9911796707
TMI Blog2024 (2) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of Rs 502.62 Cr is justified. Therefore, on this issue the order under section 263 of the income tax act passed by the learned PCIT is sustained. Excess bad debts allowed - Order of the PCIT does not show that what is the error in allowing the claim of the assessee wherein the amount is debited to the profit and loss account as write off .therefore, on this issue we do not find that there is any error in the order of the learned assessing officer in allowing the claim of the assessee which is after calling for the explanation and correctly allowed. Therefore, on the same issue of the bad debts allowed the order of the learned PCIT is not sustainable. Accordingly, ground number 3 of the appeal is allowed to the extent indicated above. Provision for depreciation of investment - The provision for securities held as investment was added to the total income of the assessee PCIT found that the book loss claimed by the assessee have been claimed by the assessee as realized loss on investment and reduced from the book loss of investment. Therefore, he was of the view that the amount is being actual loss and not a provision for depreciation of investments so it was required to be disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erroneous to that extent. In the result on this issue, we hold that the learned PCIT has correctly assumed the jurisdiction and correctly held that the order of the learned AO is erroneous and prejudicial to the interest of revenue. To that extent, the order of the learned PCIT is sustainable on this issue. Accordingly, ground number 6 of the appeal is dismissed. Excess deduction u/s 36 (1) (viii) - Admittedly, no revised return was filed by the assessee on this account. The only claim of the assessee is that the quantum of deduction is linked to the total income and therefore the enhancement in the income returned due to additions/disallowances which has impacted the quantum of deduction. The learned PCIT has held that in view of the decision of the honourable Supreme Court [ 2006 (3) TMI 75 - SUPREME COURT] the allowance of claim higher than the amount claimed in the return of income without revising the return of income makes the order of the learned assessing officer is erroneous and prejudicial to the interest of revenue. We do not find any infirmity in the order of the learned principal Commissioner of income tax on this account is not following the decision of the honourabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are without prejudice to each other. 1. Setting aside of order under section 263 of the Act 1.1. On the facts and circumstances of the case and in law, the Pr. CIT erred in passing an order under section 263 setting aside the assessment order dated February 12, 2019 passed under section 143(3) r.w.s. 144C(3) of the Act on the ground that the Assessing Officer in not examining the following issues has rendered the order as erroneous and prejudicial to the interest of the revenue: (a) Irregular allowance of long term capital loss of Rs. 996,75,31,387. (b) Bad debts allowed of Rs. 312,69,37,766. (c) Provision for Depreciation of investments of Rs. 46,19,11,355. (d) Deduction allowed under section 36(1) (viia) of Rs. 159,22,24,604. (e) Excess grant of deduction under section 36(1) (viia) Rs. 12,23,01,710. (f) Deduction under section 36(1) (viii) Rs. 138, 52, 06,494. (g) Allowance of Long-term Capital loss to the extent of Rs. 502,62,44,256. (h) Excess allowance of deduction under section 36(1) (vii) of Rs. 250, 03, 69,520. 1.2. The Pr. CIT erred in dismissing the Appellant's detailed submissions made vide letter dated March 26, 2021 on all the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the assessee, which is not done by the Assessing Officer. (b) As observed from the Schedule 18.18, Non-Performing Assets, Page No.149 the Appellant has shown provision utilized for write off of Rs. 1543,07,00,000/- during the year from the Provision of NPA in the Balance Sheet and thus the said amount should have been considered as bad debts written off during the year instead of Rs. 1855,76,37,766. 3.2. The Pr. CIT erred in not appreciating the Appellant's reply that Schedule 18(38) under the head "Provisions and Contingencies" comprises of bad debts written off, business loss, provisions created, provisions reversed and utilized for write off, cash write back of bad debt and other provisions and contingencies. Thus the entire amount of bad debt is a part of the amount of Rs. 3602,06,30,493 [Sch. 18(38)] which has been debited to the Profit and Loss Account and the said amount of Rs. 3602,06,30,493 has been added to the computation of income and Rs. 1855,76,37,766 has been claimed as bad debt under section 36(1)(vii) of the Act. 3.3. The Pr. CIT ought to have considered the Appellant's reply that that bad debts of Rs. 1543,07,00,000 are written o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT erred in holding that the Assessing Officer in the assessment order had allowed excess deduction under section 36(1) (viia) of Rs. 12,23,01,710 by taking into account certain branches identified by the Appellant as rural branches in its return of income but which were not rural as per RBI census 2011. 6.2. The Pr. CIT failed to appreciate the Appellant's submission that it had during the course of assessment proceedings re-worked the deduction under section 36(1)(viia) of the IT Act by following the 2011 Census published by RBI on September 1, 2016 and accordingly reduced the rural advances to Rs. 1460,96,93,335 as against Rs. 1608,37,88,170 taken by the Bank in the revised return of income and the Assessing Officer has adopted the reduced figure of rural advances in the assessment order. 7. Excess deduction under section 36(1) (viii) Rs. 138,52,06,494 7.1. The Pr. CIT erred on facts and circumstances of the case and in law, in holding that the deduction under section 36(1)(viii) of the Act should be restricted to Rs. 961,47,93,509 as against Rs. 1057,29,83,056 as claimed by Appellant in its revised return resulting in alleged excess deduction of Rs. 138,52,06,494 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrency) received and the resultant gain/loss would be converted to INR by applying provisions of Rule 115 of the Rules to compute capital gain/loss. 9. Excess allowance of deduction under section 36(1) (vii) of Rs. 250,03,69,520 9.1. On the facts and circumstances of the case and in law, the Pr. CIT ought to have appreciated that the deduction under section 36(1)(viia) being a deduction linked to the total income computed is subject to revision each time the total income changes. In the present case, the balance under section 36(1)(vila) to be reduced from the bad debts of the above-mentioned assessment year ought to be Rs. 1087,57,88,246 as per order giving effect dated September 9, 2020 for AY 2014-15 which could be rectified vide an order under section 154 of the Act and is not a subject matter of review under section 263 of the Act. GENERAL 10. The order of the Pr. CIT should be suitably modified by granting the aforesaid proper and consequential reliefs to the Appellant. 11. The Appellant craves leave and reserves its right to vary, amend, alter and/or add to the grounds of appeal and to produce such oral and documentary evidence and file such compilation of doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of mark to market (MTM) losses of ₹ 134,21,00,000/- holding that it is contingent liability. viii. Disallowance of claim of depreciation on goodwill arising in the books of assessee because of merger of Bank of Rajasthan and Anagram Finance Limited of ₹ 254,51,40,318/- on consideration of 5th proviso to Section 32(1) of the Act. ix. Addition of ₹ 39,97,71,317/- of broken period interest paid on purchase of securities held under maturity category holding that such interest is to be included in the purchase cost of such securities. x. Disallowance of ESOP expenditure of ₹ 370,39,79,795/- holding that it is notional expenditure. xi. Disallowance of deduction under Section 36(1) (viii) of the Act restricting the allowance only to the extent of ₹ 11 crores against the claim of deduction of ₹ 1,57,29,83,056/-. xii. Rejection of the revised claim of relief under Section 90 of the Act amounting to ₹ 120,42,42,761/- on increase in liability of Qatar Branch of the assessee. xiii. Disallowance of deduction under Section 36(1) (viia) of the Act, on rural advances amounting to ₹ 14,74,09,538/-. xiv. Disallowance of write off c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee by letter dated 26th March, 2021, wherein the assessee submitted as under:- "Reply to Show Cause Notice issued under section 263 of the Income-tax Act, 1961 Assessment Year: 2015-16 P.A. No.: AAACI1195H March 26, 2021 Please refer to the show cause notice dated March 11, 2021 issued under section 263 of the Income-tax Act (the Act) received by us on March 20, 2021 for the above mentioned assessment year. As per the said notice, your goodself proposes to revise the assessment order passed by the Assistant Commissioner of Income-tax 2(3)(2), Mumbai (Assessing Officer) under section 143(3) read with section 144C(3) dated February 12, 2019 on the ground that it is erroneous and prejudicial to the interest of the revenue for the reasons stated therein. We give below our submission with respect to each of the issues in respect of which your goodself has issued the captioned notice. 1. Irregular allowance of long-term capital loss of Rs. 99,675.31 lakhs. 1. During the year bank has claimed long term capital loss on investment in subsidiaries, break-up of which is as flows: Sr. No. Subsidiary Sale consideration (foreign currency) Indexed cost of acquisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UK PIc (wholly owned subsidiary of the Bank). During the year, the share capital was redeemed by USD 7,50,00,000 in a scheme of buy back. The sale consideration of the buyback was determined at USD 1 per equity share. This scheme of buyback is an extinguishment, which has resulted in capital loss to the Bank of Rs. 442,61,60,143. 1.3.b. As per the valuation report of Anil Ashok and Associates, Chartered Accountants an independent third party valuer, the valuer had valued the shares at USD 0.85 by taking into account the average value of 4 methods viz. Net Asset Method, Future Maintainable profit method, Market Multiple Method and Dividend Discount Method. 1.3.c. The indexed cost of the said shares was USD 14,58,18,562 resulting in a loss of USD 7,08,18,562 which has been converted to Indian rupees by applying the applicable conversion rate and a loss of Rs. 4,42,61,60,143 has been worked out in aforesaid assessment year which the Bank has carried forward to the subsequent assessment year 2016-17. 1.3.d. The aforesaid transaction had been examined in detail by the Transfer Pricing Officer [TPO] during the course of transfer pricing assessment proceedings. The TPO in her ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital loss, we submit that the Assessing Officer has examined the Bank's claim as can be seen in para 6 on pages 2 and 3 and para 21, page 61 of the assessment order wherein adjustment to arm's length price to buy back of shares of ICICI Bank UK Plc. has been made and carried forward loss to the subsequent year reduced by Rs. 65,62,50,000. Since the Assessing Officer after examining has taken a particular view on the said issue, there is no justification to revise the assessment on a presumption that the same is erroneous and prejudicial to the interests of the revenue. 1.6. With respect to your goodself's contention, that in case of ICICI Bank Canada and ICICI Bank UK PIc since there is a transfer from the subsidiary to the holding Company, the said transaction cannot be considered as a transfer under section 2(47) of the act and hence is not entitled to indexation benefit. Firstly, there is no transfer of a capital asset from subsidiary to holding company. In the present case amount repatriated is towards the investment held by the Bank in is its subsidiary. Secondly, we respectfully submit that it is not necessary that for a capital gain to arise there must be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have been correctly computed by the Bank and accordingly allowed in assessment. 2. Excess bad debts allowed of Rs. 312,69,37,766 2.1 As per your goodself's observation, provision utilised for write off as per Schedule 18(18) on page 149 is only Rs. 1543,07,00,000 as against Rs. 1855,76,37,766 claimed by the Bank thus resulting in an excess claim of Rs. 312,69,37,766. 2.2 Schedule 18(18) shows the movement of Provision of NPA on year to year basis. It starts with opening provision, provision created during the year, provision utilized out of opening balance for write off and closing balance. 2.3 We submit that Bad debts of Rs. 1543,07,00,000 are written off through opening provisions and balance bad debts are directly debited to P&L, hence it does not form part of schedule 18(18). 2.4 In regards to your goodself's observation, bad debts have not been debited in schedule 16A, we submit the bad debts claimed by the Bank have been written off during the year in its Annual Accounts which is reflected in Schedule 18 cl.38 under the head Provisions and Contingencies (page 167). The break- up of the same relating to bad debts is given as under: Particulars Sch. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on investments. This figure comprises of provision made in respect of securities held as stock in trade as well as those held as investments, break-up which is given below: Particulars Amount Rs. Provision for investments (A) 297,92,33,446 Less: Reversal of Provision for securities held as stock in trade (B) (44,26,64,750) Less: Book Loss in respect of securities held as stock in trade (C) 46,19,11,355 Provision for securities held as investments (A-B-C) 207,46,57,341 3.2 Investments are accounted for in accordance with the RBI guidelines on investment classification and valuation. As per RBI guidelines, Investment held by the Bank are classified into 'Held to Maturity' (HTM), 'Available for Sale' (AFS) and 'Held for Trading (AFT). In the Bank's case government securities whether classified as HTM, AFS or HFT are treated as stock in trade by the Bank. 3.3 The Bank as per RBI norms has to keep certain securities in order to maintain its statutory liquidity ratio (SLR) and cash reserve ratio (CRR) in order to protect the Bank from an unexpected huge amount of withdrawal from the depositors. The Bank acquires Government of India securities (GOI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the real income entries in a balance sheet required to be maintained in the statutory form may not be decisive or conclusive. The view of the Supreme Court has been followed by the Bombay High Court in CIT V. Bank of Baroda (262 ITR 334) and the Kerala High Court in CIT V. Nedungadi Bank (264 ITR 545). 3.8 In Bank's merged entity-Erstwhile Bank of Madura, Mumbai Tribunal in ITA 677 & 678/M/2014 dated December 12, 2019 for AY 2000-01 and 2001- 02 has following the order of earlier years held that depreciation claimed by assessee on securities held as stock in trade is allowable. 3.9 Thus, the Bank has correctly disallowed the amount of Rs. 207,46,57,341 being the amount of provision made in respect of securities held as investments and claimed the book loss of Rs. 46,19,11,355 in respect of securities held as stock in trade as per the settled legal position mentioned hereinabove. 4. Excess Deduction allowed under section 36(1)(viia) of Rs. 159,22,24,604 4.1 Your goodself has contended that deduction allowed by assessing officer of Rs. 1472,17,64,492 is more than as claimed by the Bank of Rs. 1312,95,39,888 by Rs. 159,22,24,604. 4.2 Here, we want to clarify that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 36(1)(viia) Rs. 12.23 crores 5.1 Your goodself in the show cause notice has made an observation that in the deduction claimed under section 36(1)(viia), Bank has classified some branches as rural branches which are not rural branches as per census 2011. You have identified 36 such branches whose average advances amount to Rs. 1223.01 resulting in access claim of Rs. 12.23 crore (10% of Rs. 1223.01) 5.2 The Bank in its revised return of income had claimed deduction under section 36(1)(viia) of the IT Act of Rs. 1312,95,39,888. In order to compute the deduction under section 36(1)(viia) of the Act, the Bank had worked out 10% of the rural advances as per the 2001 Census published by RBI which was the latest Census available at the time of filing the return of Income. 5.3 The Bank vide letter dated November 20, 2018 submitted during the course of assessment proceedings re-worked the deduction under section 36(1)(vila) of the IT Act by following the 2011 Census published by RBI on September 1, 2016. The rural advances have been reduced to Rs. 1460,96,93,335 as against Rs. 1608,37,88,170 taken by the Bank in the revised return of income. Thus as per the revised working, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to the Special reserve account. 6.3 In the assessment order passed under section 143(3) read with section 144(C)(3) dated February 12, 2019, deduction under section 36(1) (viii) has been allowed at Rs. 1100,00,00,000 being the amount appropriated by the assessee Bank to the Special Reserve A/c. This increase in deduction as compared to the claim made by the assessee in revised return of income was due to increase in the business income to Rs. 18453,17,42,829 on account of disallowances/additions made to the tune of Rs. 2360,38,21,139 to the returned income. 6.4 With respect to your goodself's observation that the additional clairn u/s 36(1)(viii) ought not to be allowed as the same was not made in the return of income (reliance placed Supreme Court decision in the case of Goetze India Limited vs. CIT we respectfully submit that the Bank has not made any additional claim in respect of deduction claimed under section 36(1)(viii) and therefore the question of Supreme Court decision in the case of Goetze India Limited vs. CIT is not applicable. The higher deduction granted under section 36(1)(viii) is on account of the increase in business income due to additions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y converting the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer of the capital asset into the same foreign currency as was initially utilised in the purchase of the shares or debentures, and the capital gains so computed in such foreign currency shall be reconverted into Indian currency, so, however, that the aforesaid manner of computation of capital gains shall be applicable in respect of capital gains accruing or arising from every reinvestment thereafter in, and sale of, shares in, or debentures of, an Indian company 7.4 At the outset, we submit that proviso 1 to section 48 of the Act applies to capital gains in case of an assessee who is a non-resident. In the case of the Bank this proviso has no application at all as Bank is a resident of India. 7.5 Further we reiterate that investment in shares was made by the Bank and its offshore subsidiaries in foreign currency. Sales proceeds were also received in foreign currency. Therefore, pursuant to section 48 read with Rule 115 the resultant capital gain/loss is computed by reducing index ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial to the interest of the revenue. It has been held by Supreme Court in Malabar Industrial Co. Ltd. vs. Commissioner of Income Tax (243 ITR 83 (SC), CIT v Max India 295 ITR 282, CIT v Amitabh Bachhan 384 ITR 200 at 216, Para 21] that if one of the conditions is absent, recourse cannot be had to section 263(1) of the Act. According to the Court the provisions of 263 cannot be invoked to correct each and every type of mistake or error. 10. We further submit that all the above mentioned issues given in above mentioned paras 1 to 8 have been examined by the Assessing Officer during assessment proceedings and a possible view has been taken. The assessment order therefore cannot be treated as erroneous and prejudicial the interests of the Revenue. 11. Without prejudice to the aforesaid, we respectfully submit that as per Explanation 1 to section 263(1) of the Act, the powers of the Principal Commissioner/Commissioner to revise an order under section 263 of the Act can be only restricted to matters which had not been considered or decided in appeal. We submit that the issues regarding long term capital loss in respect of investment made by the Bank in its subsidiaries ICICI Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout examination. iii. With respect to the provision for depreciation of investment of ₹ 46,19,11,355/-, he noted that assessee has debited provision for depreciation of investment of ₹ 297 crores and claimed the same as deduction, whereas assessee has added back provision of ₹ 207 crores. Sum of ₹ 46.19 crores has been claimed by the assessee as realized loss on investment and reduced from the book loss of investment. Thus, assessee has treated the same as realized loss against the sale of stock and claimed the same as expenses in the profit and loss account. Therefore, according to him, the above loss is actual loss, which is required to be added back to the total income, as it is not a provision for depreciation of investment. This amount was allowed by the learned Assessing Officer without examining the issue. iv. With respect to excess deduction under Section 36(1) (viia) of ₹ 159,22,24,604/- stating that in the revised return assessee has claimed the deduction only of ₹ 1,312,95,39,888/-, however in the assessment order the learned Assessing Officer has allowed the claim of ₹ 1,472,17,64,492/- in violation of the decision of Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he extent of ₹ 256,51,95,860/- resulting into above excess allowance. The learned Assessing Officer did not examine the same. viii. Excess allowance of deduction of ₹ 250,03,69,520/-, He held that out of provision for bad debts written off of ₹ 1,855/- crores earlier provision for bad debts allowed for A.Y. 2014-15 of ₹ 1,313 crores allowable bad debt written off to the assessee is only ₹ 542,07,79,550/-. Against this, the learned Assessing Officer after considering the opening bad debts provision of ₹ 1,855 crores reduced the earlier years provision for bad debts by ₹ 1,063 crores and ultimately allowed bad debts of ₹ 792,11,49,070/-, which has resulted in excess allowances of deduction of ₹ 250,03,69,520/- under Section 36(1)(vii) of the Act. 09. The learned CIT therefore held that the order passed by the learned Assessing Officer is erroneous by granting incorrect claim of the assessee and therefore set aside. He referred to several judicial precedents and invoked the explanation (2) of Section 263 of the Act. 010. The assessee is aggrieved with the same and preferred the appeal before us. The learned Authorized Represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in total income has resulted on account of various additions and disallowances which has resulted into enhanced quantum of deduction. It is allowed accordingly and therefore there is no error in the order of the LD AO. v. With respect to excess deduction of ₹ 12.23 crores on advances on rural branches, she referred to letter dated 17th October 2018, submitted to the learned Assessing Officer. She referred to paragraph no.2 and submitted that rural advances computed based on census. vi. With respect to higher deduction of ₹ 138.52 crores, under Section 36(1) (vii) of the Act, it was submitted that such deduction is allowable at the rate of 20% of profits derived from eligible business subject to the amount appropriated to the reserve. As the income is assessed at higher sum, the higher deduction is allowable subject to the amount credited to such reserve account. Therefore, there is no error in the assessment order. vii. With respect to excess of long term capital loss allowed of ₹ 502.62 crores, she reiterated letter dated 26th December, 2018, submitted to the learned Assessing Officer and second proviso to section 48 of the Act. This issue is identical to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so far as it is prejudicial to the interest of revenue. As each of the issues are separately dealt with in different grounds, this ground of appeal is general in nature and therefore same is dismissed. 013. The learned principal Commissioner of income tax has held assessment order to be erroneous and prejudicial to the interest of revenue under section 263 of the income tax act on following counts. i. Irregular allowance of long-term capital loss of Rs. 99,675.31 lakhs wherein it has been held that the assessee has applied the cost of inflation index on foreign currency while computing the capital gain on the assets acquired out of foreign currency. Connected issue is with respect to capital gain computed on sale of shares of subsidiaries where PCIT is of the view that excess capital loss of Rs 502.62 Cr is claimed. This claim of the assessee is allowed by the learned assessing officer without making any enquiry on this issue. The PCIT held that the cost of inflation index is with reference to Indian economy and computed with reference to the assets purchased in Indian currency and cannot be applied on foreign currency. Therefore, according to him the capital gain computation by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to Nonresident Assessee. By computing long term capital gain by incorrect method assessee has got the benefit of Foreign Exchange Fluctuation as well as cost inflation index both which is not in accordance with Income tax Act. In view of this, to this extent, on this issue we find that the jurisdiction assumed by the learned PCIT holding that there is an irregular allowance of long- term capital loss of Rs. 99,675.31 lakhs and higher capital loss of Rs 502.62 Cr is justified. Therefore, on this issue the order under section 263 of the income tax act passed by the learned PCIT is sustained. Accordingly ground number 2 and 8 of the appeal are dismissed. ii. Coming to the second issue of the excess bad debts allowed OF Rs. 3,126,937,766/-by holding that the assessee has written off only Rs. 15,430,700,000 as against the claim of the bad debts of Rs. 1,855,76,37,766/- claimed by the assessee thus resulting in an excess claim of the above sum. The claim of the assessee is that the bad debts of Rs. 15,430,700,000 written of out of opening provision of bad and doubtful debts in the balance sum of Rs. 3,126,937,766/- is directly debited to the profit and loss account. The assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock in trade as well as those held as investment. From above provision, assessee has reduced sum of Rs. 461,911,355 pertaining to the book loss in respect of securities held as stock in trade. The provision for securities held as investment of Rs. 2,074,657,341/- was added to the total income of the assessee. The learned PCIT found that the book loss claimed by the assessee of Rs. 461,911,355 have been claimed by the assessee as realized loss on investment and reduced from the book loss of investment. Therefore, he was of the view that the amount is being actual loss and not a provision for depreciation of investments so it was required to be disallowed and added to the total income of the assessee. The AO has not verified this amount. During hearing before us, nothing was shown to us that this issue was examined by the learned assessing officer. Therefore, this issue is squarely covered by the explanation 2 to section 263 of the act where the assessing officer has not made any enquiry on the issue and has allowed the claim of the assessee, to such extent the order of the learned assessing officer is erroneous and prejudicial to the interest of the revenue. Therefore, on this iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed it as rural branch eligible for deduction. The categories of the branch was test checked from the press release of reserve bank of India dated 1 November 2011 and wherein it was found that some of the branches are semi urban branches whereas those branches have been considered by the assessee as rural branches. On examination, the PCIT held that an amount of advances aggregating to Rs. 122.3 crores are advances of semi urban branches, which are not qualified for deduction under this section. Therefore, it was found that the excess deduction of Rs. 12.23 crores being 10% of the total advances of Rs. 122.3 crores of semi urban branches are allowed by the assessing officer without examination. It is the claim of the assessee that letter dated 17/10/2018 submitted during the original assessment proceedings the above explanation was given before the assessing officer and therefore he examined the same and allowed the claim. We have carefully perused the letter and find that in Para number 2.3 of that letter, assessee itself stated that exact area where the branches located is not available, but the classification has been made by the bank by identifying the list of rural branches h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as per letter dated December 26, 2018. Admittedly, no revised return was filed by the assessee on this account. The only claim of the assessee is that the quantum of deduction is linked to the total income and therefore the enhancement in the income returned due to additions/disallowances which has impacted the quantum of deduction. The learned PCIT has held that in view of the decision of the honourable Supreme Court in 284 ITR 323 the allowance of claim higher than the amount claimed in the return of income without revising the return of income makes the order of the learned assessing officer is erroneous and prejudicial to the interest of revenue. We do not find any infirmity in the order of the learned principal Commissioner of income tax on this account is not following the decision of the honourable Supreme Court makes the order of the learned assessing officer is erroneous and prejudicial to the interest of the revenue. Accordingly, ground number 5 of the appeal of the assessee is dismissed. vii. Ground number 7 of the appeal is with respect to the excess deduction under section 36 (1) (viii) of the act of ₹ 1,385,206,494/- the fact shows that the assessee has clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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