TMI Blog2021 (10) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... e of depreciation on securities - HELD THAT:- Ad hoc deduction could be allowed against the amount receivable on redemption of securities which had matured and become due for payment before the close of the accounting year. This ground therefore fails. Disallowance of payment made in respect of scientific research - HELD THAT:- Both the parties mutually agreed that this issue is already covered by the order of this Tribunal in assessee s own case for A.Y₹ 2001-02 and 2002-03 [ 2021 (7) TMI 1275 - ITAT MUMBAI] disallowance on account payments for scientific research is decided against the assessee and in favour of the Revenue. Disallowance of expenses u/s.14A of the Act r.w.r. 8D of the Rules - HELD THAT:- Computation mechanism provided in Rule 8D which was introduced from 24/03/2008 could be made applicable only from A.Y.2008-09 and hence, the same cannot be applied for earlier years prior to A.Y.2008-09. The ld. AR fairly submitted that in order to maintain consistent stand, this Tribunal in earlier years in assessee s own case had disallowed 1% of exempt income u/s.14A of the Act as expenses attributable for earning the exempt income. DR fairly agreed that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st u/s.234C of the Act should be chargeable only on the returned income and not on the assessed income. Levy of interest u/s.234D - This issue is already covered against the assessee in view of the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Indian Oil Corporation [ 2012 (9) TMI 517 - BOMBAY HIGH COURT ] Taxing the income earned from foreign branches in India - HELD THAT:- As this issue has already been adjudicated by this Tribunal in assessee s own case for A.Y 2001-02 and 2002-03 [ 2021 (7) TMI 1275 - ITAT MUMBAI] restored the issue to the file of the Assessing Officer and directed him to decide the controversy afresh by giving an opportunity of being heard to the assessee in accordance with !aw by following similar guidelines as given by the Tribunal in the aforesaid misc. application. Consistent with the view as aforesaid, we set aside the order passed by the learned Commissioner (Appeals) and restore the issue to the file of the Assessing Officer with similar direction. Write off of bad debts u/s.36(1)(vii) - HELD THAT:- All the facts necessary for adjudication of the additional ground is already on record and hence the same are h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER M. BALAGANESH (A.M): These cross appeals in ITA Nos. 3779/Mum/2012, 3780/Mum/2012, 4097/Mum/2012 4098/Mum/2012 for A.Y.2003-04 2004-05 respectively arise out of the order by the ld. Commissioner of Income Tax (Appeals)-5, Mumbai in appeal No.CIT(A)-5/ACIT-2(2)/IT-55/2009-10 CIT(A)-5/ACIT-2(2)/IT-90/2009-10 dated 01/03/2012 20/03/2012 respectively (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 30/11/2015 27/03/2006 respectively by the ld. Asst. Commissioner of Income Tax, Circle 2(2), Mumbai (hereinafter referred to as ld. AO). ITA No.3779/Mum/2012 (A.Y.2003-04) Assessee Appeal 2. The ground No.1 raised by the assessee is with regard to addition made on account of deferred payment guarantee commission. 2.1. We have heard rival submissions and perused the materials available on record. Both the parties mutually agreed that this issue is already covered by the order of this Tribunal in assessee s own case for A.Yrs. 2001-02 and 2002-03 vide order dated 12/07/2021. The relevant operative portion of the said order is reproduced hereunder:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed by the Tribunal in assessee s own case, with the following order: 38. Additional Ground No. 2 is regarding depreciation on matured securities. The assessee has claimed a sum of ₹ 2,23,86,418/- towards depreciation of investments. The AO disallowed the claim of the assessee and the CIT(A) has confirmed the action of the AO. We have heard the Ld. AR as well as Ld. DR and considered the relevant material on record. The CIT(A) has decided the issue in para 9 as under: 9. The ninth effective ground of appeal is against the disallowance of ₹ 2,23,86,418/- being the provision for diminution in the value of securities which had matured and become due for redemption during the year but were not redeemed. It was contended before the A.O. that in some cases, the companies or the State Governments who had issued the relevant securities were not able to pay the amount due on redemption. The appellant treats these securities as non- performing assets and a provision is made at a certain percentage for diminution in their value as in the case of other non-performing assets. There may be some delay on the part of the companies or the State Governments in paying the redemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year 1996-97 (para 38 39) in ITA No.5470/M/2002 which reads as under :- 38. Additional Ground No. 4 is regarding depreciation on matured securities. The assessee has claimed a sum of ₹ 2,23,86,418/- towards depreciation of investments. The AO disallowed the claim of the assessee and the CIT(A) has confirmed the action of the AO. We have heard the Ld. AR as well as Ld. DR and ITA No. 4736 4598/M/2010- State Bank of India 10 considered the relevant material on record. The CIT(A) has decided the issue in para 9 as under: 9.The ninth effective ground of appeal is against the disallowance of ₹ 2,23,86,418/- being the provision for diminution in the value of securities which had matured and become due for redemption during the year but were not redeemed. It was contended before the A.O. that in some cases, the companies or the State Governments who had issued the relevant securities were not able to pay the amount due on redemption. The appellant treats these securities as nonperforming assets and a provision is made at a certain percentage for diminution in their value as in the case of other non-performing assets. There may be some delay on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espectfully following the decision of Tribunal in assessee s own case for AY 1996-97, 1997-98 1998-99 in ITAs No. 5470/Mum/2002 and ITA No. 3823-3824/Mum/2002, this ground of appeal is dismissed. 8. On appraisal of the above mentioned finding, we find that this issue has already decided against the assessee by Hon ble ITAT in the assessee s own case for the A.Y. 1996-97, 1997-98 1998-99 bearing ITA.No.5470/M/2002, 3823 3824/M/2002. Nothing came into noticed that the finding has been changed or varied at this stage. Therefore, by reliance upon the decision of the Hon ble ITAT in the assessee s own case for the A.Y. 1999-2000 (supra). We decide this issue in favour of the revenue against the assessee. 3.2. Respectfully following the same, the ground No.2 raised by the assessee is dismissed. 4. The ground No.3 raised by the assessee is with regard to disallowance of payment made in respect of scientific research. 4.1. We have heard rival submissions and perused the materials available on record. Both the parties mutually agreed that this issue is already covered by the order of this Tribunal in assessee s own case for A.Yrs. 2001-02 and 2002-03 vide order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Interest on long term finance to infrastructure u/s.10(23G) ₹ 134,32,03,850/- Total ₹ 396,91,54,893/- 5.2. The ld. AO made disallowance of expenses u/s.14A of the Act in the sum of ₹ 307,81,30,141/- on proportionate basis as under:- Particulars Percentage treated as expenses by ld. AO Expenses attributable for earning income Interest on foreign currency loans approved by Central Government 80.81% 192,65,57,054/- Interest on tax free bonds 72.65% 17,57,35,490/- Interest on long term loans to infrastructure sector 72.65% 97,58,37,597/- Total 307,81,30,141/- 5.3. The ld. CIT(A) restricted the disallowance of expenses to ₹ 118,32,33,713/- in his order. 5.4. We find that computation mechanism provided in Rule 8D which was introduced from 24/03/2008 could be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee are allowed. 7. The ground Nos. 6.1 to 6.2 raised by the assessee are with regard to disallowance of depreciation on leased assets. 7.1. We have heard rival submissions and perused the materials available on record. Both the parties mutually agreed that this issue is already covered by the order of this Tribunal in assessee s own case for A.Yrs. 2001-02 and 2002-03 vide order dated 12/07/2021. The relevant operative portion of the said order is reproduced hereunder:- 20. Ground no. 6, relates to depreciation of ₹ 165,18,13,363, on account of leased assets. 21. Having considered the submissions of the parties and having perused the material on record including the case laws relied upon, we find that the issue for our adjudication has been decided by the Co-ordinate Bench of this Tribunal in assessee's own case against the assessee in assessment year 2008-09, 2000-01, 1996-97, 1997-98, 1998-99 and 1999-2000. The learned Sr. Counsel for the assessee submitted that the assessee has filed appeal against the order passed by the Tribunal, which has been admitted by the Hon'ble Jurisdictional High Court and pending for hearing and yet no or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record. We find that both the parties mutually agreed that this issue has already been adjudicated by this Tribunal in assessee s own case for A.Y.2008-09 in ITA No.3644 and 4563/Mum/2016 dated 03/02/2020 for A.Y.2008-09 wherein it was held as under:- 54. The next issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of AO in disallowing deduction claimed by assessee under section 36(1)(vii) of the Act being the amount of Bad Debts written off (other than in respect of rural advances). For this assessee raised the following ground No. 6: - 6. Deduction under section 36(1)(vii) of ₹1026,23,30,375/-. 6.1 The learned CIT(A) erred in not allowing deduction of ₹1026,23,30,375 under section 36(1)(vii) being the amount of bad debts written-off (other than in respect of rural advances) 6.2 The learned CIT(A) erred in relying on explanation 2 to section 36(1) as inserted by the Finance Act, 2013 which is applicable from assessment years 2014-15 onwards. 55. Brief facts are that the assessee has claimed write-off of bad debts in connection with non-rural advances under section 36(1)(vii) of the Act amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. one on provision basis and then again on actual write-off basis separately and independently. The disallowance is accordingly confirmed. This ground of appeal is dismissed. 14.4 In view of the above decision of CIT(A), claim of the appellant is disallowed. This ground of appeal is disallowed. 56. We noted that for the year under consideration the assessee has not claimed any deduction for bad debts written-off. However, it should be allowed deduction in respect of write-offs of non-rural branch advances amounting to ₹ 1026 crore. Before us Revenue has emphasised that deduction under section 36(1)(viia) of the Act is available to both rural and non-rural debts and accordingly, the restriction as per the proviso to section 36(1)(vii) of the Act is also applicable. The learned Counsel argued that as per the provisions of section 36(1)(viia) of the Act, a bank is eligible to avail deduction in respect of provision made for bad and doubtful debts, of an amount not exceeding 7.5% of total income and of an amount not exceeding 10% of the aggregate average advances made by the rural branches of the bank. Accordingly, the assessee is eligible to claim deduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alance in the provision for bad and doubtful debts account made under clause (viia). The proviso to Section 36(1)(vii) will relate to cases covered under Section 36(1)(viia) and has to be read with Section 36(2)(v) of the Act. Thus, the proviso 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. This, obviously, would be subject to satisfaction of the requirements contemplated under Section 36(2). 58. Reliance in this regard is also placed on the following decisions, wherein the aforesaid issue has been decided in favour of the assessee: CIT vs. City Union Bank Ltd. [2007] 291 ITR 144 (Madras) DCIT vs. Karnataka Bank Ltd. [2012] 349 ITR 705 (SC) Punjab Sind Bank vs. ACIT [2008] 23 SOT 103 (Delhi) 59. Further, it was contended that Explanation 2 to section 36(1)(vii) of the Act inserted w.e.f. 01.04.2014 which states that proviso to section 36(1)(vii) of the Act and section 36(2)(v) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. Consistent with the view taken therein as aforesaid, we uphold the order passed by the learned CIT(A) by dismissing the ground raised by the assessee. Ground no, 10, is dismissed. 10.2. Respectfully following the same, ground No.9 raised by the assessee is dismissed. 11. The ground No.10 raised by the assessee is with regard to chargeability of interest u/s.234C of the Act. 11.1. We have heard rival submissions and perused the materials available on record. We find that the main grievance of the ld. AR is that interest u/s.234C of the Act should be charged only on the returned income and not on the assessed income. The law is very well settled on this point and accordingly, we hold that interest u/s.234C of the Act should be chargeable only on the returned income and not on the assessed income. Accordingly, the ground No.10 raised by the assessee is allowed. 12. The ground No.11 raised by the assessee is with regard to levy of interest u/s.234D of the Act. We find that this issue is already covered against the assessee in view of the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Indian Oil Corporation reported in 25 taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e heard rival submissions and perused the materials available on record. All the facts necessary for adjudication of the additional ground is already on record and hence the same are hereby admitted. The ld. AR before us stated that this deduction has been claimed by the assessee in respect of write off of bad debts u/s.36(1)(vii) of the Act in light of decision of the Hon ble Supreme Court in the case of Vijaya Bank vs. CIT reported in 323 ITR 166. We find that similar issue had arose in assessee s own case for A.Y.2001-02 and 2002-03 wherein this Tribunal vide its order dated 12/07/2021 had restored the issue to the file of the ld. AO by observing as under:- 39. Additional ground no.1, raised by the assessee relates to deduction for write-off of the bad debts under section 36(l)(vii) of the Act as per the judgment of the Hon'ble Supreme Court in Vijaya Bank Ltd, v/s CIT, [2010] 323 ITR 166 (SC). 40. Having considered the rival submissions and having perused the-material on record in the light of the decisions of the Tribunal rendered in assessee's own case as well as the decision of the Hon'ble Supreme Court in Vijaya Bank v/s CIT [2010] 323 ITR 166 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional ground no.2r raised by the assessee is allowed for statistical purpose. 16.2. Respectfully following the same, the additional ground No.2 is restored to the file of the ld. AO and allowed for statistical purposes. 17. The additional ground Nos. 3 4 raised by the assessee are general in nature and does not require any specific adjudication. 18. In the result, the appeal of the assessee for A.Y.2003-04 in ITA No.3779/Mum/2012 is partly allowed for statistical purposes. ITA No.4097/Mum/2012 Revenue Appeal (A.Y.2003-04) 19. The ground No.1 8 raised by the Revenue are general in nature and does not require any specific adjudication. 20. The ground No.2 raised by the Revenue is with regard to deletion of disallowance of staff welfare expenses incurred by the assessee for reservation of seats in the schools for the children of the bank officers. 20.1. We have heard rival submissions and perused the materials available on record. Both the parties mutually agreed that this issue is already covered by the order of this Tribunal in assessee s own case for A.Yrs. 2001-02 and 2002-03 vide order dated 12/07/2021. The relevant operative porti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable on record. Both the parties mutually agreed that this issue is already covered by the order of this Tribunal in assessee s own case for A.Yrs. 2001-02 and 2002-03 vide order dated 12/07/2021. The relevant operative portion of the said order is reproduced hereunder:- 90. Ground no.2, relates to disallowance of deduction of ₹ 19,47,08,383, on account of loss in respect of amortization of securities held in HTM category, 91. Considered the rival submissions and perused the material on record in the light of the decision relied upon by the learned Counsel for the assessee. Both the learned Counsel appearing for the parties conceded before us that identical issue has been consistently decided in favour of the assessee and against the Revenue by the Tribunal in assessee's own case for the assessment year 2008-09, 1995-96, 1996-97, The Hon'ble Jurisdictional High Court had also dismissed the Revenue's which was filed by the Revenue challenging the order passed by the Tribunal in assessee's own case for the assessment year 1996-97 Consequently, consistent with the view taken by the Tribunal as well the Hon'ble Jurisdictional High Court in as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05 is similar to ground No.3 raised by the assessee for A.Y.2003-04. Hence, the decision rendered by us for ground No.3 for A.Y.2003-04 shall apply with equal force for A.Y.2004-05 also except with variance in figures. 29. The ground No.3 raised by the assessee for 2004-05 is similar to ground No.4 raised by the assessee for A.Y.2003-04. Hence, the decision rendered by us for ground No.4 for A.Y.2003-04 shall apply with equal force for A.Y.2004-05 also except with variance in figures. 30. The ground No.4 raised by the assessee for 2004-05 is similar to ground No.6 raised by the assessee for A.Y.2003-04. Hence, the decision rendered by us for ground No.6 for A.Y.2003-04 shall apply with equal force for A.Y.2004-05 also except with variance in figures. 31. The ground Nos. 5.1 and 5.2 raised by the assessee for 2004-05 are similar to ground Nos. 7.1 7.2 raised by the assessee for A.Y.2003-04. Hence, the decision rendered by us for ground Nos. 7.1 7.2 for A.Y.2003-04 shall apply with equal force for A.Y.2004-05 also except with variance in figures. 32. The ground No.6 raised by the assessee for 2004-05 is similar to ground No.8 raised by the assessee for A.Y.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: - 15.3 I have considered the appellant's submissions. This is a recurring issue and this issue was considered by CIT(A)in appellant's own case for A.Y. 2007-08 which are reproduced as under: .. 15.4 In view of the above decision of CIT(A), claim of the appellant is disallowed. This ground of appeal is disallowed. 62. Before us it was argued that from the financial year 2004-05, the assessee has been valuing investments in Available for Sale (AFS) and Held for Trading (HFT) in books after netting off classification-wise depreciation and appreciation, computed scrip-wise and providing for net deprecation in each classification while ignoring net appreciation, as required by RBI guidelines. However, for tax purposes, investments in AFS and HFT categories are being consistently valued scrip wise and depreciation, if any, was provided scrip wise while ignoring appreciation. Valuation of investments in AFS and HFT categories has consistently been done scrip-wise for tax purposes in earlier years. The same has also been accepted by the AO upto assessment year 2004-05 i.e. prior to the change in the treatment given in books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closing stock is to be valued at cost or market price whichever is lower, and it is now generally accepted as an established rule of commercial practice and accountancy. As profits for income-tax purposes are to be computed in conformity with the ordinary principles of commercial accounting, unless of course, such principles have been superseded or modified by legislative enactments unrealised profits in the shape of appreciated value of goods remaining unsold at the end of an accounting year and carried over to the following year's account in a business that is continuing are not brought into the charge as a matter of practice, though, as already stated, loss due to a fall in price below cost is allowed even if such loss has not been actually realised. . Again, it is a misconception to think that any profit arises out of the valuation of the closing stock and the sites of its arising or accrual is where the valuation is made. As already stated, valuation of unsold stock at the close of an accounting period is a necessary part of the process of determining the trading results of that period, and can in no sense be regarded as the source of such profits. 64. The Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 66. In context of netting off depreciation against appreciation, the Madras High Court in the case of CIT vs. Chari Ram [1949] 17 ITR 1 (Madras) has held that there would be no assurance that there would be a market for the entire stock of articles of which the market value is higher and therefore, it would be hazardous to assume that the entire stock could be sold at the prevailing market rate and necessarily bring in a profit. The High Court also held that there is no provision of law or principle according to which the assessee could be compelled to adopt either the average cost for all the items or the market rate for all the items. Further, the Supreme Court in the case of United Commercial Bank vs. CIT [1999] 240 ITR 355 (SC) has held that there is no such question of following two different methods for valuing its stock-in-trade (investments) because bank was required to prepare balance sheet in the prescribed form and it had no option to change it and for the purpose of income-tax, what is taxed is the real income which is to be deduced on the basis of the accounting system regularly maintained by the assessee. In view of the above, it was claimed that the assessee be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case there was nothing to show the bifurcation of the closing stick of sugar into levy sugar and free sugar and hence, the assessee was obligated to value the entire stock at one value. In the assessee s case as well, each scrip is different and therefore requires independent valuation. The CIT DR placed reliance on the decision of the Mumbai Tribunal in the case of JCIT vs. Dena Bank [2012] 20 taxmann.com 278 (Mumbai). In the aforementioned case, the security was purchased in year 1 at ₹ 100 and the market price at the end of the year was ₹ 90. Accordingly, the stock was valued at market price of ₹ 90 being lower than the cost. In year 2, the market price went upto ₹ 95. Accordingly, the stock was valued at market price of ₹ 95 being lower than the cost. However, suppose in year 3, the market value rises to ₹ 120, in such a situation, the stock would be valued at cost i.e ₹ 100, being lower than the market price. The Mumbai Tribunal held that excess of appreciation over the cost price would not be considered for valuing the closing stock. In the present case, we are not concerned with a scenario where in the later year the depreciation p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 is partly allowed for statistical purposes. ITA No.4098/Mum/2012 (A.Y.2004-05) Revenue Appeal: 39. The ground No.1 and 8 raised by the Revenue are general in nature and does not require any specific adjudication. 40. The ground No.2 raised by the Revenue for A.Y.2004-05 is similar to ground No.2 raised by the Revenue for A.Y.2003-04. Hence, the decision rendered by us for ground No.2 for A.Y.2003-04 shall apply with equal force for A.Y.2004-05 also except with variance in figures. 41. The ground No.3 raised by the Revenue is with regard to disallowance of expenses u/s.14A of the Act which has already been adjudicated in detail while addressing the ground No.3 of assessee s appeal for A.Y.2004-05. 42. The ground No.4 raised by the Revenue for A.Y.2004-05 is similar to ground No.5 raised by the Revenue for A.Y.2003-04. Hence, the decision rendered by us for ground No.5 for A.Y.2003-04 shall apply with equal force for A.Y.2004-05 also except with variance in figures. 43. The ground Nos. 5a 5b raised by the Revenue for A.Y.2004-05 are similar to ground Nos. 6a 6b raised by the Revenue for A.Y.2003-04. Hence, the decision rendered by us for groun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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