Allahabad Bank, Kolkata V. D.C.I.T Cir - 6,kolkata, Kolkata

ITA 1460/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5028 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 22-05-2013
• Court: TRIBUNAL
• Department Lawyers: RAJAT SUBRA BISWAS
• Assessee Lawyers: B K GHOSH; PIYU SH DEYFCA
• Keywords: Depreciation; Earning of tax free income; Bad and doubtful debts; Reassessment proceedings
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A, KO LKATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM] ITA.1460/KOL/2013 ASSESSMENT YEAR : 2003-04 ALLAHABAD BANK -VERSUS- D.C.I.T., CIRCLE-6, KOLKATA KOLKATA (PAN:AACCA8464F) (APPELLANT ) (RESPONDENT) FOR THE APPELLANT : SHRI B.K.GHOSH, FCA & SHRI PIYU SH DEY,FCA FOR THE RESPONDENT : SHRI RAJAT SUBRA BISWAS, CIT (DR) DATE OF HEARING : 07.03.2016. DATE OF PRONOUNCEMENT : 06.04.2016. ORDER PER SHRI N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 18.3.2013 OF CIT(A)- VI, KOLKATA, RELATING TO AY 2003-04. 2. IN GROUNDS NO. 1 TO 5 THE ASSESSEE HAS CHALLENG ED THE ACTION OF THE REVENUE AUTHORITIES IN DISALLOWING A SUM OF RS.4,33,45,434/ - AND ADDING THE SAID SUM TO THE TOTAL INCOME OF THE ASSESSEE BY INVOKING THE PROVIS IONS OF SEC.14A OF THE INCOME TAX ACT, 1961 (ACT) READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 (RULES). THE ASSESSEE IS A PUBLIC SECTOR BANK AND IS GOVERNED BY THE BANKING COMPANIES (A&T) ACT 1970, BANKING REGULATION ACT, 1949 AND VARIOUS RULES AND REGULATIONS MADE BY RBI FROM TIME TO TIME. THE ORIGINAL ASSESSMENT IN T HE CASE OF THE ASSESSEE WAS COMPLETED U/S.143(3) OF THE ACT ON 30.3.2006. ONE OF THE ADDITION TO THE TOTAL INCOME MADE IN SUCH ASSESSMENT WAS THE ADDITION CONSEQUENT TO DISALLOWANCE OF A SUM OF RS.4,98.28,693/- TO THE TOTAL INCOME OF THE ASSESSE E U/S.14A OF THE ACT. THE ORDER OF THE AO WAS CONFIRMED BY THE CIT(A) VIDE ORDER DATED 22.10.2007. ON FURTHER APPEAL BY THE ASSESSEE THE HONBLE ITAT VIDE ITS ORDER DAT ED 30.9.2009 IN ITA ITA NO.1460/KOL/2013 ALLAHABAD BANK A.YR.2003-04 2 NO.2486/KOL/2007 (VIDE PARA-17 OF THE ORDER) SET AS IDE THE ORDER OF THE CIT(A) AND DIRECTED THE AO TO DECIDE THE DISALLOWANCE U/S.14A OF THE ACT AS PER RULE 8D OF THE RULES AS RULE 8D OF THE RULES WHICH WAS INSERTED W. E.F. 24.3.2008 WAS HELD BY A SPECIAL BENCH OF ITAT IN THE CASE OF ITO VS. DAGA C APITAL MANAGEMENT PVT.LTD., 312 ITR 1 (AT) (ITAT)(MUM) TO HAVE RETROSPECTIVE OP ERATION. 3. PURSUANT TO THE ORDER OF THE ITAT THE AO EXAMIN ED THE ISSUE IN THE LIGHT OF THE DIRECTIONS OF THE ITAT. THE EXEMPT INCOME OF THE A SSESSEE WAS DIVIDEND ON SHARES & UNITS AMOUNTING TO RS.10.07,38,161, INTEREST ON TAX FREE BONDS OF RS.8,31,98,692/- AND INTEREST U/S.10(23G) OF THE ACT AMOUNTING TO RS.8,4 7,24,000/-. IT IS NOT IN DISPUTE THAT THERE WAS NO INTEREST EXPENDITURE INCURRED IN MAKIN G INVESTMENTS WHICH YIELDED TAX FREE INCOME. THE ONLY QUESTION WAS DISALLOWANCE OF OTHER EXPENSES IN TERMS OF RULE 8D(2)(III) OF THE RULES. THE CLAIM OF THE ASSESSEE WAS THAT A SUM OF RS.3,00,000 BEING SALARY OF ONE EMPLOYEE WHO WAS IN CHARGE OF T HE CONCERNED ACTIVITY AND ANOTHER SUM OF RS.375/- BEING BANK CHARGES ALONE OUGHT TO B E DISALLOWED AS OTHER EXPENSES. THE AO HOWEVER WAS OF THE VIEW THAT IN VIEW OF THE DIRECTIONS OF THE ITAT WHILE SETTING ASIDE THE ISSUE TO THE AO FOR FRESH CONSIDE RATION, RULE 8D WAS DIRECTED TO BE APPLIED CONSEQUENT TO THE DECISION OF SPECIAL BENCH IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT.LTD (SUPRA) AND THEREFORE APPLYING T HE FORMULA GIVEN IN RULE 8D(2)(III) OF THE RULES, THE AO DISALLOWED A SUM OF RS.4,33,45,024/-. 4. BEFORE CIT(A) THE ASSESSEE POINTED OUT THAT THE DECISION OF THE OF SPECIAL BENCH IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT.LTD (SUP RA) HOLDING APPLICATION OF RULE 8D OF THE RULES WHICH CAME INTO EFFECT ONLY FROM 24 .3.2008 AS HAVING RETROSPECTIVE APPLICATION WAS NO LONGER VALID AS THE SAID DECISIO N WAS REVERSED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG . CO. LTD. V. DY. CIT (2010) 328 ITR 87(BOM) HAS MEANWHILE HELD THAT RULE 8D COU LD NOT BE CONSIDERED AS RETROSPECTIVE AND THE SAID RULE COULD BE APPLIED ON LY WITH EFFECT FROM THE ASSESSMENT YEAR 2008-09. FURTHER, THE BOMBAY HIGH COURT ALSO O BSERVED IN THE ABOVE-REFERRED CASE THAT THE ASSESSING OFFICER WOULD FIRST BE REQU IRED TO CHECK THE CONCERNED ASSESSEE'S OFFER OF DISALLOWANCE AND ONLY AFTER REC ORDING HIS DISSATISFACTION, IF ANY, THE ITA NO.1460/KOL/2013 ALLAHABAD BANK A.YR.2003-04 3 ASSESSING OFFICER COULD COMMUTE THE AMOUNT TO BE DI SALLOWED IN ACCORDANCE WITH SUB-SECTION (2) OF SECTION 14A. THE ASSESSEE SUBMIT TED THAT THE ABOVE-REFERRED SUB- SECTION (2) OF SECTION 14A WAS INSERTED BY THE FINA NCE ACT, 2006, WITH EFFECT FROM THE ASSESSMENT YEAR 2007-08. IT WAS POINTED OUT THAT T HE PRESENT CASE OF THE ASSESSEES BEING ONE FOR THE ASSESSMENT YEAR 2003-04, THERE CA NNOT BE ANY APPLICABILITY OF THE ABOVE-REFERRED SUB-SECTION (2) OF SECTION 14A OF TH E ACT READ WITH RULE 8D OF THE RULES IN THE ASSESSEE'S CASE FOR THE ASSESSMENT YEA R 2003-04. HENCE, THE ASSESSEE SUBMITTED THAT THE COMPUTATION OF ALLEGED DISALLOWA BLE SUM MADE BY THE ASSESSING OFFICER AFTER APPLYING RULE 8D, SHOULD BE HELD TO B AD. WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE SUBMITTED THAT WHILE COMPUTING THE DISALLOWABLE SUM U/S 14A THE ASSESSING OFFICER TOOK INTO ACCOUNT ALL THE INVESTM ENTS FROM WHICH THE INCOME THAT MAY BE RECEIVED, WOULD BE EXEMPT FROM TAX, IRRESPEC TIVE OF THE FACT AS TO WHETHER ANY SUCH INCOME HAS ACTUALLY BEEN RECEIVED OR NOT. IT W AS SUBMITTED THAT AS PER THE LANGUAGE OF SECTION 14A, THE EXPENSE WHICH HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME FOR TH E YEAR, IS DISALLOWABLE. HENCE, THERE IS NO SCOPE OF CONSIDERING ANY INCOME WHICH HAS NOT ACTUALLY BEEN EARNED DURING THE YEAR, FOR THE PURPOSES OF SECTION 14A. IT WAS POINT ED OUT THAT THE ASSESSING OFFICER CONSIDERED EVEN THOSE INVESTMENTS FROM WHICH NO INC OME WAS EARNED DURING THE YEAR. 5. THE CIT(A) HELD THAT IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE (SUPRA), THE DECISION OF SPECIAL BENCH IN THE CASE OF DAGA CAPITAL MANAGEMENT (SUPRA) WAS NOT APPLICABLE AND T HEREFORE THE DISALLOWANCE HAD TO BE MADE IN TERMS OF SEC.14A OF THE ACT AND NOT IN T ERMS OF RULE 8D OF THE RULES. HE WAS HOWEVER OF THE VIEW THAT THE DISALLOWANCE OFFER ED BY THE ASSESSEE WAS ON THE LOWER SIDE. HE HELD THAT 0.5% OF THE AVERAGE VALUE OF INVESTMENTS WAS SOUND METHOD OF DISALLOWANCE TO BE MADE IN THE CASE OF THE ASSES SEE AND THUS UPHELD THE ADDITION MADE BY THE AO. 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVEN UE HAS RAISED GR.NO.2 BEFORE THE TRIBUNAL. WE HAVE HEARD THE RIVAL SUBMISSIONS. TH E LEARNED DR RELIED ON THE ORDER OF THE CIT(A). THE LEARNED COUNSEL FOR THE ASSESSEE R ELIED ON THE SUBMISSIONS MADE ITA NO.1460/KOL/2013 ALLAHABAD BANK A.YR.2003-04 4 BEFORE CIT(A) AND SUBMITTED THAT ULTIMATELY THE BAS IS OF DISALLOWANCE DONE BY THE CIT(A) WAS BY APPLYING RULE 8D OF THE RULES, THOUGH HE CAME TO THE CONCLUSION THAT RULE 8D OF THE RULES IS NOT APPLICABLE FOR AY 2003- 04. HE FURTHER POINTED OUT THAT IN THE FOLLOWING CASES, THE HON'BLE ITAT, KOLKATA HAS HELD THAT 1% OF THE EXEMPTED INCOME/DIVIDEND SHALL BE CONSIDERED AS EXPENSES/EXP ENDITURE RELATING TO THE EARNING OF EXEMPTED INCOME U/S 14A IN THE ASSESSMENT YEARS WHE RE THE RULE 8D WAS NOT APPLICABLE:- 1. HIMTAJ CONSULTANTS PVT. LTD. VS. I.T.O. (ITA NO. 721/KO1L2007- AY. 2004-05) ORDER DATED 27.04.2007. 2. CHNHS ASSOCIATION VS. ACIT(ITA NO.74/KOI/2008-AY .2004-05) ORDER DATED 19.02.2008. 3. I.T.O. VS. M/S S.P.S. SECURITIES (P) LTD. (ITA N O.123/KOI/2010- AY.2000-01 ORDER DATED 19.08.2010 HE FURTHER POINTED OUT THAT THE HONBLE CALCUTTA HI GH COURT IN THE CASE OF CIT VS. M/S.R.R.SEN & BROTHERS PVT.LTD. IN GA NO.30 19 OF 2012 IN ITA NO.243 OF 2012 DATED 4.1.2013 HELD THAT COMPUTATION OF 1% OF EXEMPT INCOME AS DISALLOWANCE U/S.14A OF THE ACT WAS PROPER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. V. DY. CIT [2010J 328 ITR 87(BOM) HAS HELD THAT RULE 8D COULD NOT BE CONSIDERED AS RETROS PECTIVE AND THE SAID RULE COULD BE APPLIED ONLY WITH EFFECT FROM THE ASSESSMENT YEAR 2 008-09. FURTHER, THE BOMBAY HIGH COURT ALSO OBSERVED IN THE ABOVE-REFERRED CASE THAT THE ASSESSING OFFICER WOULD FIRST BE REQUIRED TO CHECK THE CONCERNED ASSESSEE'S OFFER OF DISALLOWANCE AND ONLY AFTER RECORDING HIS DISSATISFACTION, IF ANY, THE ASSESSIN G OFFICER COULD COMMUTE THE AMOUNT TO BE DISALLOWED IN ACCORDANCE WITH SUB-SECTION (2) OF SECTION 14A. THE ABOVE- REFERRED SUBSECTION (2) OF SECTION 14A WAS INSERTED BY THE FINANCE ACT, 2006, WITH EFFECT FROM THE ASSESSMENT YEAR 2007-08. THE ASSES SEES CASE BEING FOR THE ASSESSMENT YEAR 2003-04, THERE CANNOT BE ANY APPLIC ABILITY OF THE ABOVE-REFERRED SUB- SECTION (2) OF SECTION 14A OR RULE 8D IN THE ASSESS EE'S CASE FOR THE ASSESSMENT YEAR ITA NO.1460/KOL/2013 ALLAHABAD BANK A.YR.2003-04 5 2006-07. IN THE GIVEN CIRCUMSTANCES, THE QUANTUM O F DISALLOWANCE HAD TO BE DECIDED IN THE LIGHT OF THE DECISIONS RENDERED BY THE ITAT KOLKATA BENCHES IN THE CASES REFERRED TO BY THE CIT(A) IN THE IMPUGNED ORDER. I N THOSE DECISIONS, THE ITAT, KOLKATA BENCHES HAVE CONSISTENTLY TAKEN A VIEW THAT 1% OF THE EXEMPTED INCOME/DIVIDEND SHALL BE CONSIDERED AS EXPENSES/EXP ENDITURE RELATING TO THE EARNING OF EXEMPTED INCOME U/S 14A IN THE ASSESSMENT YEARS WHE RE THE RULE 8D WAS NOT APPLICABLE. THE SAME HAS ALSO BEEN UPHELD BY THE H ONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S.R.R.SEN & BROTHERS PVT.LTD. (SUPRA). F OLLOWING THOSE RULINGS, WE HOLD THAT 1% OF THE EXEMPT INCOME ALONE SHOULD BE DISALL OWED U/S.14A OF THE ACT. GR.NO.1 TO 5 ARE THUS PARTLY ALLOWED TO THE EXTENT INDICATED. 8. GROUNDS NO.6 & 7 RAISED BY THE ASSESSEE READS A S FOLLOWS: 6. THAT, ON FACTS AS WELL AS ON LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) - VI, KOL HAS ERRED IN CONFIRMING THE APPL ICATION OF PROVISION OF SECTION 115JB OF THE INCOME TAX ACT TO THE CASE OF THE APPELLANT BANK IN DISREGARD OF THE RATIOS LAID DOWN BY THE HON'BLE KERALA HIGH COURT IN THE CASE O F KERALA STATE ELECTRICITY BOARD VS. OCIT 329 ITR 91, HON'BLE ITAT, MUMBAI IN THE CASE O F MAHARASHTRA STATE ELECTRICITY BOARD VS CIT. 82 ITO 422, KRUNG THAI BANK PCL VS JO INT OIT, INTERNATIONAL TAXATION (ITA NO. 3390/MUM/09), UNION BANK OF INDIA VS ACIT, L TU, MUMBAI (ITA NO. 4702 TO 4706/MUM/2010 DATED 30.06.2011) AND HON'BLE ITAT, C HENNAI IN THE CASE OF INDIAN BANK VS ADDITIONAL CIT, CHENNAI (ITA NO. 469 MD/201 0 DT. 03.08.2011 ). 7. THAT, ON FACTS AS WELL AS ON LAW, THE LEARNED CO MMISSIONER OF INCOME TAX (APPEAL) - VI, KOL HAS ERRED IN DISREGARDING THE JUDGEMENT OF HON'BLE ITAT, MUMBAI IN THE CASE OF ICICI LOMBARD GENERAL INSURANCE CO. LTD. VS ACIT (2 012-TIOL-690-ITAT-MUM) IN WHICH IT WAS HELD THAT PROVISION OF SECTION 115JB W ILL BE APPLICABLE FROM ASSESSMENT YEAR 2013-14 TO THE BANKING COMPANY IN VIEW OF THE AMENDMENT MADE BY THE FINANCE ACT, 2012. 9. WE HAVE ALREADY SEEN THAT THE ORIGINAL ASSESSME NT IN THE CASE OF THE ASSESSEE WAS COMPLETED U/S.143(3) OF THE ACT ON 30.3.2006. THE ASSESSEES TOTAL INCOME WAS COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SEC.1 15JB OF THE ACT APART FROM THE COMPUTATION OF TOTAL INCOME UNDER THE NORMAL PROVIS IONS OF THE ACT. THE ASSESSEE RAISED DISPUTES WITH REGARD TO COMPUTATION OF BOOK PROFITS U/S.115JB OF THE ACT AS DONE BY THE AO. TO THE EXTENT THE SAME WAS NOT ACC EPTABLE TO THE ASSESSEE, THE ASSESSEE CHALLENGED THE SAME BEFORE CIT(A). TO THE EXTENT THE ASSESSEE WAS NOT SUCCESSFUL BEFORE CIT(A), THE ASSESSEE PREFERRED FU RTHER APPEAL BEFORE THE HONBLE ITA NO.1460/KOL/2013 ALLAHABAD BANK A.YR.2003-04 6 ITAT IN ITA NO.2486/KOL/2007. THE GROUNDS RAISED BY THE ASSESSEE BEFORE ITAT WAS AS FOLLOWS: 8. THAT THE LD.CIT(A) WAS UNJUSTIFIED IN CONFIRMIN G THE ADDITION MADE BY THE LD. A.O. OF THE FOLLOWING ASCERTAINED LIABILITIES IN COMPUTI NG THE BOOK PROFIT FOR MAT PURPOSES. AMOUNT (RS.) (I)PROVISION FOR BAD & DOUBTFUL DEBT 1,73,13,11, 000 (II)PROVISION FOR STANDARD ASSET 4,50,77,500 (III)PROVISION FOR DEPRECIATION ON INVESTMENT 19,43,38,211 (IV)PROVISION FOR LEGAL EXPENSES 27,00,000 (V)PROVISION FOR FRAUD & FORGERY 2 ,80,00,000 (VI)PROVISION FOR WEALTH-TAX 3,00,000 (VII)PROVISION FOR STATIONERY WASTAGE 57,00,000 (VIII)PROVISION FOR TANGIBLE ASSET 8,08,94,719 (IX)PROVISION FOR PENSION 16,96,86,145 10. THE HONBLE ITAT VIDE ITS ORDER DATED 30.9.200 9 (VIDE PARA-18 & 19) HELD AS FOLLOWS: 18. IN RESPECT OF GROUND NO.8 OF THE APPEAL, THE L EARNED SUBMITTED THAT- (A) CLAIM OF RS.27 LAKHS FOR LEGAL EXPENSES WAS ACT UAL EXPENSES AND IT WAS WRONGLY MENTIONED AS PROVISION. (B) WEALTH TAX OFRS.3 LAKHS WAS ACTUAL LIABILITY OF THE ASSESSEE AND IT WAS NOT A PROVISION; AND (C) RS.16,96,86,145 WAS THE PROVISION FOR PENSION ON ACTUARIAL BASIS THOUGH SHOWN AS PROVISION AND AS SUCH, IT WAS AN ASCERTAINED LIABIL ITY OF THE ASSESSEE. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE A BOVE AMOUNTS SHOULD NOT BE ADDED TO THE BOOK PROFIT WHILE COMPUTING PROFIT FOR THE PURP OSES OF MAT U/S.115JB OF THE ACT. HOWEVER, IN RESPECT OF THE OTHER AMOUNTS VIZ, PROVI SION FOR BAD & DOUBTFUL DEBTS, PROVISION FOR STANDARD ASSET, PROVISION FOR DEPRECI ATION ON INVESTMENT, PROVISION FOR FRAUD & FORGERY, PROVISION FOR STATIONERY-WASTAGE, AND PROVISION FOR TANGIBLE ASSET, LEARNED AR OF THE ASSESSEE DID NOT MADE ANY SUBMISS ION. THE LEARNED DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT ISSUE IN RESPECT OF ABOVE THREE ITEMS COULD BE RESTORED TO THE ASSESSING OFFICER TO ASCER TAIN THE EXACT NATURE OF LIABILITIES OF THE ASSESSEE THOUGH SHOWN AS PROVISION BY THE ASSES SEE IN THE BALANCE SHEET. THE LEARNED AR OF THE ASSESSEE ALSO SUBMITTED THAT THE MATTER COULD BE RESTORED TO THE ASSESSING OFFICER. 19. CONSIDERING THE ABOVE SUBMISSIONS OF THE LEARNE D REPRESENTATIVES OF THE PARTIES, WE RESTORE THE MATTER TO THE ASSESSING OFFICER TO CONS IDER AS TO WHETHER THE ABOVE EXPENSES AS CLAIMED BY THE ASSESSEE WERE ACTUAL AND ASCERTAI NED LIABILITIES OR THEY WERE MERELY PROVISIONS MADE. IN CASE, THE ABOVE AMOUNTS ARE ASC ERTAINED LIABILITIES/EXPENSES, THE SAME SHOULD NOT BE ADDED BACK WHILE COMPUTING THE B OOK PROFIT FOR MAT AND IN CASE THE SAME ARE THE PROVISIONS MADE, ASSESSING OFFICER IS JUSTIFIED NOT TO ALLOW DEDUCTION WHILE COMPUTING BOOK PROFIT U/S.115JB. THEREFORE, GROUND NO.8 OF THE APPEAL AS STATED HEREIN ABOVE IS RESTORED TO THE ASSESSING OFFICER TO DECID E THE SAME AFRESH AFTER CONSIDERING THE DETAILS AS CONSIDERING THE DETAILS AS MAY BE FU RNISHED BEFORE HIM. ITA NO.1460/KOL/2013 ALLAHABAD BANK A.YR.2003-04 7 11. IN THE PROCEEDINGS BEFORE THE AO PURSUANT TO T HE ORDER OF THE TRIBUNAL, THE AO AGAIN HELD THAT THE LIABILITY TOWARDS LEGAL EXPENSE S AND OTHER PROVISIONS, WERE NOT ASCERTAINED LIABILITY AND THEREFORE COULD NOT BE RE DUCED FROM THE PROFIT AS PER PROFIT AND LOSS ACCOUNT PREPARED IN ACCORDANCE WITH COMPAN IES ACT, 1956 TO ASCERTAIN BOOK PROFIT FOR THE PURPOSE OF SEC.115JB OF THE ACT. 12. BEFORE CIT(A), THE ASSESSEE RAISED THE FOLLOWI NG ADDITION GROUND VIDE ITS LETTER DATED 19.7.2011: ADDITIONAL GROUND OF APPEAL THAT, WITHOUT PREJUDICE TO THE GROUND NOS.4 AND 5 RELATING TO COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB OF INCOME TAX ACT, 1961 FOR ASCERTAINING LIABILITY IN RESPECT OF MINIMUM ALTERNATE TAX, THE LEARNED ASSESSING OFF ICER HAS ERRED IN APPLYING THE PROVISION OF SECTION 115JB OF INCOME TAX ACT, 1961 IN DISREGARD OF THE REFERRED JUDICIAL PRONOUNCEMENTS. 13. THE FOLLOWING WERE THE JUDICIAL PRONOUNCEMENTS REFERRED TO IN THE GROUNDS OF APPEAL VIZ.: (1)ORDER DATED 30.09.2010 IN ITA NO.3390/2009 PASSE D BY ITAT G BENCH, MUMBAI IN THE CASE OF KRUNG THAI BANK WHEREIN IT WA S HELD THAT THE PROVISIONS OF SECTION 115 JB CAN ONLY COME INTO PLAY WHEN THE ASS ESSEE IS REQUIRED TO PREPARE ITS PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH THE PROV ISIONS OF PART II AND I II OF SCHEDULE VI TO THE COMPANIES ACT . THE STARTING POI NT OF COMPUTATION OF MINIMUM ALTERNATE TAX UNDER SECTION 115 JB IS THE RESULT SH OWN BY SUCH A PROFIT AND LOSS ACCOUNT. IN THE CASE OF BANKING COMPANIES, HOWEVER, THE PROVISIONS OF SCHEDULE VI ARE NOT APPLICABLE IN VIEW OF EXEMPTION SET OUT UND ER PROVISO TO SECTION 211 (2) OF THE COMPANIES ACT . THE FINAL ACCOUNTS OF THE BANKING C OMPANIES ARE REQUIRED TO BE PREPARED IN ACCORDANCE WITH THE PROVISIONS OF THE B ANKING REGULATION ACT . THE PROVISIONS OF SECTION 115 JB CANNOT THUS BE APPLIED TO THE CASE OF A BANKING COMPANY. (2)ORDER DATED 30.06.2011 IN ITA NOS.4702 TO 4706/2 010 PASSED BY THE ITAT, MUMBAI F BENCH IN THE CASE OF UNION BANK OF INDIA ; AND (3)ORDER DATED 03.08.2011 IN ITA NO.469/2010 PASSED BY THE ITAT C BENCH, CHENNAI IN THE CASE OF INDIAN BANK, ITA NO.1460/KOL/2013 ALLAHABAD BANK A.YR.2003-04 8 14. THE CIT(APPEALS) AFTER MAKING A REFERENCE TO T HE LEGISLATIVE HISTORY OF THE PROVISIONS OF SEC.115JB OF THE ACT WAS OF THE VIEW THAT IN THE LIGHT OF THE PURPOSE FOR WHICH PROVISIONS OF SEC.115JB OF THE ACT WERE INTRO DUCED, IT CANNOT BE SAID THAT THE PROVISIONS OF SEC.115JB OF THE ACT ARE NOT APPLICAB LE TO BANKING COMPANIES. 15. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE REI TERATED SUBMISSIONS AS WERE MADE BEFORE THE LEARNED CIT(A). THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE PROVISIONS OF SEC.115JB OF THE ACT WERE AMENDED WITH EFFECT FROM 01.04.2013 MAKING IT OBLIGATORY, INTER ALIA , FOR BANKS TO PREPARE P & L ACCOUNT IN ACCORDANCE WITH THE BANKING REGULATION ACT IS CLEARLY INDICATI VE OF LEGISLATIVE UNDERSTANDING THAT UPTO AND INCLUDING A.Y. 2012-13, SECTION 115JB HAD NO APPLICATION TO BANKS AND INSURANCE COMPANIES. IT WAS SO HELD BY ITAT, HYDER ABAD IN THE CASE OF STATE BANK OF HYDERABAD DATED 07.09.2013 IN ITA NO. 578/HYD/2010 AND ITAT MUMBAI IN THE CASE OF ICICI LOMBARD GENERAL INSURANCE CO. LTD. DATED 10. 10.2012 IN ITA NO.2398/MUM/2009. THE LEARNED DR RELIED ON THE ORDER OF THE CIT(A). 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE. WE FIND THAT THIS ISSUE WAS CONSIDERED BY THE MUMBA I BENCH OF THE TRIBUNAL IN THE CASE OF KRUNG THAI BANK (SUPRA) AND ON THE ABOVE ISSUE HELD AS FOLLOWS:- 5. LEARNED COUNSEL FOR THE ASSESSEE, HOWEVER, CONT ENDS THAT THE PROVISIONS OF MAT DO NOT APPLY TO THE ASSESSEE, AND , FOR THIS REASON, V ERY FOUNDATION OF IMPUGNED REASSESSMENT PROCEEDINGS IS DEVOID OF LEGALLY SUSTA INABLE MERITS. HIS LINE OF REASONING IS THIS. THE PROVISIONS OF MAT CAN COME INTO PLAY O NLY WHEN THE ASSESSEE PREPARES ITS PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH SCHEDULE VI TO THE COMPANIES ACT .IT IS POINTED OUT THAT , IN TERMS OF THE PROVISIONS OF SE CTION 115JB(2),EVERY ASSESSEE IS REQUIRED TO PREPARE ITS PROFIT AND LOSS ACCOUNT IN TERMS OF THE PROVISIONS OF PART II AND II I OF SCHEDULE VI TO THE COMPANIES ACT . UNLESS T HE PROFIT AND LOSS IS SO PREPARED, THE PROVISIONS OF SECTION 115 JB CANNOT COME INTO PLAY AT ALL. HOWEVER, THE ASSESSEE IS A BANKING COMPANY AND UNDER PROVISO TO SECTION 211 (2 ) OF THE ACT , THE ASSESSEE IS EXEMPTED FROM PREPARING ITS BOOKS OF ACCOUNTS IN TE RMS OF REQUIREMENTS OF SCHEDULE VI TO THE COMPANIES ACT , AND THE ASSESSEE IS TO PREPA RE ITS BOOKS OF ACCOUNTS IN TERMS OF THE PROVISIONS OF BANKING REGULATION ACT . IT IS TH US CONTENDED THAT THE PROVISIONS OF SECTION 115 JB DO NOT APPLY IN THE CASE OF BANKING COMPANIES WHICH ARE NOT REQUIRED TO PREPARE THE PROFIT AND LOSS ACCOUNT AS PER THE REQU IREMENTS OF PART II AND III OF SCHEDULE VI TO THE COMPANIES ACT . SINCE THE PROVI SIONS OF SECTION 115 JB DO NOT APPLY TO THE ASSESSEE COMPANY, THE REASONS RECORDED FOR R EOPENING THE ASSESSMENT ARE CLEARLY ITA NO.1460/KOL/2013 ALLAHABAD BANK A.YR.2003-04 9 WRONG AND INSUFFICIENT . WE ARE URGED TO QUASH THE REASSESSMENT PROCEEDINGS ON THIS SHORT GROUND. 6. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, VEHEMENTLY RELIES UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITS THAT TH ERE IS NO SPECIFIC EXCLUSION CLAUSE FOR THE BANKING COMPANIES, AND IN THE ABSENCE OF SUCH A CLAUSE, IT IS NOT OPEN TO US TO INFER THE SAME. THE SUBMISSIONS OF THE LEARNED COUNSEL, A CCORDING TO THE DEPARTMENTAL REPRESENTATIVE, ARE CLEARLY CONTRARY TO THE LEGISLA TIVE INTENT AND PLAIN WORDINGS OF THE STATUTE. 7. THE PLEA OF THE ASSESSEE IS INDEED WELL TAKEN, AND IT MEETS OUR APPROVAL. THE PROVISIONS OF SECTION 115 JB CAN ONLY COME INTO PLA Y WHEN THE ASSESSEE IS REQUIRED TO PREPARE ITS PROFIT AND LOSS ACCOUNT IN ACCORDANCE W ITH THE PROVISIONS OF PART II AND I II OF SCHEDULE VI TO THE COMPANIES ACT . THE STARTING POINT OF COMPUTATION OF MINIMUM ALTERNATE TAX UNDER SECTION 115 JB IS THE RESULT SH OWN BY SUCH A PROFIT AND LOSS ACCOUNT. IN THE CASE OF BANKING COMPANIES, HOWEVER, THE PROV ISIONS OF SCHEDULE VI ARE NOT APPLICABLE IN VIEW OF EXEMPTION SET OUT UNDER PROVI SO TO SECTION 211 (2) OF THE COMPANIES ACT . THE FINAL ACCOUNTS OF THE BANKING C OMPANIES ARE REQUIRED TO BE PREPARED IN ACCORDANCE WITH THE PROVISIONS OF THE B ANKING REGULATION ACT . THE PROVISIONS OF SECTION 115 JB CANNOT THUS BE APPLIED TO THE CASE OF A BANKING COMPANY. 17. WE ARE OF THE VIEW THAT IN THE LIGHT OF THE DE CISION OF THE MUMBAI BENCH OF THE TRIBUNAL, WE HAVE TO NECESSARILY HOLD THAT PROVISIO NS OF SECTION 115JB OF THE ACT ARE NOT APPLICABLE TO THE ASSESSEE WHICH IS A BANKING C OMPANY. THE DECISIONS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE, CLEARLY SUPPOR T THE PLEA OF THE ASSESSEE IN THIS REGARD. CONSEQUENTLY, GROUND NO.6 & 7 RAISED BY T HE ASSESSEE ARE ALSO ALLOWED. IN VIEW OF THE DECISION ON GROUND NO.6 & & THE GRIEVAN CE PROJECTED IN GROUNDS NOS. 8 & 9 DO NOT REQUIRE ADJUDICATION AS THOSE GROUNDS ARE ON THE MANNER IN WHICH BOOK PROFITS U/S.115JB OF THE ACT WERE COMPUTED. THESE GROUNDS HAVE BECOME INFRUCTUOUS IN VIEW OF THE CONCLUSION ON GR.NO.6 & 7. 18. IN THE RESULT, APPEAL BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE COURT ON 06.04.2016. SD/- SD/- [M.BALAGANESH] [N.V.VASUDEVAN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 6.4.2016. R.G.(.P.S.) ITA NO.1460/KOL/2013 ALLAHABAD BANK A.YR.2003-04 10 COPY OF THE ORDER FORWARDED TO: 1. ALLAHABAD BANK, 2, N.S.ROAD, KOLKATA-700001. 2 THE D.C.I.T., CIRCLE-6, KOLKATA. 3. THE CIT-II, KOLKATA, 4. THE CIT(A) -VI, KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES