BANK OF INDIA, MUMBAI V. ASST CIT 2(1), MUMBAI

ITA 3422/MUM/2013

• Counselvise Citation: 342219914 RSA 2013
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 13-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 02-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N P SINGH
• Keywords: Business income; Depreciation; Earning of tax free income; Bad and doubtful debts; Revised return; Capital expenditure
• Section: 14A; 115JB; 11

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.3422/MUM/2013 ASSESSMENT YEAR: 2006-07 BANK OF INDIA, 8 TH FLOOR, STAR HOUSE, TAXATION DEPARTMENT, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 / VS. ASSISTANT COMMISSIONER OF INCOME TAX-2(1), R. NO.561, 5 TH FLOOR, AAYAKAR BHAVAN, MUMBAI-400020 ( '#$ /ASSESSEE) ( / REVENUE) P.A. NO .AAACB0472C ITA NO.3437/MUM/2013 ASSESSMENT YEAR: 2006-07 ASSISTANT COMMISSIONER OF INCOME TAX-2(1), R. NO.561, 5 TH FLOOR, AAYAKAR BHAVAN, MUMBAI-400020 / VS. BANK OF INDIA, 8 TH FLOOR, STAR HOUSE, TAXATION DEPARTMENT, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 ( / REVENUE) ( '#$ /ASSESSEE) P.A. NO.AAAAJ0028Q / REVENUE BY SHRI N.P.SINGH CIT-DR '#$ / ASSESSEE BY SHRI C. NARESH % & ' ( / DATE OF HEARING : 13/08/2015 ' ( / DATE OF ORDER: 28/08/2015 BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE AS WELL AS REVENUE ARE AGGRIEVED, THE REFORE, PREFERRED CROSS APPEALS, FOR ASSESSMENT YEAR 2006-0 7, BY THE IMPUGNED ORDER DATED 18/02/2013 OF THE LD. FIRST AP PELLATE AUTHORITY, MUMBAI. 2. FIRST, WE SHALL TAKE UP APPEAL OF THE ASSESSEE, WHEREIN, FIRST GROUND RAISED PERTAINS TO DISALLOWIN G RS.19,16,63,276/-, BEING EXPENDITURE INCURRED, IN R ELATION TO INCOME CLAIMED EXEMPTION, BEING DIVIDEND, FROM COMP ANIES U/S 10(35), DIVIDEND FROM MUTUAL FUNDS U/S 10(34) A ND INTEREST ON TAX FREE BONDS U/S 10(15) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), THUS, CO NFIRMING THE DISALLOWANCE U/S 14A OF THE ACT. 2.1. DURING HEARING OF THIS APPEAL, SHRI C. NARESH , LD. COUNSEL FOR THE ASSESSEE ADVANCED HIS ARGUMENTS, WH ICH ARE IDENTICAL TO THE GROUND RAISED BY CLAIMING THAT THE IMPUGNED ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE TRIBUNAL (ITA NO.1498/MUM/2011)(A.Y. 2001-02) O RDER DATED 09/04/2014, WHEREIN, THE DISALLOWANCE WAS RES TRICTED TO 1% OF THE EXEMPT INCOME. THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY THE LD. CIT-DR, SHRI N.P. SINGH. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 3 ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE AFORESAID ORDER OF THE TRIBUNAL FOR READY REFERENCE:- 4. GROUND NO. 3 IS REGARDING DISALLOWANCE U/S 14A. THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS. 17.8 3 CRORES WHICH IS EXEMPT U/S 10(33). THE ASSESSEE HAS ALSO EARNED INTEREST ON TAX FREE BOND OF RS. 18.39 CRORE S WHICH IS EXEMPT U/S 10(15) AS WELL AS INTEREST ON INFRASTRUCTURE AMOUNTING TO RS. 26.35 CRORES WHICH IS EXMPT U/S 10(23G). THE ASSESSEE HAS NOT DISALLOWED ANY EXPENDITURE FOR EARNING THE EXEMPT INCOME. THE AO H AS COMPUTED THE EXPENSES FOR EARNING THE EXEMPT INCOME AT THE RATE OF 12% AND ACCORDINGLY DISALLOWED A SUM OF RS. 7.51 CRORE U/S 14A. 4.1 ON APPEAL CIT(A) HAS DIRECTED THE AO TO RECOMPU TE THE DISALLOWANCE AT 0.5% OF AVERAGE INVESTMENT EARN ING TAX FREE INCOME BY APPLYING THE DECISION IN THE CAS E OF GODREJ & BOYCE MANUFACTURING CO. LTD. (328 ITR 81). 4.2 BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMI TTED THAT ALL THE SECURITIES FROM WHICH TAX FREE INCOME HAS BEEN EARNED CONSTITUTE STOCK IN TRADE AND, THEREFOR E, EARNING OF INCOME THERE FROM IS ONLY INCIDENTAL TO WHICH PROVISIONS OF SECTION 14A CANNOT BE APPLIED. HE HAS RELIED UPON THE DECSION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CCI LTD. VS. COMMISSIONER OF INCOME TAX (206 TAXMAN 563) AS WELL AS THE DECISION OF THIS TRIBUNAL IN THE CASE OF DCIT VS. INDIA ADVANTA GE SECURITIES LTD. IN ITA NO. 6711/MUM/2011. THE LD. A R HAS SUBMITTED THAT THOUGH THE CIT(A) HAS ACCEPTED T HE CONTENTION OF THE ASSESSEE THAT THE ENTIRE INVESTME NT IN TAX FREE SECURITIES HAS COME OUT OF OWN FUND, HOWEV ER, THE AO WAS DIRECTED TO DISALLOW 0.5% OF AVERAGE INVESTMENT YIELDING TAX FREE INCOME WHICH IS PROVID ED UNDER RULE 8D. SINCE RULE 8D IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION, THEREFORE, THE FORMULA BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 4 ADOPTED BY THE CIT(A) IS NOT JUSTIFIED. ALTERNATIVE LY THE LD. AR HAS SUBMITTED THAT THE DISALLOWANCE FOR EARN ING THE DIVIDENT INCOME MAY BE RESTRICTED TO 1% OF THE TAX FREE INCOME. IN SUPPORT OF HIS CONTENTION HE HAS RE LIED UPON THE DECISION OF THIS TRIBUNAL IN THE CASE OF A CIT VS.HDFC BANK LTD. DATED 29.6.2011 IN ITA NO. 4529/MUM/2005. 4.3 ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THIS ISSUE HAS BEEN DECIDED BY THE THIRD MEMBER DECISION IN THE CASE OF D.H. SECURITIES (P.) LTD. V S. DCIT (146 ITD 1) AND, THEREFORE, THE PROVISIONS OF SECTION 14A ARE APPLICABLE EVEN THE SECURITIES ARE HELD BY THE ASSESSEE AS STOCK IN TRADE. 4.4 HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. WE NOTE THAT THE CIT(A ) HAS ACCEPTED THE FACT THAT THE ASSESSEE HAS PURCHAS ED THE SECURITIES IN QUESTION BY USING ITS OWN FUND AN D, THEREFORE, THERE IS NO INTEREST EXPENDITURE IN RESP ECT OF THESE SECURITIES. HOWEVER FOR DISALLOWANCE OF ADMINISTRATIVE EXPENSES U/S 14A, CIT(A) HAS DIRECTE D THE AO TO COMPUTE THE DISALLOWANCE AT .5% OF THE AVERAGE INVESTMENT EARNING TAX FREE INCOME. IT IS PERTINENT TO NOTE THAT .5% OF THE AVERAGE INVESTMEN T IS CLEARLY GIVEN UNDER RULE 8D WHICH IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION. FURTHER THE SECURITIE S ARE MAINTAINED BY THE ASSESSEE AS STOCK IN TRADE AND TH E INCOME ARISING FROM THE SALE AND PURCHASE OF SECURI TIES IS TAXABLE AS BUSINESS INCOME OF THE ASSESSEE, THER EFORE, THE EXPENDITURE IF ANY INCURRED ON ACCOUNT OF ADMINISTRATIVE EXPENSES FOR MAINTAINING THESE SECUR ITIES THE WHOLE OF THE SAID EXPENDITURE CANNOT BE ATTRIBU TED TO THE DIVIDEND INCOME WHEN THE INCOME ARISING FROM TH E SALE AND PURCHASE OF THE SECURITIES IS TAXABLE. ACCORDINGLY ONLY A REASONABLE ESTIMATE HAS TO BE MA DE FOR DISALLOWANCE OF EXPENDITURE U/S 14A IN RESPECT OF BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 5 EARNING OF DIVIDEND INCOME AND TAX FREE INTEREST. T HE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DC IT VS. HDFC BANK LTD. (SUPRA) IN PARA 7.1 AND 7.2 HAS CONSIDERED AN IDENTICAL ISSUE AS UNDER:- 7.1 IN THE CASE IN HAND, THE CIT(A) CONSIDERED THE FACTS AND POINTED OUT THAT THE ASSESSEE IS MAINTAINING TH E TREASURY DEPARTMENT WHICH LOOKS AFTER THE DAY TO DA Y INVESTMENT PORTFOLIO OF THE BANK INCLUDING TAX FREE INVESTMENTS. HAVING REGARD TO THE SAID FACTUAL PROPOSITION, THE ADMINISTRATIVE EXPENSES RELATABLE TO THE INCOME NOT FORMING PART OF THE TOTAL INCOME CAN BE ATTRIBUTABLE TO THE EXPENDITURE OF SPECIAL TREASURY DEPARTMENT MAINTAINED BY THE ASSESSEE; BUT IT SEEMS THE ASSESSEE HAS NOT FILED THE EXACT DETAIL OF THE OPER ATING EXPENSES AND THEREFORE, NO OPTION WAS LEFT BUT TO ESTIMATE THE DISALLOWANCE. 7.2 EVEN OTHERWISE, THE OVERALL ADMINISTRATION OF THE BANK LOOKS AFTER ALL THE DEPARTMENT INCLUDING THE TREASURY DEPARTMENT; THEREFORE, IN THE ABSENCE OF T HE EXACT EXPENDITURE INCURRED IN RELATION TO THE ACTIV ITY RELATING TO TAX FREE INVESTMENT AND EARNING THE INC OME NOT FORMING PART OF THE TOTAL INCOME, IN OUR CONSID ERED OPINION, THE CIT(A) IS JUSTIFIED IN RESTRICTING THE SAID DISALLOWANCE TO 1%. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD CIT(A) ON THIS ISSUE OF DISALLOWANCE OF ADMINISTRATIVE EXPEND ITURE U/S 14A. ACCORDINGLY, THE GROUND RAISED BY THE REVE NUE AS WELL AS THE ASSESSEE IN THE RESPECTIVE APPEAL AN D CROSS OBJECTION ARE LIABLE TO BE DISMISSED. 4.5 ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT 1% OF THE EXEMPT INCOME WILL BE A REASONABLE DISALLOWA NCE ON ACCOUNT OF ADMINISTRATIVE EXPENSES U/S 14A. BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 6 2.3. ON PERUSAL OF THE MATERIAL AVAILABLE ON RECOR D AND UNCONTROVERTED FACTUAL FINDING RECORDED BY THE TRI BUNAL, WE DIRECT THE LD. ASSESSING OFFICER TO FOLLOW THE AFOR ESAID ORDER OF THE TRIBUNAL HOLDING THAT 1% OF THE EXEMPT INCOME W ILL BE REASONABLE DISALLOWANCE ON ACCOUNT OF ADMINISTRATIV E EXPENSES U/S 14A OF THE ACT. 3. NEXT GROUND RAISED BY THE ASSESSEE PERTAINS TO DISALLOWING RS.2,31,62,114/-, BEING LEASE PREMIUM P AID, IN RESPECT OF VARIOUS LEASE PROPERTY TREATING THE SAME AS CAPITAL EXPENDITURE. 3.1. AT THE OUTSET, THE LD. CIT-DR CLAIMED THAT TH IS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE TRIBUNAL FOR A.Y. 2003-04(ITA NO.2781/MUM/2011) ORDER DATED 15/06/2012. THIS ASSERTION OF THE LD. CIT-DR WAS C ONSENTED TO BE CORRECT BY THE LD. COUNSEL FOR THE ASSESSEE. 3.2 IN VIEW OF THE ABOVE, UNCONTROVERTED ADMISSION FROM BOTH SIDES, WE ARE REPRODUCING HEREUNDER THE RELEVA NT PORTION FROM THE AFORESAID ORDER OF THE TRIBUNAL DATED 15/0 6/2012 19. THE NEXT GROUND IS AGAINST THE DISALLOWANCE OF RS. 1,55,43,817, WHEREIN THE AO HAS TREATED THE EXPENSE S TO BE CAPITAL IN NATURE. 20. THE AR CONCEDED THAT THE EXPENSES, TREATED TO B E OF CAPITAL IN NATURE, HAS BEEN DECIDED BY THE SPECIAL BENCH IN THE CASE OF JCIT VS MUKUND LIMITED, REPORTED IN 106 ITD 231 (MUM SB). THE AR SUBMITTED THAT A VIEW MAY BE T AKEN BY THE BENCH. 21. THE DR RELIED ON THE ORDERS OF THE REVENUE AUTH ORITIES AND THE DECISION BY THE SPECIAL BENCH IN THE CASE O F MUKUND LIMITED. BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 7 22. WE HAVE HEARD BOTH THE SIDES. THE CLAIM OF EXPE NSES MADE BY THE ASSESSEE HAVE BEEN TREATED AS CAPITAL I N NATURE AND HENCE CANNOT BE ALLOWED, HAS BEEN DECIDE D BY THE SPECIAL BENCH, AS CONCEDED BY THE AR. RESPECTFU LLY FOLLOWING THE DECISION RENDERED BY THE HONBLE SPEC IAL BENCH, WE SUSTAIN THE DISALLOWANCE OF RS. 1,55,43,8 17, AS MADE BY THE REVENUE AUTHORITIES. THE GROUND OF APPEAL IS DISMISSED. 3.3. WE NOTE THAT WHILE COMING TO A PARTICULAR CONCLUSION, THE TRIBUNAL FOLLOWED THE DECISION OF T HE SPECIAL BENCH IN THE CASE OF JCIT VS MUKUND LTD., 106 ITD 2 31 (MUMBAI)(SB). THIS FACTUAL MATRIX WAS CONSENTED TO BE CORRECT BY THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, WE DECIDE THIS ISSUE AGAINST THE ASSESSEE AND IN FAVOUR OF THE REV ENUE. 4. NEXT GROUND PERTAINS TO DISALLOWING DEDUCTION O F RS.45,00,00,000/- CLAIMED U/S 36(1)(VII) OF THE ACT . AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE CLAIMED TH AT THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA (ITA NO.269 OF 2013) AND THE TRIBUNAL IN THE CASE O F UNION BANK OF INDIA (ITA NO.4702 TO 4706/MUM/2010). THIS FACTUAL MATRIX WAS CONSENTED TO BE CORRECT BY THE LD. CIT-D R. 4.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION F ROM THE ORDER OF THE TRIBUNAL FOR READY REFERENCE:- 6. GROUND NO. 3 (IN ITA NOS. 4704, 4705 &4706/M/201 0- A.YRS 2004-05 TO 2006-07) IS WITH RESPECT TO DEDUCTION U/ S. 36(1)(VIII). BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 8 7. THE AO HAD NOT GRANTED THE DEDUCTION CLAIMED U/S . 36(1)(VIII) ON THE GROUND THAT THE SAID SECTION IS NOT APPLICAB LE TO BANKS. THE SAME WAS CONFIRMED BY LD. CIT(A). 8. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US AND H AS SUBMITTED AS FOLLOWS: THE PROVISIONS OF SECTION 36(1) (VIII) AS APPLICABL E TO THE RELEVANT ASSESSMENT YEARS RUNS AS UNDER : IN RESPECT OF ANY SPECIAL RESERVES CREATED AND MAI NTAINED BY A FINANCIAL CORPORATION WHICH IS ENGAGED IN PROVIDING LONG-TERM FINANCE FOR INDUSTRIAL OR AGRICULTURAL DEVELOPMENT OR DEVELOPMENT OF INFRASTRUCTURE FACILITY IN INDIA. OR BY A PUBLIC COMPANY FORMED AND REGISTERED IN INDIA WITH THE MAI N OBJECT OF CARRYING ON THE BUSINESS OF PROVIDING LONG TERM FIN ANCE FOR CONSTRUCTION OR PURCHASE OF HOUSES IN INDIA FOR RES IDENTIAL PURPOSES, AN AMOUNT NOT EXCEEDING FORTY PERCENT OF THE PROFITS DERIVED FROM SUCH BUSINESS IS PROVIDING LONG TERM F INANCE (COMPUTED UNDER THE HEAD PROFITS AND GAINS OF BUSI NESS OR PROFESSION BEFORE MAKING ANY DEDUCTION UNDER THIS CLAUSE) CARRIED TO SUCH RESERVE ACCOUNT. AS PER EXPLANATION (A) TO SECTION 36(1)(VIII) FINA NCIAL CORPORATION IS DEFINED TO INCLUDE A PUBLIC COMPAN Y AND A GOVERNMENT COMPANY FROM THE ABOVE IT IS CLEAR THAT UNDER THE EXISTING PROVISIONS OF THE ACT, THE DEDUCTION IS ALLOWABLE TO A FINANCIAL CORPORATION WHICH IS ENGAGED IN SPECIFIC ACTIVITIES VIZ., PROVI DING LONG TERM FIANC FOR INDUSTRIAL OR AGRICULTURAL DEVELOPMENT O R DEVELOPMENT OF INFRASTRUCTURE FACILITY ETC.,. THE T ERM FINANCIAL CORPORATION WAS DEFINED IN AN INCLUSIVE MANNER SO AS TO INCLUDE A GOVERNMENT COMPANY AND A PUBLIC COMPANY. BY VERY NATURE OF THIS DEFINITION BEING AN INCLUSIVE DEFINITION AN D NOT AN EXHAUSTIVE DEFINITION, AN ENTITY INCORPORATED UNDER A STATUTE CARRYING ON THE BUSINESS OF FINANCING WOULD COME UN DER THE DEFINITION OF FINANCIAL CORPORATION. IT SHALL NOT BE PRESUMED THAT ONLY GOVT. COMPANY AND PUBLIC COMPANY ARE ENTI TLED FOR ABOVE DEDUCTION. ANY FINANCIAL CORPORATION WHICH IS ENGAGED IN THE ACTIVITIES SPECIFIED IN THE SAID SECTION ARE EN TITLED TO CLAIM DEDUCTION SPECIFIED IN THE SAID SECTION. THE LD. CIT(A) OVERLOOKED THE FACT THAT THE SAID DE FINITION IS INCLUSIVE AND WRONGLY CONCLUDED THAT IT IS EXHAUSTI VE IN NATURE SO AS TO LIMIT THE DEDUCTION TO A PUBLIC COMPANY OR A GOVT. BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 9 COMPANY. THE APPELLANT IS A PUBLIC SECTOR UNDERTAKI NG INCORPORATED UNDER A SPECIFIC LEGISLATION CARRYING ON THE SPECIFIED BUSINESS. THE DEDUCTION UNDER THE SAID SE CTION WAS WRONGLY DENIED MERELY BECAUSE IT IS NOT A PUBLIC CO MPANY OR A GOVT. COMPANY BY OVERLOOKING THE PROVISION THAT IT IS NOT ONLY THESE TWO TYPES OF COMPANIES THAT ARE ELIGIBLE FOR DEDUCTION. FURTHER THIS POSITION HAS BEEN CLARIFIED BY THE AM ENDMENT IN THE FINANCE ACT 2007 WHEREIN THE SECTION HAS BEEN R ESTRUCTURED IN AN EXHAUSTIVE MANNER TO CATEGORIES VARIOUS ENTIT IES THAT WOULD COME WITHIN THE DEFINITION OF FINANCIAL CORP ORATION. SINCE THE DEFINITION IS ONLY CLARIFICATORY IN NATUR E IT IS ALWAYS PRESUMED THAT THE SAID ENTITIES WERE COVERED IN THE DEFINITION FROM THE INCEPTION OF THE SECTION. EVEN OTHERWISE THE APPELLANT IS A GOVERNMENT COMPAN Y AND A PUBLIC COMPANY AS DEFINED UNDER THE SAID SECTION AS EXPLAINED BELOW: AS PER THE EXPLANATION THE PUBLIC COMPANY SHALL HAV E THE MEANING ASSIGNED TO IT IN SECTION 3 OF COMPANIES AC T, 1956 AND A GOVERNMENT COMPANY SHALL HAVE THE MEANING ASSIGNE D TO IT IS SECTION 617 OF THE COMPANIES ACT. THE DEFINITION OF A GOVERNMENT COMPANY AS GIVEN IN SECTION 617 OF COMPANIES ACT IS AS UNDER: FOR THE PURPOSES OF THIS ACT, GOVERNMENT COMPANY M ENAS ANY COMPANY IN WHICH NOT LESS THAN FIFTY-ONE PER CENT O F THE PAID UP SHARE CAPITAL IS HELD BY THE CENTRAL GOVERNMENT OR BY ANY STATE GOVERNMENT OR GOVERNMENTS, OR PARTLY BY THE CENTRAL GOVERNMENT AND PARTLY BY ONE OR MORE STATE GOVERNME NTS AND INCLUDES A SUBSIDIARY OF A GOVERNMENT COMPANY AS TH US DEFINED THE APPELLANT IS A FINANCIAL CORPORATION WITHIN T HE MEANING OF SECTION 36(1)(VIII) SINCE IT IS A GOVERNMENT COMPA NY. THE CENTRAL GOVERNMETN HOLDS MORE THAN 51% OF THE SHARE CAPITAL OF THE BANK AND HENCE AS DEFINED IN SECTION 617 OF THE COMPANIES ACT THE APPELLANT IS A GOVERNMENT COMPANY . FURTHER THE APPELLANT IS A ALSO A PUBLIC COMPANY SI NCE SECTION 11 OF THE BANKING COMPANIES (ACQUISITION AND TRANSF ER OF UNDERTAKING) ACT, 1970 STATES, FOR THE PURPOSE OF THE INCOME TAX ACT, 1961 (43 OF 1961), EVERY CORRESPONDING BANK SHALL BE DEEMED TO BE AN INDIAN COMPANY AND A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INT ERESTED. BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 10 THE APPELLANT IS ENGAGED IN THE BUSINESS OF PROVIDI NG LONG TERM FINANCE FOR INDUSTRIAL OR AGRICULTURAL DEVELOPMENT OR DEVELOPMENT OF INFRASTRUCTURE IN INDIA AND HENCE IS ELIGIBLE TO CLAIM THE SAID DEDUCTION. THE APPELLANT HAD ALSO CR EATED THE NECESSARY RESERVE IN ACCORDANCE WITH THE SAID SECTI ON AND HENCE THE DEDUCTION AS CLAIMED OUGHT TO HAVE BEEN ALLOWED . 9. WE FIND THAT AS PER EXPLANATION (A) TO SEC. 36(1 )(VIII) FINANCIAL CORPORATION IS DEFINED TO INCLUDE A PU BLIC COMPANY AND A GOVERNMENT COMPANY. WE ARE OF THE OPINION THA T ANY ENTITY INCORPORATED UNDER A STATUTE CARRYING ON THE BUSINESS OF FINANCING WOULD COME UNDER THE DEFINITION OF FINANC IAL CORPORATION. THE DEFINITION IS NOT AN EXHAUSTIVE DE FINITION AND THE TERM FINANCIAL CORPORATION HAS BEEN DEFINED IN AN INCLUSIVE MANNER SO AS TO INCLUDE A GOVT. COMPANY AND A PUBLI C COMPANY. HENCE FINANCIAL CORPORATION SHOULD INCLUDE BANK A LSO. THE MEMORANDUM EXPLAINING THE AMENDMENT TO SEC. 36(1)(V III) W.E.F. 1.2.2008 HAS CLEARLY STATED AS FOLLOWS: THE PROVISION HAS ALSO BEEN RESTRUCTURED TO PROVID E FOR DIFFERENT CATEGORIES OF ENTITIES (WHICH NOW ALSO IN CLUDES CO- OPERATIVE BANKS) AND THEIR RESPECTIVE ACTIVITIES FO R ELIGIBILITY OF THE DEDUCTION UNDER THE SAID CLAUSE. FOR CLAIMING D EDUCTION UNDER THE SAID CLAUSE, (I) A FINANCIAL CORPORATION SPECIFIED IN SEC. 4A OF THE COMPANIES ACT OR A FINANCIAL CORPORATION WHICH IS A PUBLIC SECTION COMPANY OR A BANKING COMPANY OR A CO -OPERATIVE BANK (OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCI ETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOP MENT BANK). THE AMENDMENT ALSO PROVIDES DEFINITIONS OF THE EXPR ESSIONS BANKING COMPANY, CO-OPERATIVE BANK, PRIMARY AG RICULTURAL CREDIT SOCIETY. 10. FURTHER THE RESTRUCTURING DONE TO DEFINE THE FI NANCIAL CORPORATION IS ONLY CLARIFICATORY AS WE CAN SEE FRO M THE NOTES ON CLAUSES WHICH READ AS FOLLOWS: BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 11 THE PROPOSED AMENDMENT FURTHER SEEKS TO DEFINE CE RTAIN TERMS INCLUDING SPECIFIED ENTITIES AND ELIGIBLE BUSINES S FOR THE PURPOSES OF DEDUCTION. 11. SINCE THE DEFINITION IS ONLY CLARIFICATORY IN N ATURE, IT CAN BE PRESUMED THAT THE ENTITY SUCH AS THE ASSESSEE WERE COVERED IN THE DEFINITION FROM THE INCEPTION OF THE SECTION. 12. EVEN OTHERWISE THE ASSESSEE IS A GOVT. COMPANY SINCE THE CENTRAL GOVT. HOLDS MORE THAN 51% OF THE SHARE CAPI TAL OF THE BANK AND AS DEFINED IN SEC. 617 OF THE COMPANIES AC T THE ASSESSEE IS A GOVT. COMPANY. HENCE THE DEDUCTION U/ S. 36(1)(VIII) HAS TO BE ALLOWED TO THE ASSESSEE AS IT IS ENGAGED IN THE BUSINESS OF PROVIDING LONG TERM FINANCE FOR INDUSTRIAL, AGRI CULTURE AND INFRASTRUCTURE DEVELOPMENT IN INDIA AND IS A GOVT. COMPANY. THE ASSESSEE IS A FINANCIAL CORPORATION WITHIN THE MEA NING OF SEC. 36(1)(VIII) SINCE IT IS GOVT. COMPANY. HOWEVER THE DEDUCTION AVAILABLE UNDER THIS SECTION WILL BE RESTRICTED TO THE AMOUNT TRANSFERRED TO SPECIAL RESERVE SUBJECT TO THE LIMIT OF PRESCRIBED PERCENTAGE OF PROFITS DERIVED FROM PROVIDING LONG T ERM FINANCE FOR THE APPROVED PURPOSES MENTIONED IN SEC 36(1)(VI II). FOR THE PURPOSE OF DETERMINING THE DEDUCTION AVAILABLE TO T HE ASSESSEE U/S. 36(1)(VIII) THE ISSUE IS REMITTED BACK TO THE FILE OF THE AO SUBJECT TO THE ABOVE DIRECTION THE APPEAL OF THE AS SESSEE ON THIS ISSUE IS ALLOWED. 4.2. WE NOTE THAT EVEN THE HONBLE JURISDICTION HI GH COURT IN CIT VS STATE BANK OF INDIA (ITA NO.269 OF 2013) ORDER DATED 04/02/2015 FOR A.Y. 2006-07 ON IDENTICAL ISSU E DELIBERATED UPON DECISION IN THE CASE OF UNION BANK OF INDIA VS ACIT (2011) 16 TAXMAN.COM 304 ITAT (MUMBAI) AND FURTHER BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 12 THE CASE OF FEDERAL BANK LTD. VS ACIT 198 TAXMAN 4 91, DECIDED IN FAVOUR OF THE ASSESSEE, THEREFORE, WE DI RECT THE ASSESSING OFFICER TO FOLLOW THE DIRECTIONS CONTAINE D IN THE ORDER OF THE TRIBUNAL/HIGH COURT. 5. THE NEXT GROUND PERTAIN TO INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE LD. COUNS EL FOR THE ASSESSEE, WITHDREW THIS GROUND, THEREFORE, THIS GRO UND IS DISMISSED AS WITHDRAWN. 6. THE NEXT GROUND PERTAINS TO APPLICABILITY OF TH E PROVISION OF SECTION 115JB OF THE ACT. THE LD. COUN SEL FOR THE ASSESSEE THAT THIS ISSUE IS DECIDED IN FAVOUR OF TH E RESPONDENT FOR A.Y. 2001-02 (ITA NO.1498/MUM/2011) ORDER DATED 09/04/2014. THIS FACTUAL MATRIX WAS CONSENTED TO BE CORRECT BY THE LD. DR. 6.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION F ROM THE AFORESAID ORDER DATED 09/04/2014 FOR PERUSAL AND RE ADY REFERENCE:- 6. GROUND NO. 5 IS REGARDING APPLICABILITY OF PRO VISIONS OF SECTION 115JB IN CASE OF BANK. 6.1 THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE P ROVISIONS OF SECTION 115JB ARE NOT APPLICABLE TO A BANKING CO MPANY SINCE THE ACCOUNTS OF BANKS ARE PREPARED UNDER SCHE DULE III OF BANKING REGULATION ACT AND NOT IN ACCORDANCE WIT H THE SCHEDULE VI OF THE COMPANYS ACT. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE FOLLOWING DECISIO NS: BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 13 (I) KURUNG THAI BANK PCL DATED 30.09.2010 (ITA 3390/MUM/2009) (II) MAHARASHTRA STATE ELECTRICITY BOARD (82 ITD 42 2) (III) KERALA STATE ELECTRICITY BOARD (329 ITR 91) (HC) (IV) UNION BANK OF INDIA DATED 30.06.2011 (ITA NO. 4702/MUM/2010) (V) ICICI LOMBARD GENERAL INSURANCE VS. DEPARTMENT OF INCOME TAX (ITA 4286/MUM/2009). 6.2 ON THE OTHER HAND, THE LD. DR HAS RELIED UPON T HE ORDERS OF AUTHORITIES BELOW. 6.3 HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, WE NOTE THAT THIS ISSU E HAS BEEN CONSIDERED BY THIS TRIBUNAL IN THE SERIES OF DECISI ONS INCLUDING THE DECISION RELIED UPON BY THE LD. AR OF THE ASSESSEE. IN THE CASE OF ICICI LOMBARD GENERAL INSU RANCE (SUPRA) THE COORDINATE BENCH OF THIS TRIBUNAL HAS CONSIDERED AND DECIDED AN IDENTICAL ISSUE IN PARA 6 AS UNDER:- 6. WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL AS T HE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AN I DENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY US IN ASSES SEES OWN CASE FOR THE AY 2003-04 IN ITA NO. 2398/MUM/2009 AS UNDER: 9 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO QUARREL ON THE POINT THAT THE ASSESSEE, BEING AN INSURANCE COMPANY IS NOT REQU IRED TO PREPARE ITS ACCOUNTS AS PER PART II & III OF SCHEDUL E VI OF THE COMPANIES ACT 1956. SUB. SECTION (2) OF SEC 211 ARE REQUIRED EVERY P&L ACCOUNTS OF THE COMPANIES SHALL BE PREPARED AS PER THE REQUIREMENT OF PART II OF SCHEDULE VI. HOWEVER, T HE PROVISO TO SUB. SEC (2) OF SEC. 211 OF THE COMPANIES ACT CREATE S AN EXEMPTION OF APPLICABILITY OF SUB. SEC. (2) INTER-A LIA IN RESPECT OF INSURANCE COMPANIES OR BANKING COMPANIES OR ANY OTHE R COMPANIES ENGAGED IN GENERATION AND SUPPLY OF ELECT RICITY FOR WHICH A FORM OF PROFIT AND LOSS ACCOUNT HAS BEEN SPECI FIED IN OR UNDER THE ACT GOVERNING SUCH CLASS OF COMPANY. EVEN I F AN INSURANCE COMPANY DOES NOT DISCLOSE ANY MATTER IN T HE BALANCE SHEET AND P&L ACCOUNT BECAUSE THE SAME IS NOT REQUIRE D TO BE BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 14 DISCLOSED BY THE INSURANCE ACT SHALL NOT BE TREATED U N-DISCLOSER OF A TRUE AND FAIR VIEW OF THE STATE OF AFFAIRS OF THE C OMPANY AS THE SAID CONDITION HAS BEEN RELAXED BY SUB.SEC 5 OF SEC 211 OF THE COMPANIES ACT . 9.1 IT IS TO BE NOTED THAT IN ORDER TO ALIGN THE PRO VISIONS OF THE I T ACT WITH THE COMPANIES ACT , AN AMENDMENT HAS BEEN BR OUGHT INTO THE STATUTE BY THE FINANCE ACT 2012 WHEREBY SEC 115JB HAS BEEN AMENDED W.E.F 2013 AND THEREFORE, PRIOR TO 1.4. 2013, THE PROVISIONS OF SEC. 115JB CANNOT BE APPLIED IN CASE OF INSURANCE, BANKING, ELECTRICITY, GENERATION AND DISTRIBUTION C OMPANIES AND OTHER CLASS OF COMPANIES, WHICH ARE NOT REQUIRED TO PR EPARE THEIR ACCOUNTS AND PARTICULARLY BALANCE SHEET AND P&L ACCO UNT AS PER PART II & III OF SCHEDULE VI OF THE COMPANIES ACT. 9.2 THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF STATE BANK OF HYDERABAD (SUPRA) HAS CONSIDERED AND DECIDED A SIMILAR ISSUE; THOUGH IN THE CASE OF BANK IN PARAS 13 & 14 AS UNDER: 13. THE PROVISIONS OF SEC.1153B WILL BE APPLICABLE TO ALL COMPANIES. HOWEVER, IT IS CONTENDED THAT SEC.115JB W ILL BE APPLICABLE ONLY WHERE THE ASSESSEE IS REQUIRED TO SHOW PROFIT & LOSS ACCOUNT IN ACCORDANCE WITH SCHEDULE VI OF COMPA NIES ACT. AS THE BANKS ARE REQUIRED TO PREPARE BALANCE SHEET AND P ROFIT & LOSS ACCOUNT IN ACCORDANCE WITH THE BANKING REGULATION ACT , PROVISION OF 115JB CANNOT BE APPLIED TO THE BANKS. I N THE CASE OF MAHARASHTRA STATE ELECTRICITY BOARD VS. )CIT (82 LTD 422) IT WAS HELD THAT PROVISIONS OF BOOK PROFIT CANNOT BE APPLIED TO ELECTRICITY COMPANIES. BANKING COMPANIES AND COMPAN IES ENGAGED IN GENERATION AND SUPPLY OF ELECTRICITY DO NOT HAVE TO PREPARE THEIR ACCOUNTS IN ACCORDANCE WITH PARTS II A ND III OF SCH. VI OF THE COMPANIES ACT BY THE VIRTUE OF PROVISO TO S EC 21 1(2) OF THE COMPANIES ACT. WE FIND THAT BY THE FINANCE ACT 20 12, WITH EFFECT FROM 1.4.2013, EVEN COMPANIES TO WHICH PROVISO TO SEC 211(2) APPLIES (THE BANKING COMPANIES AND COMPANIES ENGAGED IN GENERATING AND DISTRIBUTION OF ELECTRICITY), SHOU LD PREPARE THEIR P&LAND BALANCE SHEET IN ACCORDANCE WITH THE PROV ISIONS OF THE ACT GOVERNING SUCH COMPANIES. THIS WOULD MEAN THAT PRIOR TO AY 2013-14, PROVISIONS OF SEC 115JB WILL NOT APPLY TO COMPANIES TO WHICH PROVISO TO SEC 211(2) OF THE COMPANIES ACT, 1 956 APPLIES. THE ASSESSEE BEING A COMPANY TO WHICH PROVIS O TO SEC 211(2) OF THE COMPANIES ACT 1956 APPLIES, WILL NOT BE LIABLE TO BE TAXED UNDER SEC 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 T HAT PROVISIONS OF SEC 115JB CANNOT BE APPLIED TO THE BAN KING COMPANY. BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 15 9.3 SIMILARLY, IN THE CASE OF RELIANCE ENERGY (SUPR A), THE COORDINATE BENCH OF THIS TRIBUNAL HAS HELD IN PARAS 28 & 29 AS UNDER: 28 AS DISCUSSED ABOVE WHEN IT IS NOT POSSIBLE TO PR EPARE THE ACCOUNTS UNDER THE COMPANIES ACT FOR THE PURPOSE OF COMPUTATION U/S 115JB, THEREFORE, THE ASSESSEE CANNO T BE FORCED TO PREPARE THE ACCOUNTS WHEN IT IS NOT POSSIBLE. THER EFORE, WE ARE IN AGREEMENT WITH THE CONTENTIONS OF THE ASSESSEE IN A S MUCH AS THE ACCOUNTING POLICIES FOLLOWED IN THE ELECTRICITY ACCOUNTS IF FOLLOWED FOR THE PREPARATION OF COMPANIES ACT ACCOUN T WILL NOT DISCLOSE TRUE AND FAIR VIEW AND WILL NOT BE IN ACCO RDANCE WITH PART II AND III OF SCHEDULE V OF THE COMPANIES ACT. T HE RATIO OF THE DECISIONS OF THE HONBLE SUPREME COURT AND THE RATIO OF THE DECISION OF THE TRIBUNAL DISCUSSED ABOVE ARE IN SUPP ORT OF THE CONTENTIONS OF THE ASSESSEE. WE FURTHER FOUND THAT THE ISSUE OF APPLICABILITY OF SEC. 115J CAME BEFORE THE TRIBUNAL FOR AY 88-89. TAKING INTO CONSIDERATION THE PREPARATION OF ACCOUN TS UNDER THE ELECTRICITY ACT AND OTHER CONTENTIONS THE ASSESSEE I NCLUDING THE DECISIONS OF THE SUPREME COURT IN THE CASE OF B.C.SRI NIVASA SETTY (SUPRA), THE TRIBUNAL HAS HELD THAT THE PROVISIONS OF SE C. 115J ARE NOT ATTRACTED ON THE FACTS OF THE PRESENT CASE. 29 AS DISCUSSED ABOVE, THE ASSESSEE IS FOLLOWING THE ACCOUNTING POLICIES UNDER THE ELECTRICITY SUPPLY ACT AND PREPAR ED ITS ACCOUNTS IN VIEW OF THOSE VERY POLICIES. FOLLOWING THOSE VERY POLICIES, THE ACCOUNTS IN ACCORDANCE WITH PART II & III OF SCHEDULE VI OF THE COMPANIES ACT ARE NOT APPLICABLE AT ALL. O NCE THERE IS NO POSSIBILITY FOR PREPARING THE ACCOUNTS IN ACCORDANCE WITH THE PART II & II OF SCHEDULE VI OF COMPANIES ACT THEN THE PROVISIONS OF SEC. 115JB CANNOT BE FORCED. THEREFORE, IN VIEW OF T HE ABOVE FACTS AND CIRCUMSTANCES AND RESPECTFULLY FOLLOWING THE AB OVE DECISIONS OF THE HONBLE SUPREME COURT AND THE DECISION OF THE TRIBUNAL FOR AY 88-89, WE HOLD THAT PROVISIONS OF SEC. 115JB ARE NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. 10 FOLLOWING THE DECISIONS OF THE COORDINATE BENCHES O F THIS TRIBUNAL, WE HOLD THAT WHEN THE INSURANCE COMPANIES, B ANKING COMPANIES AND ELECTRICITY GENERATION AND DISTRIBUTI ONS COMPANIES ARE TREATED IN THE SAME CLASS AS PER THE PR OVISIONS OF SEC. 211 OF THE COMPANIES ACT IN PREPARING THEIR FINA L ACCOUNTS, THEN THESE COMPANIES CANNOT BE TREATED DIFFERENTLY FO R THE PURPOSE OF SEC. 115JB AND ACCORDINGLY, THE PROVISION S OF SEC. 115JB ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 16 6.4 THOUGH , SECTION 115 JB HA S BEEN AMENDED TO B RING ALL THE COMPANIES IN ITS AMBIT VIDE FINANCE ACT 2012, W .E.F 1.4.2013, HOWEVER, THE SAID AMENDMENT IS NOT APPLIC ABLE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. 6.5 FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSE SSEE. 7. WE FIND THAT THE TRIBUNAL HAS ALREADY TAKEN A V IEW ON THIS ISSUE, THEREFORE, THE ASSESSING OFFICER IS DIR ECTED TO FOLLOW THE AFORESAID ORDER OF THE TRIBUNAL. 8. NOW, WE SHALL TAKE UP THE APPEAL OF THE REVENUE (ITA NO.3437/MUM/2013), WHEREIN, FIRST GROUND RAISE D BY THE REVENUE PERTAINS TO DISALLOWANCE MADE ON ACCOUNT OF BAD DEBTS AMOUNTING TO RS.4,08,13,000/- OVERLOOKING THE FACT THAT THE ASSESSEE HAS ACTUALLY NOT WRITTEN OFF THE SAID AMOUNT IN ITS BOOKS OF ACCOUNTS. THE LD. DR ADVANCED HIS ARGUMEN TS, WHICH IS IDENTICAL TO THE GROUND RAISED. ON THE OTHER HAN D, THE LD. COUNSEL FOR THE ASSESSEE, DEFENDED THE CONCLUSION A RRIVED AT IN THE IMPUGNED ORDER BY CONTENDING THAT TRIBUNAL IN I TA NO.1498/MUM/2011 (A.Y. 2001-02) ORDER DATED 09/04/2 014 AND ITA NO.3534/MUM/2011 ORDER DATED 15/06/2012, DECIDED IN FAVOUR OF THE ASSESSEE. THIS FACTUAL MAT RIX WAS NOT CONTROVERTED BY THE LD. DR. 8.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION F ROM THE AFORESAID ORDERS OF THE TRIBUNAL. BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 17 ITA NO.1498/MUM/2011 2. GROUND NO. 1 IS REGARDING CLAIM OF BAD DEBTS WR ITTEN OFF. THE AO NOTED THAT THE ASSESSEE HAS CLAIMED BAD DEBT IN THE REVISED RETURN AT RS. 217,43,16,387/- U/S 36(1)(VII ). THE AO DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF SE CTION 36(1)(VII). ACCORDING TO AO BAD DEBT IS ALLOWEABLE IF IT IS IRRECOVERABLE AND IS ACTUALLY WRITTEN OFF IN THE BO OKS OF ACCOUNTS OF THE ASSESSEE. 2.1 ON APPEAL, CIT(A) HELD THAT THE ASSESSEE IS EL IGIBLE FOR CLAIM OF BAD DEBTS, HOWEVER, THE CLAIM OF BAD DEBT U/S 36(1)(VII) IS TO BE RESTRICTED TO OVER AND ABOVE TH E PROVISIONS FOR BAD AND DOUBTFUL DEBTS AS PER SECTION 36(1)(VII A). ACCORDINGLY THE CIT(A) DIRECTED THE AO ALLOW THE BA D DEBTS OF RS. 217,43,16,387/- BY REDUCING A SUM OF RS. 102,87 ,21,160/- ON ACCOUNT OF PROVISIONS FOR BAD AND DOUBTFUL DEBTS U/S 36(1)(VIIA). 2.2 THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT T HE RESTRICTION AS PER THE PROVISO OF SECTION 36(1)(VII ) IS NOT APPLICABLE IN RESPECT OF THE BAD DEBTS WRITTEN OFF OTHER THAN THE RURAL BRANCH. HE HAS THUS SUBMITTED THAT THE RE STRICTION UNDER PROVISO HAS TO BE APPLIED ONLY WITH RESPECT T O BAD DEBTS PERTAINING TO RURAL BRANCH AND NOT TO THE URBAN BRA NCH. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF CATHOLIC SYRIA N BANK LTD. V. CIT (343 ITR 270). HE HAS ALSO RELIED UPON THE D ECISION DATED 07/09/2012 OF HYDERABAD BENCH OF THIS TRIBUNAL IN T HE CASE OF STATE BANK OF HYDERABAD VS. DCIT IN ITA NO. 578 AND 579/HYD/2010. BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 18 2.3 ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THE RESTRICTION PROVIDED UNDER THE PROVISO TO SECTION 3 6(1)(VII) IS APPLICABLE IN RESPECT OF ENTIRE BAD DEBTS WRITTEN O FF BY THE ASSESSEE IRRESPECTIVE OF RURAL BRANCH OR NON RURAL BRANCH. IN SUPPORT OF HIS CONTENTION HE HAS REFERRED EXPLANATI ON 2 INSERTED BY THE FINANCE ACT 2013 AND SUBMITTED THAT IT HAS BEEN CLARIFIED BY THE EXPLANATION THAT FOR THE PURP OSE OF PROVISO TO CLAUSE (VII) OF SUB-SECTION 1, THE ACCOU NT REFERRED TO SHALL BE ONLY ONE ACCOUNT IN RESPECT OF PROVISIONS FOR BAD AND DOUBTFUL DEBT UNDER CLAUSE (VIIA) AND SUCH ACCOUNT SHALL RELATE TO ALL TYPES OF ADVANCES INCLUDING ADVANCE MADE BY THE RURAL BRANCHES. THUS THE LD. DR HAS SUBMITTED THAT THE CL AIM OF BAD DEBTS WRITTEN OFF U/S 36(1)(VII) IS ALLOWABLE ONLY AFTER REDUCTION OF THE AMOUNT IN THE PROVISIONS FOR BAD A ND DOUBTFUL DEBTS IN TERMS OF CLAUSE (VIIA). HE HAS RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 2.4 IN REBUTTAL THE LD. AR OF THE ASSESSEE HAS SUBM ITTED THAT EXPLANATION 2 IS APPLICABLE ONLY W.E.F 01.04.2014 A ND, THEREFORE, IT IS NOT RETROSPECTIVE AND WOULD NOT AP PLY IN THE ASSESSMENT YEAR UNDER CONSIDERATION. EVEN OTHERWISE , IF THE PROVISIONS FOR BAD AND DOUBTFUL DEBTS UNDER CLAUSE (VIIA) IS TAKEN AS ONE ACCOUNT RELATING TO ALL TYPES OF ADVAN CES THEN THERE WOULD BE NO RESTRICTION IN THE CASE OF THE AS SESSEE. HE HAS REFERRED THE DETAILS OF PROVISIONS FOR BAD AND DOUB TFUL DEBTS MAINTAINED U/S 36(1)(VIIA) AND SUBMITTED THAT EXPLA NATION 2 WOULD NOT ADVERSELY AFFECT THE CASE OF THE ASSESSEE . 2.5 HAVING CONSIDERED THE RIVAL SUBMISSIONS AND CAR EFUL PERUSAL OF THE RECORD WE FIND THAT ON PRINCIPLE THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE IN RESPECT OF BAD DEBTS BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 19 WRITTEN OFF, HOWEVER, THE QUANTUM OF THE CLAIM HAS BEEN RESTRICTED IN TERMS OF THE PROVISO TO SECTION 36(1) (VII). IT IS TO BE NOTED THAT THE PROVISO TO SECTION 36(1)(VII) HAS BEEN INSERTED TO AVOID THE DOUBLE CLAIM IN RESPECT OF TH E SAME AMOUNT AND THE AMOUNT OF BAD DEBTS WHICH EXCEEDS TH E CREDIT BALANCE IN THE PROVISIONS FOR BAD AND DOUBTFUL DEBT ACCOUNT MADE UNDER CLAUSE (VIIA) SHALL BE ALLOWABLE U/S 36( 1)(VII). THE HONBLE SUPREME COURT IN THE CASE OF CATHOLIC SYRIA N BANK LTD. V. CIT (SUPRA) HAS HELD THAT THE DEDUCTION U/S 36(1 )(VII) CANNOT BE NEGATED BY READING INTO THE LIMITATION OF SECTION 36(1)(VIIA) AS IT WOULD FRUSTRATE THE OBJECT OF GRA NTING SUCH DEDUCTIONS. AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE HYDERABAD BENCHES OF THIS TRIBUNAL IN THE CASE OF S TATE BAND OF HYDERABAD VS. DCIT (SUPRA) IN PARA 9 TO 11 AS UN DER:- 9. THE APEX COURT IN THE CASE OF TRF LTD. (SUPRA) HA S HELD THAT ANY DEBT WRITTEN OFF AS IRRECOVERABLE SHOULD BE ALLOWED AS DEDUCTION. IN THE CASE OF VIJAYA BANK LTD. (SUPRA), THE APEX COURT HAS HELD THAT IF THE PROVISION FOR BAD DEBTS DEBITED TO THE P&L IS NE TTED AGAINST THE CURRENT ASSETS THE PROVISIONS IS AN ALLOWABLE DEDUCT ION EVEN IF INDIVIDUAL ACCOUNTS OF THE DEBTORS ARE NOT WTITTEN O FF. IN THE CASE OF CATHOLIC SYRIAN BANK LTD. (SUPRA), WHICH WAS NOT AVAIL ABLE WITH THE LOWER AUTHORITIES AT THE TIME OF DECIDING THE ISSUE, T HE APEX COURT HAS HELD AS UNDER (I) THE CLEAR LEGISLATIVE INTENT OF S. 36(1)(VII) & 36(1)(VIIA) TOGETHER WITH THE CIRCULARS ISSUED BY THE CBDT DEMONSTRATE THAT THE DEDUCTION ON ACCOUNT OF PROVISION FOR BAD AND DOUBT FUL DEBTS U/S 36(1)(VIIA) IS DISTINCT AND INDEPENDENT OF S. 36(1) (VII) RELATING TO ALLOWANCE OF BAD DEBTS. THE LEGISLATIVE INTENT WAS T O ENCOURAGE RURAL ADVANCES AND THE MAKING OF PROVISIONS FOR BAD DEBTS IN RELATION TO SUCH RURAL BRANCHES. THE FUNCTIONING OF SU CH BANKS IS SUCH THAT THE RURAL BRANCHES WERE PRACTICALLY TREATED A S A DISTINCT BUSINESS, THOUGH ULTIMATELY THESE ADVANCES WOULD FORM PART OF THE BOOKS OF ACCOUNT OF THE HEAD OFFICE. AN INTERPRETATIO N WHICH SERVES THE LEGISLATIVE OBJECT AND INTENT IS TO BE PREFERRED RATHER THAN ONE WHICH SUBVERTS THE SAME. THE DEDUCTION U/S 36(1)(VII) C ANNOT BE NEGATED BY READING INTO IT THE LIMITATIONS OF S. 36( 1)(VIIA) AS IT WOULD FRUSTRATE THE OBJECT OF GRANTING SUCH DEDUCTIO NS. THE REVENUE'S ARGUMENT THAT THIS WOULD LEAD TO DOUBLE DED UCTION IS NOT CORRECT IN VIEW OF THE PROVISO TO S. 36(1)(VII) WHI CH PROVIDES THAT IN BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 20 RESPECT OF RURAL ADVANCES, THE DEDUCTION ON ACCOUNT OF THE ACTUAL WRITE OFF OF BAD DEBTS WOULD BE LIMITED TO EXCESS O F THE AMOUNT WRITTEN OFF OVER THE AMOUNT OF THE PROVISION WHICH HAD A LREADY BEEN ALLOWED U/S 36(1) (VIIA) (SOUTHERN TECHNOLOGIES 320 I TR 577 (SC) & VIJAYA BANK 323 ITR 166 (SC) REFERRED) 10. IN THAT CASE THE APEX COURT HAS HELD THAT THE BANK WO ULD BE ENTITLED TO BOTH THE DEDUCTIONS, ONE UNDER CLAUSE (VI I) ON THE BASIS OF ACTUAL WRITE OFF AND ANOTHER ON THE BASIS OF CLAUSE ( VIIA) IN RESPECT OF MERE PROVISION. FURTHER TO PREVENT TO DOUBLE DED UCTION, PROVISO TO CLAUSE (VII) WAS INSERTED WHICH SAYS THAT IN RESPECT O F BAD DEBTS ARISING OUT OF RURAL ADVANCES THE DEDUCTION ON ACCOU NT OF ACTUAL WRITE OFF WOULD BE LIMITED TO THE EXCESS OF THE AMOUN T WRITTEN OFF OVER THE AMOUNT OF THE PROVISION ALLOWED UNDER CLAUSE (VIIA). IT FOLLOWS THAT DEDUCTION U/S 36(1)(VIIA) IS TO BE ALL OWED ONLY ON THE AMOUNT OF PROVISION MADE FOR BAD AND DOUBTFUL DEBTS SUBJECT TO THE MAXIMUM ON THE BASIS OF RURAL ADVANCES/ INCOME PRES CRIBED UNDER THAT SECTION. THE ALLOWANCE U/S 36(1)(VIIA) CANNOT BE IN EXCESS OF PROVISION FOR BAD DEBTS ACTUALLY MADE IN THE ACCOUN TS. 11. IN VIEW OF THE VERY CLEAR PRINCIPLES LAID DOWN B Y THE APEX COURT IN THE ABOVE JUDGMENTS, WE DEEM IT FIT TO SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE I N THE LIGHT OF THE DECISIONS OF THE APEX COURT IN THE CASES OF (A) TRF LT D. (SUPRA) (B) VIJAYA BANK LTD. (SUPRA) AND (C) CATHOLIC SYRIAN BAN KLTD. (SUPRA). 2.6 IT IS CLEAR THAT THE HYDERABAD BENCHES IN THE C ASE OF STATE BANK OF HYDERABAD VS. DCIT (SUPRA) HAD DECIDED THIS ISSUE BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CATHOLIC SYRIAN BANK LTD. V. CIT (SUPRA). 2.7 AS REGARDS THE INTRODUCTION OF EXPLANATION 2 VI DE FINANCE ACT 2013, IT HAS BEEN MADE CLEAR IN THE FINANCE ACT ITSELF THAT THE SAID EXPLANATION WILL BE EFFECTIVE W.E.F 01.04. 2014 AND, THEREFORE, IN OUR VIEW THE SAME IS NOT APPLICABLE F OR THE YEAR UNDER CONSIDERATION. FOLLOWING THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CATHOLIC SYRIAN BANK L TD. V. CIT AS WELL AS THE DECISION OF HYDERABAD BENCHES OF THI S TRIBUNAL IN THE CASE OF STATE BANK OF HYDERABAD VS. DCIT (SU PRA), WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND DIR ECT THE AO TO BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 21 ALLOW THE CLAIM IN THE LIGHT OF THE DECISION OF HON BLE SUPREME COURT. ITA NO.3534/MUM/2011 29. THE FIRST GROUND OF APPEAL IS AGAINST THE ALLOW ANCE OF WHOLE OF THE BAD DEBTS CLAIMED. 30. THE FACTS ARE THAT THE AO DISALLOWED RS. 549,60 ,45,703/- CLAIMED AS BAD DEBTS, ON THE GROUND THAT THE ASSESS EE HAS NOT ACTUALLY WRITTEN OFF THE AMOUNT IN THE BOOKS. ACCOR DING TO THE AO, THE BAD DEBT IS ALLOWABLE ONLY IF IT IS IRRECOV ERABLE AND IS ACTUALLY WRITTEN OFF IN THE ACCOUNTS OF THE ASSESSE E. THE AO OBSERVED THAT ONLY PRUDENTIAL WRITE OFF AND NOT ACT UAL WRITE OFF AS IRRECOVERABLE CANNOT BE ALLOWED. 31. AGGRIEVED, THE ASSESSEE APPROACHED THE CIT(A), WHO, RELYING ON THE DECISION OF ASSESSEES OWN CASE IN A SSESSMENT YEAR 2000-01 BY THE CIT(A) AND ALSO BY FOLLOWING TH E DECISION OF HON'BLE SUPREME COURT IN THE CASE OF VIJAYA BANK V/S CIT, REPORTED IN 323 ITR 166, WHEREIN THE HON'BLE APEX C OURT HELD, THOUGH A MERE DEBIT TO THE PROFIT AND LOSS ACCOUNT WOULD CONSTITUTE A PROVISION FOR A BAD AND DOUBTFUL DEBT, YET THAT WOULD NOT CONSTITUTE ACTUAL WRITE OFF. BUT WHERE BE SIDES DEBITING THE PROFIT AND LOSS ACCOUNT AND CREATING A PROVISION FOR BAD AND DOUBTFUL DEBT, THE ASSESSEE HAS CORRESPONDINGLY/SIMULTANEOUSLY OBLITERATED THE SAID PROVISION FROM ITS ACCOUNTS BY REDUCING THE CORRESPONDING AMO UNT FROM LOANS AND ADVANCES/DEBTORS ON THE ASSETS SIDE OF TH E BALANCE- SHEET, AND, CONSEQUENTLY AT THE END OF THE YEAR, TH E FIGURE IN THE LOANS AND ADVANCES OR THE DEBTORS ON THE ASSETS SID E OF THE BALANCE-SHEET IS SHOWN AS NET OF THE PROVISION FOR IMPUGNED BAD DEBT, THE ASSESSEE WILL BE ENTITLED TO THE BEN EFIT OF DEDUCTION UNDER SECTION 36(1)(VII), AS THERE IS AN ACTUAL WRITE BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 22 OFF BY THE ASSESSEE IN HIS BOOKS. DISALLOWANCE CANN OT BE MADE ON AN APPREHENSION THAT IF THE ASSESSEE FAILED TO C LOSE EACH AND EVERY INDIVIDUAL ACCOUNT OF ITS DEBTOR, IT MAY RESU LT IN THE ASSESSEE CLAIMING DEDUCTION TWICE OVER, ALLOWED TH E APPEAL OF THE ASSESSEE, ALLOWING THE CLAIM OF BAD DEBTS. 32. THE DR CONCEDED THAT THE ISSUE NOW STANDS SETTL ED IN FAVOUR OF THE ASSESSEE. 33. CONSIDERING THE SUBMISSIONS, WE DO NOT FIND ANY REASON TO DISTURB THE DECISION OF THE CIT(A), WHEREIN HE HAS FOLLOWED THE DECISION OF HON'BLE SUPREME COURT. THE GROUND IS DI SMISSED. 8.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTION MADE BY THE LD. RESPECTIVE COUNSEL AND FA CTUAL FINDING/LEGAL POSITION DISCUSSED IN THE ORDER OF TH E TRIBUNAL, IF KEPT IN JUXTAPOSITION AND ANALYZED, WE NOTE THAT TH E TRIBUNAL ON THE ISSUE UNDER HAND, DISCUSSED THE ISSUE AND FO LLOWING VARIOUS DECISIONS DECIDED IN FAVOUR OF THE ASSESSEE . WE NOTE THAT AFTER 01/04/1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT DEBT, IN FACT, HAS BECOME IRRECOVERA BLE, IT IS ENOUGH, IF BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE AS WAS HELD IN T.R.F. LTD. VS CIT 323 ITR 397 (SC), CIT VS AUTO METERS LTD. 292 ITR 345 ( DEL.), CIT VS MORGAN SECURITIES AND CREDITS PVT. LTD. 162 TAXM AN 124 (DEL.), SURESH GAGGAL VS ITO (2009) 180 TAXMAN 90 ( HP), LAWLYS ENTERPRISES LTD. VS CIT 314 ITR 297 (PAT.), DIT VS OWAN INTERNATIONAL BANK (2009) 184 TAXMAN 314 (BOM.). T HE FACT OF AMENDMENT TO SECTION 36(1)(VII) READ WITH SECTION 3 6(2) IS ONLY BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 23 THAT NOW FOR CLAIMING DEDUCTION U/S 36(1)(VII) MERE WRITING OFF DEBT OR PART THEREOF AS IRRECOVERABLE IS A SUBSTANT IAL COMPLIANCE. OUR VIEW IS FURTHER SUPPORTED BY THE D ECISION IN CIT VS KOHLI BROTHERS COLOR LAB PVT. LTD. (2010) 18 6 TAXMAN 62 (ALL.) AND CIT VS SMT. NILOPHER I. SINGH 309 ITR 233 (DEL.). THEREFORE, WE FIND NO INFIRMITY IN THE CONCLUSION D RAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THUS, ON THIS ISSUE, WE DECIDE IN FAVOUR OF THE ASSESSEE. 9. THE NEXT GROUND PERTAINS TO ALLOWING DEDUCTION O F RS394,23,59,023/- AS BUSINESS LOSS OVERLOOKING THE FACT THAT THE SAID LOSS ACTUALLY REPRESENTS DIMINUTION IN VAL UE OF INVESTMENT AND IS OF CAPITAL NATURE. THE LD. COUNS EL FOR THE ASSESSEE CONTENDED THAT THIS ISSUE IS IN FAVOUR OF THE ASSESSEE. RELIANCE WAS PLACED UPON THE DECISION IN UCO BANK V S CIT 240 ITR 355 (SC), CIT VS BANK OF BARODA 262 ITR 334 (MUMBAI), KARNATAKA BANK LTD. VS ACIT 356 ITR 549 (KARNATAKA) AND THE DECISION OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR A.Y. 1997-98 (ITA NO.1680/MUM/2 001) ORDER DATED 27/03/2008. THIS FACTUAL MATRIX WAS CO NSENTED TO BE CORRECT BY THE LD. DR, THOUGH, HE DEFENDED TH E CONCLUSION DRAWN IN THE ASSESSMENT ORDER. 9.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION F ROM THE AFORESAID ORDER OF THE TRIBUNAL DATED 27/03/2008 FO R READY REFERENCE:- BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 24 2.8. GROUND NO. 5 IS ON THE ISSUE OF DISALLOWANCE OF RS.37,09,35,386/- BEING VALUATION LOSS IN RESPECT O F PERMANENT INVESTMENTS. THIS ISSUE ALSO IS ADMITTEDL Y COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS BANK OF BARODA REPORTED IN 262 I TR 334 (BOM.). RESPECTFULLY FOLLOWING THE SAME, WE ALLOW T HE GROUND OF THE ASSESSEE. IN VIEW OF THE ABOVE, UNDISPUTED LEGAL POSITION, FOLLOWING THE ORDER OF THE TRIBUNAL/HONBLE JURISDI CTIONAL HIGH COURT, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESS EE, THUS, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD . COMMISSIONER OF INCOME TAX (APPEALS). 10. THE LAST GROUND RAISED BY THE REVENUE PERTAINS TO NATURE OF TRANSACTION OF LEASE RENTALS THAT OF FINA NCE TRANSACTION BETWEEN THE BANK AND CUSTOMERS AND THE DEPRECIATION OF RS.2,83,10,336/-. THE CRUX OF ARGUM ENT ON BEHALF OF THE LD. DR IS THAT WHILE COMING TO THIS C ONCLUSION, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IGNORE D THE FACT AND THUS THE DEPRECIATION IS NOT ALLOWABLE. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE, CONTENDED T HAT THE ASSESSEE IS THE OWNER OF THE ASSET AND FURTHER IN A LL EARLIER YEARS, THE DEPARTMENT ACCEPTED THE CLAIM OF THE ASS ESSEE AND NO FURTHER APPEAL WAS FILED. THIS FACTUAL MATRIX W AS NOT CONTROVERTED BY THE LD. DR. 10.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS ARE THAT THE BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 25 ASSESSEE CLAIMED DEPRECIATION OF RS.2,83,10,336/- O N THE LEASE ASSET. THE CLAIM OF THE ASSESSEE WAS DISALLOWED BY THE ASSESSING OFFICER BY HOLDING THAT THE LEASE ASSET I S NOTHING BUT THE FINANCE IS GIVEN BY THE ASSESSEE FOR PURCHASE O F ASSET TO VARIOUS PERSON, THEREFORE, IT IS PURELY A FINANCIAL TRANSACTION. WE FIND THAT THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) CONSIDERED VARIOUS CLAUSES OF THE AGREEMENT ALONGWI TH VARIOUS JUDICIAL PRONOUNCEMENTS, WHICH ARE AVAILABLE IN PAR A 8.5 (PAGE-19) OF THE IMPUGNED ORDER. THERE IS UNCONTROV ERTED FINDING THAT FOR A.Y. 2002-03 AND 2003-04, THIS ISS UE WAS DECIDED IN FAVOUR OF THE ASSESSEE AND THE SAME HAS BEEN ACCEPTED BY THE DEPARTMENT. IDENTICALLY, FOR A.Y. 2004-05 AND 2005-06, THERE WAS NO CHANGE IN FACTS, THEREFORE, I T WAS DECIDED IN FAVOUR OF THE ASSESSEE. IN VIEW OF THIS FACT, EVEN FOR THE SAKE OF CONSISTENCY AND THAT TOO IN THE ABSENCE OF ANY CONTRARY MATERIAL, WE AFFIRM THE STAND OF THE LD. C OMMISSIONER OF INCOME TAX (APPEALS). FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED AND THAT OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 13/08/2015. SD/ - (ASHWANI TANEJA) S D/ - (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; ) DATED : 28/08/2015 F{X~{T? P.S/. .. BANK OF INDIA ITA NO.3422 AND 3437/MUM/2013 26 !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 1 ( + ) / THE CIT, MUMBAI. 4. 0 0 1 / CIT(A)- , MUMBAI 5. 34.' , 0 +(' 5 , / DR, ITAT, MUMBAI 6. 6#7 / GUARD FILE. ! / BY ORDER, /3+. //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI