TMI Blog2021 (3) TMI 1357X X X X Extracts X X X X X X X X Extracts X X X X ..... f interest expenditure u/s 40(a)(ia) - HELD THAT:- It has been submitted before us that evidence to the satisfaction of Ld. AO for reasons of non-deduction tax such as Form 15G/15H etc. could not be furnished since considerable period of time had lapsed. The Ld. AR submitted that tax was automatically deducted by the systems and hence the chances of non-deduction without adequate reasons were remote. Upon due consideration of factual matrix, the bench deem it fit to grant another opportunity to the assessee to furnish requisite evidences before Ld. AO in support of non-deduction of tax at source or alternatively prove applicability of second proviso to Sec. 40(a)(ia). This ground stand allowed for statistical purposes. Applicability of Sec.115JB to the assessee Bank - HELD THAT:- We find that the issue of applicability of Section 115JB (prior to its amendment by virtue of Finance Act, 2012) to Banking Company governed by the provisions of Banking Regulation Act, 1949 is squarely covered in assessee s favor by the decision of Hon ble High Court of Bombay in assessee s own case for AY 2005-06[ 2019 (5) TMI 355 - BOMBAY HIGH COURT] - A copy of the same is on record. The Ld. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals) was right in holding that provisions u/s. 115JB are not applicable to the assessee. 2. Whether, on the facts and in the circumstances of the case and in law, the ld. Commissioner of Income tax (Appeals) was right in deleting the addition of loss on revaluation of investment to book profit holding that provisions u/s. 115JB are not applicable to the assessee? 2. We have carefully heard the rival submissions and perused relevant material on record including judicial pronouncement as relied upon during the course of hearing. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. 3. Briefly stated, the assessment for the year under consideration was reopened as per due process of law vide notice u/s 148 dated 29/03/2017. During the course of assessment proceedings, the reasons for reopening were duly supplied to the assessee, which has also been extracted in para-2 of the assessment order passed u/s 143(3) r.w.s. 147. It is evident that the reassessment proceedings were triggered upon receipt of information from TDS Wing, Nagpur that during the course of survey on one of the branches of the assessee, Tax at source (TDS) was not ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction every year under specific provisions of Sec.36(1)(viia) towards provision for bad and doubtful debts and thereby a reserve is created to set-off the bad debts in respect of rural branches. Wherever there is bad debts and written-off, it would be debited to provision for bad and doubtful debts created u/s 36(1)(viia) of the Act. Further, as per Sec. 36(1)(vii), the assessee is further allowed deduction of any bad debts written-off to the extent it exceeds the credit balance in the provision for bad and doubtful debts made u/s 36(1)(viia). Hence, the bad debts written-off in respect of rural branches are always allowed as deduction in case of bank. Therefore, the assessee s plea was to be rejected and accordingly the deduction as claimed by the assessee was added back to its income. 5.2 Disallowance u/s 40(a)(ia) During survey on one of the branches of the assessee, it was found that the assessee did not deduct TDS in certain cases where interest credited / paid exceeded basic exemption limit. The failure to do so would attract disallowance of interest expenditure u/s 40(a)(ia). Upon perusal of details furnished by the assessee, it was found that there was non-d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion required for completion of assessment. However, we find that TDS survey carried out by the department against the assessee was subsequent development. The survey findings revealed certain TDS default on the part of the assessee which would require disallowance u/s 40(a)(ia). At the stage of formation of belief, nothing more was required. In our opinion, sufficiency of reason was not a sine-qua-non to reopen assessee s case rather prima-facie opinion of escapement or underassessment of income was required to be formed at this stage. There was no requirement under law to establish that income, in fact, escaped assessment before triggering reassessment proceedings against the assessee as held by Hon ble Supreme Court in Raymond Woollen Mills Ltd. v. ITO [236 ITR 34]. In the present case, specific tangible information came into the possession of Ld. AO which revealed possible escapement of income in the hands of the assessee. Nothing more, in our opinion, was required at this stage. Undisputedly, once the case was reopened, the other issues of underassessment or escapement of income could also be examined by Ld. AO. The Ld. AR has also pleaded that objections filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held that section 41(4) of the Act cannot be invoked. Sections 41(1), 41(2), 41(3) and 41(4) of the Act operate in different spheres. Each of the sub-sections to section 41 of the Act deals with different and distinct circumstances. Each of the sub-sections deals with different and distinct topics and one cannot read recoupment under one sub-section into another. We have considered the decision relied on in this regard of Supreme Court in the case of Nectar Beverages (P.) Ltd. vs. DCIT [2009] 314 ITR 314 (SC) wherein the Supreme Court has dealt with the specific section 41(2) of the Act for taxing balancing charge versus taxing the same under section 41(1) of the Act and has concluded that section 41(1) of the Act shall not be applicable. 91. As the aspects of bad and doubtful debts is dealt with specifically under section 41(4) of the Act, as laid down by the Supreme court in Nectar Beverages (supra), section 41(1) of the Act is not applicable in case of the assessee. Further, the primary condition to be satisfied for taxing an amount as deemed income under section 41(1) of the Act is that a deduction/allowance should have been claimed by the assessee in respect of a loss, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed for statistical purposes. 9. The sole subject matter of revenue s appeal is applicability of Sec.115JB to the assessee Bank for the year under consideration. Regarding adjustment of Book Profits u/s 115JB, relying upon Tribunal decision in assessee s own case for AY 2007-08 as well as in AY 2010- 11, Ld. CIT(A) held that the provisions of Section 115JB were not applicable to the assessee bank. Aggrieved, the revenue is in further appeal before us. We find that the issue of applicability of Section 115JB (prior to its amendment by virtue of Finance Act, 2012) to Banking Company governed by the provisions of Banking Regulation Act, 1949 is squarely covered in assessee s favor by the decision of Hon ble High Court of Bombay in assessee s own case for AY 2005-06 which is reported at 105 Taxmann.com 253 dated 16/04/2019. A copy of the same is on record. The Ld. DR is unable to controvert the same. Therefore, no fault could be found in the impugned order, in this regard. Conclusion 10. The revenue s appeal stand dismissed. The assessee s appeal stand partly allowed for statistical purposes. Order pronounced on 03rd March, 2021 - - TaxTMI - TMITax - Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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