DCIT, Circle-9(1), Hyderabad, Hyderabad V. M/s Deccan Grameena Bank, Hyderabad

ITA 1742/HYD/2014

• Counselvise Citation: 174222514 RSA 2014
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-03-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 12-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G APARNA RAO
• Assessee Lawyers: T UMAKANTH
• Keywords: Depreciation; Bad and doubtful debts; Revised return
• Section: 139(5)

Judgement Text

ITA NO.1742 OF 2014 DECCAN GRAMEENA BANK HYDERABAD PAGE 1 OF 15 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER & SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1742/HYD/2014 (ASSESSMENT YEAR: 2010-11) DY. COMMISSIONER OF INCOME TAX, CIRCLE 9(1) HYDERABAD VS. M/S. DECCAN GRAMEENA BANK HYDERABAD PAN: AAAAD 3893 M (APPELLANT) (RESPONDENT) FOR REVENUE : SMT. G. APARNA RAO, DR FOR ASSESSEE : SHRI T. UMAKANTH DATE OF HEARING : 23/03/2015 DATE OF PRONOUNCEMENT : 25 /0 3/2015 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, J.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT (A)-VI HYDERABAD DATED 29.08.2014 PASSED FOR A.Y 2010-11. 2. THE ASSESSEE, A REGIONAL RURAL BANK, DEEMED TO BE A COOPERATIVE SOCIETY, FOR THE PURPOSE OF INCOME-TAX ACT, 1961, HAS BEEN INTO THE BUSINESS OF BANKING AND FILED THE RETURN OF INCOME FOR THE YEAR UNDER REFERENCE, DECLARING A TO TAL INCOME OF RS. 52,85,83,150/-. WHILE COMPLETING THE ASSESSM ENT ITA NO.1742 OF 2014 DECCAN GRAMEENA BANK HYDERABAD PAGE 2 OF 15 ORDER, THE TOTAL INCOME WAS DETERMINED AT RS.65,12, 31,956/, ON ACCOUNT OF THE FOLLOWING ADDITIONS: 1. DISALLOWANCE OF DEPRECIATION ON SECURITIES HELD AS STOCK IN TRADE RS. 976,74,332/- 2. ADDITION ON ACCOUNT OF DISALLOWANCE OF BROKEN PE RIOD INTEREST ON PURCHASE OF SECURITIES HELD AS STOCK IN TRADE RS. 3,73,12,444/- 3. ADDITION ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S. 36(1)(VIIA) OF IT ACT RS. 4,44,52,560. 3. FOR THE YEAR UNDER REFERENCE THE ASSESSEE HAS FI LED THE REVISED RETURN OF INCOME ON 31.03.2012, ADMITTING A N INCOME OF RS. 43,09,08,818/- AS AGAINST THE INCOME OF RS. 52,85,83,150/- ADMITTED IN ORIGINAL RETURN OF INCOM E FILED ON 09.10.2010. THE REVISION WAS ON ACCOUNT OF OMISSION TO CLAIM DEPRECIATION OF RS. 976,74,332/- ON SECURITIES HELD AS STOCK IN TRADE. THE AO REJECTED THE REVISED RETURN ON THE GROUND THAT THERE IS NO CHANGE IN COLUMNS FILLED AS PER OR IGINAL AND REVISED RETURNS, EXCEPT THE COLUMNS FOR PROFITS AND GAINS FROM BUSINESS OTHER THAN SPECULATIVE BUSINESS AND SUBSEQUENT COLUMNS, IN THE CASE OF ASSESSEE AND A R EVISED RETURN CAN BE FILED ONLY WHEN ANY OMISSION OR WRONG STATEMENT WAS DISCOVERED IN ORIGINAL RETURN. FOR TH IS PROPOSITION THE AO RELIED ON THE DECISION OF ASSAM HIGH COURT IN THE CASE OF SUNANDA RAO DEKA VS. CIT (210 ITR ITA NO.1742 OF 2014 DECCAN GRAMEENA BANK HYDERABAD PAGE 3 OF 15 988), WHEREIN IT WAS HELD THAT FILING OF REVISED RETURN AFTER DISCOVERY OF OMISSION OR WRONG STATEME NT IN ORIGINAL RETURN IS NOT BY ITSELF SUFFICIENT TO BRIN G REVISED RETURN IN THE AMBIT OF SEC. 139(5) OF THE INCOME TA X ACT, BUT FURTHER REQUIREMENT IS THAT OMISSION OR WRONG STATE MENT IN ORIGINAL RETURN DUE TO BONAFIDE INADVERTENCE OR MIS TAKE ON PART OF ASSESSEE. 4. THE LD CIT (A) PERUSED THE SUBMISSIONS OF THE AS SESSEE IN THIS REGARD W.R.TO THE OBSERVATIONS OF THE AO AN D FACTS OF THE CASE. THE OPINION OF THE AO WAS THAT THERE WAS NO CHANGE IN COLUMNS OF RETURNS AS PER ORIGINAL AND REVISED RETURNS AND NO CHANGE IN CLAIM OF DEPRECIAT ION OF RS. 2,56,93,000 AS PER ORIGINAL AND REVISED RETURN. THE CIT(A) OBSERVED THAT THE AO GOT CONFUSED BETWEEN TH E DEPRECIATION ON FIXED ASSETS (RS. 256,93,000) AND DEPRECIATION ON SECURITIES HELD AS STOCK IN TRADE ( RS. 976,74,332) AND THE OBSERVATIONS IN THIS REGARD APP EAR TO BE FACTUALLY INCORRECT. THE CIT (A) FURTHER HELD TH AT AS REGARDS THE CLAIM OF DEPRECIATION ON SECURITIES TO THE EXTENT OF RS.976,74,332/-, WHICH IS AN ISSUE OF DEBATE, WA S NOT CLAIMED BY ASSESSEE IN ORIGINAL RETURN, AS SUCH FILED REVISED RETURN OF INCOME, WITHIN THE DUE DATE , WHILE ITA NO.1742 OF 2014 DECCAN GRAMEENA BANK HYDERABAD PAGE 4 OF 15 CLAIMING SUCH DEPRECIATION. THE CIT (A) CONCLUDED T HAT THE OMISSION TO CLAIM SUCH ALLOWANCE, DEFINITELY AMOUNT S TO REASONABLE GROUND FOR FILING THE REVISED RETURN AND HELD THAT WHERE SUCH REVISED RETURN IS FILED IN TIME, TH E SAME CANNOT BE REJECTED AND THE CASE LAW RELIED UPON BY THE AO, THUS IS DISTINGUISHABLE ON FACTS ACCORDING TO THE C IT (A) AND THE REVISED RETURN FILED BY THE ASSESSEE IS HELD TO BE IN ORDER. THE CIT (A) DIRECTED THE AO TO ADOPT THE REV ISED RETURNED INCOME, WHILE COMPUTING THE TOTAL INCOME O N THE ISSUE OF ALLOWABILITY OF DEPRECIATION ON SECURITIES , WHICH IS DEALT SEPARATELY, IN THIS ORDER. 5. AGGRIEVED, THE DEPARTMENT HAS RAISED GROUND NO.2 (PART). WE FIND NO INFIRMITY WITH THE ORDER OF THE CIT (A). FOR THE AY 2010-11 THE ASSESSEE HAS FILED ITS RETURN ON 9.10.2010 BY DECLARING A NET TAXABLE INCOME OF RS.52,85,83,150. AFTER FILING ORIGINAL RETURN, THE ASSESSEE FOUND THAT THERE IS AN OMISSION OF CLAIM OF DEPRECI ATION ON INVESTMENT OF RS.9,76,74,332 HELD AS STOCK-IN-TRADE . TO OFFSET THE OMISSION, THE ASSESSEE HAS FILED REVISED ON 31.03.2012 WHICH IS WITH THE STATUTORY PERIOD ALLOW ED UNDER THE I.T. ACT, 1961. ITA NO.1742 OF 2014 DECCAN GRAMEENA BANK HYDERABAD PAGE 5 OF 15 6. A REVISED RETURN CAN BE FILED AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF RELEVANT AY OR B EFORE THE COMPLETION OF THE ASSESSMENT, WHICHEVER IS EARLIER. IN THE CASE OF F.C. AGARWAL VS. CIT (1976) (102 ITR 408 (G AU.) IT WAS HELD THAT SECTION 139(5) HAS BROUGHT ON THE ST ATUTE TO CORRECT SOME BONAFIDE OMISSION OR BONAFIDE WRONG STATEMENT WHICH MAY HAVE OCCURRED SO THAT CORRECT T OTAL INCOME IS DISCLOSED. IT IS INHERENT IN THE SECTION THAT IF WHILE SUBMITTING A RETURN ANY INFORMATION IS LEFT O UT ACCIDENTALLY COMPUTING THE INCOME OF THE ASSESSEE, THEN TO ENABLE THE ASSESSEE TO COMMUNICATE SUCH INFORMATION TO THE REVENUE, THE FACILITY OR REVISED RETURN IS GIVE N. HOWEVER, THE OMISSION OR WRONG STATEMENT MUST BE DISCOVERED BY THE ASSESSEE HIMSELF AND MUST BE BONAFIDE. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE HAS SUBMITTED W RITTEN STATEMENT DATED 11.03.2013 INFORMING THE REASONS FO R SUBMISSION OF REVISED RETURN AND THE SAME WAS REPRO DUCED AS UNDER: AT THE TIME OF FILING ORIGINAL RETURN, WE HAVE INADVERTENTLY NOT CLAIMED THE DEPRECIATION/LOSS ON INVESTMENT WHICH WERE CONSIDERED AS STOCK-IN- TRADE. IN OUR EARLIER SUBMISSION, WE HAVE GIVEN THE DETAILED WORKING ON DEPRECIATION/LOSS ON INVESTMENT. ITA NO.1742 OF 2014 DECCAN GRAMEENA BANK HYDERABAD PAGE 6 OF 15 DEPRECIATION ON SECURITIES HELD AS STOCK IN TRADE RS. 976,74,332/- 7. WHILE COMPLETING THE ASSESSMENT AND COMPUTING TH E TOTAL INCOME, THE AO HAS NOT CONSIDERED THE CLAIM O F RS. 976,74,332/-, TOWARDS DEPRECIATION ON SECURITIES HE LD AS STOCK IN TRADE, WHICH WAS OMITTED TO BE CLAIMED IN ORIGINAL RETURN OF INCOME, ON THE GROUND THAT THE REVISED RE TURN OF INCOME WAS NOT ACCEPTABLE. THE OTHER REASON FOR DISALLOWING THE CLAIM WAS THAT THE ASSESSEE'S SOURCES OF INVEST MENTS BEING PUBLIC MONEY, SUPPOSED TO INVEST IN SECURITIE S AND BANKS AND INVESTMENTS IN DERIVATIVES IS NOT IN CONSONANCE WITH ITS OBJECTIVES AND SUCH INVESTMENTS ARE IN CONTRAVENTION OF INFORMATION PROVIDED IN ANNUAL REP ORT OF THE BANK. HENCE, IT WAS HELD THAT THE CLAIM IS AGAI NST THE DIRECTIVES OF RBI AND DISALLOWED THE CLAIM OF RS. 976,74,332/-. 8. THE ASSESSEE OBJECTED FOR SUCH DISALLOWANCE AND SUBMITTED THAT TO MEET THE STATUTORY OBLIGATION THE ASSESSEE BANKER HAD INVESTED CERTAIN FUNDS IN GOVER NMENT SECURITIES TO MEET THE SLR RATIOS, AND BANKS INVEST IN SECURITIES FOR THE PURPOSE OF TRADING IRRESPECTIVE OF PERIOD OF HOLDING OF SUCH SECURITIES AND SUCH TREATED AS S TOCK IN ITA NO.1742 OF 2014 DECCAN GRAMEENA BANK HYDERABAD PAGE 7 OF 15 TRADE AND ONCE THE INVESTMENTS ARE TREATED AS STOCK IN TRADE, THE FALL IN THE VALUE OF SUCH SECURITIES FRO M OPENING BALANCES TO THE CLOSING BALANCES, IS TREATED AS DEP RECIATION AND BE ALLOWED AS DEDUCTION. THE ASSESSEE RELIED ON THE ORDER OF THE HON'BLE ITAT IN THE CASE OF SBH VS. DC IT IN ITA NO. 1232/HYD./2006AND DECISION OF KERALA HIGH C OURT IN THE CASE OF CIT VS. NEDUNGADI BANK LTD. (264 ITR 545), TO SUPPORT THEIR CLAIM. 9. THE CIT (A) PERUSED THE SUBMISSIONS OF THE ASSES SEE AND THE OBSERVATIONS OF THE AO. THE CIT (A) HELD AS FOLLOWS: AS COULD BE SEEN FROM THE FACTS, THE AO FAILED TO APPRECIATE THAT THE APPELLANT BANK INVESTED IN CERTAIN GOVERNMENT SECURITIES, AS PER THE SLR REQUIREMENT AND CLAIMED DEPRECIATION ON THE VARIATION IN VALUE OF SUCH SECURITIES BETWEEN THE OPENING BALANCE AND CLOSING BALANCE. SUCH CLAIM WAS OMITTED TO BE CLAIMED IN ORIGINAL RETURN OF INCOME, AS INDICATED; AND FILED REVISED RETURN WHILE CLAIMING THE DEPRECIATION. IN THIS REGARD, IT MAY BE REASONABLE TO HOLD THAT IT IS NOT THE CASE O F THE AO TO TREAT SUCH INVESTMENTS IN SECURITIES AS NON EXISTING OR TREATED AS SECURITIES HELD TO MATURITY. IT IS ALSO RELEVANT TO HOLD, THAT EVEN IF THE SECURITIES ARE CLASSIFIED AS HELD TO MATURITY (HTM), THE COURTS HAVE HELD THAT EVEN IF THE SECURITIES WHICH ARE HELD IN PERMANENT CATEGORY, ARE SUPPOSED TO BE DEALT IN MARKET, WITH THE VERY NATURE OF THESE INVESTMENTS IS TO TRADE IN SECURITIES AND AS SUCH TREATED AS STOCK IN TRADE FOR THE ASSESSEE BANKS. IT WAS ALSO HELD THAT WHERE THERE IS NO DISTINCTION BETWEEN THE ITA NO.1742 OF 2014 DECCAN GRAMEENA BANK HYDERABAD PAGE 8 OF 15 CATEGORIES OF SECURITIES, THE ASSESSEE CAN PROVIDE DEPRECIATION ON SECURITIES. 10. THE LD CIT (A) RELIED ON THE ORDER OF THE ITAT HYDERABAD IN CASE OF AP GRAMEEN VIKAS BANK (ITA NO.610/HYD/2013) DATED 13.03.2014 AND THE CIT (A) H ELD THAT DISALLOWANCE OF RS.9,76,74,332 MADE BY THE AO DOES SURVIVE AND THE GROUND WAS TREATED AS ALLOWED. ADDITION ON ACCOUNT OF DISALLOWANCE OF BROKEN PERIO D INTEREST ON PURCHASE OF SECURITIES HELD AS STOCK IN TRADE RS. 3,73,12,444/- 11. WHILE COMPUTING THE TAXABLE INCOME OF THE ASSESSEE, AO HAS DISALLOWED THE CLAIM OF RS. 373,12,444/- MAD E TOWARDS THE BROKEN PERIOD OF INTEREST IN ACQUIRING THE SECURITIES, WHICH ARE HELD AS STOCK IN TRADE BY THE ASSESSEE BANK RELYING ON THE DECISION OF SUPREME COURT IN TH E CASE OF VIJAYA BANK VS. CLT, REPORTED IN 187 ITR 541. 12. THE ASSESSEE OBJECTED FOR SUCH DISALLOWANCE AND SUBMITTED THAT THE SECURITIES WERE HELD AS STOCK IN TRADE ON THE LINES OF STATE BANK OF HYDERABAD, WHICH IS THE HOLDING BANK OF THE ASSESSEE BANK, WHERE THE SIMILAR CLAIM WAS ITA NO.1742 OF 2014 DECCAN GRAMEENA BANK HYDERABAD PAGE 9 OF 15 UPHELD BY THE HON'BLE' ITAT, HYDERABAD, DT. 18.03.2 005. THE ASSESSEE ALSO RELIED ON THE ORDER OF THE ITAT HYDER ABAD IN THE CASE OF AP GRAMEENA VIKAS BANK, WARANGAL DATED 29.04.2013. 13. THE LD CIT (A) P ERUSED THE SUBMISSIONS OF THE ASSESSEE AND THE ORDER OF THE AO. THE CIT (A) HELD AS FOLLOWS: AS COULD BE SEEN FROM THE FACTS OF THE CASE, THE INTEREST CLAIMED ON PURCHASE OF SECURITY WERE HELD AS STOCK IN TRADE BY THE APPELLANT BANK, AND THE AO HAS RELIED ON THE DECISION OF SUPREME COURT IN THE CASE OF VIJAYA BANK LTD VS. CIT (SUPRA), WHEREIN THE INVESTMENTS IN SECURITIES WERE CONSIDERED AS CAPITAL INVESTMENTS AND AS SUCH THE INTEREST ON SUCH ACQUISITION WAS TREATED AS DISALLOWABLE EXPENSES. HOWEVER, IN THIS CASE, THE INVESTMENTS IN SECURITIES WERE TREATED AS STOCK IN TRADE, WHICH WAS NOT DISPUTED BY THE AO, EITHER. FURTHER, VIDE THE DECISIONS BY VARIOUS HIGH COURTS AND SUPREME COURT, SUBSEQUENT TO THE DECISION OF VIJAYA BANK CASE (SUPRA), HAVE HELD THAT INTEREST FOR BROKEN PERIOD SHOULD BE TREATED AS PART OF PURCHASE PRICE AND DISTINGUISHED THE DECISION OF APEX COURT IN THE CASE OF VIJAYA BANK, WHERE NO DISTINCTION WAS MADE WITH REGARD TO THE CHARACTER OF SECURITIES. IN THE CASE OF AP GRAMEENA VIKAS BANK, THE HON'BLE ITAT, HYDERABAD, VIDE ITS ORDER DT. 13.03.2014 IN ITA NO. 610JHYD./2013, HAS UPHELD SUCH CLAIMS BY BANK. 14. RESPECTFULLY FOLLOWING THE ORDER OF THE HON'BLE ITA T, ITA NO.1742 OF 2014 DECCAN GRAMEENA BANK HYDERABAD PAGE 10 OF 15 IN THE CASE OF AP GRAMEENA VIKAS BANK, THE LD CIT ( A) WAS OF THE CONSIDERED OPINION THAT THE BROKEN PERIO D INTEREST ON ACQUISITION OF SECURITIES HELD AS STOCK IN TRADE, IS MUCH ALLOWABLE EXPENSE AND AS SUCH THE DISALLOWA NCE OF RS. 373,12,444/- MADE BY THE AO WAS HELD TO BE UNSUSTAINABLE BY THE CIT (A). THIS GROUND OF APPEAL IS TREATED AS ALLOWED BY THE CIT (A). ADDITION ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S. 36(L)(VIIA) OF IT ACT RS. 4.44,52,560/- 15. WHILE COMPUTING THE TOTAL INCOME FOR THE YEAR U NDER REFERENCE THE AO HAS DISALLOWED THE CLAIM OF RS. 4,44,52,560/-, MADE BY THE ASSESSEE IN THE COMPUTATION FURNISHED ALONG WITH THE RETURN OF INCO ME. SUCH CLAIM WAS MADE AS PER THE PROVISIONS OF SEC. 36(1)(VIIA) OF THE INCOME-TAX ACT, CALCULATED AT THE RATE OF 7.5% OF THE TOTAL INCOME. THE AO HAS OB SERVED THAT THE DEDUCTION WAS CLAIMED BASED ON STATUTORY PROVISION, WITHOUT THERE BEING ANY CLAIM IN BOOKS OF ACCOUNT. IT WAS FURTHER OPINED BY THE AO T HAT ANY PROVISION CREATED SHOULD HAVE A PURPOSE AND IN THE CASE OF ASSESSEE PROVISION WAS CREATED WITHOUT ANY NECESSIT Y AS SUCH THE PROVISION WAS UNWARRANTED AND THE SAID CLAIM TOWARDS BAD AND DOUBTFUL DEBTS UNDER 7.5% CAT EGORY ITA NO.1742 OF 2014 DECCAN GRAMEENA BANK HYDERABAD PAGE 11 OF 15 IS DISALLOWED TO BE ADDED BACK TO THE RETURNED INCO ME AND BROUGHT TO TAX. 16. THE ASSESSEES OBJECTION FOR SUCH DISALLOWANCE/ ADDITION WAS ON THE GROUND THAT THE PROVISIONS OF SEC. 36(1) (VIIA) PERMITS BANKING COMPANY TO CLAIM A DEDUCTION NOT EXCEEDING 7 .5% OF TOTAL INCOME COMPUTED, TOWARDS BAD AND DOUBTFUL DEBTS. THE ASSESSEE RELIED ON THE DECI SION OF ITAT, HYDERABAD, IN THE CASE OF SBH VS. DCIT (ITA N O. 1232/HYD./2006) TO SUPPORT THE CLAIM OF DEDUCTION @ 7.5% OF THE TOTAL INCOME. THE ASSESSEE ALSO RELIED ON TH E DECISION OF KARNATAKA HIGH COURT, IN THE CASE OF DCIT, SR VS . KARNATAKA BANK LTD., TO SUPPORT THE ARGUMENT THAT DEDUCTIONS U/S. 36(1)(VII) ARE ALLOWABLE INDEPENDEN TLY AND IRRESPECTIVE OF PROVISIONS FOR BAD AND DOUBTFUL DEB TS, WITHOUT CLAIMING THE DEDUCTION U/S 36(1)(VII) AND 3 6(1)(VIIA) SIMULTANEOUSLY. 17. THE LD CIT (A) PERUSED THE SUBMISSIONS OF THE A SSESSEE AND THE OBSERVATIONS OF THE AO. THE CIT (A) HELD AS FOLLOWS: AS COULD BE SEEN FROM THE FACTS OF THE CASE BROUGHT ON RECORD, THE ASSESSEE CLAIMED A DEDUCTION OF RS. 4,44,52,560/- BEING THE DEDUCTION @7.5% OF THE TOTAL INCOME, AS PEER THE ITA NO.1742 OF 2014 DECCAN GRAMEENA BANK HYDERABAD PAGE 12 OF 15 PROVISIONS OF SEC. 36( L)(VIIA) BEFORE CLAIMING DEDUCTIONS U/S. CHAPTER VI A AND THE DEDUCTION UNDER SAID CLAUSE, WHILE COMPUTING THE TOTAL INCOME. THE AO DISALLOWED THE SAME ON THE GROUND THAT THERE WAS NO NECESSITY OF SUCH PROVISION, WITH THE ADVANCES SECURED AND NO PROVISION FOR BAD AND DOUBTFUL DEBTS HAVE BEEN MADE IN BOOKS OF ACCOUNT AND THE DEDUCTION WAS CLAIMED, JUST BECAUSE IT WAS PROVIDED BY THE PROVISIONS OF INCOME-TAX ACT. IN THIS CONTEXT, IT MAY BE RELEVANT TO HOLD THAT, THE DEDUCTION WAS CLAIMED, AS PROVIDED IN SEC. 36(1)(VIIA) OF THE ACT AND NO INFIRMITY WAS POINTED OUT BY THE AO IN THIS REGARD. THE DEDUCTION WAS MADE BY THE ASSESSEE AS PER THE PROVISIONS OF THE I.T. ACT (SEC. 36(1)(VIIA) RESTRICTING TO THE 7.5% OF THE TOTAL PROFITS, IN ADDITION TO DEDUCTION OF RS.1,96,65,088 CLAIMED TOWARDS THE DOUBTFUL AND BAD DEBTS OF RURAL ADVANCES, WHICH WAS ALLOWED BY THE AO. 18. THE LD CIT (A) HELD THAT IT IS ALSO A FACT THAT , NO OTHER DEDUCTIONS WERE CLAIMED BY THE ASSESSEE BANK U/S 36 (1)(VII) TOWARDS WRITE OFF OF BAD DEBTS. IN THIS CONTEXT IT IS RELEVANT TO REFER TO THE DECISION OF THE ITAT HYDERABAD, IN THE CASE OF STATE BANK OF HYDERABAD VS. DCIT DATED 28.11.2008 I N ITA NO.1232/HYD/2006 WHEREIN THE TRIBUNAL HELD THAT DEDUCTION U/S 36(1)(VIIA) OF THE INCOME TAX ACT, NO T EXCEEDING 7.5% OF THE TOTAL INCOME COMPUTED, IS TO BE ALLOWED FOR PROVISION OF BAD AND DOUBTFUL DEBTS. CONSIDERING THE FACTS OF THE CASE THAT THE DEDUCTIO N CLAIMED BY THE ASSESSEE TO THE EXTENT OF RS.4,44,52,560 WAS CLAIMED AS PER THE PROVISIONS OF SECTION 36(1)(VIIA) AND WI THOUT ITA NO.1742 OF 2014 DECCAN GRAMEENA BANK HYDERABAD PAGE 13 OF 15 CLAIMING ANY DEDUCTION TOWARDS BAD DEBTS WRITTEN OF F AS PER THE PROVISIONS OF SECTION 36(1)(VII) AND ALSO RESPE CTFULLY FOLLOWING THE DECISION OF ITAT IN THE CASE OF SBH V S. DCIT (SUPRA), THE CIT (A) WAS OF THE OPINION THAT THERE IS NO INFIRMITY IN THE CLAIM OF THE ASSESSEE. ACCORDINGLY THE ADDITION OF RS.4,44,52,560 WAS HELD TO BE UNSUSTAIN ABLE AND THIS GROUND OF APPEAL WAS TREATED AS ALLOWED BY THE CIT (A). 19. AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEFORE U S AND RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF LD CIT (A) IS AGAINST FACTS OF THE CASE. 2. WHETHER THE LD CIT (A) IS CORRECT IN CONSIDERING THE CONTENTS OF REVISED RETURN AND ALLOWING THE DEPRECIATION ON SECURITIES HELD AS STOCK IN TRADE RS.9,76,74,332 3. WHETHER THE LD CIT (A) IS CORRECT IN LAW IN HOLDING THAT THE EXPENSE OF BROKEN PERIOD INTEREST ON PURCHASE OF SECURITIES HELD AS STOCK IN TRADE RS.3,73,12,444 4. WHETHER THE LD CIT (A) IS CORRECT IN ALLOWING L AW IN DEDUCTION CLAIMED U/S 36(1)(VIIA) OF IT ACT RS.4,44,52,560. 20. WE FIND THAT THE ISSUE ON DEPRECIATION ON SECUR ITIES (PREMIUM ON GOVT. SECURITIES) FOR RS.9,76,74,332/- IS SQUARELY COVERED BY THE ORDER OF THE ITAT HYDERABAD IN THE C ASE OF AP ITA NO.1742 OF 2014 DECCAN GRAMEENA BANK HYDERABAD PAGE 14 OF 15 GRAMEENA VIKAS BANK, WARANGAL PASSED IN ITA NO.610/HYD/2013 FOR THE RELEVANT A.Y 2009-10, ORDER OF ITAT IN THE CASE OF SBH HYDERABAD IN ITA NO.666/HYD/2013 DA TED 29.11.2013 AND THE ORDER OF THE HON'BLE JURISDICTIO NAL HIGH COURT IN ITTA NO.566 OF 2014 DATED 4.9.2014 IN THE CASE OF A.P. GRAMEENA VIKAS BANK, WARANGAL FOR A.Y 2007-08, VIJA YA BANK VS. CIT (1999) 187 ITR 541 AND CIT VS. NEDUNGADI BA NK LTD (2003) 264 ITR 545 (KER.). HENCE, RESPECTFULLY FOLL OWING THE ORDER OF THE COORDINATE BENCHES, WE DISMISS PART OF THE R EVENUES APPEAL. 21. WITH REGARD TO THE ISSUE OF BROKEN PERIOD OF IN TEREST FOR AN AMOUNT OF RS.3,73,12,444/- THE ISSUE IS COVERED BY THE ORDERS CITED ABOVE AND ALSO IN THE CASE OF UNITED COMMERCI AL BANK VS. CIT (1994) 240 ITR 355 (S.C), CIT VS. SOUTH INDIAN BANK LTD (2000) 241 ITR 374 (KER.) AND BOARDS CIRCULAR NO.6 65 DATED 5.10.1993 ISSUED BY THE CBDT. HENCE, RESPECTFULLY F OLLOWING THE ORDER OF THE COORDINATE BENCHES, WE DISMISS GROUND NO.3 OF REVENUES APPEAL. 22. WITH RESPECT TO THE ISSUE OF CLAIM OF DEDUCTION U/S 36(1)(VIIA) FOR AN AMOUNT OF RS.4,44,52,560, THIS I SSUE IS ALSO ITA NO.1742 OF 2014 DECCAN GRAMEENA BANK HYDERABAD PAGE 15 OF 15 COVERED BY THE ORDER OF THE ITAT HYDERABAD BENCH IN THE CASE OF SBH HYDERABAD IN ITA NO.584/HYD/2013 AND ALSO CATHO LIC SYRIAN BANK LTD VS. CIT (2012) 248 CTR (S.C). RESPE CTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCHES, WE D ISMISS GROUND NO.4 OF REVENUES APPEAL. 23. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MARCH, 2015. S D/ - S D/ - (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 25 TH MARCH, 2015. VNODAN/SPS COPY TO: 1. DY. COMMISSIONER OF INCOME TAX, CIRCLE 9(1) BLOCK N O.2, INCOME TAX TOWERS, AC GUARDS HYDERABAD -4 2. M/S DECCAN GRAMEENA BANK, 9-27/1 1 ST FLOOR, LALITHA NAGAR, DILSUKHNAGAR, HYDERABAD 500060 3. THE CIT(A)-VI HYDERABAD 4. THE CIT-VI HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER