9911796707
TMI Blog2012 (6) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... s issue was held against assessee by this Tribunal vide its order dated 25.10.2007 in ITA No.981/Mds/2003, reason for the adverse finding against the assessee was that it could not produce evidence for continuing existence of M/s.BOT after its amalgamation with the assessee bank. Placing reliance on paper book at page-52, Counsel for assessee submitted that master details down loaded from the official website of Registrar of Companies clearly showed that BOT continued its existence even after its amalgamation with the assessee company. Per contra Departmental Representative supported the order of Commissioner of Income Tax(Appeals). 5. We find that this issue was considered by this Tribunal in its order dated 25.10.07 in ITA No.981/Mds/03 at paragraph -3 to 6, which is reproduced hereunder:- '3. In regard to the second batch of above mentioned 15 departmental appeals, the first common issue relates to the deletion of disallowance of part of the depreciation in respect of the assets taken over from the Bank of Thanjavur as per the scheme of amalgamation formulated by the Ministry of Finance, Govt. of India. 4. We have heard the rival submissions. Assessing Officer disallowed depr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any AGM for the purpose of considering the balance sheet and account or for any other purpose or to comply with the provisions of s 159 of the Companies Act, 1956. It was not necessary for the Board of Directors of the transferor bank to meet as required by section 285 of that Act. From this it is quite clear that the transferor bank consequent upon the amalgamation ceased to exist. As such the case of the assessee clearly comes within the ken of Explanation 7 to Section 43(1). In our opinion, Assessing Officer rightly disallowed the depreciation Accordingly, we reverse the order of the Commissioner of Income Tax(Appeals) on this count and restore the order of the Assessing Officer." Argument of the Ld. Counsel for assessee is that M/s.BOT continued its existence despite the amalgamation. We find that document relied on for this purpose, namely down-loaded master detail from the official website of Registrar of Companies, clearly mention that status of M/s.BOT as dormant. It is also mentioned that corrections are to be submitted by the concerned persons, if such data is incorrect. This downloaded material cannot be considered as material evidence proving the existence of that comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.01.2004 (SLP(C) No.3710 of 2004). Therefore, even though it was earlier decided by this Tribunal in assessee's own case for Assessment Year 1996-97 in ITA No.1901/Mds/04 dated 25.10.07, that broken period interest could not be considered as revenue expenditure but had to be taken as capital outlay when paid for acquiring securities, in view of the later decisions of Hon'ble Mumbai High Court mentioned supra, such broken period interest has to be allowed. We would prefer to follow the decision of the Hon'ble Mumbai High Court, since Special leave petition filed by the Department against such decision in the case of Union Bank of India (supra) was dismissed by Hon'ble Apex Court. Thus, this issue is decided in favour of assessee. 9. The third issue raised by assessee is regarding bad debts written off, which was not allowed since it was considered technical nature. This ground appears as ground No.3 for Assessment Year 2004-05 and as Ground No.2 for Assessment Years 2005-06 & 2006-07. 10 Ld. Counsel for assessee submitted that this issue stood decided in favour of assessee in assessee's own case for Assessment Year 1998-99 in ITA No.1082/Mds/2003 dated 30/06/11. Per contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." Respectfully following the decision of Co-ordinate Bench of this Tribunal, we are inclined to allow the claim of assessee. This issue is decided in favour of assessee. 12. Next issue raised by the assessee is regarding allowance of normal write-off of bad debts. This appears as its ground No.4 for A.Y. 2004-05 and 2006-07 and as its ground No.3 for A.Y.2005- 06. These claims were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Apex Court in Catholic Syrian Bank Ltd's case (supra). Accordingly, these grounds are allowed for statistical purposes and remitted back to the file of Assessing Officer for consideration afresh. 15. Next issue raised by assessee is on disallowance made under Section 14A. This appears as its ground No.3 for Assessment Year 2006-07. Such a ground is not there in its appeals for Assessment Years 2004-05 & 2005-06. As per the assessee no disallowance was warranted since it had not incurred any expenditure with reference to income claimed as exempt. Further as per assessee, in assessee's own case for an earlier year, Assessing Officer had considered 2% of such tax free income as expenditure incurred. 16. Ld. Counsel for assessee submitted that Commissioner of Income Tax(Appeals) had followed the decision of Special Bench in the case of ITO Vs. Daga Capital Management Pvt. Ltd (117 ITD 169) and held that Rule-8D was applicable for Assessment Year 2006-07 also. According to him, Hon'ble Mumbai High Court in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT in 328 ITR 81 had held that Rule-8D could not be applied prospectively but only from Assessment Year 2008-09. 17. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r MAT. We find that recently the Mumbai Bench of the Tribunal in the case of in the case of Krung Thai Bank PCL Vs. Joint Director of Income Tax [International Taxation] [2010] 45 DTR 218 has held has under: "7. The plea of the assessee is indeed well taken, and it meets our approval. The provisions of s. 115JB can only come into play when the assessee is required to prepare its P&L a/c in accordance with the provisions of Parts II and III of Sch. VI to the Companies Act. The starting point of computation of MAT under s. 115JB is the result shown by such a P&L a/c. In the case of banking companies, however, the provisions of Sch. VI are not applicable in view of exemption set out under proviso to s. 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 provisions of s. 115JB cannot thus be applied to the case of a banking company." 8. Further, it may be noted that the authority for advance ruling in the case of The Timken Company, In re [2010-TII-25-ARA-INTL and Praxair Pacific Ltd In re [2010-TII-25-ARA-INTL] has held that MAT provisions are applicable to a foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of this ground. Accordingly, this ground is admitted being a pure question of law. 28. This issue already stands decided in favour of assessee vide para No.20 above for Assessment Years 2004-05 to 2006- 07. We are of the opinion that provisions of Sec.115JB could not have been applied on the assessee being a Banking company. Additional ground No.1 is thus allowed. Since additional ground No.1 is allowed, other additional grounds raised which are relating to computation of book profits for the purpose of MAT, have become infructuous and are dismissed. 29. Now we take up the cross appeal of revenue. 30. First ground in the cross appeal is against the direction of Commissioner of Income Tax(Appeals) to allow depreciation on assets taken over by the assessee from Bank of Thanjavur. 31. This issue stands decided against assessee by us vide para No.5 above for Assessment Years 2004-05 to 2006-07. Accordingly ground No.1 of Revenue stands allowed. 32. Second ground in the cross appeal of Revenue is on broken interest paid on purchase of investments, allowed by Commissioner of Income Tax(Appeals). This issue stands resolved in favour of the assessee by us at ground No.8 above f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le apex Court in the case of PV.AL. Kulandagam Chettiar(supra), after studying the Double Taxation Avoidance Agreement between Govt of India & Govt. of Malaysia, held that even if a person was resident in India, once such a resident in India was deemed to be a resident of a contracting state, on account of economic and personal relationship with such contracting state, then residence in India will become irrelevant and treaty would be prevail over Sections 4 & 5. Therefore, we are of the opinion that Commissioner of Income Tax(Appeals) took a correct view that income of the foreign branches in Singapore and Columbo had to be excluded and not considered only for tax credits. Ground No.3 of revenue thus stands dismissed. 38. Ground No.4 of Revenue is against, Commissioner of Income Tax(Appeals) remitting back to the Assessing Officer, issue regarding claim of bad debts written off. 39. We have already held at para-14 above in relation to assessees' appeal for Assessment Years 2004-05 to 2006-07 that this issue required a fresh look by the Assessing Officer, in view of the decision of Hon'ble Supreme Court in the case of Catholic Syrian Bank Ltd. (supra). We are, therefore giving si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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