and doubtful debts created in respect of advanced made by rural branches amounting to ₹ 103,68,55,666/-. Even otherwise s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act. 2. Ground No. 1, since not presses, stands dismissed as not pressed. Now there remain three grounds for our adjudication. These ground read as under: - 2. Disallowance of expenditure Section 40(a)(ia): 2.1 The learned CIT was in error on facts as well as in law in directing disallowance under section 40(a)(ia) ignoring the well settled position of allowability of outstanding expenses under the mercantile system of accounting as laid down by the Supreme Court in CIT Vs. A. Krishnaswami Mudaliar 53 ITR 122 (SC). 2.2 The learned CIT in directing the disallowance ignored large number of judicial decisions relied upon by the assessee including the decision in assessee's own case on the same issue in IDBI v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as there was no concealment of income by the assessee. 3. The brief facts of the case are that the assessee submitted the return of income on 26.09.2012 disclosing a total income of ₹ 3122,07,44,638/- as per the normal provisions of the Income Tax Act. The book profit under section 115JB were computed at ₹ 3694,52,39,137/-. The assessment was completed under section 143(3) at a total income of ₹ 3313,47,80,150/- under the normal provisions of the I.T. Act while the books profit was computed under section 115JB at ₹ 3884,77,25,409/-. The CIT called for the records of assessment and noted that the assessee has not deducted any tax in respect of provision for expenses of ₹ 58,25,41,577/- for which bills were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the I.T. Act for furnishing inaccurate particulars of income by the assessee. The assessee has challenged all the three directions given by the CIT by way of ground Nos. 2, 3 4 before us. 4. So far as ground No. 2 is concerned the learned A.R. before us vehemently contended that the provisions for the expenditure amounting to ₹ 58,25,41,577/- represents the liability crystallised during the year and therefore no disallowance can be made on the basis that the assessee had not made default under section 40(a)(ia). Our attention was drawn towards section 40(a)(ia) especially the proviso 1 thereto which provides that in case the assessee the assessee deducted TDS and paid the same before the due date for filing the return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t extent only. Thus, this ground is allowed for statistical purposes. 7. The next ground relates to the set off of opening balance of doubtful debts created in respect of advances made by the rural branches amounting to 103,68,55,666/-. We have heard the rival submissions and carefully considered the same. We have gone through the provisions of Section 36(i)(vii) as well as provisions of Section 36(1)(viia). We noted that both the provisions have been elaborately interpreted by the Hon'ble Supreme Court in the case of Catholic Syrian Bank Ltd. vs. CIT 343 ITR 270 wherein the Hon'ble Supreme Court held that the provisions as envisaged under section 36(1)(viia) is meant for rural branches only. We also noted that by Finance Act 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable for the year under consideration. Following the decision of Hon ble Supreme Court in the case of Catholic Syrian Bank Ltd. v. CIT as well as the decision of Hyderabad Benches of This Tribunal in the case of State Bank of Hyderabad Vs. DCIT (supra), we decide this issue in favour of the assessee and direct the AO to allow the claim in the light of the decision of Hon ble Supreme Court. Similarly, we noted that B Bench of this Tribunal in the case of Bank of India vs. ACIT in ITA No. 2966/Mum/2014 vide order dated 13.07.2016 took the same view following the decision of the Hon'ble Supreme Court in the case of Catholic Syrian Bank Ltd. vs. CIT 343 ITR 270. No contrary decision was brought to our knowledge. In view of this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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