TMI Blog2022 (11) TMI 989X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Division Bench of the Tribunal in Uttar Banga Kshetriya Gramin Bank [ 2015 (7) TMI 1280 - ITAT KOLKATA] wherein the Division Bench of the Tribunal held that for the purpose of section 36(1)(viia), to compute the aggregate monthly average advance made by the rural branch of scheduled Bank, the amount of advances by each rural branch as outstanding at the end of the last day of each month comprised in the previous year be taken into consideration. The Hon ble Madras High Court in M/s City Union Bank Ltd. [ 2022 (4) TMI 113 - MADRAS HIGH COURT] has concurred with the decision of the Hon ble Calcutta High Court. Thus, once two Hon ble High Courts of the country have expressed their opinion in respect of the issue which arose before us, in absence of contradictory view by any other Hon ble Court of equivalent or higher judicial hierarchy being brought to our notice, we as a matter of judicial propriety are bound to follow the view so expressed by the Hon ble High Courts in decisions cited supra. Thus as relying we decide the question referred for our adjudication in favour of the assessee and held that the deduction under section 36(1)(viia) r/w Rule 6 ABA is to be allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Division Bench of the Tribunal in the following cases: i) DCIT vs M/s City Union Bank Ltd in ITA No. 1485/Mds/2007 dated 30/10/2009; ii) Nizamabad District Co-operative Central Bank Ltd., Nizamabad v/s ITO in ITA No.1161/Hyd./2014; and iii) Indian Overseas Bank vs DCIT in ITA No. 2124 2125/Mds/2013 dated 26/09/2014. 4. After hearing the submissions of both sides, the Division Bench of the Tribunal, Chandigarh Bench, expressed its disagreement with the view so expressed by other Division Bench in aforesaid decisions. Accordingly, reference was made to the Hon ble President for constituting the Special Bench on this issue. The reasons mentioned in support of the reference are as follows: Reasons for referring an issue to the Special Bench of ITAT One of the grounds raised by the assessee before us in its appeal in ITA No. 510, 538, and 1259/Chd/2017 was as under: The Ld. CIT(A) erred in holding that only the incremental advances in respect of rural branches is eligible for deduction under section 36(1)(viia) overlooking the express words in Rule 6ABA r.w.s. 36(1)(viia) and even when there was no such disallowance in any of the earlier assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned in paragraph 1) was referred to this Special Bench for adjudication. 6. During the course of hearing before us, learned counsel appearing for the assessee, after briefly explaining the facts resulting in the present reference, submitted that the issue pending for consideration before this Special Bench has been decided in favour of the taxpayer by the Hon ble Calcutta High Court in PCIT vs Uttarbanga Kshetriya Gramin Bank, [2018] 408 ITR 393 (Cal.) and the Hon ble Madras High Court in CIT vs M/s City Union Bank Ltd., in T.C.A. No. 961 of 2010, vide judgment dated 07/03/2022. 7. On the other hand, the learned Departmental Representative by vehemently relying upon the orders passed by the lower authorities submitted that Hon ble Calcutta High Court upheld the conclusions of the Tribunal finding no substantial question of law in the appeal filed by the Revenue and thus, the merit of the issue was not discussed in detail. 8. We have considered the submissions of both sides and perused the material available on record. Since, it has been submitted that this issue has already been decided by the Hon ble Calcutta High Court and the Hon ble Madras High Court in aforesaid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not permissible on computation made under Rule 6ABA. He submitted a double deduction in the manner thus obtained by the assessee has not been expressly provided. He relied on a judgment of the Supreme Court in the case of Escorts Ltd. v. Union of India [1993] 199 ITR 43, on the following portion in the said judgment appearing in page 64 of the report. A double deduction cannot be a matter of inference, it must be provided for in clear and express language, regard being had to its unusual nature and its serious impact on the revenues of the State. 7. Mr. Khaitan, learned senior Advocate appeared on behalf of the assessee and submitted that the computation to be made as prescribed by Rule 6ABA is for the purpose of fixing the limit of the deduction available under section 36(1)(viia). Clauses (a) and (b) in Rule 6ABA cannot be given the restricted interpretation. The amounts of advances as outstanding at the last day of each month would be a fluctuating figure depending on the outstanding as increased or reduced respectively by advances made and repayments received. The assessee might provide for bad and doubtful debts but the deduction would only be allowed at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le deduction which is not permissible on computation made under Rule 6ABA. He submitted a double deduction in the manner thus obtained by the assessee has not been expressly provided. He relied on a judgment of the Supreme Court in the case of Escorts Ltd. v. Union of India reported in (1993) 199 ITR 43, on the following portion in the said judgment appearing in page 64 of the report. A double deduction cannot be a matter of inference, it must be provided for in clear and express language, regard being had to its unusual nature and its serious impact on the revenues of the State. 7. Mr.Khaitan, learned senior Advocate appeared on behalf of the assessee and submitted that the computation to be made as prescribed by Rule 6ABA is for the purpose of fixing the limit of the deduction available under section 36(1)(viia). Clause (a) and (b) in Rule 6ABA cannot be given the restricted interpretation. The amount of advances as outstanding at the last day of each month would be a fluctuating figure depending on the outstanding as increased or reduced respectively by advances made and repayments received. The assessee might provide for bad and doubtful doubts but the deduction wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ad-hoc basis for bad and doubtful debts and to confirm that these advances were still outstanding as at the end of the previous year relevant to this accounting year. 6.3.1. Therefore due to assessee's inability to relate the provision to any particular advance of a branch, it cannot be said whether it is a provision for rural advance or for non-rural advance so as to examine the monetary limit prescribed under section 36(1)(viia) for allowing deduction thereunder. Then such provision is only reserve for bad debts and not provision for bad and doubtful debts. Though the provisions of section 36(1)(viia) may be understood as a beneficial provision to the assessee company to claim deduction even in respect of reserve created by it to meet certain anticipated loss or contingency due to default of its debtors whom the assessee may not be able to easily identify at the end of the previous year, yet the computation machinery for determining the deduction admissible in the matter of write off bad and doubtful debts of rural or non-rural advance under section 36(1)(v) read with the proviso thereunder and section 36(2)(v) of the Act would fail. Thus, it is evident from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary for lower tier , including the High Court, to accept loyally the decisions of the higher tiers . It is inevitable in a hierarchical system of Courts that there are decisions of the supreme appellate tribunal which do not attract the unamimous approval of all members of the judiciary.... But the judicial system only works if someone is allowed to have the last word and that last word, once spoken, is loyally accepted (See observations of Lord Hailsham and Lord Diplock in Broome vs. Cassell). The better wisdom of the Court below must yield to the higher wisdom of the Court above. That is the strength of the hierarchical judicial system. 14. As regards the submission of the learned Departmental Representative that no substantial question of law was admitted by the Hon ble Calcutta High Court, we are of the considered view that non-admission of a substantial question of law under section 260A of the Act by the Hon ble High Court does not render the decision of Hon ble Court to be non-binding and the doctrine of merger would still be applicable. In any case, we find that the Hon ble Madras High Court in the aforesaid decision concurred with the legal proposition laid d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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