2019 (8) TMI 723 - AT - Income Tax

Reopening of assessment u/s 147 - based on material found in subsequent year assessment - HELD THAT - On the basis of the material found during the course of scrutiny proceedings for the subsequent years the AO found that taxable income escaped assessment. Therefore he reopened the assessment for the year under consideration. Since the assessment was reopened on the basis of tangible material found subsequent to the assessment this Tribunal is of the considered opinion that the AO has rightly reopened the assessment. Disallowance of bad debts written off relating to rural debt - HELD THAT - On the basis of the material found during the course of scrutiny proceedings for the subsequent years the AO found that taxable income escaped assessment. Therefore he reopened the assessment for the year under consideration. Since the assessment was reopened on the basis of tangible material found subsequent to the assessment this Tribunal is of the considered opinion that the Assessing Officer has rightly reopened the assessment. Deduction U/s.36(1)(viia) - assessee submitted that the very same issue was decided against the assessee in the assessee s own case by this Tribunal for the assessment year 2011-12 2016 (4) TMI 753 - ITAT CHENNAI Deduction U/s 36(1)(vii) - In view of the Judgments of the Apex Court in Vijaya Bank 2010 (4) TMI 46 - SUPREME COURT and Catholic Syrian Bank Ltd 2012 (2) TMI 262 - SUPREME COURT this Tribunal is of the considered opinion that the bad debts in respect of non-rural branches has to be allowed as bad debts written off U/s.36(1)(vii) of the Act. In view of the above we are unable to uphold the order of the lower authorities. Accordingly the orders of both the authorities below are set aside and the addition made U/s.36(1)(vii) of the Act is deleted. Deduction U/s.36(1)(viia) based on advance outstanding and not on incremental advances - HELD THAT - Admittedly the CIT(A) followed the order of this Tribunal in the assessee s own case for the assessment year 2010-11. Rule 6ABA of the Income Tax Rules clearly shows that any advance that has been made and outstanding at the end of each month has to be taken for the purpose of deduction U/s.36(1)(viia) of the Act. The Rule does not say that only the incremental advance has to be considered. Moreover this issue was also decided in favour of the assessee by this Tribunal in the assessee s own case for the assessment year 2010-11. 2014 (9) TMI 1179 - ITAT CHENNAI Taxability of amount received under Agricultural Debt Relief and Debt Waiver Scheme - HELD THAT - CIT(A) directed the assessee to furnish the relevant information before the Assessing Officer and directed the Assessing Officer to examine the matter. Under the scheme of Income-Tax Act the CIT(A) has no power to set aside the assessment for reconsideration. However this Tribunal is of the considered opinion it has to be verified whether the interest income was offered for taxation earlier. Accordingly in exercise of jurisdiction conferred on this Tribunal the orders of both the authorities below are set aside and the issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter afresh in accordance with law after giving reasonable opportunity to the assessee. Disallowance made based upon the population of village instead of ward - HELD THAT - This issue is decided against the assessee by this Tribunal in the assessee s own case for the assessment year 2011-12 2017 (4) TMI 1424 - ITAT CHENNAI Restriction of relief U/s 90 to the extent of tax paid in foreign country instead of tax charged on the foreign income which is included in total income - HELD THAT - Admittedly this issue was decided against the assessee by this Tribunal for the assessment year 2011-12 2017 (4) TMI 1424 - ITAT CHENNAI by order dated 03.04.2017. Moreover U/s.90 of the Act only to the extent of tax paid in foreign country the relief has to be granted. In this case the Assessing Officer already granted relief to the extent of tax paid in the foreign country. In view of the above this Tribunal did not find any reason to interfere with the order of the lower authorities and the same is confirmed. Depreciation on goodwill - HELD THAT - Issue was decided against the assessee by this Tribunal in the assessee s own case for the assessment year 2013-14 Loss on revaluation of trade derivatives - HELD THAT - We heard Shri Clement Ramesh Kumar the Ld. Departmental Representative also. According to the Ld.DR this issue was decided in favour of the assessee for the assessment year 2011-12 by this Tribunal in 2017 (4) TMI 1424 - ITAT CHENNAI . In view of the above this Tribunal did not find any reason to interfere with the order of the lower authority and the same is confirmed. Depreciation on UPS - depreciation at the rate of 60%- HELD THAT - This Tribunal for the assessment year 2013-14 found that the assessee is eligible for depreciation at the rate of 60% on the UPS. In this case the Assessing Officer allowed only 15% of depreciation. Therefore the CIT(A) has rightly allowed depreciation at the rate of 60%. In view of the above this Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly the same is confirmed. Disallowance made u/s.40(a)(ia) on account of short deduction - HELD THAT - No doubt the Kolkata High Court in the case of S.K. Tekriwal 2012 (12) TMI 873 - CALCUTTA HIGH COURT found that in case of short deduction there cannot be any disallowance U/s.40(a)(ia) of the Act. However as rightly submitted by the Ld.DR there are other High Court Judgments which is in favour of the Revenue also. In case of any Judgment by Madras High Court that is binding on the Assessing Officer. Since the Ld.DR could not produce the details immediately the issue is remitted back to the file of the Assessing Officer - orders of both the authorities below are set aside and the issue is remitted back to the file of the Assessing Officer to re-examine the issue and bring on record all the available Judgments on the issue. If there is a Judgment by Madras High Court the same has to be followed in preference to the other High Court Judgments. Depreciation claimed by the assessee on the asset taken over from Bank of Tamilnadu - HELD THAT - This issue was admittedly examined by this Tribunal for the assessment year 2010-11 2013 (4) TMI 751 - ITAT CHENNAI and remitted back the matter to the file of the Assessing Officer. Similarly for the assessment year 2013-14 also the very same issue was remitted back to the file of the Assessing Officer. For the sake of consistency for the year under consideration also the issue is remitted back to the file of the AO. Applicability of provision of Section 115JB - Both the representatives for the assessee and the Revenue very fairly submitted that this issue was decided in favour of the assessee in the assessee s own case for the assessment year 2011-12 2017 (4) TMI 1424 - ITAT CHENNAI In view of the above this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly the same is confirmed.

Summary

Issues Involved:
1. Reopening of Assessment
2. Deduction under Section 36(1)(viia) of the Income-Tax Act
3. Deduction under Section 36(1)(vii) of the Income-Tax Act
4. Charging of Floating Provision to Tax
5. Taxability of Amount Received under Agricultural Debt Relief and Debt Waiver Scheme
6. Depreciation on Goodwill
7. Contribution to Staff Welfare Fund
8. Recovery of Bad Debts Written Off in Respect of Rural Branches
9. Depreciation on UPS
10. Loss on Revaluation of Trade Derivatives
11. Disallowance under Section 14A of the Income-Tax Act
12. Disallowance under Section 40(a)(ia) of the Income-Tax Act
13. Depreciation on Assets Taken Over from Bank of Tamilnadu
14. Applicability of Provision of Section 115JB of the Income-Tax Act

Detailed Analysis:

1. Reopening of Assessment:
- For the assessment year 2008-09, the Tribunal upheld the reopening of the assessment by the Assessing Officer based on tangible material found during subsequent scrutiny proceedings. The reopening was deemed justified as it was based on new information indicating that taxable income had escaped assessment.
- Similarly, for the assessment year 2009-10, the reopening was upheld as it was based on tangible material from subsequent assessment years.

2. Deduction under Section 36(1)(viia):
- For the assessment year 2008-09, the Tribunal confirmed the lower authorities' decision, which was based on a prior Tribunal order for the assessment year 2011-12, denying the deduction.
- For the assessment year 2009-10, the Tribunal also confirmed the denial of the deduction, following the same rationale as the 2011-12 decision.
- For the assessment year 2012-13, the Tribunal again confirmed the denial of the deduction based on the same prior decision.

3. Deduction under Section 36(1)(vii):
- For the assessment year 2008-09, the Tribunal allowed the assessee's claim for bad debts written off for non-rural branches, citing Supreme Court judgments in Vijaya Bank and Catholic Syrian Bank Ltd.
- The same decision was applied for the assessment year 2009-10 and 2012-13, allowing the deduction for bad debts written off for non-rural branches.

4. Charging of Floating Provision to Tax:
- For the assessment year 2009-10, the Tribunal remitted the issue back to the Assessing Officer for verification of whether the floating provision was made exclusively under Section 36(1)(viia) and whether the interest repayment received from the Government was offered for taxation.

5. Taxability of Amount Received under Agricultural Debt Relief and Debt Waiver Scheme:
- For the assessment year 2009-10, the Tribunal remitted the issue back to the Assessing Officer to verify if the interest income was offered for taxation earlier and to re-examine the matter afresh.

6. Depreciation on Goodwill:
- For the assessment year 2012-13, the Tribunal confirmed the denial of depreciation on goodwill, following a prior decision for the assessment year 2013-14.

7. Contribution to Staff Welfare Fund:
- For the assessment year 2012-13, the Tribunal confirmed the denial of the deduction for contributions to the staff welfare fund, following a prior decision for the assessment year 2013-14.

8. Recovery of Bad Debts Written Off in Respect of Rural Branches:
- For the assessment year 2012-13, the Tribunal confirmed the decision against the assessee, following a prior decision for the assessment year 2013-14.

9. Depreciation on UPS:
- For the assessment year 2012-13, the Tribunal confirmed the allowance of 60% depreciation on UPS, following a prior decision for the assessment year 2013-14.

10. Loss on Revaluation of Trade Derivatives:
- For the assessment year 2012-13, the Tribunal confirmed the allowance of loss on revaluation of trade derivatives, following a prior decision for the assessment year 2011-12.

11. Disallowance under Section 14A:
- For the assessment year 2012-13, the Tribunal remitted the issue back to the Assessing Officer for reconsideration, following a prior decision for the assessment year 2013-14.

12. Disallowance under Section 40(a)(ia):
- For the assessment year 2012-13, the Tribunal remitted the issue back to the Assessing Officer to re-examine the matter in light of available judgments, particularly focusing on the short deduction issue.

13. Depreciation on Assets Taken Over from Bank of Tamilnadu:
- For the assessment year 2012-13, the Tribunal remitted the issue back to the Assessing Officer, following a prior decision for the assessment year 2010-11.

14. Applicability of Provision of Section 115JB:
- For the assessment year 2012-13, the Tribunal confirmed the decision in favor of the assessee, following a prior decision for the assessment year 2011-12.

Conclusion:
- The appeals of the assessee for the assessment years 2008-09 and 2012-13 were partly allowed.
- The appeal of the assessee for the assessment year 2009-10 was partly allowed for statistical purposes.
- The appeal of the Revenue for the assessment year 2008-09 was dismissed.
- The appeal of the Revenue for the assessment year 2012-13 was partly allowed for statistical purposes.