M/s. The Kozhikkode District Co-op Bank Ltd, Calicut V. The ACIT, Calicut

ITA 168/COCH/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96799 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 10-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Assessee Lawyers: P BALAGOPAL
• Keywords: Bad and doubtful debts

Judgement Text

ITA NO S 168 & 169/C/2015 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & G EORGE GEORGE.K , J M ITA NO S . 168 & 169/COCH/2015 (ASST YEAR S 2008 - 09 & 2009 - 10) THE KOZHIKODE DIST COOP BANK LTD HEAD OFFICE KALLAI ROAD KOZHIKODE 673 002 VS THE ASST COMMR OF INCOME TAX CIRCLE 1(1), KOZHIKODE ( APPELLANT) (RESPONDENT) PAN NO. AABAT 2984J ASSESSEE BY SHRI P BALAGOPAL REVENUE BY SHRI K P GOPAKUMAR, SR DR DATE OF HEARING 16 TH NOV 2015 DATE OF PRONOUNCEMENT 19 TH , NOV 2015 OR D ER PER G EORGE GEORGE. K. J M: THESE TWO APPEALS, AT THE INSTANCE OF THE ASSESSEE, ARE DIRECTED AGAINST SEPARATE ORDERS OF THE CIT(A), BOTH DATED 2.12.2014. THE RELEVANT ASSESSMENT YEARS ARE 2008 - 09 AND 2009 - 10. 2 IDENTICAL FOUR GROUNDS ARE RAISED IN THESE APPEA LS. GROUND NO. 1 GENERAL IN NATURE AND NO SPECIFIC ADJUDICATION IS CALLED FOR AND HENCE, THE SAME IS REJECTED. IN GROUND NO.2, THE ASSESSEE IS AGGRIEVED BY THE CIT(A)S ACTION IN CONFIRMING THE DISALLOWANCE MADE BY THE AO OF THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 36(1)(VIIA) OF AN AMOUNT NOT EXCEEDING10% OF THE AGGREGATE ITA NO S 168 & 169/C/2015 2 AVERAGE ADVANCES MADE BY THE RURAL BRANCHES. GROUND NO.3 & 4 RELATE TO THE ISSUE , WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF CLAIM OF THE ASSESSEE FOR DED UCTION U/S 36(1)(VIIA) OF AN AMOUNT NOT EXCEEDING 7.5% OF THE TOTAL INCOME. 3 BRIEF FACTS IN RELATION TO THE GROUND NO.2 ARE AS FOLLOWS: THE ASSESSEE IS A CO - OPERATIVE BANK ENGAGED IN THE BANKING BUSINESS. THE ASSESSEE, INER - ALIA MADE THE FOLLOWING PROVISIONS IN THE BOOKS OF ACCOUNT FOR BAD & DOUBTFUL DEBTS: AY 2008 - 09 RS. 5,14,62,918/ - AY 2009 - 10 RS. 5,64,26,516/ - 3.1 THE ASSESSEE CLAIMED DEDUCTION U/S 36(1)(VIIA) OF 7.5% OF THE TOTAL INCOME AND 10% OF THE TOTAL RURAL ADVANCES AS UNDER : AY 2008 - 09 7.5% OF TOTAL INCOME RS. 51,26,056 / - 10% OF TOTAL RURAL ADVANCES RS. 40,40,84,861/ - TOTAL RS. 40,92,10.,917/ - AY 2009 - 1 0 7.5% OF TOTAL INCOME RS. 88,02,917/ - 10% OF TOTAL RURAL ADVANCES RS. 47,98,02,891 / - TOTAL RS. 48,86,05,808/ - 3.2 HOWEVER, IN THE ASSESSMENT ORDERS FOR THE RESPECTIVE ASSESSMENT YEARS, THE CLAIM MADE WAS LIMITED TO THE EXTENT OF THE PROVISION MADE OF BAD DEBTS AS UNDER: ITA NO S 168 & 169/C/2015 3 AY 2008 - 09 RS 5,14,62,918/ - AY 2009 - 10 RS 5,64,26,516/ - 3.3 THE AO DISALLOWED THE ABOVE CLAIMS QUOTING THE JUDGMENT OF THE HONBLE KE RALA HIGH COURT IN THE CASE OF LORD KRISHNA BANK IN ITA NO. 234 OF 2009. THE RELEVANT OBSERVATIONS OF THE AO FOR THE AY 2008 - 09 FOR READY REFERENCE, IS REPRODUCED BELOW: 4.1 RURAL ADVANCES AS CONSIDERED BY THE ASSESSEE IS RS 404,08,48,610/ - . IT WAS EXPLA INED BY THE ASSESSEE THAT IN COMPUTING THE AMOUNT OF RURAL ADVANCES, THEY HAVE TAKEN INTO CONSIDERATION THE ADVANCES MADE BY25 BRANCHES WHICH THE BANK CLASSIFIED AS RURAL BRANCHES, ON THE BASIS THAT THE POPULATION OF THE PLACE (WHERE THE BRANCH IS LOCATED) IS NOT MORE THAN 1000 ACCORDING TO THE LAST PRECEDING CENSUS. FOR THIS PURPOSE THE BANK INTERPRETED THE TERM PLACEAS WARD. THE TERM PLACE IN THE DEFINITION OF RURAL BRANCHES IN SECTION 36(1)(VIIA) SHOULD BE INTERPRETED AS REFERRING TO VILLAGE. THIS HA S BEEN WELL ESTABLISHED BY THE ORDER OF THE HONBLE HIGH COURT OF KERALA IN CIT VS THE LORD KRISHNA BANK LTD REPORTED IN ITA NO.234 OF 2009. ON EXAMINATION O F THE BRANCHES CLASSIFIED AS RURAL BRANCHES BY THE ASSESSEE, IT IS OBSERVED THAT ALL OF THEM ARE L OCATED IN PLACES (GRAMAPANCHAYAT) HAVING POPULATION OF MORE THAN 10000 AS PER THE RELEVANT CENSUS. HENCE AGGREGATE AVERAGE ADVANCE MADE BY THE RURAL BRANCHES OF THE BANK IS NIL GOING BY THE EXPLANATION (IA) TO 36(1)(VIIA) 4 AGGRIEVED, THE ASSESSEE PREFE RRED APPEAL TO THE FIRST APPELLATE AUTHORITY. THE FIRST APPELLATE AUTHORITY CONFIRMED THE ACTION OF THE AO 3.1 WITH REGARD TO DEDUCTION AT THE RATE OF 10% OF AGGREGATE AVERAGE ADVANCE MADE BY THE RURAL BRANCHES, THOUGH THIS CASE IS COVERED BY THE DECIS I O NS OF KERALA HIGH COURT IN THE CASE OF CIT VS LORD KRISHNA BANK LTD, 339 ITR 606 AND JURISDICTIONAL ITAT'S DECISION IN THE CASE OF KANNUR D I STRICT CO - OPERATIVE BANK LTD VS ACIT 136 ITR 102, STILL IT WAS CONTENTED BY THE ID COUN SEL THAT THE WORD (PLACE' AP PEARING IN THE EXPLANATION (IA) TO CLAUSE (VIIA) OF SECTION 36(1) HAS NOT BEEN DEFINED IN THE INCOME TAX ACT AND THAT THE WARD' BEING THE SMALLEST UNIT IN THE DISTRICT ADMINISTRATION, THE LEGISLATURE MAY HAVE INTENDED THE WORD PLACE' IN THE EXPLANATION T O MEAN WARD' WHICH HAVE POPULATION OF NOT MORE THAN TEN ITA NO S 168 & 169/C/2015 4 THOUSAND AND THEIR CLAIM MAY BE ALLOWED . HOWEVER, IN VIEW OF THE BINDING DECISIONS OF HON'BLE KERALA HIGH COURT IN THE CASE OF CIT VS LORD KRISHNA BANK LTD (SUPRA) AND THE HON'BLE JURISDICTIONAL TR IBUNAL IN T HE CASE OF KANNUR DISTRICT CO - OPERATIVE BANK LTD (SUPRA), I AM UNABLE TO ACCEPT THE CONTENTION OF THE ID COUNSEL, AND THE DISALLOWANCE OF DEDUCTION AT THE RA TE OF 10% OF AGGREGATE AVERAGE ADVANCE MADE BY THE RURAL BRANCHES CLAIMED BY THE ASSESS EE IS IN ORDER AND THE SAME IS CONFIRMED . 5 THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD COUNSEL FOR THE ASSESSEE FAIRLY SUBMITTED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL IN THE CAS E OF CIT VS LORD KRISHNA LTD (SUPRA) AND THE ORDER OF THE TRIBUNAL IN THE CASE OF KANNUR DISTRICT COOPERATIVE BANK LTD. (SUPRA). THE LD DR PRESENT WAS DULY HEARD. 6 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD . THE ASSESSEE HA D CLAIMED RS. 40,40,84,861/ - FOR AY 2008 - 09 AND RS. 47,98,02,891/ - FOR THE AY 2009 - 10 AS RURAL BRANCH ADVANCES. THE ASSESSEE HAS CLASSIFIED ABOUT 25 BRANCH AS RURAL BRANCHES WHICH ARE SITUATED IN A WARD . THE WARD IS THE SMALLEST UNIT IN THE DISTRI CT ADMINISTRATION. T HE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF LORD KRISHNA BANK (SUPRA) HAD CATEGORICALLY HELD THAT RURAL BRANCH WHICH IS DEFINED IN EXPLANATION (IA) TO SEC. 36(1)(VIIA) MEANS A BRANCH SITUATED IN A VILLAGE HAVING A POPULATION O F LESS THAN 10000. IN VIEW OF THE DICTUM LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT, THE CLASSIFICATION OF RURAL BRANCH MADE BY THE ASSESSEE IS WRONG AND THE ADVANCES MADE BY THESE BRANCHES CANNOT BE ALLOWED DEDUCTION OF 10% OF THE TOTAL AGGREG ATE ADVANCES FOR BOTH ITA NO S 168 & 169/C/2015 5 THE ASSESSMENT YEARS. IT IS ORDERED ACCORDINGLY. HENCE, GROUND NO.2 FOR THE BOTH ASSESSMENT YEARS IS REJECTED. 7 THE FACTS IN BRIEF WITH REGARD TO GROUND NO.3 & 4 ARE AS FOLLOWS: THE AO HAD DENIED THE ASSESSEES CLAIM OF DEDUCTION OF 7.5% OF THE TOTAL A DVANCES AS DEDUCTION U/S 36(1)( VIIA) (A) OF THE ACT. THE REASONING OF THE AO IN DOING SO , READ AS UNDER: 4.2 WHI L E COMPUTING THE ELIGIBLE DEDUCT I ON U/S . 36 ( 1) ( VII A) , THE ASSESSEE HAS TAKEN 7.5% OF THE TOTAL INCOME (COMPUTED BEFORE MA K ING ANY DED U CT I ON UNDER THAT CLAUSE AND CHAPTER VIA) AS RS . 51 , 26 , 056/ - ; T HI S IS 7 .5% . OF TH E TOTAL INCOME OF THE ASSESSEE AS APPEARING FROM THE STA T EMENT OF COMPUTATION OF TOTAL INCOME . THE HON . SUPREME COURT OF I NDIA IN ITS J UD G MENT DATED 17.02.2012 O N THE CATHO L I C SYRIAN BAN K LTD . VS C L T , H A S HELD THAT THE L EGISLATIVE INTENT OF SEC. 36( 1) (V I IA) WAS TO ENCOURAGE RURAL ADVANCES AND THE MAKING OF PROVISIONS FOR BAD AND DOUBTFUL DEBTS IN RELA T ION TO SUCH R U RAL BRANCHES . IT CAN BE INFERRED F R OM THE SUPRE ME COU R T DECISI O N THAT T H E CLAUSE (VIIA) OF SUB - SECTION (1) OF SEC . 36 APPL I ES TO RURAL BRANCHES OF THE BANKS ONLY AND CONSEQUENTLY THE DEDUCT I ON OF NOT EXCEEDING 7.5% OF THE TOTAL INCOME CONTEMPLATED THEREIN SHOULD BE 7.5% OF THE I NCOME OF SUCH RURAL BRAN CHES ONLY . AS DISCUSSED ABOVE, NONE OF THE BRANCHES CONSIDERED AS RURAL BY THE ASSESSEE QUALIFY TO BE RURAL BRANCHES AS PER THE DEFINITION IN THE ACT . HENCE, TOTAL INCOME OF THE ASSESSEE FROM RURAL BRANCHES I S RS. .NI L . THE PROVIS I ON FOR BAD AND DOUBTFU L DEBTS THE ASSESSEE I S ELIG IB LE FOR DEDUCTION U/S.36( 1) (VIIA) IS LIM I TED TO AN AMOUNT NOT E X CEEDING 7 . 5% OF TOTAL I NCOME AND 10% OF AGGREGA T E AVERAGE ADVANCES MADE BY RURA L BRA N CHES. AS THERE IS NO INCOME FROM RURAL BRANCHES AND NO ADVANCES MADE BY RUR AL BRANCHES, ASSESSEE IS NOT ENTITLED FOR ANY DEDUCTION UNDER SECTION 36( 1) (VIIA). IN VIEW OF THE FOREGOING, DEDUCTION OF RS.5 , 14 , 62 , 918/ - CLAIMED BY THE ASSESSEE IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE . 8 AGGRIEVED, THE AS SESSEE IS IN APPEAL BEFORE US. THE LD COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. THE LD DR HAD FILED A BRIEF NOTE WHICH READS AS UNDER: ALLOWABILITY OF DEDUCTION U/S 36(1)(VIIIA): - THE DEDUCTION IS ALLOWABLE ONL Y ON THE PROVISIONS MADE FOR BAD & DOUBTFUL DEBTS; - THE DEDUCTION IS ALLOWABLE AT 7.5% OF TOTAL INCOME AND 10% OF ADVANCES IN THE RURAL BRANCHES ; ITA NO S 168 & 169/C/2015 6 - IN THIS CA SE, THE AO HAS DISALLOWED THE DEDUCTION AND THE CIT(A) HAS ENDORSED THE ACTION; - BOTH THE AUTHORITIES HAVE NOT DIFFERENTIATED BETWEEN THE TWO LIMBS OF THE DEDUCTION; - THE RURAL NATURE OF THE BANK OR ITS BRANCH IS APPLICABLE TO THE SECOND LIMB OF THE SECTION (10% OF ADVANCES IN THE RURAL BRANCHES) ONLY; - HONBLE TRIBUNAL MAY KINDLY ENSURES THE DISALLOWANCE IN RESPECT OF 10% OF ADVANCE IN THE RURAL BRANCHES.; - ADMISSIBILITY OF DEDUCTION IN RESPECT OF 7.5% OF TOTAL I COME MAY KINDLY BE DECIDED AS PER LAW. 9 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. TO UNDERSTAND THE ISSUE RAISED IN BETTER PROSPECTIVE, IT IS NECESSARY TO ANALYSIS THE RELEVANT PROVISIONS, WHICH READ AS UNDER: 36: (1) THE DEDUCTION PROVIDED FOR THE FOLLOWING CLAUSES SHALL BE ALLOWED IN RESPECT OF THE MATTERS DEALT WITH THEREIN, IN COMPUTING THE INCOME REFERRED TO IN SECTION 28. CLAUSE I).. CLAUSE II). CLAUSE III).. CLAUSE IV CLAUSE V) CLAUSE VI) CLAUSE VII). CLAUSE (VIIA) IN RESPECT OF ANY PROVISIONS FOR BAD AND DOUBTFUL DEBTS MADE BY ( A ) A SCHEDULED BANK (NOT BEING A BANK I NCORPORATED BY SCHEDULED BANK ( OR A COOPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY COOPERATIVE AGRICULT URAL AND RURAL DEVELOPMENT BANK), AN AMOUNT ( NOT EXCEEDING SEVEN AND ONE HALF PER CENT OF THE TOTAL INCOME ( COMPUTED BEFO RE MAKING ANY DEDUCTION UNDER THIS CLAUSE AND CHAPTER VIA) AND AN AMOUNT NOT EXCEEDING 10% OF THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES OF SUCH BANK COMPUTED IN THE PRESCRIBED MATTER; 10 ON READING THE ABOVE PROVISION, IT IS CLEAR THAT DE DUCTION U/S 36(1)(VIIA) (A) OF THE ACT IS ALLOWABLE @ 7.5% OF THE TOTAL INCOME AND 10% OF THE ADVANCE S ON RURAL BRANCHES . BOTH THE AO AND THE CIT(A) HAVE NOT DIFFERENTIATED BETWEEN ITA NO S 168 & 169/C/2015 7 THE TWO LIMBS OF THE DEDUCTION U/S 36(1)(VIIIA) (A) OF THE ACT. THE RUR AL NATURE OF THE BANK OR ITS BRANCH IS ONLY APPLICABLE TO THE SECOND LIMB OF SECTION (I.E. 10% OF THE ADVANCES IN THE RURAL BRANCHES), W HER EAS 7.5% OF THE TOTAL INCOME (COMPUTED BEFORE MAKING ANY DEDUCTION U/S 36(1)(VIIA) AND CHAPTER VIA ) IS TO BE ALLOW ED TO ALL THE SCHEDULED BANKS IRRESPECTIVE WHETHER IT HAVING RURAL BRANCH OR NOT . THIS IS MADE CLEAR FROM THE BOARD CIRCULAR NO 464 DATED 18 TH JULY 1986 WHICH READ AS UNDER: INCOME TAX (AMENDMENT) ACT 1986 MODIFICATION IN RESPECT OF DEDUCTION ON PROVISIO NS FOR BAD AND DOUBTFUL DEBTS MADE BY THE BANKS: 5 UNDER THE EXISTING PROVISIONS OF CLAUSE (VIIA) OF SUB - SECTION (1) OF SECTION 36 OF THE INCOME - TAX ACT INSERTED BY THE FINANCE ACT, 1979, PROVISION FOR BAD AND DOUBTFUL DEBTS MADE BY A SCHEDULED OR A NON - SC HEDULED INDIAN BANK IS ALLOWED AS DEDUCTION WITHIN THE PRESCRIBED LIMITS. THE LIMIT PRESCRIBED IS 10% OF THE TOTAL INCOME OR 2% OF THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES OF SUCH BANKS, WHICHEVER IS HIGHER. IT HAD BEEN REPRESENTED TO THE GOVERNMENT THAT THE FOREIGN BANKS WERE NOT ENTITLED TO ANY DEDUCTION UNDER THIS PROVISION AND TO THAT EXTENT, THEY WERE BEING DISCRIMINATED AGAINST. FURTHER, IT WAS FELT THAT THE EXISTING CEILING IN THIS REGARD, I.E., 10% OF THE TOTAL INCOME OR 2% OF THE A GGREGATE 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 CLAUSE (VIIA) OF SUB - SECTION (1) OF SECTION 36 OF THE INCOME - TAX ACT HA S 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 THE RURAL BRANCHES OF THE BANKS CONCERNED. IT MAY BE CLARIFIED THAT FOREIGN BANKS DO NOT HAVE RURAL BRANCHE S AND HENCE THIS AMENDMENT WILL NOT BE RELEVANT IN THE CASE OF THE FOREIGN BANKS. THE OTHER PROVISIONS 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 INCORPORAT ED 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 AGGREGAT E AVERAGE ADVANCES MADE BY SUCH BRANCHES AND A FURTHER DEDUCTION UP TO 5% OF THEIR TOTAL INCOME IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS. 11 THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CATHOLIC SYRIAN BANK LTD VS CIT REPORTED IN 3 43 ITR 270 HAS NO RELEVANT TO THE PRESENT CASE. THE ITA NO S 168 & 169/C/2015 8 HONBLE SUPREME COURT HAS NOT STATED THAT ONLY BANKS HAVING RURAL BRANCHES ARE ENTITLED TO DEDUCTION ALLOWABLE @ 7.5% U/S 36(1)(VIIA) (A) OF THE ACT. THEIR LORDSHIP WAS CONSIDERING A CASE WHETHER DEDUCT ION U/S 36(1)(VII) CAN BE GRANTED OVER AND ABOVE THE PROVISIONS MADE FOR BAD AND DOUBTFUL DEBTS U/S 36(1)(VIIA)OF THE ACT. THE RECENT DECISION OF THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS ING VYSYA BANK LTD. , IN ITA NOS 53 & 54/BANG/20 13 (ORDER DATED 25.10.2013) HAVE ELABORATELY CONSIDERED THE ISSUE OF DEDUCTION UNDER TWO LIMBS OF SEC. 36(1)(VIIA) OF THE ACT AND AFTER ANALYZING THE PROVISIONS CAREFULLY HELD THAT SECTION 36(1)(VIIA) OF THE ACT HAS TWO LIMBS WHICH OPERATED IN TWO DIFFER ENT SPHERE . THE RELEVANT FINDINGS OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ING VYSYS BANK(SUPRA) READ AS UNDER: 34. IT CAN BE SEEN FROM THE HISTORY OF SEC.36(1)(VIIA) OF THE ACT THAT AT STAGE - I THE DEDUCTION WAS ALLOWED IN RESPECT OF ANY PRO VISION FOR BAD AND DOUBTFUL DEBTS MADE BY A SCHEDULED BANK IN RELATION TO THE ADVANCES MADE BY ITS RURAL BRANCHES. AT THIS STAGE THE PBDD HAD TO BE LINKED TO THE ADVANCES MADE BY BANKS RURAL BRANCHES. AT STAGE - II OF SEC.36(1)(VIIA), THE DEDUCTION WHILE CO MPUTING THE TAXABLE PROFITS WAS ALLOWED OF 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 BAN KS, WHICHEVER IS HIGHER. AT THIS STAGE ALSO THE PBDD HAD TO BE CREATED AND DEBITED TO THE PROFIT AND LOSS ACCOUNT BUT IT ITA NOS. 53 & 54/BANG/2013 PAGE 25 OF 35 WAS NOT REQUIRED TO BE DONE IN RELATION TO ADVANCES MADE BY BANKS RURAL BRANCHES AND CAN BE I N RELATION TO ANY DEBT. PBDD NEED NOT BE IN RELATION TO RURAL ADVANCES BUT CAN BE IN RELATION TO ANY ADVANCES BOTH RURAL AND NON - RURAL ADVANCES. THE TWO PERCENT AAA MADE BY RURAL BRANCHES OF SUCH BANKS HAD TO BE COMPUTED AND THE PBDD MADE IN BOOKS HAS TO B E IN RELATION TO RURAL ADVANCES. THE OTHER ELIGIBLE SUM WHICH CAN BE CONSIDERED FOR DEDUCTION U/S.36(1)(VIIA) OF THE ACT VIZ., TEN PER CENT OF THE TOTAL INCOME (COMPUTED BEFORE MAKING ANY DEDUCTION UNDER THE PROPOSED NEW PROVISION) DOES NOT REQUIRE COMPUTA TION IN RELATION TO RURAL ADVANCES. NEVERTHELESS THE DEBIT OF PBDD TO PROFIT AND LOSS ACCOUNT IS NECESSARY OF THE HIGHER OF THE TWO SUMS TO CLAIM DEDUCTION U/S.36(1)(VIIA) OF THE ACT. IF THE CONCERNED BANK DOES NOT HAVE RURAL BRANCHES THEN THEY COULD NOT C LAIM THE DEDUCTION. THEREFORE THE DEDUCTION WAS CONFINED ONLY TO BANKS THAT HAD RURAL BRANCHES. ITA NO S 168 & 169/C/2015 9 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 AMEND ING 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 ITA NOS. 53 & 54/BANG/2013 PAGE 26 OF 35 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 AG GREGATE AVERAGE ADVANCES MADE BY SUCH BRANCHES AND (B) A FURTHER DEDUCTION UPTO 5% OF THEIR TOTAL INCOME IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS. THE FURTHER DEDUCTION OF 5% OF TOTAL INCOME WAS AVAILABLE TO BANKS WHICH DID NOT HAVE RURAL BRANCHE S. 36. THEREFORE AFTER 1.4.1987, SCHEDULED OR NON - SCHEDULED BANKS HAVING RURAL BRANCHES WERE ALLOWED DEDUCTION., (A) UPTO 2% (NOW 10%) OF THE AGGREGATE AVERAGE ADVANCES MADE BY SUCH BRANCHES AND (B) SCHEDULE OR NON - SCHEDULED BANKS WHETHER IT HAD RURAL BR ANCHES OR NOT A DEDUCTION UPTO 5% OF THEIR TOTAL INCOME IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS. EVEN UNDER THE NEW PROVISIONS CREATING A PBDD IN THE BOOKS OF ACCOUNTS IS NECESSARY. 12 FURTHER, THE TRIBUNAL HAS DISTINGUISHED THE JUDGMENT OF TH E HONBLE SUPREME COURT IN THE CASE OF CATHOLIC SYRIAN BANK LTD(SUPRA. FOR READY REFERENCE, WE REPRODUCE THE FINDINGS (PARAS 39 TO 41) OF THE COORDINATE BENCH OF THE TRIBUNAL IN DISTINGUISHING THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CATH OLIC SYRIAN BANK LTD (SUPRA): 39. WE MAY ALSO CLARIFY THAT THE DECISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF CATHOLIC SYRIAN BANK (SUPRA) HAS NO RELEVANCE TO THE PRESENT CASE. THE FACTS OF THE CASE BEFORE THE HONBLE SUPREME COURT IN THE CASE OF CATHOLIC SYRIAN BANK (SUPRA) WAS THAT THE ASSESSEE CLAIMED DEDUCTION ON ACCOUNT OF BAD DEBTS WRITTEN OFF IN RESPECT OF NON - RURAL BRANCHES U/S.36(1)(VII) OF THE ACT. THE AO NOTICED THAT THERE WAS ALREADY CREDIT BALANCE IN THE PROVISION FOR BAD AND D OUBTFUL DEBTS ACCOUNT U/S.36(1)(VIIA)(A) OF THE ACT, WHICH WAS IN EXCESS OF THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF BAD DEBTS. THE ITA NO S 168 & 169/C/2015 10 AO AFTER MAKING REFERENCE TO PROVISO TO SEC.36(1)(VII) OF THE ACT AND ALSO SEC.36(2)(V) OF THE ACT WAS OF THE V IEW THAT THE ASSESSEE COULD NOT BE ALLOWED THE DEDUCTION CLAIMED BECAUSE (I) THE AMOUNT CLAIMED AS DEDUCTION ON ACCOUNT OF BAD DEBTS WAS NOT THE EXCESS AVAILABLE IN THE CREDIT OF THE PROVISION FOR BAD AND DOUBTFUL DEBTS ACCOUNT CREATED U/S.36(1)(VIIA)(A) O F THE ACT AND; (II) THAT U/S.36(2)(V) OF THE ACT THE AMOUNT OF BAD DEBTS WRITTEN OFF SHOULD FIRST BE DEBITED IN THE PROVISION FOR BAD AND DOUBTFUL DEBTS ACCOUNT CREATED U/S.36(1)(VIIA)(A) OF THE ACT. THE STAND OF THE ASSESSEE WAS THAT SINCE THE CLAIM OF DE DUCTION OF BAD DEBTS MADE BY THE ASSESSEE WAS U/S.36(1)(VII) OF THE ACT AND PERTAINED TO BAD DEBTS OF NON - RURAL ADVANCES, ITA NOS. 53 & 54/BANG/2013 PAGE 30 OF 35 THE CREDIT BALANCE IN THE PBDD ACCOUNT SHOULD NOT BE LOOKED INTO AT ALL. THE HONBLE 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 PROVISI ONS 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) R ELATING TO ALLOWANCE OF THE BAD DEBTS. THE LEGISLATIVE INTENT WAS TO ENCOURAGE RURAL ADVANCES AND THE MAKING OF PROVISIONS FOR BAD DEBTS IN RELATION TO SUCH RURAL BRANCHES. (III) THE LANGUAGE OF S. 36(1)(VII) IS UNAMBIGUOUS AND DOES NOT ADMIT OF TWO INTE RPRETATIONS. 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 PREV IOUS 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 ONE HAND AND THAT IT SATISFIES THE REQUIREMENTS STATED IN S. 36(2) ON THE OTHER. THE PROVISO TO S. 36(1)(VII) DOES NOT, IN ABSOLUTE TERMS, CONTROL THE APPLICATION OF THIS PROVISION AS IT COMES INTO OPERATION ONLY WHEN THE CASE OF THE ASSESSEE IS ONE WHICH FALLS SQUARELY UNDER S. 36(1)(VIIA). THE EXPLANATION TO S. 36(1)(VII) SPECIFICALLY EX CLUDED ANY PROVISION FOR BAD AND DOUBTFUL DEBTS MADE IN THE ACCOUNT OF THE ASSESSEE FROM THE AMBIT AND SCOPE OF 'ANY BAD DEBT, OR PART THEREOF, WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE'. THUS, THE CONCEPT OF MAKING A PROVISION FOR BAD A ND DOUBTFUL DEBTS WILL FALL OUTSIDE THE SCOPE OF S. 36(1)(VII) SIMPLICITER. (IV) AS PER THE PROVISO TO CL. (VII) OF S. 36(1), THE DEDUCTION ON ACCOUNT OF THE ACTUAL WRITE OFF OF BAD DEBTS WOULD BE LIMITED TO EXCESS OF THE AMOUNT WRITTEN OFF OVER THE AMOU NT OF THE PROVISION WHICH HAD ALREADY BEEN ALLOWED UNDER CL. (VIIA). THE PROVISO BY AND LARGE PROTECTS THE INTERESTS OF THE REVENUE. IN CASE OF RURAL ITA NOS. 53 & 54/BANG/2013 PAGE 31 OF 35 ADVANCES WHICH ARE COVERED BY CL. (VIIA), THERE WOULD BE NO ITA NO S 168 & 169/C/2015 11 SUCH DOUBLE DEDUCTION. THE PROVISO, IN ITS TERMS, LIMITS ITS APPLICATION TO THE CASE OF A BANK TO WHICH CL. (VIIA) APPLIES. INDISPUTABLY, CL. (VIIA)(A) APPLIES ONLY TO RURAL ADVANCES. 40. THUS, IT CAN BE SEEN THAT IN THE CASE OF CATHOLIC SYRIAN BANK (SUPRA), THE CASE MADE OUT BY THE AO WAS THAT PBDD IS ONE ACCOUNT AND WHENEVER CLAIM FOR DEDUCTION IS MADE U/S.36(1)(VII) THE SAME SHOULD BE DEBITED TO THE PBDD ACCOUNT. FURTHER THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CATHOLIC SYRIAN BANK (SUP RA) HAS TO BE UNDERSTOOD IN THE CONTEXT OF ITS ASSUMPTION THAT BANKS WOULD MAINTAIN SEPARATE PBDD A/C. IN RESPECT OF RURAL BRANCHES AND NON - RURAL BRANCHES AND THEREFORE IT IS POSSIBLE TO DISCERN PBDD AS ONE IN RESPECT OF RURAL BRANCHES AND NON - RURAL BRANCH ES AND THEREFORE THERE IS NO BASIS FOR THE ASSUMPTION THAT BANKS WOULD GET DOUBLE BENEFIT OF DEDUCTION BY WAY OF PROVISION FOR BAD AND DOUBTFUL DEBTS AND ALSO BY WAY OF BAD DEBTS WRITTEN OFF. THE FOLLOWING OBSERVATIONS OF THE HONBLE SUPREME COURT IN THE CASE OF CATHOLIC SYRIAN BANK (SUPRA) WOULD BE RELEVANT IN THIS REGARD. 30. THE SCOPE OF THE PROVISO TO CL. (VII) OF S. 36(1) HAS TO BE ASCERTAINED FROM A CUMULATIVE READING OF THE PROVISIONS OF CLS. (VII), (VIIA) OF S. 36(1) AND CL. (V) OF S. 36(2) AND ONLY SHOWS THAT 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 ITA NOS. 53 & 54/BANG/2013 PAGE 32 OF 35 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 G REATER 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 SUBSTANTIATE THE ARG UMENT OF THE DEPARTMENT THAT THE INTERPRETATION GIVEN BY THE FULL BENCH OF THE HIGH COURT IS THE CORRECT INTERPRETATION OF S. 36(1)(VII). THIS ARGUMENT HAS TO BE REJECTED, BEING WITHOUT MERIT. 32. IN THE NORMAL COURSE OF ITS BUSINESS, AN ASSESSEE BANK IS TO MAINTAIN DIFFERENT ACCOUNTS FOR THE RURAL DEBTS FOR NON - RURAL/URBAN DEBTS. IT IS OBVIOUS THAT THE BRANCHES IN THE RURAL AREAS WOULD PRIMARILY BE DEALING WITH RURAL DEBTS WHILE THE URBAN BRANCHES WOULD DEAL WITH COMMERCIAL DEBTS. MAINTENANCE OF SUCH SEP ARATE ACCOUNTS WOULD NOT ONLY BE A ITA NO S 168 & 169/C/2015 12 MATTER OF MERE CONVENIENCE BUT WOULD BE THE REQUIREMENT OF ACCOUNTING STANDARDS. 33. IT IS CONTENDED, AND RIGHTLY SO, ON BEHALF OF THE ASSESSEE BANK THAT UNDER LAW, IT IS OBLIGED TO MAINTAIN ACCOUNTS WHICH WOULD CORRECT LY DEPICT ITS STATEMENT OF AFFAIRS. THIS OBLIGATION ARISES IMPLICITLY FROM THE REQUIREMENTS OF THE ACT AND CERTAINLY UNDER THE MANDATE OF ACCOUNTING STANDARDS. 34. INTER ALIA, FOLLOWING ARE THE REASONS THAT WOULD FULLY SUPPORT THE VIEW THAT A BANK SHOULD MAINTAIN THE ACCOUNTS WITH SEPARATE ITEMS FOR ACTUAL BAD AND IRRECOVERABLE DEBTS AS WELL AS PROVISION FOR SUCH DEBTS. IT COULD, FOR VALID REASONS, HAVE RURAL ACCOUNTS MORE DISTINCT FROM THE URBAN, COMMERCIAL ACCOUNTS : (A) IT IS OBLIGATORY UPON EACH BAN K TO ENSURE THAT THE ACCOUNTS REPRESENT THE CORRECT STATEMENT OF AFFAIRS OF THE BANK. (B) MAINTAINING THE COMMON ACCOUNT MAY RESULT IN OVERSTATING THE PROFITS OR THE PROFITS WILL SHOOT UP WHICH WOULD RESULT IN ACCRUING OF LIABILITIES NOT DUE. ( B ) ACCOUNTING STANDARD (AS) 29, ISSUED IN 2003, WHICH CONCERNS TREATMENT OF 'PROVISIONS, CONTINGENT LIABILITIES AND ITA NOS. 53 & 54/BANG/2013 PAGE 33 OF 35 CONTINGENT ASSETS'. UNDER THE HEAD 'USE OF PROVISIONS', CLS. 53 AND 54 STATE AS UNDER : '53. A PROVISION SHOUL D BE USED ONLY FOR EXPENDITURES FOR WHICH THE PROVISION WAS ORIGINALLY RECOGNISED. 54. ONLY EXPENDITURES THAT RELATE TO THE ORIGINAL PROVISION ARE ADJUSTED AGAINST IT. ADJUSTING EXPENDITURES AGAINST A PROVISION THAT WAS ORIGINALLY RECOGNISED FOR ANOTHER PURPOSE WOULD CONCEAL THE IMPACT OF TWO DIFFERENT EVENTS.' 35. THE ABOVE CLAUSES JUSTIFY MAINTENANCE OF DISTINCT AND DIFFERENT ACCOUNTS. 36. MERELY BECAUSE THE DEPARTMENT HAS SOME APPREHENSION OF THE POSSIBILITY OF DOUBLE BENEFIT TO THE ASSESSEE, THIS WOULD NOT BY ITSELF BE A SUFFICIENT GROUND FOR ACCEPTING ITS INTERPRETATION. FURTHERMORE, THE PROVISIONS OF A SECTION HAVE 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 VS. CIT & ANR. (2010) 231 CTR (SC) 209 : (2010) 37 DTR (SC) 401 : (2010) 5 SCC 416, 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 AMOUN T IN SUBSEQUENT YEARS IS NOT CREDITED TO THE P&L A/C OF THE HEAD OFFICE, WHICH IS WHAT ULTIMATELY ITA NO S 168 & 169/C/2015 13 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 LO AN ADVANCED UNDER THE RURAL SCHEMES CANNOT BE WRITTEN OFF AGAINST AN URBAN OR A COMMERCIAL LOAN BY THE BANK IN THE NORMAL COURSE OF ITS BUSINESS. ITA NOS. 53 & 54/BANG/2013 PAGE 34 OF 35 41. IN THE PRESENT CASE, ACCORDING TO THE AO, THE DEDUCTION 41. IN THE PRESENT CASE, ACCORDING TO THE AO, THE DEDUCTION U/S.36(1)(VIIA)(A) IS ALLOWED ONLY TO THE EXTENT PBDD IN RESPECT OF RURAL ADVANCES IS CREATED IN THE BOOKS OF ACCOUNTS. ACCORDING TO HIM, THE LIMITS UPTO TO WHICH SUCH DEDUCTION IS ALLOWED ALONE IS LAID DOWN IN RULE 6ABA OF THE RULES. ACCORDING TO THE ASSESSEE, IT IS ENTITLED TO DEDUCTION OF THE IRRESPECTIVE OF CONSIDERATIONS WHETHER PBDD CREATED IN THE BOOKS OF ACCOUNTS IS IN RESPECT OF RURAL ADVANCES OR NON - RURAL ADVANCES, SUBJECT TO THE UPPER LIMITS LA ID DOWN IN SEC.36(1)(VIIA)(A) OF THE ACT. THUS THE CASE MADE OUT BY THE AO STANDS ON A TOTALLY DIFFERENT FOOTING. THEREFORE THE DECISION IN THE CASE OF CATHOLIC SYRIAN BANK (SUPRA), IN OUR VIEW, IS NOT RELEVANT TO THE ISSUE IN THE PRESENT CASE. 1 3 FURTH ER, WHEN FOREIGN BANK ARE GIVEN DEDUCTION OF 5% U/S 36(1)(VIIA)(B), WE SEE NO REASON, WHY INDIAN BANK SHOULD NOT GET THE BENEFIT OF DEDUCTION OF 7.5% U/S 36(1)(VIIA)(A) OF THE ACT, IRRESPECTIVE WHETHER IT HAS RURAL BRANCHES OR NOT. THEREFORE, I N VIEW OF TH E CLEAR PROVISIONS OF SEC. 36(1)(VIIA), THE BOARD CIRCULAR AND THE RECENT ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF VYSYS BANK (SUPRA), WE HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION @ 7.5% OF THE TOTAL INCOME. HENCE, GROUND NOS. 3 & 4 ARE ALLOWED FOR BOTH THE ASSESSMENT YEARS. IT IS ORDERED ACCORDINGLY. ITA NO S 168 & 169/C/2015 14 1 4 IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE FOR AYS 2008 - 09 AND 2009 - 10 ARE PARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH , DAY OF NOV 2015 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 19 TH NOV 2015 DEVDAS * COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN