M/s The South Indian Bank Limited, Thrissur V. Additional Commissioner of Income Tax, Thrissur

ITA 18/COCH/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4522 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 27-09-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 15-01-2009
• Court: TRIBUNAL
• Department Lawyers: S C SONKAR
• Assessee Lawyers: P BALAKRISHNAN ADV
• Keywords: Capital asset; Depreciation; Proportionate interest; Cost of acquisition; Bad and doubtful debts; Revised return; Capital expenditure; Rule 8D
• Section: 143(3); 234B; 37(1); 139(5); 264

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.A. NO. 65/COCH/2009 ASSESSMENT YEAR:2006-07 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), TRICHUR VS. SOUTH INDIAN BANK LTD., SIB HOUSE, MISSION QUARTERS, P.B. NO. 28, T.B.ROAD, TRICHUR-1. [PAN: AABCT 0022F] (REVENUE-APPELLANT) (ASSESSEE -RESPONDENT) I.T.A. NO.18/COCH/2009 ASSESSMENT YEAR:2006-07 SOUTH INDIAN BANK LTD., SIB HOUSE, MISSION QUARTERS, P.B. NO. 28, T.B.ROAD, TRICHUR-1. [PAN:AABCT 0022F] VS. THE ADDL. COMMISSIONER OF INCOME-TAX, R-1(1), TRICHUR. (ASSESSEE -APPELLANT) (REVENUE - RESPONDENT) REVENUE BY SHRI S.C.SONKAR, CIT-DR ASSESSEE BY SHRI P.BALAKRISHNAN, ADV.-AR O R D E R PER SANJAY ARORA, AM: THESE ARE CROSS APPEALS BY THE ASSESSEE AND THE RE VENUE, ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, KOCH I (CIT(A) FOR SHORT) DATED 30.10.2008, AND THE ASSESSMENT YEAR (A.Y.) UNDER RE FERENCE IS 2006-07. THE APPEALS BEING IN RELATION TO THE SAME ASSESSMENT, FRAMED VI DE ORDER U/S. 143(3) OF THE INCOME-TAX ACT, 1961 ('THE ACT' HEREINAFTER) DATED 27.3.2008, ALSO RAISING COMMON ISSUES, WERE HEARD TOGETHER, AND ARE THEREFORE BEING DISPOSED OF BY A COMMON, CONSOLIDATED ORDER. ITA NOS. 18 & 65 /COCH/2009 2 I.T.A. NO. 18/COCH/2009 (ASSESSEES APPEAL) 2. WE SHALL, HOWEVER, TAKE UP THE ASSESSEES APPEAL , BEING SENIOR, FIRST. THE SECOND GROUND OF THE ASSESSEES APPEAL; THE FIRST BEING GE NERAL IN NATURE, WARRANTING NO ADJUDICATION, IS IN RELATION TO THE DISALLOWANCE OF THE IMPUGNED EXPENDITURE COMPRISING INTEREST AND MANAGEMENT EXPENSES, AGGREGATING TO ` 4,33,113/-, ATTRIBUTABLE TO THE INVESTMENT BY THE ASSESSEE IN TAX-FREE BONDS (AT ` 0.65 CRORES), AGAINST WHICH THE ASSESSEE HAD EARNED INTEREST INCOME OF ` 15.28 LAKHS, CLAIMED (AND ALLOWED) EXEMPT UNDER SEC TION 10(33) OF THE ACT. SIMILARLY, ANOTHER SUM OF ` 78,87,262/- STOOD ALSO DISALLOWED QUA THE AMOUNT INVESTED IN SHARES (AT ` 15.48 CRORES), YIELDING TAX-FREE INCOME BY WAY OF DIVIDEND (AT ` 0.53 CRORES). THE PROPORTIONATE INTEREST EXPENDITUR E WAS WORKED OUT BY THE ASSESSING OFFICER (AO) BY CONSIDERING THE SAID INVE STMENTS AS BEING FINANCED PROPORTIONATELY FROM THE COMMON POOL OF FUNDS AVAIL ABLE WITH THE ASSESSEE, AS REFLECTED IN THE BALANCE-SHEET ( ` 10827.42 CRORES). SIMILARLY, THE PROPORTIONATE MAN AGEMENT EXPENSES WERE WORKED OUT ON THE BASIS OF THE PROPOR TIONATE YIELD. RELIANCE WAS PLACED ON THE DECISIONS IN THE CASE OF K. SOMASUNDARAM & BROS. VS. CIT , 238 ITR 939 (MAD.); CIT VS. H.R.SUGAR FACTORY (P) LTD ., 187 ITR 363 (ALL.); CIT VS. V.I. BABY & CO ., 254 ITR 248 (KER.), AMONG OTHERS, BESIDES BY THE TRIBUN AL, AS IN THE CASE OF CIT (DY.) VS. S.G. INVESTMENTS & INDUSTRIES LTD ., 89 ITD 44 (KOL.); HARISH KRISHNAKANT BHATT VS. ITO , 91 ITD 341 (AHD.) AND EVERPLUS SECURITIES AND FINANCE LTD. VS. CIT (DY.) , 101 ITD 151 (DELHI). THE SAME STOOD CONFIRMED IN APPEAL BY THE LD. CIT(A), HOLDING, WITH REFERENCE TO THE DECISION BY THE TRIBUNAL IN THE CASE OF ITO VS. EKTA PROMOTERS P. LTD , 305 ITR (AT) 129 (DELHI) (SB), THAT RULE 8D APPLIED TO ALL ORDERS ISSUED AFTER 24.3.2008, I.E., THE DATE ON WHICH THE SAID RULE STOOD BROUGHT ON THE ST ATUTE BOOK, AND DIRECTED THE AO TO WORK OUT THE QUANTUM OF DISALLOWANCE AS PER THE MET HOD PRESCRIBED UNDER RULE 8D. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 3. BEFORE US, THE ASSESSEES PRINCIPAL CONTENTI ON IS THAT RULE 8D IS NOT RETROSPECTIVE, EVEN AS HELD BY THE HONBLE BOMBAY HIGH COURT PER I TS RECENT DECISION IN THE CASE OF GODREJ AND BOYCE LTD. VS. CIT (DY.) . SO, HOWEVER, IT STOOD ADMITTED THAT THE ISSUE STA NDS DECIDED BY THE RECENT DECISION BY THE HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF CIT ITA NOS. 18 & 65 /COCH/2009 3 VS. DHANALAXMI BANK LTD . (IN I.T.A. NO. 1324/2009 DATED 21.10.2010), PLACI NG A COPY OF THE SAME ON RECORD (ANNEXURE `C ). 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE M ATERIAL ON RECORD. 4.1 THE CONTENTION BY BOTH THE PARTIES WAS THAT T HE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V . DHANALAKSHMI BANK LTD. ( SUPRA) WOULD APPLY. THE TRIBUNAL VIDE ITS ORDER IN THE ASSESSEES OWN CASE FOR AYS 2002-03 AND 2005-06 (IN I.T.A. NOS. 722 & 935/COCH/2008 DATED 31.5.2011) RESTORED THE MATTER BACK TO THE FILE OF THE AO, ISSUING INSTRUCTIONS AS DEEMED RELEVANT. THE SA ME WOULD APPLY WITH EQUAL FORCE IN THE INSTANT CASE AS WELL, BEING ESSENTIALLY AN EXPL ANATION OF THE BINDING DECISION BY THE HONBLE HIGH COURT (SUPRA), WHICH THE TRIBUNAL DIRE CTED FOR BEING FOLLOWED IN LETTER AND SPIRIT. WE HOLD LIKE WISE. FURTHER, THE SAID ORDER BEING IN RELATION TO THE ASSESSEE ITSELF, IT IS NOT CONSIDERED NECESSARY TO REPRODUCE THE RELEVA NT PART OF THE SAID ORDER (PARAS 4,15). 4.2 THE ASSESSEE IN THE INSTANT CASE ALSO PLEADS ITS CASE WITH REFERENCE TO THE SHARES BEING, IN FACT, A TRADING ASSET, ALSO YIELDING TRAD ING INCOME. WE DO NOT CONSIDER THE SAME AS OF MUCH RELEVANCE, AS THE DISALLOWANCE IS ONLY I N RELATION TO THE DIVIDEND INCOME, WHICH IS EXEMPT AND, THUS, OF THE SAME CHARACTER (T AX-FREE), WHETHER THE INVESTMENT IN SECURITIES IS MADE BY CONSIDERING IT TO BE A TRADIN G ASSET OR OTHERWISE, I.E., IRRESPECTIVE OF THE TURNOVER THEREIN. EVEN AS HELD BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE PRECEDING YEARS (SUPRA), IT IS THE INVESTMENT IN TH E IMPUGNED ASSET THAT WOULD BE RELEVANT. 4.3 WE CONSIDER THE ASSESSEES CASE TO BE GOVE RNED BY THE DECISION BY THE HONBLE HIGH COURT IN THE CASE OF CIT V . DHANALAKSHMI BANK LTD. ( SUPRA) AS WELL AS BY THE TRIBUNAL IN ITS OWN CASE FOR THE EARLIER YEARS. WE, ACCORDIN GLY, RESTORE THE MATTER BACK TO THE FILE OF THE AO WITH LIKE DIRECTIONS. THE ASSESSEES GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 5. THE NEXT ISSUE RAISED, PER GROUND NO. 3, IS IN R ESPECT OF DEDUCTION CLAIMED U/S. 37(1) AT ` 123.10 LAKHS ON WRITE OFF OF INVESTMENTS CATEGORISE D AS NON PERFORMING ASSETS (NPA) BY THE ASSESSEE-BANK. THE AO DISALLOWED THE SAME ON THE BASIS THAT THE IMPUGNED CLAIM DID NOT SATISFY THE RELEVANT PROVISI ONS OF THE ACT, I.E., 36(1)(VII) R/W S. ITA NOS. 18 & 65 /COCH/2009 4 36(2) OF THE ACT. FURTHER, THE ASSESSEE HAD NOT SU BSTANTIATED ITS CASE OF THE MARKET VALUE OF THE RELEVANT SCRIP BEING NIL; IT OSTENSIBLY ADOP TING THE VALUATION METHOD OF COST OR MARKET PRICE (OR NET REALISABLE VALUE), WHICH EVER IS LESS. THE GUIDELINES BY THE RBI, WITH REFERENCE TO WHICH THE ASSESSEE PLEADED ITS CASE, W ERE MEANT FOR THE PREPARATION OF FINANCIAL STATEMENTS, AND WERE NOT RELEVANT FOR DET ERMINING THE TAXABLE INCOME UNDER THE ACT. IN ANY CASE, THESE COULD NOT OVERRIDE OR PREV AIL OVER THE CLEAR PROVISIONS OF LAW. THE DECISION IN THE CASE OF UNITED COMMERCIAL BANK VS. CIT (1999) 240 ITR 355 (SC) WAS DISTINGUISHED ON THE BASIS THAT THE SAME, IN EF FECT, STATES THAT THE BALANCE-SHEET PREPARED FOLLOWING THE DIRECTIVE/S BY THE RBI, WOUL D NOT BE CONCLUSIVE OF THE ASSESSEES CLAIM, WHICH HAD TO BE REGARDED ON ITS MERITS, THER EBY REBUTTING THE ASSESSEES CASE AS MADE OUT WITH REFERENCE TO THE GUIDELINES ISSUED BY THE RBI, AND RATHER SUPPORTS THE UNDERSTANDING OF THE LAW AS INVOKED BY HIM. THE LD . CIT(A), IN APPEAL, AFTER STATING THE CASE OF BOTH THE SIDES, OBSERVED THAT THE FIRST APP ELLATE AUTHORITY IN THE ASSESSEES CASE FOR THE PRECEDING YEARS (IN I.T.A. NOS. 359, 360, 394 & 395/COCH/2006 DATED 27.9.2007 FOR A.YS. 2003-04 AND 2004-05 / ANNEXURE `A ) RESTORED THE ISSUE BACK TO THE FILE OF THE AO FOR BEING CONSIDERED AFRESH ON THE BASIS OF THE LEG AL PRINCIPLES AS LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. NEDUNGADI BANK , 264 ITR 545 (KER.). AGGRIEVED, THE ASSESSEE IS IN APPEAL. 6. BEFORE US, THE LD. AR WOULD SUBMIT THAT TH E BASIS OF THE IMPUGNED DISALLOWANCE BY THE AO IS THAT THE ASSESSEE HAS NOT EVIDENCED ITS C ASE IN ANY MATERIAL RESPECT, I.E., THE BREAKUP VALUE OF THE RELEVANT SCRIPS, AS REQUIRED B Y THE PRUDENTIAL NORMS OF THE RBI, AS ALSO NOT LED ANY EVIDENCE AS TO THE ACTUAL WRITE OF F OF THE IMPUGNED INVESTMENTS AS IRRECOVERABLE IN THE BOOKS OF ACCOUNTS. THE MATTER , THEREFORE, AS IN THE CASE FOR A.Y. 2003-04 AND 2004-05 (SUPRA), MAY BE RESTORED BACK T O THE FILE OF THE AO FOR BEING LIKEWISE CONSIDERED AFRESH. 7. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD. WE FIND MERIT IN THE ASSESSEES CLAIM; THAT ALSO REPRESENTING THE CO MMON CONTENTION OF BOTH THE PARTIES BEFORE US. THIS IS ALSO FOR THE REASON THAT THE SAM E WOULD LEND CONSISTENCY, BOTH QUA THE DECISIONS BY THE TRIBUNAL AS WELL AS BY THE REVENUE , IN THE MATTER; THE TRIBUNALS ORDER FOR ITA NOS. 18 & 65 /COCH/2009 5 THE EARLIER YEARS SUPRA BEING ITSELF GUIDED BY ITS EARLIER DECISION FOR AYS 2000-01 & 2001-02. SO HOWEVER, WE MAY CLARIFY THAT THE SAME W OULD NOT IN ANY MANNER ABSOLVE THE ASSESSEE TO ESTABLISH ITS CASE ON FACTS, I.E., THE ACTUAL DECLINE IN THE VALUE OF THE RELEVANT INVESTMENTS WITH SOME MATERIALS AS WELL AS THE WRIT E OFF IN TERMS OF THE RELEVANT GUIDELINES BY THE RBI, TO THE SATISFACTION OF THE A O; IT HAVING ADMITTEDLY NOT DONE SO IN THE FIRST INSTANCE (REFER PARAS 5, 6 ABOVE). THE RE LEVANT GROUND IS CONSIDERED AS ALLOWED FOR STATISTICAL PURPOSES. WE DECIDE ACCORDINGLY. 8. THE FOURTH GROUND OF THE ASSESSEES APPEAL IS TH E DISALLOWANCE OF A DEDUCTION IN THE SUM OF ` 2973883/- CLAIMED AS LOSS ON REVALUATION OF INVESTM ENT IN UNQUOTED SHARES, BEING IN ISPAT INDIA LTD., RAMA PHOSPHATES LTD. AND SAGAR TOURIST RESORTS PVT. LTD. THE SAME WAS EXPLAINED BY THE ASSESSEE AS IN ACCORDANCE WITH THE PRUDENTIAL NORMS FOR VALUATION OF INVESTMENTS PRESCRIBED BY RBI. THE SA ME DID NOT FIND FAVOUR WITH THE AO FOR THE REASON THAT, FIRSTLY, NO DOCUMENTARY EVIDEN CE TO SUBSTANTIATE ITS CLAIM WITH REGARD TO THE VALUATION OF THE RELEVANT SCRIPS HAD BEEN BR OUGHT ON RECORD. THE ASSESSEE HAD NOT VALUED THE SAME AT THE BREAK-UP VALUE, I.E., ON THE BASIS AND BALANCE-SHEET OF THE COMPANY, AS IS REQUIRED UNDER THE SAID PRUDENTIAL N ORMS BY THE RBI. THE CLAIM FOR WRITE OFF COULD BE MADE WHERE THE AMOUNT HAD BEEN ACTUALL Y WRITTEN OFF AND, FURTHER, IN TERMS OF THE RELEVANT PROVISIONS OF THE ACT, AND COULD NO T POSSIBLY BE GOVERNED BY THE DIRECTIONS BY THE RBI, WHICH ARE CONFINED TO THE PR EPARATION AND THE PRESENTATION OF THE FINANCIAL STATEMENTS AND, IN ANY CASE, CAN NOT OVER RIDE THE CLEAR PROVISIONS OF THE ACT IN THE MATTER, I.E., S. 36(1)(VII) R/W 36(2). BEFORE THE LD. CIT(A), THE ASSESSEE PLEADED ITS CASE WITH REFERENCE TO THE DECISION BY THE APEX COU RT IN THE CASE OF UCO BANK V. CIT (SUPRA), AS WELL AS BY THE JURISDICTIONAL HIGH COUR T IN ITS OWN CASE. THE SAID COMPANIES HAD BECOME DEFUNCT AND, CONSEQUENTLY, THEIR BALANCE -SHEETS WERE NOT COMMUNICABLE. THE ASSESSEE WAS NOT GETTING ANY YIELD ON THESE INV ESTMENTS, AND VALUED THE SAID SHARES - IN THE ABSENCE OF A MARKET QUOTE - AT ` 1/-, AS PER THE GUIDELINES PRESCRIBED BY THE RBI, TREATING THE BOOK VALUE AS LOSS, ADVERTING TO PARA 3.6.3 OF THE MASTER CIRCULAR DATED 12.7.2005 BY THE RBI. THE LD. CIT(A) FURTHER OBSER VED THAT THE MATTER HAD BEEN EXAMINED BY THE TRIBUNAL IN THE ASSESSEE OWN CASE FOR AYS 2000-01 AND 2001-02 (IN ITA NOS. 18 & 65 /COCH/2009 6 I.T.A. NOS. 1031 & 1032/COCH/2004 DATED 28.9.2006 / ANNEXURE `B ). THE TRIBUNAL HAD RESTORED THE ISSUE TO THE AO TO CONSIDER AFRESH, TH E FOLLOWING: I) LOSS ON DE-VALUATION BY THE ASSESSEE IS ALLOWAB LE OR NOT; AND II) WHETHER THERE WAS ACTUALLY A DEVALUATION. HE FURTHER OBSERVED THAT THE TRIBUNAL FOUND THE ASSESSEES CASE TO BE COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT VS. NEDUNGADI BANK LTD ., 264 ITR 545 (KER), SO THAT THE PRINCIPLES LAID DOWN THE REBY WOULD APPLY. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 9. BEFORE US, THE ASSESSEES PRINCIPAL CONTENTI ON IS FOR LIKE REMISSION FOR THE CURRENT YEAR AS WELL, I.E., AS BY THE TRIBUNAL FOR THE SAID EARLIER YEARS. 10. WE HAVE PERUSED THE ORDER OF THE TRIBUNAL IN TH E ASSESSEES OWN CASE FOR AYS 2000-01 AND 2001-02, AND FIND IT TO BE COVERING THE ASSESSEES CASE IN PRINCIPLE. IN FACT, THE ASSESSEE ITSELF PLEADS FOR THE SAME, I.E., A RE STORATION TO THE FILE OF THE AO TO CONSIDER THE ISSUE AFRESH AS DIRECTED BY THE TRIBUNAL VIDE I TS SAID ORDER. THE TRIBUNAL IN THE ASSESSEES CASE FOR THE EARLIER YEARS (SUPRA), AS E XPLAINED BY THE LD. CIT(A), FOUND THAT THE INVESTMENT IN THE UNQUOTED SHARES IS TO BE TREATED AS A PART OF ITS STOCK-IN-TRADE AND, ACCORDINGLY, VALUED AT COST OR MARKET VALUE, WHICHE VER IS LESS, IN TERMS OF THE DECISION IN THE CASE OF CIT VS. NEDUNGADI BANK LTD . (SUPRA), AND RESTORED BACK THE MATTER BACK TO THE FILE OF THE ASSESSING AUTHORITY FOR FACTUAL DETERMI NATION. AS SUCH, THE AOS OBJECTION WITH REGARD TO THE NON-AVAILABILITY OF THE MARKET QUOTAT ION; THE SHARES BEING UNQUOTED, AS ALSO QUA NON WRITE OFF OF THE RELEVANT INVESTMENT IN BOOKS; THE SAME BEING LIABLE FOR A VALUATION, AS STOCK-IN-TRADE, ON EACH VALUATION DAT E, WOULD NOT HOLD. SO, HOWEVER, THE FACT THAT THE BALANCE-SHEETS WERE UN-COMMUNICABLE OR THE COMPANIES WERE DEFUNCT, WHICH ONLY WOULD ENABLE THE VALUATION AT NIL AS AGAINST B REAK-UP VALUE; THE ASSESSEE CLAIMING LOSS FOR THE ENTIRE BOOK VALUE, WOULD NEED TO BE ES TABLISHED BY IT; THE ASSSESSE ITSELF CLAIMING THE VALUE OF THE SAID INVESTMENTS AS AT TH E FOLLOWING VALUATION DATE (31/3/2007) AT ` 7.17 LACS, APPARENTLY DISPROVING ITS CLAIM OF THE B ALANCE-SHEETS BEING NOT COMMUNICABLE OR THE COMPANIES BEING DEFUNCT. WE, A CCORDINGLY, FIND NO INFIRMITY IN THE ITA NOS. 18 & 65 /COCH/2009 7 IMPUGNED ORDER; THE AO SHALL IN THE RESTORED PROCEE DINGS DECIDE THE MATTER FACTUALLY, ISSUING SPECIFIC FINDINGS IN THE MATTER. WE DECIDE ACCORDINGLY, CONFIRMING THE IMPUGNED ORDER ON THIS GROUND. 11. THE NEXT AND FIFTH GROUND OF THE ASSESSEES APP EAL RELATES TO THE DISALLOWANCE OF THE EXPENDITURE INCURRED TOWARD ISSUE OF EQUITY SHA RES, CLAIMED IN THE SUM OF ` 911.93 LAKHS, AS CAPITAL EXPENDITURE, SINCE CONFIRMED BY T HE LD. CIT(A), RELYING ON THE DECISION BY THE APEX COURT IN THE CASE OF BROOKE BOND INDIA LTD. VS. CIT (1997) 225 ITR 798 (SC). THE APEX COURT, IT WAS EXPLAINED BY THE LD. CIT(A), HAD CONSIDERED THE ARGUMENT THAT THE EXPANSION IN THE CAPITAL WAS TOWARD THE WORKING CAP ITAL REQUIREMENTS OF THE ISSUING- COMPANY, STATING THAT THE SAME STILL RETAINS THE CH ARACTER OF A CAPITAL EXPENDITURE. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 12. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD. THE LAW IN THE MATTER BEING SETTLED, THE ASSESSEE SEEKS TO DISTING UISH ITS CASE THERE-FROM ON THE BASIS THAT THE ISSUE OF SHARE CAPITAL HAD BEEN NECESSITAT ED TO MAINTAIN THE CAPITAL ADEQUACY RATIO, AS ALSO THE LIQUIDITY RATIO, SO AS TO BE ABL E TO CONTINUE ITS BUSINESS AND, THEREFORE, THE EXPENDITURE ON THE RAISING OF CAPITAL MUST BE CONSI DERED AS ON REVENUE ACCOUNT. WE CAN HARDLY AGREE. THE WORKING CAPITAL, EVEN ASSUMING TH AT THE ENTIRE CAPITAL RAISED WAS TOWARD THE SAME, DEEMING THE SAME AS IN DEFICIT IN TERMS OF THE RATIO PRESCRIBED IN ITS RESPECT, IS AS MUCH `CAPITAL AS THAT DEPLOYED IN T HE CAPITAL ASSET/S HELD BY THE FIRM FOR THE PURPOSES OF ITS BUSINESS. EITHER WAY, THE CAPITAL I S RETAINED IN THE BUSINESS AND DEPLOYED TOWARDS IT, AND IT IS IMMATERIAL WHETHER THE DEPLOY MENT IS IN FIXED ASSETS OR IN TRADING ASSETS. IN FACT, APART FROM THE FACT THAT THE AVENU E OF INVESTMENT OF CAPITAL COULD NOT POSSIBLY DECIDE WHETHER THE AMOUNT RAISED IS CAPITA L OR NOT, WHICH IS WHAT THE ASSESSEE IN EFFECT CONTENDS, THE VERY FACT THAT THE `CAPITAL AD EQUACY RATIO, TO INCREASE WHICH THE ADDITIONAL CAPITAL STANDS RAISED, DEFINES AND RECKO NS `CAPITAL AS INCLUSIVE OF THAT EMPLOYED FOR WORKING CAPITAL DEFEATS THE ASSESSEES CASE. THE DIFFERENCE SOUGHT TO BE PROJECTED BY THE ASSESSEE IS NOT KNOWN TO LAW OR AC COUNTANCY AND, RATHER, STANDS CONSIDERED BY THE APEX COURT IN THE CASE OF BROOKE BOND INDIA LTD. VS. CIT (SUPRA). THERE IS, AS SUCH, NO QUESTION OF THE IMPUGNED EXPENDITUR E, BEING ADMITTEDLY FOR RAISING FRESH ITA NOS. 18 & 65 /COCH/2009 8 CAPITAL, SO AS TO INCREASE THE CAPITAL BASE OF THE ASSESSEE-BANK, AS BEING ON REVENUE ACCOUNT, AND STANDS RIGHTLY CONSIDERED AS CAPITAL E XPENDITURE, DISALLOWABLE U/S. 37(1), BY THE REVENUE. WE DECIDE ACCORDINGLY. 13. VIDE ITS SIXTH GROUND, THE ASSESSEE CONTESTS TH E DISALLOWANCE OF DEDUCTION OF ` 650.42 LAKHS CLAIMED BY THE ASSESSEE AS PAYMENT OF PENSION. THE SAME WAS FOUND BY THE AO TO BE IN ADDITION TO THE PAYMENT OF ` 12.73 CRORES BY THE ASSESSEE TO THE APPROVED PENSION FUND. IT WAS EXPLAINED BY THE ASSESSEE, ON ENQUIRY, THAT THE PENSION FUND IS COMPLYING WITH ALL THE RELEVANT PROVISIONS OF THE A CT AND THE RULES FRAMED THERE-UNDER. HOWEVER, AS THE PURCHASE OF ANNUITIES IN FAVOUR OF THE RETIRING EMPLOYEES IS `EXPENSIVE, THE ASSESSEE PARTICIPATES IN THE PENSION FUND ONLY PARTIALLY. THAT IS, A PART OF THE PENSION IS PAID DIRECTLY, DEBITING THE SAME TO THE SALARY A CCOUNT, AND IS BEING CLAIMED U/S. 37(1) OF THE ACT, AS AGAINST U/S. 36(1)(IV) IN RESPECT OF CO NTRIBUTION TO THE PENSION FUND. IN APPEAL, THE LD. CIT(A) REMITTED THE MATTER BACK TO THE FILE OF THE AO TO CONSIDER THE ISSUE AFRESH, AS IN THE ASSESSEES OWN CASE FOR THE PRECEDING YEA RS (A.Y. 2003-04 AND 2004-05), FOLLOWING THE DECISION BY THE TRIBUNAL IN THE ASSES SEES OWN CASE (IN I.T.A. NOS. 359 & 360/COCH/2006 DATED 27.9.2007). 14. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD. THE ASSESSEE BEFORE US PLEADS FOR LIKE TREATMENT. WE WONDER AS TO HOW, THEN, IS THE ASSESSEE AGGRIEVED BY THE IMPUGNED ORDER? FURTHER, THAT APART, THE ASSESSEE WOULD DEFINITELY BE REQUIRED TO ESTABLISH ITS CASE ON FACTS, I.E., TO SHOW AS TO HO W THE LIABILITY ARISES OUT OF THE CONTRACTUAL AGREEMENT BETWEEN THE ASSESSEE AND ITS EMPLOYEES, E VEN AS OBSERVED BY THE TRIBUNAL IN ITS CASE FOR THE IMMEDIATELY PRECEDING YEAR (IN I.T.A. NO. 935/COCH/2008 DATED 31.5.2011, PARA 20). HOW COULD, IT IS NOT CLEAR, THE CONTRIBUT ION TO THE PENSION BE REGARDED AS `EXPENSIVE, I.E., ON WHAT PARAMETERS, PARTICULARLY CONSIDERING THAT THE ASSESSEE CONTENDS OF THE LIABILITY TO THE PENSION FUND AS BEING DETER MINED ON THE BASIS OF ACTUARIAL VALUATION. AGAIN, A DIRECT PAYMENT, WHICH WE UNDERSTAND TO IMP LY A DIRECT PAYMENT TO THE CONCERNED EMPLOYEE, WOULD ONLY MEAN THAT WHILE FULL CONTRIBUT ION IS BEING REMITTED TO THE FUND IN THE CASE OF THE EXISTING EMPLOYEES, THE PARTIAL PAY MENT, WHICH STANDS COMPLEMENTED BY THE DIRECT PAYMENT, IS IN RESPECT OF THE RETIRED EM PLOYEES. AS SUCH, AS ALSO OBSERVED BY ITA NOS. 18 & 65 /COCH/2009 9 THE TRIBUNAL IN THE ASSESSEES CASE FOR A.Y. 2005-0 6 (SUPRA), IT WOULD BE REQUIRED TO BE SEEN AS TO ON WHAT CONTRACTUAL BASIS THE SAID LIABI LITY ARISES. ACCORDINGLY, WE RESTORE THE MATTER BACK TO THE FILE OF THE AO TO DECIDE THIS IS SUE IN THE LIGHT OF THE OBSERVATIONS AND DIRECTIONS BY THE TRIBUNAL IN THE ASSESSEES CASE F OR EARLIER YEARS (I.E., AYS 2003-04 TO 2005-06) VIDE ITS TWO ORDERS AFORE-REFERRED, PER A SPEAKING ORDER, ADDRESSING THE FACTUAL ISSUES HIGHLIGHTED. WE DECIDE ACCORDINGLY. 15. GROUND NO. 7 OF THE ASSESSEES APPEAL CHALLENGE S THE ADDITION FOR `3 .29 LAKHS ON ACCOUNT OF EXCESS CASH AVAILABLE WITH IT, BEING TRA NSFERRED TO THE HEAD OFFICE FROM VARIOUS BRANCHES DURING THE YEAR. THE ASSESSEE STATES THAT THE SAME COULD BE CLAIMED BACK BY THE CONCERNED PARTY/CONSTITUENT, I.E., WHICH HAD EITHER PAID IN EXCESS OR WITHDRAWN IN DEFICIT, AFTER DUE ENQUIRY. THE AOS ACTION WAS CONFIRMED B Y THE LD. CIT(A), FINDING THAT THE ASSESSEE HAD NO DETAILS IN RESPECT THEREOF, AND COU LD NOT BE SAID TO REPRESENT AN ASCERTAINED LIABILITY. THE SAME WAS PAYABLE ONLY O N DEMAND AFTER DUE VERIFICATION, WHILE NO SUCH DEMAND HAD ADMITTEDLY BEEN MADE. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 16. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD. WE FIND THAT THE SAME ISSUE HAD ARISEN IN THE ASSESSEES CASE FOR TH E IMMEDIATELY PRECEDING YEAR A.Y. 2005-06 (IN I.T.A. NO. 935/COCH/2008 DATED 31.5.201 1). THE TRIBUNAL, WITH REFERENCE TO ITS EARLIER DECISION IN THE CASE OF CATHOLIC SYRIAN BANK VS. CIT (ASST. ) [IN I.T.A. NO. 10/COCH/2009 DATED 11.2.2011], UPHELD THE REVENUES STAND. THE SAME, IN ITS VIEW, COULD ONLY BE CONSIDERED AS A CONTINGENT LIABILITY, AND THE PRINCIPLES AS ENUMERATED IN THE CASE OF SHREE DIGVIJAY CEMENT MILLS LTD. VS. UOI (2002) 259 ITR 705 (SC) AND CIT VS. T.V.S. IYENGAR & SONS LTD. (1996) 222 ITR 344 (SC), WERE FOUND APPLICABLE IN THE UNDISPUTED FACTS AND CIRCUMSTANCES OF THE CASE. WE , THEREFORE, IN LINE WITH THE DECISIONS BY THE TRIBUNAL, INCLUDING IN THE ASSESSEES OWN CA SE FOR THE EARLIER YEAR, UPHOLD THE ADDITION. WE DECIDE ACCORDINGLY. 17. THE LAST AND EIGHTH GROUND CONTESTS THE LEVY OF INTEREST U/S. 234B(3) OF THE ACT. THIS IS ON THE PREMISE THAT NO LIABILITY UNDER SECT ION 234B(1) AROSE, I.E., ON THE PROCESSING OF THE RETURN U/S. 143(1), WHICH RESULTED IN A REFU ND TO THE ASSESSEE. A LIABILITY U/S. 234B ITA NOS. 18 & 65 /COCH/2009 10 (3) PROVIDES FOR AN INCREASE IN THE LIABILITY U/S. 234B(1), I.E., ON A REGULAR ASSESSMENT. THE ISSUE, AS AGREED TO BY THE PARTIES BEFORE US, S TANDS SINCE DECIDED BY THE JURISDICTIONAL HIGH COURT IN THE ASSESSEES OWN CASE FOR AN EARLIE R YEAR [REPORTED AT 325 ITR 517 (KER.)], WHEREIN IT HELD OF NO SUCH EXCEPTION, I.E., AS CONT ENDED TO BY THE ASSESSEE, FOR THE LEVY OF INTEREST U/S. 234B(3), SO THAT THE INTEREST AS LEVI ED IS IN ACCORDANCE WITH THE PROVISIONS OF LAW. WE DECIDE ACCORDINGLY. 18. IN THE RESULT, THE ASSESSEES APPEAL IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO. 65/COCH/2009 (REVENUES APPEAL) 19. GROUND NO. 2(I) AND 3; GROUND NO. 1 BEING GENER AL IN NATURE, WARRANTING NO ADJUDICATION, RELATES TO THE ASSESSEES CLAIM IN RE SPECT OF BAD DEBTS, CLAIMED IN THE SUM OF ` 2140.05 LAKHS U/S. 36(1)(VII) IN RELATION TO NON-RU RAL BRANCHES. THE SAME STOOD DISALLOWED BY THE AO AS THE SAID CLAIM DID NOT SATI SFY THE CONDITION OF THE SAID PROVISION, WHICH MANDATES THAT THE CLAIM WOULD BE LIMITED TO, I.E., IN THE CASE OF AN ASSESSEE TO WHOM THE PROVISION OF S. 36(1)(VIIA) APPLIES, THE A MOUNT AS EXCEEDS THE CREDIT BALANCE OF THE PROVISION FOR BAD AND DOUBTFUL DEBTS UNDER THAT CLAUSE, ALSO READ WITH S. 36(2)(V) OF THE ACT. THE ASSESSEES STAND, ON THE OTHER HAND, W AS THAT THE SAID CONDITION WOULD ONLY APPLY IN RESPECT OF CLAIM OF DEBTS RELATED TO RURAL BRANCHES. THE SAME STOOD DELETED IN APPEAL FOLLOWING THE DECISION BY THE HONBLE HIGH C OURT IN THE ASSESSEES OWN CASE [REPORTED AT 262 ITR 579 (KER.)], SINCE FOLLOWED BY THE TRIBUNAL IN ITS CASE FOR AYS 2000- 01 AND 2001-02 (IN I.T.A. NOS. 1031 & 1032/COCH/200 4 DATED 28.9.2006). 20. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD. BEFORE US, IT WAS THE COMMON CONTENTION BY BOTH THE PARTIES THAT THE SUBSEQUENT DECISION BY THE FULL BENCH OF THE HONBLE JURISDICTIONAL HIGH COURT [REPORTED AT 326 ITR 174 (KER.)] HAD OVERRULED THE EARLIER DECISION ON THIS ISSUE, WHICH WAS BY THE DI VISION BENCH, AND WOULD, THUS, PREVAIL. THE ASSESSEE, HOWEVER, CLAIMED THAT IT IS ONLY THE PROVISION CREDITED U/S. 36(1)(VIIA) FOR THE RELEVANT YEAR WHICH WOULD BE RELEVANT, AND NOT THE TOTAL AMOUNT OUTSTANDING IN THE PROVISION ACCOUNT. EVEN THOUGH THE SAME IS OF NO MO MENT FOR THE CURRENT YEAR; THE PROVISION FOR THE YEAR, AT ` 54.22 CRORES, EXCEEDING THE AMOUNT CLAIMED IN RESPE CT OF DEBTS ITA NOS. 18 & 65 /COCH/2009 11 WRITTEN OFF U/S. 36(1)(VII) AT ` 2288.42 LAKHS, THE SAME COULD BE RELEVANT IN ANOTHE R YEAR. THE CONTENTION BEING ADMITTEDLY OF NO CONSEQUENCE I N RELATION TO THE CURRENT YEAR, WE DO NOT CONSIDER IT NECESSARY FOR THE PURPOSE OF ADJUDI CATING THE ISSUE ARISING FOR OUR CONSIDERATION, I.E., THE DEDUCTIBILITY OF THE ASSES SEES CLAIM U/S. 36(1)(VII) IN RESPECT OF THE DEBTS CLAIMED AS BAD AND IRRECOVERABLE RELATING TO NON-RURAL BRANCHES FOR THE CURRENT YEAR. EVEN AS CONCEDED TO BY THE ASSESSEE, THE DEDUCTION U/S.36(1)(VII) QUA DEBTS OF BOTH RURAL AND NON-RURAL BRANCHES, CLAIMED AS BAD AND WRITTEN OFF AS IRRECOVERABLE, WOULD HAVE TO CONSIDERED AS BEING SUBJECT TO THE CONDITION OF PROVISO THERETO AS WELL AS S. 36(2)(V). THE FULL BENCH DECISION BY THE JURISDICTIONAL HIGH COUR T HAS ADMITTEDLY RESOLVED THE CONTROVERSY IN FAVOUR OF THE REVENUE, AND NONE OBTA INS. WE DECIDE ACCORDINGLY. 21. GROUND NO. 2(II) AND GROUND NO. 4 OF THE REVENU ES APPEAL RELATES TO THE ASSESSEES CLAIM, AT ` 7989.56 LAKHS, IN RESPECT OF DEPRECIATION ON HTM (H OLD TO MATURITY) CATEGORY OF INVESTMENTS. THE BASIS FOR TH E REVENUES OBJECTION WAS THAT THE INVESTMENTS IN THESE SECURITIES ARE IN THE NATURE O F INVESTMENTS, I.E., REPRESENT CAPITAL ASSETS, IN CONTRADISTINCTION TO CURRENT ASSETS. IN FACT, THE RELEVANT GUIDELINES ISSUED BY THE RBI ALSO STATE THAT THE INVESTMENTS HELD AND CLASSI FIED IN THIS CATEGORY ARE NOT TO BE MARKED TO MARKET, AND WOULD BE CARRIED (IN BOOKS) A T ACQUISITION COSTS UNLESS IT IS MORE THAN THE FACE VALUE, IN WHICH CASE THE PREMIUM WOUL D BE AMORTIZED OVER THE PERIOD REMAINING TO MATURITY. THE CBDT CIRCULAR NO. 665, FOLLOWED BY ITS LETTER DATED 31.1.2006, STATES LIKEWISE, WITH REFERENCE TO THE G UIDELINE ISSUED BY THE RBI. THE LD. CIT(A), HOWEVER, ALLOWED THE ASSESSEES CLAIM IN AP PEAL FOLLOWING THE DECISION BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2000-0 1 (IN I.T.A. NO. 1031/COCH/2004 DATED 28.9.2006); THE BASIS OF THE TRIBUNALS DECIS ION BEING THAT THE SAID INVESTMENTS ARE TO BE TREATED AS THE ASSESSEE-BANKS STOCKIN-TRADE . 22. WE HAVE HEARD THE PARTIES, AND PERUSED THE M ATERIAL ON RECORD. WE FIND A CONSISTENT VIEW ADOPTED BY THE TRIBUNAL IN THE MATTER. THE ISS UE ALSO AROSE IN THE ASSESSEES OWN CASE FOR A.Y. AY 2005-06 (IN I.T.A. NO. 1003/COCH/2 008 DATED 31.5.2011), WHEREAT, OBSERVING THAT THE TRIBUNAL HAD DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE, FINDING THE IMPUGNED INVESTMENT TO BE ONLY A PART OF ITS STOCK- IN-TRADE IN VIEW OF THE DECISION BY THE ITA NOS. 18 & 65 /COCH/2009 12 HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. NEDUNGADI BANK LTD . (SUPRA), CONFIRMED THE DELETION (PARAS 29, 30). THE SAID FIN DINGS WILL BE EQUALLY APPLICABLE AND RELEVANT FOR THE CURRENT YEAR AS WELL, SO THAT WE D ECIDE LIKEWISE FOR THE CURRENT YEAR AS WELL, AND CONFIRM THE DELETION BY THE LD. CIT(A). 23. GROUND NOS. 2(III) AND 5 RELATE TO THE ASSESSEE S CLAIM, PREFERRED IN THE SUM OF ` 5.96 CRORES, TOWARD PROVISION FOR LEAVE ENCASHMENT. THE SAME BEING IN THE NATURE OF A PROVISION, STOOD DISALLOWED BY THE AO WITH REFERENC E TO S. 43B(F), WHICH MANDATES FOR ITS DEDUCTION ONLY ON ACTUAL PAYMENT. IN APPEAL, THE L D. CIT(A) OBSERVED THAT THE ASSESSEE COULD HAVE PRESSED THE CLAIM THROUGH ITS REVISED RE TURN FILED ON 17.1.2008, I.E., U/S. 139(5) AND, HENCE, STOOD RIGHTLY MADE. ON MERITS, H E FOUND THE ASSESSEES CLAIM TO BE COVERED BY THE DECISION IN THE CASE OF EXIDE INDUSTRIES VS UOI, 292 ITR 470 (CAL.), WHEREBY THE HONBLE COURT HAD STRUCK DOWN THE PROVI SION OF S. 43B(F) AS UNCONSTITUTIONAL. 24. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD. THE SAID ISSUE WE FIND ALSO AROSE IN THE ASSESSEES CASE FOR A.Y. 200 5-06 (IN I.T.A. NO. 935/COCH/2008 DATED 31.5.2011), BOTH WITH REGARD TO THE ADMISSIBI LITY OF THE CLAIM AS WELL AS ON MERITS. WE FIND ITS OBSERVATIONS AND FINDINGS IN THE SAID C ASE (CONTAINED AT PARA 23, 24 OF ITS ORDER) AS APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AS WELL, AND ARE REPRODUCED AS UNDER: `24. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. WE SHALL CONSIDER BOTH THE OBJECTIONS BY THE REVENUE TO THE ASSESSEE S CLAIM. THE FIRST IS THE NON-CLAIM PER THE RETURN OF INCOME OR PER THE REVISED RETURN U/S. 139(5). WITHOUT DOUBT, THE SAME DOES NOT REPRESENT A TECHNICAL FORMALITY, SO THAT A CLAI M COULD BE PRESSED BY THE ASSESSEE WITH ABANDON AT ANY TIME. THE APEX COURT IN THE CASE OF JUTE CORPORATION OF INDIA LTD. V. CIT (1991) 187 ITR 688 (SC) HAS CLARIFIED THAT WHILE A NON-CONSIDERATION BY THE AO COULD NOT NORMALLY BE OBJECTED TO BY THE ASSESSEE WHERE N OT PRESSED AS REQUIRED BY LAW, THERE COULD BE SEVERAL REASONS FOR A NON-CLAIM EARLIER BY THE ASSESSEE. THE FIRST APPELLATE AUTHORITY, WHO IS INVESTED WITH ALL THE POWERS OF T HE ASSESSING AUTHORITY, WOULD THEREFORE BE REQUIRED TO BE SATISFIED THAT THE ASSESSEE WAS A CTING BONA FIDE , AND THAT THE GROUND BEING NOW RAISED COULD NOT BE SO EARLIER, AND USE H IS DISCRETION IN ACCORDANCE WITH LAW AND REASON, SO THAT WHERE THERE IS A CHANGE IN CIRC UMSTANCE OR IN LAW, HE WOULD BE JUSTIFIED IN ADMITTING THE ASSESSEES CLAIM RAISED BEFORE HIM FOR THE FIRST TIME. EACH CASE WOULD DEPEND ON ITS OWN FACTS, AND NO HARD AND FAST RULE COULD BE LAID DOWN. IN THE PRESENT CASE, WE CONSIDER THE ASSESSEE AS JUSTIFIED IN RAISING THE CLAIM IN THE MANNER IT ITA NOS. 18 & 65 /COCH/2009 13 DOES. BEING OF THE VIEW THAT ITS CLAIM STOOD HIT B Y S. 43B(F), THE ASSESSEE ITSELF DISALLOWED THE SAME PER ITS COMPUTATION OF INCOME F ORMING PART OF ITS RETURN. THE SUBSEQUENT DECISION BY THE HONBLE CALCUTTA HIGH CO URT IN THE CASE OF EXIDE INDUSTRIES LTD . (SUPRA), WHICH IS DATED 27/6/2007, HOLDING THE PROV ISION OF S. 43B(F) AS ULTRA VIRES , PROMPTED IT TO LODGE A CLAIM IN ITS RESPECT, AND WH ICH COULD, THE DATE FOR FURNISHING THE REVISED RETURN U/S. 139(5) HAVING EXPIRED, ONLY BE DONE BY WAY OF A WRITTEN COMMUNICATION, AND WHICH WAS DONE SOON AFTER. AGREE ABLY, THE `REVISION SOUGHT TO BE MADE WAS NOT ON ACCOUNT OF ANY OMISSION OR INADVERT ENT MISTAKE, BUT, NONETHELESS, BONA FIDE AND JUSTIFIED UNDER THE CIRCUMSTANCES. COULD THE ASSESSEE BE POSSIBLY PENALIZED FOR ACTING IN ACCORDANCE WITH THE LAW, AS UNDERSTOOD ? AS SUCH, THE REFUSAL TO CONSIDER THE ASSESSEES CLAIM ON MERITS BY THE REVENUE IS NOT JU STIFIED. COMING TO SECOND GROUND, I.E., ON MERI TS, THE DECISION IN THE CASE OF EXIDE INDUSTRIES LTD . (SUPRA) HAS SINCE BEEN STAYED BY THE APEX COURT ( IN SLA (CIVIL) CC 12060 DTD. 8/9/2008, COPY ON RECORD AS ANNEXURE D TO THE ASSESSEES WRITTEN SUBMISSIONS DATED 2/9/2010). THE SAID DECISION BEING THE BASIS ON WH ICH THE ASSESSEES CLAIM RESTS, THERE IS NO SCOPE FOR ALLOWANCE OF THE ASSESSEES CLAIM, DIS ALLOWED BY THE REVENUE U/S. 43B(F). WE DECIDE ACCORDINGLY. ACCORDINGLY, THE ASSESSEES CLAIM COUL D NOT BE DENIED ADMISSION, THOUGH WOULD NOT STAND ON MERITS; THE DECISION IN THE CASE OF EXIDE INDUSTRIES LTD. VS. UOI (SUPRA) HAVING SINCE BEEN STAYED BY THE APEX COURT (IN S.L. A. (CIVIL) CC 12060 DATED 8.9.2008). WE, THEREFORE, LIKEWISE UPHOLD THE DISALLOWANCE OF THE ASSESSEES CLAIM, AND ALLOW THE REVENUES RELEVANT GROUND. 25. GROUND NOS. 2(IV) AND 6 RELATE TO THE ADDITION MADE, IN THE SUM OF ` 42.56 LAKHS, IN RESPECT OF UNCLAIMED BALANCE IN THE DEPOSIT ACCOUNT S. THE AO RELIED ON THE DECISION IN THE CASE OF CIT VS. T.V.S.IYENGAR & SONS LTD. (SUPRA). THE SAME STOOD DELETED IN APPEAL BY THE LD. CIT(A), FINDING THE SAID DECISION BY THE APEX COURT AS DISTINGUISHABLE; THERE BEING NO WRITE BACK OF THE SAID DEPOSITS, AND NEITH ER ANY CESSATION OF LIABILITY HAVING BEEN ESTABLISHED BY THE REVENUE, FOR IT TO PRESS S. 41(1 ) OF THE ACT. 26. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD. THE SAID ISSUE ALSO AROSE IN THE ASSESSEES OWN CASE FOR A.Y. 2005-06 ( IN I.T.A. NO. 1003/COCH/2008 DATED 31.5.2011). THE TRIBUNAL DISMISSED THE REVENUES G ROUND FOLLOWING ITS DECISION IN THE CASE OF CIT (ASSTT.) V. CATHOLIC SYRIAN BANK LTD . (IN ITA 66/COCH/2009 DTD. 11/2/2011), ALSO REPRODUCING THEREFROM AT PARA 33 OF ITS SAID O RDER. WE FIND NO CHANGE IN THE FACTS AND ITA NOS. 18 & 65 /COCH/2009 14 CIRCUMSTANCES OF THE CASE AND, ACCORDINGLY, NO REAS ON TO DEPART FROM THE CONSISTENT AND CONSIDERED STAND BY THE TRIBUNAL. WE, THEREFORE, UP HOLD THE DELETION OF THE DISALLOWANCE BY THE LD. CIT(A), DECIDING ACCORDINGLY. 27. GROUND NOS. 2(V) AND 7 RELATE TO AN ADDITION FO R ` 23,221/-, BEING THE SURPLUS AMOUNT REALISED ON SALE OF JEWELLERY PAWNED WITH IT BY THE ASSESSEE. WHILE THE SAME STOOD ADDED BY THE AO BY APPLYING THE GENERAL PRINC IPLES AS LAID DOWN IN THE CASE OF SHREE DIGVIJAY CEMENT MILLS LTD. VS. UOI (SUPRA), THE LD. CIT(A) DELETED THE SAME, FINDING THE DECISION AS DISTINGUISHABLE, AND THAT T HERE WAS NO CESSATION OF LIABILITY IN TERMS OF S. 41(1) OF THE ACT. 28. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. WE FIND THAT THE TRIBUNAL (COCHIN BENCH) HAS TAKEN A CONSISTENT VIEW THAT THE SAID SURPLUS, BEING OUTSTANDING FOR YEARS, ASSUMES THE NATURE OF A TRAD E SURPLUS, VESTING IN THE ASSESSEE, AND ITS ASSESSMENT AS, CONSEQUENTLY, GOVERNED BY THE PR INCIPLES ENUNCIATED IN THE CASE OF CIT VS. T.V.S. IYENGAR & SONS LTD . (SUPRA). THE FACT OF NON WRITE BACK OR APPROPRIA TION OF THE SAME IN THE ACCOUNTS WAS FOUND BY IT AS NOT MATERIA L TO THE DECISION IN THE MATTER. RELIANCE FOR THE PURPOSE IS PLACED ON THE DECISION IN THE CASE OF CIT (ASST.) VS. CATHOLIC SYRIAN BANK LTD . (IN I.T.A. NO. 66/COCH/2009 DATED 11.2.2011) AND IN THE ASSESSEES OWN CASE FOR A.Y. 2005-06 (IN I.T.A. NO. 1003/COCH/2009 DATED 31/5/2011, PARAS 34, 35). 29. IN THE RESULT, THE REVENUES APPEAL IS P ARTLY ALLOWED. SD/- SD/- (N.VIJAYAKUMARAN) (SA NJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 30TH JUNE, 2011 GJ COPY TO: 1 . SOUTH INDIAN BANK LTD., SIB HOUSE, MISSION QUARTERS , P.B. NO. 28, T.B.ROAD, TRICHUR-1. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -1(1), TRICHUR. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, KOCH I. ITA NOS. 18 & 65 /COCH/2009 15 4. THE COMMISSIONER OF INCOME-TAX, TRICHUR 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE.