Asstt. Commissioner of Income Tax-6, Kanpur V. M/s. Triveni Kshetriya Gramin Bank, Banda.

ITA 421/LKW/2012

• Counselvise Citation: 42123714 RSA 2012
• Duration Of Justice: 2 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 27-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Depreciation; Business expenditure; Opportunity of being heard; Unabsorbed depreciation
• Section: 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.421/LKW/2012 A.Y.: 2008 - 09 A.C.I.T. - 6, KANPUR. VS. M/S TRIVENI KSHETRIYA GRAMIN BANK, D.M. COLONY, BANDA. PAN:AAALT0714E (APPELLANT) (RESPONDENT) ITA NO.493/LKW/2012 A.Y.: 2009 - 10 M/S TRIVENI KSHETRIYA GRAMIN BANK, D.M. COLONY, BANDA. PAN:AAALT0714E VS. A.C.I.T. - 6, KANPUR. (APPELLANT) (RESPONDENT) ITA NO.402/LKW/2012 A.Y.: 2006 - 07 A.C.I.T. - 6, KANPUR. VS. M/S TRIVENI KSHETRIYA GRAMIN BANK, D.M. COLONY, BANDA. PAN:AAALT0714E (APPELLANT) (RESPONDENT) ITA NO.443/LKW/2012 A.Y.: 2007 - 08 M/S TRIVENI KSHETRIYA GRAMIN BANK, D.M. COLONY, BANDA. PAN:AAALT0714E VS. A.C.I.T. - 6, KANPUR. (APPELLANT) (RESPONDENT) 2 ITA NOS.444 & 445/LKW/2012 A.YS.:2007 - 08 & 2008 - 09 M/S TRIVENI KSHETRIYA GRAMIN BANK, D.M. COLONY, BANDA. PAN:AAALT0714E VS. A.C.I.T. - 6, KANPUR. (APPELLANT) (RESPONDENT) REVENUE BY SHRI RAJIV JAIN, CIT, D.R. ASSESSEE BY NONE DATE OF HEARING 16/12/2013 DATE OF PRONOUNCEMENT 2 7 /12/2013 O R D E R PER BENCH: OUT OF THIS BUNCH OF SIX APPEALS, TWO APPEALS FOR ASSESSMENT YEAR 2006 - 07 & 2008 - 09 ARE FILED BY THE REVENUE WHEREAS THE REMAINING FOUR APPEALS FOR ASSESSMENT YEAR 2007 - 08 ( 2 APPEALS), 2008 09 AND 2009 - 2010 ARE FILED BY THE ASSESSEE. THESE APPEALS WERE FIXED FOR HEARING ON VARIOUS OCCASIONS AND THE HEARING WAS ADJOURNED ON TH E REQUEST OF LEARNED A.R. OF THE ASSESSEE. LASTLY, THE HEARING WAS FIXED ON 22/10/2013 AND ON THIS DATE ALSO, AN ADJOURNMENT APPLICATION WAS MOVED BY SHRI RAJESH KUSHWAHA, LEARNED A.R. OF THE ASSESSEE. ON HIS REQUEST, THE HEARING WAS ADJOURNED TO 16/12/2 013 AND THIS DATE OF HEARING WAS PRONOUNCED IN THE OPEN COURT. ON THIS DATE I.E. 16/12/2013, NONE APPEARED ON BEHALF OF THE ASSESSEE AND THERE IS NO REQUEST FOR ADJOURNMENT. UNDER THESE FACTS, WE PROCEED TO DECIDE TH ESE APPEAL S EX - PARTE QUA THE ASSESSEE. 3 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2006 - 2007. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE RELIEF OF RS.20,39,000/ - DEDUCTED U/S 8 0P(2)(A)(I) AS IN DECIDING THE APPEAL IN THIS CASE THE LEARNED CIT(A) NOT DISCUSSED THE STATUS OF ASSESSEE BANK AS THE SAME WAS DISPUTED BY THE ASSESSING OFFICER IN HIS ORDER AND DECIDED THE APPEAL IN THE LIGHT OF ORDER OF APEX COURT IN CASE OF CIT VS. NAW ANSHAHAR CENTRAL CO - OPERATIVE BANK LTD. AND ALLOWED ALL KINDS OF INVESTMENTS MADE BY ASSESSEE BANK AS DEDUCTIBLE U/S 80P DEEMING THE ASSESSEE BANK AS CO - OPERATIVE SOCIETY. 2. THAT THE ORDER OF THE LEARNED CIT(A) BEING ERRONEOUS IN LAW AND ON FACTS DESERVE S TO BE VACATED AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 3. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL OR TAKE ADDITIONAL GROUND DURING THE PENDENCY OF THIS APPEAL. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSE SSMENT ORDER. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D.R. OF THE REVENUE AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THIS ISSUE WAS DECIDED BY LEARNED CIT(A) BY FOLLOWING THE JUDGMENT OF HON'BLE APEX COURT RENDERED I N THE CASE OF CIT VS. NAWANSHAHAR CENTRAL CO - OPERATIVE BANK LTD. [2007] 289 ITR 6 (SC). AS PER THE FACTS OF THIS CASE, WE FIND THAT IT WAS HELD BY HON'BLE APEX COURT THAT W HERE A CO - OPERATIVE BANK CARRYING ON BUSINESS OF BANKING IS STATUTORILY REQUIRED TO PLACE A PART OF ITS FUNDS IN APPROVED SECURITIES, THE INCOME ATTRIBUTABLE THERETO IS DEDUCTIBLE UNDER SECTION 80P(2)(A)(I) OF THE INCOME - TAX ACT, 1961. IN THE PRESENT CASE, A CLEAR FINDING IS GIVEN BY THE ASSESSING OFFICER IN PARA 13 OF THE ASSESSMENT ORDER THAT BY VARIOUS JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE, THE ASSESSEE DOES NOT GET ANY SUPPORT FOR 4 THE INCOME EARNED FROM THE INVESTMENTS MADE IN NON - SLR CATEGORY BECAUSE SUCH INVESTMENTS WERE NOT THE SUBJECT MATTER OF T HE DECISION OF HON'BLE APEX COURT. THE LEARNED CIT(A) HAS NOT GIVEN ANY CONTRARY FINDING THAT THIS CONTENTION OF THE ASSESSING OFFICER IS NOT CORRECT AND THE INTEREST INCOME IS NOT IN RESPECT OF NON - SLR INVESTMENT. THEREFORE, WE FIND THAT THE ORDER OF LE ARNED CIT(A) IS NOT SUSTAINABLE. WE, THEREFORE, REVERSE THE SAME AND RESTORE THAT OF THE ASSESSING OFFICER. AS A RESULT, THIS APPEAL OF THE REVENUE IS ALLOWED. 5. NOW WE TAKE UP ONE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 2008 ARISING OUT OF PEN ALTY IMPOSED U/S 271B . IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER PASSED BY THE LEARNED CIT IS ARBITRARY AND UNJUSTIFIED AND AGAINST THE FACTS OF THE CASE. 2. THE LD CIT (APPEAL) GROSSLY ERRED IN CONCLUDING THAT 'THE PHOTOCOPY OF TAX AUDIT REPORT SUBMITTED BY THE ASSESSEE IS NOT GENUINE DOCUMENT AS SUCH AND IT IS NOT ACCEPTABLE.' THERE IS NO REQUIREMENT AS PER LAW I.E. INCOME TAX ACT 1961 TO SUBMIT ORIGINAL TAX AUDIT REPORT. 3. THE LD CIT (APPEAL) GROSSLY ERRED IN REL YING ON THE STATEMENT OF THE AO WITHOUT ACTUALLY SEEING CONTENTS OF THE LETTER ISSUED BY THE AUDITOR OF THE BANK AND VERIFYING THE CORRECTNESS OF THE STATEMENTS MADE THEREIN DURING THE APPEAL. 4. THE LD CIT (APPEAL) GROSSLY ERRED IN CONFIRMING THE PENALTY FOR WANT OF ORIGINAL COPY OF THE TAX AUDIT REPORT WITHOUT VERIFYING THE CREDENTIAL OF THE TAX AUDIT REPORT SUBMITTED AND RELYING ON AUDITORS PLAIN DENIAL WITHOUT CONSIDERING THE FACT THAT THE STATUTORY AUDIT REPORT HAS BEEN ISSUED BY THE SAME AUDITOR. 6. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5 7. THIS ISSUE WAS DECIDED BY LEARNED CIT(A) AS PER PARA 4 OF HIS ORDER, WHICH IS REPRODUCED BELOW: 4. THE ISSUE INVOLVED IN THIS APPEAL IS SIMPLE & STRAIGHT. THE AUDITOR HAS HIMSELF GIVEN A LETTER TO THE A.O. WHICH IS PART OF THE RECORDS, WHEREIN IT HAS BEEN CLEARLY STATED THAT NO SUCH AUDIT REPORT WAS EVER GIVEN. I HAD SPECIFICALLY ASKED THE LD. A.R. TO FURNISH THE ORIGINAL COPY OF THE SAID AUDIT REPORT FOR WHICH HE EXPRESSED HIS INABILITY. IN THIS VIEW OF THE MATTER, IT HAS TO BE HELD THAT THERE WAS NO SUCH AUDIT REPORT AND, THEREFORE, THE PENALTY WAS RIGHTLY LEVIED BY A.O. 7.1 IN VIEW OF THE FACTS NOTED BY LEARNED CIT(A) IN ABOVE PARA OF HIS ORDER, WE FIND THAT THERE IS N O INFIRMITY IN HIS ORDER. HENCE, WE DECLINE TO INTERFERE IN THE SAME. THIS APPEAL OF THE ASSESSEE IS DISMISSED. 8. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2 00 8 - 2009. IN THIS APPEAL , THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) HAS IGNORED THE FACTS THAT THE ASSESSEE DID NOT FILE ANY EVIDENCE IN THIS REGARD EVEN AFTER SEVERAL OPPORTUNITIES WERE GIVEN DURING THE PROCEEDING OF REMAND REPORT AND THE ASSESSING OFFICER IN HIS REMAND REPORT MENTIONED THE SAME. THE EVIDENCES PRODUCED BEFORE CIT(A) WERE ACCEPTED WITHOUT GIVING OPPORTUNITIES TO ASSESSING OFFICER. 2. THE LEARNED CIT(A) HAS IGNORED THE FACTS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE NEVER SUBMITTED THAT THE MUTUAL FUNDS HELD WERE FOR THE PURPOSE OF TRADE AND NOT FOR INVESTMENTS. EVEN THE ASSESSEE DID NOT FILE ANY EVIDENCE IN THIS REGARD EVEN AFTER SEVERAL OPPORTUNITIES WERE GIVEN DURING THE PROCEEDINGS OF REMAND REPORT AND THE ASSESSING OFFICER IN HIS REMAND REPORT MENTIONED THE SAME. THE EVIDENCES PRODUCED BEFORE CIT(A) WERE ACCEPTED WITHOUT GIVING OPPORTUNITIES TO ASSESSING OFFICER. 6 3. THAT THE ORDER OF THE CIT(A) BEING ERRONEOUS IN LAW AND ON FACTS DESERVES TO BE VACATED AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL OR TAKE ADDITIONAL GROUND DURING THE PENDENCY OF THIS APPEAL. 9. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D. R. AND THE ORDERS OF THE AUTHORITIES BELOW AND WE FIND THAT THE ISSUE REGARDING DEPRECIATION OF RS.39,51,745/ - ON MUTUAL FUNDS AND SECURITIES HAS BEEN DECIDED BY LEARNED CIT(A) AS PER PARA 8.4 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY R EFERENCE: 8.4 THESE SECURITIES WERE HELD BY THE APPELLANT COMPANY FOR THE 'PURPOSE OF TRADE'. THE BROAD NOMENCLATURE GIVEN TO SUCH SECURITIES IN ITS BOOK AS 'INVESTMENT' CANNOT BE THE SOLE BASIS OF ARRIVING AT A DECISION. IT IS COMMON PRACTICE IN THE BANKS TO CLASSIFY THE SECURITIES HELD AS 'INVESTMENT' EVEN THOUGH MANY OF THEM ARE FOR TRADING PURPOSE. THE 'PROFIT' EARNED ON THESE KINDS OF SECURITIES IS OFFERED FOR NORMAL TAX AND NOT AS CAPITAL GAINS. SINCE THE UNITS OF M. F. HAD BEEN HELD BY THE BANK FOR THE PURPOSE OF TRADE, THE LOSS ON ACCOUNT OF 'MARKED TO MARKED' IN RESPECT OF THESE SECURITIES, IS TO BE ALLOWED AS BUSINESS LOSS. THE DISALLOWANCE MADE BY THE AO IN THIS REGARD IS VACATED. 10.1 FROM THE ABOVE PARA OF THE ORDER OF LEARNED CIT(A), WE FIND THAT THE ISSUE WAS DECIDED BY LEARNED CIT(A) ON THE BASIS THAT THE MUTUAL FUNDS WERE PURCHASE D FOR THE PURPOSE OF TRADE AND NOT FOR INVESTMENT PURPOSE. WHILE GOING THROUGH THE ASSESSMENT ORDER, WE DO NOT FIND ANY SU CH ADDITION HAVING BEEN MADE BY THE ASSESSING OFFICER OF THIS AMOUNT OF RS.39,51,745/ - IN RESPECT OF DISALLOWANCE OF DEPRECIATION ON MUTUAL FUND SECURITIES. IN THE GROUND OF APPEAL, 7 IT WAS STATED BY THE REVENUE IN GROUND NO. 2 THAT IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE NEVER SUBMITTED THAT MUTUAL FUND WERE HELD FOR THE PURPOSE OF TRADE AND NOT FOR INVESTMENT. IT IS ALSO SUBMITTED IN GROUND NO. 2 THAT THE ASSESSEE DID NOT FILE ANY EVIDENCE IN THIS REGARD EVEN AFTER SEVERAL OPPORTUNITIES WERE GI VEN DURING THE ASSESSMENT PROCEEDINGS. THERE IS NO MENTION OF ANY REMAND REPORT IN THIS REGARD IN THE ORDER OF CIT(A). UNDER THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE ORDER OF CIT(A) ON THIS ISSUE IS NOT SUSTAINABLE. BUT A T THE SAME TIME , WE FEEL THAT IN THE INTEREST OF JUSTICE, THIS MATTER SHOULD GO BACK TO THE FILE OF THE CIT(A) FOR A FRESH DECISION . WE ORDER ACCORDINGLY. THE LEARNED CIT(A) SHOULD PASS SPEAKING ORDER AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. THIS APPEAL OF THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. 11. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2009 - 2010. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE ORDER PASSED BY L D CIT - II IS ERRONEOUS, AGAINST THE FACTS OF THE CASE, ILLEGAL AND UNJUSTIFIED. 2. THAT THE L D CIT APPEAL GROSSLY ERRED BY CANCELLING THE ORDER PASSED BY L D AO WITHOUT SATISFYING THE CONDITIONS AS LAID DOWN IN SECTION 263 OF THE IT ACT AND THERE WAS NO JUSTIFICATION O F INITIATION THE PROCEEDING U/S 263 IF THE I.T.ACT, 1961 AS THE CONDITION LAID DOWN FOR THE INVOCATION OF SUCH PROVISION WAS NOT REFLECTED IN THE ORDER PASSED BY THE LD.CIT. 3. THE L D CIT - II EXCEEDED HIS JURISDICTION AS THE CIT DOES NOT HAVE THE POWER TO REVISE THE CASE WHEN THE FACTS HAVE BEEN CONSIDERED AND ADJUDICATED BY THE A.O. IN THE LIGHT OF THE DECISIONS OF HIGHER JUDICIAL AUTHORITIES. 4. THAT THE L D CIT - II GROSSLY ERRED ON FACTS AND LAW WHILE CONCLUDING ' L D AO HAS NOT EXAMINED THE ISSUE OF CARRY FORWARD OF LOSS AND UNABSORBED DEPRECIATION, WITHOUT 8 APPRECIATING THE FACT THAT IN THE APPELLATE ORDER OF AY 2007 - 08 L D CIT (A) I KANPUR HAS DIRECTED THE AO TO CHECK THE CALCULATIONS AND ALLOW THE RELIEF ACCORDINGLY IF ANY TO THE ASSESSEE. 5. THE L D CIT - II GROSSLY ERRED IN IGNORING THE FACT THAT WHEN THE APPEAL EFFECT WITH RESPECT TO CORRECT CALCULATION OF CARRIED FORWARD LOSS & DEPRECIATION WAS PENDING BEFORE AO UNDER HIM, THE SAME CANNOT BE THE BASIS OF REVISION U/S 263. 6. THE LD CIT - II GROSSLY ERRED ON FACTS AND LAW WHILE CONCLUDING THAT LOSS ARISING FROM SALE OF BONDS CAN BE SET OFF AGAINST THE I NCOME FROM CAPITAL GAINS AND CANNOT BE CLAIMED AS NORMAL BUSINESS EXPENDITURE WITHOUT CONSIDERING THE LAW LAID DOWN IN (240 ITR 355) BY H ON'BLE SUPREME COUR T. THUS LD. CIT HAS GROSSLY ERRED IN CONCLUDING THAT THE LOSS ON SALE OF BONDS UNITS IS A CAPITAL LOSS, WHICH IS FACTUALLY/LEGALLY INCORRECT. THE CONCLUSION DRAWN BY THE LD.CIT IS WITHOUT ANY DISCUSSION AND REASONING. 7. THE LD. CIT GROSSLY ERR ED IN CONCLUDING THAT DEDUCTION CLAIMED U/S 36( 1 )(VIIA) DEBITING RS.25,04,746.09 TO AVOID THE ATTENTION OF THE DEPARTMENT TOWARDS THE NET INCREASE OF R S .164137293.10. THE DEDUCTION CLAIMED WAS LEGAL AND ALLOWABLE TO ASSESSEE. 8. THE LD. CIT GRO SSLY ERRED IN TAKING THE GROUND 4, WHICH WAS UNDER CONSIDERATION IN APPEAL FILED BEFORE THE CIT (A) KANPUR IN THE A.Y.2008 - 2009 . 9. THAT THE ORDER OF THE L D COMMISSIONER OF INCOME TAX II OF BEING ERRONEOUS IN LAW AND ON FACTS DESERVE TO BE VACATED AND TH E ORDER OF THE LD AO BE RESTORED. 10. THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL OR TAKE ADDITIONAL GROUNDS DURING THE PENDENCY OF THE CASE. 12. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT. 9 13. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D.R. AND HAVE GONE THROUGH THE ORDER OF LEARNED CIT PASSED BY HIM U/S 263 OF THE ACT. AFTER CAREFULLY GOING THROUGH THE SAME, WE DO NOT FIND ANY INFIRMITY THEREIN AND THEREFORE, THE SAME IS CONFIRMED. THIS A PPEAL OF THE ASSESSEE IS DISMISSED. 14. NOW WE TAKE UP THE REMAINING APPEALS OF THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 2008 AND 2008 - 2009 IN I.T.A. NO.444/LKW/2012 AND 445/LKW/2012 ARISING OUT OF ASSESSMENT PROCEEDINGS . 15. IN BOTH THESE YEARS, THE ONLY ISSUE INVOLVED IS REGARDING ALLOWABILITY OF DEDUCTION TO THE ASSESSEE U/S 36(1)( VIIA) OF THE ACT. 16. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 17. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D.R. AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THIS ISSUE WAS DECIDED BY LEARNED CIT(A) AS PER PARA 2.1, 2.2 AND 2.3 OF HIS ORDER IN ASSESSMENT YEAR 2007 - 2008 AND IN THE NEXT YEAR I.E. ASSESSMENT YEAR 2008 - 2009, HE HAS SIMPLY FOLLOWED HIS OWN ORDER. WE, THEREFORE, REP RODUCE P ARAS FROM THE ORDER OF CIT(A) F O R ASSESSMENT YEAR 2007 - 08 AS UNDER: 2.1 LEGAL: THE DEDUCTION U/S 36(1)(VIIA) @10% OF THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES HAS TO BE COMPUTED IN THE MANNER LAID DOWN UNDER RULE 6ABA OF THE L.T.RULES. THUS, RULE STATES: 'FOR THE PURPOSES OF CLAUSE (VIIA) OF SUB - SECTION (1) OF SECTION 36, THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES OF A SCHEDULED BANK SHALL BE COMPUTED IN THE FOLLOWING MANNER, NAMELY: (A) THE AMOUNTS OF ADVANCES MADE BY EACH RURAL BRANCHES AS OUTSTANDING AT THE END OF THE LAST DAY OF EACH MONTH 10 COMPRISED IN THE PREVIOUS YEAR SHALL BE AGGREGATED SEPARATELY; (B) THE SUM SO ARRIVED AT IN THE CASE OF EACH SUCH BRANCH SHALL BE DIVIDED BY THE NUMBER OF MONT HS FOR WHICH THE OUTSTANDING ADVANCES HAVE BEEN TAKEN INTO ACCOUNT FOR THE PURPOSES OF CLAUSE (A); (C) THE AGGREGATE OF THE SUMS SO ARRIVED AT IN RESPECT OF EACH OF THE RURAL BRANCHES SHALL BE THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES OF THE SCHEDULED BANK. EXPLANATION: IN THIS RULE 'RURAL BRANCH' AND 'SCHEDULED BANK' SHALL HAVE THE MEANINGS ASSIGNED TO THEM IN THE EXPLANATION TO (VIIA) OF SUB - SECTION (1) OF SECTION 36. 2.1.1 FROM THIS RULE IT I S SEEN THAT THIS DEDUCTION @10% IS AVAILABLE ONLY TO A SCHEDULED BANK AND NOT TO ANY OTHER CATEGORIES OF BANKS. I DISCUSSED THIS ISSUE WITH THE LD. A.R. OF THE APPELLANT. HE BROUGHT TO MY NOTICE A NOTIFICATION OF THE RBI DATED 22.09.2008 THROUGH WHICH THE ASSESSEE BANK HAS BEEN INCLUDED SEN. - II TO THE RBI ACT, 1934. I SPECIFICALLY POINTED OUT TO THE LD. A.R. THAT THE SAID INCLUSION IN THE SCH - H WAS W.E.F. 22.09.2008 AND, THEREFORE, THE ASSESSEE BANK COULD NOT BE TREATED AS A SCHEDULED BANK FOR F.Y. 2006 - 07 (I.E. THE A.Y. 2007 - 08) AND ALSO FOR F.Y. 2007 - 08 (I.E. A.Y. 2008 - 09). IN RESPONSE, THE LD. AR HAD NOTHING TO ADD EXCEPT SAYING THAT HE WOULD SEEK CLARIFICATION FROM THE RBI. SINCE THE DATE OF INCLUSION IN THE SCH - H OF THE RBI ACT IS AN O BVIOUS FACT, I HEREBY HOLD THAT THE ASSESSEE BANK WAS NOT A SCHEDULED BANK DURING THE F.Y. 2006 - 07 (CORRESPONDING TO THE A.Y. 2007 - 08) AND, THEREFORE, IS NOT ENTITLED TO DEDUCTION @ 10% U/S 36(1) (VIIA) OF THE ACT. 2.2 FACTUAL: THE ASSESSEE HAD SUBMITTED A COMPLETE L IST OF ADVANCES MADE BY THE RURAL BRANCHES (WHICH WAS SUBMITTED TO THE RBI ALSO). AT RANDOM, I HAD IDENTIFIED 10 BRANCHES FROM THE GIVEN LIST AND REQUESTED THE LD. A.R. TO PROVIDE THE REQUISITE DETAILS. THE LD. AR PROVIDED DETAILS LIKE POPULATION (AS PER THE LAST CENSUS) OF EACH SUCH PLACE AND ALSO THE DETAILS OF MONTHLY ADVANCES MADE BY THE EACH OF THESE BRANCHES. IN VIEW OF THIS TEST CHECKING, I AM SATISFIED WITH THE FACTUAL ASPECT OF THE LOANS GIVEN BY THE RURAL BRANCHES. 11 2.3 DECISION: IN VIEW OF THE DISCUSSION AT PARA 2.1.1, I HOLD THAT THE APPELLANT BANK IS NOT LEGALLY ENTITLED TO DEDUCTION @10% 36( 1 )(VIIA) OF THE ACT. 17.1 FROM THE ABOVE PARA S OF THE ORDER OF LEARNED CIT ( A), WE FIND THAT CIT(A) HAS EXAMINED THE ISSUE IN DETAIL AND AFTER DECIDED THE LEGAL ASPECT AS WELL AS FACTUAL ASPECT . W E DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LEARNED CIT(A) IN BOTH THE YEARS. AS A RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. 18. IN THE COMBINED RESULT, ALL THE APPEALS OF THE ASSESSEE ARE DISMISSED AND THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2007 - 2008 IS ALLOWED WHEREAS THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2008 2009 IS ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN T HE OPEN COURT ON THE DATE MENTIONED ON CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 7 / 12/2013 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. DR, ITAT, LUCKNOW ASSTT. REGISTRAR