TMI Blog2022 (1) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... ide - HELD THAT:- The assessee bank had debited an amount towards provision for Non Performing Advances and reduced the same from the gross advances (assets side) while preparing the balance sheet. Therefore, it has been treated as write off and not as provision for diminution in value of asset. The assessee bank had furnished the working in support of its claim that the provision for bad doubtful debts to the extent of provisions debited in the profit and loss account was reduced from the gross advances in the balance sheet on assets side. The CIT(A) has only directed the A.O. to verify and delete the addition made to the book profit to the extent the same is reduced from the gross advances in the balance sheet on the assets side. Therefore, we see no infirmity in the order of the CIT(A) and we uphold the same. It is ordered accordingly. Recomputation of book profit u/s 115JB - HELD THAT:- A.O. u/s 143(3) r.w.s. 250 of the I.T.Act, the A.O. has recomputed the book profit u/s 115JB of the I.T.Act by making various additions, which were not part of either the original assessment order nor the first appellate order dated 26.03.2018. Therefore, the assessee had challenged the act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the earning of exempt income) having regard to the accounts of the assessee. The undersigned vide order dated 26 March 2018 deleted the addition u/s.14A with the following observations: 7.4 The submissions of the appellant were considered. The value of tax free investments was ₹ 721.50 Cr (As on 31.03.2013). Since the interest free funds far exceeded the tax free securities, no disallowance can be made in respect of interest expenditure as per the Hon'ble Karnataka High Court decision in the case of CIT V Microlabs Ltd (2016) 383ITR 490 (KAR). 7.8 The submissions of the appellant were considered. This issue is covered in favour of the appellant by the Hon'ble ITAT, Bangalore decisions in appellant bank's own case in ITA no. 1264 1352(B)/2013for the asst. year 2011-12 and ITA No. 206/Pan/2016for AY 2012-13. This issue was involved in the AY 2012-13 also, wherein 1 have allowed the grounds on the issue. The ITAT upheld my order. Further, 1 have gone through the Supreme Court and jurisdictional High Court decisions, wherein it was clearly held that, no disallowance could be made under section 14A r. w Rule 8D where the AO failed to record the non- sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the disallowance made under section 14A should not be added to the Book Profits of the assessee under section 115JB despite the explicit provisions of Clause (i) of Explanation (1) to section 115JB? 3.4 In deciding the above substantial question of law, the Hon ble High Court has held as follows:- 10 Any disallowance computed under Section 14A of the Act pertain to computation of income under normal provisions of the Act and cannot be read into the provisions of Section 115JB of the Act pertaining to computation of book profits by levy of Minimum Alternate Tax (MAT) and there is no express provision in clause (f) of Explanation 1 to section 115JB of the Act to that extent. For the aforementioned reasons, the third substantial question of law is answered against the revenue and in favour of the assessee. 3.5 A similar view was held by the Hon ble Karnataka High Court in the case of Sobha Developers Ltd. v. DCIT (supra). The relevant finding of the Hon ble Court read as follows:- 6. We have considered the submissions made on both sides and have perused the record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Sub-Section (1) and (5) of Section 115JB of the Act. It is also pertinent to mention here that the amounts mentioned in clauses (a) to (i) of explanation to Section 115JB(2) are debited to the statement of profit and loss account, then only the provisions of Section 115JB would apply. The disallowance under Section 14A of the Act is a notional disallowance and therefore, by taking recourse to Section 14A of the Act, the amount cannot be added back to book profit under clause (f) of Section 115JB of the Act. It is also pertinent to mention here that similar view, which has been taken by this court in Gokaldas Images (P) Ltd. supra was also taken by High Court of Bombay in 'THE COMMISSIONER OF INCOME TAX-8 VS. M/S BENGAL FINANCE INVESTMENTS PVT. LTD.', I.T.A.NO.337/2013 .. 3.6 In the light of the above judgments of the Hon ble High Court, we hold that the CIT(A) is justified in deleting the addition of ₹ 108,80,99,122 while computing the book profit u/s 115JB of the I.T.Act. It is ordered accordingly. Addition of NPA provision to book profit (grounds 9 to 11) 4. The assessee had debited a sum of ₹ 928,11,93,007 towards provision for NPA in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Gross advances in the balance sheet on the asset side. In view of the various judicial decisions discussed above, the assessing officer is hereby directed to verify and delete the addition made to the book profit u/s 115JB. 4.3 The Revenue being aggrieved, has raised this issue before the Tribunal. The learned Departmental Representative supported the order of the Assessing Officer. 4.4 The learned AR submitted that the issue in question is covered in favour of the assessee by the following judicial pronouncements:- (i) CIT v. Telco Construction Equipment Co. Ltd. (2016) (6) TMI 651 (Karnataka HC) (ii) CIT v. Vodafone Essar Gujarat Ltd. (2017) 397 ITR 55 (Guj.FB) 4.5 We have heard rival submissions and perused the material on record. The addition of NPA provision to the book profit whether it is permissible or not is covered in favour of the assessee by following judicial pronouncements:- (i) CIT v. Telco Construction Equipment Co. Ltd. (2016) (6) TMI 651 (Karnataka HC) (ii) CIT v. Vodafone Essar Gujarat Ltd. (2017) 397 ITR 55 (Guj.FB) (iii) Vijaya Bank v. CIT (2010) 190 Taxman 257 (SC) (iv) CIT v. Yokogawa India Ltd. (2012) 17 taxmann.com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing effect to the order of the first appellate authority:- Sl. No. Nature of addition Amount 1. Disallowance u/s 14A r.w.s. 8D 108,80,99,122 2. Provision for NPA 928,11,93,007 3. Net depreciation on investments 52,57,75,606 5.1 Being aggrieved by the order of A.O. dated 30.05.2018, the assessee filed an appeal before the first appellate authority and the same was disposed of by the impugned order dated 11.03.2019. 5.2 Aggrieved by the order of the first appellate authority, the assessee has raised following grounds:- 1. The order of the learned Commissioner of Income Tax (Appeals) is bad in law and against the facts of the case. 1.The learned Commissioner of Income Tax (Appeals) erred in not adjudicating the ground questioning the validity of the learned Assessing Officer in making various addition going beyond his jurisdiction. 2.1. The learned Commissioner of Income Tax (Appeals) failed to appreciate the fact that the additions made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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