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TMI Blog2012 (6) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... earing both the sides we find similar issue had come up before the Tribunal in assessee's own case for the assessment year 1998-99 and the Tribunal vide ITA No.5347/M/2001 order dated 31.10.2007 vide paragraph 12 and 13 has held as under: 'After hearing both the sides we find the issue stands covered against the assessee by the decision of the Tribunal in assessee's own case vide ITA No. 2589/Mum/2001. We find the Tribunal at para 17 of the order has held as under:- We have heard the parties to the dispute and have carefully gone through the record. We are of the opinion that there are sufficient findings in the orders of the CIT(A) to show that the assessee has entered into are only loan or finance transactions and so documented as to give the colour of the lease transaction to claim 100% depreciation on the assets so leased out. Identical issue has been examined by the Tribunal in the case of HDFC Bank (supra), and the Tribunal has rejected similar contentions made by the assessee. Following the same reasoning, we affirm the findings of the departmental authorities for the two years in respect of the so-called lease transactions. In other words, the disallowance of depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained by a financial corporation which is engaged in providing long-term finance for industrial or agricultural development or development of infrastructure facility in India. Or by a public company formed and registered in India with the main object of carrying on the business of providing long term finance for construction or purchase of houses in India for residential purposes, an amount not exceeding forty percent of the profits derived from such business is providing long term finance (computed under the head 'Profits and Gains of Business or Profession' before making any deduction under this clause) carried to such reserve account." As per explanation (a) to section 36(1)(viii) "financial corporation" is defined to "include a public company and a Government Company" From the above it is clear that under the existing provisions of the Act, the deduction is allowable to a "financial corporation" which is engaged in specific activities viz., providing long term finance for industrial or agricultural development or development of infrastructure facility etc.,. The term "financial corporation" was defined in an inclusive manner so as to include a Government Company and a Publi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment holds more than 51% of the share capital of the bank and hence as defined in section 617 of the Companies Act the appellant is a government company. Further the appellant is a also a Public Company since section 11 of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 states: "For the purpose of the Income Tax Act, 1961 (43 of 1961), every corresponding bank shall be deemed to be an Indian company and a company in which public are substantially interested." The appellant is engaged in the business of providing long term finance for industrial or agricultural development or development of infrastructure in India and hence is eligible to claim the said deduction. The appellant had also created the necessary reserve in accordance with the said section and hence the deduction as claimed ought to have been allowed. 9. We find that as per Explanation (a) to sec. 36(1)(viii) 'financial corporation' is defined to "include a public company and a Government company. We are of the opinion that any entity incorporated under a statute carrying on the business of financing would come under the definition of financial corporation. The definition is not an exha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36(1)(viii) the issue is remitted back to the file of the AO subject to the above direction the appeal of the assessee on this issue is allowed. 13. Ground No. 4 (in ITA No. 4705/M/10 - A.Y. 2005-06) is with respect to disallowance of expenditure for non-deduction of TDS at Sikkim. 14. The amount represents payments made in the State of Sikkim. The AO disallowed the amount on the ground that the assessee had not deducted tax at source in respect of the payments and hence as per the provisions of sec. 40(a) the said amount is not allowable as deduction. The CIT(A) relying on the decision in the case of Anjan Banerjee v. UOI [1994] 207 ITR 130/77 Taxman 17 (Cal.) confirmed the said disallowance. 15. The ld. Counsel for the assessee submitted that the provisions regarding the applicability of I.T. Act to Sikkim was not clear and hence the assessee had not deducted tax at source. The Secretary (Finance Govt. of Sikkim vide letter 3054 dt. 9.2.1996 specifically stated about the non-applicability of the Income Tax Act to Sikkim which was also confirmed by Under Secretary Govt. of Sikkim vide letter ref. 827/Fin. dt. 1.2.2007. In view of the above the assessee had not deducted tax at s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bench in the case of Maharashtra State Electricity Board v. JCIT (82 ITD 422), which holds that provisions of MAT cannot be applied to electricity companies for mutually similar reason we uphold the plea of the assessee. The provisions of sec. 115JB do not apply to the assessee, and, as such, the AO was in error in concluding that income had escaped assessment in the hands of the assessee. The very initiation of reassessment proceedings was bad in law, and we quash the same. 22. The decision of the ld. CIT(A) is reversed and we hold that provisions of Sec. 115JB cannot be made applicable to the assessee. This ground of the assessee is dismissed. 23. Ground No. 6 (in ITA No. 4706/M/10- A.Y. 2006-07) relates to disallowance u/s. 14A in computing book profits. 24. Ground No. 5 has been dismissed therefore disallowance u/s. 14A in computing book profits is consequential therefore dismissed as consequential. ITA Nos.4720 to 4724/Mum/2010 25. Ground No. 1 raised by the Revenue (in ITA No.(s) 4702 to 4706/M/10 for A.Yrs. 2002-03 to 2006-07) is with respect to prior period expenses. 26. The expenditure disallowed as in the nature of rent, municipal taxes etc, where usually the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see's appeal observing as under. "After hearing both the sides we find similar issue had come up before the Tribunal in assessee's own case for the assessment year 1998-99 and the Tribunal vide ITA No.5347/M/2001 order dated 31.10.2007 vide paragraph 24 has held as under: "After hearing both the sides, we find the issue stands covered in favour of the assessee by the decision of the Tribunal in assessee's own case vide ITA No.2590/M/01. We find the Tribunal at para 21 & 22 of the order has held as under:- "21. The last dispute in the appeal for A.Y. 1997-98 relates to taxability of reversal of unrealized interest amounting to Rs. 5,61,73,805/-. According to the guidelines issued by the Reserve Bank of India an option is given to the Bank either to make a provision for such unrealized interest on the Non-Performing Assets (NPA) by debiting the Profit and Loss Account or reverse the said interest by debiting the income in the Profit & Loss Account and in both cases the borrowers account is credited. The banks had no option but follow the above guidelines of the Reserve Bank of India. The aforesaid method of accounting was regularly employed by the assessee in the earlier years and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 91-92, 1993-94 and 1994-95 relates to the allowability of non-rural bad debts written off, such amounts are as under: A. Y. Amt 1991-92 23,04,70,367 1993-94 38,72,24,760 1994-95 76,71,34,666 The deduction in respect of the above sums were not allowed on the ground that the credit balance in the provision for bad and doubtful debts allowed u/s. 36(1)(viiia) exceeds the bad debts written off by the above amount and hence as per the proviso to section 36(1)(vii) restricts the deduction in respect of bad debts written off only if it exceeds the credit balance in the provision for bad and doubtful debts account maintained u/s.36(1)(viiia) and is applicable only in respect of bad debts written off relating to advances made at rural branches and does not apply to bad debts written off relating to advances made by non-rural branches. Hence, the learned CIT(A) counsel for the assessee contended that the bad debts written off relating to advances made by rural branches should be allowed in full without any limitation or restriction. In support of his contentions, the learned counsel for the assessee relied on the following decisions: (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. The Assessing Officer is directed accordingly." Respectfully following the above, we hold that the provisions of sec. 36(1)(viia) does not apply to bad debts written off to advances made by non rural branches. Therefore we dismiss the departmental appeal on this issue. 33. The 4th ground (in ITA Nos. 4705 & 4706/M/10 for A.yrs 2005-06 & 2006-07) raised by the Revenue relates to depreciation on investments. 34. This issue is covered in assessee's own case for the assessment year 1982-83 in ITA No. 3075/M/86 also in ITA No. 1679/M/01 for A.Y. 1997-98 in the case of Bank of India vide order dt. 27.3.2008 wherein it has been held as follows: 35. In assessee's own case in ITA No. 3075/M/86 it has been held as follows: "We have carefully considered the rival submissions and have also gone through the orders passed by the learned authorities below. The assessee is a nationalized bank. The banks are required to keep a certain percentage of their liquidity in easily realizable securities in accordance with the provision of Banking Regulations Act and in order to comply with the directions issued by the Reserve Bank of India from time to time. Such securities as far as the banks ..... X X X X Extracts X X X X X X X X Extracts X X X X
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