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TMI Blog2014 (4) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... said chart were those issues not considered by the Tribunal in the earlier round of proceedings and those issues where COD approval was obtained subsequent to earlier adjudication. On 3rd August, 2010, the Tribunal issued a Corrigendum to its earlier order in M.P. Nos. 307 to 329/Mds/2007 mentioned supra, whereby it was clarified that the appeals which were recalled were limited to I.T.A. Nos. 131 & 388/Mds/2001, 984 to 986/Mds/2003, 1082/Mds/2003, 1654 & 1655/Mds/2004, 1900 & 1901/Mds/2004 & 682 to 684/Mds/2006. The issues in the above appeals that were earlier not adjudicated by the Tribunal and/or on which COD approvals were received subsequently are disposed of hereunder. I.T.A. No. 984/Mds/2003 3. Three issues are to be considered based on the order of recall. First issue is regarding reopening of assessment, second issue is regarding treatment of depreciation on securities and third issue is regarding treatment of appreciation on securities. 4. On the issue of reopening of assessment, submission of the learned A.R. was that ld. CIT(Appeals) had not considered this ground at all, though it was specifically raised before him. It was argued by the learned A.R. that the reope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell approached the Tribunal pointing out the mistake and requesting for an order for rectification. But, in our opinion, this decision rendered with regard to an appeal before Tribunal cannot be straightaway applied to an appeal before the CIT(Appeals). When there is a non disposal of a ground by CIT(Appeals), a level of adjudication is lost and if the Tribunal proceeds to adjudicate the issue straightaway, it is loosing the wisdom of an intermediary level of adjudication. In an appeal filed before Hon'ble jurisdictional High Court under Section 260A of the Act, the issues stand atleast adjudicated once by the lower authorities. Here, on the other hand, the issue regarding reopening of assessment was never adjudicated by the CIT(Appeals) and if the Tribunal straightaway deals with this issue, it would be loosing the view point of the ld. CIT(Appeals), who was duty-bound to adjudicate on each and every ground raised before him. Hence, we are of the opinion that the matter has to go back to the file of ld. CIT(Appeals) and he has to adjudicate the ground raised by the assessee regarding the jurisdiction of A.O. to reopen the assessments. This issue is, therefore, decided in favou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tood the scope of observations of Hon'ble Apex Court by widening the definition of securities to two categories, viz. "permanent" and "current". Learned A.R. further referred to a decision of Hon'ble Kerala High Court in the case of CIT v. Nedungadi Bank Ltd. (264 ITR 545) wherein, according to him, the securities comprised of those taken for satisfying the SLR requirements. As per learned A.R., securities purchased for maintaining SLR also were to be valued at cost or market value, whichever was lower, and Hon'ble Kerala High Court had not made any distinction or categorization. Reliance was also placed on the decision of Hon'ble jurisdictional High Court in the case of CIT v. City Union Bank Ltd. (291 ITR 144). Learned A.R. also relied on the decision of Co-ordinate Bench of this Tribunal in the case of Bharat Overseas Bank Ltd. v. JCIT in I.T.A. Nos. 231 to 237/Mds/2001, etc. dated 7th January, 2005, for buttressing his contention that a distinction between "permanent" and "temporary" securities cannot be considered for the purpose of valuation. 10. Per contra, learned D.R. submitted that RBI, vide its Circular dated 27.4.1992, had clearly bifurcated the investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooperative Apex Bank (251 ITR 194), no such bifurcation was attempted between "permanent" and "current" category for valuation. The Courts have consistently held that investment held by bank had to be valued at lower of cost or market price. A bank by virtue of Banking Regulation Act, has to maintain its accounts as per Section 29 and 30 thereof and Schedule III mentioned thereunder, gives the assessee an option to give the value of investment at cost or market price. Hence, in our opinion, differentiation attempted by ld. CIT(Appeals) between "permanent" and "current" categories of investments was not warranted. In taking this view, we are fortified by the decision of co-ordinate Bench of this Tribunal in the case of Bharat Overseas Bank Ltd. (supra). On the same issue, after considering arguments of both parties, the Tribunal at para 11 held as under:- "11. After considering the rival submissions and relevant material on record, we find force in the contentions of the learned authorized representative of the assessee. The Hon'ble Supreme Court in the case of United Commercial Bank v. CIT supra, had clearly held that even if the securities are valued at cost in the Balance Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of this Tribunal in I.T.A. No. 388/Mds/2001 dated 25.10.2007 shall stand corrected as "appeal is partly allowed". 15. In the result, appeal of the assessee in I.T.A. No. 388/Mds/2001 is to be treated as partly allowed. I.T.A. No. 985/Mds/2003 16. First issue raised by the assessee is on reopening of assessment. As per the assessee, though a ground was raised before ld. CIT(Appeals) assailing the reopening, it was not adjudicated. The above ground of assessee is akin to its similar ground raised in I.T.A. No. 984/Mds/2003. For the same reasons as given in para 6 above, we remit the issue back to the file of ld. CIT(Appeals) for adjudication. 17. Second issue raised by the assessee is regarding depreciation on securities. 18. This issue has already been raised by the assessee in its appeal in I.T.A. No. 984/Mds/2003. We have already held that such loss has to be allowed in para 11 above. Ordered accordingly for impugned assessment year also. 19. Third issue raised by the assessee is regarding disallowance under Section 80M of the Act. Assessing authority had disallowed a sum of Rs. 4,89,091/- from the gross dividend while granting assessee deduction under Section 80M of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Apex Court pronounces a judgement, it is a declaration of law as it stood always. But, it is also true that the Committee on Disputes was constituted based on directions of Hon'ble Apex Court. In the case of ONGC v. Collector of Central Excise (1992) 104 CTR 131, their Lordships directed all courts and Tribunal not to entertain litigation between Government and PSUs, without clearance from such COD. Even pending matters came within the purview of COD by virtue of a subsequent decision of Hon'ble Apex Court reported as 116 CTR 643. Though now vide the decision in Electronics Corporation of India (supra), Hon'ble Apex Court has recalled the orders in the above mentioned cases of ONGC (supra), the Tribunals all over India were not admitting any issues or appeal on which COD permission was not there. Now, these appeals before us, as already mentioned, are recalled matters, recalled by virtue of an order of this Tribunal in M.P. Nos. 307 to 329/Mds/2007 dated 31st March, 2010. The order of this Tribunal is clear in that the recall was limited to issues earlier not adjudicated and the issues where COD approval was received subsequent to its earlier decision. In fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee in I.T.A. No. 985/Mds/2003 to the extent it is recalled is partly allowed. I.T.A. No. 986/Mds/2003 25. First issue raised by the assessee is regarding disallowance of provision for bad and doubtful debts relating to foreign branches. Provision for bad and doubtful debts relating to foreign branches, which was disallowed for the impugned assessment year came to Rs. 14,23,35,103/-. Assessee claimed that income from foreign branches was not liable to be included in its total income and this claim was accepted by ld. CIT(Appeals). Revenue admittedly was not in further appeal on this issue. Therefore, as per the assessee, addition made on account of provision for bad debts relating to such foreign branches had to be deleted. As per the assessee, when foreign income was not includible, there is no question of any addition of provision for bad debts relating to foreign branches. Assessing authority and ld. CIT(Appeals) were of the opinion that foreign income being subjected to tax, provision for bad debts relating to foreign branches was to be added back in the total income and subjected to tax. 26. Before us, learned D.R. accepted the contention of the assessee that the CIT(App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputes had specifically denied permission to the assessee to pursue appeals on these issues before the Tribunal. Learned A.R. fairly agreed that there was no approval from COD on these issues for moving this Tribunal in appeal. 30. Whether assessee can pursue a matter before this Tribunal where COD had specifically refused permission, has already been adjudicated by us at para 23 above. Accordingly, we hold that these issues cannot be taken up by the assessee, in appeal before us. Related grounds thereof stand dismissed. 31. In the result, I.T.A. No. 986/Mds/2003 to the extent recalled stands partly allowed for statistical purposes. I.T.A. No. 1654/Mds/2004 32. First issue raised by the assessee is against reopening of assessment. Learned A.R. submitted that the reopening was resorted for disallowing claim on loss on account of depreciation on investments. As per learned A.R., assessee had given full details regarding such claim along with its computation. Learned A.R. submitted that the reason shown for reopening was decision of Hon'ble Calcutta High Court in the case of CIT v. UCO Bank (200 ITR 68) which had held that valuation of stock of securities considering cost or ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. CIT (SC) 177 ITR 409 R.K. Malhotra v. Kasturbhai Lalbhai (SC) 109 ITR 537 Indo-Aden Salt Mfg. Trading Co.(P) Ltd. v. CIT (SC) 159 ITR 624 K.R. Venkatesan v. WTO (Mad) 237 ITR 293 Virudhnagar Co-operative Milk Supply Society Ltd. v. CIT (Mad) 183 ITR 545 Revathy C.P. Equipments Ltd. v. DCIT (Mad) 241 ITR 856 Precot Mills Ltd. v. CIT (Mad) 273 ITR 347 WCI (Madras) (P) Ltd. v. ACIT (Mad) 324 ITR 181 Piaggio Vehicles (P) Ltd. v. CIT (Bom) 290 ITR 377 ACIT v. Mahindra Holidays & Resorts (India) Ltd. (ITAT, SBChennai) 3 ITR (Trib) 600 34. In reply, learned A.R. submitted that the reasons itself had disappeared, and hence there was no question of the reassessment proceedings being valid. According to him, depreciation on investment was an allowable claim and the reopening based on the decision of Hon'ble Calcutta High Court in the case of UCO Bank (supra) could not be held as good in law since the said decision was reversed by the Hon'ble Apex Court on appeal by the assessee concerned. 35. We have perused the orders and heard the rival contentions. As per the assessee, it had given full details for claiming depreciation on securities in its computation statement filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isted the said decision having been reversed by Hon'ble Apex Court. The sub stratum for the reopening had therefore disappeared. We are of the opinion that the reopening done after four years of the original assessment completed under Section 143(3) of the Act was not on a sound footing. Such a reopening is, therefore, held as bad in law. Ground raised by the assessee in this regard is allowed. 36. Next issue raised by the assessee is regarding its claim for depreciation on securities held under "investments". This issue has already been dealt with by us at para 11 of the order in relation to the appeal of assessee for assessment year 1986-87 in I.T.A. No. 984/Mds/2003. Hence, assessee is to succeed on this ground also. 37. In the result, appeal of the assessee in I.T.A. No. 1654/Mds/2004 to the extent it has been recalled stands allowed. I.T.A. No. 1655/Mds/2004 38. Two issues raised by the assessee are (i) reopening of assessment and (ii) its claim for depreciation on securities. Both are similar to the issues raised by it in its appeal in I.T.A. No. 1654/Mds/2004 for assessment year 1991-92. For the reasons mentioned at paras 35 and 36, we are of the opinion that assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rative for the assessee-bank to close the individual account of each debtor in its books and a mere reduction in the "loans and advances account" or debtors to the extent of the provision for bad and doubtful debt is not sufficient, is not sustainable - Apprehension that if the assessee fails to close each and every individual account of its debtors, it may result in claiming deduction twice over is not correct - It is always open to the AO to call for details of individual debtor's account if he has reasonable grounds to believe that the assessee has claimed deduction twice over - Contention that where a borrower's account is written off by debiting P&L a/c and crediting loans and advances or debtors account, it would result in escapement of income from assessment if the borrower repays the loan in the subsequent years as the assessee would credit the repaid amount to loans and advances account and not to the P&L a/c has no merit - In such circumstances the amounts are duly offered for tax and the AO is sufficiently empowered to tax such subsequent repayments under s. 41(4)." Hence this issue stands decided in favour of the assessee. 45. Next issue is on disallowance of expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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