TMI Blog2020 (3) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceedings. Therefore, the order which was silent on the claim made by the assessee, and allowing such claim, without any discussion,: will definitely render it erroneous and prejudicial to the interests of Revenue. As held by Hon ble Apex Court in the case of Malabar industrial Co. Ltd. v. lT [ 2000 (2) TMI 10 - SUPREME COURT] prejudicial to the interests of the Revenue is a term of wide import and not confined to loss of tax. An order without application of mind is definitely prejudicial to the interests of the revenue. We are in agreement with Id. CIT that the order of Assessing Officer was insofar as it was prejudicial to the interests of Revenue.No interference is required. - Decided against assessee. Restriction of relief u/s. 90 to the extent of tax paid in foreign country instead of tax charged on foreign income which is included in total income - HELD THAT:- Issue decided against the assessee by the co-ordinate Bench for the assessment year 2009-10 [ 2014 (6) TMI 954 - ITAT CHENNAI]. Depreciation on Goodwill - HELD THAT:- As decided in own case [ 2019 (2) TMI 1691 - ITAT CHENNAI] assessee did not have any goodwill in commercial terms as it has ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal. Thus, the Tribunal held that depreciation @ 30% on software was rightly claimed. Deduction u/s. 36(1)(viia) based on advances outstanding and not on incremental advances - HELD THAT:- As decided in own case [ 2017 (4) TMI 1424 - ITAT CHENNAI] Commissioner Tax (Appeals) has not erred in directing the Assessing Officer to the aggregate average advances outstanding at the end of each month and not the incremental advances granted during each month while computing deduction under section 36(i)(viia) Allowability of loss on revaluation of trading derivatives - HELD THAT:- As decided in own case [ 2017 (4) TMI 1424 - ITAT CHENNAI] we uphold the orders of Commissioner of Income Tax (Appeals) on this issue and reject the grounds of Revenue Disallowance u/s 14A - HELD THAT:- There Is no finding in the assessment order regarding treatment of exempted income yielding assets as stock-in-trade. Hence, in our opinion, if it is treated as stock-in-trade by the assessee, then the claim of assessee is to be allowed in terms of Order of Tribunal [ 2014 (9) TMI 1179 - ITAT CHENNAI] . Accordingly, this issue is remitted to the file of AO for fresh consideration. Disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth under provisions of the Income Tax Act and as well as u/s. 115JB. Aggrieved against that order, the assessee filed an appeal before the CIT(A). The Ld. CIT(A) partly allowed the appeal. Aggrieved against the order of the Ld. CIT(A), the assessee as well as the Revenue filed these appeals. They are heard together and disposed off as under. Assessee s appeal in ITA No. 777/2018: 3. On the ground nos 1.1 1.2 ie On the issue of consideration of provision for standard assets and the provision for country risk as provision for bad and doubtful debts, the Ld. AR relied on the order of this tribunal in the assessee s own case in ITA No. 776/Chny/2018 dated 28.02.2019 for assessment year 2013-14, the relevant portion is extracted as under: ITA No.496 497/2015: 8. We heard the rival submissions and perused the material on record and judicial decisions, circulars, provisions and also bank regulations. The assessee has raised various grounds in respect of one substantive issue that the Commissioner of Income Tax order is bad in law and also deduction u/s.36(1)(vii) and 36(1)(viia) shall be in respect of both bad and doubtful debts irrespective of rural or urban d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces which are covered by clause (viia), there would be no double deduction. The proviso, in its terms, limits its application to the case of a bank to which clause (viia) applies. Indisputably, clause (viia) applies only to rural advances. If the amount of bad debt actually written off in the accounts of the bank represents only debt arising out of urban advances, the allowance thereof in the assessment is not affected, controlled or limited in any way by the proviso to clause (vii). A statue is not normally construed to provide for a double benefit unless it is specifically so stipulated or is clear from the scheme of the Act. Proviso to sec 36(1)(vii) would not permit benefit of double deduction, operating with reference to 'rural' loans, while under Section 36(1)(vii), the assessee would be entitled to general deduction upon an account having become bad debt and being written off as irrecoverable in the accounts of the assessee for the previous year. 91. A number of cases decided by the Hon'ble High Courts and also by the Apex Court are cited / referred to in the above judgement. Cases of Vijaya Bank Vs. CIT (323 ITR 166) and Southern Technolog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the findings of the Commissioner of Income Tax on the issue of rural branches following the Catholic Syrian Bank decision and uphold the order of the Commissioner of Income Tax. Accordingly, the appeal of the assessee in ITA No. 496/Mds/2015 is dismissed. 9. Consequently, the appeal of the assessee in ITA No.497/Mds/2015 is also dismissed. 10. In the result, the assessee appeals ITA Nos.496 497/Mds/2015 are dismissed. ITA No.77/Mds/2014: 6. We have heard both the parties and perused the material on record. As rightly pointed out by the ld.A.R, this issue was decidedagainst the assessee. by the co-ordinate Bench of Chennai Tribunal inassessee s own case for assessment year 2010-li cited supra, wherein Tribunal held that: 60. We have perused the above order of the co-ordinate Bench of thisTribunal in ITA No.1815/Mds/2011 dated 2.4.2013 and find that the Tribunal has decided both these issues against the assessee by dismissing the grounds observing as under. - 4. The third ground of appeal of the assessee is regarding restriction of claim in respect Of deduction under section 36(1)(viia) to the extent of provision made in the books. The Aft. for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed manner. it is clear from the above that it is not a standard allowance which is given, but, the allowance is subject to the actual provision made by the assessee, which in no case shalt exceed 7.5% of the gross total income. Therefore, the argument of the assessee that whatever the provision it had actually made in its books, a provision of 7.5% of the gross total income had to be allowed, is not in accordance with law. Now considering the second aspect, whether provision for standard assets could be considered as provision for bad and doubtful debts, admittedly a provision on standard assets is not against any debts which had become doubtful. Standard assets are alwaysconsidered recoverable, in the sense, bank has no doubt of recoverability. When the bank itself has treated such assets as good and recoverable, any provision made on such assets cannot be considered as a provision for bad and doubtful debts. The debt itself being good, a provision made on good debt cannot be considered as a provision for bad and doubtful debts, May be, the RB! has made a for 10% provision for standard assets also a norm. This can however be considered as ameasure prescribed in abundant cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order without application of mind is definitely prejudicial to the interests of the revenue. We are in agreement with Id. CIT that the order of Assessing Officer was insofar as it was prejudicial to the interests of Revenue.No interference is required. 8. In the result, appeal filed by the assessee is dismissed. In view of the aforesaid findings, this ground of appeal of the assessee is dismissed. 6.1 Respectfully following the above decision of Tribunal in assessee s own case for assessment year 2010-11, we reject this ground raised by the assessee. 4. We heard the rival submissions. In view of the above findings of the Tribunal in assessee s own case in the earlier assessment years, respectfully following it, we find no reason to interfere with the order of the Ld. CIT(A) and hence reject the corresponding grounds of the assessee. 5. On the issue of Restriction of relief u/s. 90 to the extent of tax paid in foreign country instead of tax charged on foreign income which is included in total income, the AR relied on the order of this tribunal in the assessee s own case in ITA No. 776/Chny/2018 dated 28.02.2019 for assessment year 2013- 14, the relevant portion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lleged the assessee not to have provided anydifference in rates of tax in the above stated tax jurisdictions.Simultaneously, the Assessing Officer held that on furnishing detailsonassessee s part; the claim would be allowed in its favour. Thisresulted in disallowance/addition of 55, 65,44,48/-. 24.in lower appellate order, the CIT(A) has quoted a notification No. SO 2123(E) dated 28.8.2008 reported as 304 ITR(St )63, clarifying that in such a case involving a DTAA, an income has to be included in the total receipts and the necessary relief is to be granted by elimination method or as per the terms of agreement seeking to avoid double taxation. He relies upon Finance Act, 2012 inserting explanation 3 to section 90 making the notification retrospectively applicable. In this manner, the CIT(A) has directed the Assessing Officer to allow relief to the assessee as per the aforesaid notification. 25. We have heard both parties and gone through the relevant findings in the orders of Assessing Officer as well as the ClT A,) The parties are unanimous before us that this vary issue stands decided in the Revenue s favour by the tribunal supra) in preceding assessment year. So, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to goodwill on account of absorption scheme In fact it is opposite to the goodwill as defined in the IT Act as above and same do not qualify asset leave alone intangible asset as it is a liability. Hence assessee s contention to that liability. Hence assessee s contention to treat liability as an intangible asset if far stretched and contrary to the provisions of IT Act in latter and spirit. Assessee was requested to reconcile the good will as reflected in the books of the absorbed concern i.e. M/s1Shree SwarnaSahakariBank Ltd as appearing in their block of assets prior to its absorption Hence assessees notional working of goodwill based on excess liabilities is not allowable as intangible asset qualified under good will. Any absorption scheme surplus of asset over liabilities has to be taken to reserves account of balance sheet. Subsequent to absorption as held byHon ble ITAT in the case of Spencer and Company Ltd of ITAT vide ITR No.440 of 2011. On similar analogy the surplus of liabilities over assets has to be taken to the balance sheet and same has no bearing on Profit and Loss account of assessee as it tantamount to skewed representation of profits on the year o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt is distinguishable on facts of the assessee s case. In the reported case, the assets and liabilities of M/s. YSN Shares and Securities Private Limited were transferred to the assessee for a consideration; that the difference between the cost of an asset and the amount paid constituted goodwill and that the assessee-Company in the process of amalgamation had acquired a capital right in the form of goodwill because of which the market worth of the assessee-Company stood increased. This finding has also been upheld by Income Tax Appellate Tribunal. However, in the assessee s case, there is a deficit or loss of I207.55 crores in the purchase consideration. Further, as per transfer agreement extracted, supra, itself it is clear that the transferor bank does not enjoy any goodwill in commercial terms and hence, there is no goodwill. When there is no goodwill and the assessee has also not paid any amount for goodwill it is not entitled to claim any goodwill, consequently no depreciation can be allowed. 7.3 We heard rival submissions and gone through relevant material. It is clear from the above that the assessee did not have any goodwill in commercial terms as it has acquired mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 dated 2.4.2013 in para 14 of the order. Respectfully following the said order of this Tribunal, we dismiss the ground of assessee on this issue. 14.1 Respectfully following the above decision of Tribunal in assessee s own case for assessment year 2010-11, we reject this ground raised by the assessee. In view of the above, respectfully following the above order of this Tribunal, we reject the corresponding grounds of appeal of the assessee. 10. We heard the rival submissions. In view of the above findings of the Tribunal in assessee s own case in the earlier assessment years, respectfully following it, we reject the corresponding grounds of the assessee. 11. On the issue of Recovery in respect of bad debts written off relating to rural branches viz ground nos 5.1 5.2, the AR relied on the order of this tribunal in the assessee s own case in ITA No. 776/Chny/2018 dated 28.02.2019 for assessment year 2013-14, the relevant portion is extracted as under: 9. The next ground raised by the assessee is with regard to recovery of bad debts written off relating to rural branches. The Ld. AR submitted that this issue was decided in favour of the assessee by this Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, as a matter of caution, we observe that theassessee s claim of bad debts pertaining to those sums inpreceding assessment years, if any, shall be deemed to have been dismissed. With these observations, the Revenue s ground is rejected. In view of the above Order of Tribunal, we dismiss the ground raised by the Revenue. Further, we make it clear that if it is allowed as bad debt in earlier years and recovered the same in the assessment year under consideration to be treated as income of assessee. 9.2 Respectfully following the above order of this Tribunal, we allow these grounds of the assessee subject to the above lines. 12. We heard the rival submissions. In view of the above findings of the Tribunal in assessee s own case in the earlier assessment years, respectfully following it, we allow the corresponding grounds of the assessee. 13. On the issue of Depreciation on UPS allowed at 60% instead of 80%, the AR relied on the order of this tribunal in the assessee s own case in ITA No. 776/Chny/2018 dated 28.02.2019 for assessment year 2013-14, the relevant portion is extracted as under: 10. The next ground raised by the assessee iswithregard to depr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. AR submitted that this issue was decided in favour of the assessee by the Hon ble Bombay High Court in the case of CIT Vs.SaraswatInfotech Ltd. in ITA(L) No.1243 of 2012. On hearing both sides, we find that the Hon ble Bombay High Court in the above cited case has held as under:- 5) In second appeal, the Tribunal by its order dated 14.03.2012 held that UPS is an integral part of the computer system and regulate the flow of power to avoid any kind of damage to the computer network due to fluctuation in power supply which could lead to loss of valuable data. The Tribunal relied upon the decision of Delhi High Court dated 20/1/2011 in the matter of CIT Vs. Orient Ceramics Industries Ltd in which UPS was held to be the part of the computer system and depreciation at 60% was allowed. Similarly, so far as ATMs are concerned, the Tribunal on finding of fact concluded that ATM cannot function without the help of computer and would be a part of the computer used in the banking industry. Reliance was placed by the Tribunal upon the decision of the Delhi Bench of Tribunal in the matter of DCIT v. Global Trust Bank (ITA No.474/D/09) wherein it has been held that ATM was a compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of hearing counsel for the assessee submits that the present issue has been decided in favour of the assessee by this Tribunal for the assessment year 2009-10/n J74 No. 1949/Mds/20.t2 dated 18.6.2014 at pages 24 to 26 in pares 55 to 59 of the order. He places reliance on the said order. Departmental Representative relies on the order of the Assessing Officer. 81. Similar issue has been raised by the Revenue in 17A No.2030/Mds/2013 for the assessment year 2007-08 and we have dealt with this issue in para 51 52 of this order. For the reasons mentioned therein and the decision holds good for the assessment year 2010-11, we reject the grounds raised by the Revenue on this issue. 22.1 In view of the above Order of Tribunal in the appeal of Revenue, we dismiss the ground raised by the Revenue Respectfully following the above decisions, the grounds of the Revenue are dismissed. 18. We heard the rival submissions. In view of the above findings of the Tribunal in assessee s own case in the earlier assessment years, respectfully following it, we reject the corresponding grounds of the Revenue. 19. On the issue of Allowability of loss on revaluation of trading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee s own case in the assessment year 2011-12, respectfully following it, we reject the corresponding grounds of the Revenue. 21. On the issue of Disallowance u/s. 14A, the ld DR presented the case on the lines of grounds of appeal. Per contra, the ld AR relied on the orders of this tribunal in the assessee s own case in ITA No. 947/Chny/2018 dated 28.02.2019, the relevant portion is extracted as under: 14. The next ground raised by the Revenue is against the disallowance under section 14A. The Ld. DR submitted on the lines of grounds of appeal. However, the Ld AR submitted that this issue was decided in favour of the assessee by the Hon ble Supreme Court in the case of Maxopp Investment Ltd (402 ITR 640) and this Tribunal in ITA No.77/Mds/2014 vide order dated 03/04/2017 decided partly in the assessee sfavour in its own case. The relevant portion of the order of this Tribunal dated 03.04.2017 is extracted as under:- 8. The second ground is with regard to disallowance u/s.14Ar.w.Rules 8D of the Income Tax Rules, 1962. 9. At the outset, the Id.A.R submitted that this issue came forconsideration before this Tribunal in assessee s own case in IT.A.No.2126/Mds/20 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought to our notice a recent Third Member decision incase of D.H. Securities P. Ltd vs DCIT (2014] 31 (Trib) 381. This decision follows the judgment of the hon ble Bombay high court (which is also the concerned jurisdictional high court) in case of Godrej Boyce Manufacturing Co. Ltd vs A CIT, 328 ITR 81 and that of hon ble Calcutta high court in Dhanuka Sons vs CIT, 339 ITR 319. Notonly this, the hon ble Third Member also refers to the case law CC! Ltd.(supra) and expresses a view that the aforesaid decisions of otherhon ble high courts were not brought to the notice of the Karnatakahigh court. In these circumstances, the picture that emerges is thatvarious high courts have expressed divergent opinions on this legalissue. That being the case, we apply the decision of CIT vs Vegetable Products Ltd 88 ITR 192 and in the view favourable to the assessee is followed. So, in principle, we hold that the authorities below have wrongly invoked section 14A in case of investments held as stock-in trade wherein the exempt income by way of dividends is only incidental. It is also made clear that since there is no verification of the factual position of investments held as stock-in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Tribunal s decision in assessee s case for assessment year 2010-11 in ITA No.2031/Mds/2013 dated 26.09.2014. Before us, the assessee submitted that the provision for leave salary cannot be disallowed u/s. 43B for the reason that leave provision is a contractual liability and therefore, it cannot be treated at par with tax, duty, cess or fee u/s. 43B. However, in the SLP (Civil) Nos. 22889/2008 dated 08.05.2009 in the case of CIT ors. Vs M/s. Exide Industries Ltd ANR, wherein, the Apex Court held that pending hearing and final disposal of the Civil Appeal, Department is restrained from recovering penalty and interest which has accrued till date. It is made clear that as far as the outstanding interest demand as of date is concerned, it would be open to the Department to recover that amount in case Civil Appeal of the Department is allowed. We further make it clear that the assessee would, during the pendency of this Civil Appeal, pay tax as if section 43B(f) is on the statute Book but at the same it would be entitled to make a claim in its returns. In view of the above, subject to the conditions imposed by the Apex Court, supra, the addition made is sustained. 24. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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