DCIT, Circle - 7, Kolkata V. Allahabad Bank, Kolkata

ITA 1633/KOL/2002

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4194 (ITAT-KOLKATA)
• Duration Of Justice: 14 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-11-2016
• Assessment Year: 1998-1999
• Appeal Filed On: 08-08-2002
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUHA
• Assessee Lawyers: B K GHOSH
• Keywords: Deemed to accrue or arise in india; Additional evidence; Bad and doubtful debts
• Section: 143(3); 115JB; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1633 / KOL / 2002 ASSESSMENT YEAR :1998-99 DCIT, CIRCLE-7, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, 5 TH FLOOR, KOLKATA V/S . ALLAHABAD BANK 2, N.S. ROAD, KOLKATA-700 001 [ PAN NO.AACCA 8464 F ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI G. MALLIKARJUHA, CIT-DR /BY RESPONDENT SHRI B.K. GHOSH, FCA /DATE OF HEARING 07-11-2016 /DATE OF PRONOUNCEMENT 18-11-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-VII, KOLKATA I N APPEAL NO.19/CIT(A)- VII/2001-02 DATED 31.05.2002. ASSESSMENT WAS FRAMED BY ADDL. CIT, SPL. RANGE-3, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 30.03.2008 FO R ASSESSMENT YEAR 1998-99. SHRI G. MALLIKARJUHA, LD. DEPARTMENTAL REPRESENTATI VE APPEARED ON BEHALF OF REVENUE AND SHRI B.K. GHOSH, LD. AUTHORIZED REPRESE NTATIVE APPEARED ON BEHALF OF ASSESSEE. ITA NO.1633/KOL/2002 A.Y.1998-99 DCIT, CIR-7 KOL. VS. ALLAHABAD BAN K PAGE 2 2. FIRST ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF 10,81,616/- MADE BY ASSESSING OFFICER ON ACCOUNT OF PRIOR PERIOD EXPENSE. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND:- (1) THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND IN FACTS IN DELETING THE DISALLOWANCE OF RS.10,81,616/- BEING EXPENSES PERTA INING TO EARLIER YEARS BY CONTRADICTING THE FINDING OF THE ASSESSING OFFICER THAT EARLIER YEARS EXPENSES WERE NOT ALLOWABLE WHEN THE ASSESSE E WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. 3. FACTS IN BRIEF ARE THAT ASSESSEE IN THE PRESENT CASE IS A SCHEDULED BANK AND ENGAGED IN BANKING BUSINESS. THE ASSESSEE IN TH E YEAR UNDER CONSIDERATION HAS CLAIMED CERTAIN EXPENSES FOR 10,81,616/-. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE SAID EXPENSES DO NOT PERTAIN TO THE YEAR UNDER CONSIDERATION AND ACC ORDINGLY HE DISALLOWED THE SAME BY ADDING TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO DELETED THE ADDITION MADE BY AO BY OBSERVING AS UND ER:- GROUND NO. 3: THIS GROUND IS DIRECTED AGAINST THE DISALLOWANCE OF EXPENSES OF RS.10,81,616/- PERTAINING TO EARLIER YE ARS. ON GOING THROUGH THE DETAILS OF THE EARLIER YEARS EXPENSES IT WAS NOTICED THAT THE AMOUNT OF RS.10,81,16/- INCLUDES SALARY AND ALLOWAN CE OF STAFFS, RENT AND TAXES, TRAVELLING AND CONVEYANCE, PRINTING AND STATIONARY, REPAIRS AND MAINTENANCE AND POSTAGE ETC., BILLS FOR WHICH W ERE RECEIVED IN THE SUBSEQUENT YEARS AND AS SUCH, THE LIABILITY TO PAY THESE EXPENSES WERE ASCERTAIN AND CRYSTALLIZED IN THE RELEVANT ASSESSME NT YEARS. THIS IDENTICAL ISSUE CAME UP FOR MY CONSIDERATION IN THE APPELLANTS APPEAL FOR ASSESSMENT YEARS 1995-96, 1996-97 AND 1997-98 I N APPEAL NO. 8/A- VII/2001-02,14/A-VII/2001-02, AND 21/A-VII/2001-02 RESPECTIVELY. FOLLOWING MY EARLIER DECISION IN THE MATTER I HOLD THAT THE CLAIM IS ADMISSIBLE A DEDUCTION. THE AO IS ACCORDINGLY DIREC TED TO ALLOW THIS CLAIM. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. ITA NO.1633/KOL/2002 A.Y.1998-99 DCIT, CIR-7 KOL. VS. ALLAHABAD BAN K PAGE 3 5. BEFORE US LD. DR SUBMITTED THAT THE EXPENSE CLAI MED BY ASSESSEE ARE IN THE NATURE OF REGULAR AND ROUTINE EXPENSES AND T HEREFORE IT CANNOT BE SAID THAT THESE EXPENSES WERE CRYSTALLIZED AND ASCERTAIN ING IN THE YEAR UNDER CONSIDERATION. THE LD. DR RELIED ON THE ORDER OF HO NBLE ITAT MUMBAI IN THE CASE OF TIPCO INDUSTRIES LTD. VS. ACIT IN ITA NO. 5708/MUM/2009 VIDE ITS ORDER DATED 3.8.2012. LD. DR LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. ON THE OTHER HAND, LD. AR SUBMITTED THAT THESE EXPE NSES WERE CRYSTALLIZED IN THE YEAR UNDER CONSIDERATION. THE LD. AR FURTHER SU BMITTED THAT IN THE EARLIER YEARS ON THE IDENTICAL FACTS IN ASSESSEES OWN CASE LD. CIT(A) DELETED THE ADDITION. THEREFORE, THIS YEAR ALSO DISALLOWANCE MA DE BY AO DESERVES TO BE DELETED. HE VEHEMENTLY RELIED ON THE ORDER OF LD. C IT(A). 6. WE HAVE GONE THROUGH THE SUBMISSION MADE BY BOTH THE SIDES AND ORDER OF THE LOWER AUTHORITIES ALONG WITH THE MATER IALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION WE FIND THAT THE ASSE SSEE HAS CLAIMED PRIOR PERIOD EXPENSES IN THE YEAR UNDER CONSIDERATION BUT THE SAME WAS DISALLOWED BY THE AO. HOWEVER THE LD. CIT(A) DELETED THE ADDIT ION BY OBSERVING THAT PRIOR PERIOD EXPENSES WERE ASCERTAINED AND CRYSTALLIZED I N THE YEAR UNDER CONSIDERATION. THE LD. CIT(A) ALSO OBSERVED THAT IN THE EARLIER ASSESSMENT YEARS 1995-96, 1996-97 & 1997-98 THE RELIEF WAS PRO VIDED BY HIS PREDECESSOR IN THE IDENTICAL ISSUES. IN THE CASE ON HAND THE LD . CIT(A) HAS GIVEN CLEAR CUT FINDING THAT THE PRIOR PERIOD EXPENSES WERE CRYSTAL LIZED IN THE YEAR UNDER CONSIDERATION. THE LD. DR BEFORE US HAS NOT BROUGHT ANYTHING ON RECORD TO COUNTER THE FINDINGS OF THE LD. CIT(A). WE ALSO FIN D THAT THE LD. CIT(A) HAS ALLOWED THE APPEAL IN FAVOR OF THE ASSESSEE ON THE GROUND THAT IN THE EARLIER YEARS THE PRIOR YEAR EXPENSES WERE ALLOWED. THEREFO RE IN OUR CONSIDERED VIEW WE ARE NOT INCLINED TO DISAGREE WITH THE REASONING OF THE LD. CIT(A). IT IS SETTLED LAW THAT THE DEDUCTIONS CAN BE PERMITTED IN RESPECT OF ONLY THOSE EXPENSES WHICH ARE INCURRED IN THE RELEVANT ACCOUNTING YEAR FOR THE PURPOSE OF ITA NO.1633/KOL/2002 A.Y.1998-99 DCIT, CIR-7 KOL. VS. ALLAHABAD BAN K PAGE 4 COMPUTING YEARLY PROFITS AND GAINS. BUT THE EXPENSE S CRYSTALLIZED IN PARTICULAR YEAR WILL BE ALLOWED IN THAT YEAR ONLY IRRESPECTIVE OF THE FACT THESE WERE PERTAINING TO THE EARLIER YEARS. WE ACCORDINGLY ARE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE OF EXPENSES PERTAINING TO PRIOR PERIOD IS ALLOWED. IN VIEW OF ABOVE, WE HAVE NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). HENCE THE GROUND RAISED BY THE REVENUE IS DISMISSED. 7. NEXT ISSUE RAISED BY REVENUE IN THIS APPEAL IS T HAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO FOR 1 CRORE ON ACCOUNT OF CONVERSION OF NON-PERFORMANCE (NPA FOR SHORT) TO PERFORMING ASSET (PA FOR SHORT) BY ADMITTING THE ADDITIONAL EVIDENCE IN CONTRAVENTION TO THE RULE 46A OF THE IT RULES,1962 (THE RULE FOR SHORT). 8. THE ASSESSEE IS COVERED UNDER THE PROVISION OF S EC. 36(1)(VIIA) AND ACCORDINGLY IT IS CLAIMING THE DEDUCTION IN RESPECT OF PROVISION AGAINST THE NPA ON YEAR-TO-YEAR BASIS. THE AO ACCORDINGLY, OBSERVED THAT THE PROVISION CREDITED IN EARLIER YEARS IN RESPECT OF NPA SHOULD BE OFFERED TO TAX WHEN SUCH NPA BECOMES PA. ACCORDINGLY, AO DURING THE COURSE O F ASSESSMENT PROCEEDINGS REQUESTED THE ASSESSEE TO FURNISH THE D ETAILS OF THE PROVISION WRITTEN BACK IN RESPECT OF NPA CONVERTED TO PA IN T HE YEAR UNDER CONSIDERATION. THE ASSESSEE FAILED TO FILE ANY DETA ILS IN THIS CONNECTION. IN THE ABSENCE OF ANY INFORMATION, AO HAS ADDED THE PROVIS ION IN RESPECT OF NPA CONVERTED TO PA FOR 1CRORES ON AD HOC BASIS AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 9. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO HAS DELETED THE ADDITION MADE BY AO BY OBSERVING AS UND ER:- GROUND NOS. 6 TO 6.2: THESE GROUNDS ARE DIRECTED A GAINST THE AD HOC ADDITION OF RS.1,00,00,000/- ON THE ALLEGED GROUND OF NPA CONVERTING ITA NO.1633/KOL/2002 A.Y.1998-99 DCIT, CIR-7 KOL. VS. ALLAHABAD BAN K PAGE 5 INTO PA. FOLLOWING MY EARLIER DECISIONS ON THE SAME ISSUE IN THE IMMEDIATELY PRECEDING THREE YEARS APPEAL, I HOLD TH AT THIS AD HOC ADDITION IS NOT SUSTAINABLE IN LAW. ACCORDINGLY, TH E AO IS DIRECTED TO DELETE THE ADDITION. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 10. BEFORE US BOTH PARTIES RELIED ON THE ORDER OF A UTHORITIES BELOW AS FAVOURABLE TO THEM. 11. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. WE FIND THAT THE ASSESSING OFFICER HAS MA DE THE IMPUGNED DISALLOWANCE ON THE SHORT GROUND THAT THE ASSESSEE HAS FAILED TO PROVIDE THE DETAILS IN RESPECT TO THE PROVISIONS WR ITTEN BACK WITH REGARD TO THE CONVERSION OF NON-PERFORMING ASSETS INTO PERFORMING ASSETS IN THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAS CLAIMED THE DEDUCTI ON IN THE EARLIER YEARS UNDER THE PROVISIONS OF SECTION 36(1)(VIIA) IN RESP ECT TO THE PROVISIONS FOR BAD DEBTS ON YEAR TO YEAR BASIS. BUT EVERY YEAR SOME NP A MUST BE BECOMING PA AND THEREFORE THE ASSETS WHICH HAS BECOME PA THEN T HE PROVISIONS IN RELATION TO SUCH ASSETS SHOULD BE OFFERED TO TAX AS THE ASSE SSEE HAS ALREADY CLAIMED THE DEDUCTION UNDER SECTION 36(1)(VIIA) IN RESPECT TO SUCH ASSETS. HOWEVER THE LD. CIT(A) HAS DELETED THE ADDITION BY OBSERVING TH AT THE ADDITION WAS MADE ON ADHOC BASIS AND IN IDENTICAL CASE OF THE ASSESSE E OF THE EARLIER YEARS SUCH ADDITION WAS DELETED BY HIS PREDECESSOR. NOW THE IS SUE BEFORE US ARISES FOR THE CONSIDERATION WHETHER THE ACTION OF THE CIT(A) DELETING THE ADDITION IS CORRECT IN THE AFORESAID FACTS & CIRCUMSTANCES. AT THE OUTSET WE FIND THAT THE ADDITION WAS MADE ON ADHOC BASIS BY THE AO ON HIS O WN PREMISE AND CONJUNCTURE. THE ASSESSEE CLAIMED THE DEDUCTION IN TERMS OF THE PROVISIONS OF SECTION 36(1)(VIIA) OF THE ACT AND NO DEFECT WAS PO INTED OUT BY THE AO IN THE CLAIM OF THE ASSESSEE. THE CALCULATION FOR THE DEDU CTION UNDER RULE 6ABA OF ITA NO.1633/KOL/2002 A.Y.1998-99 DCIT, CIR-7 KOL. VS. ALLAHABAD BAN K PAGE 6 INCOME TAX RULES WAS PROVIDED. THE AO DID NOT BRING ANY DEFECT IN THE CALCULATION OF THE DEDUCTION BUT THE AO HAS MADE TH E ADDITION ON ADHOC BASIS. WE ALSO FIND THE REVENUE HAS CHALLENGED THE LD. CIT (A) ORDER ON THE GROUND THAT THE RELIEF WAS PROVIDED ON THE BASIS OF ADDITI ONAL DOCUMENT/ EVIDENCE BUT THE SAME WERE ACCEPTED IN CONTRAVENTION TO THE INCO ME TAX RULES 46A OF THE ACT. BUT FROM THE PERUSAL OF THE ORDER WE FIND THAT NO SUCH ADDITIONAL EVIDENCE WAS SUBMITTED. THEREFORE IN OUR CONSIDERED VIEW THE GROUND OF REVENUE IS NOT A VALID GROUND AS THE ISSUE RAISED BY THE REVENUE I S NOT ARISING FROM THE ORDER OF LD. CIT(A). IN SUCH CIRCUMSTANCES, A PURELY ADHO C DISALLOWANCE ON THE BASIS SURMISE AND CONJUNCTURE IS WHOLLY UNCALLED FOR. WE ARE UNABLE TO SEE ANY MERITS IN THIS SAME. IT IS NOT REALLY NECESSARY, TH EREFORE, TO DEAL WITH THAT ASPECT OF THE MATTER. SUFFICE TO SAY THAT WE DISAPP ROVE THE ACTION OF THE AO AND CONFIRM THE RELIEF GRANTED BY THE CIT(A). IN OU R CONSIDERED VIEW, WE UPHOLD THE ORDER OF LD. CIT(A). HENCE, THE GROUND R AISED BY REVENUE IS DISMISSED. 12. NEXT ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN ALLOWING THE DEDUCTION IN RESPECT OF PROVISION FOR BAD DEBTS AMOUNTING TO 62,77,00635/- U/S 36(1)(VIIA) OF THE ACT AS THE PRO VISION FOR BAD DEBT IN RESPECT OF AVERAGE AGGREGATING RURAL ADVANCES. 13. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT ASSESSEE HAS FILED ITS RETURN OF INCOME DECLARING L OSS AND THEREFORE, IT WAS NOT ENTITLED THE BENEFIT FOR THE AFORESAID DEDUCTION. A S PER AO, ASSESSEE IS ENTITLED TO CLAIM 5% OF THE TOTAL INCOME OR 10% OF THE AGGREGATE AVERAGE ADVANCE OF THE RURAL BRANCHES IN RESPECT OF PROVISI ON FOR DOUBTFUL DEBTS AS SPECIFIED U/S 36(1)(VIIA) OF THE ACT. THE AO FURTHE R OBSERVED THAT ASSESSEE IS ENTITLED FOR DEDUCTION TOWARDS THE PROVISION FOR DO UBTFUL DEBTS EITHER 5% OF TOTAL INCOME OR 10% OF AGGREGATING RURAL ADVANCE. A S IN THE PRESENT CASE, AS HAS FILED INCOME DECLARING AT LOSS. THEREFORE, THE LIMIT OF 5% OF TOTAL INCOME ITA NO.1633/KOL/2002 A.Y.1998-99 DCIT, CIR-7 KOL. VS. ALLAHABAD BAN K PAGE 7 CANNOT BE WORKED OUT AND AS PER THE INTERPRETATION OF THE PROVISIONS OF ACT LEAST OF THE TOO IS ALLOWED. HENCE, NO DEDUCTION IS AVAILABLE TO THE ASSESSEE U/S 36(1)(VIIA) OF THE ACT. 14. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO DELETED THE ADDITION MADE BY AO BY OBSERVING AS UND ER:- GROUNDS NO. 7 TO 7.3: THESE GROUNDS ARE DIRECTED A GAINST THE DISALLOWANCE OF THE APPELLANTS CLAIM OF RS.62,77,0 0,635/- U/S 36(1)(VIIA) OF THE INCOME-TAX ACT. SIMILAR ISSUE CAME UP FOR MY CONSIDERATION IN THE APPELLANTS APPEAL FOR THE IMMEDIATELY PRECEDING TH REE ASSESSMENT YEARS IN WHICH I HAVE DECIDED THE CLAIM IN FAVOUR O F THE APPELLANT. FOLLOWING MY EARLIER YEARS DECISIONS, IN THE MATTE R, I ALLOW THE APPELLANTS CLAIM OF DEDUCTION OF RS.62,77,00,635/- U/S. 36(1)(VIIA) OF THE INCOME-TAX ACT. THE AO IS ACCORDINGLY DIRECTED TO A LLOW THE CLAIM OF RS.62,77,00,635/- U/S 36(1)(VIIA) OF THE INCOME-TAX ACT. 15. BEFORE US LD. DR VEHEMENTLY RELIED ON THE ORDER OF AO WHEREAS LD. AR RELIED ON THE ORDER OF LD. CIT(A). 16. WE HAVE GONE THROUGH THE SUBMISSION MADE BY BOT H THE SIDES AND ORDER OF THE LOWER AUTHORITIES ALONG WITH THE MATER IALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION WE FIND THAT THE ASSE SSEE HAS DECLARED THE RETURN OF INCOME AT LOSS. ACCORDINGLY THE AO WAS OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 36 (1)(VIIA) OF THE ACT EITHER @ 5% OF THE INCOME OR 10% OF THE RURAL ADVANCE WHICHE VER IS LESS. AS THERE IS NO INCOME DECLARED BY THE ASSESSEE AND THEREFORE NO DEDUCTION IS AVAILABLE TO THE ASSESSEE UNDER SECTION 36(1)(VIIA) OF THE AC T. BUT THE LD. CIT(A) HAS REVERSED THE ORDER OF THE AO. NOW THE ISSUE BEFORE US ARISES SO AS TO WHETHER THE ACTION OF THE CIT(A) DELETING THE ADDITION IS C ORRECT IN THE AFORESAID FACTS & CIRCUMSTANCES. AT THIS JUNCTURE WE FIND RELEVANT TO REPRODUCE THE PROVISIONS OF SECTION 36(1)(VIIA) OF THE ACT WHICH READS AS UNDER :- ITA NO.1633/KOL/2002 A.Y.1998-99 DCIT, CIR-7 KOL. VS. ALLAHABAD BAN K PAGE 8 36.(1) THE DEDUCTIONS PROVIDED FOR IN THE FOLLOWIN G CLAUSES SHALL BE ALLOWED IN RESPECT OF THE MATTES DEALT WITH THEREIN , IN COMPUTING THE INCOME REFERRED TO IN SECTION 28- (I) . (II) (III) (IV) (V) .. (VI) [(VIIA) [IN RESPECT OF ANY PROVISION FOR BAD AND D OUBTFUL DEBTS MADE BY- (A) A SCHEDULED BANK [NOT BEING [***] A BANK INCORP ORATED BY OR UNDER THE LAWS OF A COUNTRY OUTSIDE INDIA] OR A NON -SCHEDULED BANK [OR A CO-OPERATIVE BANK OTHER THAN A PRIMARY A GRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTUR AL AND RURAL DEVELOPMENT BANK], AN AMOUNT [NOT EXCEEDING SEVEN A ND ONE-HALF PER CENT] OF THE TOTAL INCOME ((COMPUTED B EFORE MAKING ANY DEDUCTION UNDER THIS CLAUSE AND CHAPTER VIA) AND AN AMOUNT NOT EXCEEDING [TEN] PER CENT OF THE A GGREGATE AVERAGE ADVANCES NOT MADE BY THE RURAL BRANCHES OF SUCH BANK COMPUTED IN THE PRESCRIBED MANNER: FROM THE ABOVE PROVISION, WE FIND THAT THE ASSESSEE IS ENTITLED FOR BOTH THE DEDUCTION IN PURSUANCE TO THE PROVISIONS OF SECTION 36(1)(VIIA) OF THE ACT. HENCE, WE UPHOLD THE ORDER OF LD. CIT(A) AND THE GR OUND RAISED BY THE REVENUE IS DISMISSED. 17. LAST ISSUE RAISED BY REVENUE IN GROUND NO. 4 & 5 THIS APPEAL IS THAT LD. CIT(A) ERRED IN GIVING RELIEF TO ASSESSEE IN COMPUT ING THE BOOK PROFIT U/S. 115JA OF THE ACT. 18. AT THE OUTSET, WE FIND THE PROVISIONS OF SECTIO N 115JB OF THE ACT ARE NOT APPLICABLE TO THE BANKING COMPANIES. THE ASSESSEE W AS ESTABLISHED UNDER THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1970. THE ASSESSEE IS NEITHER A ' COMPANY ' REGISTERED UNDER COMPANIES ACT, 1956 ITA NO.1633/KOL/2002 A.Y.1998-99 DCIT, CIR-7 KOL. VS. ALLAHABAD BAN K PAGE 9 NOR IS IT AN EXISTING COMPANY REGISTERED UNDER THE ACT SPECIFIED IN CLAUSE (II) OF SECTION 3(1) OF THE COMPANIES ACT, 1956. IN THE CIRCUMSTANCES, EVEN THOUGH THE ASSESSEE IS ASSESSED IN THE STATUS OF A ' COMPANY ' FOR TAX PURPOSES, IT IS NOT A ' COMPANY ' WITHIN THE MEANING ASSIGNED TO THAT EXPRESSION BY SECTION 3 OF THE COMPANIES ACT, 1956. THE NEWLY INSERTED EXPLANATION 3 TO SECTION 115JB AMPLIFIES THE INTENTION OF THE LEGISLATURE AND CATEGORICALLY CLARIFIES THAT THE AS SESSEES TO WHICH SECTION 115JB IS APPLICABLE ARE ONLY THOSE WHO ARE ' COMPANIES ' TO WHICH PROVISO TO SUB-SECTION (2) OF SECTION 211 OF THE COMPANIES ACT , 1956 IS APPLICABLE AND NOT TO ASSESSEES WHICH ARE ASSESSED IN THE STATUS O F ' COMPANY ' FOR TAX PURPOSES. TO ILLUSTRATE THIS POINT, IT MAY BE STATE D THAT HDFC BANK LTD, KOTAK MAHINDRA BANK LTD ETC. ARE ' BANKING COMPANIES ' AS DEFINED IN SECTION 5(C) & (D) OF BANKING REGULATION ACT, 1949. THESE BANKING COMPANIES ARE INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT, 1956. THESE ASSESSEES CARRY ON BUSINESS OF BANKING. AS SUCH PROVISO TO SE CTION 211(2) IS APPLICABLE TO THESE BANKING COMPANIES AND, THEREFORE, THESE BA NKING COMPANIES PREPARE THEIR ACCOUNTS IN CONFORMITY WITH SCHEDULE II OF BA NKING REGULATION ACT, 1949. BY VIRTUE OF EXPLANATION 3 TO SECTION 115JB, SUCH BANKING COMPANIES ARE RETROACTIVELY MADE LIABLE TO PAY TAX ON THE DEEMED INCOME COMPUTABLE WITH RESPECT TO NET PROFIT AS DISCLOSED BY PROFIT AND LO SS ACCOUNT PREPARED BY SUCH BANKING COMPANIES IN CONFORMITY WITH THE PROVISIONS OF BANKING REGULATION ACT, 1949. IN THIS CONNECTION WE RELY IN THE ORDER OF HONBLE ITAT IN THE CASE OF UCO BANK VS . DEPUTY COMMISSIONER OF INCOME-TAX , CIRLCLE-6, KOLKATA 1768 (KOL) OF 2009 VIDE ORDER DATED NOVEMBER 27, 2 015. THE HEAD NOTE READS AS UNDER : SECTION 115JB OF THE INCOME-TAX ACT, 1961, READ WI TH SECTION 211 OF THE COMPANIES ACT, 1956 - MINIMUM ALTERNATE TAX (BANKIN G COMPANIES) - ASSESSMENT YEAR 2002-03 - WHETHER SECTION 115JB IS APPLICABLE ONLY TO ENTITIES REGISTERED AND RECOGNIZED TO BE COMPANIES UNDER COMPANIES ACT, 1956 AND NOT TO ASSESSEES WHICH ARE ASSESSED IN STA TUS OF 'COMPANY' FOR PURPOSE OF TAX - HELD, YES - WHETHER WHERE ASSESSEE WAS A BANKING COMPANY AND NOT A COMPANY WITHIN MEANING OF COMPANIES ACT, 1956, PROVISO TO SUB- SECTION (2) OF SECTION 211 WOULD NOT BE APPLICABLE AND, THEREFORE, ITA NO.1633/KOL/2002 A.Y.1998-99 DCIT, CIR-7 KOL. VS. ALLAHABAD BAN K PAGE 10 CONSEQUENTLY PROVISIONS OF SECTION 115JB WOULD ALSO NOT BE APPLICABLE - HELD, YES - WHETHER AMENDMENT BROUGHT ABOUT IN SECTION 11 5JB VIDE FINANCE ACT 2012, TO BRING ALL COMPANIES (INCLUDING BANKING COMPANIES) WITHIN ITS AMBIT WITH EFFECT FROM 1-4-2013 IS APPLI CABLE ONLY WITH EFFECT FROM ASSESSMENT YEAR 2013-14 ONWARDS - HELD, YES IN VIEW OF ABOVE, WE HOLD THAT THE PROVISIONS OF SE CTION 115JB ARE NOT APPLICABLE TO THE BANKING COMPANIES. THEREFORE THE GROUNDS RAISED BY THE REVENUE DO NOT REQUIRE ANY ADJUDICATION. HENCE BOTH THE GROUNDS RAISED BY REVENUE ARE DISMISSED. 19. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 18/ 11/2016 SD/- SD/- ( !') ( !') (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S $!% &- 18 / 11 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT, CIRCLE-7, P-7, CHOWRINGHEE SQ., AA YAKAR BHAWAN, 5 TH FL, KOL-69 2. /RESPONDENT-ALLAHABAD BANK, 2, N.S. ROAD, KOLKATA-0 1 3. %.%/0 1 1 2 / CONCERNED CIT KOLKATA 4. 1 1 2- / CIT (A) KOLKATA 5. 567 /0, 1 /0 , / DR, ITAT, KOLKATA 6. 7:; <= / GUARD FILE. BY ORDER/ 1! , /TRUE COPY/ / % 1 /0 ,