TMI Blog2020 (3) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities is hereby set aside. Disallowance stale drafts and pay orders u/s 41 (1) - assessee purchased these and had not claimed/encashed them - AO was of the opinion that the said amount which remained unclaimed in the hands of assessee was profit chargeable to tax under section 41 (1) - HELD THAT:- As decided in own case the amounts represented credit balances in the name of the trading parties and was taken to its P L a/c. The CIT(A) held that these amounts were not revenue receipts but were of capital nature. The provisions of s. 41(1) were not attracted in the facts of this case because he assessee s liability to pay back the amounts to its customers had not ceased. Ground raised by revenue stands dismissed. Disallowance of interest expenses u/s.40(a)(ia) - HELD THAT:- As DR submitted that, for assessment year 2007-08, there is no finding of Ld.AO regarding collection of form 15 G/H by assessee. We therefore, direct assessee to submit evidences of form 15 G/H having collected before Ld. AO. AO shall grant relief to assessee as directed by this Tribunal in the subsequent assessment years reproduced hereinabove. Accordingly, these grounds raised by assessee stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dication. Ground No. 2: It is observed that assessee is a rural bank, engaged in business of banking. Ld. AO had noticed that assessee claimed deduction on account of provision for bad and doubtful debts amounting to ₹ 228.48 crores. 4. Both sides submitted that, this issue stands covered against assessee by order of this Tribunal for assessment year 2008-09, which is reproduced by this Tribunal in its order dated 25/04/2018 in ITA No. 673 and 674/be/2014 for assessment year 2009-10 and 2010-11. There is no dispute that facts and circumstances in present appeals are identical with that of assessment year 2012-13 and 2013-14 on this issue. It is also, admitted fact that assessee did not debit its profit and loss account by any sum towards provision for bad and doubtful debts, amounting to ₹ 228.48 crores under section 36 (1) (vii) of the Act. This issue has again been considered by this Tribunal for assessment year 2012-13 and 2013-14 reported in (2020) 113 Taxmann.com 530, wherein this Tribunal observed as under: 8. We have considered the rival submission. The provisions of Section 36(1)(viia)(a) of the Act lays down as follows: (viia) in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra) 150 ITD 103 (Bang.) noticed that the ITAT Bangalore Bench in the case of Canara Bank in ITA No.58/Bang/2004 dated 9.6.2006 considered in the case of Canara Bank in ITA No.58/Bang/2004 dated 9.6.2006 considered the decision of the ITAT in the case of Syndicate Bank 78 ITD 103(Bang) and the decision of the Hon'ble Punjab and Haryana High Court in the case of State Bank of Patiala (supra) and held that the decision rendered by the Hon'ble High Court has to be followed. The above decision though of a non-jurisdiction High Court was followed as the said decision of the Hon'ble High Court was rendered after the decision in the case of Syndicate Bank 78 ITD 103 (Bang.). The Tribunal held that Judicial discipline demands that the Tribunal should follow the later decision which has considered both the decisions on the issue. The Tribunal following the said decision held deduction on account of Provision for Bad and Doubtful Debts u/s.36(1)(viia) of the Act has to be allowed only to the extent such provision is actually debited in the Profit Loss Account by the Assessee for the relevant previous year. We therefore respectfully following the decision of the Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et value whichever is less applicable to the valuation of closing stock'. The Assessing Officer however did not agree with the view of the assessee and relying on CBDT's Instruction No.17/2008 dt.26.12.2008 came to the conclusion that the securities in respect of which the decrease in value was written off in the profit and loss account are held investments held to maturity and therefore these cannot be treated as stock-in-trade and consequently cannot be valued in the manner in which stock-in-trade is valued. On appeal, the learned CIT (Appeals) in his order relying on the decisions of the coordinate benches of this Tribunal in the case of :- I. ACIT (LTU) V Vijaya Bank in ITA Nos.253 205/Bang/2007 d.24.1.2008 for Assessment Year 2003-04. II. (ii) The Karnataka Bank Ltd. VJCIT in ITA No.50/Bang! 997. III. (in) ING Vysya Bank Ltd V DCIT (2006) 6 SOT 606 (Bang) held that all investments made by the assessee constitute stock in trade for the purpose of income tax and has to be therefore valued in the manner in which stock-in-trade is valued. On further appeal by the revenue the Tribunal upheld the order of the CIT(A). Following are the relevant observation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has also been followed by a co-ordinate bench of this Tribunal in the case of DCIT V Syndicate Bank in ITA Nos.668 669/Bang/2010 and 708 709/Bang/2010 dt 19 6 2013 We, therefore, respectfully following the decision of the Hon ble Karnataka High Court in the case of Karnataka Bank Ltd. (supra) hold that the order-of the learned.CIT(Appeals)does not call for any interference and consequently, dismiss grounds No.2 to 4 raised by revenue. 28. Respectfully following the decision referred above, we uphold the order of the CIT(A) and dismiss ground No.4 and 5 5aised by the Revenue. There is no dispute that facts and circumstances in present appeal are identical with that of A. Y: 2009 10 and 2011 12 on this issue. Respectfully following the same, we do not find any infirmity in the order passed by Ld. CIT (A) and the same is upheld. Accordingly, this ground raised by revenue stands dismissed. 7. Ground No. 4 concerns with deletion of sum of ₹ 13,76,649/-being stale drafts. It has been submitted that assessing officer disallowed stale drafts and pay orders under section 41 (1) of the Act, by holding that assessee purchased these and had not claimed/enca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cruing to the successor in business shall be deemed to be profits and gains of the business or profession, and accordingly chargeable to income-tax as the income of that previous year. 18. A careful perusal of the above provision leads us to infer that Section 41(1) can be pressed into service when an allowance or deduction is sought to be made in respect of loss, expenditure or trading liability is incurred by the assessee. In the instant case, the sum of ₹ 58,38,581/- has remained with the assessee owing to the fact that the payees or holders of the draft/pay orders had not encashed them. The language employed by the legislature being unambiguous, it would be incongruous to construe the said sum as either a loss, expenditure or trading liability incurred by the assessee. While dealing with a situation of unclaimed amount, the Hon ble Supreme Court in the case of T.V. Sundaram Iyengari, has held as follows:- 12. We are unable to uphold the decision of the Tribunal. The amounts were not in the nature of security deposits held by the assessee for performance of contract by its constituents. As it appears from the facts of the case, the amounts were depleted b adjus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. To the extent that payment of interest relates to the Government and the exempted category of persons, the assessee is directed to furnish required details to the AO and the AO will consider the claim of the assessee after affording opportunity of being heard to the assessee. 15. The decision cited by the revenue in the grounds of appeal is with regard to the action of the CIT(A) in the deleting the disallowance u/s.40(a)(ia) of the Act on the ground the sums in question did not remain payable as on the last date of the relevant previous year and by following the decision of the Special Bench, Visakapatnam in the case of Merilyn Shipping Transports (supra). As we have already seen the CIT(A) appeal deleted the disallowance u/s.40(a)(ia) of the Act on two grounds viz., (i) once the depositors give Form No.15G/H, the law empowers the Assessee to make payment of interest without deduction of tax at source. The requirement of filing the form so obtained before the prescribed authority within the prescribed period was only a procedural requirement and it was mandatory and for failure to file the form before the prescribed authority no disallowance can be made u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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