Bharat Overseas Bank Ltd., CHENNAI V. ACIT, CHENNAI

ITA 2774/CHNY/2014

• Counselvise Citation: 277421714 RSA 2014
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 10-11-2014
• Court: TRIBUNAL
• Keywords: Depreciation; Earning of tax free income; Revenue expenditure; Capital expenditure
• Section: 14A; 115JB; 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI ... , . , , BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NOS.2755, 2756 /MDS./2014 ( !' #' / ASSESSMENT YEARS : 2005-06, 2006-07) ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(2), CHENNAI 34. VS. M/S BHARAT OVERSEAS BANK LTD. (SINCE TAKEN OVER BY INDIAN OVERSEAS BANK, CHENNAI),ACCOUNTS DEPARTMENT, 762, ANNA SALAI, CHENNAI-600 002. PAN : AAACB 1374 M ( / APPELLANT ) ( / RESPONDENT ) ./ I.T.A.NOS. 2774, 2775 /MDS./2014 ( !' #' / ASSESSMENT YEARS : 2005-06, 2006-07) M/S BHARAT OVERSEAS BANK LTD. (SINCE TAKEN OVER BY INDIAN OVERSEAS BANK, CHENNAI), ACCOUNTS DEPARTMENT, 762, ANNA SALAI, CHENNAI-600 002. VS. ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(2), CHENNAI 34. PAN : AAACB 1374 M ( / APPELLANT ) ( / RESPONDENT ) BHARAT OVERSEAS BANK 2 REVENUE BY : MR.MILIND MADHUKAR BHUSARI, CIT D.R ASSESSEE BY : MR.C.NARESH, ADVOCATE $ % & '( / DATE OF HEARING : 15.09.2015 )# & '( /DATE OF PRONOUNCEMENT : 20.11.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THESE APPEALS ARE FILED BY THE REVENUE AND ASSES SEE, AGGRIEVED BY THE SEPARATE ORDER OF THE LEARNED COMMISSIONER O F INCOME TAX(A)-I, CHENNAI IN ITA NO.549/10-11/A-1 & ITA NO. 605/11-12/A-1 BOTH ORDER DATED 21.07.2014 PASSED UNDER SEC.143(3) READ WITH SECTION 147 & SEC. 250 OF THE ACT FOR THE ASSESSMEN T YEARS 2005-06 & 2006-07 RESPECTIVELY. 2. THE CONCISED GROUNDS RAISED IN ALL THESE APPEAL S ARE LISTED HERE-IN-BELOW FOR ADJUDICATION. 2.A ASSESSEES APPEAL : COMMON GROUND IN BOTH THE ASSESSEES APPEALS FOR THE A.YS 2005-06 & 2006-07) (I) LD. CIT(A) ERRED IN CONFIRMING REASSESSMENT PR OCEEDINGS U/S.147 OF THE ACT, WHICH WAS UPHELD BY THE CIT(APPEALS) SI NCE THE ISSUES ON BHARAT OVERSEAS BANK 3 WHICH REOPENING HAD BEEN INITIATED WAS EXAMINED BY THE LD. CIT UNDER SECTION.263 OF THE ACT AND THE PROCEEDINGS WE RE DROPPED. FOR A.Y 2005-06 (II) LD. CIT(A) ERRED IN CONFIRMING THE DISALLO WANCE OF PROVISION FOR WAGE ARREARS TO STAFF OF ` 3,50,35,000/- ON THE GROUND THAT THE PROVISION MADE WAS TOWARDS CONTINGENT LIABILITY. FOR A.Y 2006-07 (III) LD. CIT(A) ERRED IN ALLOWING THE DEPRECIATIO N ON UPS AT 60%, INSTEAD OF ALLOWING THE ASSESSEES CLAIM OF 80% BY CONSIDERING THE UPS AS ENERGY SAVING DEVICE. (IV) LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWAN CE MADE U/S.14A READ WITH RULE 8D OF INCOME TAX RULES DISREGARDING THE ORDER OF THE CHENNAI BENCH OF THE TRIBUNAL IN ITA NO.1949/MDS./2 012 FOR THE ASSESSMENT YEAR 2009-10 WHEREIN IT WAS HELD THAT DI SALLOWANCE U/S.14A WAS NOT WARRANTED IF SECURITIES FROM WHICH TAX FREE INCOME IS EARNED ARE HELD AS STOCK-IN-TRADE. 2.B REVENUES APPEAL : COMMON GROUND IN BOTH THE REVENUES APPEALS FOR THE A.YS 2005-06 & 2006-07) BHARAT OVERSEAS BANK 4 (V) THE LD.CIT(A) ERRED IN HOLDING THAT COMPUTATIO N OF BOOK PROFIT U/S.115JB OF THE ACT IS NOT APPLICABLE TO TH E ASSESSEE FOR THE A.Y 2005-06 & A.Y 2006-07. FOR A.Y 2005-06 (VI) THE LD.CIT(A) ERRED IN HOLDING THAT THE BROKE RAGE PAID TOWARDS ACQUISITION OF SECURITIES IS REVENUE EXPEN DITURE ON THE GROUND THAT THE SECURITIES HELD BY THE BANK ARE STOCK-IN- TRADE WITHOUT VERIFYING WHETHER THE SAME ARE HELD A S INVESTMENT THEREBY AMOUNTING TO CAPITAL EXPENDITURE . (VII) LD. CIT(A) ERRED IN TREATING THE LOSS ON SALE OF INVESTMENTS AS REVENUE EXPENDITURE BY HOLDING THE INVESTMENTS TO B E STOCK IN TRADE WHILE AS THE INVESTMENTS RELATED TO HTM CATEGORY A ND THEREFORE, IT AMOUNTS TO CAPITAL LOSS. FOR A.Y 2006-07 (VIII) LD. CIT(A) ERRED IN ALLOWING 60% DEPRECIATIO N ON UPS TREATING IT AS COMPUTER ACCESSORIES AS AGAINST 15% GRANTED B Y THE LD. ASSESSING OFFICER. BHARAT OVERSEAS BANK 5 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF BANKING, FILED ITS RETURN OF INCOME ON 31.10.2005 FOR THE A.Y 2005-06 ADMITTING INCOME AS ` .5,77,37,702/- AND ON 21.11.2006 FOR THE A.Y 2006-07 ADMITTING INCOME AS ` 6,84,34,355/-. INITIALLY BOTH THE ASSESSMENT ORDERS FOR THE ASSESS MENT YEAR 2005-06 & 2006-07 WERE PASSED U/S.143(3) OF THE ACT ON 31.1 2.2007 & 24.12.2008 RESPECTIVELY. SUBSEQUENTLY BOTH THE ASSE SSMENT WERE RE- OPENED AND THE ASSESSMENT WAS COMPLETED U/S.143(3) R.W.S 147 OF THE ACT ON 30.12.2010 FOR THE ASSESSMENT YEAR 2005- 06 & ON 30.12.2010 FOR THE ASSESSMENT YEAR 2006-07. AGGRI EVED BY THE ORDERS OF THE LD. ASSESSING OFFICER, THE ASSESSEE W ENT ON APPEALS BEFORE THE LD. CIT (A) AND NOW BOTH THE ASSESSEE AN D THE REVENUE ARE IN APPEAL BEFORE US AGAINST THE ORDER OF THE LD . CIT (A). ASSESSEES APPEAL . 4. GROUND NO. (I) - VALIDITY OF REASSESSMENT PROCE EDINGS U/S.147(FOR THE A.YS 2005-06 & 2006-07):- LD. A.R. ARGUED BEFORE US STATING THAT THE GROUND S ON WHICH REOPENING PROCEEDINGS WERE INITIATED WERE ORIGINALL Y EXAMINED BY THE CIT U/S.263 OF THE ACT AND AFTER CONSIDERING THE EX PLANATIONS BHARAT OVERSEAS BANK 6 RENDERED BY THE ASSESSEE THE LD.CIT HAD DROPPED THE PROCEEDINGS INITIATED U/S.263 OF THE ACT. IT WAS THEREFORE ARGU ED THAT ON THE SAME GROUNDS REOPENING U/S.147 IS ERRONEOUS. RELIANCE W AS PLACED ON THE DECISION OF ITAT KOLKATA IN THE CASE OF ACIT VS . BOTHRA SHIPPING SERVICES REPORTED IN (2015) (1) TMI 742 WHERE IT W AS HELD THAT, WHEN AN ISSUE HAS BEEN EXAMINED AND HELD IN FAVOUR OF AS SESSEE IN THE PROCEEDINGS U/S.263, THE SAME CANNOT BE SUBJECT MAT TER OF REOPENING U/S.147 OF THE ACT. ON THE OTHER HAND TH E LD. D.R RELIED ON THE ORDER OF LD. CIT(A) WHO HAD UPHELD THE VALID ITY OF REOPENING DISCUSSING THE ISSUE IN DETAIL. AFTER HEARING BOTH SIDES AND PERUSING THE MATERIALS ON RECORD, WE FIND THAT THE LD. CIT ( A) HAD JUDICIOUSLY CONSIDERED THE ISSUE AND HELD THE MATTER AGAINST TH E ASSESSEE BECAUSE REOPENING WAS WITHIN A PERIOD OF FOUR YEARS AND VARIOUS OMISSIONS AND DISCREPANCIES WAS REVEALED FROM THE A SSESSMENT ORDER BASED ON WHICH THE LD. ASSESSING OFFICER HAD INITIATED PROCEEDINGS U/S. 147 OF THE ACT. THEREFORE WE HERE BY UPHOLD THE ORDER OF THE LD. CIT (A). ACCORDINGLY, THE FIRST GR OUNDS RAISED BY THE ASSESSEE IN BOTH THE APPEALS ARE HELD AGAINST IT. BHARAT OVERSEAS BANK 7 5. GROUND NO. (II) - DISALLOWING PROVISION FOR WAG E ARREARS TO STAFF OF ` 3,50,35,000/- IT WAS OBSERVED BY THE LD. ASSESSING OFFICER FROM ANNUAL REPORT OF THE ASSESSEE THAT THE ASSESSEE HAD MADE AN ADHOC PROVISION OF ` 3,50,35,000/- TOWARDS PAYMENT OF ARREARS OF SALARY AND THE SAME WAS DEBITED IN THE P&L A/C. THE LD. ASSESSING OFFIC ER DISALLOWED THE SAME SINCE THE AMOUNT DEBITED IN THE P&L A/C WAS AN ADHOC PROVISION. ON APPEAL, THE LD. CIT (A) FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF INDIAN OVERSEAS BANK(IOB) F OR THE ASSESSMENT YEAR 2005-06 IN ITA NO.393/MDS./2009 DAT ED 05.03.2013 HELD THAT THE ADHOC PROVISION MADE SHALL BE ALLOWED AS DEDUCTION IN THE YEAR OF PAYMENT AND NOT IN THE YEA R PROVISION IS MADE. SINCE THE LD. CIT (A) HAS FOLLOWED THE DECIS ION OF THE TRIBUNAL, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH HIS ORDER. ACCORDINGLY, THIS ISSUE IS HELD AGAINST THE ASSESSE E. 6. GROUND NO. (IIII) - ALLOWING DEPRECIATION ON UP S AT 60% INSTEAD OF 80% CLAIMED BY THE ASSESSEE FOR THE A.Y 2006-07. BHARAT OVERSEAS BANK 8 IT WAS OBSERVED BY THE LD. ASSESSING OFFICER THAT THE ASSESSEE HAD CLAIMED DEPRECIATION ON UPS @ 80% AMOUNTING TO ` 39,05,906/- BY HOLDING IT TO BE ENERGY SAVINGS DEVICE. THE LD. ASSESSING OFFICER OPINED THAT THE UPS IS AN ELECTRICAL INSTALLATION I N THE CATEGORY OF PLANT & MACHINERY AND THEREFORE, RESTRICTED THE DEP RECIATION @ 15% AND THEREBY DISALLOWED EXCESS DEPRECIATION OF ` 31,73,549/-. ON APPEAL, THE LD. CIT (A) FOLLOWING THE DECISION OF T HE TRIBUNAL IN THE CASE OF IOB FOR THE ASSESSMENT YEAR 2008-09 IN ITA NO. 1815/MDS./2011 DATED 02.04.2013 HELD THAT THE APPEL LANT IS ENTITLED TO DEPRECIATION @ 60% BY TREATING THE UPS UNDER THE CATEGORY OF COMPUTER. SINCE THE LD. CIT (A) HAS FOLLOWED THE D ECISION OF THE TRIBUNAL, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH HIS ORDER. ACCORDINGLY, THIS ISSUE IS HELD AGAINST THE ASSESSE E. 7.1 GROUND NO. (IV) DISALLOWANCE MADE U/S.14A REA D WITH RULE 8D OF INCOME TAX RULES,1962 FOR THE A.Y 2006-07. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS IT CAME TO LIGHT THAT THE ASSESSEE BANK HAD MADE INVES TMENTS IN TAX FREE BONDS TO THE TUNE OF ` 45.47 CRORES. THE LD. BHARAT OVERSEAS BANK 9 ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 14A READ WITH RULE 8D OF I.T.RULES AND ADDED ` 24,27,875/- TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. ASSESSING OFFICER. 7.2 BEFORE US, LD. A.R. SUBMITTED THAT THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF IOB IN ITA NO.1949/MDS./201 0 DATED 18.6.2014 HELD THAT THE PROVISIONS OF SECTION 14A C ANNOT BE INVOKED WHERE SECURITIES ARE HELD IN STOCK IN TRADE. IT WAS FURTHER SUBMITTED THAT, SINCE THE APPELLANT HOLDS ALL ITS SECURITIES AS STOCK IN TRADE, THE DECISION OF THE TRIBUNAL WILL HOLD GOOD IN THE CASE OF THE ASSESSEE AND ACCORDINGLY DISALLOWANCE U/S.14A IS NOT WARRANT ED. LD. D.R ON THE OTHER HAND ARGUED IN SUPPORT OF THE ORDERS OF T HE REVENUE. 7.3 AFTER HEARING BOTH THE SIDES AND PERUSING THE MATERIAL ON RECORD AND THE CASE CITED BY THE LD. A.R, WE FIND T HAT ON THE EARLIER OCCASION THE TRIBUNAL IN THE CASE OF IOB (SUPRA) HA S HELD THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE CASE CIT VS. VEGETABLE PRODUCTS LTD REPORTED IN 88 ITR 192, BECA USE THERE WERE BHARAT OVERSEAS BANK 10 DIVERGENT VIEWS BY VARIOUS JUDICIAL AUTHORITIES. HO WEVER IN THE PRESENT CASE, IT IS NOT EVIDENT AS TO WHETHER THE SECURITIE S ARE HELD IN STOCK IN TRADE OR HELD AS INVESTMENTS. THE WHOLE PURPOSE OF ENACTMENT OF SECTION.14A OF THE ACT IS TO DISALLOW CERTAIN EXPEN SES WHICH ARE ATTRIBUTABLE TO EXEMPT INCOME. THE ASSESSEE BANK DU E TO VARIOUS STATUTORY REQUIREMENTS AND COMMERCIAL REASONS IS BO UND TO MAKE INVESTMENTS IN SECURITIES AND EQUITY SHARES ETC., W HICH EARN DIVIDEND THAT, ARE EXEMPT FROM INCOME. FOR MAKING SUCH INVE STMENTS OBVIOUSLY THE FINANCIAL WIZARDS EMPLOYED BY THE ASS ESSEE COMPANY HAS TO MAKE TREMENDOUS EXERCISE TO DETERMINE AS TO WHAT SECURITIES /EQUITY SHARES ETC., HAS TO BE PURCHASED BY THE ASS ESSEE TO OPTIMIZE THE ECONOMICAL FUNCTIONING OF THE ASSESSEE. THIS IN CURS COST. A PORTION OF THIS COST HAS TO BE APPORTIONED TOWARDS THE FACTOR OF EXEMPT INCOME WHETHER IT IS EARNED DURING THE YEAR OR OTHERWISE. FOR DETERMINING SUCH APPORTIONMENT OF COST, INCOME TAX RULES ARE FRAMED WHICH WE FIND IN RULE-8D. HOWEVER, RULE-8D H AS COME INTO EFFECT FROM 24.03.2008. THEREFORE FOR THE RELEVANT ASSESSMENT YEAR, RULE-8D IS NOT APPLICABLE. IN THESE CIRCUMSTANCES, CHENNAI BENCH OF THE TRIBUNAL ON MANY OCCASIONS HAS HELD 3% OF EARNE D EXEMPT BHARAT OVERSEAS BANK 11 INCOME CAN BE ESTIMATED FOR MAKING DISALLOWANCE FOR THE PURPOSE OF SECTION.14A OF THE ACT VIZ., IN THE CASE M/S.HTC GL OBAL SERVICES (INDIA) P. LTD., CHENNAI VS. ACIT IN ITA NO.58/MDS. /2014 FOR THE ASSESSMENT YEAR 2008-09 VIDE ORDER DATED 02.06.2015 . ACCORDINGLY, WE HEREBY DIRECT THE LD. ASSESSING OFFICER TO DISAL LOW 3% OF EARNED EXEMPT INCOME FOR MAKING DISALLOWANCE U/S.14A OF TH E ACT. REVENUES APPEAL 8.1 GROUND NO.(V) APPLICABILITY OF SECTION-115JB OF THE ACT IN THE CASE OF THE ASSESSEE BANK FOR THE A.Y 20 05-06 & A.Y 2006-07 . THE LD. ASSESSING OFFICER HAS INVOKED TH E PROVISIONS OF SECTION 115JB OF THE ACT WHILE FRAMING THE ASSESSME NT IN THE CASE OF THE ASSESSEE BANK. THE ASSESSEE HAD ARGUED BEFORE T HE REVENUE BY STATING THAT THE PROVISIONS OF SECTION 115JB OF THE ACT IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE BANK BECAUSE THE ASSESSEE BANK HAS TO STATUTORILY MAINTAIN THE BOOKS OF ACCOU NTS AND DRAW ITS STATEMENT OF ACCOUNTS LIKE P&L A/C, NOTES TO BALANC E SHEET ETC., AS PER THE RBI GUIDELINES AND NOT AS PER THE COMPANIES ACT. BHARAT OVERSEAS BANK 12 8.2 AT THE OUTSET, THE LD. A.R. BROUGHT TO OUR NOT ICE THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE IOB V S. ACIT IN ITA NO.98/MDS./2010 DATED 5 TH MARCH 2013 WHEREIN IT WAS HELD THAT THE PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE TO T HE CASE OF THE ASSESSEE BANK. WHILE DOING SO, THE TRIBUNAL HAD PLA CED RELIANCE IN THE DECISION OF HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE SBI VS. DCIT IN ITA NO.578/HYD./2010 DATED 07.09.2012. THE RELEVANT PORTION OF THAT ORDER IS REPRODUCED HEREIN BELOW FO R REFERENCE:- 13. THE PROVISIONS OF SECTION 115JB WILL BE APPLIC ABLE TO ALL COMPANIES. HOWEVER, IT IS CONTENDED THAT SECTION.115JB WILL BE APPLICABLE ONLY WHERE THE ASSESSEE IS REQUIRED TO SHOW PROFIT & LOS S ACCOUNT IN ACCORDANCE WITH SCHEDULE VI OF COMPANIES ACT. AS TH E BANKS ARE REQUIRED TO PREPARE BALANCE SHEET AND P&L A/C IN AC CORDANCE WITH THE BANKING REGULATION ACT, PROVISION OF 115JB CANNOT B E APPLIED TO THE BANKS. IN THE CASE OF MAHARASHTRA STATE ELECTRICITY BOARD VS. JCIT (82 ITD 422) IT WAS HELD THAT PROVISIONS OF BOOK PROFIT CANNOT BE APPLIED TO ELECTRICITY COMPANIES. BANKING COMPANIES AND COMPA NIES ENGAGED IN GENERATION AND SUPPLY OF ELECTRICITY DO NOT HAVE TO PREPARE THEIR ACCOUNTS IN ACCORDANCE WITH PARTS II AND III OF SCH. VI OF T HE COMPANIES ACT BY THE VIRTUE OF PROVISO TO SECTION.211(2) OF THE COMPANIE S ACT. WE FIND THAT BY THE FINANCE ACT 2012, W.E.F 01.04.2013, EVEN COMPAN IES TO WHICH PROVISO TO SECTION.211(2) APPLIES (THE BANKING COMP ANIES AND COMPANIES ENGAGED IN GENERATING AND DISTRIBUTION OF ELECTRICITY), SHOULD BHARAT OVERSEAS BANK 13 PREPARE THEIR P&L AND BALANCE SHEET IN ACCORDANCE WITH THE PROVISIONS OF THE ACT GOVERNING SUCH COMPANIES. THIS WOULD M EAN THAT PRIOR TO A.Y. 2013-14, PROVISIONS 115JB WILL NOT APPLY TO CO MPANIES TO WHICH PROVISO TO SECTION.211(2) OF THE COMPANIES ACT, 195 6 APPLIES. THE ASSESSEE BEING A COMPANY TO WHICH PROVISO TO SECTIO N.211 (2) OF THE COMPANIES ACT, 1956 APPLIES, WILL NOT BE LIABLE TO BE TAXED U/S.115JB. 14. THE MUMBAI TRIBUNAL IN THE CASE OF KRUNG THAI BANK VS. JCIT (133 TTJ 435) TO WHICH ONE OF US IS A PARTY HAS HELD THA T PROVISIONS OF SECTION 115JB CANNOT BE APPLIED TO THE BANKING COMPANY. 15. IN VIEW OF THE ABOVE, AS THE AMENDMENT TO SECT ION.115JB BY THE FINANCE ACT, 2012 WILL BE APPLICABLE ONLY FROM THE A.Y.2013-14, WE UPHOLD THE CLAIM OF THE ASSESSEE THAT PROVISIONS OF SECTION 115 JB WILL NOT BE APPLICABLE TO THE ASSESSEE BANK AND SET ASID E THE ASSESSMENT MADE U/S.115JB ON THE ASSESSEE COMPANY. FURTHER IT WAS OBSERVED BY THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE IOB VS. ACIT IN ITA NO.98/MDS./2010 DATED 5 TH MARCH 2013 THAT:- SIMILAR VIEW HAS BEEN TAKEN BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ICICI LOMBARD GENERAL INSURANCE CO., LT D. IN ITA NO.2398/MUM/2009 WHEREIN THE TRIBUNAL RELYING ON TH E ORDER OF THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF STAT E BANK OF HYDERABAD(SUPRA) HAS CONCLUDED THAT THE PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. BHARAT OVERSEAS BANK 14 8.3 THEREFORE, FOLLOWING THE ABOVE DECISIONS, WE H EREBY HOLD THAT IN THE CASE OF THE ASSESSEE BANK PROVISIONS OF SECTION 115JB OF THE ACT WILL NOT BE APPLICABLE. IT IS ORDERED ACCORDINGLY. 9.1 GROUND NO. (VI) TREATMENT OF BROKERAGE PAID A T THE TIME OF ACQUISITION OF INVESTMENTS IN SECURITIES AS REVENUE EXPENDITURE OR CAPITAL EXPENDITURE FOR THE A.Y 2005-06. THE ASSESSEE BANK HAD INCURRED EXPENDITURE TOWARD BROKERAGE FOR ACQUIRING INVESTMENTS FROM THE SECONDARY MARKET . THESE EXPENSES WERE TREATED AS REVENUE EXPENDITURE BY THE ASSESSEE AND DEBITED TO THE P&L A/C. HOWEVER, THE LD. ASSESSING OFFICER WAS OF THE VIEW THAT THESE INVESTMENTS WERE CAPITAL EXPEND ITURE AND HENCE, BROKERAGE PAID FOR ACQUIRING THESE INVESTMENTS HAS TO BE ADDED TO THE COST OF THE INVESTMENTS. ON APPEAL, THE LD. CI T (A) HELD THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE INVESTMENTS CONSTITUTE STOCK IN TRADE FOLLOWING THE DECISION OF THE JURISDICTIONAL MADRAS HIGH COURT IN THE CASE OF KAURU VYAS BANK LT D TAX CASE NO.2139 OF 2008. BEFORE US, THE LD. A.R. ALSO RELIE D IN THE DECISION OF THE SUPREME COURT IN THE CASE OF UCO BANK REPORTED IN 240 ITR 355 BHARAT OVERSEAS BANK 15 WHICH WAS IN FAVOUR OF THE ASSESSEE. ON THE OTHER H AND THE LD. D.R RELIED ON THE ORDERS OF THE LD. ASSESSING OFFICER. 9.2 WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY P ERUSED THE MATERIALS AVAILABLE ON RECORD. BEFORE US, THE NATU RE OF INVESTMENTS AS TO WHETHER THE INVESTMENT MADE AMOUNTS TO CAPITA L EXPENDITURE OR REVENUE EXPENDITURE IS NOT EXPLAINED BY BOTH THE PA RTIES. MOREOVER THE DECISION CITED BY THE LD. CIT (A) AND THE ASSES SEE WERE NOT BROUGHT TO THE NOTICE OF LD. ASSESSING OFFICER THER EFORE IN THE INTEREST OF JUSTICE WE REMIT BACK THE MATTER TO THE FILE OF LD. ASSESSING OFFICER FOR DENOVO CONSIDERATION AND TO PASS APPROPRIATE OR DER AS PER LAW AND MERIT AND AFTER DULY EXAMINING THE DECISIONS CI TED BY THE ASSESSEE AS WELL AS THE LD. CIT (A). 10. GROUND NO.(VII) LD. CIT(A) ERRED IN TREATING THE LOSS ON SALE OF INVESTMENTS AS REVENUE EXPENDITURE BY HOLDING THE I NVESTMENTS TO BE STOCK IN TRADE WHILE AS THE INVESTMENTS RELATED TO HTM CATEGORY AND THEREFORE, IT AMOUNT TO CAPITAL LOSS. FOR THE A .Y. 2005-06. BHARAT OVERSEAS BANK 16 WHILE ADJUDICATING GROUND NO. 2B(VI) HEREIN ABOVE WE HAVE MADE IT CLEAR THAT, BEFORE US THE NATURE OF INVESTM ENTS AS TO WHETHER THE INVESTMENTS MADE AMOUNTS TO CAPITAL EXPENDITURE OR REVENUE EXPENDITURE IS NOT EXPLAINED BY BOTH THE PARTIES. M OREOVER THE DECISION CITED BY THE LD. CIT (A) AND THE ASSESSEE WERE NOT BROUGHT TO THE NOTICE OF LD. ASSESSING OFFICER. HENCE WE HE REBY REMIT BACK THE MATTER TO THE FILE OF LD. A.O FOR FRESH CONSIDE RATION TO PASS APPROPRIATE ORDER AS PER LAW AND MERIT AND AFTER DU LY EXAMINING THE DECISIONS CITED BY THE ASSESSEE AS WELL AS THE LD. CIT (A). ACCORDINGLY THIS GROUND RAISED BY THE REVENUE IS AL SO DISPOSED OFF. 11. GROUND NO. (VIII) - GRANTING 60% DEPRECIATION ON UPS INSTEAD OF 15% ALLOWED BY THE LD.A.O FOR THE A.Y.2006-07. THIS ISSUE HAS BEEN ADJUDICATED HEREIN A BOVE WHILE DECIDING THE ASSESSEES APPEAL IN GROUND 2A(III) BY HOLDING THAT THE ASSESSEE IS ENTITLED TO 60% DEPRECIATION ON UPS CONNECTED TO THE COMPUTERS BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CA SE OF IOB FOR THE ASSESSMENT YEAR 2008-09 IN ITA NO. 1815/MDS./2011 D ATED BHARAT OVERSEAS BANK 17 02.04.2013. THEREFORE THIS GROUND RAISED BY THE REV ENUE IS DISPOSED OFF ACCORDINGLY. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06 IS DISMISSED, THE APPEAL FI LED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 IS PARTLY ALLOWED, THE APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2005-06 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE AP PEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2006-07 IS PARTLY ALLOWED. ORDER PRONOUNCED ON 20 TH NOVEMBER, 2015 AT CHENNAI. SD/- SD/- ( . . . ) ( N.R.S.GANESAN ) ( . '#$ %' ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 20 TH NOVEMBER, 2015. K S SUNDARAM. & *'+, - ,#' /COPY TO: 1. ./ /APPELLANT 2. *0./ /RESPONDENT 3. $ 1' ( ) /CIT(A) 4. $ 1' /CIT 5. ,4 *'5! /DR 6. ' 6% /GF