Col. R.D. Nikam Sainik Sahakari Bank Ltd., Satara V. Assistant Commissioner of Income-tax,

ITA 207/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9409 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 27-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVANAND KALAKERI
• Assessee Lawyers: M K KULAKARNI
• Keywords: Business expenditure; Search and seizure; Bad and doubtful debts; Revenue expenditure
• Section: 143(3); 234B; 145

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.207 AND 208/PN/2015 / ASSESSMENT YEAR : 2010-11 & 2011-12 COL.R.D. NIKAM SAINIK SAHAKARI BANK LTD., SHIVAJI MAHARAJ CIRCLE, POWAI NAKA, 178/2, B, RAVIVAR PETH, SATARA 415001. PAN : AABAS2355J. . / APPELLANT V/S A SST. COMMISSIONER OF INCOME TAX, SATARA CIRCLE, SATARA. . / RESPONDENT / APPELLANT BY : SHRI M.K. KULAKARNI / RESPONDENT BY : SHRI SHIVANAND KALAKERI / ORDER PER ANIL CHATURVEDI, AM : THESE TWO APPEALS FILED BY THE ASSESSEE ARE EMANATIN G OUT OF A CONSOLIDATED ORDER OF COMMISSIONER OF INCOME T AX (A) - 4, PUNE DT. 18.12.2014 FOR THE ASSESSMENT YEARS 2010-11 A ND 2011- 12. 2. BEFORE US, AT THE OUTSET LD.AR SUBMITTED THAT THOUGH THE APPEALS FILED BY THE ASSESSEE ARE FOR DIFFERENT ASSESSM ENT YEARS / DATE OF HEARING :18.05.2017 / DATE OF PRONOUNCEMENT: 31.05.2017 2 ITA NO.207/PN/2015 ITA NO.208/PN/2015 BUT THE FACTS AND ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICAL EXCEPT FOR THE ASSESSMENT YEAR AND THE AMOUNTS INVOLVE D AND THEREFORE THE SUBMISSIONS MADE BY HIM WHILE ARGUING ONE AP PEAL WOULD BE EQUALLY APPLICABLE TO THE OTHER APPEAL ALSO AND T HEREFORE, BOTH THE APPEALS CAN BE HEARD TOGETHER. THE AFORESA ID SUBMISSION OF THE LD.AR HAS NOT BEEN OBJECTED TO BY LD.DR. WE THERE FORE FOR THE SAKE OF CONVENIENCE PROCEED TO DISPOSE OF BOTH THE APPEALS BY A CONSOLIDATED ORDER, HOWEVER, WE PROCEED WITH NARRATING THE FACTS FOR ASSESSMENT YEAR 2010-11. 3. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORDS ARE AS UNDER: ASSESSEE IS A CO-OPERATIVE SOCIETY STATED TO BE ENGA GED IN THE BANKING BUSINESS. IT FILED ITS RETURN OF INCOME FOR A.Y . 2010-11 ON 25.09.2010 DECLARING TOTAL INCOME AT RS.2,54,19,320/-. SUBSEQUENTLY ASSESSEE REVISED ITS RETUR N OF INCOME ON 30.03.2012 BY DECLARING TOTAL INCOME OF RS.2,60,75,854/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT V IDE ORDER DT.10.12.2012 AND THE TOTAL INCOME WAS DETERMINED AT RS.3,08,32,880/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE C ARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE CONSOLIDATED ORDER FO R A.Y. 2010-11 AND 2011-12 DATED 18.12.2014 GRANTED PARTIAL RE LIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSES SEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) WAS NOT JUSTIFIED IN DISMISSING THE GROUN D OF APPEAL OF THE ASSESSEE-APPELLANT HEREIN RESULTING INTO CONFIRMING THE ADDITION MADE BY THE AO OF CLAIM OF BROKEN PERIOD INTEREST O F RS.28,15,258/- 3 ITA NO.207/PN/2015 ITA NO.208/PN/2015 WHICH IN FACT AND IN LAW AMOUNTS TO NOT FOLLOWING T HE HONBLE JURISDICTIONAL HIGH COURT IN HDFC CASE (SUPRA). TH E ADDITION CONFIRMED BE DELETED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISAL LOWANCE OF RS.10,00,787/- MADE BY THE AO OF BAD DEBTS WRITTEN OFF UNDER SEC.36(1)(VII) AND PROVISIONS OF S.36(1)(VII-A) MAD E APPLICABLE TO CO.OP.BANKS FROM 01.04.2007 ONWARDS AND ALSO HONBL E APEX COURT JUDGMENT IN THE CASE OF CATHOLIC SYRIAN BANK LTD. (SUPRA). THE LD.CIT(A) CONFIRMED THE DISALLOWANCE MADE BY TH E AO UNDER MISCONCEPTION OF LAW. IT BE ALLOWED TO THE APPELLA NT BANK. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISAL LOWANCE OF RS.1,85,049/- MADE BY THE AO OUT OF RS.5,09,449/-. THE DISALLOWANCES MADE BY AO AND CONFIRMED BY LD.CIT(A) ARE CONTRARY TO THE PROVISIONS OF LAW. THEY BE ALLOWED TO THE A PPELLANT BANK. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEVY OF INTEREST U/S 234A, 234B AND 234C IS NOT JUSTIFIED. 4. GROUND NO.1 IS WITH RESPECT TO BROKEN PERIOD INTEREST. 4.1 ON PERUSAL OF THE DETAILS FURNISHED BY THE ASSESSEE DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED THAT A SSESSEE HAD CLAIMED RS.28,15,258/- AS BROKEN PERIOD INTEREST. TH E ASSESSEE WAS ASKED TO SHOW AS TO WHY THE BROKEN PER IOD INTEREST BE DISALLOWED, TO WHICH THE ASSESSEE INTER-ALIA SUBMITTED ITS EXPLANATION AND ALSO RELIED ON THE DECISION OF MUMBAI HIGH CO URT IN THE CASE OF AMERICAN EXPRESS INTERNATIONAL BANKING CORPORATION VS. CIT [2002] 258 ITR 601. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO. HE DISTING UISHED THE FACTS OF THE CASE AND THAT OF AMERICAN EXPRESS INTE RNATIONAL BANKING CORPORATION(SUPRA) AND WAS FURTHER OF THE VIEW THA T BROKEN PERIOD INTEREST IS PART OF COST OF THE GOVERNME NT SECURITIES, ANY LOSS OR GAIN CAN BE ASCERTAINED ONLY WHEN THE SECURITIES ARE SOLD. HE THEREAFTER BY RELYING ON THE INST RUCTION OF CBDT NO.17/2018 DT.26.11.2008, DISALLOWED THE CLAIM OF BROK EN PERIOD INTEREST OF RS.28,15,258/-. AGGRIEVED BY THE ORDER OF AO, 4 ITA NO.207/PN/2015 ITA NO.208/PN/2015 ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A) WHO UPHELD T HE ORDER OF AO BY HOLDING AS UNDER : 7.1 . TO DECIDE THE ISSUE, IT I S NECESSARY TO UNDERSTAND THE MEANING OF EXPRESSION 'BROKEN PERIOD OF I NTEREST ' , WHICH I S COMMONLY USED IN CASE OF BANKS . AS PER THE RBI GUIDELINES, THE BANKS PURCHASE DATED GOVERNMENT SECU R ITIES , WHICH HAVE THE ISSUE PRICE, BEAR INTEREST, HAVE MATURITY PERIOD. T HESE SECURIT I ES CAN BE PURCHASED EITHER ON THE DATE OF ISSUE O R AFTER THE DATE OF I SSUE BUT BEFORE THE MATUR I TY DATE OR BETWEEN TWO DUE DATES OF I NTEREST IN CASE O F SECURITIES WHERE I NTEREST I S PAY A BLE P E RIODICALLY. IN T HE FI R ST CATEGO R Y O F SECURITIES, WHERE INTE R EST I S PAY AB L E O N MATUR I T Y , T H E BAN K PURC H ASES T H OSE SECURITIES AFTER C E R TAIN TIME OF THE DAT E OF ISSUE AND BY THE TIME SE CUR I T IES A R E PURCHASE O BY THE BANK, CERTAIN AMOUNT OF INTEREST HAS ALREADY A CC RUED ON THE SECURITIES, PAYABLE BY THE GOVERNMENT T O THE PURCHASER BANK . IN OTHER WORDS, THE BANK PURCHASED THE SECURITIES BY PAYING THE COMPOSITE SUM, COMPRISING THE ISSUE PRICE, AND ACCRUED INTEREST TILL THE DATE OF PURCHASE. IT IS THIS ELEMENT OF INTEREST, WHICH IS PAID BY THE BANK, AT THE TIME OF PURCHASE, FOR THE PERIOD BETWEEN THE DATE OF ISSUE AND DATE ' OF PURCHASE, IS KNOWN AS 'BROKEN PERIOD INTEREST'. THE QUESTION IS WHETHER SUCH COMPOSITE PRICE CAN BE APPORTIONED OR BIFURCATED INTO INTEREST ACCRUED UP TO DATE OF PURCHASE AND BA LANCE OF THE PRICE AND WHETHER THE BANK IS ENTITLED TO HAVE DEDU CTION OF THIS ELEMENT OF INTEREST I . E. 'BROKEN PERIOD INTEREST' FROM ITS INCOME. THE OTHER CATEGORY OF GOVERNMENT SECURITIES IS WHERE INTEREST IS PAYABLE PERIODICALLY MOSTLY AT QUARTERLY, HALF YEAR LY INTERVALS AND SECURITIES ARE PURCHASED FOR A COMPOSITE CONSIDERAT ION MADE UP OF ITS FACE VALUE AND INTEREST COMPUTED DE DIE IN DIEM, FROM THE LAST DUE DATE TO THE DATE OF PURCHASE FALLING BEFORE THE NEXT DUE DATE. THE INTEREST PAYABLE FROM THE LAST DUE DATE OF INTE REST TO THE DATE OF PURCHASE FALLING BEFORE THE NEXT DUE DATE IS ALS O KNOWN AS BROKEN PERIOD INTEREST OR ATTRIBUTABLE INTEREST . 7.2. COMING TO THE FACTS OF THE PRESENT CASE, THE L D. COUNSEL EXPLAINED THAT THE INTEREST FOR THE BROKEN PERIOD T HAT WOULD HAVE BEEN REALIZED BY THE SELLER AT MATURITY PERIOD WAS PAID TO THE SELLER AT THE TIME OF PURCHASE OF SECURITIES AND DE BITED TO ITS PROFIT & LOSS A/C. THIS APPARENTLY SHOWS THAT THE APPELLANT ACQUIRED GOVT. SECURITIES WHERE INTEREST IS PAYABLE AT MATUR ITY PERIOD OF THE SECURITIES. IN SUCH A CASE, THE 'BROKEN PERIOD INTE REST' PAID ON PURCHASE OF SECURITIES FORMS INTEGRAL PART OF COST OF SECURITIES AND SUCH COMPOSITE CONSIDERATION CANNOT BE BIFURCATED I NTO BROKEN PERIOD INTEREST AND COST OF THE SECURITIES EVEN THO UGH THE DIFFERENCE BETWEEN THE FACE VALUE AND THE PURCHASE PRICE IS BASED MAINLY ON THE 'BROKEN PERIOD INTEREST'. THE BROKEN PERIOD INTEREST CANNOT BE SEGREGATED AND CLAIMED AS DEDUCTION BY TH E BANK FOR THE REASON THAT SUCH EXPENDITURE WAS INCURRED AS CA PITAL OUTLAY. SUCH EXPENDITURE HAS TO BE DEALT WITH AT THE TIME OF SALE OF SECURITIES AND NOT I N THE Y E AR OF PURCHASE OF SECURITIES . THIS IS IN L I NE WITH THE RAT I O OF THE JUDGMENT OF THE APEX COURT I N THE CASE OF VIJAYA BANK V CIT (187 ITR 541) . IN THIS CONTEXT, REFERENCE CAN ALSO BE MADE TO THE CBDT INSTRUCTION NO. 17/2008 DA TED 26/11/2008 WHEREIN IT I S MENTIONED AS UNDER : 5 ITA NO.207/PN/2015 ITA NO.208/PN/2015 'IN CASES WHERE ASSESSEE BA N K PURCHASES SECUR I T I ES UNDER CAPI TAL ACCOUNT AT A PRICE INCLUS I VE OF ANY ACCRUED INT EREST , T HE E N T I RE PURC H ASE CONSIDERATION I S IN THE NATURE OF CAPITAL OUTLAY . THEREFORE , ANY INTERES T ELEMENT INCLUDED IN THE PURCHASE CONSIDERATION IS NOT ALLOWABLE A S EXPENDITURE AGAINST INCOME ACCRUING ON THOSE SECURITIES [VIJAYA BANK V CIT ( 187 ITR 541)] ' 7.3 . THE RAJASTHAN HIGH COURT IN CIT VS BANK OF RAJASTHA N LTD . REPORTED I N 316 ITR 391 FOLLOWED THE APEX COURT DECISION IN V IJAYA BANK CASE AND DISSENTED FROM THE BOMBAY HIGH COURT DECISION IN AMERICAN EXPRESS INTERNATIONAL BANKING CO-OPERATION REPORTED IN 258 ITR 601 . THE REASONING GIVEN BY THE HON'BLE COURT IN CHOOSIN G TO FOLLOW THE VIJAYA BANK CASE IS GIVEN AT PARAS 6 TO 10 OF THE SAID JUDGEMENT WHICH IS REPRODUCED HEREIN UNDER: '6. A LOOK AT THE JUDGMENT IN V I JAYA BANK LTD. ' S CASE (SUPRA) DOES SHO W , THA T OF COURSE THAT JUDGMENT DID CONSIDER THE PROVISIONS OF SECTION 18, AS THEY EXISTED AT THAT TIME, BUT THEN , A LOOK AT THE QUESTION FRAMED THEREIN , DOES SHOW , THA T THE PRECISE QUESTION WAS, AS TO WHETHER DEDUCTION COULD BE CLAIMED U N DER SECTIONS 1 9 , 20 AND 37 OF THE INCOME-TAX ACT , FOR THE AMOUNT OF RS. 58 , 568 , BEING INT EREST ACCRUED ON SECURITIES TAKEN OVER BY THE ASSES SEE- BANK, FROM JAYALAKSHMI BANK LTD . AND RS . 11,630 BEING THE INTEREST ACCRUED UP TO THE DATE OF PURCHASE, IN THE CASE OF SECURITIES PURCHASED BY THE ASSESSEE BANK FROM THE OPEN MARKET , AND RE LYI NG UPON ENGLISH JUDGMENT IN IRC V. PILCHER [1949J 31 TAX CASES 3 1 4 , 332 (CA) , W HERE IN IT WAS HELD THAT I T I S A WELL - SETTLED PRIN C IPLE , THAT OUTLAY ON THE PURCHASE OF AN I NCOME- BEARING ASSET, I S I N THE NATURE OF CAPITAL OUTLAY , AND NO PART OF THE CAPITAL , SO LAID OUT CAN, FOR I N COM E - TO X P U RPOSES , BE SET OFF AS EXPEND I TURE , AGA I NST I NCOME ACCRU I NG FROM T HE ASSET IN QUESTION , AND IT WAS HEL D, T HAT IN THAT IN STANT CASE , T HE ASSESS E E PURCHASED SECUR I TIES , AND THE PRICE PA I D FOR T HE SECURITIES WAS DETERMINED W IT H REFERENCE TO THEIR ACTUAL VALUE AS WELL AS T HE I NTEREST, WHICH HAD ACCRUED ON THEM T I LL THE DATE OF PURCHASE , AND IT WAS FOUND, THAT THE FACT REMAINS , THAT WHATEV E R WAS TH E CONS I DERAT I ON , WH I CH PROMPTED T HE A S SESSEE TO PURCHASE T H E SE C URITIES , TH E P R IC E PA I D FOR THEM W AS I N THE N ATURE OF A CAP I TAL O UT L AY , AN D N O P A RT OF IT C AN BE SE T OF F A S EXPENDITURE AGAINST IN COME ACCRU I NG O N TH OSE S E C URITIES. SUB SEQU ENTLY, WH E N THESE SECURITIES YIELDED INCOME BY WAY OF INTEREST, SUCH I NCOME ATTRACTED SECT I ON 18. THUS , THE CLAIM FOR DEDUCTION WAS FOUND TO BE NOT ALLOWABLE . 7. THEN, A LOOK AT THE JUDGMENT IN AMERICAN EXPRESS INTERNATIONAL BANKING CO R PN ' S CASE (SUPRA) SHOWS , THAT IT DOES LOOK INTO THE JUDGMENT I N V I JAYA BANK LTD . 'S CASE (SUP R A) , AND SUBSTANTIALLY PROCEEDS ON THE ASPECT OF METHOD OF A C CO UN T I NG A DOPTED BY THE BANK CONCERNED. THEN, I T WAS C ONSIDERED, THAT SIN C E A T T HE TIME WHEN THE SECURITY WAS SOLD , THE ASSESSEE DID RECEIVE AN AMOUNT REPRESENTING INTEREST FOR THE BROKEN PERIOD, AS WAS PAID BY THE ASSESSEE ALSO, AND THEREFORE , WHEN THE ASSESSEE IS TAXED ON THE AMOUNT RECEIVED B Y THE ASSESSEE AT THE TIME OF SALE OF THE SECURITY ON ENT IRE AMOUNT OF INTEREST COMPONENT THEREOF, NOT ALLOWING DEDUCTION FOR THE B ROKEN PERIOD I NTEREST, PAID BY THE ASSESSEE, WOULD RESULT INTO DOUBLE TAXATION . THEREFORE , I T WAS HELD TO BE AN ALLOWABLE DEDUCTION . TO PRECISELY QUOTE THE WORDS USED IN THE SAID JUDGM ENT, WHICH READS AS UNDER: 6 ITA NO.207/PN/2015 ITA NO.208/PN/2015 ' IN THE PRESENT CASE , AS HELD BY THE TRIBUNAL, THE DEPARTMENT HAS PROCEEDED TO COMPUTE THE ENTIRE I NCOME UNDER SECTION 28. IN THIS CASE, THE DEPARTMENT HAS SOUGHT TO TAX THE BROKEN P ERIOD INTEREST RECEIVED UNDER THE HEAD 'BUSINESS ' AND NOT UNDER THE HEAD (INTEREST ON SECURITIES . .. ', ONCE THE DEPARTMENT SEEKS TO ASSESS BROKEN PERIOD INTEREST UNDER THE HEAD ( BUS I NESS ', THEN THE DEPARTMENT COULD NOT HAVE REJECTED THE IMPUGNED ADJ USTMENT IN THE METHOD OF ACCOUNTING ADOPTED BY THE BANK UNLESS THE DEPARTMENT WAS IN A POSITION TO PROVE THAT THE METH OD ADOPTED BY THE BANK DID NOT DISCLOSE THE TRUE AND PROPER INCOM E . . .. ' IN OUR VIEW, SO FAR AS TAXABILITY OF INCOME FROM INTEREST BY THE ASSESSEE, SO ALSO ENTITLEMENT TO CLAIM DEDUCTION, I S A MATTER, WITH REGARD TO WHICH THERE IS NO MATERIAL OR SIGNIFICANT DIFFERENCE, CONSEQUENT UPON DELETIONS OF THE PROVISIONS OF SECT IONS 18 AND 19; OBVIOUSLY SECTIONS 20 AND 21 ARE NOT RELEVANT FOR THE PRESENT PURPOSE. THAT BEING THE POSITION, THE RATIO PROPOUN DED IN VIJAYA BANK LTD. ' S CASE (SUPRA), EVEN THOUGH IT PROCEEDS ON CONSIDER ATION OF THE THEN PROVISIONS OF SECTIONS 18 AND 19, STILL DOES HOLD GOOD . THEN WE TAKE UP THE JUDGMENT IN AMERICAN EXPRESS IN TERNATIONAL BANKING CORPN. ' S CASE (SUPRA) . A READING OF THAT JUDGMENT SHOWS THAT, REASONS GIVEN BY T HE BOMBAY HIGH COURT , FOR DISTINGUISHING THE JUDGMENT IN VIJAYA BANK LTD . 'S CASE (SUPRA) PROCEED ON A DIFFERENT LINE OF REASONING. WHILE IN OUR V IEW , WHEN THE SUPREME COURT JUDGMENT PROCEEDS ON THE ESTABLISHED LEGAL PRINCIPLE, DEDUCE D FROM PREVIOUS ENGLISH JUDGMENT, WITH ALL HUMILITY AT OUR COMMAND , WE FEEL BOUND BY THE RATIO LAID DOWN IN VIJAYA BANK LTD .' S CASE (SUPRA). EVEN OTHERWISE, SO FAR AS THE REASONING IN AMERICAN EXPRESS INTERNATIO NAL BANKING CORPN.'S CASE (SUPRA) IS CONCERNED , WE DO NOT FIND OURSELVES ABLE TO AGREE WITH THE REASONING, INASMUCH AS IF CARRIED TO LOGICAL CONCLUSION , IT PERMITS A POST-MORTEM , OF THE PURCHASE COMPONENT OF THE ASSET, AND PERMITS DEDUCTION OF INTEREST ELEMENT PAID , AS BUSINESS EXPENDITURE. WE ARE AFRAID ON T HE FACE OF THE JUDGMENT I N VIJAYA BANK LTD . ' S CASE (SUPRA) TH I S CANNOT BE SA I D TO BE PERMISSIBLE . 10. THUS , IN VIEW OF THE RATIO LAID DOWN I N VIJAYA BA N K L T D. ' S C AS E ( SUPRA) , W HI C H VERY MUCH APPLIES TO THE CIRCUMSTANCES AND FACTS OF THE PRESEN T CA S E, THE JUDGMEN T OF THE LEARNED TRIBUNAL CANNOT BE SUSTA I NED . ' 7.3.1 . THUS THE RAJASTHAN HIGH COURT IN THE CASE R EFERRED TO SUPRA DIFFERED FROM THE BOMBAY HIGH COURT DEC I SION IN THE CASE OF AMERICAN EXPRESS, WHICH RELATED TO ASSESSMENT YEARS 1974-75 TO 1977-78, WHEREIN THERE WAS SEPARATE SECTION 18 FOR ASSESSING INTERES T INCOME. IT IS ALSO SEEN THAT THE BOMBAY HIGH COURT DECISION WAS RENDER ED FOR THE PERIOD WHEN THE HYBRID SYSTEM OF ACCOUNTING WAS PERMISSIBL E BUT WHICH IS NOW IMPERMISSIBLE IN VIEW OF THE AMENDMENT OF SEC. 145 OF THE ACT, WITH EFFECT FROM 01 . 04 . 1997. KEEPING IN VIEW THE DECISION OF THE HON'BLE A PEX COURT IN VIJAYA BANK CASE (SUPRA) WHICH HAS BEEN FOLLOWED BY THE RAJASTHAN AND BOMBAY HIGH COURTS IN BANK OF RAJASTH AN LTD., IT IS HELD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN NOT ALL OWING BROKEN PERIOD INTEREST AS REVENUE EXPENDITURE. GROUND OF APPEAL NO.4 FOR A.Y. 2010-11 & . GROUND NO.L FOR A.Y. 2011-12 STANDS DISMISSED. 7 ITA NO.207/PN/2015 ITA NO.208/PN/2015 AGGRIEVED BY THE ORDER OF LD.CIT(A) ASSESSEE IS NOW IN APP EAL BEFORE US. 5. BEFORE US, AT THE OUTSET, LD.A.R. SUBMITTED THAT THE ISS UE IN THE PRESENT CASE IS DIRECTLY COVERED IN ASSESSEES FAVO UR BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V S. HDFC BANK LIMITED REPORTED IN [2014] 366 ITR 505 AND THE DECISION OF PUNE TRIBUNAL IN THE CASE OF PRATHAMIK SHIKSH AK SAHAKARI BANK LTD., VS. ACIT IN ITA NO.1725/PN/2014 ORDE R DT.18.05.2016. HE ALSO PLACED ON RECORD THE COPY OF THE A FORESAID DECISIONS. HE THEREFORE SUBMITTED THAT THE GROUND OF ASS ESSEE BE DECIDED IN ITS FAVOUR. LD.D.R. ON THE OTHER HAND, SUPPORTE D THE ORDER OF AO AND LD.CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO ALLOWABILITY OF BROKEN PERIOD INTEREST AS AN EXPENSE. WE FIND THAT AN IDENTICAL ISSUE OF BROKEN PERIOD INTEREST WAS BEFORE THE HONBLE B OMBAY HIGH COURT IN THE CASE OF HDFC BANK LIMITED (SUPRA) AND TH E SAME WAS DECIDED IN FAVOUR OF THE ASSESSEE BY HONBLE BO MBAY HIGH COURT BY FOLLOWING THE DECISION IN THE CASE OF AMERICA N EXPRESS INTERNATIONAL BANKING CORPORATION (SUPRA). THE QU ESTION OF LAW BEFORE THE HONBLE HIGH BOMBAY COURT IN THE CASE O F HDFC BANK LTD. (SUPRA) AND THE OBSERVATIONS OF HONBLE BOMBAY HIGH COURT ARE REPRODUCED HEREIN. ( B) WHETHER THE INCOME-TAX APPELLATE TRIBUNAL WAS C ORRECT IN LAW IN HOLDING THAT THE BROKEN PERIOD INTEREST IS ALLOWABL E AS A DEDUCTION, IN SPITE OF THE HONBLE SUPREME COURTS DECISION IN THE CASE OF VIJAYWA BANK LTD. V. ADDL.CIT [1991] 187 ITR 541 (S C) AND THE 8 ITA NO.207/PN/2015 ITA NO.208/PN/2015 RAJASTHAN HIGH COURTS DECISION IN THE CASE OF CIT V. BANK OF RAJASTHAN LTD. [2009] 316 ITR 391 (RAJ)? 6. EVEN AS FAR AS QUESTION (B) IS CONCERNED, WE FI ND NO INFIRMITY IN THE ORDERS PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) OR THE INCOME-TAX APPELLATE TRIBUNAL. IN DECIDING THI S ISSUE, THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE INCOME- TAX APPELLATE TRIBUNAL HAVE MERELY FOLLOWED THE JUDGMENT OF THIS COURT IN THE CASE OF AMERICAN EXPRESS INTERNATIONAL BANKING CORPORATI ON VS. CIT REPORTED IN [2002] 258 ITR 601 (BOM). ON GOING THR OUGH THE SAID JUDGMENT, WE FIND THAT QUESTION (B) REPRODUCED ABOV E AND PROJECTED AS SUBSTANTIAL BY MR. SURESH KUMAR IS SQUARELY ANSW ERED BY THE JUDGMENT OF THIS COURT IN THE CASE OF AMERICAN EXPR ESS INTERNATIONAL BANKING CORPORATION (SUPRA). IN VIEW THEREOF, WE D O NOT FIND THAT EVEN QUESTION (B) GIVES RISE TO ANY SUBSTANTIAL QUE STION OF LAW THAT NEEDS TO BE ANSWERED BY THIS COURT. 7. BEFORE US, REVENUE HAS NOT PLACED ANY CONTRARY BINDING DECISION IN ITS SUPPORT NOR HAS PLACED ANY MATERIAL TO SHO W THAT THE AFORESAID DECISION OF HONBLE BOMBAY HIGH COURT HAS BE EN SET ASIDE BY APEX COURT. WE THEREFORE RESPECTFULLY FOLLOWING T HE RATIO OF DECISION IN THE CASE OF HDFC BANK LTD., (SUPRA) HOLD THA T BROKEN PERIOD INTEREST IS DEDUCTIBLE. THUS, THE GROUND NO.1 OF THE ASSESSEE IS ALLOWED. 8. GROUND NO.2 IS WITH RESPECT TO DISALLOWANCE OF BAD DEBTS. 8.1 AO ON PERUSING THE PROFIT AND LOSS ACCOUNT NOTICED T HAT ASSESSEE HAD DEBITED AN AMOUNT OF RS.10,00,787/- ON ACCOUNT OF BAD DEBTS WRITTEN OFF. THE ASSESSEE WAS ASKED TO EXP LAIN AS TO HOW THE SAME IS AN ALLOWABLE EXPENDITURE. THE SUBMISSION O F THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO AO AS AO WAS OF T HE VIEW THAT THE PROVISION OF RESERVE ON ACCOUNT OF BAD DEBTS HAS ALREADY BEEN ALLOWED TO THE ASSESSEE IN EARLIER ASSESSMENT YEA RS AND THEREFORE THE BAD DEBTS WRITTEN OFF DURING THE YEAR CA NNOT BE ALLOWED AS ALLOWABLE EXPENDITURE. HE WAS FURTHER OF THE VIEW THAT THE BAD DEBTS WRITTEN OFF SHOULD HAVE BEEN ADJUSTED FROM THE 9 ITA NO.207/PN/2015 ITA NO.208/PN/2015 RESERVES CREATED BY ASSESSEE. HE ACCORDINGLY DISALLOWE D THE CLAIM OF ASSESSEE. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CAR RIED THE MATTER BEFORE LD.CIT(A) WHO UPHELD THE ORDER OF AO BY HOL DING AS UNDER : 6.2. I HAVE CONSIDERED THE SUBMISSION MADE ON THE BEHALF OF THE APPELLANT. THE FINANCE ACT, 2007 INTRODUCED W.E.F . 01 . 04 . 2007 ALLOWED CO-OPERATIVE BANKS, OTHER THAN A PRIMARY AG RICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTUR AL AND RURAL DEVELOPMENT BANK, TO MAKE PROV I SION FOR THE BAD AND DOUBTFUL DEBTS OF AN AMOUNT UPTO 7.5% OF THE TOTAL I NCOME COMPUTED BEFORE CHAPTER VIA DEDUCTIONS AND DEDUCTIO N UNDER THIS CLAUSE PLUS AN AMOUNT NOT EXCEEDING 10% OF THE AGGR EGATE OF THE AVERAGE ADVANCES MADE BY RURAL BRANCHES OF SUCH BAN K. SINCE THE APPELLANT IS ENTITLED TO BOTH THE DEDUCTIONS NA MELY SEC . 36(1)(VII) AND SEC. 36(1)(VIIA), THE ASSESSING OFFI CER HAS HELD THAT SINCE THE APPELLANT HAD ALREADY CLAIMED THE PR OVISION FOR RESERVES ON ACCOUNT OF BAD AND DOUBT DEBTS IN THE E ARLIER ASSESSMENT YEARS, THE BAD DEBTS HAD TO BE REDUCED F ROM THE RESERVES CREATED BY IT AND NOT CLAIMED AS AN EXPEND ITURE IN THE P & L ACCOUNT. ACCORDING TO HIM , THE PROVISO TO SEC. 36(1)(VII) LIMITED THE WRITE OFF OF BAD DEBTS TO THE EXTENT I T EXCEEDED THE CRED I T BALANCE IN THE PROVISION FOR BAD A N D DOUBTFUL DEBTS MADE U/S 36(1)(VIIA) . I HAVE EXAMINED THE STAND OF THE ASSESSING OFFICER WITH REGARD TO THE PROVISION OF LAW AS ENUNCIATED BY THE HON'BLE SUPREME COURT IN CATHOLIC SYRIAN BAN K LTD . REPORTED IN 343 ITR270. THE SUPREME COURT HELD THER EIN THAT THE BENEFIT OF WRITE OFF OF BAD DEBTS U/S 36(1)(VII) IS AN ADDITION TO THE BENEF I T OF PROVIS I ON MADE FOR BAD AND DOUBTFUL DEBTS U/S 36(1)(VI I A) AND BOTH OPERATE I N SEPARATE FIELDS. THE DEDUCT I ON IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS I S ALLOWED, I RRESPECTIVE O F ANY ACTUA L WR I TE OFF . HOWEVER , SO F AR AS ACTUALLY WR I TE OFF BAD DEBTS IS CONCERNED, IT IS SEEN THAT THE SAME IS SUBJECT TO THE CONDITION LAID DOWN IN THE PROVISO AS WELL AS EXPLANATION TO SEC . 36(1)(VI I ). THUS W I TH THE INTRODUCTION OF THE PROVISO TO SECT I ON 36(1)(VII) W.E.F. 01 . 04 . 1985, THE LEGISLATURE THOUGHT IT FIT TO RESTRICT THE CLAIM OF BAD DEBTS A CTUALLY WRITTEN OFF , ONLY IF THE SAME WAS OVER AND ABOVE THE CREDIT BALA NCE IN THE PROVISION FOR BAD AND DOUBTFUL DEBTS ACCOUNT. I T THEREFORE NEEDS TO BE EXAMINED WHETHER SUCH BAD DEBTS CLAIM E XCEEDED THE CREDIT BALANCE IN THE PROVISION FOR BAD AND DOU BTFUL DEBTS ACCOUNT AVAILABLE AS ON 31 . 03.2009, THAT IS BEGINNING OF THE ACCOUNTING YEAR. PERUSAL OF THE FINANCIAL ACCOUNTS FURNISHED BY THE APPELLANT SHOWS THAT THE APPELLANT HAS CREATED PROVISION FOR BAD AND DOUBTFUL DEBTS RESERVES AMOUNTING TO RS . 2,60,00,000/- FOR THE YEAR ENDED 31 . 03.2006, RS. 55 , 44,793/- FOR THE YEAR ENDED 31 . 03.2007, RS. 79,07,000/- FOR THE YEAR ENDED 31 . 03.2008 AND RS.1,00,00,000/- FOR THE YEAR ENDED 31 . 03.2009. THE BDDR (BAD AND DOUBTFUL DEBT RESERVE) I N THE BALANCE SHEET AS ON 31 . 03.2009 THUS STOOD AT RS. 5,00,00,000/- IN THE COMPUTATION OF INCOME, THE APPELLANT CLAIMED RS . 21,81 , 431/- FOR YEAR ENDED 31 . 03.2007, RS. 29,61,319/- FOR THE YEAR ENDED 31 . 03.2008 AND RS . 44,24,372/- FOR THE YEAR ENDED 31 . 03.2009 UNDER THE PROVISION OF SEC . 36(1)(VIIA). SINCE THE AMOUNT OF BAD DEBTS CLA I MED U/S 36(1)(VII) I . E. RS.10,00,787/- DOES NOT EXCEED THE CREDIT BALANCE IN THE PROVISION FOR BAD AND 10 ITA NO.207/PN/2015 ITA NO.208/PN/2015 DOUBTFUL DEBTS MADE BY THE APPELLANT IN ITS BOOKS A S ON 31 . 03.2009, THE ASSESSING OFFICER IS PERFECTLY CORRECT IN STATING THAT THE WRITE OFF OF BAD DEBTS OUGHT TO HAVE BEEN MADE FROM THE RESERVES CREATED BY IT AND NOT DEBITED THE SAME TO THE PROFIT & LOSS ACCOUNT. IF WE READ THE EXPLANATION TO SEC.36( 1)(VII), WHICH PROVIDES THAT ANY BAD DEBTS OR PART THEREOF WRITTEN OFF AS IRRECOVERABLE I N THE ACCOUNTS OF THE ASSESSEE SHALL NOT INCLUDE ANY PROVISION FOR BAD AND DOUBTFUL DEBTS MADE IN TH E ACCOUNTS OF THE ASSESSEE, WE FIND THAT THE DEBTS CLA I MED TO BE WRITTEN OFF HAVE ALREADY BEEN PROVIDED BY THE APPELLANT BANK IN THE EAR L IER YEARS. THE APPELLANT VERY CLEARLY MENTIONS THIS I N THE SUBMISSION DATED 29.10.2012 MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IRRESPECTIVE OF THAT, THE A PPELLANT CLAIMED THAT SINCE THE PROVISION FOR BAD DEBTS I N RESPECT OF THESE LOAN WAS NOT C L AIMED AS DEDUCTION IN THE RESPECTIVE YEARS WHEN THE PROVISION WAS MADE, THE BAD DEBTS WRITTEN OFF H AVE BEEN C L A I MED AS EXPENDITURE AS PER PROVISION OF SEC . 36(1)(VII) IN T H E CURRENT YEAR. THIS CONTENTION OF THE APPELLANT I S C L EARLY AGAINST THE P R OVISION OF LAW REFERRED TO ABOVE. THE EXPLANATION T O SEC . 36(1)(VII) MAKES IT CLEAR THAT NEITHE R BAD DEBTS NOR PART THEREOF THAT ARE WRITTEN OFF AS IRRECOVERABLE I N THE ACCOUNTS OF THE ASSESSEE SHALL INCLUDE ANY PROV I S I ON FOR BAD AND DOUBTFUL DEBTS MADE I N THE ACCOUNTS OF THE ASSESSEE . CONSEQUENTLY THE DISALLOWANCE OF BAD DEBTS AMOUNTING TO RS.10,00,787 / - BY THE ASSESSING OFFICER I S UPHELD . GROUND NO.3 IS DISMISSED. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE US. 9. BEFORE US, AT THE OUTSET, LD.A.R. SUBMITTED THAT IDENTICAL ISSUE AROSE IN REVENUES APPEAL IN ASSESSEES OWN CASE IN A.Y. 2009-10. THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL BY ORDER DT.20.05.2015. HE PLACED ON RECORD TH E COPY OF THE AFORESAID ORDER. HE FURTHER SUBMITTED THAT THERE AR E NO CHANGES IN THE FACTS AND IN THE YEAR UNDER CONSIDERATION AND THAT OF 2009-10. HE THEREFORE SUBMITTED THAT FOLLOWING THE ORDE R OF THE TRIBUNAL FOR A.Y. 2009-10, THE DEDUCTION BE ALLOWED. LD.D.R . ON THE OTHER HAND, SUPPORTED THE ORDER OF AO AND LD.CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIAL ON RECORD 11 ITA NO.207/PN/2015 ITA NO.208/PN/2015 11. WE FIND THAT IDENTICAL ISSUE OF BAD DEBTS WRITTEN OFF AROSE IN ASSESSEES OWN CASE IN A.Y. 2009-10. THE CO-ORDINATE BE NCH OF THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE B Y HOLDING AS UNDER : 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE LIMITED ISSUE ARISING IN THE PRESENT APPEAL IS IN RE LATION TO THE CLAIM OF BAD DEBTS WRITTEN OFF BY THE ASSESSEE IN ITS BOO KS OF ACCOUNT AMOUNTING TO RS.18,53,814/-. THE CLAIM OF THE ASSES SEE WAS THAT IN VIEW OF THE PROVISIONS OF SECTION 36(1)(VIIA) OF TH E ACT BEING APPLICABLE TO THE CO-OPERATIVE BANKS W.E.F. 01.04.2 007 WHERE IT HAD NOT CREATED ANY PROVISION TOWARDS THE BAD DEBTS AGA INST THE LOANS IN THE EARLIER YEARS NOR ANY PROVISION FOR BAD DEBT S WAS CLAIMED AS DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT FOR ASSESSMENT YEARS 2007-08 AND 2008-09, THE WRITE-OFF OF THE BAD DEBTS WAS CORRECTLY MADE UNDER SECTION 36(1)(VII) OF THE ACT. WE FIND T HAT THE CIT(A) HAD CONSIDERED THE EVIDENCE FILED BY THE ASSESSEE VIS- -VIS THE WRITE-OFF OF THE BAD DEBTS SATISFIED THE CONDITIONS LAID DOWN IN SECTION 36(1)(VII) R.W.S. 36(2) OF THE ACT. THE NECESSARY E VIDENCE WAS FILED BEFORE THE CIT(A) WHICH WAS CONSIDERED BY HIM AND I T WAS OBSERVED AS UNDER :- 6.2 I HAVE CONSIDERED THE SUBMISSION MADE ON BEHAL F OF THE APPELLANT. THE FINANCE ACT, 2007 INTRODUCED W.E.F. 01.04.2007 ALLOWED CO-OPERATIVE BANKS OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK TO MAKE PRO VISION FOR THE BAD AND DOUBTFUL DEBTS OF AN AMOUNT UPTO 7. 5% OF THE TOTAL INCOME COMPUTED BEFORE CHAPTER VIA DEDUCTIONS AND DEDUCTION UNDER THIS CLAUSE PLUS AN AMOUNT NOT EXCE EDING 10% OF THE AGGREGATE OF THE AVERAGE ADVANCES MADE B Y RURAL BRANCHES OF SUCH BANK. SINCE THE APPELLANT IS ENTIT LED TO BOTH THE DEDUCTIONS NAMELY SEC. 36(1)(VII) AND SEC. 36(1 )(VIIA), THE ASSESSING OFFICER HAS HELD THAT SINCE THE APPELLANT HAD ALREADY CLAIMED THE PROVISION FOR RESERVES ON ACCOU NT OF BAD AND DOUBT DEBTS IN THE EARLIER ASSESSMENT YEARS, TH E BAD DEBTS HAD TO BE REDUCED FROM THE RESERVES CREATED B Y IT AND NOT CLAIMED AS AN EXPENDITURE IN THE P & L ACCOUNT. ACCORDING TO HIM, THE PROVISO TO SEC. 36(1)(VII) LI MITED THE WRITE OFF OF BAD DEBTS TO THE EXTENT IT EXCEEDED TH E CREDIT BALANCE IN THE PROVISION FOR BAD AND DOUBTFUL DEBTS MADE UNDER SECTION 36(1)(VIIA). I HAVE EXAMINED THE STAN DS OF THE ASSESSING OFFICER WITH REGARD TO THE PROVISION OF L AW AS ENUNCIATED BY THE HONBLE SUPREME COURT IN CATHOLIC SYRIAN BANK LTD. REPORTED IN 343 ITR 270. THE SUPREME COUR T HELD THEREIN THAT THE BENEFIT OF WRITE OFF OF BAD DEBTS UNDER SECTION 36(1)(VII) IS AN ADDITION TO THE BENEFIT OF PROVISI ON MADE FOR BAD AND DOUBTFUL DEBTS UNDER SECTION 36(1)(VIIA) AN D BOTH OPERATE IN SEPARATE FIELDS. THE DEDUCTION IN RESPEC T OF PROVISIONS FOR BAD AND DOUBT DEBTS IS ALLOWED, IRRE SPECTIVE OF ANY ACTUAL WRITE OFF. THE APPELLANT HAS CREATED PRO VISION FOR BAD AND DOUBTFUL DEBTS DESERVED AMOUNTING TO RS.55,44,793/- FOR THE YEAR ENDED 31.03.2007 AND RS.79,07,000/- FOR THE YEAR ENDED 31.03.2008. THE B DDR (BAD AND DOUBT DEBT RESERVE) IN THE BALANCE SHEET A S ON 12 ITA NO.207/PN/2015 ITA NO.208/PN/2015 31.03.2008 THUS STOOD AT RS.4,00,00,000/-. IN THE COMPUTATION OF INCOME, THE APPELLANT CLAIMED RS.21, 81,431/- FOR YEAR ENDED 31.03.2007 AND RS.29,61,319/- FOR TH E YEAR ENDED 31.03.2008 UNDER THE PROVISION OF SEC. 36(1)( VIIA). THE ASSESSING OFFICER HAS NOT CHALLENGED THAT THE BAD D EBTS CLAIMED HAVE NOT ACTUALLY WRITTEN OFF AS IRRECOVERA BLE IN THE ACCOUNTS OF THE APPELLANT DURING THE YEAR. THEREFOR E, KEEP IN VIEW OF THE SUPREME COURT DECISION, CITED SUPRA, TH E WRITE OFF OF THE BAD DEBTS OF RS.18,53,814/- IS ALLOWABLE AND THE SAME CANNOT BE DENIED ON THE GROUND THAT THE APPELL ANT HAS CLAIMED DEDUCTION UNDER SECTION 36(1)(VIIA) FOR THE EARLIER YEARS. GROUND NO.3 IS THUS ALLOWED. 10. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REV ENUE HAS FAILED TO CONTROVERT THE FINDINGS OF THE CIT(A) THAT AFTER INSERTION WAS MADE BY THE FINANCE ACT, 2007 W.E.F. 01.04.2007, UNDER W HICH CO- OPERATIVE BANKS WERE ENTITLED TO THE CLAIM OF DEDUC TION UNDER SECTION 36(1)(VIIA) OF THE ACT, WHETHER THE ASSESSE E WAS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 36(1)(VII) OF THE ACT VIS--VIS SUCH BAD AND DOUBTFUL DEBTS. THE HONBLE SUPREME CO URT IN CATHOLIC SYRIAN BANK LTD. VS. CIT, 343 ITR 270 (SC) HAD LAID DOWN THAT THE BENEFIT OF WRITE-OFF OF BAD DEBTS UNDER SE CTION 36(1)(VII) OF THE ACT WAS IN ADDITION TO THE BENEFIT OF PROVISION MADE FOR BAD AND DOUBTFUL DEBTS UNDER SECTION 36(1)(VIIA) OF THE ACT AND BOTH THE SECTIONS OPERATE IN SEPARATE FIELDS. THE ASSESSEE H AD CREATED THE PROVISIONS FOR BAD AND DOUBTFUL DEBTS AMOUNTING TO RS.55,44,793/- FOR THE YEAR ENDING 31.03.2007 AND RS.79,07,000/- F OR THE YEAR ENDING 31.03.2008, THE TOTAL BAD AND DOUBTFUL DEBTS RESERVE CREDITED IN THE BALANCE SHEET AS ON 31.03.2008 WAS AT RS.4,00,00,000/-. IN THE COMPUTATION OF INCOME FOR THE YEAR ENDING 31.03.2007, THE ASSESSEE HAD CLAIMED DEDUCTION OF R S.21,81,431/- AND FOR THE YEAR ENDING 31.03.2008 DEDUCTION OF RS. 29,61,319/- UNDER THE PROVISIONS OF SECTION 36(1)(VIIA) OF THE ACT. HOWEVER, THE ASSESSEE, DURING THE YEAR UNDER CONSIDERATION, HAD CLAIMED WRITE- OFF OF BAD DEBTS OF RS.18,53,814/- WHICH SATISFIED THE CONDITION LAID DOWN UNDER SECTION 36(1)(VII) R.W.S. 36(2) OF THE A CT. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE UPHOLD T HE FINDINGS OF THE CIT(A) IN ALLOWING THE CLAIM OF DEDUCTION OF BA D DEBTS WRITTEN-OFF BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT AND THE GRO UNDS OF APPEAL RAISED BY THE REVENUE ARE THUS, DISMISSED. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE AFORESAID DECISION OF THE CO-ORDINAT E BENCH OF THE TRIBUNAL HAS BEEN SET ASIDE BY THE HONBLE HIGH CO URT. WE THEREFORE, FOLLOWING THE SAME REASONING AS GIVEN BY THE CO- ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2009 -10 HOLD THAT THE EXPENDITURE OF BAD-DEBTS IS ALLOWABLE. THUS, THIS GROUND OF THE ASSESSEE IS ALLOWED. 13 ITA NO.207/PN/2015 ITA NO.208/PN/2015 12. WITH REFERENCE TO GROUND NO.3, BEFORE US, LD.A.R. SUBMITTE D THAT HE DOES NOT WISH TO PRESS THE GROUND. IN VIEW OF THE SUBMISSION OF THE LD.A.R., THE GROUND IS DISMISSED AS NOT PRESSED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.207/PUN/2015 IS PARTLY ALLOWED. 14. WE NOW TAKE UP ASSESSEES APPEAL IN ITA NO.208/P UN/2015 FOR A.Y. 2011-12. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) WAS NOT JUSTIFIED IN DISMISSING THE GROUN D OF APPEAL OF THE ASSESSEE-APPELLANT HEREIN RESULTING INTO CONFIRMING THE ADDITION MADE BY THE AO OF CLAIM OF BROKEN PERIOD INTEREST O F RS.25,06,422/- WHICH IN FACT AND IN LAW AMOUNTS TO NOT FOLLOWING T HE HONBLE JURISDICTIONAL HIGH COURT IN HDFC CASE (SUPRA). TH E ADDITION CONFIRMED BE DELETED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISAL LOWANCE MADE BY THE AO OF RS.78,143/- OF OLD BALANCES, ANIMATED WRI TTEN OFF. THE CONFIRMING THE DISALLOWANCE IS CONTRARY TO LAW. TH E CLAIM BE ALLOWED TO THE APPELLANT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISAL LOWANCE OF RS.78,143/- MADE BY AO OUT OF RS.7,11,343/-. THE D ISALLOWANCES MADE BY AO AND CONFIRMED BY LD.CIT(A) ARE CONTRARY TO THE PROVISIONS OF LAW. THEY BE ALLOWED TO THE APPELLAN T BANK. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEVY OF INTEREST U/S 234A, 234B AND 234C IS NOT JUSTIFIED. 15. BEFORE US, LD.A.R. SUBMITTED THAT THE GROUNDS RAISED IN PRESENT APPEAL ARE IDENTICAL TO THAT OF A.Y. 2010-11 AND T HE AFORESAID SUBMISSION OF LD.A.R. HAS NOT BEEN OBJECTED TO BY LD.D.R. IN VIEW OF THE AFORESAID SUBMISSIONS AND FOR THE REAS ONS STATED HEREIN WHILE DECIDING THE APPEAL OF AS FOR A.Y. 2010- 11 AND 14 ITA NO.207/PN/2015 ITA NO.208/PN/2015 FOR SIMILAR REASONS, GROUND NO.1 AND 2 ARE ALLOWED AND GROU ND NO.3 IS DISMISSED AS NOT PRESSED. 16. THUS, THE APPEAL OF ASSESSEE IN ITA NO.208/PUN/201 5 IS PARTLY ALLOWED. 17. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AR E PARTLY ALLOWED. ORDER PRONOUNCED ON 31 ST DAY OF MAY, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; ! DATED : 31 ST MAY, 2017. YAMINI '#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEAL S ) - 4, PUNE 4. 5 6. THE PR.CIT-III, PUNE #$% &&'(,* '(, A / DR, ITAT, A PUNE; %+,-/ GUARD FILE. / BY ORDER, //// // TRUE COPY // T // // TRUE COPY // // //TRUE COPY// . /012 / ASSISTANT REGISTRAR, * '( , / ITAT, PUNE.