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TMI Blog2015 (2) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... d to appreciate that the amount written off had been credited to NCD account, hence, it would be allowable as a deduction under section 36(1)(vii) of the Act. 1.3 The learned CIT(A) failed to appreciate the fact that the assessment order passed by the learned AO for the assessment years 2000-01 & 2001-02 clearly mentioned that the amounts written off would be allowed as a deduction in the year in which it is credited to the NCD account. Further, the learned CIT(A) has failed to appreciate the fact that since amounts written off were credited to NCD account in the assessment year 2002-03, it would be allowable under section 36(1)(vii) of the Act. 2. The assessee is engaged in the business of banking. In the computation of business income furnished along with the return of income for the A.Y. 2002-03, the assessee had claimed deduction of a sum of Rs. 11,18,42,001 on account of write off of non-convertible debentures (NCDs). In its letter dated 1.2.2005 furnished by the assessee before the Assessing Officer, the assessee submitted that the total write off on account of NCDs was a sum of Rs. 17,16,17,001, out of whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claim of the assessee being rejected in A.Ys. 2000-01 & 2001-02, the claim should be allowed in the A.Y. 2002-03. We hold and direct accordingly. 7. Ground No.2 raised by the assessee in its appeal reads as follows:- 2. Ground 2 - Amortization of premium paid on Held to Maturity ('HTM') category of investment amounting to Rs. 3,13,60,916 2.1 The learned CIT(A) erred in confirming the disallowance made by the AO in respect of the amount debited to profit and loss account towards amortization of investments held under the HTM category. 2.2 The learned CIT(A) has erred in not appreciating the fact that RBI guidelines provides that premium paid on HTM category investments should be amortized over the period remaining to maturity. 2.3 The learned CIT(A) further erred in law in not taking cognizance of the Central Board of Direct Taxes ("CBDT") Instruction No 17/2008 dated 26 November, 2008 which reiterated that in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed as a deduction in the assessment year 2002- 2003. 9. However, the AO disallowed the entire sum of 3,13,60,916/- by relying on the order of his predecessor for the assessment year 2001-2002. The CIT(Appeals) also did not agree with the submissions made and he followed his own order in assessee's own case for the A.Y. 2004-05, wherein similar issue was decided against the assessee. Aggrieved by the order of the CIT(Appeals), the assessee has raised ground No.2 before the Tribunal. 10. We have heard the rival submissions. The issue raised by the assessee in ground No.2 is no longer res integra and has been decided by this Tribunal in the case of M/s. Sir M.Visweswaraya Cooperative Bank Ltd. Vs. JCIT ITA No.1122/Bang/2010 for AY 07-08 order dated 11.5.2012. The following were the relevant observations of the Tribunal: "03. Let us first take up the issue relating to amortization of premium on investment in government securities. Relevant grounds read as under : " i) The learned Commissioner (Appeals) ought to have appreciated that the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is in second appeal before us with this issue. 06. The learned counsel for the assessee submitted that the Commissioner of Income-tax (Appeals) had failed to see the reason that a issue similar to that of the present one had been allowed by various benches of the Hon'ble Tribunals, namely : * Catholic Syrian Bank Ltd., v. ACIT - Cochin (2010) 38 SOT 553 ; * Khanapur Coop.Bank Ltd., v. ITO in ITA.141/PNJ/2011 (Panaji); * Corporation Bank v. ACIT, M'lore in ITA.112/Bang/2008 (Bang) The learned counsel also placed reliance on Board's Instructions No.17 of 2008(vii) and pleaded that the claim of the assessee be allowed as the assessee had the powers to debit in its P&L account a sum of Rs. 29,02 lakhs of amortization of premium. 07. Per contra, the learned DR was unable to controvert to the submissions of the learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are of the considered view that the assessee is entitled to claim this deduction and hence we allow the grounds of the assessee relating to this issue." 11. We are of the view that in the light of the decision on the issue considered by the Tribunal, the claim made by the assessee has to be allowed. Accordingly, the AO is directed to allow the claim of the assessee for deduction. 12. Ground No.3 was not pressed and the same is dismissed as not pressed. 13. Ground No.4 raised by the assessee reads as follows:- 4. Ground 4 - Disallowance under section 43B amounting to Rs. 44,80,266. 4.1 The learned CIT(A) failed to appreciate that write back excess provision of bonus needs to be allowed as a deduction from the taxable income as the provision was offered to tax in earlier years. 4.2 The learned CIT(A) erred in law and in fact in confirming the disallowance made by the AO and holding that the claim of the Appellant was an excess claim of deduction under Section 43B of the Act. 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been found out by the A.R. in this calculation. Only the deduction relating to this A.Y. has been considered to compute the excess amount of deduction. Hence, I see no reason to interfere. Grounds of appeal is dismissed." 18. Before us, the ld. counsel for the assessee drew our attention to page 12 of the paperbook, which contains the statement showing the details of sums which fall for consideration u/s. 43B of the Act. The same is annexed as Annexure-I to this order. He also drew our attention to page 9 & 10 of the paper book which is the computation of income from business. The same is annexed as Annexure-II. Attention was also drawn to the fact that one of the items added to the profit & loss account was Schedule-C of the computation of income from business and that in Schedule-C the excess provision of bonus of Rs. 44,80,266 had been duly considered while arriving at the sum of Rs. 6,31,91,125 which was the amount debited to the profit and loss account. It was submitted that there was no claim made for deduction as assumed by the revenue authorities. 19. We have considered the submissions of the learned counsel for the Assessee and are of the view that the aspects pointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1956, but a statutory corporation governed by the provisions of Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970. It had prepared the profit and loss account as per the latter Act, and not in accordance with the provisions of the Companies Act. However, in view of the requirements of section 115JB(2), it had redrawn the profit and loss account in accordance with the provisions of Parts II and Ill of Schedule VI to the Companies Act. Therefore, the MAT computed in accordance with the redrawn profit and loss account was in order. 90. Before the CIT(Appeals), the assessee stated that the assessing officer had erred in adopting the net profit as per the profit and loss account prepared on the basis of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, for computing the book profit under section 115JB. He ought to have called for and adopted the profit and loss account as required under section 115JB(2) and prepared as per Schedule- Vl of the Companies Act. The assessee also questioned the various other adjustments made by the assessing officer in computing the book prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT [2002] 255 ITR 273, wherein it was held that the assessing officer had no power to rework the book profit if the profits were computed in accordance with Parts II and II of Schedule VI to Companies Act. Accordingly, he referred to his own order dated 15.01.2010 in ITA No. RB-lIl/UDP/CIT(A)MNG/2008-09 in the assessee's own case for assessment year 1990-91 holding that if the adjustments carried out in preparing the revised profit and loss account were in accordance with the provisions of Parts II and Ill of Schedule V to the Companies Act, the assessing officer ought to consider only the revised profit and loss account for purposes of computation of book profit under section 115J, and not the profit as per the profit and loss account prepared in accordance with the Banking Regulation Act. Following the same reasoning, the CIT(A) directed that computation of MAT may be done on the basis of the profit and loss account redrawn by the assessee in accordance with the Companies Act. The assessee was directed to furnish the profit and loss account redrawn in accordance with Schedule VI of Companies Act. 94. Aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. counsel for the assessee. We find that this issue was considered by the Mumbai Bench of the Tribunal in the case of Krung Thai Bank (supra) and on the above issue held as follows:- "5. Learned counsel for the assessee, however, contends that the provisions of MAT do not apply to the assessee, and , for this reason, very foundation of impugned reassessment proceedings is devoid of legally sustainable merits. His line of reasoning is this. The provisions of MAT can come into play only when the assessee prepares its profit and loss account in accordance with Schedule VI to the Companies Act. It is pointed out that, in terms of the provisions of Section 115JB(2),every assessee is required to prepare its profit and loss account in terms of the provisions of Part II and II I of Schedule VI to the Companies Act . Unless the profit and loss is so prepared, the provisions of Section 115 JB cannot come into play at al l. However, the assessee is a banking company and under proviso to Section 211 (2) of the Act , the assessee is exempted from preparing its books of accounts in terms of requirements of Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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