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TMI Blog2012 (6) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... ite-off of bad debts raised by assessee in its ground No.4 for Assessment Years 2004-05 and 2006-07and as ground No.3 for Assessment Year 2005-06 requires reconsideration by the Assessing Officer, in the light of judgment of the Apex Court in Catholic Syrian Bank Ltd‘s case (2012 (2) TMI 262 - SUPREME COURT OF INDIA) as held that once bad debts were written off in the books of accounts, the claims had to be allowed Disallowance made under Section 14A -Held that:- We are of the opinion that this issue requires a fresh look by Assessing Officer. Rule-8D was held to be applicable only from Assessment Year 2008-09 by Hon’ble Mumbai High Court. It was also held that even for earlier years, disallowance had to be made under Section 14A of the Act considering the facts and circumstances. We, therefore, set aside the orders and remit back to the file of Assessing Officer for consideration of this issue afresh in accordance with law. This issue thus, stands decided in favour of assessee for statistical purposes. MAT applicability - Held that:- The provisions of Sec.115JB could not be applied on the assessee. In the result, this issue stands decided in favour of assessee. Exclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 depreciation on the ground that the assessee should have taken the WDV of Bank of Thanjavur instead of the acquired price of the Indian Bank. Ld. Counsel for the assessee contended that the value of assets was determined by the Govt. of India for the fpurpose of taking over the bank business. Accordingly assessee did claim the depreciation on such assets on the basis of cost fixed by the Govt.of India. Reference was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 company. These were only the master data, which could be incorrect and such master data was always subject to correction. It would not show that the M/s.BOT continued its independent existence and continued its operation despite amalgamation. We, therefore, find no reason to take a different view from that, which was taken by Co-ordinate Bench of this Tribunal. Accordingly, this issue is decided again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh 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 contra, Departmental Representative supported the orders of lower authorities. 11. We have perused the orders of lower authorities and heard the rival contentions. We find that the issue regarding allowance of bad debts written off on technical reasons stand decided in favour of assessee by this Tribunal in ITA No.1082/Mds/2003 for Assessment Year 1998-99. It was held by this Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount, 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 disallowed by lower authorities. 13. When the matter came up before us. Ld. Counsel for assessee submitted that in the case of Catholic Syrian Bank Ltd. in civil appeal No.1143 of 2001 dated 17.02.2012, Hon ble Supreme Court has held that once bad debts were written off in the books of accounts, the claims had to be allowed. On the other hand, Departmental R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. We have perused the orders of lower authorities and heard rival contentions. We are of the opinion that this issue requires a fresh look by Assessing Officer. Rule-8D was held to be applicable only from Assessment Year 2008-09 by Hon ble Mumbai High Court. It was also held that even for earlier years, disallowance had to be made under Section 14A of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 company that does not have a physical presence in India, as such, companies are not required to prepare its accounts as per Companies Act. Therefore, respectfully following the above cited decisions of the Tribunal, we set aside the orders of the lower authorities and allow the appeal of the assessee on the ground that the bank is not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 for Assessment Years 2004-05 to 2006-07. Therefore ground No.2 of Revenue is dismissed. 33. Ground No.3 of Revenue is regarding exclusion of income of assessee from its Singapore and Colombo operations. 34. Assessing Officer had not accepted the claim of exclusion of income from assessee s branches at Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 similar directions for Assessment Year 2003-04 also. Ground No.4 of Revenue is allowed for statistical purposes. 40. To summarise the results, appeals of assessee for Assessment Years 2003-04, 2004-05, 2005-06 2006-07 are partly allowed whereas that of Revenue for 2003-04 is partly allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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