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TMI Blog2025 (3) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... 43 DCBR. BPD (PCB) M.C Νo.4/16.20.000/2015-16 dated July 1, 2015, without appreciating the fact that RBI guidelines or prudential norms issued by the RBI are not intended to regulate the Income Tax Laws and could not over rule the permissible deductions or their exclusions under the Income Tax Act, 1961, as held by the Hon'ble Supreme Court in the case of Southern Technologies Ltd. reported in 320 ITR 577. 3. On the facts and circumstances of the case and in law, the Id. CIT(A), has erred in giving relief to the assessee relying on the CBDT's Instruction No.17/2008 dated 26/11/2008 without appreciating the fact that the said instruction merely states that depreciation / appreciation of scrips held under AFS securities is to be aggregated and only net depreciation is to be provided for in the accounts, as per the latest RBI guidelines but the same does not provide that such notional depreciation be allowed as expenditure while computing taxable income. 4. On the facts and circumstances of the case and in law, the Id. CIT(A), while giving relief to the assessee, has failed to appreciate that even the latest Master Direction of the RBI dated 12/09/2023 bearing No.RBI/DO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the matter in appeal before the Ld. CIT(A) who decided the impugned issue in favour of the assessee by recording his observations and findings as under: "6.1 Brief facts of the case are that the appellant had filed its return of income for A.Y 2018-19 on 30.10.2018. Thereafter the appellant revised its return of income on 14.2.2019 & 73.2019. The case of the appellant was selected for scrutiny under CASS. The AO during the course of the assessment proceedings noticed that the appellant had claimed large amount of refund during the year so the appellant was asked to submit explanation about the same. After considering the reply of the appellant the AO noticed that the appellant had made provision for depreciation of Rs. 34.50 cr. However the amount was not disallowed by the appellant while computing its total income. In view of the same the AO issued a show cause dated 1.2.2021 to the appellant asking it to explain as to why the provision of Rs. 34.50 cr should not be disallowed and added back to its income as provision for depreciation is not allowed as an expense. In response to the same the appellant submitted its reply explaining that the bank had made investment in securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e letter F No. 225/157/2017/ITA. II dated 23.6.2017 as the same does not mention in clear terms that the case of the appellant has been selected for complete scrutiny as has been claimed in the second SCN cum DAO served on the appellant on 5.3.2021 6.3.1 The appellant in its submission during the appellate proceedings has not submitted any evidence in support of its contention. Moreover as per the provisions of section 292 B the notice or the assessment cannot be held to be invalid or deemed to be invalid merely by reason of any mistake, defect or omission in such assessment or notice if such assessment or notice is in substance and effect in conformity with or according to the intent and purpose of this act. The provisions of section 292 B are as under Return of income, etc., not to be invalid on certain grounds. 292B. No return of income, assessment, notice, summons or other proceeding. furnished or made or issued or taken or purported to have been fumished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The Ld. DR supported the order of the Ld. AO and submitted that Ld. CIT(A) has erred in deleting the addition made by the Ld. AO. He submitted that the reliance placed by the Ld. AR on the various case laws in support of its claim including that of the assessee's own case for the earlier years decided favorably by the Pune Tribunal, is completely misplaced as the facts involved are distinguishable. The Ld. DR relied on the decision of the Apex Court in the case of Southern Technologies Ltd. reported in 320 ITR 577 (SC). 7. The Ld. AR, on the other hand, strongly supported the order of the Ld. CIT(A) and submitted that the Ld. CIT(A) has rightly allowed the claim of the assessee. He further submitted that the impugned issue is covered in favour of the assessee in its own case by the coordinate bench of the Tribunal for the preceding AYs 2007-08, 2008-09, 2009-10 and 2010-11. Before us, the Ld. AR filed the detailed written submissions in support of its claim, which is reproduced below: "After placing before Your Honors, these facts, now please allow us to make our submission on the grounds of appeal raised by the Appellant Department in this impending appeal as follows - I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not provide that such notional depreciation be allowed as expenditure while computing taxable income, clearly amounts to an attempt to interpret/challenge by the appellant-department to the said instruction which has been issued by the CBDT u/s 119(2)(a) of the Act. III.I with due respect & utmost humbleness, please allow us to place on record that CBDT instructions are totally binding upon every Revenue Officer & he is only supposed to abide by the same & not allowed to put his own interpretations into it. For this purpose, the assessee - appellant wishes to place on record the following judicial precedents on which he wishes to place his heavy reliance - Case 1. in Commissioner of Customs Calcutta vs Indian Oil Corporation (CA 2342-2362 of 2001) Hon'ble Apex Court, while stating that provisions of section 151A of Customs Act are pari material with provisions of section 119 of the Income Tax Act, has held that A Revenue Officer can not take stand against Circulars issued by the Department-136 taxman 491 Case 2. Whether, since Board has considered it necessary to lay down a general test for deciding what is a doubtful debt in circular dated 9-10-1984 and directed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons reproduced above. Before us, the Ld. DR has argued that the Ld. CIT(A) has erred in deleting the addition of Rs. 34,50,00,000/- on account of disallowance of "provision for depreciation" for the reasons stated in the grounds of appeal raised by the Revenue which are reproduced in the proceeding para 2 above. On the contrary, the Ld. Counsel for the assessee vehemently supported the order of the Ld. CIT(A) by making a detailed submission of its arguments reproduced in the preceding paragraph. We find that the Ld. CIT(A) has allowed the claim of the assessee giving the cogent reasons in his appellate order after considering the assessment order and the factual and legal submissions made by the assessee. Further, perusal of the decision(s) of the coordinate bench of the Pune Tribunal reveals that the impugned issue has been decided in favour of the assessee in AY 2007-08, 2008-09, 2009-10 and 2010-11 in The Karad Urban Co-op Bank Ltd. Vs. Addl. CIT (ITA Nos. 103, 1454 & 2432/PN/2012 respectively), wherein the Tribunal has discussed this issue in detail and accordingly gave its verdict in favour of the assessee. The Revenue has not brought on record any material to contradict the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P of the Income Tax Act. However, I propose to exclude all other co-operative banks from the scope of that section Accordingly, section 80P is to be amended to give effect to the above proposal. It is also proposed to amend section 2(24) to provide that profits and gains of business of banking (Including providing credit facilities) carried on by a co-operative society with its members shall be included in the definition of 'income' (with effect from 1st April, 2007)". 6. Cooperative bank unlike other commercial banks are subjected to dual control from both RBI as well as from state cooperative department. The accounting treatment for a cooperative bank is therefore a result of guidelines from both the controlling authorities. Ordinarily a deduction is not available to an assessee unless specifically provided under the Act. This is irrespective of accounting treatment provided by the assessee in its books of accounts. But at the same time it was well settled that deduction expressly mentioned under the Act are not exhaustive and profit is to be derived according to ordinary commercial principles. As per the extant RBI guidelines dated 01-07-2009 the investment portfolio o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M category which has been. amortised over the period till maturity is allowable as revenue expenditure since the claim is as per RBI Guidelines and CBDT also has directed to allow such premium. It has also been held in the case of Catholic Syrian Bank Ltd. Vs. ACIT that amortization on purchase of Government securities was made as per prudential norms of the RBI and same was allowable deduction. In view of above, assessee was justified in contending for amortization of premium paid in excess of face value of securities held to maturity (HTM) category or period remaining till maturity was found reasonable by the CIT(A). Accordingly addition of Rs.17,91,659/- made by the Assessing Officer by disallowing amount towards amortization of Government Securities (HMT) was deleted. This reasoned factual and legal finding of the CIT(A) needs no interference from our side. We uphold the same. 9. As a result, the appeal filed by the Revenue is dismissed". 10.1 Respectfully following the decision of the Coordinate Bench of the Tribunal and in absence of any contrary material brought to our notice against the above cited decision we find no infirmity in the order of the Ld.CIT(A) deleting the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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