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TMI Blog2017 (8) TMI 1577X X X X Extracts X X X X X X X X Extracts X X X X ..... s general in nature and hence, requires no separate adjudication by us. 4. Ground No.4 of the appeal is not pressed by ld A.R. of the assessee, hence, same is dismissed as not pressed. 5. In Ground No.2 of the appeal, the grievance of the assessee is that the CIT(A) erred in confirming the addition of Rs. 16,50,000/- under the head "provision for standard assets" as per RBI norms. 6. The brief facts of the case are that the Assessing Officer required the assessee to explain why provision for standard assets amounting to Rs. 16,50,000/- shall not be disallowed since provisions for expenditure claimed in the profit and loss account are not permissible expenditure under the Act. The assessee explained that the bank provided for an amount of Rs. 16,50,000/- towards provisions for standard assets in accordance with the guidelines issued by Reserve Bank of India for provisioning of loans and advances of a Bank. The assessing Officer was not satisfied with the explanation of the assessee and observed that such provision for standard assets is not permissible expenditure under the act and moreover expenditure on such assets is in the nature of capital expenditure. Therefore, he disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court in the case of Southern Technologies vs JCIT, 320 ITR 577 (SC), wherein also, similar finding was given. Hence, it was his submission that the order of the CIT should be confirmed. 11. We have heard the rival submissions, perused the orders of lower authorities and materials available on record. In the instant case, the undisputed facts are that the assessee made a claim for deduction of Rs. 1,68,13,000/- for bad and doubtful debts which includes Rs. 16,50,000/- as provision made for standard assets in the profit and loss account. The Assessing Officer disallowed deduction of Rs. 16,50,000/- on the ground that it was not permissible expenditure and that it was capital expenditure. 11.1 On appeal, the CIT(A) confirmed the action of the Assessing Officer on the ground that it is a contingent liability. 12. We find that the assessee argued before the CIT(A) that the deduction claimed of Rs. 1,68,13,000/- which includes Rs. 16,50,000/- was in accordance with the provisions of section 36(1)(viia) of the Act. The contention of the assessee was that it being a Regional Rural Bank, provision of section 36(1)(viia) of the Act was applicable to it and the provision of Rs. 1,68, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer asked the assessee to explain why provision towards leave encashment of Rs. 37,00,000/- should not be disallowed since provision for expenditure claimed in the profit and loss account are not permissible expenditure under the Act. The assessee submitted before the Assessing Officer that provision for leave encashment for Rs. 37,00,000/- was made in the accounts. However, the bank has paid an amount of Rs. 4,86,413/- against leave encashment made during earlier years and not allowed to them as deduction. The Assessing Officer observed that auditor in his report in Schedule-18 at item Sl.No.6(j) mentioned that leave encashment is accounted for on cash basis. Therefore, he did not accept the contention of the assessee regarding payment of Rs. 4,86,413/-. The Assessing Officer concluded that provision towards leave encashment of Rs. 37,00,000/- is not permissible under the Act. 16. Before the CIT(A), the assessee submitted that though provision made is disallowed u/s 43B(f) of the Act, the Hon'ble Calcutta High Court in the case of Exide Industries Ltd vs UOI, 292 ITR 470 (SC) has held that liability towards leave encashment should be allowed as a deduction even if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring such amendment. They were within their power to bring such amendment. However, they must disclose reasons which would be consistent with the provisions of the Constitution and the laws of the land and not for the sole object of nullifying the apex Court decision. Therefore, s. 43B(f) is struck down being arbitrary, unconscionable and de hors the apex Court decision in the case of Bharat Earth Movers (2000) 162 CTR (SC) 325." 19 The A.R. has contended that even though the decision of the Hon'ble Calcutta High Court holding Clause (f) of Section 43D as ultra virus is stayed by the Hon'ble Supreme Court while admitting the SLP filed by the Revenue, the same has not been reversed and, therefore, the Tribunal is bound to follow the same being a binding precedent. He, therefore, prayed that the matter should be restored back to the file of the Assessing Officer for adjudication afresh of the issue in the light of the decision of Hon'ble Supreme Court in the case of Exide Industries ltd (supra). 19.1 The DR also agreed with the submission of ld AR of the assessee. In the circumstances of the case, we set aside the order of the CIT(A) and remit the matter to the file of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Ground No.3 of the appeal, the grievance of the assessee is that the CIT(A) erred in confirming the disallowance made under provision for non-SLR securities as per Mark to market valuation of Rs. 2,50,125/-. 27. The brief facts of the case are that the Assessing Officer disallowed Rs. 2,50,125/- being provision for non-SLR securities as per Mark to market valuation. 28. The CIT(A) confirmed the action of the Assessing Officer. 29. With regard to Ground Nos.2 & 3 of the appeal, ld A.R. of the assessee relied on the decision of Hon'ble Karnataka High Court in the case of Karnataka Bank Ltd vs ACIT, (2013) 356 ITR 549 (Kar) and submitted that the Hon'ble High Court has held as under: "The assessee had maintained the accounts in terms of the Reserve Bank of India Regulation and it had shown the securities as investments. But consistently for more than two decades they had been shown as stock-in-trade and depreciation was claimed and allowed. The value of the stocks being closely connected with the stock market at the end of the financial year while valuing the assets, necessarily the assessee had to take into consideration the market value of the shares. If the market value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en claiming this loss consistently for past so many year and was allowed deduction for the same. Instruction No.17/2008 dated 26.11.2008 issued by the CBDT wherein, at para vi, it has been clearly stated that in the case of HFT and AFS Securities of the Bank, the depreciation and appreciation to be aggregated script wise and only depreciation, if any, is required to be provided in the accounts. 34. In view of the above, we do not find any merit in the action of lower authorities for disallowing loss arose on the year end revaluation of securities. Our view is supported by decision of Hon'ble Bombay High Court in the case of CIT Vs. HDFC Bank Ltd., passed in ITA N0.330 of 2012; United Commercial Bank Vs. CIT, 240 ITR 355(SC); Investment Ltd. Vs. CIT, 77 ITR 533 (SC); and CIT Vs. Bank of Baroda, 262 ITR 334 (Bom). Respectfully following the decision of Hon'ble Supreme Court and Hon'ble Bombay High Court and considering the classification of security so made and the loss arose on account of revaluation of securities are required to be allowed. Ld D.R. has not controverted the submission of the assessee or cited any contrary decision. Facts being identical, therefore, res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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