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2018 (7) TMI 2067 - ITAT MUMBAIDisallowance u/s. 14A read with Rule 8D - HELD THAT:- We direct the AO to restrict the disallowance under Section 14A to 2% of the exempt income. in the result the ground of appeal raised by the assessee is allowed. Disallowance on account of bad debts written off u/s 36(1)(vii) - HELD THAT:- Proviso to clause (vii) stood introduced in order to protect the Revenue. It would be meaningless to invoke the said proviso where there is no threat of double deduction. In case of rural advances, which are covered by the provisions of clause (viia), there would be no such double deduction. 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 issued 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). Accordingly, the above question is answered in the affirmative, i.e., in favour of the assessee(s). Disallowance made by the AO on account of broken period interest - HELD THAT:- It is not disputed that in respect of the securities held by the respondent on 31st March, 2001, the due date for payment of interest thereon had not arrived on 31st March, 2001 and that the respondent sold some of such securities prior to the next due date for payment of interest. It is only the holder of the security on such date to whom interest can be said to have accrued. In any event interest did not accrue to the respondent on 31st March, 2001, as admittedly interest was not payable on that date as per the terms of the said securities. The appellate authorities, therefore, rightly deleted the addition of ₹ 1,21,57,517/- by the Assessing Officer as interest income. MAT applicability u/s 115JB - HELD THAT:- In terms of the provisions of Section 115 JB {2), every assessee is required to prepare its profit and loss account in terms of the provisions of Part II and III of Schedule VI to the Companies Act. Unless the profit and loss is so prepared, the provisions of Section 115JB cannot come into play at all. However, the assessee is a banking company and under proviso to Section 211(2) of the Act the assessee is exempted from preparing its books of accounts in terms of requirements of Schedule VI to the Companies Act, and the assessee is to prepare its books of accounts in terms of the provisions of Banking Regulation Act. It is thus contended that the provisions of Section 115JB do not apply in the case of banking companies which are not required to prepare the profit and loss account as per the requirements of Part II and III of Schedule VI to the Companies Act. Since the provisions of Section 115 JB do not apply to the assessee company Valuation of securities while shifting from Available for sale to Hold to Maturity - HELD THAT:- We have noted that almost on identical facts on identical question of law the Hon'ble High Court in the case of CIT vs. HDFC Bank Ltd [2014 (7) TMI 724 - BOMBAY HIGH COURT] held that loss incurred on account of security held under category “ available for sale” to ‘held to maturity’ was to be allowed as business loss. Therefore, respectfully following the decision of jurisdictional high court this ground of appeal raised by revenue is dismissed.
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