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TMI Blog2020 (3) TMI 1374X X X X Extracts X X X X X X X X Extracts X X X X ..... nd varied. No law has been produced before us in support of any contention raised by assessee. Taking into account all the facts and circumstances and by relying upon the decision of the Hon'ble ITAT in the assessee's own case for the A.Y. 1999-2000, we decide this issue in favour of the revenue against the assessee. Disallowance of expenses by applying the provisions of Section 14A r.w. Rule 8D - HELD THAT:- As decided in own case [ 2018 (1) TMI 1600 - ITAT MUMBAI] the claim of the assessee has been allowed as the loans granted and the investment made are out of own interest free funds available with the assessee's Bank. No disallowance in relation to interest expenses was warranted as own interest free fund are far exceeding investment. Disallowance of depreciation on leased assets - HELD THAT:- Assessee has voluntary admitted this fact that this issue has been decided against assessee in the assessee's own case [ 2018 (1) TMI 1600 - ITAT MUMBAI] . Disallowance being payment to SBI Mutual Fund in respect of shortfall arising on redemption of Magnum Triple Scheme 1991 - HELD THAT: As decided in own case [ 2016 (4) TMI 1392 - ITAT MUMBAI] as relying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t nor it is the case of the AO or FAA that Trust was not bonafide or the expenditure was not incurred wholly and exclusively for the employees - Decided in favour of assessee. Disallowance of provisions for bad debts and doubtful debts u/s 36(1)(viia) - HELD THAT:- There is no dispute regarding the claim allowed by the AO is proper as per the provisions of section 36(1)(viia). When the allowable claim has been accepted by the AO under the provision of section 36(1)(viia) then merely the provision made on the basis of RBI guidelines does not become allowable for deduction in contravention of the provision of section 36(1)(viia). It is pertinent to note that when the claim of deduction specifically provided u/s 36(1)(viia) then the same cannot be allowed by applying any other provision. Accordingly, we do not find any merit or substance in the claim of the assessee. Hence dismissed. Disallowance of provision in respect of foreign offices - HELD THAT:- Disallowance of provision in respect of foreign offices. Before us, the AR referred to note No.19, of the return of income and the letter submitted on 05.09.2000 along with the annexure which form part of the Paper book. We ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee on the basis of the decision of the Hon'ble ITAT Jaipur Bench in the case of State Bank of Bikaner Jaipur Vs. DCIT [ 1998 (10) TMI 93 - ITAT JAIPUR] . The issue has already been decided in favour of the assessee against the revenue in the earlier A.Y. 1997-98 by the predecessor of the CIT(A) who pass the present order. In view of the above said decision the CIT(A) has decided the issue in favour of the assessee. - I.T.A. No. 6482 /Mum/2010 And ITA. No. 6822/Mum/2010 - - - Dated:- 6-3-2020 - Shri Rajesh Kumar, AM And Shri Amarjit Singh, JM For the Assessee : Shri Girish Dave/Urvi Mehta. For the Revenue Shri Awungshi Gimson (DR). ORDER PER AMARJIT SINGH, JM: The Revenue as well as assessee have filed the above mentioned appeals against the order dated 21.07.2010 passed by the Commissioner of Income Tax (Appeals)-5, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Y.2000-01. ITA No. 6482/M/2010 2. The assessee has filed the present appeal against the order dated 21.07.2010 passed by the Commissioner of Income Tax (Appeals)-05, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Y.2000- 01. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to the business of another person viz. SBI Mutual Fund which was not an income earning apparatus for the appellant and therefore, the expenditure incurred for an on behalf of SBI Mutual Fund could not be treated as expenditure during the course of the business of the assessee. 7. The Ld. CIT(A) erred in not accepting the claim of the appellant that the interest of ₹ 11,22,91,234/- was in the nature of unearned income on non- performing assets as envisaged by section 43D of the Act and that the write-off of the same was allowable as a deduction. 8. The Ld. CIT(A) erred in holding that the claim that the deduction was claimed before the AO is not fully verifiable as the assessment order is completely silent on such a claim, it at all made during assessment proceedings. The Ld. CIT(A) erred in holding that the clam that the claim that the deduction was claimed before the AO is not fully verifiable as the assessment order is completely silent on such a claim it all made during assessment proceedings. 9. The Ld .CIT(A) erred in confirming the addition in respect of contribution of ₹ 10,00,00,000/- to SBI Retired Employees Medical Benefit Fund. The L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by ld. representatives. First we are taking appeal filed by assessee in ITA No. 4736/Mum/2010. 6. On appraisal of the above mentioned finding, we noticed that the Hon'ble ITAT has allowed the claim of the assessee on the basis of the earlier decision of the assessee's own case for the A.Y. 1994-95 1996-97. Nothing came into noticed that the finding has been changed and varied. Nothing contrary to the said finding has been produced before us, therefore, by following the decision of the Hon'ble ITAT in the assessee's own case for the A.Y. 1999-2000 bearing ITA. No. 4736/M/2010 4598/M/2010 dated 31.01.2018, the claim of the assessee has been allowed. Accordingly, this issue is decided in favour of the assessee against the revenue. ISSUE No. 2 7. Under this issue the assessee has challenged the disallowance of depreciation on matured investments in sum of ₹ 15,13,81,119/-. At the very outset, the Ld. Representative of the assessee has argued that this issue has been covered against the assessee in the assessee's own case bearing ITA. No. bearing ITA. No. 4736/M/2010 4598/M/2010 dated 31.01.2018 for the A.Y. 1999-2000. The relevant findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Navin R. Karnani Karnani vs. CIT 185 ITR 408 (Bom), (Bom) it was not possible to waive any amount of income which had accrued under the mercantile system of accounting on the ground of diminished hope of recovery. Furthermore, any liability de futuro is not an ascertained liability in praesenti and cannot be allowed as deduction under the Income-tax Act as held in the case of Indian Molasses Co. Pvt. Ltd. vs. CIT 37 ITR 66 (SC) and Standard Mills Co. Ltd. Vs.CIT Vs.CIT 229 ITR 366(Bom) 366(Bom). Hence, no such ad hoc deduction could be allowed against the amount receivable on redemption of securities which had matured and become due for payment before the close of the accounting year. This ground therefore fails. 39. The findings of the CIT(A) is based the on the various decisions of the Hon'ble Supreme Court as well Jurisdiction High Court. No contrary decisions has been brought before us accordingly we do not find any error or illegality in the impugned order of CIT(A) qua this issue. The same is upheld. 9. Again in appeal for AY 1997-98 1998-99, the Tribunal by following the decision of AY 1996-97 dismissed the identical ground of appeal by passing the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had become receivable is contrary to the postulates of the Act, the Supreme Court held (p. 146 of 158 ITR). Moreover, as held in the case of Navin R. avin R. Karnani vs. CIT 185 ITR 408 (Bom) Karnani vs. CIT 185 ITR 408 (Bom) ani vs. CIT 185 ITR 408 (Bom), it was not possible to waive any amount of income which had accrued under the mercantile system of accounting on the ground of diminished hope of recovery. Furthermore, any liability de futuro is not an ascertained liability in praesenti and cannot be allowed as deduction under the Income-tax Act as held in the case of Indian Molasses Co. Pvt. Molasses Co. Pvt.Ltd. vs. CIT 37 ITR 66 (SC) Ltd. vs. CIT 37 ITR 66 (SC) and Standard Mills Ltd. vs. CIT 37 ITR 66 (SC) Standard Mills Co. Ltd. Vs.CIT 229 ITR 366(Bom Co. Ltd. Vs.CIT 229 ITR 366(Bom) CIT 229 ITR 366(Bom). Hence, no such ad hoc deduction could be allowed against the amount receivable on redemption of securities which had matured and become due for payment before the close of the accounting year. This ground therefore fails. 39.The findings of the CIT(A) is based the on the various decisions of the Hon'ble Supreme Court as well Jurisdiction High Court. No contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been made out of a fund established by the ITA No. 4736 4598/M/2010- State Bank of India 12 assessee for scientific research assistance, that the fund was set up out of surplus fund in earlier years, that the payment was not out of the income of the year under consideration. Following the earlier years order the AO disallowed the claim. 3.1. Aggrieved by the order of the AO the assessee preferred an appeal before the First Appellate Authority (FAA). After considering the submission of the assessee and the assessment order he held that his predecessor disallowed the claim made by the assessee while deciding the appeal for AY 1996-97. Following the order of his predecessor for the earlier year he upheld the order of the AO. 3.2. During the course of hearing before us, the AR agreed that assessee had not challenged the order for the year 1996-97 before the Tribunal. As the assessee had accepted the order of the FAA for the earlier year, we are of the opinion that there is no need to disturb the order of the CIT(A) for the current year as facts for both the years are identical- except that the amounts involved are different. Confirming the order of the FAA Ground No.3 is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 383 ITR 529), CIT vs. HDFC Bank Ltd. (366 ITR 505), decision of Hon'ble Delhi High Court in CIT vs. Tin Box Co. (260 ITR 367), Gujarat State Fertilizers Chemicals Ltd. (Tax Appeal No. 82 of 2013(Gujarat HC), UTI Bank Ltd. (32 taxmann.com 370) (Guj HC). It was further argued that Rule 8D is not applicable for AY 1999-2000. On this submission the ld. AR of the assessee relied upon the decision of Hon'ble Bombay High Court in Godrej Boyce Manufacturing Company Ltd. vs. DCIT (2010) 328 ITR 81. The ld. AR of the assessee further argued that no disallowance under section 14A is warranted, if investments are held as stock-in-trade. In support of his submission, the ld. AR relied upon the decision of CIT vs. India Advantage Securities Ltd. (2016 380 ITR 471) (Bombay High Court), State Bank of Patiala (78 taxmann.com 3) (Punjab and Haryana High Court), CCI Ltd. vs. JCIT (2012 206 taxman 563) (Karnataka High Court), Oasis Securities Ltd. vs. DCIT (59 SOT 302) (Mumbai Tribunal), Ganjam Trading Co. Pvt. Ld. vs. DCIT (ITA No. 3724/Mum/2005 and others) (Mumbai Tribunal), State Bank of Hyderabad (63 taxmann.com (Hyderabad ITAT) Gulshan Investment Co. Ltd. (ITA No. 666/Kol/2012). In al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the matter following the earlier precedent. On the other hand, the ld. DR for the Revenue relied upon the order of authorities below. 15. We have considered the rival submission of the parties and have gone through the orders of authorities below. At the time of hearing, the ld. representative for the assessee pointed out that earlier AYs 1997-98 1998-99 vide its order dated 29.04.2016 (supra), the issue relating to the disallowance under section 14A of the Act was remanded back by the Tribunal to the file of AO. He conceded that the circumstances which prevailed with the Tribunal to remand the matter with the file of AO continued to prevail in this year too. It is pointed out that when the impugned assessment was finalized, the jurisprudence on the implication of section 14A was not developed but by the time, the matter travelled to the Tribunal, law had considerably developed on the subject. By noticing this, the Tribunal restored the matter back to the file of AO for fresh adjudication so that the benefit of the later developed law could be available to the AO. So, however, it is pointed out that in the order giving effect to the directions of the ITAT for AY 1997-98 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Tribunal for AY 1996-97 dated 23.08.2016. The ld. DR for the Revenue submits that this ground of appeal may be dismissed as similar ground of appeal has already been admittedly dismissed by the Tribunal for AY 1996-97 to 1998-99. 17. We have considered the submission of the parties and have gone through the order of authorities below and the orders passed by co-ordinate bench of Tribunal in assessee's own case for AY 1996-97 wherein similar ground of appeal was decided against the assessee. Again in the appeal for AY 1997-98 1998-99, the similar grounds of appeal was dismissed by following the decision of Tribunal in AY 1996-97 with the following order: 6. Next Ground of appeal is about disallowance of depreciation of ₹ 61.75 crores on leased assets. During the course of hearing before us, the AR fairly conceded that identical issue has been decided against the assessee by the Tribunal. While adjudicating appeal for AY.1996-97 dt.26.7.13 in ITA No.5470/Mum/2002 the Tribunal held as under: 15. Ground No. 8 is regarding depreciation on lease assets given to Konkan Railway Corporation Ltd. The assessee has entered into an agreement dated 30.3.1996 with Ko ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n are material and relevant to be considered. Therefore, mere nomenclature words used in the agreement cannot be looked into in isolation of the substance of the document, the real intentions of the parties and the surroundings circumstances under which the transaction took place. Undisputedly in the case in hand the asset in question is the railway track which is already owned by the lessee Konkan Railway Corporation Ltd. (KRCL) but because of the requirement of funds the KRCL decided to raise the funds by making the arrangement of sale and lease back of the asset. Thus, the real object as far as KRCL is concerned for entering into the transaction of sale and lease back is to raise/arrange the funds. The two transaction of sale of the asset in question to the assessee bank and lease back cannot be separated as there was no choice with either of the party to restrict the transaction of sale alone independently because it was neither possible nor permissible to sell out the asset in question by the Konkan Railway Corporation being the integral part of their railway system which is the very basis of the existence of the KRCL. Thus, we have not doubt that the sale transaction in quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is effected by the Manufacturer/Supplier before delivery of the Equipment. 5.2 immediately after the delivery of the Equipment, insure the Equipment and keep the same insured throughout the term of this Agreement against loss or damage by accident, lighting, fire, flood, storm, earthquake, tempest, falling aircraft, malicious damage, riot, strike, civil commotion, explosion, implosion and where necessary against third party claims in respect of Equipment used in hazardous industries and those requiring environmental protection as also for other risks usually covered by insurance in the type of business for which the Equipment is for the time being used to the satisfaction of the Lessor upto the full replacement value thereof under a Comprehensive Policy of Insurance, in the joint names of the Lessor and the Lessee with an endorsement showing the Lessor as the owner and Loss payee. 8. Lessor's Interest and Title: The Lessee agrees and undertakes that it will8.1 ensure that in so far as the Equipment is installed in or affixed to any land or building, such Equipment shall be capable of being removed without material injury to the said land or building and that all su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.7 punctually pay all registration charges, licence fees, rent, rates, taxes including in particular Sales Tax and other outgoings payable in respect of the Equipment under this Agreement or for storage, installation, or use thereof, or in respect of any premises in which the Equipment form time to time may be placed or kept and produce to the Lessor, on demand, the latest receipts for all such payments and in the event of the Lessee making default under this sub-clause the Lessor shall be at liberty to make all or any of such payments and to recover the amount thereof from the Lessee forthwith. 8.8 not claim any relief by way of any deduction, allowance or grant available to the Lessor as the owner of the Equipment, under the Income Tax Act, 1961 or under any other Statute, rule, regulation or guideline issued or that may be issued by the Government of India or any Statutory Authority and not do or omit to do or be done any act, deed or thing whereby the Lessor is deprived, whether wholly or partly of such relief by way of deduction, allowance or grant. The Lessee shall at the end of each financial year of the Lessor provide to the Lessor such information as it may re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing amounts viz: 13.3.1 The entire amount of the lease rentals for the fixed period of the lease computed in the manner set out in Part II of the First Schedule hereto on the footing and as if the Agreement had not been terminated to the end and intent that the Lessee shall pay to the Lessor not only arrears of instalments of lease rentals upto the date of termination of this Agreement but also such further instalments for the then unexpired residue of the term which the Lessee would have been bound to pay to the Lessor had this Agreement continued. 14. Redelivery/Repossession of Equipment: 14.1 Upon the expiration of this Agreement if the Lessee does not propose to renew the lease for further fixed period or secondary period the Lessee shall if required by the Lessor deliver the Equipment to the Lessor at the address of the Lessor stated in this Agreement or at such other addresses as the Lessor may specify or if not so required shall hold the Equipment in trust for the lessor so as to make it available to the Lessor for collection by itself or by its employees or agents; the Lessor or its employees or agents shall be entitled to retake possession of the Equipm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the lease term, therefore the lease agreement has been framed and constructed in such a way that the assessee recovers its entire cost along with the interest in equated monthly installments. Even in the schedule to the lease agreement the period of 84 months is a fixed nonconcealable period. As per clause 5 of the agreement the lessee is required to take out the insurance on the asset in question and also bear all the damages, loss and risk attached to the leased asset, therefore, it is agreement between the parties that all the risk and reward attach to the lease asset shall be born and enjoyed by the lessee. The so-called restrictions on the sale, creating charge, lien by the lessee are necessary being a security against the funds provided by the assessee to the lessee. Even otherwise in case of simple finance, the asset which is being financed is always kept as asecurity/mortgage with the bank to protect the interest of the bank till the repayment of the finance. Therefore, the restrictions provided in the lease agreement are only to secure the interest of the bank till the recovery of the full amount along with the interest. Some of the terms of the agreement appear to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er also, whereas in a finance lease it is the lessee who becomes the real owner. The lessor's title over the asset is only symbolic to serve as security for the rentals, which are nothing but the return of his investment with interest. d. Operating lease is cancellable, whereas tinance lease is always noncancellable. In a case of finance lease, the lessor is interested in lease rentals and not the asset. e. In the case of an operating lease, substantial risks and rewards of ownership of the asset remain with the lessor, whereas in the case of finance lease these ab initio vest with the lessee. f. In the case of an operating lease, the fixation of lease rental bear no symmetry with the economic life of the asset and the possibility of the asset reverting back to the lessor can never be ruled out. However in the case of a finance lease, the lease period is ordinarily equal to the economic life of the asset and lease rentals are fixed in such a way so as to recover the investment with interest during the lease peiod itself. The possibility of the asset reverting back to the lessor is never there. g. In the case of an operating lease, the asset is ordinarily common use utility wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he recovery of the investment with interest. Further the operating lease generally covers the asset which can be needed by different users so that the lessor may make available to one lessee after another. 5.23 Now let us try to find out the substance of the extant lease agreement as to whether it predominantly satisfies the conditions of an operating lease. On reading the lease agreement as a whole, we find that except for naming the lessor as owner at some places in the agreement and inserting certain cosmetic clauses to give the colour of operating lease, there is nothing in substance which satisfies the inherent requisites of operating lease. It can be observed that the lease is not cancellable prior to the expiry period of seven years. The cost of repairs and insurance is to be borne by the lessee. Sum total of the lease rentals by the lessee recoups the amount invested by the lessor plus interest. There is a clause that after the expiry of seven years period, the boiler will be sold to the lessee at predetermined value. It is the lessee who has to bear the loss due to obsolescence. All the risks and rewards vest with the lessee. When we consider the cumulative eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, certificates, scrips and other instruments, and securities whether transferable or negotiable or not; the granting and issuing of letters of credit, traveller's cheques and circular notes; the buying, selling and dealing in bullion and specie; the buying and selling of foreign exchange including foreign bank notes; the acquiring, holding, issuing on commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock, bonds, obligations, securities and investments of all kinds; the purchasing and selling of bonds, scrips or other forms of securities on behalf of constituents or others, the negotiating of loans and advances; the receiving of all kinds of bonds, scrips or valuables on deposit or for safe custody or otherwise; the providing of safe deposit vaults; the collecting and transmitting of money and securities; (b) acting as agents for any Government or local authority or any other person or persons; the carrying on of agency business of any description including the clearing and forwarding of goods, giving of receipts and discharges and otherwise acting as an attorney on behalf of customers, but excluding the business of a 1[managing agent or secr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s other than those referred to in sub-section (1). 25. As it is clear from the sub-section 2 that no banking company shall engaged in any form of business other than those referred in subsection 1 of section 6. However, as per circular dated 19.2.1994 the Reserve Bank of India has allowed the banking companies to undertake the activities of equipment leasing but the same should be treated on par with the loan and advances. Therefore, the activity of equipment leasing permitted by the RBI vide said circular is only in the nature of finance lease. The said circular has also been considered and discussed by the Special Bench in para 5.24-5.27 as under: 5.24 Our view is fortified by the RBI Circular No. FSCBC 18/24- 01-001/93-94 dated 14.02.1994 which inter alia deals with equipment leasing. It is needless to say that this circular is binding on the assessee bank. Para 1(i) of it provides that the activities like equipment leasing, hire purchase and factoring services should be undertaken only by certain selected branches of the Bank. Para 1 (ii) which is relevant for our purpose reads as under: (ii) These activities should be treated on par with loans and advances and should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set. It is .impermissible to read para 1 (vi) of the Circular in isolation to support the contention that the RBI permits claiming depreciation on the leased assets. It is in fact not so because the Circular as a whole treats the activity of equipment leasing as that of loans and advances and the reference to full depreciation in para 1 (vi) should be read in juxtaposition to para 1(v) which talks of the second component of the lease rental being the replacement cost of the asset. When we read this Circular in entirety, there remains no doubt that the activity of equipment leasing has to be considered by a bank on par with the loans and advances. 5.26 In view of the above circular we do not find any scope for argument that the instant lease agreement be treated as that of operating lease. Since the loans and advances encompass finance lease, naturally such type of equipment leasing cannot be given any name other than the finance lease. Here it is relevant to note that the assessee claimed depreciation on leased asset and also showed full amount of lease rental as income in contravention of para 1(v) of the afore noted RBI Circular. When the Assessing Officer concluded that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision as under: 2. The assessee is a public limited company, classified by the Reserve Bank of India (RBI) as a non-banking finance company. It is engaged in the business of hire purchase, leasing and real estate etc. The vehicles, on which depreciation was claimed, are stated to have been purchased by the assessee against direct payment to the manufacturers. The assessee, as a part of its business, leased out these vehicles to its customers and thereafter, had no physical affiliation with the vehicles. In fact, lessees were registered as the owners of the vehicles, in the certificate of registration issued under the Motor Vehicles Act, 1988 (hereinafter referred to as the MV Act ). 28. Therefore the Hon'ble Supreme Court has decided the issue in the case of nonbanking financial company which is engage in the business of leasing whereas in the case of bank it is not permitted under the Banking Regulation Act to engage in the business of leasing of equipments. Following the decision of Special Bench of this Tribunal in case of IndusInd Bank Ltd., we hold that the transaction in question is finance lease and not operating lease. Accordingly, we uphold the orders of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not to effect the source of income etc. This fact is not doubted by the AO in his assessment order but admitted this. But the AO disallowed the claim of expenses / loss only on the basis that the assessee has treated it as to have goodwill among the investors and therefore, he treated this expense as capital in nature. We noted that this issue is squarely covered by the decision of Hon ble Supreme Court in the case of Empire Jute Co. Ltd. Vs. CIT (124 ITR i), L. H. Sugar Factor Oil Mills Pvt. Ltd. Vs. CIT (125 ITR 293), CIT vs. Malayalam Plantations Ltd. (53 ITR 140), Sassoon J. David Co. Pvt. Ltd. Vs. CIT (118 ITR 261). From the above judgments of Hon'ble Supreme Court, we will reproduce the findings of one of the judgments of Hon ble Supreme Court in the case of Malayalam Plantations Ltd. (supra), wherein Hon'ble Court was concerned whether, Estate Duty paid by the company on the death of shareholders can be said to be, laid out or expended wholly or exclusively for the purpose of business.' Hon ble Supreme Court while disallowing the claim, laid down certain principles as under:- The aforesaid discussion leads to the following result: The expression fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be dropped. The fact that somebody other than the assessee is also benefited by the expenditure should not come in the way of an expenditure being by way of deduction tinder section 10(2)(xv) of the Act if it satisfies otherwise the tests laid down by law. 8. We also noted from the arguments of the learned Counsel relied on by him of Hon'ble Karnataka High court in the case of CIT v. Canara Bank Ltd. in [TA No. 1397/Mum/2006, wherein identical set of facts were considered. The facts were that the bank had set up in Mutual fund which had floated a scheme under which an assured return of income @ 12.5% was grante16the investors. But, at the time of redemption, the scheme did not have adequate assets nor funds to honor its commitment and consequently, in order to maintain the banks goodwill and reputation, the bank decided to repurchase of units of the scheme at a price at which mutual fund had committed to the investors. The bank claimed the said amount paid towards repurchase of the units as an expenditure. The AO disallowed and finally, Hon'ble Karnataka High Court allowed the claim of the assessee. Hence, we are of the view that the CIT(A) has rightly allowed the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of the assessee the FAA held that the contention of the assessee was contrary to the provisions of the Act, that there was no provision in Sec.43D for reversal of entries of interest credited or for claiming deduction in subsequent years, that it was entitled for any relief. 7.1. Before us, the AR stated that the amount in question had already been disallowed in the past, that there cannot be disallowance of the same amount in two years. He relied upon the case of American Express Bank Ltd.(55SOT136). The DR stated that section 43D was a charging section, that the order of the FAA was in accordance with the provisions of the Act. 7.2. We have heard the rival submissions and perused the material before us. We find that the claim made by the assessee of double disallowance of the same amount has not been considered. Therefore, in the interest of justice we are reverting back the issue to the file of the AO to decide the issue afresh after affording reasonable opportunity of hearing to the aa.Gr.No.7 stands partly allowed in favour of the assessee. 21. Thus, considering the decision of co-ordinate bench, this ground of appeal is restored to the file of AO with simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that he has no objection for admission of additional grounds of appeal, provided all three additional grounds of appeal are restored back to the file of AO for examining the issues afresh. 20. On appraisal of the above said finding, we find that the CIT(A) has decided the issue on the basis of the decision of the Hon'ble ITAT in the assessee's own case for the A.Y. 1996-97 in which the issue has been restored before the AO by giving certain directions mentioned therein. Accordingly, we set aside the finding of the CIT(A) on this issue and restored the issue before the AO to decide the matter of controversy afresh by giving an opportunity of being heard to the assessee. It is necessary to follow the direction as given by Hon'ble ITAT in the assessee's own case for the A.Y. 1999-2000 bearing ITA. No. 4736/M/2010 4598/M/2010 dated 31.01.2018. Accordingly, this issue is decided in favour of the assessee against the revenue. ISSUE No. 9 21. Under this issue the assessee has challenged the disallowance of contribution of ₹ 10,00,00,000/- to SBI Retired Employees Medical Benefit Fund. This issue has also been adjudicated by Hon'ble ITAT beari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Bank of Travancore (supra), the AO had disallowed the claim of the Bank in respect of the contribution to medical benefit scheme, amounting to ₹ 50.00 lakhs. The AO was of the opinion that the provision of section 40A(9) of the Act were applicable and the assessee was not entitled to claim the expenditure as an allowable item. Matter travelled upto the Tribunal and it deliberated upon the provisions of Section 40A(9)of the Act at length. The Tribunal held that the basic intention of the legislature for insertion of sub section 9 of section 40A was to discourage the practice of creation of camouflage Trust funds, ostensibly for the welfare of the employees and transferring huge funds to such Trusts by way of contribution, that in those cases the investment of the trust corpus was also left to the complete discretion of the Trustees, that to avoid hardship in the case where Trust/Funds had been set up wholly and exclusively for the welfare of the employees prior to 1.4.1984 sub section (10) was also inserted to section 40A.The Tribunal was of the opinion that provisions of section 40A(9) should not make any harm to the expenditure incurred bonafide, that the contribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal is liable to be dismissed as the High Court has already dismissed the appeal of assessee for AY 1996- 97. 29. We have considered the submission of the parties and gone through the orders of authorities below. We find that similar ground of appeal was dismissed by the Tribunal in assessee's own case for AY 1996-97 vide ITA No. 5470/M/2002 dated 26.07.2013. Further, the similar ground of appeal was dismissed by Tribunal in appeal for AY 1997-98 1998-99 in ITA No. 3823 3824/Mum/2005 dated 29.04.2016 holding as under: 8. Next Ground is about not allowing deduction for provision for bad and doubtful debts at ₹ 706.29 crores u/s. 36(1)(viia) as against ₹ 833.30crores. 8.1. In the appellate proceedings, before the FAA, the assessee argued that it had made provision for bad and doubtful debts on the basis of RBI Guidelines, that the entire amt of provision had to be allowed as a deduction. The FAA after considering the assessment order and the assessee's order held that section 36(1)(viia) prescribed upper limit for deduction in respect of provision for bad and doubtful debts, that the assessee could not allow deduction for any amt excee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24. On appraisal of the above mentioned finding, we find that the issue has been decided by the Hon'ble ITAT in the earlier years of the assessee i.e. 1996-97, 1997-98 1998-99. The assessee preferred the appeal for the A.Y. 1996-97 before the Hon'ble High Court of Bombay which was dismissed. Nothing came into noticed that the finding has been changed and varied. Accordingly and by relying upon the finding of the Hon'ble ITAT in the assessee's own case for the A.Y. 1998-99 (supra), we decide this issue in favour of the revenue against the assessee. ISSUE No. 11 25. Under this issue the assessee has challenged the disallowance of provision in respect of foreign offices. This issue has already been adjudicated by Hon'ble ITAT in the assessee's own case for the A.Y.1999-2000. The relevant finding is hereby reproduced as under.:- 31. Ground No.10 relates to disallowance of provision in respect of foreign offices. The ld. AR of the assessee argued that similar ground of appeal was restored back by the Tribunal to the file of AO in assessee's own case for AY 1998-99 in its order dated 29.04.2016. The ld. DR for the Revenue expressed his no ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant finding has been given in para no. 5 to 10 which are hereby reproduced as under.:- 2. We have heard the Ld. Counsel for the assessee as well as the Ld. DR and have carefully perused the impugned order and relevant material. The grievance of the assessee as pointed out in the miscellaneous application is regarding the additional grounds no. 1 to 3 raised by the assessee which was disposed off by the Tribunal by remitting the same to the record of the assessing officer. The Ld. Counsel for the assessee has pointed out that though these grounds were raised for the first time before the Tribunal and the Tribunal after considering the fact that these are purely legal issues have admitted these grounds for adjudication on merit. The Ld. Counsel has further submitted that in support of these additional grounds the assessee has relied upon the various decisions whereby these issues were covered in favour of the assessee. However in para 37 of the impugned order the decision relied upon by the assessee do not find mention. Thus the Ld. Counsel has submitted that instead of remitting the issue to the AO for fresh adjudication the Tribunal should also consider the decisions relied up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. CIT (2010) 323 ITR 166 2. Covered by the decision of the Bangalore Tribunal in the case of State Bank of India Mysore Vs. DCIT (2009) 33 SOT 7 (BANG.) 3. Covered in favour of the appellant by the decision of the Mumbai bench of Tribunal in the case of Bank of India Vs. DCIT (ITA No. 2781/Mum/2011) However since the issue has not been examined by the AO, therefore, in the interest of justice we remit these grounds to the record of the Assessing Officer for fresh examination and adjudication after considering the decisions relied upon by the assessee as well as after giving opportunity of hearing to the assessee. 28. On appraisal of the above mentioned finding, we noticed that this issue has been decided in the assessee's own case for the A.Y 1996-97 bearing M.A. No.371/M/2014. Accordingly, we restored this issue before the AO to decide the matter of controversy afresh by giving an opportunity of being heard to the assessee in accordance with law by following the similar guidelines as given by the Hon'ble ITAT in MA. No. 371/M/2014 for the A.Y. 1996-97. Accordingly, this issue is decided in favour of the assessee against the revenue. ADDITIONAL GROUND No. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T 7 (BANG.) 3. Income earned from foreign branches should not be liable to tax in India Covered in favour of the appellant by the decision of the Mumbai bench of Tribunal in the case of Bank of India Vs. DCIT (ITA No. 2781/Mum/2011) 4. The Tribunal has disposed of the issue in para 37 of the order which reads as under:- In additional Ground no. 1-3 are raised first time by the assessee and involves legal issue, therefore as prayer by the assessee the same are remitted to the record of the Assessing Officer for examination and adjudication as per law after giving a opportunity of hearing to the assessee . 5. It is apparent from the finding of the Tribunal in para 37 (Supra) that the decisions relied upon by the Ld. AR have escaped consideration, accordingly we are of the view that to that extent there is an apparent error in the impugn order of the Tribunal which requires to be rectified u/s 254(2) of the Income Tax Act. Since these issues were raised for the first time and remitted to the record of the AO for examination and adjudication, therefore, we modify our finding on the additional grounds no. 1-3 in para 37 which reads as under:- 37. Additional ground no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of interest on securities on accrual basis as the assessee followed mercantile system of accounting. 3(b) On the facts and in the circumstances of the case and in law, the Id. CIT(A) failed to appreciate that interest on securities is changeable to tax-on acfl1basis as the assessee followed mercantile system of accounting in accordance with the Banking Regulation Act. I. For these and other grounds that may be urged at the time of hearing, the decision of the CIT(A) may be set aside and that of the AO restored. ISSUE No. 1 33. Issue no. 1 is general in nature which nowhere required any adjudication. ISSUE No. 2(A) 2(B) 34. Under this issue the revenue has challenged the deletion of disallowance of ₹ 82.714 lakhs incurred by the assessee on reservation of seats in the school for children of the bank officers. The Ld. Representative of the revenue has argued that the CIT(A) has wrongly allowed the claim of the assessee, therefore, the finding of the CIT(A) is not justifiable, hence, is liable to be set aside. On the other hand, the Ld. Representative of the assessee has refuted the said contention. Before going further, we deem it necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the CIT(A) on record :- 46. I have considered the submissions of the appellant. In my view, even as per the mercantile system of accounting interest can be said to have accrued only when there was a right to receive the same. In case of interest on securities the right to receive interest crystallizes only on the coupon date and not before that. The interest on securities does not accrue on day to day basis and the assessee does not have any right to claim interest till it becomes due. The case of the appellant is squarely covered by the decision of Hon'ble ITAT, JaipurBench in the case of State Bank of Bikaner Jaipur vs. DCIT 74 ITD 203 wherein it has been held that interest on securities is assessable to tax on due basis; that the omission of section 18 to 21 does not come in the way of the claim of the assessee as these sections are not charging sections; that charging section is section 5; that the income has to be computed as per the provisions of section 5 and sections 21 to 43D. The Hon'ble ITAT Mumbai 'C' Bench in the case of Union Bank of India for AY. 1989-90 (ITA No 8817/Bom/92) vide order dated 23rdDecember 2003 para 22, have also held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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