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TMI Blog2024 (9) TMI 1443X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Department NFAC, Delhi erred in holding that deduction u/s.36(1)(viia) was applicable to rural advances only, and that since the appellant had not rural branches, said deduction was not available to the Appellant. 3. The appellant craves leave to add, amend, alter and withdraw any ground of appeal anytime up to the hearing of this appeal." 3. The facts necessary for disposal of the appeal, are stated in brief. The assessee before us, is a Co-operative bank and engaged in the business of banking. The assessee-bank claimed deduction, under section 36(1)(viia) of the Act, in respect of provision for bad and doubtful debts. During the assessment proceedings, the assessing officer asked the assessee, to explain, why deduction u/s 36(1)(viia) of the Act, should not be disallowed, as there are no rural branches and no rural advances. 4. During the assessment proceedings, the assessee submitted, its detailed reply, before the assessing officer, which is reproduced below: "Assessee has claimed deduction of Rs.20,38,284 in respect of provision for bad and doubtful debt u/s 36(1)(viia) on the ground that the said section allows any co- operative bank other than a primary co-operative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emonstrate that the deduction on account of provision for bad and doubtful debts u/s 36(1)(viia) is distinct and independent of s. 36(1)(vii) relating to allowance of bad debts. The legislative intent was to encourage rural advances and the making of provisions for bad debts in relation to such rural branches. The functioning of such banks is such that the rural branches were practically treated as a distinct business though ultimately these advances would form part of the books of accounts of the head office. An interpretation which serves the legislative object and intent is to be preferred rather than one which subverts the same. The deduction u/s 36/1)(vii) cannot be negated by reading into it the limitations of s. 36(1)(viia) as it would frustrate the object of granting such deductions. The Revenue's argument that this would lead to double deduction is not correct in view of the Proviso to s. 36(1)(vii) which provides that in respect of rural advances, the deduction on account of the actual write off of bad debts would be limited to excess of the amount written off over the amount of the provision which had already been allowed u/s 36(1) (viia) (Southern Technologies 320 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omote rural advances by benefiting the banks to make provisions on their average rural advances. The relevant para of the speech of Shri Charan Singh deputy Prime Minister and Minister of Finance introducing the budget for the year 1979-80 is as follows "in recent years, commercial banks, public sector banks, have been asked to reach out into the rural areas and to expand rural credit in order to promote rural banking and to assist the scheduled commercial banks in making adequate provisions from their current income to provide for risks in rural advances, I propose to amend the Income-tax Act to grant a deduction in respect of provisions made for bad and doubtful debts by scheduled commercial banks relating to advances made by their rural branches Such a deduction will however be limited to 1.5 per cent of the aggregate average advances made by the rural branches. This measure will result in a revenue loss of Rs. 12 crores during 1979-80 but it will be in a good cause." b) CBDT CIRCULAR NO 258 DATED 14-06-1979 "Amendments to income-tax Act, Finance Act, 1979 In order to promote rural banking and assist the scheduled commercial banks in making adequate provisions from their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rural branches of Indian banks, whichever is higher, should be modified. Accordingly, by the Amending Act, the deduction presently available under clause (viia) of subsection (1) of section 36 of the Income-tax Act has been split into two separate provisions. One of these limits the deduction to an amount not exceeding 2% of the aggregate average advance made by the rural branches of the banks concerned may be clarified that foreign banks do not have rural branches and hence this amendment will not be relevant in the case of the foreign banks. The other provisions secures that a further deduction shall be allowed in respect of the provision for bad and doubtful debts made by all banks, not the banks incorporated in India, limited to 5% of the total income computed before making any deduction under this clause and Chapter VIA. This will imply that scheduled or non-scheduled banks having rural branches would be allowed the deduction upto 2% of the aggregate average advances made by such branches and a further deduction up to 5% of their total income on respect of provision for bad and doubtful debts." g) In 2002 this 5% limit was increased to 7.5% which is still continued. h) H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the actual write off to the excess, if any of the write off over the amount standing to the credit of the account created under clause (viia)...... .....The proviso limits its application to the case of a bank to which clause(viia) applies, clause (viia) applies only to rural advances. This has been explained by the Circulars saved by CBDT. Thus, the proviso indicates that it is limited in its application to bad debt(s) arising out of rural advances of a bank, it follows that if the amount of bad debt(s) actually written off in the accounts of the bank represents only debt(s) arising out of urban advances, the allowance thereof in the assessment is not affected controlled or limited in any way by the proviso to clause (vii). j) From the above discussion it is clear that the provisions of sections 36(1)(vi) and 36(1)(via) of the Act are distinct and independent items of deduction and operate in their respective fields Bad debt written off relating to non- rural of urban advances are allowable in full and not restricted to the credit balance of provision for doubtful debits allowed as per section 36(1)(a) of the Act. Bad debts written off relating to rural advances allowable only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, ld CIT(A) rejected the plea of the assessee and observed that appellant has not made any submission with respect to the applicability of the decision of Hon'ble Apex Court in case of Catholic Syrian Bank Ltd. (supra). Further, in income tax proceedings allowing any expense in earlier years cannot be a criterion for allowing that expense in the next year, as rest- judicata is not strictly applicable in income tax proceedings. Further, it has not been submitted by the appellant whether the previous decisions on this issue were arrived after due inquiry. In view of these facts ld CIT(A) confirmed the addition made by the assessing officer. 7. Aggrieved by the order of the Ld. CIT(A), the assessee is in further appeal before us. 8. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. Shri D. M. Rindani, Ld. Counsel for the assessee, pleaded that the assessee has claimed the deduction u/s 36(1)(viia) of the Act for the assessment year 2014-15, and as per the provisions of the said section 36(1)(viia) of the Act, the assessee, cooperative bank, is entitled to claim such deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration, can be claimed by the assessee, and accordingly, the assessee has claimed the deduction, therefore, as per the statutory provisions of the Act, the deduction should be allowed to the assessee. For this, Ld. Counsel for the assessee, relied on the following judgments: (i) Hon'ble Supreme Court in the case of Catholic Syrian Bank Ltd. vs. CIT, [2012] 80CCH 0193 ISCC (ii) Co-ordinate Bench of ITAT, Surat in ITA No.590/Srt/2019 in the case Surat District Co-operative Bank Ltd. Vs. ACIT [2023] 152 taxmann.com 549 (Surat-Trib.) (iii) Co-ordinate Bench of ITAT, Pune in ITA No.167/Srt/2015 in the case Bhaggini Nivedita Sahakari Bank Ltd Vs. DCIT [2018]100 taxmann.com 375 (Pune) (iv) Hon'ble Bombay High Court in the case of Yes Bank Ltd. vs. ACIT [2024] 160 taxmann.com 329(Bombay). (v) Co-ordinate Bench of ITAT, Hyderabad in ITA No.450/Hyd/2015 in the case of State Bank of Hyderabad vs. DCIT [2015] 63 taxmann.com 322(Hyderabad-Trib.) (vi) Co-ordinate Bench of ITAT, Bangalore in ITA No.53/Bang/2013 in the case DCIT vs. ING Vysya Bank Ltd. [2014] 42 taxmann.com 303 (Bangalore- Trib.) 10. On the other hand, Learned Commissioner of Income-tax- Departmental Representa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of the proviso to section 36(1)(vii) of the Act and not with the computation of deduction u/s 36(1)(viia) of the Act. (ii) The Court considered the import of provision for non-rural and rural advances for the limited purpose of interpreting section 36(1)(vii), proviso for applying and not for any other purpose. (iii) The judgement cannot be read and applied conversely to mean that section 36(1)(viia), deduction, mandates existence of both rural and non-rural advances, such cannot be read into it; as this is not the 'ratio decidendi' of the judgement. 12. Based on the above facts, ld Counsel for the assessee, argued that if the provision of section 36(1)(viia) of the Act, is to be read, as read by the assessing officer and the Ld. CIT(A), then, in that situation, no bank would be eligible for deduction thereunder because not all banks would have rural advances. As per Supreme Court decisions in Catholic Syrian Bank Ltd (supra); the segregation is required, if so maintained and only to apply proviso to section 36(1)(vii) to obviate double deduction; not otherwise in all cases. Therefore, in assessee's case, the deduction should be allowed, even in absence of rural bra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Bench are reproduced below: "24. We have considered the rival submissions. To appreciate the contention put forth by the learned counsel for the Assessee, we need to look into the history of Sec.36(1)(viia) as it exists in the present form. Stage-I: Sec.36(1)(viia) was inserted by the Finance Act, 1979 w.e.f. 1st April, 1980 and at the time of its insertion, this clause read as under : '(viia) in respect of any provision for bad and doubtful debts made by a scheduled bank in relation to the advances made by its rural branches, an amount not exceeding one and a half per cent of the aggregate average advances made by such branches, computed in the prescribed manner. Explanation : For the purposes of this clause,- (i) "rural branch" means a branch of a scheduled bank situated in a place which has a population of not more than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; (ii) scheduled bank" has the same meaning as in the Explanation at the end of cl. (b) of sub section (2) of section 11, but does not include a co-operative bank.' This clause, as explained in par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from the purview of this provision in view of the position that under s. 80P(2)(a)(i) of the IT Act, the profits and gains of a co-operative society engaged in the business of banking or providing credit facilities to its members are completely exempt from income-tax. 13.3 It may be relevant to mention that the provisions of new cl. (viia) of s. 36(1) relating to the deduction on account of provisions for bad and doubtful debts is distinct and independent of the provisions of s. 36(1)(vii) relating to allowance of the bad debts. In other words, the scheduled commercial banks would continue to get the full benefit of the write off of the irrecoverable debts under s. 36(1)(vii) in addition to the benefit of deduction of the provision for bad and doubtful debts under s. 36(1)(viia). 13.4 This provision will take effect from 1st April, 1980 and will accordingly apply in relation to the asst. yr. 1980-81 and subsequent years.' 25. By section 10(a) of the Finance Act, 1982 in the opening portion of the word (scheduled bank" was substituted with the words "scheduled bank or a non- scheduled bank." Further in the Explanation to this clause, the existing cl. (i) was renumbered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... increasing social commitments of banks. "Deduction in respect of provisions made by banking companies for bad and doubtful debts 17.1 Sec. 36(1)(vii) of the IT Act provides for a deduction in the computation of taxable profits of the amount of any debt or part thereof which is established to have become a bad debt in the previous year. This allowance is subject to the fulfilment of the conditions specified in sub-s. (2) of s. 36. 17.2 Sec. 36(1)(viia) of the IT Act provides for a deduction in respect of any provision for bad and doubtful debts made by a scheduled bank or a non-scheduled bank in relation to advances made by its rural branches, of any amount not exceeding 1½ per cent of the aggregate average advances made by such branches. 17.3 Having regard to the increasing social commitments of banks, s. 36(1)(viia) has been amended to provide that in respect of any provision for bad and doubtful debts made by a scheduled bank [not being a bank approved by the Central Government for the purposes of s. 36(1)(viiia) or a bank incorporated by or under the laws of a country outside India] or a non-scheduled bank, an amount not exceeding ten per cent of the total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eserve Bank of India as doubtful assets or loss assets in accordance with the guidelines issued by it in this behalf, for an amount not exceeding five per cent. of the amount of such assets shown in the books of account of the bank on the last day of the previous year. Provided further that for the relevant assessment years commencing on or after the 1st day of April, 2003 and ending before the 1st day of April, 2005, the provisions of the first proviso shall have effect as if for the words "five per cent.", the words "ten per cent." had been substituted. Provided also that a scheduled bank or a non-scheduled bank referred to in this sub-clause shall, at its option, be allowed a further deduction in excess of the limits specified in the foregoing provisions, for an amount not exceeding the income derived from redemption of securities in accordance with a scheme framed by the Central Government: Provided also that no deduction shall be allowed under the third proviso unless such income has been disclosed in the return of income under the head "Profits and gains of business or profession". Explanation: For the purposes of this sub-clause, "relevant assessment years" means the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956); (iv) "State financial corporation" means a financial corporation established under section 3 or section 3A or an institution notified under section 46 of the State Financial Corporations Act, 1951 (63 of 1951); (v) "State industrial investment corporation" means a Government company within the meaning of section 617 of the Companies Act, 1956 (1 of 1956) engaged in the business of providing long-term finance for industrial projects and eligible for deduction under clause (viii) of this sub-section; (vi) "co-operative bank", "primary agricultural credit society" and "primary co- operative agricultural and rural development bank" shall have the meanings respectively assigned to them in the Explanation to sub-section (4) of section 80P.' 32. The object of the substitution, as explained in para 5 of the CBDT Circular No. 464, dt. 18th July, 1986, was to give the separate deduction, viz., one in respect of rural advances and the other for provision for bad and doubtful debts in general and also to extend the benefit of deduction to all banks including foreign banks. "Modification in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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;" 34. It can be seen from the history of Sec.36(1)(viia) of the Act that at stage-I the deduction was allowed in respect of any provision for bad and doubtful debts made by a scheduled bank in relation to the advances made by its rural branches. At this stage the PBDD had to be linked to the advances made by Bank's rural branches. At stage-II of Sec.36(1)(viia), the deduction while computing the taxable profits was allowed of an amount not exceeding ten per cent of the total income (computed before making any deduction under the proposed new provision) or two per cent of the aggregate average advances made by rural branches of such banks, whichever is higher. At this stage also the PBDD had to be created and debited to the profit and loss account but it was not required to be done in relation to advances made by Bank's r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under the new provisions creating a PBDD in the books of accounts is necessary. 37. Though under Stage-II and Stage-III of the provisions of Sec.36(1)(viia) of the Act, PBDD has to be created by debiting the profit and loss account of the sum claimed as deduction, the condition that the provision should be in respect of rural advances is not necessary. At stage-II of the provisions of Sec.36(1) (viia) of the Act, this condition was done away with and it was only necessary to create PBDD in the books of accounts and debit to profit and loss account. The quantification of the maximum deduction permissible u/s.36(1)(viia) of the Act had to be done. Firstly it has to be ascertained as to what is 10% of the aggregate average advances made by rural branches, if the Bank has rural branches, otherwise that part of the deduction u/s.36(1)(viia) of the Act will not be available to the bank. The second part of the deduction u/s.36(1)(viia) has to be ascertained viz., 7.5% seven and one-half per cent of the total income (computed before making any deduction under this clause and Chapter VI-A). The above are the permissible upper limits of deductions u/s.36(1)(viia) of the Act. The actual p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t balance in the provision for bad and doubtful debts account made under clause(viia) to Sec.36(1) of the Act. It would be just and fair if the order of CIT(A) is set aside and the AO directed to examine the claim of the Assessee in the light of the discussion made above. Similar order would be just and fair in AY 04-05 also. We hold and direct accordingly by allowing the relevant grounds raised by the Revenue for statistical purpose. 39. We may also clarify that the decision rendered by the Hon'ble Supreme Court in the case of Catholic Syrian Bank Ltd. (supra) has no relevance to the present case. The facts of the case before the Hon'ble Supreme Court in the case of Catholic Syrian Bank Ltd. (supra) was that the Assessee claimed deduction on account of bad debts written off in respect of non-rural branches u/s.36(1)(vii) of the Act. The AO noticed that there was already credit balance in the Provision for Bad and Doubtful Debts Account u/s.36(1)(viia)(a) of the Act, which was in excess of the claim of the assessee for deduction on account of bad debts. The AO after making reference to proviso to Sec.36(1)(vii) of the Act and also Sec.36(2)(v) of the Act was of the view t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art thereof, written off as irrecoverable in the accounts of the assessee'. Thus, the concept of making a provision for bad and doubtful debts will fall outside the scope of s. 36(1)(vii) simpliciter. (iv) As per the proviso to cl. (vii) of s. 36(1), the deduction on account of the actual write off of bad debts would be limited to excess of the amount written off over the amount of the provision which had already been allowed under cl. (viia). The proviso by and large protects the interests of the Revenue. In case of rural advances which are covered by cl. (viia), there would be no such double deduction. The proviso, in its terms, limits its application to the case of a bank to which cl. (viia) applies. Indisputably, cl. (viia)(a) applies only to rural advances." 40. Thus, it can be seen that in the case of Catholic Syrian Bank Ltd. (supra), the case made out by the AO was that PBDD is one account and whenever claim for deduction is made u/s.36(1)(vii) the same should be debited to the PBDD account. Further the law laid down by the Hon'ble Supreme Court in the case of Catholic Syrian Bank Ltd. (supra) has to be understood in the context of its assumption that Banks woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anches would deal with commercial debts. Maintenance of such separate accounts would not only be a matter of mere convenience but would be the requirement of Accounting Standards. 33. It is contended, and rightly so, on behalf of the assessee bank that under law, it is obliged to maintain accounts which would correctly depict its statement of affairs. This obligation arises implicitly from the requirements of the Act and certainly under the mandate of Accounting Standards. 34. Inter alia, following are the reasons that would fully support the view that a bank should maintain the accounts with separate items for actual bad and irrecoverable debts as well as provision for such debts. It could, for valid reasons, have rural accounts more distinct from the urban, commercial accounts: (a) It is obligatory upon each bank to ensure that the accounts represent the correct statement of affairs of the bank. (b) Maintaining the common account may result in overstating the profits or the profits will shoot up which would result in accruing of liabilities not due. (c) Accounting Standard (AS) 29, issued in 2003, which concerns treatment of 'provisions, contingent liabilities and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respective of considerations whether PBDD created in the books of accounts is in respect of rural advances or non-rural advances, subject to the upper limits laid down in Sec.36(1)(viia)(a) of the Act. Thus the case made out by the AO stands on a totally different footing. Therefore the decision in the case of Catholic Syrian Bank Ltd. (supra), in our view, is not relevant to the issue in the present case." 16. Our view is fortified by the order of the Coordinate Bench of ITAT Pune, in the case of Bhagini Nivedita Sahakari Bank Ltd. vs. DCIT, 100 taxmann.com 375 (Pune - Trib.) wherein it was held that a co-operative bank is entitled to claim deduction of bad debts provided in first part of section 36(1)(viia)(a) being 7.5 per cent of total income even in absence of rural branches. The detailed findings of the Coordinate Bench are reproduced below: "14. We have heard the rival contentions and perused the record. The issue which arises in the present appeal is against claim of deduction under section 36(1)(viia) of the Act. Under the said section, deduction is allowable on account of provision for bad and doubtful debts. In other words, deduction could be claimed in respect of bad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be relevant in the case of foreign banks. The Circular further provided that the other provisions secure that a further deduction shall be allowed in respect of provision for bad and doubtful debts made by all banks, not just the banks incorporated in India, limited to 5% of total income. The Circular then concluded by saying that this will imply that all scheduled or non-scheduled banks having rural branches would be allowed the deduction upto 2 percent of the aggregate average advances made by such branches and a further deduction upto 5 percent of their total income in respect of provision for bad and doubtful debts. In other words, the Circular very clearly provided that two types of deductions have to be allowed to scheduled or non-scheduled banks i.e. in case they had rural branches, then deduction of 2% of aggregate average advances was to be allowed and in addition to that deduction upto 5% of their total income in respect of provision for bad and doubtful debts was to be allowed. The second part of deduction was also made available to foreign banks, which admittedly would never have rural branches in India. In such scenario, the intent of the Legislature was to provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. We are concerned with sub-clause(a) of clause (viia) to section36(1). Prior to Finance Act of 2007, cooperative bank was not included in sub-clause (a) so far as provisions for bad and doubtful debts. With effect from 1.4.2007, cooperative bank was included under sub clause (a) of clause (viia) of section 36(1). It is further clarified that only such cooperative bank other than a primary agriculture credit society, etc., is included in sub clause (a) of clause (viia). The provision is a beneficial one. No doubt, plain reading of main section 36(1) (viia)(a) and Explanation under said section present certain difficulties, but situation is not without possibilities. The object and intention of the legislature is to be understood by harmonious construction of the provisions. The policy was to include cooperative banks as well, as they could not take shelter under section 80P of the Income Tax Act any more. By restricting the scope of the provisions, the very purpose of inclusion of cooperative bank would be lost. Sub clause (a) consists of two types of deduction. One refers to deduction of an amount not exceeding 7.5% of the total income (computed before making any deduction u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided by us for emphasis) 18. The Hon'ble High Court of Kerala thus, laid down the proposition that existing co-operative banks which do not enjoy the benefit of deduction provided under section 80P of the Act after 01.04.2007 but would be entitled to the benefit provided under section 36(1)(viia) of the Act, then the provisions have to be understood taking into consideration the amendment made by the Legislature. The Hon'ble High Court has clearly noted the fact that for availing the benefit of 7.5% of total income, there is no condition that it should be in respect of any rural branches. It has further observed that all types of banks described under sub-clause (a) of clause (viia) are entitled to seek deduction of an amount not exceeding 7.5% of total income and only condition is that there should be provision for bad and doubtful debts in the books of account. The second linked issue which was considered was whether co-operative bank in respect of having rural branches was entitled to have the benefit of second part of section 36(1)(viia)(a) of the Act. The Hon'ble High Court clearly held that reading the definition of non-scheduled bank along with meaning of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e first part of clause (viia)(a) of 7.5% of the total income, hitherto enjoyed by the assessee since the inclusion of cooperative banks within the ambit of clause (viia)(a) by Finance Act, 2007, is unconcerned with advances made by the rural branches of the banks. A reading of paragraph 27 of the judgment of the Hon'ble Apex Court would show that while making the observation "indisputably, clause (viia)(a) applies only to rural advances", the Hon'ble Apex Court was examining the issue if there would be double deduction of actual bad debts written off under clause (vii) and deduction in respect of rural advances provided under the second part of clause (viia). The Hon'ble Apex Court has not held that the first part of clause (viia) providing for deduction of 7.5% of the total income applies only to rural advances." (underline provided by us for emphasis) 20. Then, reference was made to the decision of jurisdictional High Court i.e. Hon'ble High Court of Kerala in The Kodungallur Town Co-Op. Bank Ltd. (supra), judgment dated 03.04.2014 and it was held that invoking of jurisdiction by the Commissioner was held to be not justified, relying on the ratio laid down by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided the issue relying on the ratio laid down by the Hon'ble High Court of Madras, which was not jurisdictional High Court. However, dismissing the appeal filed by Revenue, the Hon'ble Bombay High Court found favour with the view taken by Tribunal relying on the law declared by the Hon'ble High Court though of another State, which was final law of the land. 25. The Pune Bench of Tribunal in Aurangabad Holiday Resorts (P) Ltd. (supra) has referred to the aforesaid ratio laid down by the jurisdictional High Court in the case of Smt. Godavari devi Saraf (supra) and held as under:- '11. Let us now take a look at the Hon'ble jurisdictional High Court's judgment in the case of Godavari Devi Saraf (supra). In this case, question before. Their Lordships was as follows: "Whether, an the facts and circumstances of the case, and in view of decision in the case of A.M. Sali Maricar 90 ITR 116, the penalty imposed on the assessee under Section 140A(3)was legal?" 12. The specific question before. Their Lordships was whether the Tribunal, while sitting in Bombay, was justified in following the Madras High Court decision holding the relevant section as unconstit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn, relying on the decision of the Hon'ble Supreme Court in Vegetable Products Ltd. (supra). It was also noted that there were various other High Courts which were not in favour of view taken in Smt. Godavaridevi Saraf (supra). The Tribunal decided the issue in turn, relying on the ratio laid down by the Hon'ble High Court of Gauhati in Smt. Bandana Gogoi v. CIT [2007] 289 ITR 28/[2008] 171 Taxman 1 in the absence of any other decision of any High Court in other State. In view of the above said position of law, we are departing from the view taken by Pune Bench of Tribunal in assessee's own case relating to assessment year 2010-11, wherein the order is dated 29.05.2015 but decision of the Hon'ble High Court of Kerala on the issue is dated 03.04.2014 was neither relied upon nor brought to the knowledge of Tribunal and the issue was decided against assessee. The issue raised in the present appeal stands fully covered by the decision of the Hon'ble High Court of Kerala (supra) though not the jurisdictional High Court, but the only decision available on the said issue squarely binds the Tribunal and hence, applying the said ratio, we hold that the assessee is entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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