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TMI Blog2014 (2) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... such a contingency cannot be a sufficient reason to consider a provision made on standard assets also as a provision for bad and doubtful debts - claim of the assessee that provision for standard assets also has to be considered for applying the condition set out under Section 36(1)(viia) is not in accordance with law - 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 - "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 ld. CIT that the order of Assessing Officer was erroneous insofar as it was prejudicial to the interests of Revenue – Decided against Assessee. Disallowance u/s 14A of the Act r.w Rule 8D of the Rules – Held that:- The decision in Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] followed - Rule 8D could not be applied for assessment year - even after the application of Rule 8D, disallowance under Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction, by a resident of India, in respect of profits or income arising in Thailand, which has been subjected to tax both in India and in Thailand, shall be allowed as a credit against the Indian tax payable in respect of such profits or income provided that such credit shall not exceed the Indian tax (as computed before allowing any such credit) which is appropriate to the profits or income arising in Thailand." According to Article 23(3) of the DTAA, "For the purposes of the credit referred to in Paragraph (2), the term "That tax payable" shall be deemed to include any amount which would have been payable as Thai tax for any year...." It is clear from the above, where the profits or income has been subjected to tax both in India and in Thailand, there shall be allowed as a credit in the form of "DITR Relief" against the Indian tax payable in respect of such profit or income earned in Thailand. It is simply made clear vide article 23(3) of DTAA that the quantum of credit to be allowed is that "any amount which would have been payable as Thai tax for any year". The above stand is also strengthened by the Gazette Notification Extraordinary Part II Section 3 Sub-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its Bangkok income. Relevant para in the assessment order appearing on page 5 is reproduced hereunder: "DIT relief under Double Taxation Agreement The assessee has claimed a sum of Rs. 4,50,23,152/- being 35.70% tax on its Bangkok income of Rs. 12,61,15,270/-. As held by the Supreme Court of India, in the case of P.V.A.L. Kulandagan Chettiar (supra), the income from Bangkok amounting to Rs. 12,61,15,270/-is not taxable in India and hence reduced from the total income. The above Supreme Court judgment was referred to the Sr. Standing Counsel for proper interpretation and as advised by her necessary reworking has been done in earlier years also." Thus, Assessing Officer, during the course of original assessment, was very well aware of the decision of Hon'ble Apex Court in the case of P.V.A.L. Kulandagan Chettiar (supra). When we look at the reason given for reopening reproduced at para 4 above, we find that the reopening has been resorted to for the same issue. There is no new material or tangible evidence in the hands of the Revenue. It was only based on a change of opinion that reopening was resorted to. That a reopening cannot be done based on a change of opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had moved in appeal against some of the additions made by the Assessing Officer on other issues and pursuant to the relief granted in such appeal, the gross total income which earlier stood at Rs. 76,54,31,493/- came down to Rs. 35,38,65,546/-. As a result of the reduction in gross total income, deduction under Section 36(1)(viia) was also scaled down from Rs. 5,74,07,362/- to Rs. 2,65,39,916/-. This sum when aggregated with 10% of rural advances coming to Rs. 2,72,65,099/-, resulted in the sum of Rs. 5,38,05,015/- being eventually allowed as deduction under Section 36(1)(viia) of the Act. In the books of the assessee, actual provision for bad and doubtful debts was only Rs. 4,01,44,027/-. Assessee had also made a provision of Rs. 2.23 Crores on its standard assets. If the provision for bad and doubtful debts alone was considered, then the total allowance under Section 36(1)(viia) was in excess of such provision. However, if the provision for standard assets was also considered as provision for bad and doubtful debts, then the total provision could go up to Rs. 6,24,44,027/-. Then of course, assessee's claim as finally allowed was well within the limits specified under Section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts also has to be considered for applying the condition set out under Section 36(1)(viia) is not in accordance with law. If the provision for standard assets is not considered as provision for bad and doubtful debts, the actual provision for bad and doubtful debts made by the assessee in its books Rs. 4,01,44,027/- fall much below the sum of Rs. 5,38,05,015/- allowed by the Assessing Officer. In any case, a look into the original assessment order clearly show that but for the deduction allowed to the assessee as claimed by it in its return, there was no discussion as to how Section 36(1)(viia) was applied and whether the limits were corrected worked out. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision of co-ordinate Bench of this Tribunal in the case of MSA Securities Services (P.) Ltd. v. Asstt. CIT in I.T.A.No. 1523/Mds/2012 dated 17th October, 2012.. 19. Per contra, learned D.R. submitted that in assessee's own case for assessment year 2006-07, this Tribunal has remitted the issue back to the file of the Assessing Officer for consideration afresh. 20. We have perused the orders and heard the rival submissions. In view of the decision of Hon'ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. v. Dy. CIT (328 ITR 81), there can be no dispute that Rule 8D could not be applied for impugned assessment year. However, Hon'ble Bombay High Court also held that even after the application of Rule 8D, disallowance under Section 14A could be made. No doubt, here assessee's submission is that securities were held by it as stock-in-trade and earning of income was incidental thereon. But, at the same time, we also find that co- ordinate Bench of this Tribunal in assessee's own case for assessment year 2006-07 in I.T.A. No. 96/Mds/2010 dated 3.1.2011 had remitted the said issue back to the file of the Assessing Officer. Therefore, in the interest of justice, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing the order of co-ordinate Bench of this Tribunal, we hold that assessee was entitled for higher depreciation available to energy saving device. 26. Ground No.3 of the assessee is allowed. 27. In the result, appeal of the assessee for assessment year 2007-08 is partly allowed for statistical purposes. 28. Coming to the appeal of the Revenue, it has raised altogether five grounds, of which, Ground Nos.1 and 5 are general needing no adjudication. 29. Vide its ground No.2, grievance raised by the Revenue is that CIT(Appeals) allowed the claim of the assessee on bad debt relating to non-rural advances. 30. Learned A.R. submitted that the issue stood decided in favour of assessee by the decision of the Tribunal in assessee's own case for assessment year 2006-07 in Dy. CIT v. Bharat Overseas Income Tax IT Appeal No. 215 (Mds.) of 2010, dated 30-10-2012. 31. Learned D.R. fairly admitted that decision of Hon'ble Apex Court in the case of Catholic Syrian Bank Ltd. v. CIT 343 ITR 270 went in favour of assessee. 32. In view of the admitted position, ground No.2 of the Revenue stands dismissed. 33. Vide its ground No.3, grievance of the Revenue is that CIT(Appeals) directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and applied the same and decided the issue. We therefore hold that the finding given by the learned CIT(Appeals) is not correct. Accordingly, we reverse the order passed by the learned CIT(Appeals) on this count and uphold the order of the Assessing Officer." 36. Ground No.3 of the Revenue is allowed. 37. Vide its ground No.4, grievance raised by the Revenue is that CIT(Appeals) directed the Assessing Officer to allow loss on revaluation of investments of Rs. 34,98,10,600/-. 38. Learned A.R. submitted that the issue stood decided in favour of assessee by this Tribunal on assessee's appeal for assessment year 2006-07 in Bharat Overseas Income Tax (supra). Reliance was also placed on the decision of co-ordinate Bench of this Tribunal in assessee's own case for assessment year 2007-08 in I.T.A. No. 861/Mds/2010. Learned D.R. fairly agreed with this. 39. In view of the admitted position that loss on revaluation of investments has been allowed by virtue of the decision of this Tribunal in assessee's own case for assessment year 2006-07 in Bharat Overseas Income Tax (supra), we do not find any merit in this ground raised by the Revenue. 40. Ground No.4 of the Revenue stands ..... X X X X Extracts X X X X X X X X Extracts X X X X
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