Assistant Commissioner of Income Tax, Thrissur V. Danalakshmi Bank Ltd, Thrissur

ITA 133/COCH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52345 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 19-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 13-03-2009
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: P BALAKRISHNAN ADV
• Keywords: Depreciation; Cost of acquisition; Bad and doubtful debts
• Section: 143(3); 234B; 14A; 37(1); 147; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM I.T.A NOS. 93 & 94/COCH/2009 ASSESSMENT YEARS: 2005-06 & 2006-07 THE DHANALAKSHMY BANK LTD., NAICKANAL, TRICHUR. [PAN: AABCT 0019J] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, RANGE-1(1), TRICHUR. (ASSESSEE -APPELLANT) (REVENUE - RESPONDENT) I.T.A NO.132 & 133/COCH/2009 ASSESSMENT YEARS: 2005-06 & 2006-07 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), TRICHUR VS. THE DHANALAKSHMY BANK LTD., NAICKANAL, TRICHUR. [PAN: AABCT 0019J] (REVENUE-APPELLANT) (ASSESSEE -R ESPONDENT) REVENUE BY SHRI S.R.SENAPATI, SR.DR ASSESSEE BY SHRI P.BALAKRISHNAN, ADV.-AR DATE OF HEARING 19/10/2011 DATE OF PRONOUNCEMENT 30/12/2011 O R D E R PER SANJAY ARORA, AM: THESE ARE A SET OF TWO CROSS APPEALS, I.E., BY THE ASSESSEE AND THE REVENUE, IN RESPECT OF THE ASSESSMENTS FOR TWO CONSECUTIVE YEAR S, BEING A.Y. 2005-06 AND 2006-07, CONTESTING THE IMPUGNED ORDERS BY THE FIRST APPELLA TE AUTHORITY, PARTLY ALLOWING THE ASSESSEES APPEALS DIRECTED AGAINST THE ASSESSMENTS UNDER SECTION 143(3) OF THE INCOME- TAX ACT, 1961 (`THE ACT HEREINAFTER) VIDE SEPARATE ORDERS OF EVEN DATE, I.E., 21-11-2008. THE APPEALS FOR THE TWO YEARS RAISING COMMON ISSUES , WERE TAKEN UP FOR HEARING TOGETHER AND ARE BEING DISPOSED OF BY A COMMON, CONSOLIDATED ORDER. I.T.A. NOS.93,94,132& 133/COCH/2009 DHANALAKSHMY BANK LTD. VS. ACIT, TRICHUR 2 ASSTT.YEAR 2005-06 (ASSESSEES APPEAL IN I.T.A. NO. 93/COCH/2009) 2. THE FIRST ISSUE IN THIS APPEAL IS WITH REFERENCE TO THE DISALLOWANCE IN THE SUM OF ` 59,22,784/-BY APPLYING S. 14A OF THE ACT, WITH THE IMPUGNED EXPENSES INCLUDING THE PURCHASE COST OF INTEREST-FREE SECURITIES, AS ALSO THE PROPORTIONATE SHARE OF ADMINISTRATIVE EXPENSES, I.E., ` 58,641/-. IT WAS THE COMMON CONTENTION OF THE PARTI ES DURING HEARING BEFORE US THAT THOUGH THE MATTER STANDS DECIDED IN THE ASSESSEES FAVOUR BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR EARLIER YEAR, THE MATTE R HAS SINCE ATTAINED FINALITY BY THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF THE ASSESSEE-BANK, ALONG WITH, OTHERS FOR SEVERAL YEARS (IN I.T.A. NO. 1324 OF 2009 DATED.21-10-2010 (EXHIBIT P- 1), IT MAY BE RESTORED BACK TO HE FILE OF THE ASSES SING AUTHORITY TO CARRY OUT THE DIRECTIONS BY THE HONBLE HIGH COURT, AFTER HEARING THE ASSESS EE. WE FIND THE SAID CONTENTION TO BE IN ACCORD WITH THE PROCEDURE THAT WOULD ENABLE THE APP LICATION OF THE DECISION BY THE HONBLE HIGH COURT IN A FAIR AND TRANSPARENT MANNER . WE, ACCORDINGLY, DIRECT SO. 3. THE SECOND ISSUE RAISED BY THE ASSESSEE RELATES TO THE DISALLOWANCE IN THE SUM OF ` 16,67,332/- IN RESPECT OF ITS CLAIM UNDER SECTION 3 5D OF THE ACT, I.E., AT THE ENTIRE AMOUNT FOR WHICH THE SAME STOOD MADE. THE BASIS OF THE DI SALLOWANCE BY THE ASSESSING OFFICER (AO) WAS THAT THE CLAIM IS NOT MAINTAINABLE IN VIEW OF THE FACT THAT THE ASSESSEE-BANK DOES NOT QUALIFY TO BE AN INDUSTRIAL UNDERTAKING AS DEFINED UNDER EXPLANATION 1 BELOW CLAUSE (V) OF SUB-SECTION (15) OF SECTON 10 OF THE ACT; THERE BEING NO DEFINITION OF THE SAID TERM UNDER SECTION 35D. NONE OF THE CONDITIONS AS SPECIFIED THEREIN STANDS SATISFIED BY THE ASSESSEE-BANK. FURTHER, THE CLAIM IS IN RESPECT OF PRELIMINARY EXPENSES TOWARDS PUBLIC ISSUE OF SHARES, AND WHICH HAS BEEN HELD TO BE A CA PITAL EXPENDITURE BY THE APEX COURT IN THE CASE OF BROOKE BOND (INDIA) LTD. VS. CIT (1997) 225 ITR 798 (SC). THE REVENUE CONFIRMED THE DISALLOWANCE RELYING ON THE DECISION BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2003-04 & 200405. THI S BEING THE ADMITTED POSITION, EVEN AS THE DISALLOWANCE, AS WOULD BE APPARENT, IS ONLY IN CONFORMITY WITH THE WELL-SETTLED LAW, WE HAVE NO HESITATION IN UPHOLDING THE IMPUGNE D ORDER. WE DECIDE ACCORDINGLY. I.T.A. NOS.93,94,132& 133/COCH/2009 DHANALAKSHMY BANK LTD. VS. ACIT, TRICHUR 3 4. THE THIRD AND FINAL ISSUE AGITATED BY THE ASSESS EE IS IN RESPECT OF THE DISALLOWANCE OF THE CLAIM FOR PENSION U/S. 37(1) OF THE ACT IN T HE SUM OF ` 1,66,96,636/-. THE ASSESSEE CLAIMED A TOTAL EXPENDITURE OF ` 4176.18 LAKHS UNDER THE HEAD PAYMENT TO AND PROVIS ION FOR EMPLOYEES. THE SAME INCLUDES PAYMENT TO AN APP ROVED PENSION FUND (AT ` 247.57 LAKHS) AND PAYMENT OF PENSION TO RETIRED EMPLOYEES (AT ` 166.97 LAKHS). IT IS THE THIRD PAYMENT WHICH IS THE SUBJECT MATTER OF CONTROVERSY BETWEEN THE ASSESSEE AND THE DEPARTMENT. THE REVENUES CASE STANDS DELINEATED AT PARA 16 TO 22 OF THE ASSESSMENT ORDER, MAKING A REFERENCE TO THE DECISIONS BY THE H IGHER COURTS OF LAW, INCLUDING THE APEX COURT. THE LD. CIT(A) DID NOT RENDER ANY DECISION IN THE MATTER IN VIEW OF THE FACT THAT THE MATTER WAS ALREADY BEFORE THE AO IN RESPECT OF THE IMMEDIATELY TWO PRECEDING YEARS (A.Y.2003-04 AND 2004-05) FOR BEING DECIDED IN TERM S OF THE DIRECTIONS BY THE ITAT VIDE ITS ORDER DATED 20-08-2007 (ANNEXURE B). IT WAS, AC CORDINGLY, HELD THAT THE MATTER BE LIKEWISE RESTORED BACK TO THE FILE OF THE AO FOR TH E CURRENT YEARS AS WELL. FURTHER, THE LD.AR DURING HEARING SOUGHT TO PRESS INTO SERVICE T HE DECISION IN THE CASE OF CIT VS. RANBAXY LABORATORIES LTD. 334 ITR 341(DEL.). THE MATTER HAVING BEEN ALREADY EXAMINED BY THE TRIBUNAL, AND RESTORED BACK TO THE FILE OF T HE AO, WITH DIRECTIONS, WE ONLY CONSIDER IT FIT AND PROPER THAT THE MATTER BE LIKEWISE RESTO RED BACK TO THE FILE OF THE AO, WHO SHALL DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW, RELY ING ON THE DECISIONS BY THE HIGHER COURTS AS WELL AS BY THE TRIBUNAL THAT MAY COME TO, OR ARE BROUGHT, TO HIS NOTICE, OF COURSE, AFTER AFFORDING DUE OPPORTUNITY OF REPRESENTATION T O THE ASSESSEE IN THIS REGARD. WE MAY CLARIFY THAT THE SAME ISSUE HAS ALSO BEEN CONSIDERE D BY THIS TRIBUNAL IN THE CASE OF OTHER BANKS AS WELL, AS IN THE CASE OF SOUTH INDIAN BANK LTD. (IN ITA NO. 935/COCH/2008 DATED 31/5/2011 FOR AY 2005-06/COPY ON RECORD), AND REFER ENCE TO WHICH WOULD BE RELEVANT IN THE MATTER. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 20 05-06 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ASSTT.YEAR 2005-06 (REVENUES APPEAL IN I.T.A NO. 1 32/COCH/2009) I.T.A. NOS.93,94,132& 133/COCH/2009 DHANALAKSHMY BANK LTD. VS. ACIT, TRICHUR 4 6. THE FIRST ISSUE IN THE REVENUES APPEAL RELATES TO THE ADDITION ON ACCOUNT OF VALUATION OF INVESTMENTS MADE IN THE SUM OF ` 1,86,23,010/-. IT WAS INFORMED BY THE ASSESSEE, BY RELYING ON THE DECISIONS BOTH BY THE H ONBLE HIGH COURT AND THE TRIBUNAL (PLACED AT ANNEXURE A & C RESPECTIVELY OF ITS PAPER -BOOK), THAT THE MATTER HAS ATTAINED FINALITY BY THE HONBLE HIGH COURT UPHOLDING THE OR DER BY THE TRIBUNAL IN THE CASE OF SOUTH INDIAN BANK LTD . (IN I.T.A. NO. 1215/COCH/2004 DATED 13-12-2007 FO R A.Y.1998-99). 7. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, INCLUDING THE ORDER BY THE TRIBUNAL IN THE CASE OF SOUTH INDIAN BANK LTD . (SUPRA), FOLLOWING ITS EARLIER ORDER IN THE ASSESSEES CASE, CONFIRMING THE DELETION OF THE ADDITION TO THE INCOME ON ACCOUNT OF APPRECIATION OF THE CURRENT SECURITIES, WHICH IS TH E SUBJECT MATTER OF THE PRESENT ADDITION. THE JUDGMENT OF THE HONBLE HIGH COURT REFERRED TO (IN I.T.A NO. 1237/2009 DATED 27-10- 2009), IN FACT, ONLY REFERS TO ITS EARLIER JUDGMENT IN THE CASE OF THE SAME ASSESSEE ( SOUTH INDIAN BANK LTD .) (IN I.T.A. NO. 946/2009 DATED 09-10-2009), WHICH WE OBSERVE TO BE ON A DIFFERENT ISSUE, I.E., THE LOSS ARISING OUT OF TH E WRITE OFF IN RESPECT OF THE PURCHASE PRICE DEEMED EXCESS, I.E., OVER THE FACE VALUE OF THE SEC URITIES TO BE RETAINED TILL MATURITY, WRITTEN OFF IN ITS INSTALMENTS BY SPREADING THE CHA RGE EQUALLY OVER THE BALANCE TERM UNTIL THE DATE OF MATURITY. AS SUCH, EVEN THOUGH THE APPE LLATE ORDER BY THE HONBLE HIGH COURT IN I.T.A NO. 1237/2009 DATED 27-10-2009 IS QUA THE REVENUES APPEAL BEFORE IT IN I.T.A. NO. 1215/COCH/2004 DATED 13-12-2007, THE CONTENTION ADVANCED BY THE ASSESSEE ON THE BASIS OF THE SAID DECISION, I.E., OF THE MATTER HAV ING BEEN UPHELD BY THE HONBLE HIGH COURT, MAY NOT BE CORRECT ON FACTS. SO, HOWEVER, CL EARLY THE SAME REPRESENTS THE CONSISTENT VIEW OF THE TRIBUNAL IN THE MATTER. ACCORDINGLY, W E MAY ADVERT TO PARA 10 & 11 OF THE TRIBUNALS ORDER IN THE CASE OF SOUTH INDIAN BANK LTD. VS. ACIT ( SUPRA) FOR A.Y.1998-99 (SUPRA) DATED 13-02-2002 (ANN. C TO PB). WE ACCORDI NGLY HAVE NO HESITATION IN CONFIRMING THE SAID DELETION BY THE LD. CIT(A). WE DECIDE ACCORDINGLY. 8. THE SECOND ISSUE IN THE REVENUE APPEAL RELATES TO THE DISALLOWANCE OF THE ASSESSEES CLAIM IN RESPECT OF WRITE OFF OF BAD DEB TS RELATING TO ITS NON-RURAL BRANCHES, IN I.T.A. NOS.93,94,132& 133/COCH/2009 DHANALAKSHMY BANK LTD. VS. ACIT, TRICHUR 5 THE SUM OF ` 1,57,56,437/-. THE LD. CIT(A) DELETED THE DISALLOW ANCE FOLLOWING THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF SOUTH INDIAN BANK LTD. V. CIT (REPORTED IN 262 ITR 579 (KER)). THOUGH THE SAME HAS SINCE BEEN OVERRULED BY THE FULL BENCH DECISION BY THE HONBLE JURISDICTIONAL H IGH COURT IN THE CASE OF THE SAME ASSESSEE [IN CIT VS. SOUTH INDIAN BANK LTD. (2010) 326 ITR 124 (KER.) (FB)], SO THAT THE ISSUE STANDS DECIDED IN FAVOUR OF THE REVENUE, AND APPARENTLY COVERED AGAINST THE ASSESSEE, WE SHALL IN VIEW OF THE ASSESSEES SPECIF IC CASE AS RAISED BEFORE US, ARE OBLIGED TO ADVERT TO THE FACTS OF THE CASE. 9. THE BASIS OF THE AOS DENIAL OF DEDUCTION TO THE ASSESSEE WAS THAT IN HIS VIEW ALLOWING THE SAME WOULD AMOUNT TO A DOUBLE DEDUCTIO N. THE ASSESSEE HAD AN OPENING CREDIT OF ` 2021.45 LAKHS, I.E., IN THE PROVISION FOR BAD AND D OUBTFUL DEBTS ACCOUNT, WHICH WAS FURTHER INCREASED BY ` 688.38 LAKHS FOR THE RELEVANT YEAR (FOR WHICH THE D EDUCTION WAS CLAIMED AND ALLOWED UNDER SECTION 36(1)(VIIA) OF TH E ACT), SO THAT THERE WAS A TOTAL PROVISION OF ` 2709.83 LAKHS AS AT THE YEAR-END (REFER PARA 13, PG . 14 OF THE ASSESSMENT ORDER). THAT BEING THE CASE, THERE WAS AN EXCESS CR EDIT OUTSTANDING IN THE PROVISIONA CCOUNT, WHICH STOOD REDUCED TO ` 2552.28 LAKHS AT THE YEAR-END (31-03-2005) BY THE D EBIT OF THE AMOUNT WRITTEN OFF IN ACCOUNTS TO THE SAID A CCOUNT. AS SUCH, THE ASSESSEE WOULD NOT BE ENTITLED TO ANY CLAIM IN RESPECT OF ITS SAID WRITE OFF, I.E., IN VIEW OF A POSITIVE BALANCE IN THE PROVISION ACCOUNT EVEN AFTER MAKING ALLOWANCE FOR THE WRITE OFF. THE ASSESSEES CASE WAS THAT THE PROVISION IS ONLY IN R ESPECT OF RURAL BRANCHES WHILE THE DEBTS WRITTEN OFF, CLAIMED U/S. 36(1)(VII), ARE IN RESPEC T OF BRANCHES OTHER THAN RURAL, SO THAT THERE IS NO CASE FOR LINKING THE TWO DEDUCTIONS, WH ICH ARE IN RESPECT OF DIFFERENT DEBTS. THIS WAS COUNTERED BY THE AO BY STATING THAT THERE WAS NOTHING IN THE LANGUAGE OF S. 36(1)(VIIA) WHICH MAKES IT LIABLE TO BE CONSTRUED A S BEING APPLICABLE ONLY TO ADVANCES MADE ONLY IN RESPECT OF THE ADVANCES MADE BY THE RU RAL BRANCHES OF THE BANK. AS AFORE- NOTED, THE ASSESSEE FOUND FAVOUR WITH THE LD. CIT(A ) ON THE BASIS OF THE DECISION BY THE HONBLE HIGH COURT IN THE CASE OF (REPORTED AT 262 ITR 579), WHEREIN THE PROVISION U/S. 36(1)(VIIA) WAS HELD TO BE IN RESPECT OF RURAL BRAN CHES ONLY. THE SAID DECISION BEING NO LONGER A GOOD LAW, I.E., IN VIEW OF THE SUBSEQUENT DECISION BY THE FULL BENCH DECISION I.T.A. NOS.93,94,132& 133/COCH/2009 DHANALAKSHMY BANK LTD. VS. ACIT, TRICHUR 6 (REPORTED AT 326 ITR 174), THE ASSESSEES CLAIM OF TWO SECTIONS OPERATING INDEPENDENT OF EACH OTHER WOULD NOT HOLD. BOTH THE SECTIONS, I.E., S. 36(1)(VII) AND S. 36(1)(VIIA), EQUALLY APPLY TO ALL ADVANCES BY THE BANK. FURTHER, READING THE TWO TOGETHER, AND ALONG WITH S. 36(2)(V), WOULD ABUNDANTLY CLARIFY THAT THE STAND OF THE AO IS CORRECT. THE AS SESSEE IS ENTITLED TO DEDUCTION U/S. 36(1)(VII) ONLY WHERE THE SAME EXCEEDS THE CREDIT B ALANCE IN THE PROVISION ACCOUNT, AND WHICH HAS TO BE NECESSARILY DEBITED WITH THE AMOUNT OF SUCH DEBTS WRITTEN OFF. AS SUCH, THERE IS NO SUBSTANCE OR BASIS FOR THE ASSESSEES C LAIM THAT THE WRITE OFF FOR THE CURRENT YEAR, IS TO BE SEEN ONLY WITH REFERENCE TO THE PROV ISION AS MADE FOR THE CURRENT YEAR ONLY. THE LANGUAGE OF THE PROVISION TO S. 36(1)(VII) BEIN G CLEAR, IN FACT, THERE IS NO OTHER CONSTRUCTION THAT EMANATES OUT OF A HARMONIOUS AND CO-JOINT READING OF THE THREE PROVISIONS. THEREFORE, IT IS NOT ONLY THE WRITE OF F FOR THE CURRENT YEAR ( ` 157.56 LAKHS) BY WHICH THE PROVISION ACCOUNT HAS TO BE REDUCED, BUT ALSO AS THAT CLAIMED FOR THE EARLIER YEARS AS WELL, I.E., WHILE RECKONING ANY DEDUCTION U/S. 36(1)(VII) OF THE ACT. THE REVENUE, THUS, SUCCEEDS ON THIS COUNT. WE DECIDE AC CORDINGLY. 10. THE THIRD ISSUE ARISING IN THE REVENUES APPEAL IS IN RESPECT OF LOSS ON AMORTIZATION OF THE PREMIUM PAID ON THE PURCHASE OF GOVERNMENT S ECURITIES, DISALLOWED IN THE SUM OF ` 403.29 LAKHS. THE LD. CIT(A) DELETED THE SAME ON TH E BASIS OF THE DECISION BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2003-0 4 (IN I.T.A. NO. 394/COCH/2006 DATED 27-09-2007). THE LD. CIT(A) HAS ALSO GIVEN A CLEAR FINDING THAT NO DEPRECIATION IN RESPECT OF THESE SECURITIES IS BEING CLAIMED BY THE ASSESSE E. 11. THE ASSESSEE BEFORE US HAS PLACED ON RECORD THE DECISION RELIED UPON BY THE LD. CIT(A) IN CASE OF SOUTH INDIAN BANK LTD . (ANNEXURE B) (IN I.T.A. NO. 394/COCH/2006 DATED 27-09-2007). WE HAVE PERUSED THE SAME AND FI ND THE TRIBUNAL TO HAVE FOLLOWED THE EARLIER DECISION BY IT IN THE CASE OF THE SAME ASSE SSEE (IN I.T.A. NO. 1215/COCH/2004 DATED 13-02-2007), DELETING THE SAID DISALLOWANCE. IN VIEW OF THE CONSISTENT VIEW BY THE TRIBUNAL, WE CONFIRM THE SAID DELETION BY THE LD. C IT(A). WE MAY ALSO STATE THAT IN THIS VIEW OF THE MATTER, WE FIND NO MERIT IN THE ARGUMEN T ADVANCED BY THE LD. DR DURING I.T.A. NOS.93,94,132& 133/COCH/2009 DHANALAKSHMY BANK LTD. VS. ACIT, TRICHUR 7 HEARING THAT THE MATTER BE RESTORED BACK TO THE FIL E OF THE AO FOR FRESH ADJUDICATION IN THE LIGHT OF THE DECISION, WHICH IS, IN EFFECT, WHAT WE HAVE ESSENTIALLY DONE. WE DECIDE ACCORDINGLY. 12. THE FOURTH AND FINAL ISSUE AGITATED BY THE REVE NUE IS IN RESPECT OF DELETION OF THE ADDITION ON ACCOUNT OF UNCLAIMED BALANCE IN THE DEP OSIT ACCOUNTS, EFFECTED IN THE SUM OF ` 78,68,000/-. WHILE THE AO SOUGHT TO APPLY THE RATI O OF THE DECISION IN THE CASE OF CIT VS.T.V. SUNDARAM IYENGAR & SONS (1996) 222 ITR 344 (SC), THE LD. CIT(A) DELETED TH E SAME AFTER AN AT LENGTH DISCUSSION OF THE MATTER VI DE PARA 10 OF THE IMPUGNED ORDER. WE MAY NOT DWELL ON THE NICETIES OF THE MATTER; THE SA ME REPRESENTING THE CONSISTENT VIEW OF THE TRIBUNAL AS WELL, HAVING BEEN IN FACT APPLIED I N THE CASE OF SOUTH INDIAN BANK LTD . (IN I.T.A. NO. 1003/COCH/2008 DATED 31-05-2011 FOR AY 2 005-06/COPY ON RECORD), FOLLOWING ITS EARLIER DECISION IN THE CASE OF CIT(ASST.) VS. CATHOLIC SYRIAN BANK (IN I.T.A. NO. 66/COCH/2009 DATED 11-02-2011), REPRODUCING THE RELEVANT EXTRACT THEREOF AT PARA 33 OF THE SAID ORDER. WE, ACCORDINGLY, CONFIRM THE IMP UGNED ORDER, AND THE REVENUE FAILS. 13. IN THE RESULT, THE REVENUES APPEAL FOR A.Y. 20 05-06 IS PARTLY ALLOWED. ASSTT.YEAR 2006-07 (ASSESSEES APPEAL IN I.T.A. NO. 94/COCH/2009) 14. THE FIRST ISSUE ARISING IN THE SAID APPEAL IS I N RELATION TO THE DISALLOWANCE EFFECTED IN THE SUM OF ` 47,05,420/- VIDE ASSESSMENT DATED 28-03-2008. THE F ACTS AND CIRCUMSTANCES OF THE CASE, AS WELL AS THE RESPECTIV E CASES OF BOTH THE PARTIES, IS THE SAME AS FOR A.Y. 2005-06, ADJUDICATED BY VIDE PARA 2 OF THIS ORDER (IN ITA NO. 93/COCH/2009). AS SUCH, OUR DECISION FOR THE SAID YEAR WOULD BE EQ UALLY VALID AND APPLY WITH EQUAL FORCE FOR THIS YEAR AS WELL. WE DECIDE ACCORDINGLY. 15. THE SECOND ISSUE ARISING IN THE INSTANT APPEAL IS IN RESPECT OF THE DISALLOWANCE OF PENSION PAYMENT TO THE RETIRED EMPLOYEES IN THE SUM OF ` 2,09,17,554/- (REFER PARA 13 OF THE ASSESSMENT ORDER). THE FACTS AND CIRCUMSTANCES OF THE CASE, AS WELL AS THE RESPECTIVE I.T.A. NOS.93,94,132& 133/COCH/2009 DHANALAKSHMY BANK LTD. VS. ACIT, TRICHUR 8 CASES OF BOTH THE PARTIES, IS THE SAME AS FOR A.Y. 2005-06, ADJUDICATED BY VIDE PARA 4 OF THIS ORDER (IN ITA NO. 93/COCH/2009). AS SUCH, OUR DECISION FOR THE SAID YEAR WOULD BE EQUALLY VALID AND APPLY WITH EQUAL FORCE FOR THIS Y EAR AS WELL. WE DECIDE ACCORDINGLY. 16. THE THIRD ISSUE AND THE FINAL ISSUE IN THE ASSE SSEES APPEAL AGAINST THE IMPUGNED ORDER IS IN RESPECT OF LEVY OF INTEREST U/S. 234B O F THE ACT IN THE SUM OF ` 1,11,27,840/-. THE BASIS OF THE ASSESSEES OBJECTION, WHICH FOUND ACCEPTANCE BY THE LD. CIT(A), IS THAT THE LIABILITY TO INTEREST AROSE ONLY CONSEQUENT TO THE REGULAR ASSESSMENT, AND WHICH IT IS CLAIMED COULD NOT BE ANTICIPATED EARLIER; IT FILING A RETURN OF INCOME FOR THE YEAR. 17. WE ARE UNABLE TO FIND ANY MERIT IN THE ASS ESSEES CASE, PARTICULARLY IN VIEW OF THE SETTLED POSITION THAT INTEREST U/S. 234B IS COMPENS ATORY AND, THUS, MANDATORY, EVEN AS CLARIFIED BY THE APEX COURT TIME AND AGAIN (REFER CIT VS. ANJUM S. GHASWALA (2001) 252 ITR 1 (SC). BEFORE US, THE ASSESSEE HAS REFERRED TO THE DECISION BY THE HON'BLE JURISDICTIONAL HIGH COURT IN ITS CASE FOR A.Y. 1999 -2000 [REPORTED AT (2010) 325 ITR 517 (KER.)], STATING THAT THE MATTER BE RESTORED TO THE FILE OF THE AO TO MODIFY THE LEVY, IF FOUND NECESSARY, ON THE BASIS OF THE DICTUM LAID DO WN IN THE SAID DECISION. IN FACT, VIDE THE SAID DECISION, THE HON'BLE JURISDICTIONAL HIGH COURT, REFERRING TO THE DECISION IN THE CASE OF CIT VS. ANJUM S. GHASWALA (SUPRA), HAS FURTHER CLARIFIED THAT THE LEVY OF INT EREST U/S. 234B(3) WOULD SURVIVE INDEPENDENT OF A LEVY U/S. 23 4B(1), I.E., IT IS NOT NECESSARY OR A PRE-CONDITION FOR THE LEVY OF INTEREST U/S. 234B(3) , I.E., UPON RE-ASSESSMENT OR RE- COMPUTATION U/S. 147 OR S. 153A, THAT IT COULD FOLL OW ONLY A LEVY OF INTEREST U/S. 234B(1), I.E., ON DETERMINATION OF INCOME U/S. 143(1) OR REG ULAR ASSESSMENT. AS SUCH, THE SAID DECISION CLARIFYING THE LEGAL POSITION, FURTHER IMP UGNS THE ASSESSEES CASE, IF AT ALL ONE WAS REQUIRED; THE INSTANT LEVY BEING ONLY CONSEQUEN T TO A REGULAR ASSESSMENT U/S. 143(3) OF THE ACT. THE ASSESSEE HAS ALSO NOT BEEN ABLE TO SHOW ANY OTHER INFIRMITY IN THE IMPUGNED LEVY AT ANY STAGE, SO THAT IT SAID PLEA IS ALSO WITHOUT MERIT. WE DECIDE ACCORDINGLY. I.T.A. NOS.93,94,132& 133/COCH/2009 DHANALAKSHMY BANK LTD. VS. ACIT, TRICHUR 9 18. IN THE RESULT, THE ASSESSEES APPEAL IN I.T.A N O. 94/COCH/2009 FOR A.Y. 2006-07 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ASSTT.YEAR 2006-07 (REVENUES APPEAL IN I.T.A. NO. 133/COCH/2009) 19. THE FIRST ISSUE IN APPEAL IS IN RELATION TO THE ADDITION (AT ` 1,11,71,762/-) IN RESPECT OF THE VALUE OF INVESTMENTS, I.E., BY CONSIDERING T HE APPRECIATION IN THEIR VALUE. THIS FORMS THE SUBJECT MATTER OF OUR ADJUDICATION WHILE DECIDING THE REVENUES APPEAL FOR A.Y. 2005-06 (VIDE PARA 7 OF THIS ORDER), AND WHICH WOULD EQUALLY APPLY FOR THE CURRENT YEAR AS WELL; THE FACTS AND CIRCUMSTANCES AS WELL A S THE RESPECTIVE CASES OF BOTH THE PARTIES BEING THE SAME. WE DECIDE ACCORDINGLY. 20. THE SECOND ISSUE IN THE INSTANT APPEAL RELATES TO THE CLAIM FOR BAD DEBTS WRITTEN OFF U/S. 36(1)(VII) OF THE ACT. WHILE THE AO EFFECTED THE DISALLOWANCE OF ` 5,32,51,378/-, THE ASSESSEE AGITATED THE SAME ONLY AT ` 4,91,42,629/-, I.E., IN SO FAR AS IT RELATED TO THE DEBTS RELATING TO NON-RURAL BRANCHES. THIS FORMS THE SUBJ ECT MATTER OF OUR ADJUDICATION WHILE DECIDING THE REVENUES APPEAL FOR A.Y. 2005-06 (VID E PARA 9 OF THIS ORDER), AND WHICH WOULD EQUALLY APPLY FOR THE CURRENT YEAR AS WELL; T HE FACTS AND CIRCUMSTANCES AS WELL AS THE RESPECTIVE CASES OF BOTH THE PARTIES BEING THE SAME. WE DECIDE ACCORDINGLY. 21. THE THIRD ISSUE ARISING IN THE PRESENT APPEAL, IS IN RELATION TO LOSS ON AMORTIZATION PREMIUM ON THE PURCHASE OF GOVERNMENT SECURITIES, D ISALLOWED IN THE SUM OF ` 7,37,21,374/-. THIS HAS BEEN THE SUBJECT MATTER OF OUR ADJUDICATION WHICH WE HAVE ALREADY CONSIDERED WHILE DECIDING THE REVENUES APP EAL FOR A.Y. 2005-06 (VIDE PARA 10 OF THIS ORDER), AND WHICH WOULD EQUALLY APPLY FOR T HE CURRENT YEAR AS WELL; THE FACTS AND CIRCUMSTANCES AS WELL AS THE RESPECTIVE CASES OF BO TH THE PARTIES BEING THE SAME. WE DECIDE ACCORDINGLY. 22. THE FOURTH ISSUE BY THE REVENUE IS IN RESPECT O F THE PROVISION FOR LEAVE ENCASHMENT LIABILITY, DISALLOWED IN THE SUM OF ` 1,27,74,500/- BY THE AO IN VIEW OF THE I.T.A. NOS.93,94,132& 133/COCH/2009 DHANALAKSHMY BANK LTD. VS. ACIT, TRICHUR 10 NON OBSTANTE CLAUSE OF S. 43B(F) OF THE ACT. DURING THE HEARIN G, IT WAS CONCEDED BY THE LD. AR THAT THE MATTER STANDS DECIDED BY THE TRIBUN AL IN THE CASE OF SOUTH INDIAN BANK LTD. (IN I.T.A. NO. 935/COCH/2008 DATED 31-05-2011 FOR A.Y. 2005-06). THE COPY OF THE SAID ORDER IS ON RECORD, AND THE ISSUE STANDS DEALT WITH BY THE TRIBUNAL AT PARA 23 & 24 OF ITS SAID ORDER. IN VIEW THEREOF, WE HAVE NO HESITA TION IN CONFIRMING THE SAID DISALLOWANCE, REVERSING ITS DELETION BY THE FIRST APPELLATE AUTHO RITY, THE BASIS OF WHOSE DELETION, WE FIND STANDS DEALT WITH BY THE TRIBUNAL PER IT SAID ORDER . FURTHER, IN VIEW OF THE CLEAR APPLICATION OF S. 43B(F), WE FIND NO MERIT IN THE ASSESSEES RE FERENCE TO THE DECISION IN THE CASE OF CIT VS. RANBAXY LABORATORIES LIMITED , 334 ITR 341 (DEL.). WE DECIDE ACCORDINGLY. 23. THE FIFTH AND FINAL ISSUE AGITATED BY THE REVEN UE IS WITH REGARD TO THE SURPLUS ARISING ON THE SALE OF PAWNED JEWELLERY, I.E., BELO NGING TO THE DELINQUENT CUSTOMERS, I.E., AS DETERMINED AFTER ASCERTAINING/ADJUSTING THEIR LI ABILITY TO THE ASSESSEE-BANK. THIS ISSUE HAS AGAIN BEEN THE SUBJECT MATTER OF ADJUDICATION B Y THE TRIBUNAL IN THE CASE OF SOUTH INDIAN BANK LTD . (IN I.T.A. NO. 1003/COCH/2008 DATED 31-05-2011 FO R A.Y. 2005-06 ), WHEREIN FOLLOWING ITS EARLIER DECISION IN THE CASE OF CIT(ASST.) VS. CATHOLIC SYRIAN BANK LTD . (IN I.T.A. NO. 66/COCH/2009 DATED 11-02-2011/COPY ON RECORD), IT CONFIRMED THE ADDITION, HOLDING THE SAID SURPLUS TO BEAR THE CHAR ACTER OF A TRADE SURPLUS, VIDE PARAS 34 AND 35 OF ITS SAID ORDER (COPY ON RECORD). IN VIEW THEREOF, WE CONFIRM THE SAME, REVERSING ITS DISALLOWANCE BY THE LD. CIT(A). WE D ECIDE ACCORDINGLY. 24. IN THE RESULT, THE REVENUES APPEAL FOR A.Y. 20 06-07 IN I.T.A. NO. 133/COCH/2009 IS PARTLY ALLOWED. SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 30TH DECEMBER, 2011 GJ COPY TO: 1. THE DHANALAKSHMY BANK LTD., NAICKANAL, TRICHUR. I.T.A. NOS.93,94,132& 133/COCH/2009 DHANALAKSHMY BANK LTD. VS. ACIT, TRICHUR 11 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1(1), TRICHUR. 3. THE ASSISTANT COMMISSIONER OF INCOME-TAX, RANGE- 1(1), TRICHUR. 4. THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, KOCH I. 5. THE COMMISSIONER OF INCOME-TAX, TRICHUR. 6. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .