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TMI Blog2014 (7) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... opening WDV of automatic voltage controller and motor cars purchased in the earlier years got changed due to the application of wrong rate of depreciation in the earlier years - the explanation of the assessee was not examined by the AO - the AO was not justified in not examining the explanations given by the assessee before making the disallowance – thus, the matter is remitted back for fresh Adjudication – Decided in favour of Assessee. Assessment of inter-branch credit balance transferred to the reserve account – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that, if the assessee bank has not claimed debit of such entries made in the branch, then credit of such entries cannot be treated as income – the AO will be required to ascertain as to whether the corresponding debit entry has been claimed by the branch as expenditure and if the same has not been claimed as expenditure, then the amount credited cannot be taxed as income - CIT(A) has followed the decision rendered by the co-ordinate bench of the Tribunal in the assessee’s own case – thus, there is no reason to interfere in the order of the CIT(A) – Decided against Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 100.32 crores and the assessment was made on a total income of ₹ 70.69 crores. Subsequently, the Assessing officer noticed that there was escapement of income and accordingly, he re-opened the assessment relating to AY 2006-07 by issuing notice u/s. 148 of the Act and completed the same by making various additions. The assessment relating to the assessment year 2007-08 was completed u/s. 143(3) of the Act by making various additions. Aggrieved by the assessment orders passed for both the years, the assessee preferred the appeals before the Ld. CIT(A) and the appeals were partly allowed. Aggrieved, both the parties have filed these appeals before us on the issues decided against each of them. 3. We shall take up the appeal filed by the assessee for the assessment year 2006-07. The first issue relates to the validity of re-opening of the assessment. The Ld. Counsel for the assessee submitted that the Assessing officer has reopened the assessment, only on change of opinion and hence the re-opening is not valid. In this regard, he placed reliance on the decision of the Hon ble Supreme Court rendered in the case of CIT vs. Kelvinator India Limited (187 Taxman 312). 3.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 4.1 In the appellate proceedings, the Ld. CIT(A) took the view that the statutory auditor has given the report after verification of claims and rates of depreciation and hence, the Assessing officer was justified in relying upon the report of the statutory auditor. 4.2 We have heard the rival contentions on this issue. The Ld. AR submitted that the assessee has computed the amount of depreciation by adopting correct amount of Written down Value of the assets and also by applying the applicable rates. He further submitted that the difference between the amount of depreciation shown in the tax audit report and in the return of income has arisen on account of consideration of incorrect rate of depreciation on automatic voltage controller and motor cars purchased in 1998-99 and 2001-02 which had the cascading effect in the subsequent years resulting in carry forward of wrong amount of WDV. The Ld. AR further submitted that the Assessing officer is required to determine correct amount of total income and in that process he is required to ascertain the correct amount of deduction admissible under the Act. Accordingly, he submitted that the tax authorities are not justified in no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is not taxable under the principle of mutuality. However, the Assessing officer took the view that the RBI letter cited above recognizes the un-reconciled inter-branch amount balance as income of the assessee. Accordingly, the Assessing officer assessed the above said amount as miscellaneous income of the assessee. 5.1 Before the Ld. CIT(A), the assessee placed reliance on the decision rendered by the Delhi Bench of the Tribunal in the case of Punjab National Bank vs. ACIT (I.T.A. No. 2047/Del/2007 dated 25-10-2011 relating to the assessment year 2005-06). The Ld. CIT(A) however took the view that the decision rendered by the Delhi Bench of Tribunal centers around the applicability of provisions of sec. 41(1) of the Act. On the contrary, the Ld. CIT(A) placed reliance on the decision rendered by the co-ordinate bench of the Cochin Tribunal in the assessee s own case in I.T.A. Nos. 98 99/Coch/2002 relating to the assessment years 1997-98 and 1998-99 and accordingly, directed the Assessing officer to decide this issue as per the directions given by the Tribunal. For the sake of convenience, we extract the relevant observations made by the Ld. CIT(A) on this issue: 16.6 On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther expressed the view that if the loss is claimed in respect of an investment in a prior year due to fall in its value and in the current year, if part of loss is recouped due to appreciation of the value, then the said increase should be assessed to tax. Hence, the AO asked for details of the securities whose value has appreciated. Since the assessee did not furnish the details, the AO disallowed 50% of the amount claimed as loss in the value of securities. 6.1 The Ld CIT(A) accepted with the principles expressed by the AO, but directed the AO determine the actual quantum, instead of making adhoc disallowance. 6.2 The Ld A.R submitted that the assessee has been following consistent method of valuing stock in trade at Cost or market value, whichever is less. Accordingly he submitted that market value has to be necessarily ignored, if it is more than the cost, since the said appreciation is notional until it is actually realized. He further submitted that the assessee has valued the stock in trade according to the method consistently followed and hence there is no requirement to disturb the loss claimed by the assessee. 6.3 On the contrary, the Ld D.R pointed out that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue for the assessment year 2006-07. The only issue urged relates to the disallowance made u/s 36(1)(viia) of the Act. According to the AO, the claim made by the assessee results in allowing the deduction twice. The AO has arrived at this conclusion with the following observations:- On verifying the past records also it was found that the assessee has not been debiting the bad debts written off to the provision for bad and doubtful debts account created u/s 36(1)(viia) of the Act resulting in duplication of claim of bad debts in violation of the provisions of section 36(1)(vii) r.w.s 36(1)(viia) r.w.s 36(2)(v) However, according to the assessee, it has been debiting the bad debts written off only to the Provision for bad and doubtful debts account and only the debit balance available in the above said Provision account was claimed as deduction. Thus, we notice that observations made by the AO and the submissions made by the assessee contradicts with each other. 7.1 There appears to be no dispute for claiming deduction both u/s 36(1)(vii) and 36(1)(viia) of the Act. The dispute relates to the issue viz.., whether the assessee has complied with the proviso to 36(1)(vii ..... 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