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TMI Blog2021 (7) TMI 1289X X X X Extracts X X X X X X X X Extracts X X X X ..... kos for the parties. 2. Commissioner of Income Tax, Thrissur/Revenue is the appellant. M/s. South Indian Bank Ltd, Thrissur/assessee is the respondent. The appeal is directed against the order of Income Tax Appellate Tribunal (for short 'Tribunal), Cochin Bench in ITA No.394/Coch/2006 dated 27.09.2007. The appeal deals with the issues arising in the tax return filed by the assessee for the Assessment Year 2003-04. 3. The Assessing Officer through the assessment order in Annexure-A, added appreciation in the value of securities; disallowed the claim of pension payment, bad debts in urban branches, and asset amortization. The assessee filed appeal before the Commissioner of Income Tax (Appeals) and the appeal was allowed in part. In the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer?" 5. Substantial question nos.1 and 2 deal with bad debts and provision for bad debts. These questions are covered by the decision of the Supreme Court in Catholic Syrian Bank v. Commissioner of Income Tax [[2012] 343 ITR 270 (SC)] and the Apex Court has already answered the question in the following terms: "Firstly, the Full Bench ignored the significant expression appearing in both the proviso to Section 36(1) (vii) clause (v) of Section 36(2) i.e ., 'assessee to which clause (viia) sub-section(1) applies'. In other words, if the case of the assessee does not fall under Section 36(1)(viia) proviso/limiations would not come into play. xxxx &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first question raised pertains to valuation of unquoted Government securities. Since securities involved are not quoted in the market, market price is not known. The assessee treats the unquoted Government securities as current assets and, therefore, it has to work out the profit or loss in the end of the year for the purpose of payment of tax. The assessee adopted the RBI guidelines for valuation of unquoted Government securities and based on the same it claimed a substantial loss. The Assessing Officer, however, rejected the claim because according to him when shares are not quoted, the cost price has to be adopted and going by the cost price the assessee has not suffered the loss as claimed. It is a settled position through various de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is answered in favour of assessee and against the Revenue. 5.2 Additional question no.4 deals with the claim of assessee under Section 36(1)(viia) of the Act. The extent to which the assessee is entitled to claim provision under Section 36(1)(viia) is again considered by the reported judgment of this Court in Lord Krishna Bank Ltd (supra). The relevant paragraphs 4, 5 and 6, read as under "Next question raised pertains to the assessee's claim for deduction of provision for bad debts in terms of section 36(1) (viia) of the Income-tax Act. Here the only question raised is as to basis of classifying branches of the bank as rural branches and other branches, Rural branch is defined under Explanation (ia) to section 36(1)(viia) as follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition clause does not exclude the literal meaning of rural branch which necessarily excludes urban areas. If the assessee's case accepted by the Tribunal that population in a ward has to be reckoned for deciding as to whether the location of a panchayat is in a rural area or not is accepted, then probably even in municipal areas there may be wards with less than 10000 population thereby answering the branch located in such municipal area also as a rural branch. Going by the ordinary meaning of rural branch, we feel only branches of the bank located in rural areas are covered. When the Legislature adopts population as the basis for clasification of rural branches, that too, with reference to the last Census Report, we feel the basic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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