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2020 (3) TMI 897 - AT - Income TaxAddition u/s 36(1)(viia) - Provision for standard assets and the provision for country risk as provision for bad and doubtful debts - HELD THAT - As decided in own case 2019 (2) TMI 1691 - ITAT CHENNAI admittedly, no question was asked to the assessee during the course of assessment proceedings also with regard to the claim made by it under Section 36(1)(viia), insofar as it concerns the quantum of such claim. This obviously show that there was no application of mind by the Assessing Officer at the time of assessment. Assessing Officer had not come to any conclusion at all having not considered the claim in the light of the conditions set out in Section 36(1)viia of the Act. We cannot say that he had taken a view which was in accordance with law. It is not a case where the Assessing Officer had adopted one of the courses possible in law. Of course, a cryptic order of the Assessing Officer by itself may not show that there was no thought given by him on a claim of the assessee. Here there was no enquiry made during the course of assessment proceedings. Therefore, the order which was silent on the claim made by the assessee, and allowing such claim, without any discussion, will definitely render it erroneous and prejudicial to the interests of Revenue. As held by Hon ble Apex Court in the case of Malabar industrial Co. Ltd. v. lT 2000 (2) TMI 10 - SUPREME COURT prejudicial to the interests of the Revenue is a term of wide import and not confined to loss of tax. An order without application of mind is definitely prejudicial to the interests of the revenue. We are in agreement with Id. CIT that the order of Assessing Officer was insofar as it was prejudicial to the interests of Revenue.No interference is required. - Decided against assessee. Restriction of relief u/s. 90 to the extent of tax paid in foreign country instead of tax charged on foreign income which is included in total income - HELD THAT - Issue decided against the assessee by the co-ordinate Bench for the assessment year 2009-10 2014 (6) TMI 954 - ITAT CHENNAI . Depreciation on Goodwill - HELD THAT - As decided in own case 2019 (2) TMI 1691 - ITAT CHENNAI assessee did not have any goodwill in commercial terms as it has acquired more liabilities than the assets. The Ld.DR s submission that when there is no goodwill as per the terms of the agreement as well as in reality. When the assessee has not paid any amount for the goodwill, it cannot claim existence of any goodwill. When there is no existence of goodwill, it is not entitled for any depreciation. Therefore, the assessee s corresponding grounds fail. Disallowance of contribution to staff welfare fund - HELD THAT - As decided in own case 2019 (2) TMI 1691 - ITAT CHENNAI respectfully following it, we reject the corresponding grounds of the assessee. Recovery in respect of bad debts written off relating to rural branches - HELD THAT - As decided in own case 2019 (2) TMI 1691 - ITAT CHENNAI Revenue does not dispute that the assessee had raised its claim of deduction of bad debts relating to the very sums in preceding assessment years. The Assessing Officer did not allow this relief in relevant previous year, when it has recovered the aforesaid debts, the Revenue is again seeking to tax the same. There is no cogent evidence before us to dispute this factual position Moreover, the CIT(A) has cited section 41(4) of the Act whilst granting relief.The Revenue has failed to point out any legal or factual error in CIT(A) s findings Therefore, the same are affirmed. However, as a matter of caution, we observe that the assessee s claim of bad debts pertaining to those sums in preceding assessment years, if any, shall be deemed to have been dismissed. With these observations, the Revenue s ground is rejected. Depreciation on UPS allowed at 60% instead of 80% - HELD THAT - As relying in own case 2019 (2) TMI 1691 - ITAT CHENNAI we reject this ground raised by the assessee. Depreciation on ATM - HELD THAT - As relying in own case 2019 (2) TMI 1691 - ITAT CHENNAI concluded that ATM cannot function without the help of computer and would be a part of the computer used in the banking industry. Reliance was placed by the Tribunal upon the decision of the Delhi Bench of Tribunal in the matter of DCIT v. Global Trust Bank 2011 (1) TMI 1430 - ITAT DELHI wherein it has been held that ATM was a computer equipment and depreciation @ 60% was allowed. So far as the use of software is concerned, the Tribunal records a fact that the evidence of the use of the software on 31/3/2008 was produced before the Tribunal. Thus, the Tribunal held that depreciation @ 30% on software was rightly claimed. Deduction u/s. 36(1)(viia) based on advances outstanding and not on incremental advances - HELD THAT - As decided in own case 2017 (4) TMI 1424 - ITAT CHENNAI Commissioner Tax (Appeals) has not erred in directing the Assessing Officer to the aggregate average advances outstanding at the end of each month and not the incremental advances granted during each month while computing deduction under section 36(i)(viia) Allowability of loss on revaluation of trading derivatives - HELD THAT - As decided in own case 2017 (4) TMI 1424 - ITAT CHENNAI we uphold the orders of Commissioner of Income Tax (Appeals) on this issue and reject the grounds of Revenue Disallowance u/s 14A - HELD THAT - There Is no finding in the assessment order regarding treatment of exempted income yielding assets as stock-in-trade. Hence, in our opinion, if it is treated as stock-in-trade by the assessee, then the claim of assessee is to be allowed in terms of Order of Tribunal 2014 (9) TMI 1179 - ITAT CHENNAI . Accordingly, this issue is remitted to the file of AO for fresh consideration. Disallowance of provision for leave encashment - HELD THAT - As decided in own case 2019 (2) TMI 1691 - ITAT CHENNAI as far as the outstanding interest demand as of date is concerned, it would be open to the Department to recover that amount in case Civil Appeal of the Department is allowed. We further make it clear that the assessee would, during the pendency of this Civil Appeal, pay tax as if section 43B(f) is on the statute Book but at the same it would be entitled to make a claim in its returns - thus the addition is sustained. Depreciation on assets taken over by Bank of Tamilnadu - HELD THAT - Since the LdCIT(A) has directed the AO to follow the directions of this tribunal decision in the assessee s own case in 2013 (4) TMI 751 - ITAT CHENNAI wherein, the ITAT had remitted the matter back to the AO to verify the scheme of take over and to determine whether the provisions of section 2(1B) were applicable, we do not find any error in the order of the Ld.CIT(A). Applicability of provisions of section 115JB - HELD THAT - Since, the Ld. CIT(A) has followed and applied the decision of Calcutta ITAT in the case of UCO Bank 2015 (12) TMI 300 - ITAT KOLKATA and Damodar Valley Corporation 2018 (8) TMI 1363 - ITAT KOLKATA we do not find any reason to interfere with the order of the Ld. CIT(A) and hence, the corresponding grounds of the Revenue on this ground as well as the other grounds raised by the Revenue with regard to the various additions made in computing book profits are dismissed.
Issues Involved:
1. Consideration of provision for standard assets and country risk as provision for bad and doubtful debts. 2. Restriction of relief under section 90 to the extent of tax paid in a foreign country. 3. Depreciation on goodwill. 4. Disallowance of contribution to staff welfare fund. 5. Recovery in respect of bad debts written off relating to rural branches. 6. Depreciation on UPS. 7. Depreciation on ATM. 8. Deduction under section 36(1)(viia) based on advances outstanding and not on incremental advances. 9. Allowability of loss on revaluation of trading derivatives. 10. Disallowance under section 14A. 11. Disallowance of provision for leave encashment. 12. Depreciation on assets taken over by Bank of Tamilnadu. 13. Applicability of provisions of section 115JB. Detailed Analysis: 1. Consideration of Provision for Standard Assets and Country Risk as Provision for Bad and Doubtful Debts: The tribunal upheld the CIT(A)'s decision, referencing the Supreme Court's judgment in the Catholic Syrian Bank case. It was determined that provisions for bad and doubtful debts under section 36(1)(viia) apply only to rural advances. The tribunal confirmed that provisions made towards urban debts should be added back and allowed only when bad debts are actually written off. 2. Restriction of Relief under Section 90 to the Extent of Tax Paid in a Foreign Country: The tribunal followed its earlier decision in the assessee's own case for the assessment year 2011-12, which restricted relief under section 90 to the extent of tax paid in the foreign country. The tribunal upheld the CIT(A)'s order, rejecting the assessee's grounds. 3. Depreciation on Goodwill: The tribunal denied the assessee's claim for depreciation on goodwill, referencing the Supreme Court's decision in Smifs Securities Ltd. and noting that the transferor bank did not enjoy any goodwill in commercial terms. The tribunal concluded that no depreciation could be allowed since there was no actual goodwill. 4. Disallowance of Contribution to Staff Welfare Fund: The tribunal upheld the CIT(A)'s disallowance of the contribution to the staff welfare fund, following its earlier decision in the assessee's own case for the assessment year 2011-12. 5. Recovery in Respect of Bad Debts Written Off Relating to Rural Branches: The tribunal allowed the assessee's grounds, subject to the condition that if the bad debts were allowed as deductions in earlier years and recovered in the assessment year under consideration, they should be treated as income of the assessee. 6. Depreciation on UPS: The tribunal rejected the assessee's claim for depreciation on UPS at 80%, following its earlier decision in the assessee's own case for the assessment year 2011-12, where it was held that UPS is not an energy-saving device eligible for higher depreciation. 7. Depreciation on ATM: The tribunal allowed the assessee's claim for depreciation on ATM, referencing the Bombay High Court's decision in CIT vs. Saraswat Infotech Ltd., which held that ATM is part of the computer system and eligible for higher depreciation. 8. Deduction under Section 36(1)(viia) Based on Advances Outstanding and Not on Incremental Advances: The tribunal upheld the CIT(A)'s order, following its earlier decision in the assessee's own case, which directed that the deduction under section 36(1)(viia) should be calculated based on the aggregate average advances outstanding at the end of each month. 9. Allowability of Loss on Revaluation of Trading Derivatives: The tribunal upheld the CIT(A)'s order allowing the claim of loss on revaluation of derivative contracts, following its earlier decision in the assessee's own case for the assessment year 2011-12. 10. Disallowance under Section 14A: The tribunal remitted the issue back to the AO for fresh consideration, following its earlier decision in the assessee's own case, which held that if the securities yielding exempt income are held as stock-in-trade, no disallowance under section 14A is warranted. 11. Disallowance of Provision for Leave Encashment: The tribunal sustained the addition, subject to the conditions imposed by the Supreme Court in the case of CIT vs. Exide Industries Ltd., which held that the provision for leave salary cannot be disallowed under section 43B. 12. Depreciation on Assets Taken Over by Bank of Tamilnadu: The tribunal upheld the CIT(A)'s direction to the AO to follow the directions given by the ITAT in the assessee's own case, which remitted the matter back to the AO to verify the scheme of takeover. 13. Applicability of Provisions of Section 115JB: The tribunal upheld the CIT(A)'s order, which followed the decisions of the Calcutta ITAT in the cases of UCI Bank and Damodar Valley Corporation, holding that the provisions of section 115JB are not applicable. Conclusion: The assessee's appeal was partly allowed, and the Revenue's appeal was treated as partly allowed, with the tribunal following its earlier decisions and the decisions of higher courts in the assessee's own cases for previous assessment years.
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