TMI Blog2024 (4) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Reserve from the profits of the previous year 2013-14 and therefore, is eligible to claim the deduction u/s 36(1)(viii). Though as per the section, Reserve needs to be created out of the income of the previous year, there is no stipulation that the Reserve should be created in the previous year itself. A similar issue has been decided by the co-ordinate Bench of this ITAT in the assessee s own case in [ 2016 (2) TMI 1236 - ITAT CHENNAI] for the Asst Year 2009-10. The only reason for disallowing the claim of the assessee is that the Reserve was not created during the Financial Year 2013-14 and the ITAT order for the earlier year has not been accepted by the Department. Therefore, respectfully following the decision of the co-ordinate bench of the ITAT in assessee s own case[supra], we hold that the assessee is entitled to the deduction u/s 36(1)(viii) as the Reserve was created out of the profits for the year 2013-14 and delete the addition made by the AO. This ground of the assessee s appeal is allowed. Enhancement by CIT(A) - Depreciation on investments - CIT(A) confirmed additions based on the enhancement petition by the AO - HELD THAT:- Disallowance of depreciation on invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on u/s. 36(1)(viia) by reclassifying some of the banks as non rural based on the census data of the year 2011 - HELD THAT:- As in the assessee s case in [ 2021 (11) TMI 568 - ITAT CHEENAI] for the A.Y 2013-14. we hold that the branches cannot classified considering the population as per 2011 census and therefore set aside the order of the CIT(A) on this issue and allow the ground of appeal of the assessee. Since the issue is decided on merits the technical ground raised by the appellant is left open. Disallowance of stale drafts - assessee is in the business of banking, has issued demand drafts to various persons and further any unclaimed demand drafts was kept in stale draft account under the head outstanding liabilities' - HELD THAT:- This issue is squarely covered in favour of the assessee by the decision of ITAT in assessee s own case for assessment year 2013-14 [ 2021 (11) TMI 568 - ITAT CHEENAI] , where under identical circumstances the Tribunal has deleted addition made by the AO by holding that amount kept under stale draft account is not income of the assessee. Identical issue in case of City Union Bank Ltd. [ 2020 (3) TMI 475 - MADRAS HIGH COURT] where it has been cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinery and restricted the depreciation @ 15% - HELD THAT:- We find that an identical issue has been considered in the case of NCR Corporation [ 2020 (6) TMI 439 - KARNATAKA HIGH COURT] wherein held that the ATM machines are computers and are eligible for 60% depreciation. Disallowance of deduction claimed by the bank u/s 36(1)(viia) by computing the Aggregate Average Rural Advances by considering the incremental advance and not outstanding advance - HELD THAT:- We find that an identical issue has been considered by the Tribunal in the case of City Union Bank [ 2024 (3) TMI 613 - ITAT CHENNAI] where under identical set of facts has decided the issue in favour of the assessee as held AO is erred in computing deduction u/s. 36(1)(viia) of the Act, by considering only incremental advances made by rural branches of appellant bank as against the aggregate average advances made by rural branches of appellant bank as outstanding at the end of the financial year and thus, we direct the Assessing Officer to consider aggregate average advances outstanding at the end of the relevant financial year for the purpose of computing deduction u/s. 36(1)(viia) of the Act - Decided against revenue. Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties for the period from December 2014 to May 2015 and the same should be offered to tax for the Asst Year 2015-16 - CIT(A) deleted addition - AR submitted that the income on government securities accrues only on appointed days and therefore, the broken period interest receivable is not liable to tax - HELD THAT:- We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We find that this issue has been decided by the Hon'ble Madras High Court in the assessee s own case in favour of the assessee. Further, we find that the Hon'ble Karnataka High Court also decided the issue in favour of the assessee. - Shri V. Durga Rao, Hon ble Judicial Member And Shri Manjunatha. G, Hon ble Accountant Member For the Assessee : Shri. Anandhan, CA and Smt. Lalitha, CA For the Revenue : Shri. Nilay Baran Som, CIT ORDER PER MANJUNATHA. G, ACCOUNTANT MEMBER: These four cross appeals filed by the assessee, and revenue are directed against the order passed by the learned Commissioner of Income Tax (Appeals)-1, Chennai, dated 07.02.2019 and 11.02.2019 and pertains to assessment year 2014-15 and 2015-16, respectively. Since, facts are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the valuation of the stock at cost or market value whichever is lower. 4.2. The learned Commissioner of Income Tax (Appeals) erred in disallowing the depreciation by relying on the RBI guidelines. 4.3. The learned Commissioner of Income Tax (Appeals) failed to appreciate the fact that the appreciation need not be adjusted against the depreciation. 4.4. The learned Commissioner of Income Tax (Appeals) failed to appreciate the fact that appreciation being notional income cannot be taxed. 4.5. The learned Commissioner of Income Tax (Appeals} erred in not following the CBDT Circular Nos 18/2015 and 6/2016. 5. The learned Commissioner of Income Tax (Appeals) erred in law and on facts in making addition of Rs. 24,27,60,018/- being reversal of NPA provision. 5.1 The learned Commissioner of Income Tax (Appeals) failed to appreciate that it was reversal of provision and not income. 5.2 The learned Commissioner of Income Tax (Appeals) failed to appreciate that write back of the excess provision cannot be treated as deemed income u/s 41(1). 5.3 The learned Commissioner of Income Tax (Appeals) failed to appreciate the fact that the Assessing Officer did not bring anything on record to prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,184 7 Disallowance u/s. 14A 79,95,384 8 Disallowance of depreciation on ATMs 7,56,91,597 Total disallowance/addition 84,69,51,728 4. Being aggrieved by the assessment order, the assessee preferred before the ld. CIT(A). Before the ld. CIT(A), the assessee has challenged various additions made by the Assessing Officer. During the appellate proceedings, the ld. CIT(A) vide their letter dated 12.02.2018, issued enhancement notice to the assessee on certain issues including disallowance of excess claim of depreciation on investments, disallowance u/s. 36(1)(viia) of the Act on the issue of incremental advances and excess claim of bad and doubtful debts and also release of NPA etc. The assessee challenged proposed enhancement of assessment on legal ground as well as various additions proposed by the ld. CIT(A). The ld. CIT(A), after considering relevant submissions of the assessee and also taken note of various provisions of law disposed off appeal filed by the assessee by partly enhancing the total income and also deleted certain additions including addition of interest accrued on NPA, addition towards stale drafts account, disallowance of exgratia, disallowance u/s. 14A and disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferred to Special Reserve during the financial year 2013-14. The Assessing Officer has also observed that the decision of the co-ordinate bench of the Tribunal in the assessee s case has not been accepted by the department. On appeal, the ld. CIT(A) upheld the disallowance. Aggrieved by the ld. CIT(A) order, the assessee is in appeal before us. 6.1 The Ld. Counsel for the assessee, submitted that this issue is squarely covered in favour of the assessee by the decision of ITAT in assessee s own case for the assessment year 2009-10in ITA 1640/Mds/2014 order dt 29.02.2016, where the issue has been restored back to the AO to decide the issue afresh in accordance with law keeping in view of the ratio laid down by the Hon'ble ITAT in the case of ACIT v Corporation Bank in ITA 1264/Bang/2013 order dt 11.03.2015. He also relied on the decision of the Hon'ble Punjab Haryana High Court in the case of CIT v Punjab State Industrial Development Corporation [2010] 323 ITR. Alternatively, Ld. Counsel for the assessee, submitted that the amount transferred to Statutory and other reserves should be treated as transfer to Special Reserve. For this he relied on the ITAT decision in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessee s own case in ITA No. 1640/Mds/2014 order dated 29-02-2016 for the Asst Year 2009-10. In that case also, the Reserve was created subsequently and the ITAT allowed the appeal by way of remand by observing as follows: 24. We have considered the rival contentions and perused the orders of authorities below. The assessee has claimed benefit of deduction under section 36(1)(viii) of the Act for the first time in the assessment year 2009- 10. This reserve is to be apportioned from the net profit along with other reserves and it is a below the line operation , i.e., after arriving net profit and at the time of apportioning the balance of profit to various reserves. The Assessing Officer has observed that the assessee has not segregated this amount from the general reserve in 2009. Though the assessee has claimed deduction, the required special reserve was not created and found in the balance sheet of the assessee as on 31.03.2009, but in the year 2010, it had created ₹.10 crores reserve by withdrawing the same from the general reserve. Since the assessee has not created the special reserve in the financial year 2008-09 relevant to the assessment year 2009-10, the ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial charges are not shown to be out of providing long-term finance and hence not eligible for deduction under section 36(1)(viii) of the Act. 26. Under the above facts and circumstances, we set aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer to decide the issue afresh in accordance with law keeping in view of the ratio laid down by the Bangalore Benches of the Tribunal in the case of ACIT v. Corporation Bank in I.T.A. No. 1264(Bang)2013 dated 11.03.2015 after allowing opportunity of hearing to the assessee. Thus, the ground raised by the assessee is allowed for statistical purposes. 6.5 We further agree with the submissions of the Ld. Counsel for the assessee that the decision of jurisdictional Hon'ble Madras High Court relied on by the Ld. DR is not applicable to the facts of the case. In this case also, it is seen that the assessee had income of Rs. 429.95 Cr during the Financial Year 2013-14 as evidenced in the Profit Loss A/c. Out of this profit, it had transferred Rs. 157 Cr to the Revenue Other Reserves. In the Financial Year 2014-15, it had transferred Rs. 30 Cr to Special Reserve from the Revenue Other Reserves. In the assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that the enhancement by the Ld. CIT(A) itself is beyond the powers of the Ld. CIT(A) u/s 251 of the Act. It is the submission of the Ld. Counsel for the assessee that the power of the CIT(A) u/s 251(1)(a) of Act to enhance extends only to those items that were dealt by the AO in the assessment order. He submitted that though the power the Ld. CIT(A) is co-terminus with that of the AO, new issues / additions / sources of income would fall outside the ambit of provisions of section 251 of the Act in regard to enhancement of income. The Ld. Counsel for the assessee, in his written submissions, relied on the case law of Hon ble Delhi High Court in the case of CIT vs. Sardari Lal Co., [2001] 251 ITR 864 (Delhi) and argued that the Hon ble Delhi High Court has categorically held that whatever the question of taxability of income from a new sources of income is concerned, which had not been considered by the AO in the assessment order, jurisdiction to deal with the same in appropriate cases may be dealt with u/s. 147 or u/s. 263 of the Act as the law mandates and if the requisite conditions are fulfilled but it is inconceivable that in presence of such specific provisions a similar p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subject matter of appeal before him or this was never discussed by the AO during assessment proceedings or even a whisper is not there in the assessment order about this issue. Now, the question arises whether the CIT(A), whose powers are coterminous with those of the AO can go into the new issues altogether. We have gone through the provisions of section 251 of the Act and noted that the first appellate authority has plenary powers in disposing of an appeal and the scope of his powers is coterminous with that of the AO. He can do what the AO can do and can also direct the latter to do what the latter failed to do. This issue was considered by Hon ble Madras High Court in the case of CIT vs. T.T Krishnamachari and Co., 223 ITR 224, wherein the Hon ble High Court has held that the first appellate authority has all the powers which the original authority may have. In the absence of any statutory provisions to the contrary, the appellate authority is vested with all the plenary powers which the sub-ordinate authority has in the matter. It was held by Hon ble High Court that an item of income noticed by the officer, but not examined by him from the point of view of its taxability or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nhance the assessment are not confined to the assessment reached through a particular process but the amount which ought to have been computed if the true total income had been found. There is no doubt that this view is also possible. On the other hand, it must not be overlooked that there are other provisions like s. 34 and 33B which enable escaped income from new sources to be brought to tax after following a special procedure. The assessee contends that the powers of the Appellate Assistant Commissioner extend to matters considered by the Income-tax Officer, and if a new source is to be considered, then the power of remand should be exercised. By the exercise of the power to assess fresh sources of income, the assessee is deprived of a finding by two tribunals and one right of appeal. The question is whether we should accept the interpretation suggested by the Commissioner in preference to the one, which has held the field for nearly 37 years. In view of the provisions of section 34 and 33b which escaped income can be brought to tax, there is reason to think that the view expressed uniformly about the limits of the powers of the Appellate Assistant Commission to enhance the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s placed by learned counsel for the revenue on the decision of the Apex Court in CIT v. Nirbheram Daluram (1997) 224 ITR 610. It was submitted that a different view was expressed about the scope and ambit of the power of the first appellate authority vis-a-vis the sources considered by the assessing officer and even if the action of the first appellate authority related to a new source of income not considered by the assessing officer, it was not impermissible. It is to be noted that in Union Tyres' case (supra), this decision was also considered by this court in the background of what had been stated in Daluram's case (supra) and it was observed that there was really no difference from the view expressed earlier in Shapoorji Pallonji Mistry s case (supra) and Rai Bahadur Hardutroy Motilal Chamaria's case (supra). The learned counsel for the revenue also submitted that this conclusion of the Division Bench needs a fresh look. We have considered this submission in the background of what had been stated by the Apex Court in Jute Corporation's case (supra) and Daluram's case (supra). In Jute Corporation's case (supra), the Apex Court while considering the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 'the Rules'), for the purpose of computing the income of a non-resident even if the Income Tax Officer had not done so in the assessment proceedings. But, in Shapoorji Pallonji Mistri [1962] 44 ITR 891, this court, while considering the extent of the power of the Appellate Assistant Commissioner, referred to a number of cases decided by various High Courts including the Bombay High Court judgment in Narrondas Manordass [1957] 31 ITR 909 and also the decision of this court in McMillan Co. [1958] 33 ITR 182 and held that, in an appeal filed by the assessed, the AAC has no power to enhance the assessment by discovering new sources of income not considered by the Income Tax Officer in the order appealed against. It was urged on behalf of the revenue that the words 'enhance the assessment' occurring in section 31 were not confined to the assessment reached through a particular process but the amount which ought to have been computed if the true total income had been found. The court observed that there was no doubt that this view was also possible, but having regard to the provisions of sections 34 and 33B, which made provision for assessment of escaped income from ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not there in the assessment order about this issue. The reasons given by us in the preceding paragraph on the power of enhancement shall mutatis mutandis apply to this ground of appeal as well. Therefore, we quash the enhancement and allow the ground of assessee s appeal by directing the AO to delete the addition. Since we have decided this issue on technical grounds, the issue on merits is left open. 9. The next issue that came up for our consideration from ground No. 6.1 6.2 of assessee s appeal is deduction u/s. 36(1)(vii) of the Act, in bad debts actually written off in the books of accounts of the assessee. The facts with regard to the impugned dispute are that, the assessee is a scheduled bank and has claimed deduction u/s. 36(1)(viia) of the Act, in respect of provision for bad and doubtful debts. The assessee had also claimed deduction u/s. 36(1)(vii) of the Act, towards actual write off of bad debts totaling to Rs. 189,21,11,268 of which Rs. 189,13,82,084 pertains to non rural advances and Rs. 7,29,184 pertains to rural advances. The Assessing Officer, however disallowed the bad debts write off pertaining to rural branches, as per provisions of section 36(1)(vii) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debts, on the basis of provisions credited, then if you adjust write off of non-rural debts against provision account, then the benefit given to rural banks is taken away. In other words, when it comes to deduction towards write off of bad debts deductible u/s. 36(1)(vii) of the Act, the advances given by rural branches alone needs to be considered, without any adjustment towards provisions credited for non-rural advance and actual write off of non-rural advances. This issue is also covered by the decision of Hon ble Delhi High Court in the case of Oriental Bank of Commerce vs PCIT in ITA No. 521/2023, where the Hon ble High Court has considered provisions of section 36(1)(vii) of the Act and explanation provided thereto and held that there is no substantial question of law raised from the decision of the Tribunal. From the above, it is very clear that the findings of the ITAT in respect of deduction towards provision for bad and doubtful debts u/s. 36(1)(viia) and write off of bad debts u/s. 36(1)(vii) of the Act, pertains to rural advances should be considered separately without any adjustment in respect of write off of bad debts pertains to nonrural debts. Therefore, he submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to which clause (viia) applies, the amount of the deduction relating to any such debt or part there of shall be limited to the amount by which such debt or part there of exceeds the credit balance in the provision for bad and doubtful debts accounts made under that clause. It is further explained in Explanation-2: For the removal of doubts, it is hereby clarified that for the purposes of the proviso to clause (vii) of this sub-section and clause (v) of sub-section (2), the account referred to therein shall be only one account in respect of provision for bad and doubtful debts under clause (viia) and such account shall relate to all types of advances, including advances made by rural branches; The assessee bank can claim bad debts written off as irrecoverable u/s. 36(1)(vii), subject to the provision of sub section (2) of section 36 of the Income Tax Act. Provided, assessee being a scheduled bank, where they already claimed deduction of 'provision for bad and doubtful debt' under clause (a) of section 36(1 )(viia), to claim bad debt write off, the write off should exceed the credit balance in the provision for bad and doubtful debt made. Sub clause (v) of section 36(2) categ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad debt P L Ac Credit Corresponding Debtor A/c in Balance sheet 2.2 In the Computation of Income submitted by the assessee for the above three assessment years in appeal, the assessee has claimed the bad debts written off as under: AY Amount (Rs. In Cr) 2014-15 189.21 2015-16 480.84 2017-18 264.88 2.3 The appellant has claimed both provision for bad and doubtful debts u/s. 36(1)(viia) and bad debt write off as irrecoverable u/s 36(1)(vii) of the Income Tax Act as deduction while computing the total income. 2.4 However, the claim of bad debts written off is not allowable to the assessee as it has not debited the write off of bad debts to the profit and loss account and correspondingly closed the debtor account. Further the assessee has to satisfy the conditions mentioned in section 36(2)(v). Sub clause (v) of section 36(2) categorically prescribes that no such deduction (bad debt write off) u/s 36(1)(vii) shall be allowed to the assessee falling under 36(1)(viia), unless the assessee has debited the amount of such debt or part of debt in the previous year to the provision for bad and doubtful debts a/c made under 36(1)(viia). 2.5 As per RBI guidelines-prudential norms, assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that for the purposes of the proviso to section 36(1)(vii) and section 36(2)(v), only one account as referred to therein is made in respect of provision for bad and doubtful debts under section 36(1)(viia) and such account relates to all types of advances, including advances made by rural branches. Therefore, for an assessee to which clause (viia) of section 36(1) applies, the amount of deduction in respect of the bad debts actually written off under section 36(1)(vii) shall be limited to the amount by which such bad debts exceeds the credit balance in the provision for bad and doubtful debts account made under section 36(1)(viia) without any distinction between rural advances and other advances Hence, it is clear that the explanation applies to a bank as a whole and not for any specific type of advances. The assessee claims that section 36(1)(viia) is applicable only to rural bad debts write off and not for urban bad debts write off which can be claimed u/s 36(1)(vii). The section 36(1)(viia) was inserted by Finance Act 1979 w.e.f. 01.04.1980. The section starts as in respect of any provision for bad and doubtful debts made by . It includes NPAs irrespective of whether the advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmerce (Delhi High Court) in ITA 521/2023 wherein the Hon'ble Delhi High Court confirmed the order of the Hon'ble Delhi Tribunal dated 04.03.2022 in Oriental Bank of Commerce v Ad CIT in ITA No. 1199/Del/2018. It is pertinent to note that the decisions of the Hon'ble Delhi Tribunal and Delhi High Court rely on the decision of the Hon'ble Supreme Court in Vijaya Bank (supra) which stated that there must be PBDD debit to the P L along with reduction of Loans Advances. The relevant portion of the decision in Vijaya Bank (supra) has been reproduced above. In the facts of the case of Oriental Bank of Commerce, the assessee had reduced the PBDD from Loans Advances as recorded in the order of the Hon'ble Delhi Tribunal. Hence, the Hon'ble Courts relied on Vijaya Bank (supra) and decided the matter in favour of the assessee. However, in the instant cases, the assessee has not reduced the PBDD from the Advances in the Balance Sheet (reference is drawn to Schedule 9 -Advances of the Balance Sheet of the assessee for the respective assessment years. Relevant pages of the financials have been enclosed). Hence, the decisions in the case of Oriental Bank of Commerce (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debt as one relating to rural advances and other advances (nonrural) does not arise for consideration. Thus, reasoning of the Assessing Officer in confining the deduction claimed under section 36(1)(viia) only to the provision made towards rural advances, is not in accordance with the statutory provision. On the other hand, the view expressed by Commissioner (Appeals) while allowing assessee's claim of deduction is as per the statutory provision. Accordingly, there is no infirmity in the order of Commissioner (Appeals) in allowing assessee's claim of deduction for Rs. 616.55 crores u/s 36(1)(viia). [Para 3] Alternate claim regarding taxability u/s. 41(4) Now, whether the alternative claim that if the bad debt write off is disallowed by the AO, recovery of the bad debt write off u/s. 41(4) of the Income Tax Act was also not to be charged was right? It is an incorrect claim. Prima facie, for the assessee, section 36(l)(vii) and section 41(4) is not be applicable as they have not written off any bad debt as irrecoverable in their accounts (Profit Loss accounts). Only they created provision for bad and doubtful debts and claimed as a deduction as per section 36(1)( viia) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year , or represents money lent in the ordinary course of the business of banking or money-lending which is carried on by the assessee; (iv) The assessee is obliged to prove to the AO that the case satisfies the ingredients of Section 36(1)(vii) as well as section 36(2) of the Act. Summary: It is submitted that mere provision for NP A cannot be considered as write off u/s. 36(1 )(vii) as held by Supreme Court in the case of Southern Technologies vs ACJT 352 ITR 577. Reliance is also placed on the decision rendered by Hon'ble Kerala High Court in the case of CIT vs Hotel Ambassador [2002] 253 ITR 430, wherein it was held that the deduction u/s. 36(l)(vii) of the Act is allowable only if the assessee debits the same into the accounts as irrecoverable. Exactly, on similar facts and grounds, the Hon'ble Supreme Court has admitted the SLP in the case of Commissioner of Income-tax, LTU vsVijaya Bank [2021] in 130 taxmann.com 149. Reliance is further placed on the decision of the Hon'ble Supreme Court in Vijaya Bank vs CIT 323 ITR 166, wherein it was he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for bad and doubtful debts in terms of section 36(1)(viia) of the Act and deduction towards actual write off of bad debts u/s. 36(1)(vii) r.w.s. 36(2)(v) of the Act, has to be understood in the context of rural advance and non-rural advance given by the banks. 10.4 The provisions of section 36(1)(vii) deals with deduction toward bad debts or part thereof which is written off as irrecoverable in the accounts of the assessee subject to the provision of sub-section (2) to section 36 of the Act. As per said provision in the case of assessee, to which clause (viia) applies, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made under that clause. Sub-section (2) to section 36 prescribed conditions for making any deduction for bad debts or part thereof and as per subsection (v) to section 36(2), where debts or part thereof relates to advances made by an assessee to which clause (viia) of sub-section (1) applies, no such deduction shall be allowed unless the assessee had debited the amount of such debt or part of debt in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the credit balance in the provision for bad and doubtful debts account under that clause. .. Explanation 2 For the removal of doubts, it is hereby clarified that for the purposes of the proviso to clause (vii) of this sub-section and clause (v) of sub section (2), the account referred to therein shall be only one account in respect of provision for bad and doubtful debts under clause (via) and such account shall relate to all types of advances, including advances made by rural branches; The provisions of sec. 36(2)(v) are relevant here and it reads as under:- (2) In making any deduction for a bad debt or part thereof, the following provisions shall apply-- -- . (v) where such debt or part of debt relates to advances made by an assessee to which clause (viia) of sub-section (1) applies, no such deduction shall be allowed unless the assessee has debited the amount of such debt or part of debt in that previous year to the provision for bad and doubtful debts account made under that clause. A combined reading of provisions of clause (vii) of sec.36(1), the proviso there under and clause (v) of sec.36(2) would show that (a) the bank should debit the actual bad debts written off by it t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o separate PBDD a/c for rural and non-rural advances, the bad debts relating nonrural branches need not be reduced from the PBDD a/c allowed u/s. 36(1)(viia) in terms of sec. 36(2)(v) and the proviso to sec. 36(1)(vii) of the Act. However, the Ld A.R submitted before us that the Explanation 2 has been inserted in sec. 36(1)(vii) by Finance Act, 2013 (after the decision of Catholic Syrian Bank) to debar certain assessees to avail the interpretation given by Hon ble Supreme Court in the case of Catholic Syrian Bank (supra). 7.11 We have considered the arguments advanced by Ld A.R on this point. According to Ld A.R, if we closely analyse the provisions of sec. 36(1)(viia) of the Act, the intention of the Parliament in inserting Explanation -2 shall become clear. Accordingly, we analysed the provisions of sec.36(1)(viia) and notice that the said section allows deduction of PBDD to various types of assessees, viz., (i) Clause (a) of sec. 36(1)(viia) shall be applicable to a Scheduled bank (not being a bank incorporated by or under the laws of a country outside India) or non-scheduled bank or a cooperative bank other than a primary agricultural credit society or a primary cooperative agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad debts in case of banks:- Under the existing provisions of section 36(1)(viia) of the Income-tax Act, in computing the business income of certain banks and financial institutions, deduction is allowable in respect of any provision for bad and doubtful debts made by such entities subject to certain limits specified therein. The limit specified under section 36(1)(viia)(a) of the Act restrict the claim of deduction for provision for bad and doubtful debts for certain banks (not incorporated outside India) and certain cooperative banks to 7.5% of gross total income (before deduction under this clause) of such banks and 10% of the aggregate average advance made by the rural branches of such banks. This limit is 5% of gross total income (before deduction under this clause) under sections 36(1)(viia)(b) and 36(1)(viia)(c) for a bank incorporated outside India and certain financial institutions. Provisions of clause (vii) of section 36(1) of the Act provides for deduction for bad debt actually written off as irrecoverable in the books of account of the assessee. The proviso to this clause provides that for an assessee, to which section 36(1)(viia) of the Act applies, deduction under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count as referred to therein is made in respect of provision for bad and doubtful debts under section 36(1)(viia) and such account relates to all types of advances, including advances made by rural branches. Therefore, for an assessee to which clause (viia) of section 36(1) applies, the amount of deduction in respect of the bad debts actually written off under section 36(1)(vii) shall be limited to the amount by which such bad debts exceeds the credit balance in the provision for bad and doubtful debts account made under section 36(1)(viia) without any distinction between rural advances and other advances. This amendment will take effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years. The CBDT has issued an Explanatory note to the Provisions of Finance Act, 2013 on 24.01.2014 in F No. 142/24/2013 TPC, wherein also the very same explanations have been given for introducing Explanation 2 in Sec. 36(1)(vii) of the Act. The above said Memorandum and the Explanatory Note issued by the Government/CBDT supports our view. 7.13 Our view is further fortified by certain observations made by Hon ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (a) to sec.36(1)(viia) has been held to be applicable to rural advances only and this interpretation has not been overridden by any amendment. 7.15 As noticed earlier, the assessees covered by clauses (b) to (d) may not be having rural branches, but they would be getting the benefit of deduction of PBDD u/s. 36(1)(viia) of the Act. Hence, in order to bring those assessees within the ambit of the proviso to sec. 36(1)(vii) and sec. 36(2)(v), it was imperative for the Parliament to clarify the legal position and accordingly Explanation-2 has been inserted in sec. 36(1)(vii) of the Act. Accordingly, on the analysis of the provisions discussed above, we are of the view that the above said Explanation-2 shall operate (a) in respect of clause (a) of sec. 36(1)(viia) of the Act only to rural advances and (b) in respect of clauses (b) to (d), for advances given by both rural and non-rural branches. 7.16 In the instant case, the assessee has claimed deduction towards PBDD under clause (a) to sec. 36(1)(viia) of the Act, meaning thereby, the clause (a) is applicable to rural advances only as per the decision given by Hon ble Supreme Court in the case of Catholic Syrian Bank. Hence th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y covered in favour of the assessee by the decisions of Hon'ble Himachal Pradesh High Court in the case of HP. Tourism Development Corporation Ltd 2013 (6) TMI 97- HIMACHAL PRADESH HIGH COURT and of ITAT in TVS Infotech Limited 2019 (6) TMI 1287- ITAT CHENNAI. 10.2 The Ld. DR relied on the orders of the lower authorities. 10.3 We have heard the rival parties, perused material available on record and gone through orders of the authorities below. We find that this issue is squarely covered Hon'ble Himachal Pradesh High Court in the case of HP. Tourism Development Corporation Ltd (supra). While allowing the claim of the assessee and dismissing the appeal of the department the held as follows: In both these appeals, the Assessing Officer, relying on the decision of the Calcutta High Court, in the case of CIT versus Bharat General Textile Mills Ltd. 1986 157 ITR 158 (Cal) held that the provision made by the respondent in the books of account towards leave encashment of employees for the relevant period was unascertained liability and, therefore, was required to be disallowed. The Appellate Tribunal, however, over turned that finding recorded by the Assessing Officer. The Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) to rework the deduction u/s. 36(1)(viia) of the Act by reclassifying some of the banks as non rural based on the census data of the year 2011. 11.1 The Ld. Counsel for the assessee, submitted that as per the section the census data as available before the first day of the previous year can alone be considered. It was submitted that the Census data of 2011 was published only on 30.04.2013 and as such would be applicable only from the A.Y 2015-16. He further submitted that the issue is squarely covered the decision of the ITAT in the assessee s case in ITA no 2765/Chny/ 2017 order dt 3-11-2021 for the A.Y 2013-14. He also submitted that this is new issue considered by the CIT(A) and as such the power of enhancement could not be exercised. 11.2 The ld. DR relied on the orders of the authorities of below. 11.3 We have heard the rival parties, perused material available on record and gone through orders of the authorities below. We find that this issue is squarely covered by the coordinate bench of the ITAT in the assessee s case (supra). The Tribunal held as follows: 14.6 Be that as it may. As per the provisions of section 36(1)(viia) of the Act, rural branch means a branch of a sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we hold that the branches cannot classified considering the population as per 2011 census and therefore set aside the order of the CIT(A) on this issue and allow the ground of appeal of the assessee. Since the issue is decided on merits the technical ground raised by the appellant is left open. 12. The next issue that came up for our consideration from ground No. 9 of assessee appeal is deduction towards education cess and secondary and higher education cess. The Ld. Counsel for the assessee, at the time of hearing submitted that the assessee does not want to press this ground and thus, ground No. 9 of assessee appeal is dismissed as not pressed. 13. The next issue that came up for our consideration from ground No. 10 of assessee appeal is a technical ground regarding enhancement of income by the CIT(A). As detailed decisions have been rendered in this regard while deciding each issue, no separate decision is rendered for this ground. 14. In the result, appeal filed by the assessee for assessment year 2014-15 is partly allowed for statistical purposes. ITA No: 1343/CHNY/2019 for AY 2014-15: 15. The revenue has raised common grounds of appeal for both the assessment years. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has erred in deleting the disallowance under 14A to the tune of Rs. 1,00,70,278/-, following the decision in favour of assessee in Supreme Court case law of Maxopp Investment Ltd 402 ITR 640 (SC) which is not applicable to this issue. As per the Hon'ble Supreme Court in the case of CIT vs Walfort Stock Brokers Pvt. Ltd and Godrey Boyce Manufacturing Co. Ltd vs DCIT, has categorically held that application of the provision of section 14A are absolute. 12. The Hon'ble CIT(A) has erred while deciding the issue on interest accrued on NPAs by holding Rule 6EA(a) as noncompliant with Sec 43 Das no amendment in line with the changes in RBI's guidelines has been made. 13. The Hon'ble CIT(A) has erred in deleting the addition made towards accrued interest on loans on which recovery was due for more than 90 days but less than 180 days in view of section 43D r.w. Rule 6EA. 14. The CIT(A) has erred while deciding the issue on disallowance on account of depreciation of ATM claimed by the assessee is at the rate of 60% per annum for ATM machines (at the rate of depreciation allowed to computers) instead of 15% per annum by treating as Plant and Machinery. As in the case of DC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding liabilities . During the course of assessment proceedings, the AO noticed that an amount of ₹ 2,46,14,514/- was shown under the head outstanding liabilities towards stale draft and treated the same as income of the assessee and added to total income. On appeal before the ld. CIT(A), the CIT(A) has deleted addition made by the AO by following the decision of ITAT in assessee s own case for earlier years. 16.1 The ld. DR submitted that the ld. CIT(A) has erred in deleting the disallowance made by the AO towards stale draft account without appreciating the fact that amount kept under stale draft account is nothing but income of the assessee and same need not to be paid to any person. 16.2 The ld.AR for the assessee on the other hand strongly supporting order of the CIT(A) submitted that the issue is squarely covered in favour of the assessee by the decision of ITAT in assessee s own case for assessment year 2013-14 in ITA No. 2765/Chny/2017, where under identical circumstances the Tribunal has deleted addition made by the AO by holding that amount kept under stale draft account is not income of the assessee. He further submitted that the Hon ble High Court of Madras has con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of ex-gratia payment of ₹ 26,05,79,311/-. The AO had disallowed ex-gratia payment made by the assessee to its staff by observing that the Revenue has filed appeals before the Hon ble High Court against the orders of the ITAT and in order to keep the issue alive, the claim made by the assessee was disallowed. On appeal, the Ld. CIT(A) following the earlier orders of the ITAT, allowed the appeal of the assessee. 17.1 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. An identical issue had been considered by the Tribunal in assessee s own case for assessment year 2013-14 in ITA No. 2762/Chny/2017, where the Tribunal after considering relevant facts held that exgratia payment to staff is deductible u/s. 37(1) of the Act. The relevant findings of the Tribunal are as under: 7.1 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. An identical issue had been considered by the Tribunal in assessee s own case for assessment year 2012-13 in ITA No. 3197/Chny/2017, where the Tribunal after considering relevant facts held that exgratia payment to st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 1962 and thus, there is no error in the reasons given by the AO towards disallowance u/s. 14A and the order of the AO should be upheld. 18.2 The ld.AR for the assessee at the time of hearing submitted that this issue is covered in favour of the assessee by the decision of ITAT in assessee s own case for assessment year 2013-14 in ITA No. 2765/CHNY/2017, where it has been held that no disallowance u/s. 14A is permissible in terms of Rule 8D where the assessee is engaged in banking business. He further submitted that in a decision in the case of South Indian Bank Ltd., vs. CIT, the Hon ble Supreme Court in Civil Appeal No. 9606 of 2011, vide order dated 09.09.2021 held that in the case of banking companies, Section 14A is not applicable. 18.3 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. An identical issue had been considered by the Tribunal in assessee s own case for assessment year 2013-14 in ITA No. 2765/Chny/2017, where the Tribunal after considering relevant facts held that no disallowance u/s 14A is warranted. The relevant findings of the Tribunal are as under: 12.3 We have heard both the parties, peru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of interest on NPAs, as per which NPAs which are less than 180 days are covered under Rule 6EA of Income Tax Rules, 1962, as per which the assessee shall recognize interest on accrual basis. 19.2 The ld.AR for the assessee submitted that this issue is squarely covered in favour of the assessee by the decision of ITAT in assessee s own case for assessment year 2013-14 in ITA No. 2762/Chny/2017, where under identical set of facts, the Tribunal deleted addition made by the AO towards interest on NPAs. 19.3 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We find that an identical issue has been considered by the Tribunal in assessee s own case for assessment year 2013- 14 in ITA No. 2762/Chny/2017, where under identical set of facts and by following the decision of Hon ble Supreme Court in the case of Vasisth Chary Vyapar Ltd., vs. CIT(supra), held that interest income cannot be said to have been accrued to the assessee on NPAs account. The relevant findings of the Tribunal are as under:- 10.3 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above decision, we are inclined to uphold the findings of the CIT(A) and reject the ground taken by the Revenue. 20. The next issue that came up for our consideration from Ground No. 14 of Revenue appeal is deletion of disallowance of depreciation on ATMs. The assessee has claimed depreciation on ATMs at 60%. The AO however, treated the ATMs as Plant Machinery and restricted the depreciation @ 15%. He thus, made an addition of ₹ 7,56,91,591/- towards excess depreciation claimed on ATMs. On appeal, the Ld. CIT(A) deleted the disallowance by following the ITAT decision in the case of Royal Bank of Scotland N.V. [2017] 88 taxmann.com 330. 20.1 The Ld DR relied on the order of the Assessing Officer. 20.2 The Ld AR submitted that this issue is covered by the decision of the Hon'ble Karnataka High Court in the case of NCR Corporation Pvt Ltd [2020] 117 taxmann.com 252 and also the decisions of the Chennai Bench of the ITAT in the case of Indian Bank 2016 (7) TMI 728 and City Union Bank Ltd in ITA No. 636/Chny/2020 for Asst Year 2017-18. 20.3 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We find that an id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation @ 60%, but not depreciation @ 15% as applicable to plant and machinery and as claimed by the Assessing Officer. The ld. CIT(A) deleted additions made by the Assessing Officer towards excess depreciation by following the decision of Hon ble Supreme Court in the case of CIT vs State Bank of Patiala (Supra), where the Hon ble Supreme Court has dismissed SLP filed by the revenue against the decision of Hon ble Punjab and Haryana High Court. Therefore, we are of the considered view that there is no error in the reasons given by the ld. CIT(A) to delete additions made towards excess depreciation claimed on ATMs and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject ground taken by the revenue. 20.5 Respectfully following the above decisions, we are inclined to uphold the findings of the CIT(A) and reject the ground taken by the Revenue. 21. The next issue that came up for consideration from Ground No. 15 is with regard to allowing rural debt written off. 21.1 The Ld. AR submitted that this ground is infructuous since the CT(A) did not allow any rural write off as deduction u/s 36(1)(vii). 21.2 We have heard both the parties, perused materials availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Hon ble Kolkata High Court in the case of PCIT vsUttarbangakshetriya Gramin Bank [2018] 94 Taxman.com 90 Kolkata, held that aggregate average advances made by rural branches as outstanding at the end of the last day of each month should be considered, but not aggregate monthly advances taking loans and advances made only during the previous year relevant to the assessment year as computed by the Assessing Officer. But, the High Court has remitted the matter back to the file of the Assessing Officer for the purpose of re-computation after considering the fact that the Assessing Officer has not computed deduction based on the documents produced by the assessee. The relevant findings of the Hon ble High Court are as under: 10.2 Similarly, the second issue relating to deduction of Rs. 8.53 crores u/s. 36(1)(viia) with regard to the provision for bad and doubtful debts, is covered by the decision in Principal Commissioner of Income Tax, Jalpaiguri v. UttarbangaKshetriyaGramin Bank [(2018) 94 taxmann. Com 90 (Calcutta), in favour of the assessee and the relevant passage of the same is usefully extracted below: 6. Mr. Nizamuddin,learned advocate appeared on behalf of the Revenue and sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this context, the relevant paragraphs of the assessment order dated 31.03.2006 passed by the assessing officer are quoted below: 5.3 When the assessee was asked to clarify whether the advances which were considered to be bad and doubtful in earlier years and for which the provision was made so as to claim deduction under section 36(1)(viia) of the Act, have been recovered subsequently, it was stated that as the provision claimed was not with reference to any particular debt due to the assessee but on an overall basis, it is not possible to certify that the bad debts claimed as trading loss for deduction u/s. 36(1)(viia) was recovered or not. It was also stated that the assessee would not be able to give age-wise details of outstanding advances for the branches more so for the rural branches with reference to which the deduction was claimed, so as to determine whether any advance of earlier year for which provision was made is still outstanding. 5.4. In other words, the assessee is not in a position to give details of the advances with reference to which the deduction of Rs. 14.99 crores was allowed as per Annexure 2 as deduction under section 36(1)(viia) towards unknown and anti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause said data was officially available with the bank while deciding the branches as rural branches or urban branches and this issue is covered by the decision of ITAT, Chennai benches in the case of KarurVysya Bank in ITA Nos. 2762/Chny/2017 332/Chny/2018, dated 03.11.2011, where the issue has been discussed in detail. Therefore, we direct the Assessing Officer to consider the issue in light of the decision of the ITAT, Chennai Benches in the case of KarurVysya Bank vs CIT (Supra). 12.5 In this view of the matter and considering facts and circumstances of the case and also following the decision of Hon ble High Court of Madras in appellant s own case for earlier years, we are of the considered view, that the Assessing Officer is erred in computing deduction u/s. 36(1)(viia) of the Act, by considering only incremental advances made by rural branches of appellant bank as against the aggregate average advances made by rural branches of appellant bank as outstanding at the end of the financial year and thus, we direct the Assessing Officer to consider aggregate average advances outstanding at the end of the relevant financial year for the purpose of computing deduction u/s. 36(1)(vii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock in trade. For the purpose of income tax, it prepares a separate investment trading account and offers the net result of the trading account to tax. It values individual securities at lower of cost or market value. However, for the purpose of books of accounts, the bank classifies securities as per RBI norms in the following categories i.e., Held to Maturity (HTM), Available for Sale (AFS) and Held for Trading (HFT) and also value them as per RBI guidelines. The AO by relying on the instruction No. 17/2008 dated 26th Nov 2008 held that the appreciation of Rs. 3,27,56,636/- has to be netted off against the depreciation and only the net depreciation if any, can be claimed. He further observed that the assessee has claimed a depreciation of Rs. 5,75,99,181/- on the preference shares Non performing. He also observed that the claim of the assessee is not covered by any specific provision of the Act and it also does not quality u/s 36(1)(viia). Further, he relied on the decision of the Hon ble Supreme Court in the case of Southern Technologies in CA No. 1337/2003. He therefore, disallowed the amount of Rs. 5,75,99,181/- and added to the total income. He thus, added an amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... average cost for all the items or the market rate for all the items. Further, the Supreme Court in the case of United Commercial Bank vs. CIT [1999] 240 ITR 355 (SC) has held that there is no such question of following two different methods for valuing its stock-in-trade (investments) because bank was required to prepare balance sheet in the prescribed form and it had no option to change it and for the purpose of income-tax, what is taxed is the real income which is to be deduced on the basis of the accounting system regularly maintained by the assessee. In view of the above, it was claimed that the assessee be allowed a deduction in respect of depreciation on each securities, scrip wise, while ignoring the appreciation. 67. Further, the assessee claimed that it has consistently been following the method of valuation of lower of cost or market price in respect of securities. Accordingly, the method of valuation followed by the assessee is required to be accepted. Reliance in this regard is placed on the following decisions: CIT vs. Bank of Baroda [2003] 262 ITR 334 (Bombay) CIT vs. Corpn. Bank Ltd. [1988] 174 ITR 616 (Karnataka) Further, the issue was not disputed upto financial ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 90 being lower than the cost. In year 2, the market price went upto ₹ 95. Accordingly, the stock was valued at market price of ₹ 95 being lower than the cost. However, suppose in year 3, the market value rises to ₹ 120, in such a situation, the stock would be valued at cost i.e ₹ 100, being lower than the market price. The Mumbai Tribunal held that excess of appreciation over the cost price would not be considered for valuing the closing stock. In the present case, we are not concerned with a scenario where in the later year the depreciation provided in earlier years is reduced. Further, the decision of the Mumbai Tribunal in the case of Deutsche Bank A.G vs. DCIT [2003] 86 ITD 431 (Mumbai), relied by the AO is in connection with valuation of foreign exchange forward contracts. In this case the assessee did not account for in the financial statement the anticipated/contingent profits from the contracts to the extent not settled as on the last day of the accounting year whereas any loss on such contracts was provided for by a charge in the profit and loss account on the best estimates. The Department brought to tax the profit on such forward exchange ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO has substituted his own method and has disallowed a sum of ₹ 15,33,68,165/-. We find that this issue has been decided by the ITAT in the assessee s case for the Asst Year 2013-14 (supra), where in the Tribunal held as follows: A similar issue had been considered by the Tribunal right from assessment years 2010-11 to 2012-13, where the Tribunal has set aside the issue to the file of the AO and directed him to reconsider the issue in accordance with provisions of section 36(1)(viii) of the Act. We further noted that the AO had passed an order dated 04.11.2019 to give effect to the orders of the Tribunal. In the said order, the AO has examined computation submitted by the assessee and allowed deduction as per the computation of the assessee. Since, the AO had already accepted computation methodology adopted by the assessee bank for assessment years 2010-11 2011-12, based on directions of ITAT, we are of the considered view that this year also the issue needs to go back to the file of the AO to consider the issue in light of directions of the Tribunal for earlier years. Hence, we set aside the issue to the file of the AO and direct him to follow the directions given by the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal is dismissed as not pressed. 30. The next issue that came up for our consideration from ground No. 8 of assessee appeal is a technical ground regarding enhancement of income by the CIT(A) in relation to bad debts written off by the non rural branches of the Bank. Since the issue has been decided on merits while adjudicating ground nos. 5.1 to 5.4, this ground and it is left open. 31. In the result, appeal filed by the assessee for assessment year 2015-16 is partly allowed for statistical purposes. ITA No. 1321/CHNY/2019 for AY 2015-16: 32. At the outset, we find that there is a delay of 11 days in appeal filed by the revenue, for which petition for condonation of delay along with reasons for delay has been filed. After considering the petition filed by the revenue and also hearing both the parties, we find that there is a reasonable cause for the revenue in not filing appeal on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeal and admit appeal filed by the revenue for adjudication. 33. The first issue that came up for our consideration from Ground Nos.2 to 5 of Revenue appeal is deletion of addition made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x. He submitted that this issue is decided by the Hon'ble Madras High Court (supra) in assessee s own case in favour of the assessee and also relied on the decision of Hon'ble Karnataka High Court in the case of Karnataka Bank 2014 (11) TMI 221. He also relied on a few ITAT decisions in this regard. 36.3 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We find that this issue has been decided by the Hon'ble Madras High Court in the assessee s own case in favour of the assessee. Further, we find that the Hon'ble Karnataka High Court also decided the issue in favour of the assessee. 36.4 Respectfully following the above decisions, we are inclined to uphold the findings of the CIT(A) and reject the ground taken by the Revenue. 37. The next issue that came up for consideration from Ground No. 13 is with regard to allowing rural debt written off. 37.1 The Ld. AR submitted that this ground is infructuous since neither the assessee claimed rural write off as deduction nor the CT(A) allow any rural write off as deduction u/s 36(1)(vii). 37.2 We have heard both the parties, perused materials available on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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