TMI Blog2022 (12) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... e find no merit in its arguments in light of Lachmandas Mathuradas [ 1997 (12) TMI 16 - SUPREME COURT] , Rungta Mines Ltd. [ 2018 (10) TMI 672 - ITAT KOLKATA] and M/s. M.L. Reality [ 2021 (9) TMI 877 - ITAT MUMBAI] holding such interest payment on delayed remittances of tax items as an allowable revenue expenditure u/s. 37 of the Act. The impugned disallowance accordingly stands deleted. Disallowing its claim of expenditure regarding education, secondary and higher education cess - HELD THAT:- Learned counsel fails to dispute that the legislature has amended section 40(h) of the Act vide Finance Act 2022 w.e.f. 01.04.2005 that such education cess is not an allowable expenditure item. We take note thereof to hold that the impugned claim of preceding cess(es) items is not allowable in law. The same stands rejected. Invoking section 115JB MAT computation on a public sector banking company - HELD THAT:- Both the parties are fair enough in not pinpointing any distinction on facts or law qua the instant issue of applicability of section 115JB in assessee's case. There is further hardly any dispute as we have restored the assessee's foregoing second substantive grievan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the Hon'ble Supreme Court in the case of Catholic Syrian Bank [2012] 343 ITR 270 (SC) did not lay down the law that the deduction should be allowed by only considering the provision for rural advances in the books. 2.5. The learned CIT(A) erred in not following the order of the Hon'ble ITAT in the app Bank's own case for the earlier Assessment years. 3. In the facts and circumstances of the case and in law, the learned CIT(A) has erred in confirming the disallowance of prior period expenses amounting to Rs. 1,72,73,670/-. 3.1. The learned CIT(A) failed to appreciate the fact that the expenses were crystallized during the previous year relevant to the assessment year under appeal. 3.2. Without prejudice to the above, if this expenditure is not allowable during the Assessment Year 2015-16, the learned Assessing Officer be directed to allow the same as an expenditure for the Assessment Year 2014-15. 4. In the facts and circumstances of the case and in law, the learned CIT(A) has erred in confirming the disallowance of the interest paid amounting to Rs. 1,71,338/- for delayed remittance of TDS. 4.1. The learned CIT(A) failed to appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 1138/PN/2013 (supra). The relevant extract of the findings of Co-ordinate Bench on the issue are reproduced here-in-under: 28. By way of Ground of Appeal No. 3, assessee has raised a claim of deduction of Rs. 68,06,15,000/- u/s. 36(1)(vii) of the Act on account of write off on debts by the non-rural branches of the assessee bank. The learned counsel for the assessee explained that the said claim was raised by way of an Additional Ground of Appeal before the CIT(A) vide letter dated 26.08.2008 but the same has not been inadvertently considered by the CIT(A). In this connection, a reference has been invited to a copy of the communication addressed to the CIT(A), which is placed in the Paper Book. Before us, it is sought to be canvassed that the said claim is covered by the judgment of the Hon'ble High Court in the case of Catholic Syrian Bank Ltd. vs. CIT, (2012) 343 ITR 270 (SC) and in the case of assessee for assessment years 2002-03, 2003-04 and 2004-05 the Tribunal vide its order dated 30.05.2014 (supra) admitted such an Additional Ground but remitted the same back to the file of the Assessing Officer for adjudication in the light of the Hon'ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tallization plea. That being the case, we allow the assessee's impugned claim in principle and direct the Assessing Officer to examine its supportive evidence of crystallization of the corresponding expenditure items in the relevant previous year by quoting CIT Vs. Indian Petrochemicals Corporation Ltd. 2016 (9) TMI 110 - Gujarat High Court and case law CIT vs. Adani Enterprises Ltd. Tax Appeal 566/2016 (Guj) also holds that such prior period expenditure items ought not to be disallowed where the taxpayer concerned is assessed at the same rate all along. The second substantive ground is accepted for statistical purposes in foregoing terms. 7. The assessee's third substantive grievance seeks to reverse both the lower authorities action disallowing its interest paid on TDS amounting to Rs. 1,71,338/- on the ground that the same is 'penal' in nature. The Revenue strongly supported the impugned disallowance placing reliance on the learned lower authorities' action. We find no merit in its arguments in light of Lachmandas Mathuradas vs. CIT (2002) 254 ITR 799 (SC), DCIT vs. Rungta Mines Ltd. 2018 (10) TMI 672 - ITAT Kolkata and M/s. M.L. Reality vs. ACIT 2021 (9) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that they are not Banking Company. He referred to the events of nationalization of Banks that took place in the year 1970 and relevant Acts i.e. Banking Companies (acquisition and transfer of undertakings) Act 1970. 21. It is the case of the Revenue on this proviso that the assessee falls under the Banking Company and therefore, proviso to section 115JB of the Act still applicable to the Banking Company like the assessee. 22. In rebuttal, the Ld. Counsel for the assessee submitted that the assessee is neither the Company leave alone Banking Company and it is a Corporation created by the Special law of Parliament and therefore, the provisions of section 115JB cannot be applicable to the present case of the assessee. In this regard, the Ld. Counsel for the assessee has placed reliance on the following decisions: (i) ACIT Vs. Indian Overseas Bank, ITA No. 948 777/Chny/2018 dated 22.01.2020. (ii) DCIT Vs. Damodar Vally Corporation 2018 (8) TMI 1363-ITAT Kolkata. The Ld. Counsel further submitted that amended provision on Finance Act, 2012 does not apply to a non-Banking Company like the assessee. 23. Further, referring to the computation provided in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute as we have restored the assessee's foregoing second substantive grievance of prior period expenditure back to the Assessing Officer. Faced with the situation, we set aside the instant MAT issue as well back to the Assessing Officer for his afresh adjudication in light of CIT(A)'s findings in the preceding assessment year (s) 2013-14 and 2014-15, as the case may be, as per law. Ordered accordingly. No other ground has been pressed before us in assessee's appeal in ITA No. 472/PUN/2020. The same is partly accepted in above terms. 11. We now advert to the Revenue's cross appeal ITA No. 596/PUN/2020 raising the sole substantive grievance that the CIT(A) has erred in law and on facts in allowing assessee's claim of loss on valuation of Held to Maturity (HTM) securities amounting to Rs. 20,64,08,969/- as an allowable revenue item thereby reversing the assessment findings to this effect. Suffice to say, it transpires during the course of hearing that the very issue had arisen before the learned co-ordinate bench in the preceding twin assessment year(s) wherein Revenue's corresponding substantive ground(s) stood rejected as under: 5. We have heard bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudicated the issue by observing as under: 20. In the background of the aforesaid legal position, a premise which can be drawn is that for the purposes of valuation of the closing stock it is permissible for the assessee to value it at the cost or market value, whichever is lower. In-fact, the Hon'ble Supreme Court in the case of Chainrup Sampatram vs. CIT, (1953) 24 ITR 481 (SC) held that the assessee is entitled to value the closing stock either at cost price or market value, whichever is lower. In the present case, Revenue does not dispute that the method of the valuation adopted by the assessee, namely, valuing the stock either at cost price or market value whichever is lower, is a generally accepted method of valuation. No doubt, there are no statutory rules for the valuation of closing stock but the ordinarily accepted method of commercial accounting support the valuation of closing stock based on the lower of the cost or market value. Therefore, the departure from the erstwhile method of valuation of closing stock by the assessee is quite appropriate, and in fact is line with a method approved by the Hon'ble Supreme Court in the case of Chainrup Sampatram (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by holding that in the present case the method of valuation of the closing stock adopted by the assessee i.e. cost or market value, whichever is lower is fair and proper and the income-tax authorities have erred in not accepting the same. The orders of the authorities below on this aspect are hereby reversed. 5.4 The Ld. AR has further drawn our attention that the decision of Tribunal has been upheld by the Hon'ble Bombay High Court in Income Tax appeal No. 920 of 2015 (supra). The copy of the Hon'ble High Court order dated 27-02-2018 was furnished before us. A perusal of same shows that one of the question of law before the Hon'ble High Court for consideration was: (i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the addition of Rs. 359,24,58,508/- in allowing loss of valuation of Held to Maturity (HTM) securities, when HTM securities are capital in nature? The aforesaid question was decided by the Hon'ble High Court in favour of the assessee upholding the order of Tribunal. Thus, in view of the fact that the issue has now been settled by the Hon'ble High Court in favour of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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