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TMI Blog2016 (3) TMI 1361X X X X Extracts X X X X X X X X Extracts X X X X ..... it from 2009-10 onwards. Accordingly, the ground raised by the assessee is allowed for statistical purposes. Income from foreign branches - whether to be included in the total income and only double taxation relief s contemplated as per the agreement is allowable ? - HELD THAT:- As decided in own case [ 2015 (11) TMI 1519 - ITAT CHENNAI] income of the assessee at Singapore and Colombo would be included in the return of income of the assessee in India and whatever taxes paid by the branches in foreign countries, credit of such taxes shall only be given. Accordingly, the ground raised by the assessee is dismissed. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As decided in own case [ 2015 (11) TMI 1519 - ITAT CHENNAI] in view of the decision of Godrej Boyce Mfg. Co. Ltd. v. DCIT [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] that Rule 8D is applicable from the assessment year 2008-09, when the Act has prescribed a method for quantifying the disallowance, the same cannot be overlooked. Since Rule 8D is not applicable prior to the assessment year 2007-08, the Tribunal has set aside the order passed by the ld. CIT(A) and directed the AO to work out the disallowance @ 2%. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est paid on purchase of securities - HELD THAT:- As decided in own case [ 2015 (11) TMI 1519 - ITAT CHENNAI] interest received by an assessee, from transferees for broken period is included under the head business income , amounts paid by the assessee to the transferors for broken periods could not have been disallowed. Depreciation on securities at the time of shifting from AFS to HTM - HELD THAT:- As decided in own case [ 2015 (11) TMI 1519 - ITAT CHENNAI] we uphold the claim of the assessee and direct the AO to allow depreciation / fall in value of investment in Government Securities including those classified under HTM category. No doubt the value in opening stock in the next year would correspondingly be adjusted. This issue is decided in favour of the assessee Claim towards deduction of bad debts written off - HELD THAT:- In the instant case, besides debiting the P L a/c and creating a provision for bad and doubtful debts, the assessee bank had simultaneously obliterated the said provision from its accounts by reducing the corresponding amount from loans and advances/debtors on the assets side of the balance sheet and consequently, at the end of the year, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue expenses incurred. 3. After hearing the parties, we are of the opinion that similar issue came for consideration before the Tribunal in assessee s own case in ITA No.1871/Mds/12 Others. Vide order dated 30.11.2015, it was held as under : 97. After hearing both sides, we find that the provisions of section 35D of the Act have been amended by the Finance Act, 2008 with effect from 01.04.2009 wherein the words Industrial unit and Industrial undertaking were substituted with the words Unit and undertaking . The memorandum explaining the provisions clearly states as under: Section 35D provides for deduction of certain specified preliminary expenses. The deduction is allowed on an amount equal to one fifth of such expenditure for five successive previous years. The preliminary expenses relate either to the period before the commencement of the business or after. However, if preliminary expenses relate to a period after the commencement of the business, such expenses are only allowed if they are in relation to the extension of an industrial undertaking or the setting up of a new industrial unit. With a view to providing a level playing field to the serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Tribunal in ITA No.1871/Mds/2012 Others, cited supra, wherein the Tribunal followed the decision of Mumbai Benches in the case of Bank of Baroda vs. ACIT in ITA No. 2927/Mum/2011 dated 25.7.2014 and observed as under : 94. In view of the above decision of the Mumbai Benches of the Tribunal, we are of the considered view that the decisions rendered in assessee s own case prior to assessment year 2004-05 will not have binding precedence in the assessment year 2009-10 or subsequent years. Accordingly, we hold that the income of the assessee at Singapore and Colombo would be included in the return of income of the assessee in India and whatever taxes paid by the branches in foreign countries, credit of such taxes shall only be given. Accordingly, the ground raised by the assessee is dismissed. In view of the above, we dismiss this ground of appeal raised by the assessee. 6. The next ground raised by the assessee is as under : Without prejudice to the above contention, the CIT(Appeals) ought to have appreciated that your appellant s alternate contention that the loss on sale of loan assets to Asset Reconstruction Companies are allowable as business deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormal plant and machinery. 11. After hearing both the parties, we are of the opinion that this issue was considered in assessee s own case by the Tribunal in ITA No.1871/Mds/2012 Others, wherein it was observed as under : 98. The sixth ground raised in the appeal is with regard the depreciation on ATM and UPS. With regard to allowability of 60% depreciation on UPS, we have considered similar issue and dismissed the ground raised by the Revenue in I.T.A. Nos. 2124 and 2125/Mds/2014 for the assessment year 2005-06 and 2007-08 at para 17 to 22 of this order. With regard to the allowability of 60% depreciation on ATM, we have considered the issue and allowed the ground raised by the assessee in its appeal in I.T.A. Nos.1396 1395/Mds/2014 for the assessment years 2005-06 and 2007-08 at para 8 to 13 of this order. Accordingly, the ground raised by the assessee is allowed. Respectfully following the decisions of the Tribunal in assessee s own case, we allow this ground of appeal raised by the assessee. 12. The next ground raised by the assessee is that the CIT(Appeals) ought to have noted that advances of the Rural Branch is the criteria for computation of eligible de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed in the return ₹ 698,32,76,000 Excess deduction claimed, now disallowed ₹ 100,65,01,417 Against this, the assessee went in appeal before the CIT(Appeals). 14. The CIT(Appeals) observed that as per the provisions of sec.36(1)(viia), the assessee being a schedule bank, is eligible for deduction of not exceeding 10% of the aggregate average advances made by the rural branches of the banks computed in the prescribed manner. Further, the CIT (Appeals) observed that the statutes clearly contain that the deduction is available on the aggregate average advances made by the rural branches, and not on the incremental advances only. Therefore, according to the CIT(Appeals), that assessee is entitled for deduction only on the incremental average aggregate advances of the rural branches, is not in accordance with the provisions of the Act. The CIT(Appeals) relied on the decision of the Tribunal in the case of Lakshmi Vilas Bank in ITA No.551, 552 553/Mds/2009 dated 18.12.2009 and held that the allowable deduction u/s.36(1)(viia) of the Act is @ 10% of the total average aggregate advances, as cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose to amend the Income-tax Act to grant a deduction in respect of provisions made for bad and doubtful debts by scheduled commercial banks relating to advances made by their rural branches. Such a deduction will, however, be limited to 1.5 per cent of the aggregate average advances made by the rural branches. This measure will result in a revenue loss of Rs. 12 crores during 1979-80 but it will be in a good cause. . .. 16. We have carefully gone through the above findings of the CIT(Appeals). In our opinion, the finding of the CIT(Appeals) is based on the Budget Speech of the Finance Minister by presenting the budget of 1978-79. We have also gone through the intention under which sec.36(1)(viia) was brought to statute book and there is no intention to support rural branches and being so, only advances made for improving the rural economy to be considered for eligible deduction u/s.36(1)(viia) of the Act. Accordingly, the finding of the AO is upheld and the ground of appeal of the assessee is dismissed. 17. The next ground in the appeal of the assessee is that the CIT(Appeals) failed to appreciate the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sec.115JB on a Bank governed by Bank Regulation Act had coming up before a Coordinate Bench of this Tribunal in assessee s own case for Assessment Year 2000-01. It was held by the Co-ordinate Bench of this Tribunal in its order dated 3rd April, 2011 as under:- 7. We have heard the rival submissions and perused the orders of the lower authorities and the material available on record. In the instant case, the only dispute raised by the assessee is that since it is a bank and is required to prepare its accounts according to Banking Regulation Act, 1949 and not according to Schedule VI Part II and III of the Companies Act, 1956, the provisions of section 115JB are not applicable to it while computing the income under 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 Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim of broken period interest paid on purchase of securities as revenue expenditure, we find that issue involved in this appeal is squarely covered by the decision of the Coordinate Bench of the Tribunal, in assessee s own case in I.T.A. Nos. 470 to 472/Mds/2010 for the assessment years 2004-05 to 2006-07 vide order dated 11.06.2012, wherein the Tribunal has observed as under: 8. We have perused the orders of the authorities below and heard the rival contentions. Issue is regarding treatment of amount paid by assessee to transferors of securities, towards interest accrued as on the date of transfer. Hon ble Mumbai High Court in the case of American Express International Banking Corporation Vs. C.I.T. in 258 ITR 60 has clearly held that when interest received by an assessee, from transferees for broken period is included under the head business income , amounts paid by the assessee to the transferors for broken periods could not have been disallowed. This viewwas reiterated in the case of Union Bank of India referred to supra. Hon ble Apex Court had dismissed the special leave petition filed by the Department against such judgement of order of Mumbai High Court on 27.01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of IT Act following CBDT Circulars, Case laws relied upon by the assessee, relevant accounting standards, RBI guidelines and Accounting Principles. 3. On appeal, the CIT(A) following his predecessor s decision in AY 2005-06, set aside the issue to the file of the AO with a direction to ascertain the facts and allow depreciation accordingly. 4. Before us, the learned counsel for the assessee has canvassed that the issue is squarely covered by the decision of the coordinate bench in assessee s own case for AY 2006-07 in ITA No. 97/Hyd/2010 vide order dated 04/04/2013. The learned DR neither controverted the submission of the learned counsel nor brought any contrary decision on record against the said order. 5. After hearing the parties and perusing the record, we find that the issue under consideration is squarely covered by the decision of the coordinate bench of ITAT, Hyderabad in assessee s own case for AY 2006- 07wherein the coordinate bench held as follows: 50. We are of the opinion that the assessee Bank is holding various Government Securities in order to comply with the statutory liquidated ratio. The bank would have to hold requisite p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff. 27. After hearing both the parties, we are of the opinion that similar issue was considered by the Tribunal in assessee s own case in ITA No.880/Mds/2010. Vide its order dated 30.11.2015, the Tribunal observed as under : 44. We have heard both sides, perused the materials on record and gone through the orders of authorities below. The Tribunal, while deciding the group cases of the assessee in I.T.A. Nos. 470 to 472/Mds/2010 for the assessment years 2004-05 to 2006-07 vide order dated 11.06.2012, has followed its own decision in I.T.A. No. 1082/Mds/2003 dated 30.06.2011, wherein, the issue stands settled in favour of the assessee by the decision of the Hon ble Supreme Court in the case of Vijaya Bank v. CIT 323 ITR 166 and the Tribunal in its order dated 11.06.2012 has held as under: 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 at para Nos. 43 44 of its order dated 30/06/11 as under:- I.T.A. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. 45. Respectfully following the above decision of the Coordinate Bench of the Tribunal, wherein the decision of the Hon ble Supreme Court is followed, we set aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer to delete the disallowance made on this issue. Thus, the ground raised by the assessee is allowed. Respectfully following the above order of the Tribunal, this ground raised by the Revenue is dismissed. 28. The next ground raised by the Revenue is that the CIT(Appeals) erred in allowing the claim of the assessee u/s.36(1)(viia) of the Act. 29. The ld. AR submitted that the issue was considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nit. He has thus submitted that if the opening balance is included for the purpose of computation of aggregate average advances of the rural branches for computation of deduction u/s. 36(1)(viia), it will de-hors the provisions of sections 4 5 of the Income Tax Act. He has further submitted that the issue in the case of City Union Bank was not on the point of calculation of aggregate average advances made by the rural branches, therefore the said decision is not applicable in the facts of the present case. 4.1.3 We have considered the rival contentions and relevant records. At the outset, we find that the Coordinate Bench of this Tribunal in case of City Union Bank Ltd supra considered and adjudicated this issue in para 8 as under: We have duly consider the rival contentions and the material on record. We have perused Rule 6ABA of the Income Tax Rules, 1962. As per the said rule, the aggregate average advances made by the rural branches have to be computed by taking 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. Thus, it is clear that there is no provision to consider only the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ful debts as per option (b) i.e. 7.5% of Gross Total Income and 10% of aggregate average rural advances, the Assessing Officer has rightly worked out the allowable deduction, which is less than that of the provision made by the assessee as doubtful debts, allowed the deduction of bad debts for all assessment years and remaining balance was brought to tax. Accordingly, we reverse the order of the ld. CIT(A) and confirm the addition made by the Assessing Officer for all the above assessment years. This ground of appeal of the Revenue is allowed. Respectfully following the aforesaid decision of the Tribunal, we decide this ground in favour of the Revenue. 31. The next ground in Revenue s appeal is with regard to shifting of securities from AFS to HTM u/s.115JB of the Act. 32. This issue does not require adjudication as it has been held that the provisions of sec.115JB of the Act are not applicable to the Banks. Accordingly, this ground of appeal of the Revenue is dismissed. 33. In the result, the appeal of the assessee as well as the appeal of the Revenue is partly allowed. Order pronounced on Friday, the 11th of March, 2016 at Chennai. - - TaxTMI - TMITax - Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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