The Assistant Comissioner of Income Tax, Circle-1, RAJKOT-GUJARAT V. The Co. Op. Bank of Rajkot Ltd., RAJKOT-GUJARAT

ITA 307/RJT/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89151 (ITAT-RAJKOT)
• Duration Of Justice: 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 05-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: PM MAHARSHI
• Keywords: Reopening of assessment; Business income; Depreciation; Bad and doubtful debts; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO.36/RJT/2014 WITH CO NO.1/RJT/2014 / ASSTT. YEAR: 2010-11 ACIT, CIR.1 RAJKOT. VS THE COOPERATIVE BANK OF RAJKOT LTD. SAHKAR SARITA PANCHNATH ROAD RAJKOT. ./ ITA NO.543/RJT/2014 / ASSTT. YEAR: 2011-12 DCIT, CIR.1 RAJKOT. VS THE COOPERATIVE BANK OF RAJKOT LTD. SAHKAR SARITA PANCHNATH ROAD RAJKOT. ./ ITA NO.307/RJT/2014 WITH CO NO.13/RJT/2014 / ASSTT. YEAR: 2008-09 DCIT, CIR.1 RAJKOT. VS THE COOPERATIVE BANK OF RAJKOT LTD. SAHKAR SARITA PANCHNATH ROAD RAJKOT. ./ ITA NO.308/RJT/2014 WITH CO NO.14/RJT/2014 / ASSTT. YEAR: 2009-10 A CIT, CIR.1 RAJKOT. VS THE COOPERATIVE BANK OF RAJKOT LTD. SAHKAR SARITA PANCHNATH ROAD RAJKOT. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI P.M. MAHARSHI, CA REVENUE BY : SHRI AVINASH KUMAR, DR / DATE OF HEARING : 19/03/2015 / DATE OF PRONOUNCEMENT: 27/03/2015 ACIT VS. THE COOPERATIVE BANK OF RAJKOT (7 APPEALS) 2 / O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: 1. ITA NO.36/RJT/2014 AND CO NO.1/RJT/2014 ARE APPE AL AND THE CROSS OBJECTION FILED BY THE REVENUE AND THE ASSESS EE AGAINST THE ORDER OF THE CIT(A), JAMNAGAR DATED 23.10.2013 FOR THE AS STT.YEAR 2010-11. ITA NO.543/RJT/2014 IS APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-I, RAJKOT DATED 4.2.2014 FOR TH E ASSTT.YEAR 2011- 12. ITA NO.307/RJT/2014 AND CO NO.13/RJT/2014 ARE APPE AL AND THE CROSS OBJECTION FILED BY THE REVENUE AND THE ASSESS EE AGAINST THE ORDER OF THE CIT(A)-I, RAJKOT DATED 4.2.2014 FOR THE ASST T.YEAR 2008-09. ITA NO.308/RJT/2014 AND CO NO.14/RJT/2014 ARE APPE AL AND THE CROSS OBJECTION FILED BY THE REVENUE AND THE ASSESS EE AGAINST THE ORDER OF THE CIT(A)-I, RAJKOT DATED 3.2.2014 FOR THE ASST T.YEAR 2009-10. 2. THE GROUND NO.1 OF THE APPEAL IN ASSTT.YEAR 2008 -09, GROUND NO.2 IN ASSTT.YEAR 2009-10, GROUND NO.2 IN THE ASSTT.YEA R 2010-11 AND THE GROUND NO.2011-12 ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) IN DELETING THE ADDITION OF RS.17,34,322/-IN ASSTT.YEA R 2008-09, RS.58,31,100/- IN ASSTT.YEAR 2009-10, RS.50,70,382/ - IN ASSTT.YEAR 2010-11 AND RS.1,91,35,903/- IN THE ASSTT.YEAR 2011 -12 ON ACCOUNT OF ACCRUED INTEREST ON NPA ACCOUNT. 3. BRIEF FACTS OF THE CASE ARE THAT THE AO MADE ADD ITION FOR INTEREST ACCRUED ON NPA ACCOUNT ON THE GROUND THAT THE EXEMP TION FROM INTEREST INCOME IN RELATION TO NPA ACCOUNT WAS ONLY AVAILABL E TO THE SCHEDULED BANKS. IF THE LEGISLATURE WANTED TO EXTEND THE BEN EFIT TO THE COOPERATIVE BANKS, THEN THE WORD COOPERATIVE BANK WOULD HAVE BEEN INSERTED AS IT HAS BEEN INSERTED W.E.F. 1.4.2007 IN SUB-CLAUSE (VIIA) TO ACIT VS. THE COOPERATIVE BANK OF RAJKOT (7 APPEALS) 3 CLAUSE (1) TO SECTION 36 OF THE ACT. THE AO ALSO OBSERVED THAT THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF JCIT V S. INDIA EQUIP. LEASING LTD., (2008) 111 ITD 37 (CHENNAI) HAS HELD THAT RBI GUIDELINES UNDER 1934 ACT HAVE BEEN ISSUED FOR THE PURPOSE OF EFFECTIVE SUPERVISION, MANAGEMENT AND CONTROL OF MONETARY AND CREDIT SYSTEM OF THE COUNTRY AND NOT FOR TAKING INTEREST ACCRUED AS PER SECTION 5 OUT OF THE SCOPE OF THE ACT, THEY WOULD NOT STOP ACCRUAL O F INCOME UNDER CLAUSE 5 OF THE ACT. THE AO ALSO OBSERVED THAT HO NBLE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD. VS. JCIT, (2010) 187 TAXMAN 346(SC) HELD THAT RBI DIRECTIONS DEAL ONLY WITH PRE SENTATION OF NPA PROVISIONS IN THE BALANCE SHEET, AND THEY HAVE NOTH ING TO DO WITH THE COMPUTATION OR TAXABILITY OF NPAS UNDER THE INCOME TAX ACT, 1961. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). 5. THE CIT(A) OBSERVING THAT ON SIMILAR FACTS, IN T HE ASSESSEES OWN CASE FOR THE ASSTT.YEAR 2010-11, THE CIT(A) JAMNAGA R, VIDE HIS ORDER IN APPEAL NO.CIT(A)/JAM/164/12-13 DATED 23.10.2013 HAS HELD AS UNDER: 7.0 I FIND THAT, ON SIMILAR SET OF FACTS I THE APP ELLANTS OWN CASE FOR A.Y.2010-11, THE LD.CIT(A) JAMANGAR, VIDE HIS O RDER IN APPEAL NO.CIT(A/JM/164/12-13, DT.23/10/2013 HAS HELD AS UN DER: THE ONLY ISSUE IS WHETHER ACCRUED INTEREST ON NON-P ERFORMING ASSETS SHOULD BE TAXED ON ACCRUAL BASIS OR CASH BAS IS. THE APPELLANT HAS BEEN FOLLOWING CASH SYSTEM OF ACCOUNT ING I.E. WHENEVER IT IS RECOVERED IT IS SHOWN AS INCOME WHIL E, THE AO HAS TAXED IT ON ACCRUAL BASIS. SIMILAR ISSUE WAS INVOL VED I THE CASE OF KARNAVATI CO-OP. BANK LTD., IN WHICH THE HONBLE IT AT, AHMEDABAD BENCH D (17 TAXMANN 239) HAS DECIDED IN FAVOUR OF THE APPELLANT. RESPECTFULLY, FOLLOWING THE HONBLE ITAT, AHMEDABADS DECISION THE ADDITION MADE ON THIS ACCO UNT IS HEREBY DELETED. THIS GROUND OF APPEAL IS ALLOWED. 7.1 THE HONBLE ITAT, AHMEDABAD BENCH HAS DISCUSSED THE RELEVANT DECISIONS IN DETAIL AND HAS STATED AS UNDE R:- ACIT VS. THE COOPERATIVE BANK OF RAJKOT (7 APPEALS) 4 WE CAN THEREFORE SAFELY DRAW A CONCLUSION THAT BY THE INSERTION OF A SPECIAL PROVISION TO TAX INTEREST IN COME IN THE CASE OF PUBLIC FINANCIAL INSTITUTION, ETC. SECTION 43-D HAS TO BE APPLIED IN ITS LETTER AND SPIRIT. IT IS PERTINEN T TO MENTION THAT LATER ON, IN THE CASE OF CIT V. BANK OF AMERIC A N.T. & S.A. [2003] 262 ITR 504/ 133 TAXMAN 648 (BOM.) THE QUESTION OF INTEREST ON 'STICKY LOANS' WAS DECIDED IN FAVOUR OF THE ASSESSEE AND HELD THAT THE QUESTION IS TO BE ANSWERED IN FAVOUR OF THE ASSESSEE FOLLOWING THE DE CISION OF UCO BANK (SUPRA), UNITEDCOMMERCIAL BANK V. CIT [ 1999] 240 ITR 355/ 106 TAXMAN 601 (SC). LIKEWISE, IN AN ANOTHER CASE OF CIT V. STATE BANK OF INDIA [2003] 2 62 ITR 662/ 129 TAXMAN 409 (BOM.) AGAIN IT WAS HELD THAT T HE AMOUNT CREDITED TO THE INTEREST SUSPENSE ACCOUNT WA S NOT TAXABLE FOLLOWING THE DECISION PRONOUNCED IN THE CA SE OF UCO BANK (SUPRA). (V) JUDGEMENT IN FAVOUR OF REVENUE : FROM THE SIDE OF THE REVENUE AN ORDER OF THE TRIBUN AL HAS BEEN VEHEMENTLY RELIED UPON AND THIS IS THE BASIC R EASON OF THE ELABORATE DISCUSSION MADE HEREINABOVE SO AS TO UNFOLD THE CONTROVERSY. IN THE SAID DECISION OF THE TRIBUN AL, VIZ. JT.CIT V. INDIA EQUIPMENT LEASING LTD. [2008] 111 I TD 37 (CHENNAI), THE RESPECTED CO-ORDINATE BENCH HAS EXPRESSED THAT QUOTE 'PRIOR TO INSERTION OF SECTION 43D WITH EFFECT FROM 1-4-1991, RECOGNITION OF INCOME WAS ON THE BASIS OF CIRCULAR OF 9-10-1984. IT SAID THAT FOR FI RST THREE YEARS THE INCOME MAY BE TAKEN ON ACCRUAL BASIS AND FROM 4TH YEAR ONWARDS, THE INCOME IN RESPECT OF DOUBTFUL DEBTS WAS TO BE RECOGNIZED ON RECEIPT BASIS. SINCE THE IN COME WAS TO BE ASSESSED FOR FIRST THREE YEARS ON ACCRUAL BAS IS, PROVISIONS OF SECTION 43D WERE INSERTED IN THE ACT. CIRCULAR NO.621, DATED 19-12-1991 GIVES THE LEGISLATIVE INTE NTION STATING THAT SECTION 43D WAS INSERTED WITH A VIEW T O IMPROVING THE VIABILITY OF BANKS, PUBLIC FINANCIAL INSTITUTIONS ETC., SO AS TO PROVIDE THAT INTEREST ON STICKY LOAN S SHALL BE CHARGED TO TAX ONLY IN THE YEAR IN WHICH THE INTERE ST IS ACTUALLY RECEIVED OR CREDITED TO THE PROFIT AND LOS S ACCOUNT. THIS BENEFIT WAS EXTENDED WITH EFFECT FROM 1-4-2000 IN THE CASE OF PUBLIC COMPANIES ENGAGED IN LONG-TERM FINAN CING OF HOUSING PROJECTS APPROVED BY NATIONAL HOUSING BANKS . THE LEGISLATURE IN THEIR WISDOM DID NOT EXTEND -THE SAM E BENEFIT TO NBFCS WHICH HAS BEEN GIVEN TO SCHEDULED BANKS, P UBLIC FINANCIAL INSTITUTIONS, ETC. THE PROVISIONS OF SECT ION 43D AS STOOD AT RELEVANT TIME CONTAINED AN EXPRESSION 'THE INCOME BY WAY OF INTEREST IN RELATION TO SUCH CATEGORIES O F BAD OR ACIT VS. THE COOPERATIVE BANK OF RAJKOT (7 APPEALS) 5 DOUBTFUL DEBTS AS MAY BE PRESCRIBED HAVING REGARD T O THE GUIDELINES ISSUED BY THE RBI IN RELATION TO SUCH DE BTS'. THIS EXPRESSION CONTINUES TO EXIST IN THE NEWLY SUBSTITU TED SECTION 43D APPLICABLE WITH EFFECT FROM 1-4-2000. T HIS SHOWS THAT THE RBI GUIDELINES IN RESPECT OF SCHEDULED BANKS, PUBLIC FINANCIAL INSTITUTIONS ETC. , WERE NOT SUFFICIENT FOR RECOGNITION OF INCOME ON CASH BASIS FOR THE PURPOSES OF INCOME-TAX. THE INCOME OF SUCH ASSESSEE S WAS DETERMINED AS PER CIRCULAR DATED 9-10-1984. BECAUSE OF THIS REASON, SECTION 43DWAS INSERTED IN THE STATUTE. RBI GUIDELINES IN CASE OF NBFC ARE FOR THE PURPOSE OF C ONTROL AND SUPERVISION WITH RESPECT TO PUBLIC INTEREST AND VIABILITY OF THE NBFC. THE GUIDELINES NEVER INTENDED FOR TAKI NG THE INTEREST INCOME ACCRUED AS PER SECTION 5 OUT OF THE SCOPE OF THE ACT. IF THE CONTENTION OF ASSESSEE WAS ACCEPTED , IT WOULD AMOUNT TO INSERTION OF 'NBFC' IN SECTION 43D, THAT TOO BY A GUIDELINE ISSUED FOR DIFFERENT PURPOSES BY AN AUTHORITY OTHER THAN THE PARLIAMENT IN OTHER WORDS, THE DOCTR INE OF 'CASUS OMISSUS' WILL DEEM TO HAVE BEEN APPLIED WHIC H IS CONTRARY TO LAW OF LAND.' UNQUOTE. THE BASIC REASON FOR DIRECTING TO ASSESS THE ACCRUED INTEREST ON NPA WAS THE RBI GUIDELINES ISSUED ONLY FOR SCHEDULED BANKS, PUBLIC FINANCIAL INSTITUTIONS AND NOT FOR NBFC. THE OBSERVATION OF T HE RESPECTED TRIBUNAL WAS THAT IF THE CONTENTION OF TH E ASSESSEE WAS TO BE ACCEPTED, THEN IT WOULD AMOUNT T O INSERTION OF 'NBFC' IN SECTION 43-D OF THE I.T. ACT . AS AGAINST THAT, AS FAR AS THE ASSESSEE IS CONCERNED, IT IS AN ACCEPTED FACT THAT THE ASSESSEE IS A COOPERATIVE BA NK AND NOT A NON-BANKING FINANCIAL COMPANY AND THIS NOTEWO RTHY DISTINCTION HAS ALREADY BEEN APPRECIATED BY US IN O NE OF THE PARAGRAPHS ABOVE. THERE IS ONE MORE DECISION OF THE HON'BLE APEX COUR T WHICH IS YET TO BE MENTIONED WHILE DISCUSSING THE ARGUMEN TS RAISED FROM THE SIDE OF THE REVENUE. A DECISION IN THE CASE OF SOUTHERN TECHNOLOGIES LTD. (SUPRA) HAS BEEN CITE D BUT THE FUNDAMENTAL DIFFERENCE IS THAT THE ISSUE BEFORE THE HON'BLE COURT WAS IN RESPECT OF PROVISION FOR NPA A ND DEBITED TO P&L ACCOUNT BY A NBFC. THE SAID PROVISIO N WAS UNDISPUTEDLY MADE BY THE SAID NBFC AS PER THE PRUDE NTIAL NORMS MADE BY THE RESERVE BANK. THEREFORE WE WANT T O MAKE IT CLEAR THAT THE QUESTION FOR CONSIDERATION B EFORE THE HON'BLE COURT WAS THAT IF A PROVISION FOR DOUBTFUL DEBT IS MADE THEN WHAT WILL BE THE LEGAL POSITION OF THE AP PLICABILITY OF EXPLANATION TO SECTION 36(1)(VII) OF THE I.T. AC T. FOR THE SAKE OF READY REFERENCE, RELEVANT PARAGRAPH FROM TH E HELD PORTION IS REPRODUCED BELOW:- ACIT VS. THE COOPERATIVE BANK OF RAJKOT (7 APPEALS) 6 'THE INCOME-TAX IS A TAX ON 'REAL INCOME', I.E., TH E PROFITS ARRIVED AT ON COMMERCIAL PRINCIPLES SUBJECT TO THE PROVISIONS OF THE ACT. THEREFORE, IF BY THE EXPLANATION TO SEC TION 36(1)(VII) A PROVISION FOR DOUBTFUL DEBT IS KEPT OU T OF THE AMBIT OF BAD DEBT WHICH IS WRITTEN OFF, THEN ONE HA S TO TAKE INTO ACCOUNT THE EXPLANATION IN COMPUTING THE TOTAL INCOME UNDER THE INCOME-TAX ACT FAILING WHICH ONE CANNOT A SCERTAIN THE REAL PROFITS. THE PROVISION FOR NON-PERFORMING ASSETS DEBITED IN THE PROFIT AND LOSS ACCOUNT UNDER THE RESERVE BANK DIRECTIONS OF 1998 IS ONLY A NOTIONAL EXPENSE AND, THEREFORE, THERE WOULD BE ADD BACK TO THAT EXT ENT IN THE COMPUTATION OF TOTAL INCOME UNDER THE INCOME-TA X ACT.' THEREFORE THE DISTINCTION CAN EASILY BE DRAWN THAT IN THE APPEAL BEFORE US THE QUESTION IS ACCRUAL OF INTERES T INCOME ON STICKY LOAN BUT IN THIS CITED DECISION THE QUEST ION BEFORE HE APEX COURT WAS ABOUT THE ADMISSIBILITY OF PROVIS ION MADE IN RESPECT OF DOUBTFUL DEBTS. (VI) CONCEPT OF REAL INCOME APPROVED IN THE CASE OF BANKING BUSINESS: BEFORE US, THE THEORY OF 'REAL INCOME' HAS ALSO BEE N ARGUED AND IN SUPPORT A DECISION OF HON'BLE COURT PRONOUNC ED IN THE CASE OF GODHRA ELECTRICITY CO. LTD. V. CIT [199 7] 225 ITR 746/ 91 TAXMAN 351 (SC). IN SHORT, THE VIEW EXP RESSED WAS THAT IF INCOME DOES NOT RESULT AT ALL, THERE CA NNOT BE ANY TAX AND THAT IF AN INCOME HAS NOT MATERIALIZED, THEN MERELY AN ENTRY MADE ABOUT A HYPOTHETICAL INCOME BY FOLLOWING BOOK KEEPING METHODS, THE LIABILITY TO TA X CANNOT BE ATTRACTED. NOW AT PRESENT THE SITUATION IS THAT THE HON'BLE MA DRAS HIGH COURT IN THE CASE OF CIT V. ELGI FINANCE LTD. [2007 ] 293 ITR 357 (MAD.) HAS TAKEN A VIEW THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF LEASE, FINANCE A ND HIRE PURCHASE AND THAT THE PRINCIPLE OF ACCRUAL COMES IN TO PLAY WITHOUT INCOME WAS RECOGNIZED AND THAT THE ASSESSEE HAD CLASSIFIED ITS ASSETS ON THE BASIS OF NOTIFICATION ISSUED BY R.B.I. AND FOUND THAT CERTAIN ASSETS CAME UNDER THE CATEGORY OF NPA AND THAT FROM SUCH NPA THE ASSESSEE HAD NOT RECOGNIZED ANY INCOME IN CONSONANCE WITH THE NOTIFICATION ISSUED BY RBI AND AS-9 ISSUED BY ICAI AND THAT THE ASSESSEE WAS JUSTIFIED IN NOT RECOGNIZING SUCH INCOME. THE COURT HAD FURTHER EXPRESSED THAT THERE WAS NO O CCASION TO CONSIDER WHETHER THE PRINCIPLE OF ACCRUAL WOULD ARISE OR NOT, NEVERTHELESS, THE INTEREST FROM SUCH NPA WOULD BE TAXED IN THE APPROPRIATE ASSESSMENT YEAR ON THE BAS IS OF ACTUAL RECEIPT. IT IS WORTH TO MENTION THAT FOR THI S DECISION, THE HON'BLE MADRAS HIGH COURT HAS RELIED UPON AN AN OTHER ACIT VS. THE COOPERATIVE BANK OF RAJKOT (7 APPEALS) 7 DECISION OF THE SAME HIGH COURT PRONOUNCED IN THE C ASE OF CIT V. INDIA EQUIPMENT LEASING LTD. [2007] 293 I TR 350 (MAD.). TO CONCLUDE THE ISSUE, WE DEEM IT IMPORTANT TO DISC USS THE DECISION OF INDIA EQUIPMENT LEASING LTD. (SUPRA) FO R THE SAKE OF COMPLETENESS OF OUR JUDGEMENT. IN THAT APPE AL, THE ASSESSEE WAS DOING THE BUSINESS OF HIRE PURCHASE TRANSACTION AND LEASING OF PLANT & MACHINERY. THE I NTEREST ON 'STICKY LOANS' NOT BEING BROUGHT INTO THE PROFIT & LOSS ACCOUNT BUT BEING TAKEN TO THE SUSPENSE ACCOUNT WAS HELD BY THE COURT AS AN ACCEPTED MODE OF TREATMENT OF NO TIONAL INCOME IN ACCOUNTING PRACTICE. THE COURT HAS SAID T HAT THE CIRCULAR-9 OF OCTOBER-1984 SERVE A PRACTICAL PURPOS E OF LAYING DOWN A UNIFORM TEST FOR THE ASSESSING AUTHOR ITY TO DECIDE WHETHER THE INTEREST INCOME WHICH IS TRANSFE RRED TO SUSPENSE ACCOUNT IS, IN FACT, ARISING IN RESPECT OF A DOUBTFUL OR STICKY LOAN. THIS WAS DONE BY PROVIDING THAT NON -RECEIPT OF INTEREST FOR THE FIRST THREE YEARS WILL NOT BE T REATED AS INTEREST ON A DOUBTFUL LOAN, BUT IF AFTER THREE YEA RS THE PAYMENT OF INTEREST IS NOT RECEIVED, FROM THE 4TH Y EAR ONWARDS IT WILL BE TREATED AS INTEREST ON A DOUBTFU L LOAN AND WILL BE ADDED TO THE INCOME ONLY WHEN IT IS ACTUALL Y RECEIVED. FOLLOWING THE UCO BANK (SUPRA), THE SAID APPEAL OF THE REVENUE WAS DISMISSED. 6. THE DR RELIED ON THE ORDER OF THE AO, WHEREAS, T HE AR OF THE ASSESSEE RELIED O THE ORDER OF THE CIT(A). 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. THE ISSUE INVOLVED IN THIS GROUND OF APPEAL IS THAT WHETHER IN CASE OF A CO-OPERATIVE BANK, INTEREST ON NPA, WHICH HAS NOT BEEN PROVIDED AS ACC RUED IN THE BOOKS OF ACCOUNT BY THE BANK, IS TO BE BROUGHT TO TAX UNDER THE PROVISIONS OF INCOME TAX ACT IN THE YEAR OF ITS ACCRUAL AS PER TH E TERMS OF GRANT OF LOAN OR NOT. THE AO IS OF THE OPINION THAT SUCH IN TEREST IS TO BE BROUGHT TO TAX, WHEREAS ACCORDING TO THE CIT(A), SUCH INTER EST IS TO BE TAXED IN THE YEAR OF ITS RECEIPT. THE AO PLACED RELIANCE ON THE DECISION OF CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF JCIT V S. INDIA EQUIPMENT LEASING LTD. (SUPRA) AND THE DECISION OF THE HONBL E SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD. VS. JCIT (SU PRA). ACIT VS. THE COOPERATIVE BANK OF RAJKOT (7 APPEALS) 8 8. WE FIND THAT THE ISSUE IS SQUARELY COVERED BY TH E DECISION OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF KARNAVATI CO-O P. BANK LTD. VS. DCIT, (2012) 14 ITR (TRIB) 175 (AHD) WHERE THE TRIB UNAL AFTER TAKING INTO CONSIDERATION TWO DECISIONS RELIED UPON BY THE AO HAS HELD AS UNDER: SEC. 43D IS IN CONTRAST WITH THE FUNDAMENTAL PRINC IPLE OF ACCOUNTANCY. THE CARDINAL PRINCIPLE OF MERCANTILE S YSTEM OF ACCOUNTANCY IS THAT AN INCOME IS TO BE SHOWN IN THE BOOKS OF ACCOUNT ON ACCRUAL BASIS. THE PRINCIPLE IS THAT IT IS IMMATERIAL WHETHER IT WAS ACTUALLY RECEIVED OR NOT, BUT IF AN INCOME IS EXPECTED TO BE RECEIVED, THEN IT SHOULD BE BROUGHT TO BOOKS OF ACCOUNT AS AN INCOME ACCRUED TO THE ASSESSEE. CONTR ARY TO THIS RECOGNIZED PRINCIPLE, THIS SECTION HAS PRESCRIBED T HAT AN INCOME BY WAY OF INTEREST SHALL BE CHARGEABLE TO TAX IN TH E PREVIOUS YEAR IN WHICH IT IS CREDITED. THE OTHER DEVIATION FROM T HE SAID ACCEPTED PRINCIPLE OF ACCOUNTANCY IS THAT AN INCOME BY WAY O F INTEREST SHALL BE CHARGEABLE TO TAX IN THE PREVIOUS YEAR IN WHICH IT IS ACTUALLY RECEIVED. THE ACT SAYS THAT THE INCIDENCE OF 'CREDI T' OR 'ACTUALLY RECEIVED', WHICHEVER IS EARLIER IS TO BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF CHARGEABILITY OF INCOME BY WAY OF INTERE ST. SIMULTANEOUSLY, IT IS NOTEWORTHY THAT THIS SECTION IS AN OVERRIDING SECTION BECAUSE THE OPENING WORDS ARE 'NOTWITHSTAND ING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER PROVISIONS O F THIS ACT'. THEREFORE, IN SPITE OF ANYTHING CONTAINED IN THE AC T, THE PROVISIONS OF THIS SECTION SHALL OVERRIDE THOSE PROVISIONS. ON CE THE STATUTE HAS CATEGORICALLY MADE A LAW IN RESPECT OF PUBLIC F INANCIAL INSTITUTIONS THAT INTEREST IS CHARGEABLE TO TAX EIT HER IN THE YEAR IN WHICH CREDITED OR ACTUALLY RECEIVED, WHICHEVER IS E ARLIER, THEN IT IS COMPULSORY TO ABIDE BY THE SAID RULE. NO SCOPE IS L EFT WITH THE REVENUE AUTHORITIES TO IGNORE THESE PROVISIONS DUE TO UNAMBIGUOUS USE OF LANGUAGE IN THE SECTION. AS FAR AS THE STATUS OF THE ASSESSEE IS CONCERNED, THE AO HAS STATED THA T THE ASSESSEE-BANK IS A CO-OPERATIVE BANK. UNDISPUTEDLY, THE ASSESSEE IS ALSO GOVERNED BY THE RBI GUIDELINES. VIDE AN EXP LN. (D) R/W S. 36(L)(VIIA) ANNEXED TO S. 43D THE DEFINITION OF THE ENTITIES INCORPORATED BY THE SECTION HAVE BEEN DEFINED AND I N THE ABSENCE OF ANY CONTRARY MATERIAL, IT IS HEREBY HELD THAT TH E ASSESSEE IS COVERED BY ONE OF THE ENTITIES, HENCE THE PROVISION S OF S. 43D ARE TO BE APPLIED. NEXT ISSUE IS THAT WHETHER A CIRCULA R HAVING EFFECT OF RELAXING RIGOUR OF LAW CAN BE TREATED AS INCONSISTE NT WITH THE PROVISIONS OF A STATUTE. IN ORDER TO AID PROPER DET ERMINATION OF THE INCOME OF MONEYLENDERS AND BANKS, THE CBDT HAS ISSU ED A CIRCULAR DT. 6TH OCT., 1952, PROVIDING THAT WHERE I NTEREST ACCRUING ON DOUBTFUL DEBTS IS CREDITED TO A SUSPENSE ACCOUNT , IT NEED NOT BE INCLUDED IN ASSESSEE'S TAXABLE INCOME, PROVIDED THE ITO IS ACIT VS. THE COOPERATIVE BANK OF RAJKOT (7 APPEALS) 9 SATISFIED THAT RECOVERY IS PRACTICALLY IMPROBABLE. THE CBDT UNDER S. 119 HAS POWER TO ISSUE CIRCULARS IN EXERCISE OF ITS STATUTORY POWERS. IF THE BOARD CONSIDERS IT NECESSARY TO LAY DOWN CERTAIN RULES AND THEN DIRECT THE SUB-ORDINATE AUTHORITIES, SUCH DIRECTIONS ARE REQUIRED TO BE FOLLOWED AND SUCH CIRCULAR WOULD BE BINDING ON THE DEPARTMENT UNLESS AND UNTIL HELD AS ULTRA VIRES BY A COURT OF LAW. THE BOARD HAS POWERS TO RELAX THE SEVERITY OR THE STRICTNESS OF LAW AND THE AUTHORITIES ARE REQUIRED TO THOSE IN STRUCTIONS. AS OF NOW THE LAW AS LAID DOWN IS THAT IN TERMS OF CBDT C IRCULAR THE INTEREST IS TO BE ADDED AS INCOME ONLY WHEN ACTUALL Y RECEIVED OR CREDITED IN RESPECT OF THE 'STICKY ADVANCES' WHILE MAKING ASSESSMENT FOR A FINANCIAL INSTITUTION. IT CAN SAFE LY BE CONCLUDED THAT BY THE INSERTION OF A SPECIAL PROVISION TO TAX INTEREST INCOME IN THE CASE OF PUBLIC FINANCIAL INSTITUTION, ETC. S . 43D HAS TO BE APPLIED IN ITS LETTER AND SPIRIT. UNITED COMMERCIA L BANK VS. CIT (1999') 154 CTR (SC) 88 : (1999) 237 ITR 889 (SC), CIT VS. ELGI FINANCE LTD. (2007) 293 ITR 357 (MAD) AND JT. CIT V S. INDIA EQUIPMENT LEASING LTD. (2007) 293 ITR 350 (MAD) REL IED ON; SOUTHERN TECHNOLOGIES LTD, VS. JT. CIT_(2010) 228 C TR (SC) 440 : (2010) 34 DTR (SC) 11 : (2010) 320 ITR 577 (SC) A ND 3T. CIT VS. INDIA EQUIPMENT LEASING LTD. (2007) 111 TTJ (CH ENNAI) 250 DISTINGUISHED. 9. WE FIND THAT THE ORDER OF THE CIT(A) IS IN CONFI RMITY WITH THE ORDER OF THIS BENCH OF THE TRIBUNAL STATED AS ABOVE. THE DR COULD NOT POINT OUT ANY GOOD REASON AS TO WHY THE AFORESAID ORDER O F THIS TRIBUNAL SHOULD NOT BE FOLLOWED. WE, THEREFORE, FOLLOWING T HE ABOVE QUOTED DECISION OF THE TRIBUNAL, CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THIS GROUND OF APPEAL. 10. THE GROUND NO.1 OF THE APPEAL OF THE REVENUE IN THE ASSTT.YEAR 2009-10, 2010-11 AND 2011-12 IS DIRECTED AGAINST TH E ORDER OF THE CIT(A) IN DELETING THE ADDITION OF RS.80,75,000/- I N THE ASSTT.YEAR 2009-10, RS.1,04,61,642/- IN A.Y.2010-11 AND RS.1,1 1,46,927/- IN A.Y.2011-12 ON ACCOUNT OF AMORTIZATION OF PREMIUM P AID ON INVESTMENT. 11. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVE D THAT IT IS SEEN FROM THE SCHEDULE-16 OF THE STATEMENT OF ACCOUNT CO NTAINING THE DETAILS OF OPERATING EXPENDITURE THAT THE ASSESSEE HAS CLAI MED EXPENDITURE ON ACIT VS. THE COOPERATIVE BANK OF RAJKOT (7 APPEALS) 10 ACCOUNT AMORTISATION OF PREMIUM ON GOVT. SECURITIE S. ON SHOW CAUSE NOTICE ISSUED, THE ASSESSEE CONTENDED THAT THE SECU RITIES HELD BY THE BANK ARE STOCK-IN-TRADE OF THE BUSINESS OF THE BANK , AND THE NOTIONAL LOSS SUFFERED ON ACCOUNT OF THE AMORTIZATION OF PRE MIUM ON SAID SECURITIES AT THE CLOSE OF THE YEAR IS AN ALLOWABLE DEDUCTION IN THE COMPUTATION OF THE PROFITS OF BANK. THE AO OBSERVE D THAT THE MAIN ISSUE FOR CONSIDERATION WAS THAT THE GOVERNMENT SEC URITIES WERE NOT STOCK IN TRADE BUT WERE HELD TO MATURITY SECURITIES . THEREFORE, THEY PARTOOK THE NATURE OF INVESTMENT AND DISALLOWED THE DEDUCTION TO THE ASSESSEE ON ACCOUNT OF PREMIUM WRITTEN OFF ON GOVER NMENT SECURITIES. 12. ON APPEAL, THE CIT(A) DELETED DISALLOWANCE BY O BSERVING AS UNDER: THIS IS A SETTLED ISSUE BY VARIOUS COURT DECISIONS IN FAVOUR OF THE APPELLANT IN WHICH IT HAS BEEN HELD THAT GOVERNMENT SECURITIES HELD BY COOPERATIVE SOCIETIES AS PER RBI GUIDELINES ARE IN THE NATURE OF STOCK-IN-TRADE. IN THE CASE OF RAJKOT PEO PLE CO- OPERATIVE BANK LTD. FOR A.Y. 2009-10 THE UNDERSIGNE D HAS ALLOWED THE APPEAL ON THIS ISSUE, GIVING THE FOLLOWING REAS ONS:- (I) THE GOVERNMENT SECURITIES HELD UNDER HTM CATEGORY IS VERY MUCH ALLOWED TO BE TRADED AS PER RBI GUIDELINE S. THESE SECURITIES ARE IN THE NATURE OF STOCK-IN-TRADE AS P ER CLAUSE (VII) OF THE CBDT INSTRUCTION NO.17/2008 DTD. 26/11/2008. (II) IF THE GOVERNMENT SECURITIES HELD UNDER H TM IS STOCK-IN- TRADE, THEN ALL THE PROVISIONS APPLICABLE ON 'INCOM E FROM BUSINESS & PROFESSION' WILL BE VERY MUCH APPLICABLE ON THIS STOCK-IN-TRADE TOO. FOR E.G. IF THE MARKET VALUE OF THIS STOCK AT THE END OF THE FINANCIAL YEAR IS REDUCED COMPARED TO THE OPENING V ALUE, THE LOSS HAS TO BE BOOKED AS BUSINESS LOSS AND IF THE VALUE GETS INCREASED THE INCOME HAS TO BE BOOKED AS BUSINESS INCOME. (III) THE GOVERNMENT SECURITIES IN QUESTION ARE HELD BY BANK FOR COMPLYING WITH THE REQUIREMENTS OF MAINTAINING THE SLR AS REQUIRED UNDER THE PROVISIONS OF BANKING REGULATION ACT, 1949. ALTHOUGH THEY ARE MARKED FOR MATURITY WHICH APPEARS TO BE GIVING COLOUR OF INVESTMENT TO IT, BUT IN THE REALITY THEY ARE STOCK-IN- TRADE AS THE BANK IS FREE TO TRADE WITH THIS STOCK. THE ONLY CONDITION IS THAT WHILE ENGAGING IN PURCHASE AND SA LE OF GOVERNMENT SECURITIES THE STATUTORY SLR SHOULD NOT BE DISTURBED. ACIT VS. THE COOPERATIVE BANK OF RAJKOT (7 APPEALS) 11 (IV) THE APPELLANT IS NOT AT ALL ENGAGED IN PUR CHASE AND SALE OF SECURITIES BUT HAD INVESTED MONEY IN GOVERNMENT SEC URITIES ONLY FOR THE PURPOSE OF COMPLYING WITH THE PROVISIONS OF BANKING REGULATION ACT FOR MAINTAINING THE SLR. (V) THE APPELLANT HAS FOLLOWED ACCOUNTING METHOD A S PRESCRIBED BY THE RESERVE BANK OF INDIA FOR VALUATION OF INVES TMENT/STOCK-IN- TRADE CONSISTENTLY AND INCOME FROM INVESTMENT/STOCK -IN-TRADE HAS ALWAYS BEEN OFFERED AS BUSINESS INCOME. IN VIEW OF THE ABOVE, IT IS HELD THAT 'PREMIUM WRITTEN OFF' IS VERY MUCH IN THE NATURE OF REVENUE EXPENDITURE AND SHOULD BE ALLOWED. ACCORDIN GLY, THE ADDITION MADE ON THIS ACCOUNT IS HEREBY DELETED. TH IS GROUND OF APPEAL IS ALLOWED. 7.2 IT IS ALSO SEEN THAT THIS ISSUE HAS BEE DECIDED BY THE HONBLE ITAT, RAJKOT BENCH IN THE CASE OF JAMNAGAR DISTRIC T CO-OP. BANK VS. ADDL. CIT, JAMANGAR IN ITA NO.481/RJT/2011 FOR A.Y.08-09. WHILE DECIDING THE SAME ISSUE, THE HONBLE ITAT HAS HELD AS UNDER: 22. WITH REGARD TO GROUND NO.3, WE HAVE HEARD BOTH SIDES. THE AO DISALLOWED THE OVERDUE INTEREST RESERVE AMOU NTING TO RS.1,15,00,000/- ON THE GROUND THAT ASSESSEE MAD E THE PROVISION OF THIS AMOUNT. BEFORE US, THE ASSESSEE S UBMITTED THAT THE AO HAS NOT CONSIDERED THAT IT IS CREDITED INTO PROFIT AND LOSS ACCOUNT AND DEBITED BACK AS PER RBI GUIDEL INES ACCOUNTING POLICY OF THE BANK ADOPTED CONSISTENTLY. THUS, THERE IS NO REAL INCOME AND THE AMOUNT DOES NOT REM AIN CREDITED IN P/L A/C. AS REQUIRED U/S.43D. IN SUPPOR T OF THIS, RELIANCE IS PLACED ON THE DECISION OF ITAT AHMEDABA D BENCH IN THE CASE OF KARNAVATI COOP. BANK LTD. V. DCIT [2 012] 134 ITD 486(AHD.) THE LD. D.R. APPEARED FOR THE REVENUE COULD NOT CONTROVERT THE SAME. 23. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERT INENT TO NOTE THAT AO HAS NOT CONSIDERED THE FACT THAT OVERD UE INTEREST AMOUNTING TO RS.1,15,00,000/- WHICH IS CRE DITED INTO PROFIT AND LOSS ACCOUNT WAS DEBITED AS PER RBI GUIDELINES AND THERE IS NO ULTIMATE CREDIT IN P/L. A/C. IN THIS RESPECT. THUS, THERE IS NO INCOME ACCRUED AND NO AD DITION ON THIS ACCOUNT CAN BE MADE. THIS VIEW IS SUPPORTED BY THE DECISION OF ITAT AHMEDABAD BENCH IN THE CASE OF KAR NAVATI CO-OP BANK LTD.(SUPRA). IN THIS CASE, THE TRIBUNAL HAS FOLLOWED THE JUDGMENT OF HONBLE APEX COURT RENDERE D IN THE ACIT VS. THE COOPERATIVE BANK OF RAJKOT (7 APPEALS) 12 CASE OF UCO BANK VS. CIT AS REPORTED IN 237 ITR 889 . WE THEREFORE, FOLLOWING THE DECISION OF ITAT AHMEDABAD BENCH IN THE CASE OF KARNAVATI CO-OP. BANK LTD. (SUPRA) D ELETE THE DISALLOWANCE OF RS.1,15,00,000/- MADE BY AO. THIS G ROUND OF APPEAL IS ALLOWED. 7.3 RESPECTFULLY FOLLOWING THE HONBLE ITAT, AHMED ABAD BENCHS DECISION IN THE PRESENT APPEAL, THE ADDITIO N MADE ON THIS ACCOUNT IS HEREBY DECIDED. THIS GROUND OF APPEAL IS ALLOWED. 13. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. THE AO HAS DISALLOWED DEDUCTION CLAIMED BY THE ASSESSEE ON ACC OUNT OF AMORTISATION OF PREMIUM ON GOVT. SECURITIES, WHIC H WAS DISALLOWED BY THE AO ON THE GROUND THAT THESE SECURITIES WERE NOT STOCK-IN-TRADE, BUT ARE HELD TO MATURITY SECURITIES. EXPLANATION OF TH E ASSESSEE BEFORE THE AO WAS THAT THE SECURITIES HELD BY THE BANK ARE STO CK-IN-TRADE OF THE BUSINESS OF THE BANK, AND THE NOTIONAL LOSS SUFFERE D ON ACCOUNT OF AMORTISTION OF PREMIUM ON GOVT. SECURITIES AT TH E CLOSE OF THE YEAR IS AN ALLOWABLE DEDUCTION IN THE COMPUTATION OF PROFIT S OF THE BANK. 14. ON APPEAL, THE CIT(A) DELETED THE DISALLOWANCE BY OBSERVING THAT- (III) THE GOVERNMENT SECURITIES IN QUESTION ARE HELD BY BANK FOR COMPLYING WITH THE REQUIREMENTS OF MAINTAINING THE SLR AS REQUIRED UNDER THE PROVISIONS OF BANKING REGULATION ACT, 1949. ALTHOUGH THEY ARE MARKED FOR MATURITY WHICH APPEARS TO BE GIVING COLOUR OF INVESTMENT TO IT, BUT IN THE REALITY THEY ARE STOCK-IN- TRADE AS THE BANK IS FREE TO TRADE WITH THIS STOCK. THE ONLY CONDITION IS THAT WHILE ENGAGING IN PURCHASE AND SA LE OF GOVERNMENT SECURITIES THE STATUTORY SLR SHOULD NOT BE DISTURBED. (IV) THE APPELLANT IS NOT AT ALL ENGAGED IN PUR CHASE AND SALE OF SECURITIES BUT HAD INVESTED MONEY IN GOVERNMENT SEC URITIES ONLY FOR THE PURPOSE OF COMPLYING WITH THE PROVISIONS OF BANKING REGULATION ACT FOR MAINTAINING THE SLR. THEREFORE, HE HELD THAT IN VIEW OF THE ABOVE, IT I S HELD THAT PREMIUM WRITTEN OFF IS VERY MUCH IN THE NATURE OF REVENUE EXPENDITURE AND SHOULD BE ALLOWED. ACIT VS. THE COOPERATIVE BANK OF RAJKOT (7 APPEALS) 13 15. BEFORE US, THE DR SUPPORTED THE ORDER OF THE AO AND AR SUPPORTED THE ORDER OF THE CIT(A). 16. WE FIND THAT THE CIT(A) HAS GIVEN A FINDING THA T THE GOVERNMENT SECURITIES, WHICH WERE HELD TO MATURITY WERE ACQUIR ED BY THE ASSESSEE IN THE COURSE OF ITS BANKING BUSINESS TO FULFILL TH E REQUIREMENT OF MAINTAINING SLR AND THE ASSESSEE CAN SELL IT AT ANY TIME, AND THEREFORE, THE SAME WAS STOCK-IN-TRADE OF THE ASSESSEE-BANK. 17. THE DR COULD NOT CONTROVERT THE ABOVE FINDINGS OF THE CIT(A). 18. WE, THEREFORE, AGREE WITH THE FINDINGS OF THE C IT(A) TO THE EXTENT THAT THE GOVERNMENT SECURITIES HELD BY THE ASSESSEE WAS ITS STOCK-IN- TRADE. BEING STOCK-IN-TRADE, THE ASSESSEE IS ALLOW ED TO VALUE THE SAME AT COST OR MARKET VALUE, WHICHEVER IS LESS, AT THE END OF THE RELEVANT PREVIOUS YEAR, AND THUS, LOSS IF ANY, SUFFERED BY T HE ASSESSEE ON SUCH VALUATION IS DEDUCTIBLE LOSS. 19. HOWEVER, IN THE INSTANT CASE, THE ASSESSEE CLAI MED AMORTIZATION OF PREMIUM. THE CIT(A) HAS HELD THAT THE PREMIUM W RITTEN OFF WAS IN THE NATURE OF REVENUE EXPENDITURE. WE FIND THAT TH E EXACT NATURE OF PREMIUM WRITTEN OFF HAS NOT BEEN BROUGHT ON RECORD BY ANY OF THE LOWER AUTHORITY, AND BOTH THE PARTIES BEFORE US ALSO COUL D NOT EXPLAIN AS TO HOW THIS AMOUNT WAS WORKED OUT. IF THE AMOUNT CLAI MED UNDER THE HEAD PREMIUM WRITTEN OFF IS WORKED OUT ON THE BAS IS OF THE MARKET VALUE OF THE SECURITIES, AS AT THE END OF RELEVANT YEAR VIS--VIS THE OPENING BALANCE AND/OR COST OF SUCH SECURITIES, THE N SUCH AMOUNT IS ALLOWABLE AS DEDUCTION TO THE ASSESSEE, BUT IF THE AMOUNT REPRESENTS A NOTIONAL WRITING OFF OF PREMIUM PAID AMOUNT WITHOUT REFERENCE TO THE MARKET VALUE OF THE SECURITIES AS AT THE END OF THE RELEVANT PREVIOUS YEAR, THEN THE SAME IS NOT ALLOWABLE AS DEDUCTION T O THE ASSESSEE. IN THE ABSENCE OF COMPLETE DETAILS, WE ARE NOT IN POSI TION TO ADJUDICATE THE ACIT VS. THE COOPERATIVE BANK OF RAJKOT (7 APPEALS) 14 ISSUE COMPLETELY. WE, THEREFORE, REMIT THE MATTER BACK TO THE FILE OF THE AO FOR DECIDING THE ISSUE AFRESH IN THE LIGHT OF OB SERVATIONS MADE HEREINABOVE AFTER PROPER VERIFICATION AND AFTER ALL OWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, THIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. CO NO.1/RJT/14 (IN ITA NO.36/RJT/2014) ASSTT.YEAR 2010-11 (ASSESSEES CO) 20. SOLE GROUND OF THE CROSS OBJECTION IS AS UNDER: 1. THE LD.CIT(A), JAMNAGAR ERRED IN UPHOLDING DISA LLOWANCE MADE BY AO OF RS.8,29,726/- BEING 4/5 TH OF RS.10,37,157/- CLAIMED BY RESPONDENT AS VRS SALARY EXPENDITURE U/S .35DDA OF THE ACT. 21. AT THE TIME OF THE HEARING THE AR OF THE ASSESS EE HAS NOT MADE ANY SUBMISSIONS ON THIS GROUND OF APPEAL, AND HENCE , THE SAME IS DISMISSED FOR WANT OF PROSECUTION. CO NO.13/RJT/14 (IN ITA NO.307/RJT/2014) ASSTT.YEA R 2008- 09 (ASSESSEES CO) 22. SOLE GROUND OF THE CROSS OBJECTION IS AS UNDER: 1. THE LD.CIT(A), RAJKOT ERRED IN DISMISSING THE G ROUND RELATING TO ISSUE OF NOTICE U/S.148 AND THUS ERRED IN UPHOLDING VALIDITY OF REOPENING OF ASSESSMENT MADE U/S.147 OF THE ACT. 23. IN VIEW OF OUR DECISION IN THE APPEAL OF THE RE VENUE, THIS GROUND OF CROSS OBJECTION HAS BECOME ACADEMIC IN NATURE, A ND HENCE DISMISSED. CO NO.14/RJT/14 (IN ITA NO.308/RJT/2014) ASSTT.YEA R 2009- 10 (ASSESSEES CO) 24. SOLE GROUND OF THE CROSS OBJECTION IS AS UNDER: ACIT VS. THE COOPERATIVE BANK OF RAJKOT (7 APPEALS) 15 1. THE LD.CIT(A), RAJKOT ERRED IN UPHOLDING DISALL OWANCE MADE BY AO OF RS.3,62,942/- 4/5 TH OF RS.4,53,678/-CLAIMED BY RESPONDENT AS VRS SALARY EXPENDITURE U/S.35DDA OF T HE ACT. 25. NO SUBMISSION WAS MADE BY THE AR OF THE ASSESS EE ON THIS GROUND OF THE CROSS OBJECTION, AND HENCE, THE SAME IS DISMISSED FOR WANT OF PROSECUTION. 26. IN THE RESULT, THE APPEALS OF THE REVENUE ARE P ARTLY ALLOWED FOR STATISTICAL PURPOSE AND CROSS OBJECTIONS OF ASSESSE E ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 27 TH MARCH, 2015 AT RAJKOT. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 27/3/2015