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TMI Blog2021 (12) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr.Joseph Markos for the parties. 2. Commissioner of Income Tax, Trichur/Revenue is the appellant. M/s. South Indian Bank Ltd, Trichur/assessee is the respondent. The appeal is directed against the order of the Income Tax Appellate Tribunal, Cochin Bench in I.T.A 395/Coch/2006 dated 27.09.2007. The appeal deals with the issues arising from the tax return filed by the assessee for the assessment year 2004-05. 2.1 The Assessing Officer through the assessment order in Annexure-A, disallowed the claim of the assessee under Section 36(1)(viia). Similarly, the Assessing Officer disallowed the revaluation of unquoted securities adopted by the assessee. The assessee filed appeal before the Commissioner of Income Tax (Appeals) and the appeal was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rian Bank v. Commissioner of Income Tax (2012) 343 ITR 270 (SC) and had answered the point in favour of assessee and against the Revenue. We are referring to the decision by the Apex Court with a view to comprehensively advert to the outcome on all the substantial questions raised by the Revenue in the instant appeal. The operative portion in Catholic Syrian Bank Ltd judgment reads thus: "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/limitation would not come into play." xxx xxxx xx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 decisions including that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional Question No.4 after the judgment dated 13.7.2021 has been recalled. A similar question raised by revenue in I.T.A.No.1327 of 2009 has been considered by this Court in judgment dated 14.7.2021 and concluded as follows: "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 rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e surveyed boundaries. The rural area is, however, taken as the residual portion excluding the urban area and for that no strict definition is followed." In our view, the 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 area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is answered in favour of revenue and against the assessee in the manner indicated above. 7. Accordingly, ITA No.1284 of 2009 is also remitted to the Assessing Officer for consideration and disposal in accordance with law along with ITA No.1327 of 2009. 8. Mr.Joseph Markose introduces by placing reliance on the judgment reported in Vijaya Bank v Commissioner of Income Tax [2010] 323 ITR 166 (SC) (supra) another dimension to the objections available to the assessee in this behalf, upon remand. He suggests that the assessee may be given liberty to raise the objections available by referring to the ratio laid down by the Supreme Court in Vijaya Bank case. The assessee is granted liberty to raise the objections available by referrin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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