TMI Blog2018 (9) TMI 2109X X X X Extracts X X X X X X X X Extracts X X X X ..... and against Revenue. Respectfully following the aforesaid decision of the Hon'ble Apex Court in the case of Vijaya Bank [ 2010 (4) TMI 46 - SUPREME COURT] and the decision of co-ordinate benches of this Tribunal in the assessee's own case (supra) and that of Vijaya Bank (supra), we hold that the assessee bank is eligible to claim and be allowed write off of the bad debts under Section 36(1)(vii) of the Act. We, therefore, delete the disallowance made by the Assessing Officer in this regard. Consequently, ground No.2 of the assessee's appeal is allowed. Disallowance of Claim u/s.36(1)(viia) - assessee bank had created a provision for bad and doubtful debts in the books of account and claimed deduction u/s.36(1)(viia) based on the Aggregate Rural Advances (AAA) computed as per Rule 6ABA of the Income Tax Rules, 1962 - AO was of the view that it is only the incremental advances that has to be considered for computing the AAA and consequently allowed the deduction to that extent - HELD THAT:- We find that this issue is covered in favour of the assessee by the aforesaid decisions of the co-ordinate benches of this Tribunal in the assessee's own case [ 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus we hold that the unrealized gains on revaluation of foreign exchange contracts is not exigible to tax and therefore delete the addition made in this regard by the Assessing Officer. Consequently, Ground No.6 of the assessee's appeal is allowed. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Respectfully following the aforesaid decisions of the coordinate bench in the case of Vijaya Bank [ 2018 (1) TMI 1575 - ITAT BANGALORE] and the assessee's own case [ 2018 (1) TMI 1575 - ITAT BANGALORE] , we hold that, in the facts and circumstances of the case on hand, no disallowance can be made under Section 14A of the Act over and above the amount disallowed suo moto by the assessee. Consequently, ground No.7 of the assessee's appeal is allowed. TDS u/s 194J - Disallowance u/s.40(a)(ia) of the Act in respect of payment made to NPCI - AO held that since NPCI is providing technical services to the assessee bank, the payments made in this regard are liable to TDS - HELD THAT:- We find that the issue before us is covered in favour of the assessee by the decision of the Hon'ble Apex Court in the case of Kotak Securities Ltd. [ 2016 (3) TMI 1026 - SUPREME COURT] to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a)(ia) - Assessing Officer made this disallowance since the assessee bank did not furnish the details called for in respect of TDS and its remittances - HELD THAT:- As submitted by the counsels of both parties and from a perusal of the order of assessment, we find that the disallowance under Section 40(a)(ia) of the Act has been made by the authorities below on account of non-furnishing of details by the assessee. We are of the considered view that in the interest of substantial justice, the ex-parte disallowance under Section 40(a)(ia) of the Act made by the Assessing Officer is to be set aside and this issue is restored to the file of the Assessing Officer for fresh examination, verification and adjudication. Needless to add that the Assessing Officer shall afford the assessee adequate opportunity of being heard and to file details / submissions required that shall be considered by the Assessing Officer before deciding this issue. It is ordered accordingly. Consequently, ground No.11 of the assessee's appeal is allowed for statistical purposes. Taxing of interest on Income Tax Refunds - assessee assails the decision of the authorities below in taxing the interest of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set Reconstruction Company) Trust. According to the observations made by CIT(Appeals), assessee has not filed any evidence either before her on the Assessing Officer about the assets in question being transferred irrevocably and proceeded to uphold the disallowance made by the Assessing Officer. In this factual matrix of the case, we are of the view that in the interest of substantial justice, the order of authorities below are to be set aside and this issue remanded to the file of the Assessing Officer for examination, verification and adjudication after affording the assessee adequate opportunity of being heard and to file details / submissions required in this regard which shall be duly considered before deciding the issue. Disallowance of penalty paid to RBI under FEMA Guidelines - AO made disallowance of payment of penalty imposed by RBI on the assessee under FEMA Guidelines on the ground that it is not in respect of any infraction of law, has not been adjudicated by the learned CIT(Appeals) in the impugned order, where the issue was raised by the assessee at ground of appeal No.10 - HELD THAT:- We find that this issue was raised in ground No.10 by the assessee before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on revaluation of forward contracts. Rs.77,91,16,260 vii) Disallowance of depreciation on leased assets. Rs.1,67,500 viii) Disallowance u/s.14A Rs.24,91,38,500 ix) Disallowance u/s.40(a)(ia) payment made to NPCI Rs.8,05,15,590 x) Amortisation of Premium in respect of HTM category of investments. Rs.88,31,63,478 xi) Profit on sale of shares of CARE Ltd. Rs.161,89,97,600 xii) Depreciation on ATM Rs.7,24,63,522 xiii) Disallowance u/s.40(a)(ia) Rs.28,53,74,990 xiv) Interest on Income Tax Refund Rs.95,09,19,255 xv) Disallowance u/s.40(A)(ia) Rs.1,05,28,580 Book Profits u/s.115JB of the Act was computed at Rs.6283,53,31,901. 2.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India guidelines. 2.8. The learned Commissioner of Income tax - Appeals, failed to appreciate that fact that the Appellant has offered to tax the write back on account of recovery/upgradation of such kind of bad debts written off in the earlier years u/s 41 of the Income tax Act, 1961. 2.9. The learned Commissioner of Income tax - Appeals, erred in making the addition on surmises conjunctures. 2.10. The learned Commissioner of Income tax - Appeals, failed to appreciate the fact that on the same set of facts the jurisdictional Appellate Tribunal and Hon ble High Court have allowed the deductions to various Banks. 2.11. Without prejudice to the above, the learned Commissioner of Income tax -Appeals erred in upholding the taxing of the recovery from bad debts which were not allowed as deduction u/s Sec 36(1)(vii). 3. The learned Commissioner of Income tax - Appeals, erred in law in confirming the disagreed the method of calculation of eligible amount of the provision for bad debts claimed u/s 36(1)(viia). 3.1. The learned Commissioner of Income tax - Appeals, erred in law in holding that Rule 6ABA prescribes only fresh/incremental advances are to be consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income and not liable to tax. 6. The learned Commissioner of Income tax - Appeals, erred in law in sustaining the disallowance of unrealized gains on revaluation of forward contracts in foreign exchange amounting to Rs.77,91,16,260/-. 6.1. The learned Commissioner of Income tax - Appeals, failed to appreciate the fact that the unrealised gains cannot be taxed and only real income can be taxed. 6.2. The learned Commissioner of Income tax - Appeals, failed to appreciate the fact that the unrealised gains did not accrue to the appellant bank. 6.3. The learned Commissioner of Income tax - Appeals, failed to appreciate the fact that the entries in the books alone cannot be the basis for taxing a receipt. 6.4. The learned Commissioner of Income tax - Appeals, ignored the consistent method adopted by the appellant Bank in offering the unrealized gains to tax over the years. 6.5. The learned Commissioner of Income tax - Appeals, failed to appreciate the fact that it is only a revenue neutral exercise and there is no loss to the Revenue over the years as the Appellant Bank had offered to tax on the date of actual realization. 7. The learned Commissioner of Income tax - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions of Hon ble Tribunal and High Courts favouring the classification adopted by the Appellant. 11. The learned Commissioner of Income tax - Appeals, erred in law and on facts in sustaining the disallowance of expenditure u/s 40(a)(ia) of Rs.28,53,74,990/- 12. The learned Commissioner of Income tax - Appeals, erred in law in confirming the addition of interest on Income Tax Refunds of Rs.95,09,19,255/- though the same is not recognized as income in the books of the Appellant Bank. 12.1. The learned Commissioner of Income tax - Appeals, erred not appreciation the fact that the appellant Bank is accounting the interest on income tax refunds only when the same is granted after giving effect to the orders of appellate authority. 5. Ground No.1 (supra) being general in nature, no adjudication is called for thereon. 6. Ground No.2 - Bad Debts Written Off u/s.36(1)(vii) 6.1 In this ground (supra), the assessee challenges the disallowance of bad debts written off by it u/s.36(1)(vii) of the Act. In the order of assessment, the Assessing Officer disallowed the assessee's claim as he was of the view that it was only a prudential write off since the individual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the year under consideration could be found at page 12 of the Paper Book and the said recovery was credited to the profit and loss account and offered to tax as Other Income . The learned Authorised Representative finally concluded contending that since the write off was debited to the Profit and Loss Account and reduced from the Balance Sheet, it amounted to write off. In support of the assessee's claim for write off of bad debts, the learned Authorised Representative placed reliance on the following judgements : (i) Decision of the co-ordinate bench of this Tribunal in the assessee's own case Canara Bank Vs. JCIT, LTU (2017) 60 ITR (Trib) 1 (Bangalore) (ii) Vijaya Bank in ITA No.1284/Bang/2016 dt.5.1.2018 for Assessment Year 2010-11, which followed the decision of the Hon'ble Apex Court in that assessee's own case; i.e. Vijaya Bank Vs. CIT (2010) 323 ITR 166 (SC). 6.2.3 The learned Authorised Representative contended that the reliance placed by the authorities below on the decision of the Hon'ble Apex Court in the case of Southern Technologies Ltd. (supra) is not applicable as the facts of the cited case are different. It is submitted that the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot in dispute that s. 36(1)(vii) of 1961 Act applies both to banking and non-banking businesses. The manner in which the write off is to be carried out has been explained hereinabove. It is important to note that the assessee-bank has not only been debiting the P L a/c to the extent of the impugned bad debt, it is simultaneously reducing the amount of loans and advances or the debtors at the year-end, as stated hereinabove. In other words, the amount of loans and advances or the debtors at the year-end in the balance sheet is shown as net of the provisions for impugned debt. However, what is being insisted upon by the AO is that mere reduction of the amount of loans and advances or the debtors at the year-end would not suffice and, in the interest of transparency, it would be desirable for the assesseebank to close each and every individual account of loans and advances or debtors as a precondition for claiming deduction under s. 36(1)(vii) of 1961 Act. This view has been taken by the AO because the AO apprehended that the assessee-bank might be taking the benefit of deduction under s. 36(1)(vii) of 1961 Act, twice over. [See order of CIT(A) at pp. 66, 67 and 72 of the paper book, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts of the rural branches have to tally with the accounts of the head office. If the repaid amount in subsequent years is not credited to the P L a/c of the head office, which is ultimately what matters, then, there would be a mismatch between the rural branch accounts and the head office accounts. Lastly, in any event, s. 41(4) of 1961 Act, inter alia, lays down that, where a deduction has been allowed in respect of a bad debt or a part thereof under s. 36(1)(vii) of 1961 Act, then, if the amount subsequently recovered on any such debt is greater than the difference between the debt and the amount so allowed, the excess shall be deemed to be profits and gains of business and, accordingly, chargeable to income-tax as the income of the previous year in which it is recovered. In the circumstances, we are of the view that the AO is sufficiently empowered to tax such subsequent repayments under s. 41(4) of 1961 Act and, consequently, there is no merit in the contention that, if the assessee succeeds, then it would result in escapement of income from assessment. 5.5.2 Respectfully following the aforesaid decision of the Hon'ble Apex Court in the assessee's own case repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read into it as has been done by the authorities below. It was submitted that this issue has been considered and decided in favour of the assessee by the co-ordinate bench of this Tribunal in the case of Canara Bank Vs. JCIT (2017) 60 ITR (Trib) 1 [ITAT (Bang)]. 7.3 Per contra, the learned Departmental Representative for revenue placed reliance on the orders of the authorities below. 7.4.1 We have heard the rival contentions, perused and carefully considered the material on record; including the judicial pronouncements cited. We find that the issue before us; i.e. in respect of the computation of deduction under Section 36(1)(viia) of the Act; has been considered and decided by a co-ordinate bench of this Tribunal in the assessee's own case (supra). Further, we find that the aforesaid decision was followed by another co-ordinate bench in the case of Vijaya Bank in ITA No.915 845/Bang/2017 and others dt.5.1.2018, wherein at para 7.4.1 and 7.4.2 thereof it has been held as under :- 7.4.1 We have heard the rival contentions, perused and carefully considered the material on record; including the judicial pronouncement cited. We find that the issue before us; in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at in Step One by the number of months for which the outstanding amounts have been taken into account for the purpose of Step One. Step Three- Aggregate the amounts arrived at under Step Two in respect of all the rural branches. Thus, it is clear that the said Rules do not provide for only fresh advances made by each rural branch during each month alone is to be considered. It only prescribes that the amount of advances made by rural branch and is outstanding at the end of the last day of each month shall be aggregated. Having regard to the plain provisions of the IT Rules, it cannot be construed that only fresh loans made by rural branches outstanding at the end of each month should be considered for the purpose of calculating AAA. It is trite law that the condition not imposed by the statute cannot be imported while construing a particular provision of Rules or statutes. Thus, the reasoning adopted by the AO as well as the CIT(A) does not stand the test of law. Furthermore, co-ordinate bench of Hyderabad Tribunal in the case of Nizamabad District Cooperative Central Bank Ltd. (supra) held as follows: 8. We have considered the submissions of the parties and perused the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the assessee that it is to be allowed u/s 37(1), in our view, is acceptable. On a perusal of the assessment order and the facts and materials available on record, it is quite evident that the amount was waived at the direction of the State Govt. Department has not controverted this fact. Therefore, in our view, the waiver of interest at the instance of the State Government, has to be allowed as business expenditure u/s 37(1). Accordingly, we uphold the order of ld. CIT(A) in deleting addition of Rs. 18,79,704 though, for a different reason. The grounds raised by the department are dismissed. 18.3 In the light of the above, we hold that the methodology adopted by the AO for the purpose of computing AAA is against the plain provisions of rules and also against the ratio of the decision of the coordinate bench in the cases cited supra. However, remit this issue back to the file of the AO to identify rural branches less than 10,000 population as per last census and the AAA of such rural branches alone should be considered for the purpose of this deduction. Thus, these grounds of appeal are allowed for statistical purposes. 7.4.2 We find that the issue is settled in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision n the case of Karnataka Bank (supra), was followed by the Hon'ble Karnataka High Court in the assessee's own case of Vijaya Bank in their order in ITA No.687/2008. The learned Authorised Representative further submitted that this issue is squarely covered by the decisions of the co-ordinate bench of this Tribunal in the assessee's bank s own case (supra) and also by the case of Vijaya Bank in ITA No.1252/Bang/2016 dt.5.1.2018 for Assessment Year 2010-11. 8.3 The ld. CIT DR placed strong reliance on the order of the Assessing Officer which was based on the decision of the Hon'ble Karnataka High Court in the case of ING Vysya Bank (supra) which decided the issue in favour of the revenue. The ld. DR further submitted that the assessee did not give the reconciliation between figures as per RBI norms and figures for the purpose of Income Tax. It was also submitted that if depreciation is to be allowed then amortisaton allowed by Assessing Officer should be withdrawn. 8.4 In rejoinder, the learned Authorised Representative submitted that the Bank totally disregards the book results which are based on RBI Guidelines when filing its returns of income and offers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon ble High Court of Karnataka in the case of CIT v. ING Vysya Bank Ltd. in ITA No.2886/2005 dated 06.06.2012. In the aforesaid decision, the Hon ble High Court of Karnataka took a view that the guidelines issued by the RBI will not be relevant while computing income under the Income-tax Act. The Hon ble Court further took the view that every investment held by a bank cannot be considered as stock-in-trade. The Hon ble High Court finally concluded that 30% of the investments can be clothed to the character of stock-in-trade and that the remaining amounts will be investments and therefore diminution in their value cannot be allowed as a deduction. 59. The ld. counsel for the assessee, however, submitted that in the assessee s own case for the A.Y. 2005-06, this Tribunal has confirmed the order of the CIT(A), deleting identical addition made by the AO. Our attention was also drawn to the order of the Tribunal in assessee s own case in ITA No.492/Bang/2009 for the A.Y. 2005-06, order dated 13.01.2012, wherein the Tribunal had to deal with identical issue as to whether the CIT(A) was correct in deleting the addition made by the AO on account of profit on sale of investments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth for book keeping as well for income-tax purposes. The Hon ble Apex Court upheld the method adopted by the banks valuing stock-in-trade (investments) at cost in balance sheet in accordance with the Banking Regulation Act and valuing the same at cost or market value, whichever was lower for income-tax purposes. The Hon ble Court took the view that all investments held by a bank are to be regarded as stock-in-trade. 61. The ld. counsel for the assessee further drew our attention to a very recent decision of the Hon ble High Court of Karnataka rendered on 11.03.2013 in the case of CIT v. Vijaya Bank, ITA No.687/2008. The Hon ble High Court of Karnataka in the aforesaid case followed its own decision rendered in the case of Karnataka Bank Ltd. v. CIT in ITA No.172/2009 rendered on 11.01.2013, wherein the Court took the view that depreciation claimed on investments held on maturity by a bank has to be treated as stock-in-trade in accordance with RBI guidelines and CBDT Circular. It was his submission that the later decision of the Hon ble Karnataka High Court has to be followed. 62. We have given a careful consideration to the rival submissions and are of the view that the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on as per books amounting to Rs.366.51 Crores has to be brought to tax. On appeal, the learned CIT (Appeals) upheld the order of the Assessing Officer. 9.2 Before us, the learned Authorised Representative for he assessee submitted that the amount written back by the assessee bank is the appreciation in the value of investments as per the books, as per RBI Guidelines. It is contended that since the assessee bank adopts different methods of valuing the investments for the purpose of Income Tax, by considering all the securities as stock-in-trade, the appreciation in the Books has to be ignored for the purpose of Income Tax where it is taken at cost OR market price, whichever is lower. The learned Authorised Representative relied on submissions made in the earlier grounds No.4, with regard to depreciation on investments, to submit that since the valuation as per Books is to be ignored for the purposes of Income Tax, the appreciation credited to the profit and loss account, which is also as per Books based on RBI Guidelines, should be ignored. It was further submitted that this appreciation on investments was purely a notional gain and therefore not liable to tax. In support of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ang)] dt.15.9.2017; wherein at para 28 thereof it has been held as under :- 28. We heard rival submissions and perused the material on record. There is no dispute that the assessee-bank has recognized as income in the profit and loss account on account of unrealized Forward exchange contracts. However, same was claimed as deduction in the computation of income. It is also undisputed fact that income is recognized only on hypothetical basis which has not accrued to the company. In the light of these facts, the issue is whether this income is liable to tax as accrued income within the meaning of section 5 of the Act. It is salutary principle that income-tax is not leviable on hypothetical income. No income can be taxed unless otherwise accrued and realized. Reliance in this regard can be placed on the decision of the Hon'ble Supreme Court in the case of CIT vs. Shoorji Vallabhdas Co. (46 ITR 144)(SC) and Godhra Electricity Co. Ltd vs. CIT (225 ITR 746)(SC). This issue was settled by the Hon'ble Madras High Court in the case of Indian Overseas Bank vs. CIT (183 ITR 200). In the light of these judgments, we hold that no income can be taxed on notional basis unless and ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used and carefully considered the material on record; including the judicial pronouncements cited. We find that this issue before us is covered in favour of the assessee bank by the decision of the co-ordinate bench of this Tribunal in the assessee's own case (supra) and also in the decision in the case of Vijaya Bank (supra). At paras 12.4.1 and 12.4.2 of the decision in the case of Vijaya Bank (supra), the co-ordinate bench has held as under :- 12.4.1 We have heard the rival contentions, perused and carefully considered the material on record; including the judicial pronouncements cited. We find that the issue before us is covered in favour of the assessee bank by the decision of the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2008-09 in ITA Nos.578 653/Bang/2012 dt.27.2.2015; wherein at para 51 it has been held as under :- 51. We have given a very careful consideration to the rival submissions. In the present case, the claim of the Assessee before the AO that tax free income for the bank is mainly from investments held by the bank. The investment activities of the bank are carried out by the Treasury Department at Head Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horised Representative of the assessee submitted that since it is a standard facility, the same is not covered under the purview of the provisions of Sec. 194J of the Act as technical services. In this regard, the learned Authorised Representative placed reliance on the decision of the Hon'ble Apex Court in the case of Kotak Securities Ltd., reported in (2016) 67 taxman.com 356 (SC). It was further contended that in any case, the assessee bank had submitted Form No.26A as per Rule 31ACB and as such is covered by the proviso to Sec. 40(a)(ia) and therefore no disallowance could be made. 12.3 Per contra, the learned Departmental Representative for Revenue placed reliance on the orders of the Assessing Officer on this issue. 12.4.1 We have heard the rival contentions, perused and carefully considered the material on record; including the judicial pronouncements cited. We find that the issue before us is covered in favour of the assessee by the decision of the Hon'ble Apex Court in the case of Kotak Securities Ltd. (supra); wherein at paras 8 to 10 thereof the Hon'ble Apex Court has held as under :- 8. A reading of the very elaborate order of the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mode is not correct. A member who wants to conduct his daily business in the Stock Exchange has no option but to avail of such services. Each and every transaction by a member involves the use of the services provided by the Stock Exchange for which a member is compulsorily required to pay an additional charge (based on the transaction value) over and above the charges for the membership in the Stock Exchange. The above features of the services provided by the Stock Exchange would make the same a kind of a facility provided by the Stock Exchange for transacting business rather than a technical service provided to one or a section of the members of the Stock Exchange to deal with special situations faced by such a member(s) or the special needs of such member(s) in the conduct of business in the Stock Exchange. In other words, there is no exclusivity to the services rendered by the Stock Exchange and each and every member has to necessarily avail of such services in the normal course of trading in securities in the Stock Exchange. Such services, therefore, would undoubtedly be appropriate to be termed as facilities provided by the Stock Exchange on payment and does not amount to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al share holding. Subsequently, SEBI was said to be willing to treat CARE as a professionally managed company and exempt the assessee, Canara Bank and IDBI Bank as being treated as promoters. However, both these banks were treated as principal share holders as each of them held more than 15% of the equity shares of CARE. During the F.Y.2012-13; i.e. the year under consideration, CARE decided to come out with an IPO by way of sale of stake by the existing equity share holders. The assessee bank sold part of their holdings in the IPO and also paid Securities Transaction Tax (STT) on the said sale and met a part of the IPO expenses. Since the shares were originally purchased as strategic investment and the bank treated the shares as investment and not stock-in-trade as the same were held for a period of 20 years, the LTCG arising on sale thereof were treated as exempt under Section 10(38) of the Act by the assessee bank. The learned Authorised Representative drew the attention of the Bench to pages 18 to 23 of Paper Book in support of the assessee's contention and also to page 24 of the Paper Book, which is an extraction of the prospectus of CARE Ltd. in which the assessee is show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reatment in the books that the issue of whether in the case on hand the profits arising on sale of shares of CARE Ltd. by the assessee in the year under consideration are to be treated as business income on account of holding shares as stock-in-trade, as held by Revenue OR as Capital Gains since they are investments, as claimed by the assessee. In this regard in the light of the principles stated in CBDT Circulars on the subject (supra), the Hon'ble Gujarat High Court in the case of Prin. CIT Vs. Ramniwas Ramjivan Kasat reported in (2017) 82 taxmann.com 458 (Guj.) has held as under at paras 6 to 8 thereof :- 6. Whether to tax the income generated from the sale of shares as capital gain or business income is an issue of frequent dispute between the revenue and the assessees. The Courts in the past have had occasions to consider such issue and through judicial pronouncement various parameters have been laid down to check whether the sale of shares would lead to business income or capital gain. Despite several judicial pronouncements, the controversy did not subside. Each case would have to be considered individually leading to long drawn litigations. The CBTD therefore in or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lars issued by the CBDT. 5. It is reiterated that the above principles have been formulated with the sole objective of reducing litigation and maintaining consistency in approach on the issue of treatment of income derived from transfer of shares and securities. All the relevant provisions of the Act shall continue to apply on the transactions involving transfer of shares and securities. 7. Two things emerge from this circular. One is that the CBDT desires to obviate the difficulties of the assessees and simultaneously to reduce the litigation. In paragraph 3 of the circular, certain parameters have been laid down. Clause (b) thereof in particular provides that in respect of listed shares and securities held for a period of more than 12 months immediately preceding the date of its transfer, if the assessee desires to treat the income arising from the transfer thereof as Capital Gain, the same shall not be put to dispute by the Assessing Officer. In other words, the Revenue would not pursue this issue if the necessary ingredients are satisfied, only rider being the stand taken by the assessee in a particular year would be followed in the subsequent years also and the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused and carefully considered the material on record; including the judicial pronouncements cited (supra). We find that this issue has been held in favour of revenue and against the assessee by the decision of a coordinate bench of this Tribunal in the case of State Bank of Mysore (supra) in which the Tribunal held that ATMs are not computers and hence depreciation thereon is to be allowed @ 15% only. Respectfully following the aforesaid decision of the co-ordinate bench (supra), we dismiss ground No.10 raised by the assessee. 15. Ground No.11 Disallowance u/s.40(a)(ia) of the Act. 15.1 In this ground (supra), the assessee contends that the learned CIT(Appeals) erred in confirming the disallowance of expenditure amounting to Rs.28,53,74,990 u/s.40(a)(ia) of the Act. From the details on record, it is seen that the Assessing Officer made this disallowance since the assessee bank did not furnish the details called for in respect of TDS and its remittances. 15.2 We have heard the rival contentions, perused and carefully considered the material on record. It was prayed by the learned Authorised Representative of the assessee that this issue may be remanded to the file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The CIT (Appeals) has erred in holding that the provisions of Sec. 115JB are not applicable to the assessee. 3. The CIT (Appeals) has erred in directing the Assessing Officer to delete the addition made on account of depreciation on assets leased to certain companies. 19. Ground No.1 , being general in nature, no adjudication is called for thereon. 20. Ground No.2 Applicability of Sec.115JB of the Act to Banking Companies. 20.1 In this ground (supra), Revenue assails the order of the ld. CIT(A) for holding that the provisions of Sec.115JB of the Act are not applicable to Banking Companies. The ld. CIT, DR submits that the learned CIT(Appeals) decided the issue in favour of the assessee without recording a finding on the Amendment by Finance Act, 2012 to Sec.115JB of the Act. According to the learned Departmental Representative, after the amendment by Finance Act, 2012, the provisions of Sec. 115JB of the Act are applicable to the assessee bank w.e.f. Assessment Year 2013-14 and the learned CIT(Appeals) erred in not considering this amendment at all and mechanically followed her own decisions of earlier years prior to the amendment by Finance Act, 2012. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord; including the judicial pronouncements. This issue is only consequential in nature as in earlier years, a co-ordinate bench of this Tribunal in the assessee's own case in M.P. Nos.42 43/Bang/2016 and in ITA No.684/Bang/2012 813/Bang/2011 for Assessment Years 2008-09 2007-08 has allowed the assessee's claim for depreciation on leased assets to Kedia Group of companies. These orders have been referred to and followed by another co-ordinate bench of this Tribunal in the assessee's own case for Assessment Years 2009-10 to 2011-12 dt.15.09.2017 reported in (2017) 60 ITR (Trib) 1 [ITAT (Bang)] at para 11 thereof. Respectfully following the aforesaid decision of the co-ordinate bench of this Tribunal in the assessee's own case (supra), we dismiss Ground No.3 of Revenue s appeal. 22. In the result, Revenue s appeal for Assessment Year 2013-14 is partly allowed. Assessment Year 2014-15. Assessee's Appeal in ITA No.1899/Bang/2017 for A.Y. 2014-15. 23. In this appeal, the assessee has raised the following grounds :- 1. The Order of the learned Commissioner of Income tax - Appeals Bangalore dated 29.06.2017 is against law and facts of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustaining the disallowance of unrealized gains on revaluation of forward contracts in foreign exchange amounting to Rs.249,49,28,650/-. 4.1 The learned Commissioner of Income tax - Appeals failed to appreciate the fact that the unrealised gains cannot be taxed and only real income can be taxed. 4.2 The learned Commissioner of Income tax Appeals failed to appreciate the fact that the unrealised gains did not accrue to the appellant bank. 4.3 The learned Commissioner of Income tax Appeals failed to appreciate the fact that the entries in the books alone cannot be the basis for taxing a receipt. 4.4 The learned Commissioner of Income tax Appeals ignored the consistent method adopted by the appellant Bank in offering the unrealized gains to tax over the years. 4.5 The learned Commissioner of Income tax - Appeals failed to appreciate the fact that it is only a revenue neutral exercise and there is no loss to the Revenue over the years as the Appellant Bank had offered to tax on the date of actual realization. 5 The learned Commissioner of Income tax Appeals erred in law in sustaining the disallowance u/s 14A amounting to Rs.22,26,96,500/-. 5.1 The learned Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation is called for thereon. 25. Ground No.2 (2.1to2.4) Disallowance u/s.36(1)(viia) of the Act. 25.1 In this ground (supra), the assessee assails the orders of the authorities below in disallowing its claim of deduction under Section 36(1)(viia) of the Act amounting to Rs.1130,80,54,088. 25.2 We have heard the rival contentions, perused and carefully considered the material on record. We find that the facts and circumstances of the case on this issue raised in this ground are similar to that raised by the assessee in ground No.3 of its appeal in ITA No.1900/Bang/2017 for Assessment Year 2013-14 (supra), wherein we have decided the issue in favour of the assessee following the decisions of co-ordinate benches of this Tribunal in the assessee's own case viz. Canara Bank Vs. JCIT (2017) 60 ITR (Trib) 1 [ITAT (Bang)] and in the case of Vijaya Bank in ITA No.1284/Bang/2016. Respectfully following the same in this year also, the ground No.2 raised by the assessee is allowed. 26. Ground No.3 (3.1 to 3.5) Depreciation on Investments. 26.1 In this ground (supra), the assessee assails the orders of the authorities below in disallowing its claim of depreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the decisions of co-ordinate benches of this Tribunal in the assessee's own case, viz. Canara Bank Vs. JCIT (supra) and in the case of Vijaya Bank in ITA No.1252/Bang/2016 for Assessment Year 2010-11 (Department s appeal). Respectfully following the aforesaid decisions (supra), in this year also, ground No.5 raised by the assessee is allowed. 29. Ground No.6 (6.1 6.2) Disallowance of expenditure u/s.40(a)(ia) paid to NPCI. 29.1 In this ground (supra), the assessee assails the orders of the authorities below in disallowing its claim of expenditure u/s.40(a)(ia) of the Act amounting toRs.10,11,94,605 on account of payments made to NPCI without deduction of tax at source. 29.2 We have heard the rival contentions, perused and carefully considered the material on record. We find that the facts and circumstances of the case on the issue raised in this ground are similar to that raised by the assessee is ground No.8 of its appeal in ITA No.1900/Bang/2017 for Assessment Year 2013-14 (supra); wherein we have decided the issue in favour of the assessee following the decision of the Hon'ble Apex Court in the case of Kotak Securities Ltd. (2016) 67 taxmann.com 356 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of State Bank of Mysore in ITA No.1063/Bang/2014 dt.27.5.2016. Respectfully following the aforesaid decision of the co-ordinate bench (supra), in this year also, ground No.8 of the assessee's appeal is dismissed. 32. Ground No.9 : Disallowance of penalty paid to RBI under FEMA Guidelines. 32.1 According to the learned Authorised Representative for the assessee, this ground challenging the Assessing Officer s order on disallowance of payment of penalty of Rs.3,00,10,000 imposed by RBI on the assessee under FEMA Guidelines on the ground that it is not in respect of any infraction of law, has not been adjudicated by the learned CIT(Appeals) in the impugned order, where the issue was raised by the assessee at ground of appeal No.10. It was prayed at this ground / issue be remanded to the file of the learned CIT(Appeals) for adjudication on merits. 32.2 We have heard both parties in the matter and have carefully perused both the impugned order and the grounds raised by the assessee in Form No.35. We find that this issue was raised in ground No.10 by the assessee before the learned CIT(Appeals), but the same has not been adjudicated by the learned CIT(Appeals). W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emanded the issue to the file of the Assessing Officer for examination and verification of the assessee's claims. Following the same in this year also, we remand this issue to the file of the assessee for examination and verification of the assessee's claim, as directed by us in the assessee's appeal for Assessment Year 2013-14 (supra). 35. In the result, the assessee's appeal for Assessment Year 2014-15 is partly allowed. Revenue s appeal in ITA No.1881/Bang/2017 for A.Y. 2014-15. 36. In this appeal, revenue has raised the following grounds of appeal :- 1. The order of CIT (Appeals) is opposed to the facts and law in so far as the below issues have been decided against the Revenue. 2. The CIT (Appeals) has erred in holding that the provisions of Sec. 115JB are not applicable to the assessee. 3. The CIT (Appeals) has erred in directing the Assessing Officer to delete the addition made on account of depreciation on assets leased to certain companies. 37. Ground No.1 (supra) being general in nature, no adjudication is called for thereon. 38. Ground No.2 Applicability of provisions of Sec.115JB of the Act. 38.1 In th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
