ING Vysya Bank Limited, Bangalore V. ACIT, Bangalore

ITA 443/BANG/2012

• Counselvise Citation: 44321114 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 29-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Bad and doubtful debts; Reassessment proceedings
• Section: 43B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI N.V. VASUDEVAN, JUDICIAL MEMBER ITA NO.443/BANG/2012 ASSESSMENT YEAR : 2002-03 ING VYSYA BANK LTD., ING VYSYA HOUSE, NO.22, M.G. ROAD, BANGALORE 560 001. PAN : AABCT 0529M VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 11(3), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S. ANANTHAN, C.A. RESPONDENT BY : SHRI FARAHAT HUSSAIN QURESHI, CIT-II(DR) DATE OF HEARING : 06.08.2013 DATE OF PRONOUNCEMENT : 14.08.2013 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 02.01.2012 OF THE CIT(APPEALS)-I, BANGALORE RELATING TO ASSESS MENT YEAR 2002-03. 2. GROUND 1 RAISED BY THE READS AS FOLLOWS:- ITA NO.443/BANG/2012 PAGE 2 OF 22 1. GROUND I - WRITE OFF OF NON-CONVERTIBLE DEBENTU RES AMOUNTING TO RS.11,18,42,001. 1.1 THE LEARNED CIT(A) ERRED IN LAW AND IN FACT IN CONFIRMING THE DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFI CER (AO) IN RESPECT OF THE AMOUNT WRITTEN OFF AND CHARGED TO PROFIT AND LOSS ACCOUNT IN RESPECT OF NON-CONVERTIBLE DEBENTURES (N CD). 1.2 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE AMOUNT WRITTEN OFF HAD BEEN CREDITED TO NCD ACCOUNT, HENCE , IT WOULD BE ALLOWABLE AS A DEDUCTION UNDER SECTION 36(1)(VII) O F THE ACT. 1.3 THE LEARNED CIT(A) FAILED TO APPRECIATE THE FA CT THAT THE ASSESSMENT ORDER PASSED BY THE LEARNED AO FOR THE A SSESSMENT YEARS 2000-01 & 2001-02 CLEARLY MENTIONED THAT THE AMOUNTS WRITTEN OFF WOULD BE ALLOWED AS A DEDUCTION IN THE YEAR IN WHICH IT IS CREDITED TO THE NCD ACCOUNT. FURTHER, THE LEA RNED CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT SINCE AMOUNTS WR ITTEN OFF WERE CREDITED TO NCD ACCOUNT IN THE ASSESSMENT YEAR 2002 -03, IT WOULD BE ALLOWABLE UNDER SECTION 36(1)(VII) OF THE ACT. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BANKI NG. IN THE COMPUTATION OF BUSINESS INCOME FURNISHED ALONG WITH THE RETURN OF INCOME FOR THE A.Y. 2002-03, THE ASSESSEE HAD CLAIMED DEDU CTION OF A SUM OF RS.11,18,42,001 ON ACCOUNT OF WRITE OFF OF NON-CONV ERTIBLE DEBENTURES ( NCDS ). IN ITS LETTER DATED 1.2.2005 FURNISHED BY THE A SSESSEE BEFORE THE ASSESSING OFFICER, THE ASSESSEE SUBMITTED THAT THE TOTAL WRITE OFF ON ACCOUNT OF NCDS WAS A SUM OF RS.17,16,17,001, OUT O F WHICH A SUM OF RS.5,97,75,000 HAD BEEN WRITTEN OFF DURING THE PREV IOUS YEAR AND CHARGED TO THE PROFIT & LOSS ACCOUNT. THE ASSESSEE SUBMITT ED THAT THIS AMOUNT HAS BECOME IRRECOVERABLE AND WERE THEREFORE CLAIMED AS DEDUCTION ON ACCOUNT OF BAD DEBTS U/S. 36(1)(VII) OF THE ACT. THE ASSES SEE POINTED OUT THAT THE ITA NO.443/BANG/2012 PAGE 3 OF 22 REMAINING SUM OF RS.11,18,42,001 WAS ACTUALLY THE A MOUNT CHARGED TO PROFIT & LOSS ACCOUNT FOR THE A.YS. 2000-01 AND 200 1-02 AS FOLLOWS:- A.Y. 2000-01 RS.3,70,00,315 A.Y. 2001-02 RS.7,48,41,686 -------------------- RS.11,18,42,001 -------------------- 3. THE ASSESSEE POINTED OUT THAT A SUM OF RS.11,18 ,42,001 WAS NOT ALLOWED DURING THE RESPECTIVE ASSESSMENT YEARS FOR THE REASON IT WAS NOT WRITTEN OFF IN THE ACCOUNT. THE ASSESSEE ALSO POINTED OUT THAT IT HAD FILED APPEAL AGAINST THE AFORESAID ORDERS OF ASSESS MENT AND THE SAME WERE PENDING AND THAT THE CLAIM FOR DEDUCTION OF THE AFO RESAID AMOUNT IS BEING MADE IN THIS YEAR BY WAY OF ABUNDANT CAUTION. THE AO HELD THAT SINCE THESE AMOUNTS WERE SUBJECT MATTER OF ANOTHER ASSESS MENT YEAR, THE CLAIM CANNOT BE ENTERTAINED IN THIS ASSESSMENT YEAR. 4. ON APPEAL, THE CIT(A) UPHELD THE ORDER OF THE AO . 5. AT THE TIME OF HEARING, IT WAS POINTED OUT BY TH E LD. COUNSEL FOR THE ASSESSEE THAT THE DEDUCTION CLAIMED IN THE A.Y. 2000-01 WAS ALLOWED BY THE AO HIMSELF AND DEDUCTION CLAIMED IN THE A.Y. 2001-02 WAS DIRECTED TO BE ALLOWED BY THE APPELLATE AUTHORITY. IT WAS H IS SUBMISSION THAT IN THE EVENT OF THOSE DECISIONS BEING REVERSED, THE CLAIM OF THE ASSESSEE FOR DEDUCTION SHOULD BE ALLOWED AS THE INVESTMENT IN DE BENTURES WERE HELD AS STOCK IN TRADE AND DIMINUTION IN THEIR VALUE HAS TO BE ALLOWED AS A DEDUCTION. ITA NO.443/BANG/2012 PAGE 4 OF 22 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. CO UNSEL FOR THE ASSESSEE AND ARE OF THE VIEW THAT THE ACTUAL WRITE OFF IN THE NCD ACCOUNT HAD TAKEN PLACE IN THIS YEAR. THE CLAIM OF THE ASS ESSEE AS MADE IN THE A.Y. 2000-01 AND 2001-02 WOULD BE ON THE BASIS THAT THERE IS A DIMINUTION IN THE VALUE OF STOCK IN TRADE, WHEREAS THE CLAIM O F THE ASSESSEE IN THIS ASSESSMENT YEAR WOULD BE ON THE BASIS THAT IT IS A BAD DEBT AND ALLOWABLE AS A DEDUCTION U/S. 36(1)(VII) OF THE ACT. WE ARE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE HAS TO BE ALLOWED IN EITHER OF THE ASSESSMENT YEARS, AS THE LOSS IN QUESTION IS INCIDENTAL TO THE BUSINESS AND HAD TO BE ALLOWED AS A DIMINUTION IN VALUE OF STOCK IN TRADE. WE THEREFOR E HOLD THAT IN THE EVENT OF THE CLAIM OF THE ASSESSEE BEING REJECTED IN A.YS. 2 000-01 & 2001-02, THE CLAIM SHOULD BE ALLOWED IN THE A.Y. 2002-03. WE HO LD AND DIRECT ACCORDINGLY. 7. GROUND NO.2 RAISED BY THE ASSESSEE IN ITS APPEAL READS AS FOLLOWS:- 2. GROUND 2 - AMORTIZATION OF PREMIUM PAID ON HELD TO MATURITY (HTM) CATEGORY OF INVESTMENT AMOUNTING T O RS 3,13,60,916 2.1 THE LEARNED CIT(A) ERRED IN CONFIRMING THE DIS ALLOWANCE MADE BY THE AO IN RESPECT OF THE AMOUNT DEBITED TO PROFIT AND LOSS ACCOUNT TOWARDS AMORTIZATION OF INVESTMENTS HE LD UNDER THE HTM CATEGORY. 2.2 THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATI NG THE FACT THAT RBI GUIDELINES PROVIDES THAT PREMIUM PAID ON H TM CATEGORY INVESTMENTS SHOULD BE AMORTIZED OVER THE P ERIOD REMAINING TO MATURITY. ITA NO.443/BANG/2012 PAGE 5 OF 22 2.3 THE LEARNED CIT(A) FURTHER ERRED IN LAW IN NOT TAKING COGNIZANCE OF THE CENTRAL BOARD OF DIRECT TAXES (C BDT) INSTRUCTION NO 17/2008 DATED 26 NOVEMBER, 2008 WHIC H REITERATED THAT IN CASE OF INVESTMENT CLASSIFIED UN DER HTM CATEGORY, THE PREMIUM SHOULD BE AMORTIZED OVER THE PERIOD REMAINING TO MATURITY IN LINE WITH THE RBI GUIDELIN ES. 8. THE APPELLANT HAS DEBITED A SUM OF RS. 3,13,60, 916/- BEING AMORTISATION OF INVESTMENTS UNDER HELD TO MATURITY CATEGORY AND HAD CLAIMED THE SAME AS AN ALLOWABLE DEDUCTION. THE A SSESSEE SUBMITTED THAT WHEN THE INVESTMENTS ARE PURCHASED AT A PRICE HIGHER THAN ITS REDEEMABLE VALUE AND ARE INTENDED TO BE HELD UPTO I TS MATURITY, THE DIFFERENCE BETWEEN THE PURCHASE PRICE AND REDEEMABL E VALUE OF INVESTMENTS WERE BEING AMORTIZED OVER THE LIFE OF T HE INVESTMENTS. AT THE SAME TIME, THE COUPON RATES OF INTEREST EARNED FROM THE INVESTMENTS ARE BEING OFFERED TO TAX. THE ASSESSEE FURTHER SUBMITT ED THAT WHEN THE COUPON RATE OF INTEREST IS HIGHER THAN THE PREVAILING MARK ET RATE OF INTEREST, THE PRICE OF THE SECURITY WILL BE HIGHER THAN THE FACE VALUE AS THE HOLDER WILL BE RECEIVING A HIGHER STREAM OF INCOME OVER THE REMAIN ING MATURITY OF THE SECURITY. SINCE, THE HIGHER PAYMENT IS TO SECURE A BENEFIT OVER A NUMBER OF YEARS, THERE IS A CONTINUING BENEFIT TO THE ASSESSE E OVER THE LIFE OF SECURITY AND THEREFORE, SUCH AMOUNT SHOULD BE SPREAD OVER TH E PERIOD OF THE SECURITY. IN SUPPORT OF ITS CONTENTION THAT THE SU M OF RS. 3,13,60,916/- BEING AMORTISATION OF INVESTMENTS UNDER HELD TO MAT URITY CATEGORY, SHOULD BE ALLOWED AS A DEDUCTION, THE ASSESSEE PLACED RELI ANCE ON THE FOLLOWING DECISIONS: ITA NO.443/BANG/2012 PAGE 6 OF 22 (I) MADRAS INDUSTRIAL INVESTMENTS CORPORATION LTD. VS. CIT [1997] (225 ITR 802) (S C) (II) M.P. FINANCIAL CORPORATION V. CIT [1985] (165 ITR 765) (MP) (III) NATIONAL ENGINEERING INDUSTRIES LIMITED VS. CIT (1998) (236 ITR 577) (CAL) FURTHER, THE ASSESSEE ALSO PLACED RELIANCE ON THE D ECISION OF THE ITAT, BANGALORE IN ASSESSEES CASE, WHEREIN THE APPELLANT S CLAIM FOR DEPRECIATION IN RESPECT OF INVESTMENTS CLASSIFIED U NDER PERMANENT CATEGORY (WHICH IS SIMILAR TO INVESTMENTS UNDER HE LD TO MATURITY CATEGORY) WAS ALLOWED FOR THE ASSESSMENT YEAR 1993-94 VIDE IT S ORDER DT.10.03.2005. THE ASSESSEE THUS PRAYED THAT THE CLAIM AMOUNTING T O RS.3,13,60,916/- TOWARDS AMORTISATION OF INVESTMENTS UNDER HELD TO MATURITY CATEGORY BE ALLOWED AS A DEDUCTION IN THE ASSESSMENT YEAR 2002- 2003. 9. HOWEVER, THE AO DISALLOWED THE ENTIRE SUM OF 3,1 3,60,916/- BY RELYING ON THE ORDER OF HIS PREDECESSOR FOR THE ASS ESSMENT YEAR 2001-2002. THE CIT(APPEALS) ALSO DID NOT AGREE WITH THE SUBMIS SIONS MADE AND HE FOLLOWED HIS OWN ORDER IN ASSESSEES OWN CASE FOR T HE A.Y. 2004-05, WHEREIN SIMILAR ISSUE WAS DECIDED AGAINST THE ASSES SEE. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE ASSESSEE HAS RAISED GROUND NO.2 BEFORE THE TRIBUNAL. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE ISSUE RAISED BY THE ASSESSEE IN GROUND NO.2 IS NO LONGER RES INTEGRA AND HAS BEEN DECIDED BY THIS TRIBUNAL IN THE CASE OF M/S. SIR M.VISWESWARAYA COOPERATIVE ITA NO.443/BANG/2012 PAGE 7 OF 22 BANK LTD. VS. JCIT ITA NO.1122/BANG/2010 FOR AY 07- 08 ORDER DATED 11.5.2012 . THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE TRIBUNAL: 03. LET US FIRST TAKE UP THE ISSUE RELATING TO AMO RTIZATION OF PREMIUM ON INVESTMENT IN GOVERNMENT SECURITIES. RE LEVANT GROUNDS READ AS UNDER : ' I) THE LEARNED COMMISSIONER (APPEALS) OUGHT TO H AVE APPRECIATED THAT THE APPELLANT HAS TO INVEST SURPLU S FUND IN GOVERNMENT SECURITIES AS PER RBI GUIDELINES AND THE PREMIUM PAID WHILE INVESTING IN GOVERNMENT SECURITI ES THAT ARE BOUGHT IN OPEN MARKET WOULD HAVE TO BE AMORTIZED TILL THE MATURITY DATE OF THE SECURITY AN D THUS THE PREMIUM WAS WRITTEN OFF WAS LIABLE TO BE ALLOWED AS DEPRECIATION OF VALUE OF SECURITIES ; II) THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE CLASSIFICATION OF SECURITIES F OR RBI PURPOSES WOULD NOT TAKE AWAY THE BENEFIT WHICH THE APPELLANT WAS ENTITLED TO AND HE OUGHT TO HAVE APPR ECIATED THAT THE CASE LAW REFERRED WERE DISTINGUISHABLE AND ACCORDINGLY HE OUGHT TO HAVE ALLOWED THE DEDUCTION AS CLAIMED IN FULL.' 04. THE BRIEF FACTS PERTAINING TO THIS ISSUE ARE TH AT WHILE FRAMING THE ASSESSMENT U/S.143(3) OF THE IT ACT, FO R THE ASSESSMENT YEAR 2007-08, THE ASSESSING OFFICER NOTI CED THAT THE ASSESSEE HAS CLAIMED A SUM OF RS.26,40,237/- UNDER AMORTIZATION OF PREMIUM ON INVESTMENTS AND THE ASSESSEE HAD NO E XPLANATION FOR THE CLAIM. HENCE, HE DISALLOWED THE SAME. WHI LE DISALLOWING THE SAME, THE ASSESSING OFFICER FOLLOWED THE DECISI ON OF THE MADRAS HIGH COURT IN THE CASE OF TN POWER FINANCE A ND INFRASTRUCTURE DEVELOPMENT CORPORATION LTD., V. JCI T (2006) 280 ITR 491. AGGRIEVED, THE ASSESSEE MOVED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. ITA NO.443/BANG/2012 PAGE 8 OF 22 05. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) AFTER CONSIDERING THE SUBMISSIONS MADE BEFORE HIM AND FOL LOWING THE DECISION OF THE MADRAS HIGH COURT CITED SUPRA, CAME TO THE CONCLUSION THAT THE HON'BLE MADRAS HIGH COURT HAS T HAT MERELY BECAUSE THE RBI HAD DIRECTED THE ASSESSEE TO PROVID E FOR NON- PERFORMING ASSETS, THAT DIRECTION CANNOT OVERRIDE T HE MANDATORY PROVISIONS OF THE INCOME-TAX ACT CONTAINED IN SECTI ON 36(1)(VIIA) WHICH STIPULATE FOR DEDUCTION NOT EXCEEDING 5 PER C ENT OF THE TOTAL INCOME ONLY IN RESPECT OF THE PROVISION FOR BAD AND DOUBTFUL DEBTS WHICH ARE PREDOMINANTLY REVENUE IN NATURE OR TRADE RELATED AND NOT FOR PROVISION FOR NON-PERFORMING ASSETS WHI CH ARE OF PREDOMINANTLY CAPITAL NATURE. THUS, HE WAS OF THE VIEW THAT THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION OF AMORTIZAT ION OF PREMIUM ON INVESTMENTS U/S.36(1)(VII). AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL BEFORE US WITH THIS ISSUE. 06. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAD FAILED TO SEE THE REASON THAT A ISSUE SIMILAR TO THAT OF THE PRESENT ONE HAD BEEN ALLOWED BY VARIOUS BENCHES OF THE HON'BLE TRIBUNALS , NAMELY : CATHOLIC SYRIAN BANK LTD., V. ACIT COCHIN (2010) 38 SOT 553 ; KHANAPUR COOP.BANK LTD., V. ITO IN ITA.141/PNJ/2011 (PANAJI); CORPORATION BANK V. ACIT, M'LORE IN ITA.112/BANG/20 08 (BANG) THE LEARNED COUNSEL ALSO PLACED RELIANCE ON BOARD'S INSTRUCTIONS NO.17 OF 2008(VII) AND PLEADED THAT THE CLAIM OF TH E ASSESSEE BE ALLOWED AS THE ASSESSEE HAD THE POWERS TO DEBIT IN ITS P&L ACCOUNT A SUM OF RS.29,02 LAKHS OF AMORTIZATION OF PREMIUM. 07. PER CONTRA, THE LEARNED DR WAS UNABLE TO CONTRO VERT TO THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE . 08. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE RELEVANT FACTS AND MATERIALS ON RECORD. WE HAVE ALSO CONSIDERED THE FINDINGS OF THE VARIOUS BENCHES OF T HE TRIBUNAL, AS UNDER : ITA NO.443/BANG/2012 PAGE 9 OF 22 (I) CATHOLIC SYRIAN BANK LTD V. ACIT (2010) 38 SO T 553 (COCH) : AN IDENTICAL ISSUE TO THAT OF THE SUBJECT MATTER UN DER CONSIDERATION HAD ARISEN BEFORE THE COCHIN BENCH. AFTER ANALYZIN G THE ISSUE IN DEPTH, THE BENCH HAS OBSERVED THAT WITH REGARD TO A MORTIZATION OF PREMIUM ON PURCHASE OF GOVERNMENT SECURITIES, IT WA S CLARIFIED THAT THIS WAS MADE AS PER THE PRUDENTIAL NORMS OF THE RB I. FOLLOWING THE TRIBUNAL DECISION IN THE ASSESSEE'S OWN CASE AND CO NSIDERING THAT THE ASSESSEE BANK IS FOLLOWING CONSISTENT AND REGUL AR METHOD OF ACCOUNTING SYSTEM, THERE IS NO JUSTIFICATION IN INT ERFERING WITH THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) O N THIS ISSUE OF AMORTIZATION OF PREMIUM ON GOVERNMENT SECURITIES. UNITED COMMERCIAL BANK V. CIT (1999) 156 CTR (SC) 380 ; ( 1999) 240 ITR 355 (SC) AND SOUTH INDIAN BANK LTD., (ITA NO.126/CO CH/2004, DATED.___ SEPT, 2005 FOLLOWED.' (II) THE KHANAPUR CO-OP BANK LTD V. ITO ITA NO.14 1/PNJ/2011, DATED.8.9.2011 : THE HON'BLE BENCH OF PANAJI TRIBUNAL HAD RECORDE D ITS FINDINGS THAT '6. LIKEWISE, THE PREMIUM AMORTIZED A T RS.1,78,098/- IS CLAIMED TO BE IN RESPECT OF SECURI TIES HELD UNDER THE CATEGORY 'HELD TO MATURITY'. THE ASSESSING OFF ICER HAS TAKEN THEM AS LONG TERM INVESTMENTS. IN OTHER WORDS, HE HAS ACCEPTED THE ASSESSEE'S CLAIM THAT THE SECURITIES ARE 'HELD TO MATURITY'. THAT BEING SO AND HAVING REGARD TO THE CBDT INSTRUCTION NO.17 OF 2008 DATED.26.11.2008 AS REPRODUCED HEREIN ABOVE, T HE PREMIUM PAID ON SUCH GOVERNMENT SECURITIES IS REQUIRED TO BE AMORTIZED OVER THE PERIOD REMAINING TO MATURITY .' (III) IN THE CASE OF CORPORATION BANK V. ACIT, M'LO RE IN ITA.112/BANG/2008 (BANG), FOR THE ASSESSMENT YEAR 2 004-05, THE EARLIER BENCH HAD ALSO HELD A SIMILAR VIEW. IN THE LIGHT OF THE ABOVE DISCUSSION AND THE CASE L AWS DISCUSSED SUPRA, TAKING INTO ACCOUNT THE TOTALITY OF THE FACT S AND MATERIALS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ENTITLED TO CLAIM THIS DEDUCTION AND HENCE WE ALLOW THE GROUNDS OF THE ASSESSEE RELATING TO THIS ISSUE. ITA NO.443/BANG/2012 PAGE 10 OF 22 11. WE ARE OF THE VIEW THAT IN THE LIGHT OF THE DEC ISION ON THE ISSUE CONSIDERED BY THE TRIBUNAL, THE CLAIM MADE BY THE A SSESSEE HAS TO BE ALLOWED. ACCORDINGLY, THE AO IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION. 12. GROUND NO.3 WAS NOT PRESSED AND THE SAME IS DIS MISSED AS NOT PRESSED. 13. GROUND NO.4 RAISED BY THE ASSESSEE READS AS FOL LOWS:- 4. GROUND 4 - DISALLOWANCE UNDER SECTION 43B AMOUNT ING TO RS 44,80,266. 4.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT W RITE BACK EXCESS PROVISION OF BONUS NEEDS TO BE ALLOWED AS A DEDUCTION FROM THE TAXABLE INCOME AS THE PROVISION WAS OFFERE D TO TAX IN EARLIER YEARS. 4.2 THE LEARNED CIT(A) ERRED IN LAW AND IN FACT IN CONFIRMING THE DISALLOWANCE MADE BY THE AO AND HOLDING THAT TH E CLAIM OF THE APPELLANT WAS AN EXCESS CLAIM OF DEDUCTION UNDE R SECTION 43B OF THE ACT. 14. DURING THE FINANCIAL YEAR 2001-02 RELEVANT TO A Y 02-03, THE ASSESSEE MADE A PROVISION FOR BONUS OF RS. 6,42,00, 000/- IN ITS BOOKS OF ACCOUNT. EARLIER IN THE FINANCIAL YEAR 2000-01 TH E ASSESSEE HAD MADE A PROVISION FOR BONUS OF RS.2,92,90,900/- AND CLAIMED AN AMOUNT OF RS.2,36,62,452/- ONLY ON THE BASIS OF AMOUNT PAID U PTO THE DATE OF FILING OF RETURN OF INCOME FOR FINANCIAL YEAR 2000-01 (ASSESS MENT YEAR 2001-02) AND ADDED BACK RS.56,28,448/- IN THE COMPUTATION. OUT OF THE ITA NO.443/BANG/2012 PAGE 11 OF 22 RS.56,28,448/-, AN AMOUNT OF RS.11,48,182/- HAS BEE N PAID AFTER FILING THE RETURN OF INCOME FOR ASSESSMENT YEAR 2001-02. THE R EMAINING AMOUNT OF RS.44,80,266/- WAS TRANSFERRED BACK TO PROFIT & LOS S - BONUS A/C AS THE SAME IS NO LONGER REQUIRED. THUS THE NET DEBIT FOR THE FINANCIAL YEAR 2001- 02 RELEVANT TO AY 02-03, AMOUNTED TO RS.5,97,19,734 1- (BEING RS.6,42,00,000/- MINUS RS.44,80,266/-). THE ASSESSE E CLAIMED DEDUCTION OF AN AMOUNT OF RS.6,31,91,125/- BEING BONUS ACTUAL LY PAID UPTO THE DATE OF FILING OF RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002-03. THE ASSESSEE WHILE COMPUTING INCOME FROM BUSINESS ADDED A SUM OF RS.44,80,266/- I.E. AMOUNT CREDITED BACK TO BONUS A/C AS MENTIONED EARL IER BECAUSE THE SAID AMOUNT WAS ALREADY OFFERED TO TAX IN THE ASSESSMEN T YEAR 2001-02. 15. HOWEVER, THE AO WHILE COMPUTING INCOME FROM BUS INESS ADDED A SUM OF RS.44,80,266/- AS EXCESS CLAIM MADE UNDER SECTION 43B OF THE ACT. 16. BEFORE CIT(A), THE ASSESSEE CONTENDED THAT THE SUM OF RS.44,80,266 ADDED AS EXCESS CLAIM MADE U/S.43B OF THE ACT NEEDS TO BE REDUCED FROM THE TAXABLE INCOME, SINCE THE SAME HAS BEEN OFFERED FOR TAX FOR THE FINANCIAL YEAR 2000-01 (A.Y. 2001-02). 17. THE CIT(APPEALS) DID NOT AGREE WITH THE SUBMISS IONS MADE BY THE ASSESSEE AND HE CONFIRMED THE ORDER OF THE AO O BSERVING AS FOLLOWS:- 10.4. I HAVE CONSIDERED THE ABOVE. THE CITED C ASE LAWS WERE PERUSED. THE GIST OF THE RATIO OF THESE CASE LAWS I S THAT WHEN THE ITA NO.443/BANG/2012 PAGE 12 OF 22 ASSESSEE FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING, T HE INCOME IS TO BE TAXED WHEN IT ACCRUES AND NOT AT THE TIME OF ITS RECEIPT. THUS, IT HAS BEEN PLEADED THAT THE RECEIPT OF RS.44 ,80,266/- HAD ALREADY BEEN TAXED IN A.Y.2001-02 AND THEREFORE, SH OULD NOT BE TAXED AGAIN IN THIS YEAR. I FIND GAPS IN THIS ARGUM ENT. WHAT IS BEING BROUGHT TO TAX HERE IS EXCESS CLAIM OF DEDUCT ION U/S.43B OF I.T. ACT. NO DEFECT HAS BEEN FOUND OUT BY THE A.R. IN THIS CALCULATION. ONLY THE DEDUCTION RELATING TO THIS A. Y. HAS BEEN CONSIDERED TO COMPUTE THE EXCESS AMOUNT OF DEDUCTIO N. HENCE, I SEE NO REASON TO INTERFERE. GROUNDS OF APPEAL IS DI SMISSED. 18. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE DRE W OUR ATTENTION TO PAGE 12 OF THE PAPERBOOK, WHICH CONTAINS THE STATEM ENT SHOWING THE DETAILS OF SUMS WHICH FALL FOR CONSIDERATION U/S. 4 3B OF THE ACT. THE SAME IS ANNEXED AS ANNEXURE-I TO THIS ORDER. HE ALSO DREW OUR ATTENTION TO PAGE 9 & 10 OF THE PAPERBOOK WHICH IS THE COMPUTATI ON OF INCOME FROM BUSINESS. THE SAME IS ANNEXED AS ANNEXURE-II . ATTENTION WAS ALSO DRAWN TO THE FACT THAT ONE OF THE ITEMS ADDED TO TH E PROFIT & LOSS ACCOUNT WAS SCHEDULE-C OF THE COMPUTATION OF INCOME FROM BU SINESS AND THAT IN SCHEDULE-C THE EXCESS PROVISION OF BONUS OF RS.44,8 0,266 HAD BEEN DULY CONSIDERED WHILE ARRIVING AT THE SUM OF RS.6,31,91, 125 WHICH WAS THE AMOUNT DEBITED TO THE PROFIT AND LOSS ACCOUNT. IT WAS SUBMITTED THAT THERE WAS NO CLAIM MADE FOR DEDUCTION AS ASSUMED BY THE R EVENUE AUTHORITIES. 19. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEAR NED COUNSEL FOR THE ASSESSEE AND ARE OF THE VIEW THAT THE ASPECTS P OINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE DESERVES EXAMINATION BY TH E AO. ACCORDINGLY, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE MATTER IS REMANDED TO THE ITA NO.443/BANG/2012 PAGE 13 OF 22 ASSESSING OFFICER FOR FRESH CONSIDERATION IN THE LI GHT OF THE ANNEXURES TO THIS ORDER AND THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE US. 20. GROUND NO.5 RAISED BY THE ASSESSEE READS AS FOL LOWS:- 5. GROUND 5 - SECTION 115JB NOT APPLICABLE 5.1 THE ADJUSTMENT ON ACCOUNT OF MINIMUM ALTERNATI VE TAX PROVISIONS UNDER SECTION 115JB IS BAD IN LAW IN AS MUCH AS THE PROVISIONS OF MAT WERE NEVER APPLICABLE TO THE APPE LLANT COMPANY. 21. THE ISSUE RAISED IN THE AFORESAID GROUND IS TH E QUESTION AS TO WHETHER THE PROVISIONS OF SECTION 115JB ARE APPLICA BLE TO A BANKING COMPANY. THIS ISSUE IS NO LONGER RES INTEGRA AND HAS BEEN DECIDED BY THE ITAT BANGALORE BENCH IN THE CASE OF SYNDICATE BANK V. DCIT IN ITA NO.668 & 669/BANG/2010 VIDE ORDER DATED 19.06.2013 FOR THE A.YS. 2006-07 & 2007-08 . THE RELEVANT PORTIONS OF THE DECISION READS AS FOLLOWS:- 88. GROUND NO.3 RAISED BY THE ASSESSEE READS AS FOL LOWS:- 3. THAT THE LEARNED CIT-A OUGHT TO HAVE ACCEPTED T HE APPELLANTS CONTENTION THAT NOT BEING A COMPANY UNDER THE COMPA NIES ACT, 1956 BUT BEING A BANK GOVERNED BY THE PROVISIONS OF THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS ) ACT, 1970 AND DEEMED AS A COMPANY UNDER THE LATTER ACT COULD NOT BE CONSTRUED AS A COMPANY FOR THE PURPOSES OF CHARGING MAT IN THE LIGHT OF A DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MAHARASHTRA STATE ELECTRICITY BOARD VS. JCIT REPORT ED IN 82 LTD 422 AND THEREFORE SHOULD NOT HAVE TO BE SUBJECTED TO TH E MAT. 89. THE ASSESSING OFFICER REJECTED THE COMPUTATION OF BOOK PROFITS MADE BY THE APPELLANT ON THE GROUND THAT IT WAS DONE AS ITA NO.443/BANG/2012 PAGE 14 OF 22 PER SCHEDULE-VI OF THE COMPANIES ACT, BUT HAD NOT A DOPTED THE PROFIT ARRIVED AT IN THE PROFIT AND LOSS ACCOUNT AP PROVED BY SHAREHOLDERS IN THE ANNUAL GENERAL MEETING, CERTIFI ED BY THE AUDITORS, AND FILED BEFORE RBI. HE REJECTED THE ASS ESSEES CONTENTION THAT THE BANK WAS NOT A COMPANY AS PER C OMPANIES ACT, 1956, BUT A STATUTORY CORPORATION GOVERNED BY THE PROVISIONS OF BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKING) ACT, 1970. IT HAD PREPARED THE PROFIT AND LOSS ACCOUNT AS PER THE LATTER ACT, AND NOT IN ACCORDANC E WITH THE PROVISIONS OF THE COMPANIES ACT. HOWEVER, IN VIEW O F THE REQUIREMENTS OF SECTION 115JB(2), IT HAD REDRAWN TH E PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF P ARTS II AND ILL OF SCHEDULE VI TO THE COMPANIES ACT. THEREFORE, THE MAT COMPUTED IN ACCORDANCE WITH THE REDRAWN PROFIT AND LOSS ACCOUNT WAS IN ORDER. 90. BEFORE THE CIT(APPEALS), THE ASSESSEE STATED T HAT THE ASSESSING OFFICER HAD ERRED IN ADOPTING THE NET PRO FIT AS PER THE PROFIT AND LOSS ACCOUNT PREPARED ON THE BASIS OF TH E BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS ) ACT, 1970, FOR COMPUTING THE BOOK PROFIT UNDER SECTION 1 15JB. HE OUGHT TO HAVE CALLED FOR AND ADOPTED THE PROFIT AND LOSS ACCOUNT AS REQUIRED UNDER SECTION 115JB(2) AND PREPARED AS PER SCHEDULE- VL OF THE COMPANIES ACT. THE ASSESSEE ALSO QUESTION ED THE VARIOUS OTHER ADJUSTMENTS MADE BY THE ASSESSING OFF ICER IN COMPUTING THE BOOK PROFIT. ON 16.02.2010, THE ASSES SEE FILED AN ADDITIONAL GROUND OF APPEAL, QUESTIONING THE APPLIC ABILITY OF SECTION 115JB, WHILE THE OTHER ADJUSTMENTS MADE BY THE ASSESSING OFFICER IN COMPUTING THE BOOK PROFIT UNDER THAT SEC TION WERE CHALLENGED IN THE ORIGINAL GROUNDS. 91. ON THE APPLICABILITY OF SECTION 115JB, THE AS SESSEE PLACED RELIANCE ON THE DECISION OF THE MUMBAI BENCH OF THE HONBLE ITAT IN THE CASE OF MAHARASHTRA STATE ELECTRICITY BOARD VS. JCIT [20021 82 LTD 422 , WHERE IT WAS HELD THAT A COMPANY WHICH WAS NOT CONSTITUTED AS A COMPANY WITHIN THE M EANING OF SECTION 3 OF THE COMPANIES ACT, 1956, COULD NOT BE DEEMED AS A COMPANY WITHIN THE MEANING OF SECTION 616(C) OF THE COMPANIES ACT AND SINCE SUCH COMPANY WAS NOT REQUIRED TO DIST RIBUTE ANY DIVIDEND , IT WOULD NOT COME UNDER THE MISCHIEF OF SECTION 115JA. ITA NO.443/BANG/2012 PAGE 15 OF 22 92. THE CIT(APPEALS) WAS OF THE VIEW THAT THIS DEC ISION IS NOT APPLICABLE TO THE ASSESSEES CASE BECAUSE THE DECIS ION WAS RENDERED IN THE CONTEXT THAT THE CONCEPT OF AN ANNU AL GENERAL MEETING WAS ALIEN TO THE ELECTRICITY BOARD AND THE REFERENCE TO SECTION 616(C), WHICH WAS RELEVANT TO A COMPANY ENG AGED IN THE GENERATION OR DISTRIBUTION OF ELECTRICITY. 93. THE ASSESSEE BANK DOES CONDUCT ANNUAL GENERAL MEETINGS, DECLARES DIVIDENDS, AND IS NOT ENGAGED IN GENERATIO N OR DISTRIBUTION OF ELECTRICITY. THE MUMBAI BENCH OF TH E HONBLE ITAT HAS, IN THE CASE OF UNION BANK OF INDIA VS. JCIT IN THEIR ORDER DATED 25.07.2006 IN ITA NOS. 5493-5495/MUM/20 00 FOR ASSESSMENT YEARS 1988-89 AND 1990-91 , HELD THAT, EVEN THOUGH THE ASSESSEE WAS FUNCTIONALLY REGULATED BY BANKING REGULATIONS ACT, IT WAS EQUALLY GOVERNED BY THE PROVISIONS OF T HE COMPANIES ACT AS IT WAS BASICALLY A CORPORATE ENTITY. THEREFO RE, THE ASSESSEE COMPANY WAS BOUND BY THE PROVISIONS OF LAW CONTAINE D IN SECTION 115J. IN THESE CIRCUMSTANCES, THE CIT(A) HELD THAT THERE IS NOTHING IN THE PROVISIONS OF SECTION 115JB TO EXCLU DE ITS APPLICABILITY TO BANKING COMPANIES. AS REGARDS THE ADOPTION OF PROFIT DECLARED IN THE PROFIT AND LOSS ACCOUNT PREP ARED UNDER THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDE RTAKINGS) ACT, HE RELIED ON THE DECISION OF THE HONBLE SUPRE ME COURT HAS, IN CASE OF APOLLO TYRES LTD. VS. CIT [2002] 255 ITR 273 , WHEREIN IT WAS HELD THAT THE ASSESSING OFFICER HAD NO POWER TO REWORK THE BOOK PROFIT IF THE PROFITS WERE COMPUTED IN ACCORDANCE WITH PARTS II AND II OF SCHEDULE VI TO COMPANIES AC T. ACCORDINGLY, HE REFERRED TO HIS OWN ORDER DATED 15. 01.2010 IN ITA NO. RB-LIL/UDP/CIT(A)MNG/2008-09 IN THE ASSESSE ES OWN CASE FOR ASSESSMENT YEAR 1990-91 HOLDING THAT I F THE ADJUSTMENTS CARRIED OUT IN PREPARING THE REVISED PR OFIT AND LOSS ACCOUNT WERE IN ACCORDANCE WITH THE PROVISIONS OF P ARTS II AND ILL OF SCHEDULE V TO THE COMPANIES ACT, THE ASSESSING O FFICER OUGHT TO CONSIDER ONLY THE REVISED PROFIT AND LOSS ACCOUN T FOR PURPOSES OF COMPUTATION OF BOOK PROFIT UNDER SECTION 115J, A ND NOT THE PROFIT AS PER THE PROFIT AND LOSS ACCOUNT PREPARED IN ACCORDANCE WITH THE BANKING REGULATION ACT. FOLLOWING THE SAME REASONING, THE CIT(A) DIRECTED THAT COMPUTATION OF MAT MAY BE DONE ON THE BASIS OF THE PROFIT AND LOSS ACCOUNT REDRAWN BY THE ASSESSEE IN ACCORDANCE WITH THE COMPANIES ACT. THE ASSESSEE WAS DIRECTED TO FURNISH THE PROFIT AND LOSS ACCOUNT REDRAWN IN ACCO RDANCE WITH SCHEDULE VI OF COMPANIES ACT. ITA NO.443/BANG/2012 PAGE 16 OF 22 94. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASS ESSEE HAS RAISED GROUND NO.3 BEFORE THE TRIBUNAL. 95. AT THE TIME OF HEARING, IT WAS SUBMITTED BY T HE LD. DR THAT THE ISSUE CAN BE REMANDED FOR FRESH CONSIDERATION A S WAS DONE BY THE TRIBUNAL IN A.Y. 2005-06 IN ITA NO.504/BANG/200 9, ORDER DATED 13.01.2012. THE LD. COUNSEL FOR THE ASSESSEE , HOWEVER, SUBMITTED THAT THE TRIBUNAL IN ITS EARLIER ORDER TH OUGH NOTED DIRECT JUDGMENTS ON THE POINT VIZ., (1) ORDER DATED 30.09.2010 IN ITA NO.3390/2009 PASSED BY ITAT G BENCH, MUMBAI IN THE CASE OF KRUNG THAI BANK; (2) ORDER DATED 30.06.2011 IN ITA NOS.4702 TO 4706/2010 PASSED BY THE ITAT, MUMBAI F BENCH IN THE CASE OF UNION BANK OF INDIA; AND (3) ORDER DATED 03.08.2011 IN ITA NO.469/2010 PASS ED BY THE ITAT C BENCH, CHENNAI IN THE CASE OF INDIAN BANK, DID NOT ADJUDICATE ON THE APPLICABILITY OF SECTION 115JB, BUT FOLLOWING AN EARLIER ORDER IN THE ASSESSEES OWN CA SE FOR EARLIER YEARS (AT WHICH POINT OF TIME THE ABOVE TRIBUNALS DECISIONS WERE NOT AVAILABLE), RESTORED THE MATTER TO THE ASSESSIN G OFFICER TO COMPUTE BOOK PROFITS BASED ON RECAST P & L ACCOUNT PREPARED IN ACCORDANCE WITH THE SCHEDULE-VI OF THE COMPANIES AC T. 96. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUB MITTED THAT THE PROVISIONS OF SEC.115JB OF THE ACT WERE AMENDED WITH EFFECT FROM 01.04.2013 MAKING IT OBLIGATORY, INTER ALIA , FOR BANKS TO PREPARE P & L ACCOUNT IN ACCORDANCE WITH THE BANKIN G REGULATION ACT IS CLEARLY INDICATIVE OF LEGISLATIVE UNDERSTANDING THAT UPTO AND INCLUDING A.Y. 2012-13, SECTION 115JB HAD NO APPLICATION TO BANKS AND INSURANCE COMPANIES. IT W AS SO HELD BY ITAT, HYDERABAD IN THE CASE OF STATE BANK OF HYDERABAD DATED 07.09.2013 IN ITA NO. 578/HYD/2010 AND ITAT MUMBAI IN THE CASE OF ICICI LOMBARD GENERAL INSURANCE CO. LTD. DATED 10.10.2012 IN ITA NO.2398/MUM/2009 . 97. THE LEARNED DR RELIED ON THE ORDER OF THE CIT(A). 98. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE L D. COUNSEL FOR THE ASSESSEE. WE FIND THAT THIS ISSUE WAS CONSIDERED ITA NO.443/BANG/2012 PAGE 17 OF 22 BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF KRUNG THAI BANK (SUPRA) AND ON THE ABOVE ISSUE HELD AS FOLLOWS:- 5. LEARNED COUNSEL FOR THE ASSESSEE, HOWEVER, CONTENDS THAT THE PROVISIONS OF MAT DO NOT APPLY TO THE ASSESSEE, AND , FOR THIS REASON, VERY FOUNDATIO N OF IMPUGNED REASSESSMENT PROCEEDINGS IS DEVOID OF LEGALLY SUSTAINABLE MERITS. HIS LINE OF REASONING I S THIS. THE PROVISIONS OF MAT CAN COME INTO PLAY ONLY WHEN THE ASSESSEE PREPARES ITS PROFIT AND LOSS ACCOUNT I N ACCORDANCE WITH SCHEDULE VI TO THE COMPANIES ACT. I T IS POINTED OUT THAT, IN TERMS OF THE PROVISIONS OF SECTION 115JB(2),EVERY ASSESSEE IS REQUIRED TO PREPARE ITS PROFIT AND LOSS ACCOUNT IN TERMS OF THE PROVISIONS OF PART II AND II I OF SCHEDULE VI TO TH E COMPANIES ACT . UNLESS THE PROFIT AND LOSS IS SO PREPARED, THE PROVISIONS OF SECTION 115 JB CANNOT COME INTO PLAY AT AL L. HOWEVER, THE ASSESSEE IS A BANKING COMPANY AND UNDER PROVISO TO SECTION 211 (2) OF THE ACT , THE ASSESSEE IS EXEMPTED FROM PREPARING ITS BOOKS OF ACCOUNTS IN TERMS OF REQUIREMENTS OF SCHEDULE VI TO THE COMPANIES ACT , AND THE ASSESSEE IS TO PREPARE ITS BOOKS OF ACCOUNT S IN TERMS OF THE PROVISIONS OF BANKING REGULATION AC T . IT IS THUS CONTENDED THAT THE PROVISIONS OF SECTION 115 JB DO NOT APPLY IN THE CASE OF BANKING COMPANIES WHICH ARE NOT REQUIRED TO PREPARE THE PROFIT AND LO SS ACCOUNT AS PER THE REQUIREMENTS OF PART II AND III OF SCHEDULE VI TO THE COMPANIES ACT . SINCE THE PROVISIONS OF SECTION 115 JB DO NOT APPLY TO THE ASSESSEE COMPANY, THE REASONS RECORDED FOR REOPENING THE ASSESSMENT ARE CLEARLY WRONG AND INSUFFICIENT . WE ARE URGED TO QUASH THE REASSESSME NT PROCEEDINGS ON THIS SHORT GROUND. 6. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, VEHEMENTLY RELIES UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITS THAT THERE IS NO SPEC IFIC EXCLUSION CLAUSE FOR THE BANKING COMPANIES, AND IN THE ABSENCE OF SUCH A CLAUSE, IT IS NOT OPEN TO US TO INFER THE SAME. THE SUBMISSIONS OF THE LEARNED COUNSEL, ACCORDING TO THE DEPARTMENTAL REPRESENTATIVE, ARE CLEARLY CONTRARY TO THE LEGISLA TIVE INTENT AND PLAIN WORDINGS OF THE STATUTE. ITA NO.443/BANG/2012 PAGE 18 OF 22 7. THE PLEA OF THE ASSESSEE IS INDEED WELL TAKEN, AND IT MEETS OUR APPROVAL. THE PROVISIONS OF SECTION 11 5 JB CAN ONLY COME INTO PLAY WHEN THE ASSESSEE IS REQUIRED TO PREPARE ITS PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF PART II AND I II OF SCHEDULE VI TO THE COMPANIES ACT . THE STARTING POI NT OF COMPUTATION OF MINIMUM ALTERNATE TAX UNDER SECTION 115 JB IS THE RESULT SHOWN BY SUCH A PROFIT AND LOSS ACCOUNT. IN THE CASE OF BANKING COMPANIES, HOWEVER, THE PROVISIONS OF SCHEDULE VI ARE NOT APPLICABLE IN VIEW OF EXEMPTION SET OUT UNDER PROVI SO TO SECTION 211 (2) OF THE COMPANIES ACT . THE FINAL ACCOUNTS OF THE BANKING COMPANIES ARE REQUIRED TO B E PREPARED IN ACCORDANCE WITH THE PROVISIONS OF THE BANKING REGULATION ACT . THE PROVISIONS OF SECTION 115 JB CANNOT THUS BE APPLIED TO THE CASE OF A BANKING COMPANY. 99. WE ARE OF THE VIEW THAT IN THE LIGHT OF THE DE CISION OF THE MUMBAI BENCH OF THE TRIBUNAL, WE HAVE TO NECESSARIL Y HOLD THAT PROVISIONS OF SECTION 115JB OF THE ACT ARE NOT APPL ICABLE TO THE ASSESSEE WHICH IS A BANKING COMPANY. THE DECISIONS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE, CLEARLY SUPPOR T THE PLEA OF THE ASSESSEE IN THIS REGARD. CONSEQUENTLY, GROUND NO.3 RAISED BY THE ASSESSEE IS ALSO ALLOWED. 22. FOLLOWING THE DECISION REFERRED TO ABOVE, WE HO LD THE PROVISIONS OF SECTION 115JB OF THE ACT ARE NOT APPLICABLE TO T HE ASSESSEE AND ALLOW GROUND NO.5 RAISED BY THE ASSESSEE. 23. GROUNDS 6 & 7 RAISED BY THE ASSESSEE ARE WITH R EGARD TO THE MANNER OF COMPUTATION OF BOOK PROFITS U/S. 115JB OF THE ACT. SINCE WE HAVE HELD WHILE DECIDING GROUND NO.5 THAT PROVISION S OF SECTION 115JB ARE NOT APPLICABLE TO A BANKING COMPANY, GROUNDS NO. 6 & 7 DO NOT REQUIRE ANY ADJUDICATION. ITA NO.443/BANG/2012 PAGE 19 OF 22 24. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS PA RTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF AUGUST, 2013. SD/- SD/- ( N. BARATHVAJA SANKAR ) ( N.V. VASU DEVAN ) VICE PRESIDENT JUDIC IAL MEMBER BANGALORE, DATED, THE 14 TH AUGUST, 2013. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR/ SENIOR PRIVATE SECRETARY ITAT, BANGALORE. ITA NO.443/BANG/2012 PAGE 20 OF 22 ANNEXURE I TO THE ORDER ITA NO.443/BANG/2012 PAGE 21 OF 22 ANNEXURE-II TO THE ORDER ITA NO.443/BANG/2012 PAGE 22 OF 22 ANNEXURE-II TO THE ORDER