TMI Blog2024 (2) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs 502.62 Cr is justified. Therefore, on this issue the order under section 263 of the income tax act passed by the learned PCIT is sustained. Excess bad debts allowed - Order of the PCIT does not show that what is the error in allowing the claim of the assessee wherein the amount is debited to the profit and loss account as write off .therefore, on this issue we do not find that there is any error in the order of the learned assessing officer in allowing the claim of the assessee which is after calling for the explanation and correctly allowed. Therefore, on the same issue of the bad debts allowed the order of the learned PCIT is not sustainable. Accordingly, ground number 3 of the appeal is allowed to the extent indicated above. Provision for depreciation of investment - The provision for securities held as investment was added to the total income of the assessee PCIT found that the book loss claimed by the assessee have been claimed by the assessee as realized loss on investment and reduced from the book loss of investment. Therefore, he was of the view that the amount is being actual loss and not a provision for depreciation of investments so it was required to be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the AO is erroneous to that extent. In the result on this issue, we hold that the learned PCIT has correctly assumed the jurisdiction and correctly held that the order of the learned AO is erroneous and prejudicial to the interest of revenue. To that extent, the order of the learned PCIT is sustainable on this issue. Accordingly, ground number 6 of the appeal is dismissed. Excess deduction u/s 36 (1) (viii) - Admittedly, no revised return was filed by the assessee on this account. The only claim of the assessee is that the quantum of deduction is linked to the total income and therefore the enhancement in the income returned due to additions/disallowances which has impacted the quantum of deduction. The learned PCIT has held that in view of the decision of the honourable Supreme Court [ 2006 (3) TMI 75 - SUPREME COURT] the allowance of claim higher than the amount claimed in the return of income without revising the return of income makes the order of the learned assessing officer is erroneous and prejudicial to the interest of revenue. We do not find any infirmity in the order of the learned principal Commissioner of income tax on this account is not following the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appeals against and on the following amongst other grounds which are without prejudice to each other. 1. Setting aside of order under section 263 of the Act 1.1. On the facts and circumstances of the case and in law, the Pr. CIT erred in passing an order under section 263 setting aside the assessment order dated February 12, 2019 passed under section 143(3) r.w.s. 144C(3) of the Act on the ground that the Assessing Officer in not examining the following issues has rendered the order as erroneous and prejudicial to the interest of the revenue: (a) Irregular allowance of long term capital loss of Rs. 996,75,31,387. (b) Bad debts allowed of Rs. 312,69,37,766. (c) Provision for Depreciation of investments of Rs. 46,19,11,355. (d) Deduction allowed under section 36(1) (viia) of Rs. 159,22,24,604. (e) Excess grant of deduction under section 36(1) (viia) Rs. 12,23,01,710. (f) Deduction under section 36(1) (viii) Rs. 138, 52, 06,494. (g) Allowance of Long-term Capital loss to the extent of Rs. 502,62,44,256. (h) Excess allowance of deduction under section 36(1) (vii) of Rs. 250, 03, 69,520. 1.2. The Pr. CIT erred in dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1855,76,37,766/- under section 36(1)(vii) of the Act was required to be disallowed and added back to total income of the assessee, which is not done by the Assessing Officer. (b) As observed from the Schedule 18.18, Non-Performing Assets, Page No.149 the Appellant has shown provision utilized for write off of Rs. 1543,07,00,000/- during the year from the Provision of NPA in the Balance Sheet and thus the said amount should have been considered as bad debts written off during the year instead of Rs. 1855,76,37,766. 3.2. The Pr. CIT erred in not appreciating the Appellant's reply that Schedule 18(38) under the head Provisions and Contingencies comprises of bad debts written off, business loss, provisions created, provisions reversed and utilized for write off, cash write back of bad debt and other provisions and contingencies. Thus the entire amount of bad debt is a part of the amount of Rs. 3602,06,30,493 [Sch. 18(38)] which has been debited to the Profit and Loss Account and the said amount of Rs. 3602,06,30,493 has been added to the computation of income and Rs. 1855,76,37,766 has been claimed as bad debt under section 36(1)(vii) of the Act. 3.3. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Grant of deduction under section 36(1)(viia) Rs. 12,23,01,710 6.1. On the facts and circumstances of the case and in law, the Pr. CIT erred in holding that the Assessing Officer in the assessment order had allowed excess deduction under section 36(1) (viia) of Rs. 12,23,01,710 by taking into account certain branches identified by the Appellant as rural branches in its return of income but which were not rural as per RBI census 2011. 6.2. The Pr. CIT failed to appreciate the Appellant's submission that it had during the course of assessment proceedings re-worked the deduction under section 36(1)(viia) of the IT Act by following the 2011 Census published by RBI on September 1, 2016 and accordingly reduced the rural advances to Rs. 1460,96,93,335 as against Rs. 1608,37,88,170 taken by the Bank in the revised return of income and the Assessing Officer has adopted the reduced figure of rural advances in the assessment order. 7. Excess deduction under section 36(1) (viii) Rs. 138,52,06,494 7.1. The Pr. CIT erred on facts and circumstances of the case and in law, in holding that the deduction under section 36(1)(viii) of the Act should be restricted to Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Rule 115 the resultant capital gain/loss is computed by reducing indexed cost of acquisition of shares (in foreign currency) from sales proceeds (in foreign currency) received and the resultant gain/loss would be converted to INR by applying provisions of Rule 115 of the Rules to compute capital gain/loss. 9. Excess allowance of deduction under section 36(1) (vii) of Rs. 250,03,69,520 9.1. On the facts and circumstances of the case and in law, the Pr. CIT ought to have appreciated that the deduction under section 36(1)(viia) being a deduction linked to the total income computed is subject to revision each time the total income changes. In the present case, the balance under section 36(1)(vila) to be reduced from the bad debts of the above-mentioned assessment year ought to be Rs. 1087,57,88,246 as per order giving effect dated September 9, 2020 for AY 2014-15 which could be rectified vide an order under section 154 of the Act and is not a subject matter of review under section 263 of the Act. GENERAL 10. The order of the Pr. CIT should be suitably modified by granting the aforesaid proper and consequential reliefs to the Appellant. 11. The Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g advances provision u/s 43D of Rs 47,05,01481/- vi. Disallowance of provision of expenditure of ₹ 89,92,67,946/-, holding that it is contingent and unascertained liability. vii. Disallowance of mark to market (MTM) losses of ₹ 134,21,00,000/- holding that it is contingent liability. viii. Disallowance of claim of depreciation on goodwill arising in the books of assessee because of merger of Bank of Rajasthan and Anagram Finance Limited of ₹ 254,51,40,318/- on consideration of 5th proviso to Section 32(1) of the Act. ix. Addition of ₹ 39,97,71,317/- of broken period interest paid on purchase of securities held under maturity category holding that such interest is to be included in the purchase cost of such securities. x. Disallowance of ESOP expenditure of ₹ 370,39,79,795/- holding that it is notional expenditure. xi. Disallowance of deduction under Section 36(1) (viii) of the Act restricting the allowance only to the extent of ₹ 11 crores against the claim of deduction of ₹ 1,57,29,83,056/-. xii. Rejection of the revised claim of relief under Section 90 of the Act amounting to ₹ 120,42,42,761/- on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 36 (1) (vii) of the Act, where the assessee is eligible for deduction to the extent of only ₹ 542,07,79,550/- but in the assessment order same was allowed to the extent of ₹ 792,11,49,070/-. 06. This show cause notice was replied by the assessee by letter dated 26 th March, 2021, wherein the assessee submitted as under:- Reply to Show Cause Notice issued under section 263 of the Income-tax Act, 1961 Assessment Year: 2015-16 P.A. No.: AAACI1195H March 26, 2021 Please refer to the show cause notice dated March 11, 2021 issued under section 263 of the Income-tax Act (the Act) received by us on March 20, 2021 for the above mentioned assessment year. As per the said notice, your goodself proposes to revise the assessment order passed by the Assistant Commissioner of Income-tax 2(3)(2), Mumbai (Assessing Officer) under section 143(3) read with section 144C(3) dated February 12, 2019 on the ground that it is erroneous and prejudicial to the interest of the revenue for the reasons stated therein. We give below our submission with respect to each of the issues in respect of which your goodself has issued the captioned notice. 1. Irregu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fered to tax deemed dividend under section 1158BD of Rs. 9,64,71,360 and has incurred long term capital loss of Rs. 316,52,79,976 on the balance which the Bank has carried forward to the subsequent assessment year 2016-17. The relevant statements are a part of the return of income and also submitted during the course of assessment proceedings vide letter dated December 26, 2018 on pages 8 and 11 respectively. Copy of the resolution passed dated February 27, 2015 and copy of the valuation report of Anil Ashok and Associates, Chartered Accountants was submitted as documentary evidence in support of the said transaction vide letter dated December 26, 2018 on pages 42 and 43 to 56 respectively. 1.3.a. The Bank had invested in equity shares of ICICI Bank UK PIc (wholly owned subsidiary of the Bank). During the year, the share capital was redeemed by USD 7,50,00,000 in a scheme of buy back. The sale consideration of the buyback was determined at USD 1 per equity share. This scheme of buyback is an extinguishment, which has resulted in capital loss to the Bank of Rs. 442,61,60,143. 1.3.b. As per the valuation report of Anil Ashok and Associates, Chartered Accountants an indepe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The total capital loss as per the said statement works out to Roubles236,64,16,630 which has been converted to Indian rupees by applying the applicable conversion rate and a loss of Rs. 237,60,91,268 has been worked out in aforesaid assessment year which the Bank has carried forward to the subsequent assessment year 2016-17. Copies of the term sheet dated May 5, 2014 and the agreement for sale entered between the Bank and Sovcombank on March 17, 2015 were submitted as documentary evidence in support of the said transaction vide letter dated December 26, 2018 on pages 12 and 13 to 22 respectively. Thus the allegation in the show cause notice that the status of ICICI Bank Eurasia is not readily available on records is incorrect. 1.5. With respect to the above-mentioned capital loss, we submit that the Assessing Officer has examined the Bank's claim as can be seen in para 6 on pages 2 and 3 and para 21, page 61 of the assessment order wherein adjustment to arm's length price to buy back of shares of ICICI Bank UK Plc. has been made and carried forward loss to the subsequent year reduced by Rs. 65,62,50,000. Since the Assessing Officer after examining has taken a parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, combined reading specifies that, capital gain in respect of capital asset acquired in foreign currency is required to be first computed in foreign currency and thereafter converted into INR for tax purposes. b. Investment in shares was made by the Bank and its offshore subsidiaries in foreign currency. Sales proceeds were also received in foreign currency. Therefore, pursuant to section 48 read with Rule 115 the resultant capital gain/loss is computed by reducing indexed cost of acquisition of shares (in foreign currency) from sales proceeds (in foreign currency) received. Resultant gain/loss would be converted to INR applying provisions of Rule 115 of the Rules to compute capital gain/loss. 1.8. Hence the long-term capital loss has of Rs. 99,675.31 lakhs have been correctly computed by the Bank and accordingly allowed in assessment. 2. Excess bad debts allowed of Rs. 312,69,37,766 2.1 As per your goodself's observation, provision utilised for write off as per Schedule 18(18) on page 149 is only Rs. 1543,07,00,000 as against Rs. 1855,76,37,766 claimed by the Bank thus resulting in an excess claim of Rs. 312,69,37,766. 2.2 Schedule 18(18) show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8) 3602,06,30,493 2.8 With respect to your goodself's contention that the provision for NPA shown in Books of Accounts is Rs. 3023,25,00,000 [Note 1 to Schedule 18(38), page 167] contradicts the provision for NPAs shown in statement No.15 of the return of income amounting to Rs. 3141,26,87,071, we respectfully submit that the figure in statement No. 15 provides the breakup as given in para 2.7 above. The Note 1 to Schedule 18(38) on page 167 clearly specifies that Amount of Rs. 3023,25,00,000 is part Rs. 3141,26,87,071. 2.9 We reiterate that presentation of figures of provision for bad debts, write off of bad debts etc, in the books of accounts are done in accordance with the RBI guidelines and the Banking Regulation Act, 1949 but the claim made by the Bank in its return of income is as per provisions of section 36(1)(vii) the Income-tax Act. Thus, since bad debts is debited to profit and loss account under schedule 16A, the same is an allowable expenditure under section 36(1)(viia) of the Act. 3. Provision for Depreciation of investments of Rs. 46,19,11,355 3.1 In the aforesaid assessment year, the Bank had debited an amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision made for securities held as stock in trade has been offered by the Bank and the book loss in respect of securities held as stock in trade has been claimed. The provision on securities held as investments of Rs. 207,46,57,341 has been disallowed by the Bank in its computation of income. This accounting practice has been followed by the Bank consistently and has been accepted by the Department. The losses/gains on revaluation on securities held as stock in trade by the Bank have been consistently claimed as a deduction/offered to tax and allowed in all the preceding assessment years. 3.6 It has been held by the Bombay High Court in American Express International Banking v. CIT (258 ITR 61) that the choice of the method of accounting lies with the assessee and the valid method followed by the assessee can be disregarded only if the same does not disclose the true and proper income over the period, 3.7 The Supreme Court in the case of United Commercial Bank v. CIT (240 ITR 355) has held that it is open to the assessee to value the investments at cost or market whichever is lower and the method of accounting adopted by the taxpayer consistently and regularly canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the case of Goetze India Limited vs. CIT) we respectfully submit that the Bank has not made any additional claim in respect of deduction claimed under section 36(1)(viiia) and therefore the question of Supreme Court decision in the case of Goetze India Limited vs. CIT is not applicable. The higher deduction granted under section 36(1)(viiia) is on account of the increase in business income due to additions/disallowances made in the assessment order. Hence the deduction u/s 36(viiia) has been correctly allowed to the Bank. 4.5 With respect to your goodself's observation that the deduction should be restricted to provision actually created in the books, we have to submit that the since the deduction under section 36(1) (viia) allowed at Rs. 1472,17,64,492 is less than the provision created in the books of accounts the same is admissible as per provisions of the Act. 4.6 Your goodself in the show cause notice has made an observation that in case of Kotak Mahindra Bank, the Assessing Officer had restricted the deduction under section 36(1)(viia) to the extent of claimed made by the assessee in their return of income. We respectfully submit that we are unaware of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vances in the revised working submitted vide letter dated November 20, 2018. 5.5 Of the 36 branches mentioned in the show cause notice, 34 branches have been removed from the list of rural branches in the revised working submitted during assessment proceedings as per census of 2011. The other 2 branches mentioned in the show cause notice actually belongs to another state and the said branch is classified as Rural as per 2011 census. The correct details of the said 2 branch are as follows: Sr. No. State District Branch Population group as per 2011 census 1. Himachal Pradesh Shimla Rampur Rural 30. Madhya Pradesh Indore Rajpura Rural 5.6 In the assessment order dated February 12, 2019 passed under section 143(3) r.w.s 1440(3), the figure of rural branches has been taken at Rs. 1460,96,93,335 (page 63 of assessment order). 5.7 Thus, the deduction u/s. 36(1)(viia) on rural advances has been correctly allowed to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,829. 6.6 We submit that the claim of deduction under section 36(1)(viii) is linked to business income computed under the head profits and gains of business or profession subject to the amount appropriated to the special reserve account created and maintained by the assessee. Thus if the business income is increased on account of disallowances, the deduction would consequentially increase restricted to the amount carried to the special reserve account in the said year. In the aforesaid assessment year, since the business income on account of additions/disallowances has increased to Rs. 18453,17,42,829, the deduction under special reserve also increases to Rs. 1155,50,27,607 (sr. no.6 page 44 of the assessment order). However, since the assessee Bank has appropriated Rs. 1100,00,00,000 to the special reserve account during the said year, the deduction has been restricted to the said amount in the order. Hence the deduction u/s 36(viii) has been correctly allowed to the Bank. 7. Excess allowance of Long term Capital loss to the extent of Rs. 502,62,44,256 7.1 During the year Bank has claimed long term capital loss on investment in subsidiaries of ICICI Bank Canada a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed in assessment. 7.7 Further your goodself's observation on page 10 of the show cause notice that the Assessing Officer has failed to examine facts of these transactions is erroneous. As mentioned in para 1, all transactions pertaining to long term capital loss on redemption of shares of subsidiary companies has been examined by him and taken into account in the order accordingly. Hence we state that the order passed is neither erroneous nor prejudicial to the interests of the revenue. 8. Excess allowance of deduction of Rs. 250,03,69,520 8.1 The Bank has claimed deduction of bad debts u/s 36(1) (vii) of Rs. 792,11,49,070 after reducing the balance as on April 1, 2014 u/s 36(1)(viia) amounting to Rs. 1063,64,88,695. This balance was taken by the Bank as the amount claimed by it in the revised return filed for the AY 2014-15. 8.2 As per your goodself the balance under section 36(1)(viia) to be reduced ought to be Rs. 1313,68,58,216 as per assessment order dated February 21, 2018 passed under section 143(3) r.w.s 144C(3) of the Act for AY 2014-15, thus resulting in excess allowance of Rs. 250,03,69,520. 8.3 The deduction u/s 36(1)(viia) being a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither erroneous nor prejudicial and the proceedings under section 263 ought to be dropped. 07. The learned PCIT after considering the explanation of the assessee noted that on this issues that the learned Assessing Officer has neither examined the issues nor called for any details in the assessment proceedings and allowed either excessive deduction then claimed by the assessee contrary to the decision of Honourable Supreme court, contrary to the law and therefore, the order passed in the case is erroneous so far as prejudicial to the interest of the Revenue. 08. The learned PCIT held so on following issues:- i. With respect to irregular long-term capital loss allowed of ₹ 99,675 lacs., He noted that while applying the cost inflation index on foreign currency was irregular as indexation of cost is allowed only when capital assets is purchased in Indian currency. He was further of the view that cost of inflation index is with reference to Indian economy and only applies when the assets are purchased in Indian currency and not in foreign currency. The correct method to compute the capital gain in case of such transfer was to convert the cost price in Indian currency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 36(1) (vii) of the Act of ₹ 12.23 crores, he found that huge advances were shown against the few branches and claimed it as rural branch on which deduction is allowable. He examined the category of braches and held that on ₹ 1223 crores against such branches which are Semi Urban braches, hence, those advances were not required to be considered for granting to the deduction and accordingly 10% of the sum of ₹ 12.23 crores was allowed in excess. Thus, LD AO failed to examine the advances or Rural Branches and allowed it without examination. vi. With respect to deduction under Section 36(1)(viii) of the Act of ₹ 138,52,06,494/-, he found that in the return of income, the assessee has claimed deduction of only ₹ 1057,29,83,056/-, whereas the learned Assessing Officer has allowed excess deduction of ₹ 42,17,16,944/-. The learned Assessing Officer has allowed the deduction of ₹ 1155,50,27,607/- though deduction is ultimately restricted to the extent of ₹ 11,000 crores as per reserve credited the books of account. He further computed on an addition wherein there is wide difference between the amount claimed in the return of income and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bruary, 2018, the learned Assessing Officer was clearly explained the above issue. She referred to paragraph no.5 of that order and reiterated the submissions. She specifically submitted that provision to Section 48 of the Act, specifically debars indexation in case of non-residence. She submitted that assessee has purchased shares in foreign currency and sold them in foreign currency and therefore indexation was claimed on foreign currency thereafter-such gain was converted in to Indian currency and claimed loss. She said that it is in accordance with law. ii. With respect to excess of bad debt allowed of ₹ 312 crores she submitted that letter dated 24 th December, 2018, submitted to the learned Assessing Officer placed at page no. 83 of the Paper Book clearly shows that a reconciliation of bad debts claimed was provided to the learned Assessing Officer and therefore, after considering the explanation of the assessee the learned Assessing Officer has allowed the claim. It was further stated that the learned Assessing Officer disallowed bad debts relating to credit card, which is in appeal before the learned Commissioner of Income tax (Appeals). iii. With respect to ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the assessment proceedings and therefore there is no error in the assessment order leave aside it being prejudicial to the interest of revenue. x. She further submitted that some of the issues are arising out of the Audit objection and same are not valid. She enclosed copies of audit objections at page no 154 to 163 of the paper book. Those are related to computation of capital gain, deduction u/s 36(1) (viia) and incorrect deduction of Rs 1385206491 u/s 36(1) (viii) of the Act. xi. She also relied up on the decision of Honourable Supreme court in case of Malabar industrial co Ltd 243 ITR 83 to submit that where the ld AO on examination of information has not raised further query and in fact accepted it does not make order erroneous. It was further submitted that explanation 2 to 263 of the act does not confer unfettered power on CIT and scope of inquiry of the ld AO relying on decision of coordinate bench in JRD Tata Trust V DCIT 85 ITR (T) 431. 011. We have carefully considered the rival contention and perused the orders of the learned assessing officer as well as the learned principal Commissioner of income tax. By the revisionary order dated 31/3/2021 passed under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee stated that ICICI Euroasia limited liability was a wholly owned subsidiary of the assessee. The assessee has sold the shares of the subsidiary company to another entity for a consideration of Russian rubles ₽ 122,49,51,818. This was purchased by the assessee for Russian ruble ₽ 183,12,16,035. Assessee while computing the capital gain indexed it and claimed the deduction for as a cost of Russian ruble ₽ 359,13,68,448/ . Assessee worked out capital loss of Russian ruble ₽ 236,64,16,630/ which has been converted to Indian rupees by applying the applicable conversion rate and determined the loss of Rs. 2,376,091,268/ . Further, the assessee has also invested in equity shares of ICICI bank UK plc, which is a wholly owned subsidiary of the bank. The shares of the subsidiary were bought back at US dollar one per equity share. The sale proceeds were determined at US$ 75,000,000. The cost of acquisition of the shares were indexed to US dollar 14,58,18,562 which resulted into the loss of US dollars 7,08,18,562 which has been converted to Indian rupees by applying the applicable conversion rate and a loss of Rs. 4,426,160,143/ was worked out. On the transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... write back of the bad debts amounting to Rs. 1,684,861,113 that resulted into the total debit to the profit and loss account of Rs. 36,020,630,493/ . Therefore, it is not the case that assessee has not debited the difference between the claim of Rs. 18,557,637,766/ and a sum of Rs. 1,543,07,00,000 to the profit and loss account. The learned PCIT has merely stated that the learned assessing officer has not examined this issue. However, assessee submitted that this issue was explained by letter dated 24/12/2018 and assessee has given the complete breakup of the reconciliation of the bad debts claim with the accounts. The Para number 1.5 of that letter clearly shows that the total bad debts claim by the assessee in the return of income is Rs. 18,557,637,766. In paragraph number 1.3 it is specifically stated that the bad debts claim by the bank has been written off during the year in its annual accounts, which is reflected in schedule 18.38 under the head provisions and contingencies. The breakup of the same was also given which show that the amount of Rs. 36,020,630,493 are the total bad debts written off. In view of this, the assessing officer has verified the same. The order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereas the learned assessing officer allowed the claim of Rs. 14,721,764,492/ under that section. Therefore, allowing the claim of the assessee higher than the amount claimed in the return of income is against the decision of the honourable Supreme Court in 284 ITR 323. The only argument of the learned authorized representative is that the quantum deduction is linked to the total income and therefore any enhancement made in the income returned to additions/disallowances impact the quantum of deduction. However, we find that it cannot be the case that the amount of deduction is allowable to the assessee higher than what is not claimed in the return of income without there being a revised return before the LD AO. Therefore, it is in clear violation of the decision of the honourable Supreme Court in 284 ITR 323 in case of Goetz India limited versus CIT. Therefore, we uphold the action of the learned PCIT in holding that claim allowed by the assessing officer higher than that claimed in the return of income without assessee filing any revised return is definitely erroneous and prejudicial to the interest of the revenue. Therefore, to that extent on this issue the action of the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction under this section. The learned principal CIT has categorically found that certain branches are not rural branches on which deduction should have been granted. Therefore, there is an error in the order of the learned assessing officer in granting deduction merely on the submission of the assessee and without making any enquiry about the various branches, which are claimed to be eligible for deduction under this section on the advances. Thus, non-examination of the details clearly makes the order of the learned assessing officer erroneous and prejudicial to the interest of revenue. Further, it is the claim of the assessee that this is based on the audit objection raised by the Director-General of Audit, Mumbai. We do not find any infirmity in the order of the learned PCIT because even if there is an audit objection, he has applied his mind independently and held that order of the AO is erroneous to that extent. In the result on this issue, we hold that the learned PCIT has correctly assumed the jurisdiction and correctly held that the order of the learned AO is erroneous and prejudicial to the interest of revenue. To that extent, the order of the learned PCIT is sustainable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deciding ground number 5 of the appeal of the assessee in dismissing it, we also dismiss ground number 7 of the appeal. viii. Ground number nine of the appeal is against the excess allowance of deduction under section 36 (1) (vii) of the act of ₹ 2,500,369,520. The learned principal Commissioner of income tax after examining the detail found that as per the chart placed at page number 44 of the revisionary order show that the allowable bad debts written off allowed by the learned assessing officer of ₹ 7,921,149,070/ whereas according to the learned principal Commissioner of income tax the allowable bad debts written off should be restricted to ₹ 542,07,79,550/ and therefore there is an excess disallowance of deduction of ₹ 250,03,69,520. This fact has not at all been examined by the assessee and the impact of the assessment order for assessment year 2014 15 with respect to the provision for bad debt allowable allowed to the assessee of ₹ 13,136,858,216/ should have been considered against earlier years provisions which has been considered by the AO at ₹ 1,636,488,695/ . During the course of assessment proceedings neither there is any dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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