9911796707
TMI Blog2024 (9) TMI 1443X X X X Extracts X X X X X X X X Extracts X X X X ..... T PUNE] wherein it was held that a co-operative bank is entitled to claim deduction of bad debts provided in first part of section 36(1)(viia)(a) being 7.5 per cent of total income even in absence of rural branches. Actual provision made in the books by the Assessee on account of provision for bad and doubtful debts (PBDD) (irrespective of whether it is rural or non-rural) has to be seen. To the extent PBDD is so created, then subject to the permissible upper limits referred in section 36(1)(viia) (a), the deduction has to be allowed to the Assessee. For availing the benefit of 7.5% (present limit 8.5%) of total income, there is no condition that it should be in respect of any rural branches. All types of banks described under sub-clause (a) of clause (viia) are entitled to seek deduction of an amount not exceeding 7.5% (present limit 8.5%) of total income and only condition is that there should be provision for bad and doubtful debts in the books of account. Based on these facts and circumstances, we delete the addition made by the assessing officer and allow the appeal of the assessee. - DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces, this limit is not applicable on assessee, while calculating the amount of deduction u/s 36(1)(viia). Plain text of section 36/1) viial is as follows . Please also note that during the year assessee had incurred bad debts of Rs. 50,44,149.48 which would otherwise have been allowable to assessee u/s 36(1)(vii) being actual bad debt written off during the year. As assessee has claimed deduction of Rs. 20,38,284/- u/s 36(1)(viia), being 7.5% of total income, balance amount of Rs. 30,05,865.48 is claimed u/s 36(1)(vii) being the difference of actual bad debt incurred and deduction u/s 36 (1)(viia). Hence, effectively, there is no loss to the revenue on claiming the deduction u/s 36 (1) (viia). 6.3 Another angle to this issue is that, the Hon Supreme Court in the case of Catholic Syrian bank has held as under. The gist of which is given below The Supreme Court had to consider whether a bank was eligible to claim a deduction for bad debts u/s 36(1)(vii) in respect of its (rural urban) advances and also claim a provision for bad and doubtful debts u/s 36(1)(viia) in respect of its rural advances in view of the Proviso to section 36(1)(vii) which provides that only the excess over the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. Normally, these circulars cannot be ignored. A circular may not override of detract from the provisions of the Act but it can seek to mitigate the rigour of a particular provision for the benefit of the assessee in certain specified circumstances. So long as the circular in force, it aids the uniform and proper administration and application of the provisions of the Act (UCO Bank vs. CIT 237 ITR 889 (SC) followed) Per S. H. KAPADIA, CJI (concurring) (iii) S. 36(1) (vii) 36(1)(viia) are distinct and independent items of deduction and operate in their respective fields. Section 36(1)(vii) allows deduction for bad debts in respect of urban and rural debts. However, by virtue of the Proviso to s. 36(1)(vii), the deduction in respect of rural debts is limited to the extent of difference between the debt or part thereof written off in the previous year and the credit balance in the provision for bad and doubtful debts account made under section 36(1) (viia). The proviso prevents benefit of double deduction with reference to rural loans. This is in consonance with the CBDT's interpretation in the Circulars. 6.4 From the above it is clear that the deduction u/s 36(1)(viia) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income of 2 is of rural advance whichever is higher there is no mention that income should be of rural advance but we have to count taxable income before this clause. d) CBDT CIRCULAR NO 421 DATED 12-06-1985 Having regard to the increasing social commitments of banks, section 36(1)(viia) been amended to provide that in respect of any provision for bad and doubtful debt made by a scheduled bank [not being a bank approved by the Central Government for the purposes of section 36(1)(viia) or a bank incorporated by or under the laws of a country outside India) or a non- scheduled bank, an amount not exceeding ten per cent of the total income (computed before making any deduction under the proposed new provision) or two per cent of the aggregate average advances made by rural branches of such Banks whichever is higher, shall be allowed as a deduction to computing the taxable profits. e) Then in 1986 the Finance Ministry separated this clause in two parts one of 2% of rural advances and the second of 10% of total taxable income before this clause. f) Explanatory Notes on the provisions of the Income-tax (Amendment) Act, 1986, Circular No 464 Dated 18/7/1986. Modification is respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue. In case of rural advances which are covered by clause (via), there would be no such double deduction. The proviso, in its terms, limits its application to the case of a bank to which clause (viia) applies. Indisputably, clause (viia) applies only to rural advances. 1) Observations and judgement by the Chief Justice of India Shri S. KAPADIA in the above Apex Court Judgement 2. Under Section 36(1)(vii) of the ITA 1961, the tax payer carrying on business is entitled to a deduction, in the computation of taxable profits, of the amount of any debt which is established to have become a bad debt during the previous year, subject to certain conditions. However, a mere provision for bad and doubtful debt(s) is not allowed as a deduction in the computation of taxable profits in order to promote rural banking and in order to assist the scheduled commercial banks in making adequate provisions from their current profits to provide for risks in relation to their rural advances, the Finance Act, inserted clause (viia) in sub-section (1) of Section 36 to provide for a deduction, in the computation of taxable profits of all scheduled commercial banks, in respect of provisions made by them for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank are eligible for the deduction. As you have rightly, pointed out in the budget speech for 2006-07 the relevant portion which talks about the reason for removing the cooperatives from section 80P begins as cooperative banks like any other banks are lending institutions and should pay tax on their profits 6.6 Therefore in the changed position after 1/4/2007 along-with scheduled and non scheduled banks, cooperative banks are also included for deduction u/s 36(1)(viia). However this doesn't change the nature of deduction available under section 36(1)(viia). From the beginning it was for rural advances and the status quo is still maintained. 5. However, the assessing officer, rejected the contention of the assessee and the claim of the assessee of deduction u/s 36(i)(viia) of the Act, of Rs.20,38,284/- towards provision for bad and doubtful debt was disallowed. 6. Aggrieved by the order of the assessing officer (AO), the assessee carried the matter in appeal, before Ld. CIT(A), who has confirmed the action of the AO. The ld CIT(A) noticed that Assessing Officer held relying on the decision of Hon'ble Supreme Court in case of Catholic Syrian Bank Ltd. vs. CIT(A) (dated 17-02- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporated by or under the laws of a country outside India or a non-scheduled bank [or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank], an amount not exceeding eight and one-half per cent, of the total income (computed before making any deduction under this clause and Chapter VI-A) and an amount not exceeding ten per cent, of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner . 9. The Ld. Counsel for the assessee stated that Finance Act, 2017, substituted rate of deduction for 7.50%, with effect from 1st April 2018, at 8.50%. In assessee s case, under consideration, the assessment year involved is the assessment year 2014 15, therefore, the deduction available, to the assessee bank, is at the rate of 7.5% and 10% as per clause (viia) of sub- section 1 of section 36 of the Act. We find that as per clause (viia) of sub- section 1 of section 36 of the Act, the assessee can claim the deduction in respect of any provision for bad and doubtful debts made by a scheduled bank or a co-operative bank, an amount not exceeding eight and one-half per cent, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (viia) of the Act, the assessee is not entitled to claim deduction, under section 36(1)(viia) of the Act. To support his arguments, Ld. Sr. DR for the Revenue, relied on the following judgements. i. Hon ble Supreme Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd., [2008] 173 Taxman 322(SC) ii. Co-ordinate Bench of ITAT Cochin in the case of DCIT vs. Catholic Syrian Bank Ltd. iii. Hon ble Supreme Court in the case of Catholic Syrian Bank Ltd. Vs. CIT [2012]18 taxmann.com 282(SC) 11. We have considered arguments of both sides and we find that the solitary issue in appeal by assessee is, whether the presence of both rural advances and non-rural advances by a bank, is a must in order to be eligible to claim deduction towards provision for bad and doubtful debts, under section 36(1) (viia) of the Act. We note that section 36(1) (viia) of the Act, lays down upper limit of the claim to be quantified as a percentage of total income of the bank and second limb, as a percentage of average rural advances amount. The first limb of the provision calculates the deduction as a percent of income while the second limb does so as a percent of amount of advances. The presence of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound, the impugned deduction should not be allowed and hence the matter may be remitted back to the file of the assessing officer. 14. However, we find that the assessing officer, nowhere stated that no provision in profit and loss account was claimed by the assessee, in fact, the assessing officer held that assessee has claimed the deduction, u/s 36(1)(viia) of the Act, even, ld. CIT held that assessee has claimed the deduction, u/s 36(1)(viia) of the Act. At this juncture, the ld Counsel for the assessee, argued that the ground for the disallowance made by the assessing officer could not be changed at the stage of second appeal; the assessee is in appeal on subject- matter, as per memo of appeal; the scope of appeal before the Tribunal is limited to the subject-matter of appeal only; therefore, Ld. Sr. DR for the revenue, cannot set up an altogether new case as held by Special Bench in Mahindra Mahindra Ltd. vs DCIT, 122 TTJ 577 (SB) (2009)). We also find that from the extract from bank's annual report for F.Y. 2013-14 which shows appropriation of Rs. 20,62,563.96 for bad debts (it is 7.5% of total income before the said claim); hence the argument of ld DR on this issue is he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the amount of any debt which is established to have become bad during the previous year, subject to certain conditions. However, a mere provision for bad and doubtful debts is not allowed as a deduction in the computation of the taxable profits. 13.2 In order to promote rural banking and assist the scheduled commercial banks in making adequate provisions from their current profits to provide for risks in relation to their rural advances, the Finance Act has inserted a new cl. (viia) in sub-s. (1) of s. 36 of the IT Act to provide for a deduction, the computation of the taxable profits of all scheduled commercial banks, in respect of provisions made by them for bad and doubtful debts relating to advances made by the rural branches. The deduction will be limited to 1-1/2 per cent of the aggregate average advances made by the rural branches computed in the manner to be prescribed by rules in the IT Rules, 1962. For this purpose, a rural branch means a branch of a scheduled bank situated in a place with a population not exceeding 10,000 according to the last preceding census of which the relevant figures have been published before the first day of the previous year. The expression s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds in respect of any provision and ending with the words in the prescribed manner , the following was substituted w.e.f. 1st April, 1985: in respect of any provision for bad and doubtful debts made by a scheduled bank [not being a bank approved by the Central Government for the purposes of cl. (viiia) or a bank incorporated by or under the laws of a country outside India] or a non-scheduled bank, an amount not exceeding ten per cent of the total income (computed before making any deduction under this clause and Chapter VI-A) or an amount not exceeding two per cent of the aggregate average advances made by the rural branches of such banks, computed in the prescribed manner, whichever is higher. 28. Proviso to Sec.36(1)(vii) of the Act, was introduced by the Finance Act, 1985 and it reads thus: Provided that in the case of an assessee to which cl. (viia) applies, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made under that clause. 29. Simultaneously, Sec.36(2)(v) was introduced by the Finance Act, 1985 and it reads t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit balance in the provision for bad and doubtful debts account. 17.5 Sec. 36(2) has been amended by insertion of a new cl. (v) to provide that where a debt or a part of a debt considered bad or doubtful relates to advances made by a bank to which s. 36(1)(viia) applies, no such deduction shall be allowed unless the bank has debited the amount of such debt or part of debt in that previous year to the provision for bad and doubtful debt account made under cl. (viia) of s. 36(1). Stage-III: 31. The IT (Amendment) Act, 1986 substituted the present cl. (viia) for the one as substituted by the Finance Act, 1985. These provisions came into effect from 1.4.1987. 'SECTION 36 - OTHER DEDUCTIONS The section reads as under: Other deductions.- (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28 (viia) in respect of any provision for bad and doubtful debts made by a scheduled bank not being a bank incorporated by or under the laws of a country outside India] or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the 1st day of April, 2005, deduction in respect of any provision made by it for any assets classified by the Reserve Bank of India as doubtful assets or loss assets in accordance with the guidelines issued by it in this behalf, of an amount not exceeding ten per cent. of the amount of such assets shown in the books of account of such institution or corporation, as the case may be, on the last day of the previous year. (c) a public financial institution or a State financial corporation or a State industrial investment corporation, an amount not exceeding five per cent of the total income (computed before making any deduction under this clause and Chapter VI-A). Explanation: For the purposes of this clause (i) non-scheduled bank means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949) which is not a scheduled bank;] (ia) rural branch means a branch of a scheduled bank or a non-scheduled bank situated in a place which has a population of not more than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; (ii) scheduled bank means the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the existing ceiling in this regard i.e. 10% of the total income or 2% of the aggregate average advances made by the rural branches of Indian banks, whichever is higher, should be modified. Accordingly, by the Amending Act, the deduction presently available under cl. (viia) of sub-s. (1) of s. 36 of the IT Act has been split into two separate provisions. One of these limits the deduction to an amount not exceeding 2% of the aggregate average advances made by rural branches of the banks concerned. It may be clarified that foreign banks do not have rural branches and hence this amendment will not be relevant in the case of the foreign banks. The other provision secures that a further deduction shall be allowed in respect of the provision for bad and doubtful debts made by all banks not just the banks incorporated in India, limited to 5% of the total income (computed before making any deduction under this clause and Chapter VI-A). This will imply that all scheduled or non-scheduled banks having rural branches would be allowed the deduction upto 2% of the aggregate average advances made by such branches and a further deduction upto 5% of their total income in respect of provision for b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viia) of the Act. If the concerned bank does not have rural branches then they could not claim the deduction. Therefore the deduction was confined only to banks that had rural branches. 35. At Stage-III of the provisions of Sec.36(1)(viia) of the Act, the deduction allowed earlier was enhanced. The enhancement of the deduction was consequent to representation to the Government that the existing ceiling in this regard i.e. 10% of the total income or 2% of the aggregate average advances made by the rural branches of Indian banks, whichever is higher, should be modified. Accordingly, by the Amending Act, the deduction presently available under cl. (viia) of sub-s. (1) of s. 36 of the IT Act has been split into two separate provisions. One of these limits the deduction to an amount not exceeding 2% (as it existed originally, now it is 10%) of the aggregate average advances made by rural branches of the banks concerned. This will imply that all scheduled or non-scheduled banks having rural branches would be allowed the deduction (a) upto 2% (now 10%) of the aggregate average advances made by such branches and (b) a further deduction upto 5% of their total income in respect of provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctually written off out of the PBDD of rural advances. The Assessee wrote off a sum of Rs.88,26,10,825 as bad debts on account of non rural advances and claimed the same as deduction u/s.36(1)(vii) of the Act. The said claim for deduction was allowed by the AO. The Assessee made a claim for deduction u/s.36(1)(viia)(a) of the Act of Rs.23,80,55,247. This was rejected by the AO for the reason that the deduction u/s.36(1)(viia) of the Act is allowed only to the extent PBDD in respect of rural advances is created in the books of accounts. As we have already explained above, this is not a relevant consideration. What has to be seen by the AO is as to whether PBDD is created (irrespective of whether it is in respect of rural or non-rural advances) by debiting the Profit Loss A/C. To the extent PBDD is so created, the Assessee is entitled to deduction subject to the upper limit of deduction laid down in Sec.36(1)(viia) of the Act. To avoid possible claim for double deduction in respect of one and the same debt first as PBDD and thereafter as Bad Debts, the legislature has already provided in Sec.36(2)(v) of the Act that where such debt or part of debt relates to advances made by an asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Supreme Court held: (i) The provisions of Section 36(1)(vii) and 36(1)(viia) are separate items of deduction. These are independent provisions and, therefore, cannot be intermingled or read into each other. (ii) Clear legislative intent of the relevant provisions and unambiguous language of the circulars with reference to the amendments to s. 36 demonstrate that the deduction on account of provisions for bad and doubtful debts under s. 36(1)(viia) is distinct and independent of the provisions of s. 36(1) (vii) relating to allowance of the bad debts. (iii) The legislative intent was to encourage rural advances and the making of provisions for bad debts in relation to such rural branches. The language of s. 36(1)(vii) is unambiguous and does not admit of two interpretations. It applies to all banks, commercial or rural, scheduled or unscheduled. It gives a benefit to the assessee to claim a deduction on any bad debt or part thereof, which is written off as irrecoverable in the accounts of the assessee for the previous year. This benefit is subject only to s. 36(2). It is obligatory upon the assessee to prove to the AO that the case satisfies the ingredients of s. 36(1)(vii) on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a double benefit in respect of the same debt is not given to a scheduled bank. A scheduled bank may have both urban and rural branches. It may give advances from both branches with separate provision accounts for each. 31. It was neither in dispute earlier, nor disputed before us, that the assessee bank is maintaining two separate accounts, one being a provision for bad and doubtful debts other than provisions for bad debts in rural branches and another provision account for bad debts in rural branches for which separate accounts are maintained. This fact is evinced by the entries in the P L a/c, balance sheet and break up details. We need not deliberate this aspect with reference to records at any greater length as this is not a matter in issue before us. It was contended on behalf of the Revenue that the Revenue is only concerned with the assessee as a single unit and not with how many separate accounts are being maintained by the assessee and under what items. The Department, therefore, would assess an assessee with reference to a single account maintained in the head office of the concerned bank. This, according to the learned counsel appearing for the Department, would further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to be interpreted on their plain language and could not be interpreted on the basis of apprehension of the Department. This Court, in the case of Vijaya Bank v. CIT [2010] 231 CTR (SC) 209, held that under the accounting practice, the accounts of the rural branches have to tally with the accounts of the head office. If the repaid amount in subsequent years is not credited to the P L a/c of the head office, which is what ultimately matters, then there would be a mismatch between the rural branch accounts and the head office accounts. Therefore, in order to prevent such mismatch and to be in conformity with the accounting practice, the banks should maintain separate accounts. Of course, all accounts would ultimately get merged into the account of the head office, which will ultimately reflect one account (balance sheet), though containing different items. 37. Another example that would support this view is that, a bank can write off a loan against the account of 'A' alone where it has advanced the loan to party 'A'. It cannot write off such loan against the account of 'B'. Similarly, a loan advanced under the rural schemes cannot be written off against an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit has been extended to co-operative banks and they are entitled to claim the deduction on account of provision for bad and doubtful debts, subject to the condition that provision to that extent is made in the books of account. Sub-clause (a) refers to deduction of an amount not exceeding 7.5% of total income, before allowing any deduction under the Chapter VI-A and secondly, it also refers to a deduction of an amount not exceeding 10% of aggregate average advances made by rural branches of such banks, which have been computed in prescribed manner. 15. The CBDT vide Circular No.464, dated 18.07.1986 had clarified the position for bad and doubtful debts made by the banks that under the existing provisions inserted by Finance Act, 1979 provision for bad and doubtful debts made by scheduled or non-scheduled Indian bank was allowed as deduction within prescribed limits. The limit prescribed at the relevant time was 10% of total income or 2% of aggregate average advances made by the rural branches of such banks, whichever was higher. There was representation to the Government that foreign banks were not entitled to any such deduction and further it was also felt that existing ceiling a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricultural and rural development banks, deduction was allowable to the extent of an amount not exceeding 7.5% of total income computed before making any deduction under Chapter VI-A and an amount not exceeding 10% of aggregate average advances made by rural branches of such banks, computed in the prescribed manner. The scope of said section has thus been enlarged w.e.f. 01.04.2007 and deduction is available not only to the scheduled or non-scheduled banks but to the Co-operative banks also i.e. the assessee before us. 16. The issue which arises before us is in relation to co-operative banks which do not have any rural branches. The question which is to be addressed is whether in the absence of any rural branches, can the benefit of deduction be allowed under section 36(1)(viia) of the Act and that also to the extent of 7.5% of total income. 17. We find that this issue has been elaborately considered and addressed by the Hon'ble High Court of Kerala in The Kodungallur Town Co-Op. Bank Ltd. (supra) and it has been held as under: 9. Admittedly, appellants/assessees are cooperative banks. With introduction of Finance Act of 2007, coming into effect from 01.04.2007, one has to under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. It is to be noted that appellants/assessees are not primary agricultural credit co- operative society or other kind of bank so as to go out of the definition of co- operative bank under sub-clause (a) to clause (viia) of Section 36(1). No doubt, Explanation (ia) to Section 36(1)(viia) defines what is a rural branch. It is with reference to a place and certain number of population. It refers to branch of a scheduled bank or a non-scheduled bank. Apparently, we do not find the term co-operative bank. Section 5(cci) of Banking Regulation Act though has brought in definition of co- operative bank, virtually every bank which is not a scheduled bank would fall under the definition of non- scheduled bank. Reading of definition of non schedule bank along with meaning of rural branch under Explanation to Section 36(1) of the Act, clearly indicate that co-operative bank also falls under the category of non- schedule bank for the purpose of this Section. Therefore, reading of entire Section 36(1)(viia)(a) along with explanation would mean two kinds of deductions referred to in the section will be allowed to all those banks only if they satisfy the terms and conditions referred to in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating to assessment year 2010-11 in the case of Kodungallur Town Co-Op. Bank Ltd. (supra) again decided the aforesaid issue of claim of deduction under section 36(1)(vii) of the Act, especially in view of the ratio laid down by the Hon'ble Supreme Court in Catholic Syrian Bank Ltd. (supra) relied upon by the Commissioner while invoking revisionary jurisdiction under section 263 of the Act. The Tribunal held that the Hon'ble Supreme Court had considered the issue whether the deduction was allowable to scheduled banks under section 36(1)(vii) of the Act in respect of bad debts written off and had held that the same shall be limited to the extent the said debts credit balance in the provision for bad and doubtful debts account made under clause (viia). It was further observed by the Tribunal that the assessments in the said case related to assessment year 2002-03 and prior years and the Apex Court had considered the law with reference to the fact situation; whereas the assessee before them was co-operative bank, which was included in the category of beneficiaries under clause (viia) by the Finance Act, 2007 w.e.f. 01.04.2007. The Tribunal further goes on to hold that the deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized Representative for the assessee has pointed out before us that no other decision of any Hon'ble High Court, whether in favour or contrary, is available. The learned Departmental Representative for the Revenue has not pointed out any contrary decision or any decision of jurisdictional High Court on the issue. The position as settled by the Hon'ble High Court is that deduction under section 36(1)(viia) of the Act is available to non-scheduled bank i.e. co-operative bank @ 7.5% of total income or in case there are rural branches, then further deduction of 10% of aggregate average advances as per prescribed procedure. 24. The issue before us is similar to the issue before the Hon'ble High Court of Kerala and though the decision is by non-jurisdictional High Court but in the absence of any decision to the contrary by the jurisdictional High Court, the decision of High Court is binding upon the Tribunal. In any case, no other decision of any High Court has been brought to our knowledge contradicting or favouring the view taken by the Hon'ble High Court of Kerala. In such circumstances, we are guided by the proposition laid down by the Hon'ble Bombay High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Hon'ble Bombay High Court in CIT v. Thana Electricity Supply Ltd. [1994] 206 ITR 727, wherein the limited question was whether or not the decision of one of the High Court was binding on another High Court. The Tribunal in this regard observed as under: 10. In this light, and bearing in mind the fact that limited question before. Their Lordships was whether or not decision of one of the High Court's is binding on another High Court, it would appear to us that ratio decidendi in Thana Electricity Co. Ltd. (supra), is on the non binding nature of a High Court's judgment on another High Court. In any case, this Division Bench did not, and as stated in this judgment itself, could not have differed with another Division Bench of the some strength in the case of Godavari Devi Saraf (supra). Therefore, it cannot be open to a subordinate Tribunal like us to disregard any of the judgments of the Hon'ble Bombay High Court, whether in the case of Thana Electricity Co. Ltd. (supra) or in the case of Godavari Devi Saraf. It is indeed our duty to loyally extend utmost respect and reverence to the Hon'ble High Court, and to read these two judgments by the Division Benche ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
