9911796707
TMI Blog2019 (9) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... of issue of notice and re-assessment. 3.1. The main objection of the assessee-bank is that the re-opening of assessment is based on the existing material and it is merely a change of opinion and the assessee filed the information and the AO has referred at Page Nos. 4 to 6 of the order and finally the assessment was completed by the AO by disallowing the claim under section 36(1)(viia) of the Act for ₹ 120,87,72,242/- and disallowance of deduction u/s. 36(1)(vii) of the Act of ₹ 91,86,24,875/- and other additions and further the AO has held that the provisions u/s 115JB of the Act are applicable and passed order u/s 147 r.w.s. 143(3) dated 16-01-2014. 3.2. Aggrieved by the order of AO, assessee preferred an appeal before the CIT(A). 4. Ld.CIT(A) considered the submissions of assessee and the findings of AO and observed that claim u/s. 36(1)(vii) of the Act has to be allowed to the assessee-bank to an extent of ₹ 91,86,24,875/- and the provisions of Section 115JB of the Act are not applicable. But CIT(A) confirmed the reopening of assessment u/s. 147 of the Act and disallowance of claim u/s. 36(1)(viia) of the Act and partly allowed the appeal. 4.1. Aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and they have nothing to do with computation or taxability of provisions for NPAs under Income-tax Act - Held, yes - Whether provision for NPAs in terms of 1998 Directions constitutes expense on basis of which deduction can be claimed by NBFCs under section 36(1)(vii) - Held, no - Whether even applying theory of real income, a debit, which is expressly disallowed by Explanation to section 36(1)(vii), if claimed, has got to be added back to total income of assessee, because Act seeks to tax 'real income' which is income computed according to ordinary commercial principles but subject to provisions of Act - Held, yes Section 36(1)(vii), read with section 43D, of the Income-tax Act, 1961 - Bad debts - Whether sections 36(1)(vii) and 43D are violative of articles 14 and 19 of Constitution - Held, no Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowable as - Whether section 37 applies only to items which do not fall in sections 30 to 36; if a provision for doubtful debt is expressly excluded from section 36(1)(vii), then such a provision cannot be claimed as a deduction under section 37 even on basis of 'real income theory' - Held, yes" and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer having come to know, since it was made known in the return of income that its business of distribution of electricity is taken over by the Karnataka Electricity Board, under Indian Electricity Act, there was an obligation on the part of the Assessing Officer to have enquired with the assessee whether he has made any claim for payment of compensation, since he was passing an order under section 143(3) of the Act………" 7.1. Ld.AR referred to the reasons for reopening of assessment provided by the AO at Page No. 19 of the Paper Book, where the assessment for the AY. 2006-07 was re-opened because the assessee has claimed deduction u/s. 36(1)(viia) of the Act calculated on the basis of 10% of average aggregate rural advances. But whereas in the scrutiny proceedings of assessment year 2010-11, the assessee-bank has claimed similar deduction and as per the provisions of Section 36(1)(viia) of the Act, the average aggregate advances of the rural branches shall be taken into consideration for calculating deduction available u/s. 36(1)(viia) of the Act. Whereas AO on verification of the details submitted by the bank found that the branches located in sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of less than 10,000. b) 'Semi-urban group includes centres with population of 10,000 and above but less than I lakh. c) 'Urban' group includes centres with population of 1 lakh and above but less than 10 lakh. d) 'Metropolitan' group Includes centres with population of 10 lakh and more. 8. Commercial Banks refer to both scheduled and non-scheduled commercial banks which are regulated by Banking Regulation Act, 1949. I. Scheduled Commercial Banks are grouped under following categories: i) Public Sector Banks a. SBI and its' 6 Associates 19 Nationalised Banks Other Public Sector Banks (IDBI Ltd.) ii) Regional Rural Banks iii) Foreign Banks iv) Other Scheduled Commercial Banks (Private Banks) a. Old Private Sector Banks b. New Private Sector Banks II. Non-scheduled Commercial Banks (Local Area Banks) 9. Banked Centre is a center having at least a branch/office of a commercial or co-operative bank or a temporary office, such as an extension counter or a satellite office or an off-site ATM of a commercial or co-operative bank is functioning". 7.2. The Ld.AR drew attention to the computation of income and in particular head of 'bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessment. the Tribunal having found that the relevant material including that of transfer by the assessee to PEPL was on record and therefore it was not a case where there was non-disclosure of true and correct facts. The aforesaid finding, in our view, could be said to be rather pertaining to the question of fact to be examined on the basis of the material on record which would fall outside the judicial scrutiny in the present appeal." ii. Karnataka Bank (2014) [52 taxmann.com 526] (Karnataka); "5…………….It is a case where facts were fully and truly set out in the returns and disallowance was claimed in the assessment under section 143(3) of the Act. The Assessing Authority on application of mind and being satisfied with the claim allowed the case of the assessee. The said order has been confirmed in appeal. It is thereafter i.e., after four years, the reassessment proceedings are initiated. When the returns fully and truly disclosed all material facts, the Assessing Authority could not have initiated proceedings under section 147 of the Act, after the end of assessment year. That is precisely what the Tribunal has held. Therefore, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MI 813 - Gujarat High Court; "………Thus, the third proviso to section 147 of the Act permits the Assessing Officer to assess or re-assess only such income which was not subject matter of appeal, reference or revision. In the present case, the Assessing Officer seeks to reopen the assessment in respect of income involving a matter which was subject matter of appeal before the Commissioner(Appeals). The reopening of assessment by the impugned notice under section 148 of the Act is, therefore, also hit by the third proviso to section 147 of the Act and is not permissible in law". vi. ICICI Bank 2011 (11) TMI 304 - Bombay High Court; "17. In this regard, it needs to be noticed that the second proviso to Section 147 stipulates that the Assessing Officer may assess or re-assess such income other than the income involving matters which are the subject matter of any Appeal, Reference or Revision, which is chargeable to tax and has escaped assessment. In the present case, it has emerged from the affidavit in reply of the Revenue that the Assessee had filed an Appeal to the CIT(Appeals) against the order of assessment. paragraph 4(v) of the reply states that by his o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and fair disclosure of material. Further, the assessee-bank has discharged its duty by disclosing all material facts fully and truly and if the information submitted is untrue or on account of omission or failure to discharge fully and truly, the provisions of section 147(a) shall not apply. We also support our view and rely on the decision of the Hon'ble Karnataka High Court in the case of Infosys Ltd. (Formerly known as Infosys Technologies Ltd.) vs. Deputy Commissioner of Income-tax [2019] (6) TMI 1261(Kar.) "Reassessment u/s 147 r.w.s 148 - deduction u/s 10A - original assessment u/s 143(3) - reason to believe that the income chargeable to tax has escaped assessment - full and true disclosure of the material facts at the time of original assessment - alleged that Master Service Agreements, Work Orders, Scope of Works and invoices were not placed before the AO at the time of the original assessment - borrowed satisfaction, HELD THAT: It is held that 'Note' on Software development projects and the various stages of software development placed by the assessee before the AO discloses the stages wherein the petitioner - assessee was required to carry out the project at t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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