9911796707
TMI Blog2019 (3) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... as revised on 27.03.2008 at a total income of Rs. 196,10,11,010/- and again it was revised on 19.06.2009 at a total income of Rs. 1,72,55,93,283/-. Against the said return of income, the assessment was completed by the Asst. CIT, Corporate Circle-1, Thiruchirapalli (hereinafter called as 'AO') vide order dated 31.12.2009 passed u/s. 143(3) of the Income Tax Act, 1961 (in short 'the Act') at a total income of Rs. 320,83,80,764/-. While doing so, the AO has made the following disallowances: Additions 1. Depreciation on securities 59,27,74,569 2. Broken period interest 9,98,67,263 3. Brokeragepaid 28,000 4. Expenditure for earning tax free income 13,65,488 5. Ex-gratia payment 6,26,71,637 6. Right issues 22,62,934 7. Pooja expenses 8,84,725 8. Speculative loss on derivative transaction 6,43,030 9. Interest receivable but not due 22,21,14,416 10. Baddebts written off 8,24,47,532 11. Loss on sale of HTM category of securities 1,39,30,565 12. Unclaimed balance 1,12,00,000 13. Entertainment expense 1,34,000 3. Being aggrieved by the above additions, an appeal was preferred before ld. CIT(A), who vide impugned order deleted the addition on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was remitted to the file of AO for the purpose of verifying the average advances. Thus, the appeal filed by the assesseebank came to partly allowed by the ld. CIT(A). Being aggrieved by that part of the ld. CIT(A) order, which is against the assessee-bank, the assessee filed an appeal bearing ITA No.1342/Chny/2013 and the Revenue is in appeal in ITA No.1497/Chny/2013. Now, we shall take up the assessee's appeal in ITA No.1342/Chny/2013. 4. The assessee raised the following grounds of appeal in ITA No.1342/Chny/2013 are as under: "1) The order of the CIT (A) in so far as it is against the assessee is contrary to law erroneous and unsustainable on the facts of the case 2% Disallowance of expenses on exempted income. 2) The CIT (A) erred in confirming 2% disallowance of expenses on exempted income. 3) The CIT(A) failed to appreciate that for the Assessee Bank, securities are stock- in-trade and Section 14A has no application to securities/shares held as stock-in- trade as per the Karnataka High Court decision in CCI Ltd vs. CIT (206 Taxman 563) (followed in Chennai Bench of ITAT in MSA securities ITA No: 1523 & 1524 order dated 17th Oct, 2012) and hence estimated disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee's own case in this regard and allowed the same. (ITA No. 930/2011 - A Y 2004-05: ITA No. 907/2010 - A Y 2005-06: ITA No. 931/2011 - A Y 2006- 07: ITA No. 905/2010 - A Y 2002-03) Additions: Speculative Loss on Derivative transactions 16) The CIT (A) erred in confirming the addition on account of "interest paid on Derivative transactions". 17) The CIT (A) failed to note that the regulator of Banks "RBI" had allowed these transactions and the RBI cannot and will not allow banks, which are dealing in public money to go in for speculative business. Further IRS (Interest Rate Swap) transactions are not of any speculative nature. 18) The CIT(A) failed to note that Mumbai ITAT had allowed IRS (Interest Rate Swap) as revenue expense in the case of J.P.Morgan Chase Bank Vs ADIT [2010-TI I-I 85-ITAT-DEL-INTL] 19) The CIT(A) failed to note that Mumbai ITAT special Bench in the case of DCIT VS Bank of Bahrain & Kuwait (132 TTJ 505) allowed the same following the above judgement. 20) The CIT(A) failed to observe that ITAT Mumbai had given a favourable decision to ABN Amro Securities India Pvt Ltd Vs ITO. Further in the above cited cases, the loss arising on year end valuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 & 13 are general in nature and do not require any adjudication. The Grounds of appeal No.2 to 4 challenges the disallowance of 2% of exempt income under the provisions of s. 14A of the Act. The AO made a disallowance of Rs. 13,60,438/- invoking the provisions of s. 14A of the Act r/w. Rule 8D of the Income Tax Rules rejecting the contention of the appellant that no expenditure was incurred to earn the exempt income as the employees, who are employed to carry out banking activity are used in the activities related to the earning of the exempt income. Further, the AO observed that the disallowance of 2% of exempt income in the case of Lakshmi Vilas Bank have been upheld by the Tribunal. Even, on appeal before ld. CIT(A), the same came to be confirmed vide para 4.3 of the ld. CIT(A) order. Being aggrieved, the appellant is before us in the present grounds of appeal contending that the provisions of s. 14A of the Act has no application to the shares and stock held as stock in trade. It is further contended that in the absence of finding by the AO as to how the contention of the appellant that no expenditure was incurred is incorrect, no disallowance should be made. Reliance in this r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince, the orders of lower authorities are in conformity law laid down by the Jurisdictional High Court, we do not find any merit in the grounds of appeal raised by the assessee-bank. 5.3. In the result, the ground of appeal No.2 raised by the assessee is dismissed. 6. Ground No.3 challenges the addition of ex-gratia payment of Rs. 6,26,71,637/-. The assessee-bank made a claim for deduction of exgratia payment of Rs. 6,26,71,637/- made to the employees excluded from the purview of the payment of bonus act, the incentives were paid to these employees on the completion of 90 years of the existence. The AO disallowed the claim placing reliance on the provisions of s. 36(1)(ii) of the Act, which lays down that any sum paid to an employee as a bonus for services rendered, where the same would not have been payable to the employee as profit or dividend, if it is not paid as a bonus or commission shall be allowed as a deduction. Further, the AO opined that the assessee-bank circumvented the provisions of Bonus Act. The AO also placed reliance on the several judicial precedents. On appeal before ld. CIT(A), confirmed the disallowance by holding that the ex-gratia payment cannot be allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion that the actual amount of deduction computed by the assessee as well as the Assessing Officer was very same. As per the Ld. CIT(Appeals), the ground was purely academic, since, according to him, for the impugned assessment year, the Assessing Officer though he followed a different method of computation, it did not effect the taxable income of the assessee." 6.4 In the light of the above discussion, we are of the considered opinion that the claim for deduction of ex-gratia payment of Rs. 6,26,71,637/- should be allowed, accordingly, we direct the AO to allow the same as a deduction. 6.5 In the result, Ground of appeal No.3 filed by the assessee is allowed. 7. Ground of appeal No.4 challenges the addition on disallowance of expenditure incurred on bonus shares. The AO disallowed the same holding to be a capital expenditure. The assessee had incurred a total expenditure of Rs. 6,97,00,934/- on the right issue, out of which a sum of Rs. 22,62,934/- was claimed as deduction in the current year. It is claimed that the expenditure is in the nature of registration fee, SEBI fee, which was allowed in the earlier years and on the same principle, the same should be allowed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd No.5 challenges the disallowance of Pooja expenses. The AO disallowed a sum of Rs. 8,84,725/- by holding that the expenditure, was not incurred wholly and exclusively for business purpose. Even, the ld. CIT(A) confirmed the same. 8.1. Being aggrieved, the assessee is in appeal before us in the present appeal. 8.2 It is submitted before us that the similar expenditure was allowed in the assessee's own case in the AY 2004-05, 2005-06 and 2006-07 by this Tribunal, following the decision of Hon'ble High Court of Madras in the case of CIT v. Aruna Sugars Ltd. [1981] 132 ITR 718 (Mad.). The decision of the Tribunal was accepted by the Revenue by not filing any further appeal. These submissions of the ld. Authorized Representative of assessee were not controverted by the ld. Sr. Departmental Representative. In the circumstances, following the decision of this Tribunal in assessee's own case, we direct the AO to allow the same as a deduction. 8.3 In the result, ground of appeal No.5 of the assessee is allowed. 9. Ground No.6 challenges the disallowances of interest swap transactions to the extent of Rs. 200 crores. Under these transactions, one party will pay fixed interest on the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd was placed on the decision of Hon'ble Jurisdictional High Court in the case of CIT v. Karur Vysya Bank Ltd. [2005] 273 ITR 510 (Mad.) and the decision of Hon'ble Supreme Court in the case of United Commercial Bank v. CIT [1999] 273 ITR 510 (SC). Therefore, the resultant profit or loss on the sale of such securities are to be treated as a business profit / loss. In the present case, the claim was made in the original return of income, but wrong amount of Rs. 24,78,54,994/- was claimed. It is only during the course of assessment proceedings that this revised claim was made before the AO. But it is bounden duty of the AO to work out the correct profits and the income tax proceedings are not adversely proceedings and therefore, the AO should have allowed the claim. Reliance was made in this regard in the case of CIT v. McMillan & Co. [1958] 33 ITR 182 (SC), SN Namasivayam Chettiyar v. CIT [1960] 38 ITR 579 (SC) and CIT v. British Paints India Ltd. [1991] 188 ITR 44 (SC) and also the decision of CIT v. Prudvi 23 Taxman 23. On the other hand, the ld. Departmental Representative placed reliance on the orders of lower authorities. 10.3 We heard the rival submissions and perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is covered in favour of the assessee-company in its own case by the decision of this Tribunal for the AY 2010- 11 (Para 47 at page 116 of the order), wherein the Tribunal deleted the addition on the ground that there was nothing on the record to show that any expenditure was incurred for the benefit of the employees. The ld. CIT(A) had not controverted above submissions. Therefore, we allow this ground of appeal. 11.3 In the result, appeal filed by the assessee in ITA No.1342/Chny/2013 stands partly allowed. Revenue Appeal in ITA No.1497/Chny/2013 for AY 2007-08: 12. The Revenue raised the following grounds in ITA No.1497/Chny/2013 for AY 2007-08: "01.The CIT(A) failed to appreciate the fact that the ssessee is claiming the debts written off as urban debts only before CIT(A) and no remand report was called for and rule 46(1) was violated. 02.The CIT(A) failed to see that no rural debt writtn off can be claimed u/s 36(1)(vii) if its value is less than the provision made u/s 36(a)(viia) and also failed to appreciate the fact that the list of debts written off filed by the assessee contains some rural debts also. 03.The CIT(A) erred in interpreting the 2nd limb of section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that under these circumstances, the delay of 10 days may be condoned. The ld. Counsel for the assessee-bank had no serious objection for the condonation of delay. Considering the rival submission, we condone the delay of 10 days in filing the present appeal and admit the appeal. 13.1 Grounds No.1 & 2 challenges the direction of ld. CIT(A) deleting the addition made u/s. 36(1)(vii) of the Act for Rs. 8,24,47,532/-. The AO made addition by disallowing the claim for deduction u/s. 36(1)(vii) of the Act solely on the ground that the credit balance available in the account of provision for bad and doubtful debts more than the amount claimed as a bad debts. On appeal before the ld. CIT(A), the CIT allowed the claim considering the fact that the bad debts were written off in the books of account, the provision of s. 36(1)(vii) of the Act are different from s. 36(1)(viia) of the Act. Both the provisions are separate and distinct and the proviso to clause (7) of s. 36(1) are not applicable, inasmuch as, there was no double deduction. 13.2 Being aggrieved by this decision of the ld. CIT(A), the Revenue is in appeal before us in the present grounds of appeal. The issue in the present ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of the appellant- Bank, was ordered to be placed before the AO and with respect to other banks, before the concerned Benches of the Tribunal. The order of the Special Bench of the Tribunal was implemented by the Department and was never called in question. It may be noticed here that in relation to earlier assessments, i.e. right from 1985-86 to 1987-88 in a similar case, different banks came up for hearing in appeal before a Division Bench of the Kerala High Court in the case of South Indian Bank Ltd. (supra) wherein, as mentioned above, while discussing the scope of ss. 36(1)(viia) and 36(2)(v) of the Act, the High Court set aside the order of the Tribunal in that case and held that the assessee was entitled to the deduction under cl. (vii) irrespective of the difference between the credit balance in the provision account made under cl. (viia) and the bad debts written off in the books of accounts in respect of bad debts relating to urban or non-rural advances. It accepted the contention of the assessee and referred the matter to the AO. This judgment of the High Court is subject-matter of Civil Appeal Nos. 1190-1193 of 2011 before us." 13.3 Even in the assessee's own cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank shall be computed in the following manner, namely : (a) the amounts of advances made by each rural branch as outstanding at the end of the last day of each month comprised in the previous year shall be aggregated separately ; (b) the sum so arrived at in the case of each such branch shall be divided by the number of months for which the outstanding advances have been taken into account for the purposes of clause (a) ; (c) the aggregate of the sums so arrived at in respect of each of the rural branches shall be the aggregate average advances made by the rural branches of the scheduled bank. Explanation : In this rule, rural branch and scheduled bank shall have the meanings assigned to them in the Explanation to clause (viia) of sub-section (1) of section 36." From a bare reading of the above rule it is crystal clear that the said rules prescribe three steps for computing AAA in the following manner: Step One - In respect of each rural branch, note down the amounts of advances outstanding at the end of the last day of each month comprised in the previous year and aggregate the amounts so noted. Step Two- Divide the aggregate amount arrived at in Step One by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f aggregate average advances has to be worked out on the entire outstanding advances and not the advances of that month alone. That being the case, we agree with the view held by ld. CIT(A). 9. Now coming to the quantum of deduction claimed u/s 36(1)(vii) and 36(1) (viia), law is well settled that an assessee can claim deduction under both the clauses subject to the condition imposed under the proviso to 36(1)(vii). As can be seen from the working submitted by ld. AR, the provision created during the year u/s 36(1)(viia) read with rule 6ABA, amounts to Rs. 16,35,55,829.00 whereas assessee has claimed deduction of Rs. 5,16,46,976, which is well within the provision permissible under section 36(1)(viia). Therefore, there cannot be any doubt with regard to the allowability of deduction claimed by the assessee u/s 36(1)(viia). Accordingly, we do not find any infirmity in the order of ld. CIT(A) in deleting addition of Rs. 3,88,25,673. However, as far as deduction of Rs. 18,79,704 is concerned, the same cannot be allowed u/s 36(1)(vii) considering the fact such amount has not exceeded the provision for bad and doubtful debts u/s 36(1)(viia). At the same time, alternative claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges the direction of ld. CIT(A) to allow the loss of fall in the value of the securities held by the bank. The AO has disallowed the claim for deduction of loss on account of HTM category of securities held by the assessee-bank on the ground that the notional profit made on account of AFS and HFT securities categories cannot be brought to tax. 15.1 Being aggrieved, an appeal was preferred before the ld. CIT(A), who vide impugned order had directed the AO to allow the deduction following the law laid down by the Hon'ble Supreme Court in the case of UCO Bank, Universal Bank Ltd. 248 ITR 355 and the order of the Chennai Tribunal in the case of Bharat Overseas Bank and Indian Bank. On the other hand, the ld. Departmental Representative placed reliance on the orders of the lower authorities. 15.2 On the other hand, the Authorized Representative of assessee Shri S.Ananthan submitted that this issue in the present grounds of appeal is covered in favour of the assessee's bank by the decision of Hon'ble Jurisdictional High Court of Madras in the assessee's own case in the case of in TMA No. 1210 and Hon'ble High Court of Madras in the assessee's own case 273 ITR 510 (Mad). This issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circular No. 18/2015: 'Circular No. 18 of 2015, dated November 02, 2015. Subject : Interest from Non-SLR securities of Banks-reg. It has been brought to the notice of the Board that in the case of Banks, field officers are taking a view that, "expenses relatable to investment in non-SLR securities need to be disallowed under section 57(i) of the Act as interest on non-SLR securities is income from other sources". 2. Clause (id) of sub-section (1) of section 56 of the Act provides that income by way of interest on securities shall be chargeable to incometax under the head "Income from other sources", if, the income is not chargeable to income-tax under the head "Profits and gains of business and profession". 3. The matter has been examined in light of the judicial decisions on this issue. In the case of CIT v. Nawanshahar Central Cooperative Bank Ltd. [2007] 160 Taxman 48 (SC), the apex court held that the investments made by a banking concern are part of the business of banking. Therefore, the income arising from such investments is attributable to the business of banking falling under the head "Profits and gains of business and profession". 3.2 Even though the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reason that the assessee-bank, even in the books of account, has treated the investments as stock-in-trade from the assessment year 2005-06 onwards. Therefore, the question boils down to the one issue whether the change of method of accounting is bona fide or not. It is not the case of the revenue that the assessee-bank changed for a casual period to suit its own purpose. Therefore, the bona fide of the assessee-bank in changing the method of accounting cannot be doubted. Now, it is well settled that the assessee is entitled to change regular method of accounting irrespective of the fact, it results in loss to revenue. Therefore, having regard to the spirit of the circular cited supra and the fact that investments are shown as stock-in-trade in the books of account, loss/depreciation on account of fall in value of securities held by the assessee-bank should be allowed as deduction. Therefore, income arising therefrom should also be treated as business income. The provisions of section 45(2) cannot be applied to the facts of the present case, as in the earlier years, for the purpose of income-tax proceedings, the investments were treated as stock-intrade. Thus, grounds of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchases. On appeal before ld. CIT(A) he allowed the same following the reasoning that the HTM securities were stock in trade in the case of the assessee bank. 17.1 Being aggrieved, the Revenue is in appeal before us contending that the broken period should not be allowed as a deduction in respect of HTM securities as HTM securities are investments and they are capital in nature. On the other hand, the assessee placed reliance on the decision of Hon'ble Supreme Court in the case of City Bank 2008 TMI 766 and the decision of Hon'ble Jurisdictional High Court of Madras in the case of Karur Vysya Bank in 2009 TMI 1210. The Hon'ble Supreme Court had laid down in the case of City Bank (supra) that where the securities were forming part of the stock in trade the broken period interest should be allowed as a deduction, while dealing with the issue of disallowance on account of depreciation of HTM securities, we have categorically held that the securities formed part of the stock in trade and therefore, the broken period interest paid should be allowed as a deduction. Therefore, we do find any fallacy in the reasoning of the ld. CIT(A). Hence, the ground of appeal of Revenue is dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-09 was filed disclosing total income of Rs. 264,24,12,542/-. Against said return of income, the assessment was completed by Asst. CIT, Company Range-I(i/c.), Trichy vide order dated 31.12.2010 passed u/s. 143(3) of the Act. While doing so, the AO made the following additions: Additions: 1. Appreciation in value of securities Rs. 2,66,12,12,542/- 2. (i) Provision for leave encashment 8,24,21,094/- (ii) Provision for medical leave 9,21,95,063/- 3. Amortisation expenses 14,80,00,000/- 4. Broken period interest 27,63,14,889/- 5. Ex-gratia payment 17,93,38,338k 6. Pooja expenses 4,46,29,688/- 7. Entertainment expenses 10,29,851/- 8. Bad debts written off 2,08,211/- 9. Interest on Derivatives 7,95,04,449/- 10.Disallowance u/s l4Ar.w.r.8D 26,73,301/- 11.Brokerage for ETM 3,88,882/- 12. Interest accrued on NPAs 2,000/- 20. Being aggrieved by the above additions, an appeal was preferred before ld. CIT(A), who vide impugned order, confirmed the addition of the provision for leave encashment of Rs. 9,21,95,063/- and provision for medical leave for Rs. 14,80,00,000/- referring to the provisions of clause (f) of s. 43B of the Act. As regards to addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed liability in terms of actuarial valuation and that too by way of implementing the government notification, the claim of the assessee was sustainable in law. 5) The CIT(A) ought to have allowed the assessee's claim in the light of the decision in Exide Industries (292 ITR 470) and Panasonic Home Appliances case (323 ITR 344) (Mad) Medical Leave Encashment 6) The CIT(A) erred in confirming the addition on account of Medical leave. 7) The assessee craves leave to adopt ground nos: 3 to 5 in this regard. Ex-gratia payment 8) The CIT(A) erred in confirming the disallowance of ex-gratia payment. 9) The CIT(A) failed to appreciate that such payment was made out commercial expediency and hence ought to have allowed the same. 10) The CIT(A) ought to have followed the ITAT's decision of Lakshmi Vilas Banks's case (ITA No: 1403/2012 order dated 22' March, 2013) to allow the assessee's claim. 11) The CIT(A) ought to have followed the following jurisdictional High Court decisions and allowed the same: (i) CIT vs. Lakshmi Mills (240 ITR 81) (ii) CIT vs. Sivanandh Mills (156 ITR 629) (iii) Kumaran Mills vs. CIT (241 ITR 564) (iv) National Engineering Industries Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that depending on whether the amount is receivable or payable under the interest rate swap contract, the amounts are booked as income or expenditure in the Profit and Loss account. There are no issues with regard to the income so disclosed or the expenditure so claimed for deduction. 23) The appellant Bank had not claimed any loss on revaluation of IRS. But only claimed interest received and paid. So, based on the judgments cited, the CIT (A) ought to have allowed the same. 2% Disallowance of expenses on exempted income 24) The CIT (A) erred in confirming 2% disallowance of expenses on exempted income. 25) The CIT (A) failed to appreciate that for the Assessee Bank, securities are stock-in-trade and Section 14A has no application to securities/shares held as stock-in-trade as per the Karnataka High Court decision in CCI Ltd vs. CIT (206 Taxman 563) (followed in Chennai Bench of ITAT in MSA securities ITA No: 1523 & 1524 order dated 17th Oct, 2012) and hence estimated disallowance of 2% of expenses was untenable in law. 26) The CIT(A) further failed to appreciate that the assessee bank is having sufficient non - interest bearing funds, and in the absence of any finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, the case laws relied upon by the ld. Counsel cannot come to the rescue of the assessee-bank. The decision Hon'ble High Court of Calcutta in the case of Exide Industries Ltd. v. Union of India [2007] 292 ITR 470 (Cal.) striking down the provisions of clause (f) of s. 43B of the Act on the grounds of arbitrariness is stayed by Hon'ble Supreme Court in SLP(Civil) No.CC.12060 dated 08.09.2008 therefore, the provisions of clause (f) to s. 43B of the Act are in force in the light of the stay order granted by the Hon'ble Apex Court. In this context, we can rely on the decision of Hon'ble High Court of Kerala in the case of South Indian Bank Ltd. v. CIT [2014] 45 taxmann.com 428 (Kerala), wherein it was held as follows vide para 6 of the judgment: "6. Then coming to the second issue, it pertains to the provision made for leave encashment and the disallowance claimed was under Section 43B(f). As already stated above, the opinion of the CIT(Appeals) was set aside by the Tribunal in the light of the stay order of the judgment of the High Court of Calcutta in Excide Industries case (supra) and the SLP stated above is still pending. Therefore, the opinion of the Tribunal so far as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was followed by Hon'ble High Court of Bombay in the case of CIT v. Badridas [2003] 261 ITR 256 and the decision of Hon'ble Gujarat High Court in the case of Jayesh Raichand Shah v. ACIT [2013] 29 taxmann.com 151 (Guj.). Therefore, respectfully following the above decisions, we hold that the loss incurred for derivative transaction is allowable as a business deduction. Accordingly, we direct the AO to allow the same as deduction. 27.1 In the result, ground of appeal No.7 filed by the assessee is allowed. 28. Ground No.8 challenges the addition of Rs. 3,88,882/- invoking the provision of s. 14A of the Act. It is the contention of the appellant that the appellant has not incurred any expenditure to earn exempt income. The AO had not given any finding as to how the claim of the assessee-bank that no expenditure was incurred to earn the exempt income was incorrect. In the absence of this finding resort to the provisions of Rule 8D of the Income Tax Rules cannot be made as held by the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT [2018] 402 ITR 640 (SC). Therefore, this ground of appeal filed by the assessee is allowed. Accordingly, this ground of appeal st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l branches of such bank'." 31. At the outset, there is delay in filing the appeal by 10 days. The Revenue had prayed for condonation of delay. It is submitted that the delay in filing the appeal had occurred on account of change of incumbent and thus, it was prayed that the delay is not deliberate. Under this circumstance, it is prayed for the condonation of delay of 10 days. The ld. Counsel for the assessee-bank had no serious objection for condone the delay. Considering these circumstance, we condone the delay of 10 days in filing the present appeal and admit the appeal. 32. Grounds No.1 & 2 challenges the direction of ld. CIT(A) deleting the addition made on account of bad debts written off Rs. 7,95,04,449/-. This issue was dealt by us in Revenue's appeal in ITA No.1497/Chny/2013 for AY 2007-08 for the reasons stated vide para 13.1 of the order therein, we dismiss this ground of appeal filed by the Revenue. 32.1 In the result, grounds of appeal No.1 & 2 filed by the Revenue are dismissed. 33. Grounds No.3 & 4 challenges the direction of ld. CIT(A) remanding the issue the allowance u/s. 36(1)(viia) to the file of AO to follow the decision of the Co-ordinate Bench of Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the petition. 37. Being aggrieved, an appeal was preferred before ld. CIT(A), who vide impugned order directed the AO to verify the claim and allow the same as deduction after due verification. Being aggrieved, the Revenue is in appeal before us in the present appeal. 38. On behalf of the Revenue, it is contended that the ld. CIT(A) ought not have entertained the appeal, inasmuch as, the application filed by the assessee-bank is beyond the period of limitation u/s. 154 of the Act. He further argued that the ld. CIT(A) ought not have allowed the claim in the absence of claim in the return of income. 39. We heard the rival submissions and perused the material on record. The issue sought to be rectified by the assessee-bank is in nature of mistake apparent from the record, inasmuch as, the deprecation debited to the profit and loss account is apparent and patent. Thus, adopting wrong amount of provision for depreciation in the books of account constitutes a mistake apparent from the record. The application was made by the assessee-bank within the period of four years from the date of receipt of the assessment order as the assessment was completed on 15.03.2000 and the petition u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to Sec 68. The Gujarat High Court had held as "Whether once assessee has established that he has taken money by way of account payee cheques from lenders who are all income tax assesses whose PAN have been disclosed, initial burden under section 68 is discharged and then, it is Assessing Officer's duty to ascertain from Assessing Officer of those lenders, whether in their respective returns they have shown existence of such amount of money and have further shown that those amount of money had been lent to assessee". The ratio laid down in the above case squarely applies to the facts of this case. The CIT(A) failed to observe that the appellant had complied with all the requirements as mentioned the jurisdictional High Court in CIT Vs Annamalai Finance Ltd (2005) 275 ITR 451 (Mad); Premier Housing & industries Enterprises Ltd (20078) 24 SOT 236 (Chennai). The CIT (A) failed to note that the account was closed on 13/03/2004. Out of Rs. 8 Crores lease, the appellant had collected Rs. 5.11 Crores, accounted and paid tax on it. The CIT (A) had taken a wrong view that the assessment order of Prakash Industries was available and not produced. The CIT(A) failed to note that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of original assessment proceedings but produced during the course of proceedings before ld. CIT(A). The AO denied the claim for allowance of depreciation on the ground that the issue whether M/s. Prakash Industries had claimed depreciation or not is required to be verified from the assessment record of the M/s. Prakash Industries and not by the certificate issued by the Charted Accountants and Charted Engineers. As regards to the depreciation on the assets purchases and leased back M/s. Renewal Energy Systems Ltd. he accepted the claim after examining the invoices bearing Nos. 432 & 434 dated 29.03.1995 of the solar photo voltaic power packts for rural radio telephone system and allowed the depreciation @ 50% on the value of Rs. 2,45,36,400/-. 45. Being aggrieved, an appeal was preferred before ld. CIT(A), who vide impugned order confirmed the action of the AO. Being aggrieved, the assessee is in appeal before us in the present appeal. 46. It is contended that the AO ought to have verified the assessment record of M/s. Prakash Industries to verify whether M/s. Prakash Industries have claimed depreciation or not. The AO cannot except the assessee company to perform a duty w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This is an appeal filed by the Revenue directed against the common Order of the Learned Commissioner of Income Tax (Appeals), Tiruchirapalli (hereinafter called as 'CIT(A)') dated 25.03.2013 for the Assessment Year (AY) 1989-90. 51. The Revenue raised the following grounds of appeal: "1. The order of the CIT(A) is contrary to law, facts and in the circumtances of the case. 2. The CIT(A) failed to see that the statute clearly says that the section 1 15J is applicable to all companies except those which are engaged in the business of generation or distribution of electricity. 3. The order of the CIT(A) is against the ratios held by the Supreme Court in the following cases: In the case of Kesavji Raoji (183 ITR 1), the Court said that rules of interpretation would come in to play, when there is doubt regarding expressed language used therein. In the case of Tarulatha Shyam (108 ITR 345 SC), it was held that where the language is clear it has to be strictly construed and nothing can be read in to it. In the case of Ajmeera Housing Company (326 ITR 642), the Supreme Court held that a taxing statute is to be construed strictly. In a taxing statute one has to look merely what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the normal course claiming deduction and relief was Rs. 1,55,760. The profit as per books was Rs. 1,05,03,038. The appellant bank as per the provisions of the Income tax prepared and submitted its tax liability as per 1 15J (deemed income) also. Both the income as per section 115J and the income returned in normal course were available to assessing authority while he passed an order u/s 143(3) on 31.3.92. 52.3 The assessing officer assessed the income returned under section 143(3) without allowing the deduction and relief claimed by the appellant. The income determined was Rs. 1,77,22,160 as per order dated 31-03- 1992. 52.4 The learned assessing officer did not make a protective assessment for the deemed income u/s 115J. The appellant got relief in the appeal and from the petition filed before chief commissioner of income tax. To give effect to the above order an orders u/s 154 was passed on 28.2.94. The income determined was Rs. 4,29,040/-. Even at that time the assessing officer did not pass an order taking the deemed income. The then Commissioner of Income tax Tamilnadu- V requested the then chief commissioner to set aside the instruction given by the Chief Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present appeal is whether the banking concern is liable to tax under the provisions of s. 115J of the Act. This issue is settled in favour of the assessee-bank by several judicial decisions. The recent decision of Co-ordinate Bench of Tribunal, Bangalore in the case of Canara Bank v. JCIT 60 ITR 1 vide para 13 at Page No.33 held as follows:
"13. Ground of appeal No.5 is on the applicability of the provisions of section 115JB of the Act. This issue had come up before the coordinate bench in the case of assessee for asst. year 2005-06 in ITA No.305/Bang/2011 dated 18/06/2012 wherein it was held as follows:
"7. We have heard rival submissions and considered the facts X X X X Extracts X X X X X X X X Extracts X X X X
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