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TMI Blog2015 (7) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the Assessee lay down proposition that the Assessee should be given liberty to create a reserve in the books of accounts of the relevant AY. For the reasons given above, we reject the second alternate submission made by the learned counsel for the Assessee. Thus the Assessee will be entitled to deduction u/s.36(1)(viia) of the Act of ₹ 100,55,67,213/- only. - Decided prtly in favour of revenue. Deduction u/s.36(1)(vii)on account of Bad Debts written off in the books of accounts - claim disallowed by the AO on the ground that the credit balance in the PBDD relating to non-rural branches have to be adjusted against the debit to the profit and loss account on account of bad debts - CIT(A) allowed claim - Held that:- Deduction under Section 36(1)(vii) is available for deduction on account of Bad debts written off pertaining to non-rural debts. This deduction is allowed only when the amount of bad debt is actually written off in the books and debited to Profit & Loss account. Deduction cannot be claimed for creating Provision for Bad and Doubtful Debts of Non-rural branches. It is like any other bad debt written off which is allowed as deduction in the case of Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... item of expenditure. The Hon'ble Court held that permitting penalty paid for the nature of such violations as an item of deductible expenditure under s. 37 of the IT Act will only amount to placing a premium on the commission of infraction of the assessee. Therefore, penalty payable under s. 24(4)(a) and 24(4)(b) could not be allowed as deductible expenditure.- Decided in favour of revenue. Deduction u/s.36(1)(viii) - Held that:- A plain reading of the provisions of Sec.36(1)(viii) of the Act clearly shows that what is relevant is profits derived from eligible business computed under the head "Profits and gains of business or profession" and not the profits derived by the entity as a whole as has been done by the AO and CIT(A). We therefore hold that the method of computation of deduction as done by the AO and CIT(A) is incorrect. The profits derived from eligible business computed under the head "Profits and gains of business or profession" as done by the Assessee has been accepted by the AO and CIT(A). There should be no difficulty in accepting the claim made by the Assessee for deduction u/s.36(1)(viii) of the Act. The Assessee has also filed before us an alternate method of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n P. Boaz, AM,JJ. For the Petitioner : Shri O P Yadav, CIT-III (DR) For the Respondents : Shri S Ananthan and Smt Lalitha Rameswaran, CAs ORDER Per N V Vasudevan, Judicial Member ITA No. 578/Bang/2012 is an appeal by the Revenue, while ITA No.653/Bang/2012 is an appeal by the Assessee. Both these appeals are directed against the order dated 19.01.2012 of CIT(A), LTU, Bangalore, relating to AY 08-09. ITA No.578/Bang/2012 (Appeal by the Revenue) 2. Grounds Nos. 1, 6 and 7 raised by the Revenue in the grounds of appeal are general in nature and calls for no specific adjudication. 3. Ground No.2 raised by the Revenue projects the grievance of the Revenue against the order of the CIT(A) whereby the CIT(A) allowed the claim of the Assessee for deduction u/s.36(1)(viia) of the Act of ₹ 192,57,72,764/- which according to the revenue was in excess of the provisions made in the accounts by the Assessee. It is the stand of the revenue that the deduction u/s.36(1)(viia) of the Act ought to be allowed only to the extent provision is made in the books of accounts for bad and doubtful debts. The Assessee is a banking company carrying on business of banking. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in 78 ITD 103 wherein it was held that irrespective of the debit to the profit and loss account on account of provision for bad and doubtful debts (PBDD), an Assessee is entitled to 10% of the AARA as deduction u/s.36(1)(viia) of the Act. The relevant observations of the Tribunal in the aforesaid decision was as follows: 20. The learned CIT has also acted under the misconception that deduction under cl. (viia) is related to the actual amount of provision made by the assessee for bad and doubtful debts. The true meaning of the clause, as indicated earlier, is that once a provision for bad and doubtful debts is made by a scheduled bank having rural branches, the assessee is entitled to a deduction which is quantified not with respect to the amount provided for in the accounts, but with respect to a certain percentage of the total income and also a certain percentage of the aggregate average advances made by the rural branches of the bank. In other words, this is a specific deduction given by the statute irrespective of the quantum provided by the assessee in its accounts towards provision for bad and doubtful debts. 5. The learned DR relied on the decision of the ITAT Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made before the lower authorities and the Assessee cannot in proceedings before the tribunal raise the issue. The learned counsel for the Assessee however in rejoinder submitted that the Assessee can raise legal issues which can be decided on facts which are already on record. According to him the powers of the Tribunal in dealing with appeals are expressed in section 254(1) of the Act in the widest possible terms. The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. It was his submission that the word thereon , of course, restricts the jurisdiction of the Tribunal to the subject-matter of the appeal. The words pass such orders as the Tribunal thinks fit include all the powers (except possibly the power of enhancement) which are conferred upon the Commissioner of Income Tax (Appeals) by section 251 of the Act. Our attention was drawn to Rule 11 and 27 of the Appellate Tribunal Rules, 1963, which provides as follows :- Rule-11 provides: The appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e grounds incorporated in the memorandum of appeal filed by the other side, the evidentiary facts in support of new ground must be available on record. 9. It would be useful to refer to the decision of the Hon'ble Supreme Court in the case of National Thermal Power Corporation 229 ITR 383 (SC). The Hon'ble Supreme Court in the aforesaid decision reframed question of law for consideration as follows: Where on the facts found by the authorities below a question of law arises (though not raised before the authorities) which bears on the tax liability of the assessee, whether the Tribunal has jurisdiction to examine the same ? Answering the above question, the Hon'ble Supreme Court held as follows: 3. Under s. 254 of the IT Act the Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(viia) of the Act as it stood for AY 2003-04 and thereafter that for claiming deduction under the said provision that the provision for Bad and Doubtful debts should relate to rural advances or as to whether as long as the Bank makes any provision for bad and doubtful debts, it is eligible to claim deduction u/s.36(1)(viia) of the Act as per the calculation provided therein. The Tribunal analysed the provision of Sec.36(1)(viia) of the Act as it existed at various point of time and concluded as follows:- 34. It can be seen from the history of Sec.36(1)(viia) of the Act that at stage-I the deduction was allowed in respect of any provision for bad and doubtful debts made by a scheduled bank in relation to the advances made by its rural branches. At this stage the PBDD had to be linked to the advances made by Bank's rural branches. At stage-II of Sec.36(1)(viia), the deduction while computing the taxable profits was allowed of an amount not exceeding ten per cent of the total income (computed before making any deduction under the proposed new provision) or two per cent of the aggregate average advances made by rural branches of such banks, whichever is higher. At this stage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r non-scheduled banks whether it had rural branches or not a deduction upto 5% of their total income in respect of provision for bad and doubtful debts. Even under the new provisions creating a PBDD in the books of accounts is necessary. 37. Though under Stage-II and Stage-III of the provisions of Sec.36(1)(viia) of the Act, PBDD has to be created by debiting the profit and loss account of the sum claimed as deduction, the condition that the provision should be in respect of rural advances is not necessary. At stage-II of the provisions of Sec.36(1)(viia) of the Act, this condition was done away with and it was only necessary to create PBDD in the books of accounts and debit to profit and loss account. The quantification of the maximum deduction permissible u/s.36(1)(viia) of the Act had to be done. Firstly it has to be ascertained as to what is 10% of the aggregate average advances made by rural branches, if the Bank has rural branches, otherwise that part of the deduction u/s.36(1)(viia) of the Act will not be available to the bank. The second part of the deduction u/s.36(1)(viia) has to be ascertained viz., 7.5% seven and one-half per cent of the total income (computed before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said decisions the Assessee claimed deduction u/s.36(1)(viii) of the Act in respect of special reserve created and maintained by a specified entity, an amount not exceeding twenty per cent of the profits derived from eligible business computed under the head Profits and gains of business or profession (before making any deduction under this clause) carried to such reserve account. The Assessee did not create special reserve to the extent of 20% of the profits derived from eligible business. It was held that the Assessee should be afforded an opportunity to assessee to create further reserve. Reference was made to the decision of ITAT Delhi in the case of Power Finance Corporation Ltd. 2008-TIOL-475-ITAT-Del wherein in the context of deduction u/s.32A of the Act, the Tribunal held that the reserve created by holding a second Annual general meeting and where accounts were amended creating reserve required u/s.32A of the Act, the Assessee should be allowed deduction u/s.36(1)(viia) of the Act. 15. We have considered the submissions and are of the view that the same cannot be accepted. The creation of a special reserve u/s.32A or Sec.36(1)(viii) of the Act cannot be equated with c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as deduction u/s.36(1)(viia) of the Act. The Assessee gave the break-up of Bad debts written off as under:- Bad Debts written off Rs.185,53,26,012 LESS: Amount written off in respect of Rural advances for which deduction u/s.36(1)(viia) was claimed in earlier years Rs.13,17,13,161 LESS: Amount written off in respect of Nonrural branches and for which deduction u/s.36(1)(viia) was claimed in earlier years a) NPA accounts in respect of which deduction is claimed u/s.36(1)(viia) @ 7.5% of the total income in the A.Y. 2003- 04 Rs.2,92,45,322 b) NPA account in respect of which deduction is claimed u/s.36(1)(viia) @ 10% of the Bad Doubtful Debts in the AY 2003-04. Rs.15,91,33,959 c) NPA account in respect of which deduction is claimed u/s.36(1)(viia) @ 7.5% of the total income in the A.Y. 2004- 05 Rs.22,29,88,026 d) NPA account in respect of which deduction is claimed u/s.36(1)(viia) @ 10% of the Bad Doubtful Debts in the AY 2004-05. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written off as irrecoverable in the accounts of the assessee during the previous year. Proviso to Sec.36(1)(vii) provides as follows: Provided that in the case of an assessee to which clause (viia) applies, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made under that clause. Explanation.-For the purpose of this clause, any bad debt or part thereof written off as irrecoverable in the accounts of the assessee shall not include any provision for bad and doubtful debts made in the accounts of the assessee. 20. According to the AO as per the proviso to Sec.36(1)(vii) of the Act, the Assessee was required to set off the bad debts written off against the provision created u/s.36(1)(viia) of the Act. The AO further held that the credit available in the PBDD of non-rural debts was much more than the sum of ₹ 108,53,62,763 claimed as deduction on account of bad debts written off by the Assessee hence cannot be allowed. 21. Aggrieved by the aforesaid disallowance, assessee preferred appeal before the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eated by the assessee in relation to the advances of the rural branches, subject to the limitation that an amount should not be deducted twice under section 36(1) (vii) and 36(1) (via) simultaneously. The facts in that case were that the appellant bank had, in the return for assessment year 1993-94 filed on 30-12-1993, claimed a sum of ₹ 38,28,836 as bad debts actually written off. It had also claimed provision for bad and doubtful debts under section 36(1)(via) in a sum of ₹ 1,10,94,360. The assessing officer did not allow the claim for deduction of debts amounting to ₹ 38,28,836 actually written off. The CIT(A) rejected the assessee's claim and upheld the order of Assessing Officer and the ITAT held that deduction under section 36(1)(vii) was allowable independently and irrespective of the provision for bad and doubtful debts created by the assessee in relation to advances of rural branches, subject to the imitation that an amount should not be deducted twice under section 36(1)(vii) and 36(1)(viia) simultaneously. It was pointed out that the Hon'ble jurisdictional High Court considered the questions of law answered by two judgments of Kerala and Madras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he deduction. In respect of that part of debt with reference to which a provision was made under clause (viia), the Proviso would operate to limit the deduction to the extent of the difference between that part of the debt written off in the previous year and the credit balance in the provision for bad and doubtful debts account made under clause (viia). The Assessee also relied on the decision of the ITAT in its own case in ITA No.150 151/Bang/2001 order dated 9.6.2006 for AY 1999-2000 2000-01 wherein on identical issue, the Tribunal allowed deduction as claimed by the Assessee. 22. The ld. CIT(Appeals) agreed with the contentions put forth by the Assessee and directed the AO to allow the claim for deduction on account of bad debts as made by the Assessee. 23. Aggrieved by the order of the CIT(Appeals), the revenue has raised grounds No. 3 before the Tribunal. The ld. DR relied on the order of the AO. The ld. counsel for the assessee relied on the decision of Hon'ble Supreme Court in the case of Catholic Syrian Bank v. CIT, 343 ITR 270 (SC), wherein the Hon'ble Supreme Court has clearly held that deduction u/s. 36(1)(vii) of the Act is an independent deduction an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The language of s. 36(1)(vii) is unambiguous and does not admit of two interpretations. It applies to all banks, commercial or rural, scheduled or unscheduled. It gives a benefit to the assessee to claim a deduction on any bad debt or part thereof, which is written off as irrecoverable in the accounts of the assessee for the previous year. This benefit is subject only to s. 36(2). It is obligatory upon the assessee to prove to the AO that the case satisfies the ingredients of s. 36(1)(vii) on the one hand and that it satisfies the requirements stated in s. 36(2) on the other. The proviso to s. 36(1)(vii) does not, in absolute terms, control the application of this provision as it comes into operation only when the case of the assessee is one which falls squarely under s. 36(1)(viia). The Explanation to s. 36(1)(vii) specifically excluded any provision for bad and doubtful debts made in the account of the assessee from the ambit and scope of 'any bad debt, or part thereof, written off as irrecoverable in the accounts of the assessee'. Thus, the concept of making a provision for bad and doubtful debts will fall outside the scope of s. 36(1)(vii) simpliciter. (iv) As per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bt(s) arising out of rural advances, the deduction on account of actual write off would be limited to the excess of the amount written off over the amount of the provision allowed under cl. (viia). Thus, the proviso to cl. (vii) stood introduced in order to protect the Revenue. It would be meaningless to invoke the said proviso where there is no threat of double deduction. In case of rural advances, which are covered by the provisions of cl. (viia), there would be no such double deduction. The proviso limits its application to the case of a bank to which cl. (viia) applies. Clause (viia) applies only to rural advances. This has been explained by the circulars issued by CBDT. Thus, the proviso indicates that it is limited in its application to bad debt(s) arising out of rural advances of a bank. It follows that if the amount of bad debt(s) actually written off in the accounts of the bank represents only debt(s) arising out of urban advances, the allowance thereof in the assessment is not affected, controlled or limited in any way by the proviso to cl. (vii). 26. The ratio laid down by the Hon'ble Supreme Court can be summed up as follows:- (1) Deduction under Section 36(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Investments held by the Assessee in the Held to Maturity (HTM) category of Investments. According to the Assessing Officer, as per the RBI's Master Circular - Prudential norms for classification, valuation and operation of Investment Portfolio by banks - RBI/2010-11/50 revised as on 1.7.2010, investment portfolio of banks cannot be treated as stock in trade where the investments are held on the basis of Held to Maturity category or Available for Sale category. The Assessing Officer was also of the view that for IT purposes the Assessee had chosen to treat all investments as stock in trade and claimed diminution in value of stock in trade (closing stock) as loss. According to Assessing Officer, such a course of action cannot be permitted. The AO also referred to CBDT Circular No.665 dated 5/10/93 wherein the CBDT had clarified that whether a particular investment constitutes Investment or stock-in-trade is a question of fact and the AO's should be guided by RBI Circulars issued from time to time in this regard. The Assessing Officer accordingly held that Master Circular issued by the RBI had to be followed. Accordingly, the loss on diminution value of investments wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, submitted that in the assessee's own case for the A.Y. 2005-06, this Tribunal has confirmed the order of the CIT(A), deleting identical addition made by the AO. Our attention was also drawn to the order of the Tribunal in assessee's own case in ITA No.492/Bang/2009 for the A.Y. 2005-06, order dated 13.01.2012, wherein the Tribunal had to deal with identical issue as to whether the CIT(A) was correct in deleting the addition made by the AO on account of profit on sale of investments of ₹ 200,77,13,662/- and deleting the action of the AO in disallowing loss claimed on treating investments as stock-in-trade by drawing the investment trading account of ₹ 775,96,55,047. The Tribunal held 16. We have heard both sides and find that the Supreme Court in the case of UCO Bank in 240 ITR 355 has held as under : In our view, as stated above, consistently for 30 years, the assessee was valuing the stock-in-trade at cost for the purpose of statutory balance-sheet, and for the income-tax return, valuation was at cost or market value, whichever was lower. That practice was accepted by the Department and there was no justifiable reason for not accepting the same. Prep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid case followed its own decision rendered in the case of Karnataka Bank Ltd. v. CIT in ITA No.172/2009 rendered on 11.01.2013, wherein the Court took the view that depreciation claimed on investments 'held on maturity' by a bank has to be treated as stock-in-trade in accordance with RBI guidelines and CBDT Circular. It was his submission that the later decision of the Hon'ble Karnataka High Court has to be followed. 62. We have given a careful consideration to the rival submissions and are of the view that the contentions put forth on behalf of the assessee deserve to be accepted. The Tribunal in assessee's own case on an identical issue for the A.Y. 2005-06 has upheld the claim of the assessee. The later decision of the Hon'ble High Court of Karnataka is also in favour of the assessee. In such circumstances, we are of the view that the issue raised by the revenue in its appeal is without merit. Consequently, the same is dismissed. 22. The above decision squarely covers the issue in favour of the Assessee. Respectfully following the same, we uphold the order of the CIT(A) and dismiss the relevant grounds of appeal of the Revenue. 34. The ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble expenditure under s. 37 of the IT Act will only amount to placing a premium on the commission of infraction of the assessee. Therefore, penalty payable under s. 24(4)(a) and 24(4)(b) could not be allowed as deductible expenditure. 37. Respectfully following the aforesaid decision of the Hon'ble Karnataka High Court, we hold that the sum in question is not allowable as a deduction. The order of the CIT(A) on this issue is accordingly reversed and the order of the AO restored. Ground No.5 raised by the revenue is allowed. 38. The Revenue has filed the following additional grounds of appeal and seek admission of the same on the ground that the issues raised therein are legal issues relating to allowance of deduction of PBDD u/s.36(1)(viia) 36(1)(vii) of the Act. The additional grounds sought to be raised in this regard read thus: (1) Assessee's claim of deduction u/s. 36(1)(vii) of ₹ 108.53 Cr is not in accordance with the provisions under the Act where bad debts written off was not debited into the profit loss account. (2) The provision of NPA for both rural and non rural branches debited into the profit and loss account was only ₹ 100.56 Cr, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any deduction under this clause) carried to such reserve account: Provided that where the aggregate of the amounts carried to such reserve account from time to time exceeds twice the amount of the paid up share capital and of the general reserves of the specified entity, no allowance under this clause shall be made in respect of such excess. Explanation: In this clause,- (a) specified entity means,- (i) a financial corporation specified in section 4A of the Companies Act, 1956 (1 of 1956); (ii) a financial corporation which is a public sector company; (iii) a banking company; (iv) a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank; (v) a housing finance company; and (vi) any other financial corporation including a public company; (b) eligible business means,- (i) in respect of the specified entity referred to in sub-clause (i) or sub-clause (ii) or sub-clause (iii) or sub-clause (iv) of clause(a), the business of providing long-term finance for- (A) industrial or agricultural development; (B) development of infrastructure facility in India; or (C) develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. % of Interest earned from advances made to industrial, agricultural and infrastructure activities to total interest income (Sl.No.1/Sl.No.2) 18.44% 4. Operating Profit for the year ended 31.3.2008 660,87,65,493 5. Profits from activities specified u/s.36(1)(viii) (Sl.No.4 x Sl.No.3 x 100) 121,87,91,872 6. 20% of the profits derived from activities specified u/s.36(1)(viii) 24,37,58,374 7. Amount transferred to special reserve 25,00,00,000 8. Amount eligible for deduction u/s.36(1)(viii) (lower of amount under Sl.No.6 or Sl.No.7) 24,37,58,374 42. The AO held that the Assessee is not an entity eligible for deduction u/s.36(1)(viii) of the Act. Without prejudice to the above stand of the AO, he also found fault with the method of computation of deduction u/s.36(1)(viii) of the Act done by the Assessee. The loss under the head Income from Business or profession declared by the Assessee in the return of income was ₹ 118,71,25,119. After reducing the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46. We have considered the rival submissions. A plain reading of the provisions of Sec.36(1)(viii) of the Act clearly shows that what is relevant is profits derived from eligible business computed under the head Profits and gains of business or profession and not the profits derived by the entity as a whole as has been done by the AO and CIT(A). We therefore hold that the method of computation of deduction as done by the AO and CIT(A) is incorrect. The profits derived from eligible business computed under the head Profits and gains of business or profession as done by the Assessee has been accepted by the AO and CIT(A). There should be no difficulty in accepting the claim made by the Assessee for deduction u/s.36(1)(viii) of the Act. The Assessee has also filed before us an alternate method of computation of deduction u/s.36(1)(viii) of the Act to demonstrate that such alternate method will result in claim for deduction being made at ₹ 37,14,84,183/-. The said computation is given as Annexure-2 to this order. We deem it appropriate to direct the AO to examine the computation given as annexure-2 to satisfy himself that the claim as made originally was correct. The AO is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 49. On appeal by the Assessee, the CIT(A) confirmed the action of the AO. The CIT(A) however proceeded on the basis that the Assessee had incurred direct expenditure also in the form of interest expenses in earning the tax free income. We have already seen that the AO did not raise such issue in the order of assessment. The disallowance by the AO was only with reference to other expenses under Rule 8D(iii) of the Rules. Therefore the observations of the CIT(A) in his order on applicability of Sec.14A of the Act to both direct and indirect expenses, are without any basis. 50. Before the Tribunal, the learned counsel for the Assessee placed reliance on the decision of the Hon'ble Karnataka High Court in the case of CCI Ltd. Vs. JCIT (2012) 20 Taxmann.com 196 (Kar.)/(2012) 250 CTR (Kar) 291. The substantial question of law for consideration before the Hon'ble Karnataka High Court in the aforesaid case was as to whether the provisions of Section 14A of the Act are applicable to the expenses incurred by the assessee in the course of its business merely because the assessee is also having dividend income when there was no material brought to show that the assessee had incurred e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime of hearing, it was submitted by the ld. DR that the issue can be remanded for fresh consideration as was done by the Tribunal in A.Y. 2005-06 in ITA No.504/Bang/2009, order dated 13.01.2012. The ld. counsel for the assessee, however, submitted that the Tribunal in its earlier order though noted direct judgments on the point viz., (1) Order dated 30.09.2010 in ITA No.3390/2009 passed by ITAT 'G' Bench, Mumbai in the case of Krung Thai Bank; (2) Order dated 30.06.2011 in ITA Nos.4702 to 4706/2010 passed by the ITAT, Mumbai 'F' Bench in the case of Union Bank of India; and (3) Order dated 03.08.2011 in ITA No.469/2010 passed by the ITAT 'C' Bench, Chennai in the case of Indian Bank, did not adjudicate on the applicability of section 115JB, but following an earlier order in the assessee's own case for earlier years (at which point of time the above Tribunal's decisions were not available), restored the matter to the Assessing Officer to compute book profits based on recast P L account prepared in accordance with the Schedule-VI of the Companies Act. 96. The learned counsel for the Assessee also submitted that the provisions of Sec.115JB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Learned Departmental Representative, on the other hand, vehemently relies upon the orders of the authorities below and submits that there is no specific exclusion clause for the banking companies, and in the absence of such a clause, it is not open to us to infer the same. The submissions of the learned counsel, according to the departmental representative, are clearly contrary to the legislative intent and plain wordings of the statute. 7. The plea of the assessee is indeed well taken, and it meets our approval. The provisions of Section 115 JB can only come into play when the assessee is required to prepare its profit and loss account in accordance with the provisions of Part II and III of Schedule VI to the Companies Act. The starting point of computation of minimum alternate tax under section 115JB is the result shown by such a profit and loss account. In the case of banking companies, however, the provisions of Schedule VI are not applicable in view of exemption set out under proviso to Section 211 (2) of the Companies Act. The final accounts of the banking companies are required to be prepared in accordance with the provisions of the Banking Regulation Act. The provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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