Bhagini Nivedita Sahakari Bank Ltd., Pune V. Deputy Commissioner of Income-tax, Pune

ITA 465/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1155 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-09-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 18-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHABANA PARVEEN
• Keywords: Reopening of assessment; Bad and doubtful debts
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 167 /P U N/20 1 5 / ASSESSMENT YEAR : 20 11 - 12 BHAGINI NIVEDITA SAHAKARI BANK LTD., 387/388, NARAYAN PETH, RASHTRABHASHA BHAVAN, PUNE 30 . / APPELLANT PAN: A A AAB0289K VS. THE DY . COMMISSIONER OF INCOME TAX, CIRCLE 1(1) , PUNE . / RESPONDENT . / ITA NO S . 465 TO 467 /P U N/20 1 6 / ASSESSMENT YEAR S : 2007 - 08, 2009 - 10 & 2012 - 13 BHAGINI NIVEDITA SAHAKARI BANK LTD., 387/388, NARAYAN PETH, RASHTRABHASHA BHAVAN, PUNE 30 . / APPELLANT PAN: AAAAB0289K VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), PUNE . / RESPONDENT . / ITA NO. 1618 /P U N/20 16 / ASSESSMENT YEAR : 2012 - 13 LOKMANGAL CO - OPERATIVE BANK LTD., 193, GOLD FENCH PETH, RUKMINI COMPLEX, SAVAKAR MAIDAN, SOLAPUR 413007 . / APPELLANT PAN: AAAA L0119J VS. THE ASST . COMMISSIONER OF INCOME TAX, CIRCLE 2 , SOLAPUR . / RESPONDENT 2 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS . / ITA NO. 762 /P U N/20 16 / ASSESSMENT YEAR : 201 1 - 1 2 THE KARAD JANATA SAHAKARI BANK LTD., S.NO.100/101, SHIVAJINAGAR, NEAR S.T. STAND, KARAD, DIST. SATARA . / APPELLANT PAN: A BSPG7006P VS. THE INCOME TAX OFFICER , WARD - 1, SATARA . / RESPONDENT ASSESSEE BY : S MT. DEEPA KHARE, SHRI PRAMOD SHINGTE AND SHRI KISHORE PHADKE REVENUE BY : SHRI RAJEEV KUMAR, CIT AND MS. SHABANA PARVEEN / DATE OF HEARING : 12 . 0 9 .201 8 / DATE OF PRONOUNCEMENT: 3 0 . 11 .201 8 / ORDER PER SUSHMA CHOWLA, JM: THIS BUNCH OF APPEALS FILED BY DIFFERENT ASSESSEE ARE AGAINST RESPECTIVE ORDER S OF CIT (A) , RELATING TO DIFFERENT ASSESSMENT YEAR S 2007 - 08, 2009 - 10, 2011 - 12, 2012 - 13 AGAINST RESPECTIVE ORDERS PASSED UNDER SECTION 143(3) / 147 R.W.S. 143(3) OF INCOME TAX ACT 1961 (IN SHORT THE ACT). 2 . THIS BUNCH OF APPEAL OF BHAGINI NIVEDITA SAHAKARI BANK LTD. RELATING TO ASSESSMENT YEARS 2007 - 08, 2009 - 10, 2011 - 12 & 2012 - 13 ALONG WITH APPEAL IN THE CASE OF LOKMANGAL CO - OPERATIVE BANK LTD. RELATING TO ASSESSMENT YEAR 2012 - 13 AND IN THE CASE OF THE KARAD JANATA SAHAKARI BANK LTD. RELATING TO 3 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS ASSESSMENT YEAR 2011 - 12 WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, THE PARTIES ARGUED THE ISSUE RAISED IN ITA NO.167/PUN/2015, RELATING TO ASSESSMENT YEAR 2011 - 12 IN THE CASE OF BHAGINI NIVEDITA SAHAKARI BANK LTD. AS THE LEAD CASE SINCE FOR THE FIRST TIME, THE ADDITION WAS MADE IN THE SAID CASE. HENCE, REFERENCE IS BEING MADE TO THE FACTS AND ISSUES IN THE SAID APPEAL. 3. THE FIRST ISSUE RAISED BY AS SESSEE IN ITA NO. 1 67 /PUN/201 5 , RELATING TO ASSESSMENT YEAR 20 11 - 12 VIDE GROUND OF APPEAL NO.1 READS AS UNDER : - 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.95,66,809/ - TOWARDS DISALLOWANCE OF DEDUCTION U/S 36(VIIA). 4. THE FIRST ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST ADDITION OF 95,66,801/ - BY DISALLOWING DEDUCTION CLAIMED UNDER SECTION 36(1)(VIIA) OF THE ACT. IN ALL THE APPEALS, OTHER ISSUES HAVE ALSO BEEN RAISED, WHICH WE SHALL ADJUDICATE AFTER ADJUDICATING THE PRIMARY ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS CO - OPERATIVE SOCIETY WHICH WAS REGISTERED UNDER THE MAHARASHTRA CO - OPERATIVE SOCIETIES ACT. THE ASSESSEE WAS ENGAGED IN T HE BUSINESS OF BANKING AND WAS ACCEPTING DEPOSITS FROM DEPOSITORS ON INTEREST AND WAS LENDING LOANS ON INTEREST. THE ASSESSEE HAD NO RURAL BRANCHES THOUGH IT HAD SEVERAL BRANCHES IN PUNE. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD FURNISHED RETUR N OF INCOME DECLARING TOTAL INCOME OF 11,62,05,250/ - WHICH WAS LATER REVISED TO 11,72,40,650/ - . THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY. ON VERIFICATION OF BOOKS OF ACCOUNT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U NDER 4 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS SECTION 36(1)(VIIA) OF THE ACT AT 95,66,809/ - . THE ASSESSING OFFICER NOTED THAT THE ASSESSEE WAS NOT HAVING ANY RURAL ADVANCES AND HENCE, WAS NOT ELIGIBLE TO CLAIM THE AFORESAID DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT. IN THIS REGARD, RELIA NCE WAS PLACED ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF CATHOLIC SYRIAN BANK LTD. VS. CIT (CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.1143 OF 2011). THE ASSESSEE WAS THUS, SHOW CAUSED AS TO WHY DEDUCTION CLAIMED SHOULD NOT BE D ISALLOWED. IN RESPONSE THERETO, THE ASSESSEE EXPLAINED THAT IT HAD CLAIMED THE DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT WHICH WAS 7.5% OF THE TOTAL INCOME. HE FURTHER POINTED OUT THAT PROVISO TO SECTION 36(1)(VII) OF THE ACT LAYS DOWN THAT WHERE DE DUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT FOR PROVISION FOR BAD AND DOUBTFUL DEBTS HAS BEEN CLAIMED, THE ACTUAL WRITE OFF OF BAD DEBTS WOULD BE ALLOWABLE UNDER SECTION 36(1)(VII) OF THE ACT ONLY TO THE EXTENT OF AMOUNT OF ACTUAL WRITE OFF OVER AND ABOVE THE AMOUNT OF PROVISION MADE, WHICH HAS ALREADY BEEN ALLOWED UNDER SECTION 36(1)(VIIA) OF THE ACT. SECTION THUS, ENSURED THAT DOUBLE DEDUCTION WAS NOT CLAIMED ONCE FOR THE PROVISION FOR BAD AND DOUBTFUL DEBTS AND SECONDLY ON ACTUAL WRITE OFF OF BAD DEBTS . IT WAS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT SECTION 36(1)(VIIA) OF THE ACT HAD TWO DISTINCT AND TOTALLY INDEPENDENT LIMBS. THE FIRST LIMB PROVIDED FOR DEDUCTION @ 7.5% OF TOTAL INCOME AND SECOND LIMB PROVIDED FOR DEDUCTION @ 10% OF AGGREGATE AVERAGE ADVANCES MADE BY RURAL BRANCHES OF THE BANK COMPUTED IN THE PRESCRIBED MANNER. IT WAS STRESSED THAT TWO LIMBS OPERATED TOTALLY ON DIFFERENT FOOTING AND THE MANNER OF DEDUCTION ALLOWA BLE WAS ALSO TOTALLY DIFFERENT. THE FIRST LIMB RELATED TO 7.5% OF TOTAL INCOME OF BANK, WHICH INCLUDED INCOME FROM RURAL AS WELL AS NON - RURAL ADVANCES AND IN CASE THE INTENTION OF LAW WAS TO MAKE IT APPLICABLE ONLY TO RURAL ADVANCES, DEDUCTION OF 7.5% OF TOTAL INCOME WOULD BE 5 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS IRRELEVANT. THE SECOND LIMB RELATED TO RURAL BRANCHES AND DEDUCTION WAS SEPARATELY ALLOWABLE IN PRESCRIBED MANNER. THEN, REFERENCE WAS MADE TO RECENT AMENDMENT BY FINANCE BILL NO.13 TO SECTION 36(1)(VII) OF THE ACT, WHEREIN EXPLANAT ION 2 HAS BEEN INSERTED. IT WAS STRESSED THAT AMENDMENT CLEARLY STATED THAT PROVISION FOR BAD AND DOUBTFUL DEBTS ACCOUNT WOULD BE TREATED AS SINGLE ACCOUNT RELATING TO ALL TYPES OF ADVANCES I.E. RURAL AND OTHERWISE. THUS, IT COULD BE SAID THAT THE DEDUCT ION WAS ALLOWABLE IN CASE OF PROVISION MADE FOR NON - RURAL ADVANCES ALSO. THE ASSESSING OFFICER REJECTED THE PLEA OF ASSESSEE ON ACCOUNT OF FOLLOWING POINTS: - 4.2 THE SUBMISSION MADE BY THE ASSESSEE DULY CONSIDERED AND FOUND UNACCEPTABLE AS DISCUSSED UNDE R: - I . THE HONBLE SUPREME COURT IN THE CASE OF CATHOLIC SYRIAN BANK LTD. VS. CIT HAS OVERRULED THE DECISION OF KERALA HIGH COURT FULL BENCH IN THE CASE OF CIT VS. SOUTH INDIAN BANK 233 CTR 214 (KER) (FB) AND CATEGORICALLY HELD THAT THE PROVISIONS OF SECTIONS 36(1)(VII) AND 36(1)(VIIA) OF THE ACT ARE DISTINCT AND INDEPENDENT ITEMS OF DEDUCTION AND OPERATE IN THEIR RESPECTIVE FIELDS. II . FURTHER THE COURT HAS HELD THAT IN CASE OF RURAL ADVANCES WHICH ARE COVERED BY CLAUSE (VIIA), THERE WOULD BE NO SUCH DOUBLE DEDUCTION. THE PROVISO, IN ITS TERMS, LIMITS ITS APPLICATION TO THE CASE OF A BANK TO WHICH CLAUSE (VIIA) APPLIES. INDISPUTABLY, CLAUSE (VIIA)(A) APPLIES ONLY TO RURAL ADVANCES. III . THE HON'BLE SUPREME COURT HAS ALREADY CONSID ERED THE ARGUMENT PUT FORWARD BY THE ASSESSEE IN ITS SUBMISSION THAT THERE ARE TWO PART OF SECTION 36(1)(VIIA) AND ONLY LATER PART OF THIS SECTION APPLY TO RURAL ADVANCE AND FIRST APPLY TO ALL BANKS. CONSIDERING THE PROVISIONS OF THE ACT, NOTIFICATIONS AN D CIRCULARS ISSUED BY THE BOARD, ALL LEGAL ASPECTS AND DIFFERENTIAL VIEW EXPRESSED BY THE DIFFERENT HIGH COURTS THE HON'BLE SUPREME COURT HAS HELD THAT CLAUSE (VIIA)(A) APPLIES ONLY TO RURAL ADVANCES. IV . THE COURT HAS HELD THAT CLEAR LEGISLATIVE INTENT OF SE CTION 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 DOUBTFUL 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 TO ENCOURAGE RURAL ADVANCES AND THE MAKING OF PROVISIONS FOR BAD DEBTS IN RELATION TO SUCH RURAL BRANCHES HENCE THE SECTION 36(1)(VIIA) WAS ENACTED. V . FURTHER THE COURT DISCUSSED THAT AS FAR AS FOREIGN BANKS ARE CONCERNED, UNDER SECTION 36(1)(VIIA)(B) AND AS FAR AS PUBLIC FINANCIAL INSTITUTIONS OR STATE FINANCIAL CORPORATIONS OR STATE INDUSTRIAL INVESTMENT CORPORATIONS ARE CONCERNED, UNDER SECTION 36(1)(VIIA)(C), THEY DO NOT HAVE RURAL 6 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS BRANCHES. THUS, IT CAN SAFELY BE INFERRED TH AT THE PROVISO IS SELF - INDICATIVE THAT ITS APPLICATION IS TO BAD DEBTS ARISING OUT OF RURAL ADVANCES. VI . THE HONBLE CHIEF JUSTICE MR. S.H. KAPADIA, CJI HAS PASSED CONCURRING ORDER AND HAS HELD THAT IN CASE OF RURAL ADVANCES WHICH ARE COVERED BY THE PROVISIO NS OF CLAUSE (VIIA), THERE WOULD BE NO SUCH DOUBLE DEDUCTION. THE PROVISO LIMITS ITS APPLICATION TO THE CASE OF A BANK TO WHICH CLAUSE (VIIA) APPLIES. CLAUSE (VIIA) APPLIES ONLY TO RURAL ADVANCES. THIS HAS BEEN EXPLAINED BY THE CIRCULARS ISSUED BY CBDT. 6. APPLYING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT, THE ASSESSING OFFICER HELD THAT DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT WAS AVAILABLE IN RESPECT OF RURAL ADVANCES AND SINCE THE BANK WAS NOT HAVING ANY RURAL ADVANCES , WAS NOT ELIGIBLE FOR DEDUCTION UNDER SAID SECTION. HENCE, DEDUCTION CLAIMED UNDER SECTION 36(1)(VIIA) OF THE ACT AT 95,66809/ - WAS DISALLOWED. 7. BEFORE THE CIT(A), THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REITERATED ITS SUBMISSIONS MADE BEFORE THE ASSES SING OFFICER AND POINTED OUT THAT THE SCOPE OF SECTION 36(1)(VIIA) OF THE ACT WAS ALTOGETHER DIFFERENT WHEN COMPARED TO THE PROVISIONS OF SECTION 36(1)(VII) AND IT HAD TWO DISTINCT AND TOTALLY INDEPENDENT LIMBS, WHEREIN FIRST LIMB PROVIDED FOR DEDUCTION @ 7.5% OF TOTAL INCOME AND SECOND LIMB PROVIDED FOR DEDUCTION @ 10% OF AGGREGATE AVERAGE ADVANCES MADE BY RURAL BRANCHES OF THE BANK COMPUTED IN THE PRESCRIBE D MANNER. IT WAS FURTHER POINTED OUT THAT THE FACTS OF CASE IN THE DECISION OF CATHOLIC SYRIAN BANK LTD. VS. CIT (SUPRA) AND FACTS OF ASSESSEE BANK WERE TOTALLY DIFFERENT, WHEREIN CATHOLIC SYRIAN BANK LTD. HAD CLAIMED DEDUCTION UNDER SECTION 36(1)(VII) OF THE ACT TOWARDS ACTUAL WRITE OFF OF NON - RURAL ADVANCES AND ALSO DEDUCTION UNDER SECTION 36(1)(VIIA) AS WELL I N RESPECT OF RURAL ADVANCES AND THE JUDGMENT WAS RENDERED IN THE CONTEXT OF CLAIMING DOUBLE DEDUCTION. THE CIT(A) UPHELD THE ORDER OF ASSESSING O FFICER RELYING ON THE RATIO LAID DOWN BY THE APEX COURT IN THE CASE OF CATHOLIC SYRIAN BANK LTD. VS. CIT (SUPRA) OBSERVING THAT THE APEX COURT HAD CATEGORICALLY HELD THAT DEDUCTION UNDER SECTION 7 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS 36(1)(VIIA) OF THE ACT WAS AVAILABLE ONLY IN RESPECT OF RURAL ADVANCES OF THE BANK. THE RELEVANT OBSERVATIONS OF THE APEX COURT ARE REPRODUCED UNDER PARA 4.3.1 AT PAGE 7 OF APPELLATE ORDER. THUS, THE PLEA OF ASSESSEE WAS REJECTED. 8. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 9. THE LEARNED AUTHORIZE D REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE WAS CO - OPERATIVE BANK, WHICH ADMITTEDLY, HAD NO RURAL BRANCHES. SHE FURTHER POINTED OUT THAT DEDUCTION CLAIMED UNDER SECTION 80P OF THE ACT WHICH WAS INITIALLY AVAILABLE TO THE ASSESSEE, WAS WITHDRAWN AND HENCE, THE INCOME OF ASSESSEE CO - OPERATIVE BANK WAS TAXABLE FROM ASSESSMENT YEAR 2007 - 08. SHE FURTHER REFERRED TO THE AMENDMENT IN THIS REGARD IN ASSESSMENT YEAR 2007 - 08. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY ADMITTE D THAT FOR THE FIRST TIME THE ISSUE WAS DECIDED AGAINST ASSESSEE IN ASSESSMENT YEAR 2010 - 11. AGAIN, REFERRING TO THE PROVISIONS OF SECTION 36(1)(VIIA) OF THE ACT, IT WAS STRESSED THAT THE SAID SECTION HAD TWO LIMBS, WHEREIN THE DEDUCTION COULD BE COMPUTED EITHER ON THE BASIS OF 7.5% OF TOTAL INCOME OR 10% OF AGGREGATE AVERAGE ADVANCES MADE BY RURAL BRANCHES. SINCE ALL THE BRANCHES OF ASSESSEE WERE URBAN BRANCHES, SO PERCENTAGE OF RURAL BRANCHES WOULD BE ZERO AND HENCE, ONLY FIRST LIMB OF SECTION 36(1)(VII A) OF THE ACT WAS TO BE APPLIED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FIRST REFERRED TO THE DECISION OF PUNE BENCH OF TRIBUNAL IN THE CASE OF ASSESSEE ITSELF RELATING TO ASSESSMENT YEAR 2010 - 11, WHEREIN VIDE ORDER IN ITA NO. 136/PN/2014, ORDER DATED 29.05.2015 HAS DECIDED THE ISSUE VIDE PARAS 8 TO 10 AND APPLIED RATIO LAID DOWN BY THE APEX COURT IN CATHOLIC SYRIAN BANK LTD. (SUPRA) THE TRIBUNAL HAD HELD THAT BOTH THE PARTS OF CLAUSE (VIIA) OF SECTION 36(1) OF THE ACT WERE JOINED WITH CONJ UNCTION AND THEREFORE, BOTH THE LIMBS HAD TO BE READ TOGETHER AND NOT AS 8 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS ALTERNATE. SHE FURTHER REFERRED TO THE DECISION OF VISAKHAPATNAM BENCH OF TRIBUNAL IN ACIT VS. CHAITANYA GODAVARI GRAMEENA BANK (2018) 93 TAXMANN.COM 400 (VISAKHAPATNAM TRIB.), WHE REIN IT WAS HELD THAT THE ASSESSEE BANK WAS ENTITLED TO CLAIM THE DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT BOTH IN RESPECT OF RURAL OR NON - RURAL ADVANCES, TO THE EXTENT OF PROVISION FOR BAD AND DOUBTFUL DEBTS WAS SO CREATED. 10. THE LEARNED COUNSEL MR. PRAMOD SHINGTE IN LOKMANGAL CO - OPERATIVE BANK LTD. POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS ALSO SAME ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT, UNDER WHICH THERE ARE TWO LIMBS PROVIDED FOR CLAIMING THE AFORESAID DEDUCTION. HE TH EN REFERRED TO THE DECISION OF SPECIAL BENCH OF COCHIN TRIBUNAL IN DCIT VS. CATHOLIC SYRIAN BANK LTD. (2004) 88 ITD 185 (COCH.)(SB) AND POINTED OUT THAT SPECIAL BENCH HAD DECIDED THE ISSUE, AGAINST WHICH THE HON'BLE SUPREME COURT IN CATHOLIC SYRIAN BANK LT D. VS. CIT (SUPRA) EXPLAINED THE LAW. HE THEN REFERRED TO CBDT CIRCULAR NO.464, DATED 18.07.1986, UNDER WHICH CLARIFICATION WAS GIVEN IN RESPECT OF DEDUCTION FOR PROVISION FOR BAD AND DOUBTFUL DEBTS MADE BY BANKS. 11. THE LEARNED AUTHORIZED REPRESENTAT IVE FOR THE ASSESSEE EXPOUNDED ON THE SAID CIRCULAR, WHICH PROVIDED THAT THE SAID PROVISIONS SECURES FURTHER DEDUCTION SHALL BE ALLOWED IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS MADE BY ALL BANKS, NOT JUST THE BANKS INCORPORATED IN INDIA, LIMITED TO 5% OF TOTAL INCOME. IT WAS CLARIFIED THAT THIS WOULD IMPLY THAT ALL SCHEDULED OR NON - SCHEDULED BANKS HAVING RURAL BRANCHES WOULD BE ALLOWED DEDUCTION UPTO 2% OF AGGREGATE AVERAGE ADVANCES MADE BY SUCH BRANCHES AND FURTHER DEDUCTION UPTO 5% OF TOTAL INC OME IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS. HE FURTHER PLACED RELIANCE ON THE DECISION OF BANGALORE BENCH OF TRIBUNAL IN BUNCH OF APPEALS WITH 9 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS LEAD ORDER IN DCIT VS. THE CORPORATION BANK IN ITA NO.496/BANG/2010, RELATING TO ASSESSMENT YEAR 200 6 - 07, ORDER DATED 31.10.2014. HE REFERRED TO PARA 13 OF THE DECISION OF TRIBUNAL, WHEREIN THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CATHOLIC SYRIAN BANK LTD. VS. CIT (SUPRA) HAD BEEN SUMMED UP. 12. ON THE NEXT DAY OF HEARING, THE LEARNED AUTHOR IZED REPRESENTATIVE SHRI KISHORE PHADKE STRESSED THAT THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE IS NOT GOOD LAW AS THE DECISION OF THE HONBLE HIGH COURT OF KERALA IN THE KODUNGALLUR TOWN CO - OP. BANK LTD. VS. ACIT IN ITA NO.37 OF 2013, JUDGMENT DATED 03.04.2014 HAS NOT BEEN CONSIDERED AND ALSO NO T RELIED UPON BY THE LEARNED COUNSELS BEFORE PUNE BENCH OF TRIBUNAL. IT WAS POINTED OUT THAT THE TRIBUNAL HAD PASSED THE ORDER ON 29.05.2015 WITHOUT TAKING INTO CONSIDERATION THE DICTATE OF THE HONBLE HIGH C OURT OF KERALA ON THE ISSUE , WHICH IS SQUARELY APPLICABLE TO THE FACTS AND ISSUES RAISED IN THE PRESENT BENCH OF APPEALS . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD RELIED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. SMT. GODAVARIDEVI SARAF (1978) 113 ITR 589 (BOM), WHEREIN IT HAS BEEN LAID DOWN THAT THE LAW DECLARED BY NON - JURISDICTIONAL HIGH COURT WAS FINAL LAW OF LAND, IN THE ABSENCE OF ANY CONTRARY DECISION OF ANOTHER HIGH COURT. IT WAS FURTHER POINTED OUT THA T UNTIL CONTRARY DECISION WAS GIVEN BY ANY OTHER COMPETENT HIGH COURT WHICH WAS BINDING ON THE TRIBUNAL IN THE STATE, THEN IT HAS TO BE PROCEEDED ON THE FOOTING WITH THE LAW DECLARED BY THE HIGH COURT, THOUGH OF ANOTHER STATE WAS FINAL LAW OF LAND. HE ALS O REFERRED TO THE FACTUAL ASPECTS, WHEREIN THE MUMBAI BENCH OF TRIBUNAL HAD APPLIED THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF MADRAS IN DECIDING THE ISSUE AND IN THE ABSENCE OF ANY DECISION OF ANY OTHER COURT OR OF THE JURISDICTIONAL HIGH COURT, THE SAID RELIANCE PLACED WAS HELD TO BE CORRECT. SHRI KISHORE PHADKE, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER 10 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS REFERRED TO THE DECISION OF PUNE BENCH OF TRIBUNAL ON THE SAID PROPOSITION AS LAID DOWN IN ACIT VS. AURANGABAD HOLIDAY RESORT S (P) LTD. (200 9) 118 ITD 0001 (PUNE - TRIB.), WHEREIN IT WAS HELD THAT IT WAS NO T OPEN TO SUBORDINATE TRIBUNAL TO DISREGARD ANY OF THE JUDGMENTS OF EVEN NON - JURISDICTIONAL HIGH COURTS, WHICH ARE BINDING ON THE TRIBUNAL. REFERENCE WAS ALSO MADE TO THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS. VEGETABLE PRODUCTS LTD . (1973 ) 88 ITR 192 (SC) TO PROPOSE THAT WHEN TWO INTERPRETATIONS WERE POSSIBLE; ONE IN FAVOUR OF ASSESSEE MUST BE ADOPTED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER STATED THAT IN THE ABSENCE OF ANY CONTRARY DECISION BY JURISDICTIONAL HIGH COURT OR ANY OTHER HIGH COURT (A) THERE WAS NO NEED TO MAKE REFERENCE TO LARGER BENCH AND (B) THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF KERALA WAS TO BE APPLIED SINCE THE ISSUE IN PRESENT APPEAL STAND S FULLY COVERED BY THE SAID DECISION AS HELD IN P ARAS 9 AND 13. HE THEN REFERRED TO SERIES OF DECISIONS OF DIFFERENT BENCHES OF TRIBUNAL FOR THE PROPOSITION THAT EVEN IN THE ABSENCE OF RURAL BRANCHES, THE CO - OPERATIVE BANKS COULD AVAIL THE DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT. HE REFERRED TO LATEST DECISION OF COCHIN BENCH OF TRIBUNAL IN KODUNGALLUR TOWN CO - OP. BANK LTD. VS. ACIT (2016) 160 ITD 0132 (COCHIN), DATED 18.07.2016, WHICH HAD APPLIED THE RATIO LAID DOWN BY THE HONBLE HIGH COURT AND ALLOWED THE CLAIM OF ASSESSEE. HE STRESSED THAT D EDUCTION WAS NOT LIMITED TO CO - OPERATIVE BANKS WITH RURAL BRANCHES. SHRI KISHORE PHADKE, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ALSO FILED A CHART OF HISTORY OF PROVISIONS OF SECTION 36(1)(VIIA) OF THE ACT, WHICH WAS AMENDED OVER A PERIOD OF TIME. 13. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010 - 11 AND ORDERS OF AUTHORITIES BELOW. 11 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECOR D. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST CLAIM OF DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT. UNDER THE SAID SECTION, DEDUCTION IS ALLOWABLE ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS. IN OTHER WORDS, DEDUCTION COULD BE CLA IMED IN RESPECT OF BAD AND DOUBTFUL DEBTS SUBJECT TO THE TERMS AND CONDITIONS WHICH ARE PROVIDED IN THE ACT ITSELF. EXPLANATION TO SECTION 36 OF THE ACT DEFINES THE TERMS USED IN SUB - CLAUSE (A) OF CLAUSE (VII), WHEREIN IT WAS DEFINED AS NON - SCHEDULED BANK S, RURAL BRANCHES, CO - OPERATIVE BANKS AND SCHEDULED BANKS. THE ASSESSEE BEFORE US IS A CO - OPERATIVE BANK. IN THE INITIAL YEARS, CO - OPERATIVE BANKS WERE ENTITLED TO THE BENEFIT OF DEDUCTION UNDER SECTION 80P OF THE ACT. HOWEVER, THE SAID DEDUCTION HAS BE EN WITHDRAWN BY THE FINANCE ACT, 2007 W.E.F. 01.04.2007. THEREAFTER, THE LEGISLATURE HAS EXTENDED THE BENEFIT OF SECTION 36(1)(VIIA) OF THE ACT TO CO - OPERATIVE BANKS ALSO. INITIALLY, ONLY SCHEDULED BANKS WERE ENTITLED TO THE AFORESAID DEDUCTION BUT W.E.F . 01.04.2007, THE BENEFIT HAS BEEN EXTENDED TO CO - OPERATIVE BANKS AND THEY ARE ENTITLED TO CLAIM THE DEDUCTION ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS , SUBJECT TO THE CONDITION THAT PROVISION TO THAT EXTENT IS MADE IN THE BOOKS OF ACCOUNT. SUB - CLAUSE (A) REFERS TO DEDUCTION OF AN AMOUNT NOT EXCEEDING 7.5% OF TOTAL INCOME, BEFORE ALLOWING ANY DEDUCTION UNDER THE CHAPTER VI - A AND SECONDLY, IT ALSO REFERS TO A DEDUCTION OF AN AMOUNT NOT EXCEEDING 10% OF AGGREGATE AVERAGE ADVANCES MADE BY RURAL BRAN CHES OF SUCH BANKS, WHICH HAVE BEEN COMPUTED IN PRESCRIBED MANNER. 15. THE CBDT VIDE CIRCULAR NO.464, DATED 18.07.1986 HAD CLARIFIED THE POSITION FOR BAD AND DOUBTFUL DEBTS MADE BY THE BANKS THAT UNDER THE EXISTING PROVISIONS INSERTED BY FINANCE ACT, 1979 PROVISION FOR BAD AND DOUBTFUL DEBTS MADE BY SCHEDULED OR NON - SCHEDULED INDIAN BANK WAS ALLOWED AS DEDUCTION 12 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS WITHIN PRESCRIBED LIMITS. THE LIMIT PRESCRIBED AT THE RELEVANT TIME WAS 10% OF TOTAL INCOME OR 2% OF AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES OF SUCH BANKS, WHICHEVER WAS HIGHER. THERE WAS REPRESENTATION TO THE GOVERNMENT THAT FOREIGN BANKS WERE NOT ENTITLED TO ANY SUCH DEDUCTION AND FURTHER IT WAS ALSO FELT THAT EXISTING CEILING AT THE RELEVANT TIME, SHOULD BE MODIFIED. ACCORDINGLY, BY AMENDING ACT, THE DEDUCTION PRESENTLY AVAILABLE UNDER SECTION 36(1)(VII) OF THE ACT WAS SPLIT INTO TWO SEPARATE PROVISIONS. ONE OF THESE LIMBS WAS THE DEDUCTION TO AN AMOUNT NOT EXCEEDING 2% OF AGGREGATE AVERAGE ADVANCES MADE TO BY RURAL BRANCHES OF T HE BANK CONCERNED; IN THIS REGARD, IT WAS CLARIFIED THAT FOREIGN BANKS DO NOT HAVE RURAL BRANCHES, HENCE THIS AMENDMENT WOULD NOT BE RELEVANT IN THE CASE OF FOREIGN BANKS. THE CIRCULAR FURTHER PROVIDED THAT THE OTHER PROVISIONS SECURE THAT A FURTHER DEDUC TION SHALL BE ALLOWED IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS MADE BY ALL BANKS, NOT JUST THE BANKS INCORPORATED IN INDIA, LIMITED TO 5% OF TOTAL INCOME. THE CIRCULAR THEN CONCLUDED BY SAYING THAT THIS WILL IMPLY THAT ALL SCHEDULED OR NON - SCHEDULED BANKS HAVING RURAL BRANCHES WOULD BE ALLOWED THE DEDUCTION UPTO 2 PERCENT OF THE AGGREGATE AVERAGE ADVANCES MADE BY SUCH BRANCHES AND A FURTHER DEDUCTION UPTO 5 PERCENT OF THEIR TOTAL INCOME IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS. IN OTHER WORDS, THE CIRCULAR VERY CLEARLY PROVIDED THAT TWO TYPES OF DEDUCTIONS HAVE TO BE ALLOWED TO SCHEDULED OR NON - SCHEDULED BANKS I.E. IN CASE THEY HAD RURAL BRANCHES, THEN DEDUCTION OF 2% OF AGGREGATE AVERAGE ADVANCES WAS TO BE ALLOWED AND IN ADDIT ION TO THAT DEDUCTION UPTO 5% OF THEIR TOTAL INCOME IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS WAS TO BE ALLOWED. THE SECOND PART OF DEDUCTION WAS ALSO MADE AVAILABLE TO FOREIGN BANKS, WH ICH ADMITTEDLY WOULD NEVER HAVE RURAL BRANCHES IN INDIA. IN SUCH SCE NARIO, THE INTENT OF THE LEGISLATURE WAS TO PROVIDE DEDUCTION TO THE SCHEDULED OR NON - SCHEDULED 13 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS BANKS; FIRST ON ACCOUNT OF RURAL ADVANCES AND SECOND ON ACCOUNT OF TOTAL INCOME OTHER THAN THE RURAL ADVANCES AND TWO DIFFERENT TYPES OF DEDUCTIONS WER E PROVIDED. IT MAY BE CLARIFIED HEREIN ITSELF THAT THE CIRCULAR WHICH IS DATED 18.07.1986 WAS IN RESPECT OF SCHEDULED OR NON - SCHEDULED BANKS AND EXTENDING TO THE FOREIGN BANKS BUT THE CO - OPERATIVE BANKS WERE NOT INCLUDED AT THAT RELEVANT POINT FOR THE AFO RESAID DEDUCTION. IT WAS ONLY W.E.F. 01.04.12007, AMENDMENT WAS MADE TO SECTION 36(1)(VIIA) OF THE ACT IN RESPECT OF ANY PROVISION FOR BAD AND DOUBTFUL DEBTS. IT WAS PROVIDED THAT SCHEDULED BANKS OR NON - SCHEDULED BANKS, ALL CO - OPERATIVE BANKS OTHER THAN PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANKS, DEDUCTION WAS ALLOWABLE TO THE EXTENT OF AN AMOUNT NOT EXCEEDING 7.5% OF TOTAL INCOME COMPUTED BEFORE MAKING ANY DEDUCTION UNDER CHAPTER VI - A AND AN AMOUN T NOT EXCEEDING 10% OF AGGREGATE AVERAGE ADVANCES MADE BY RURAL BRANCHES OF SUCH BANKS, COMPUTED IN THE PRESCRIBED MANNER. THE SCOPE OF SAID SECTION HAS THUS BEEN ENLARGED W.E.F. 01.04.2007 AND DEDUCTION IS AVAILABLE NOT ONLY TO THE SCHEDULED OR NON - SCHED ULED BANKS BUT TO THE CO - OPERATIVE BANKS ALSO I.E. THE ASSESSEE BEFORE US. 1 6 . THE ISSUE WHICH ARISES BEFORE US IS IN RELATION TO CO - OPERATIVE BANKS WHICH DO NOT HAVE ANY RURAL BRANCHES. THE QUESTION WHICH IS TO BE ADDRESSED IS WHETHER IN THE ABSENCE O F ANY RURAL BRANCHES, CAN THE BENEFIT OF DEDUCTION BE ALLOWED UNDER SECTION 36(1)(VIIA) OF THE ACT AND THAT AL SO TO THE EXTENT OF 7.5% OF TOTAL INCOME. 1 7 . WE FIND THAT THIS ISSUE HAS BEEN ELABORATELY CONSIDERED AND ADDRESSED BY THE HONBLE HIGH COURT OF KERALA IN THE KODUNGALLUR TOWN CO - OP. BANK LTD. VS. ACIT (SUPRA) AND IT HAS BEEN HELD AS UNDER: - 14 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS 9. ADMITTEDLY, APPELLANTS/ASSESSEES ARE COOPERATIVE BANKS. WITH INTRODUCTION OF FINANCE ACT OF 2007, COMING INTO EFFECT FROM 01. 04.2007, ONE HAS TO UNDERSTAND WHAT WAS THE POSITION PRIOR TO 1.4.2007 AND AFTER 1.4.2007. DURING THE RELEVANT ASSESSMENT YEAR, ADMITTEDLY THE APPELLANTS/ASSESSEES WERE NOT ENTITLED FOR ANY DEDUCTION PROVIDED UNDER SECTION 80P OF THE ACT. PRIOR TO 1.4.2007 , THEY WERE ENJOYING THE BENEFITS PROVIDED UNDER SECTION 80P. WITH THE INTRODUCTION OF FINANCE ACT 2007 WITH EFFECT FROM 1.4.2007, THEY COULD CLAIM DEDUCTIONS AS PROVIDED UNDER SECTION 36(1) OF THE ACT. WE ARE CONCERNED WITH SUB - CLAUSE(A) OF CLAUSE (VIIA) TO SECTION36(1). PRIOR TO FINANCE ACT OF 2007, COOPERATIVE BANK WAS NOT INCLUDED IN SUB - CLAUSE (A) SO FAR AS PROVISIONS FOR BAD AND DOUBTFUL DEBTS. WITH EFFECT FROM 1.4.2007, COOPERATIVE BANK WAS INCLUDED UNDER SUB CLAUSE (A) OF CLAUSE (VIIA) OF SECTION 36 (1). IT IS FURTHER CLARIFIED THAT ONLY SUCH COOPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURE CREDIT SOCIETY, ETC., IS INCLUDED IN SUB CLAUSE (A) OF CLAUSE (VIIA). THE PROVISION IS A BENEFICIAL ONE. NO DOUBT, PLAIN READING OF MAIN SECTION 36(1) (VIIA)(A) A ND EXPLANATION UNDER SAID SECTION PRESENT CERTAIN DIFFICULTIES, BUT SITUATION IS NOT WITHOUT POSSIBILITIES. THE OBJECT AND INTENTION OF THE LEGISLATURE IS TO BE UNDERSTOOD BY HARMONIOUS CONSTRUCTION OF THE PROVISIONS. THE POLICY WAS TO INCLUDE COOPERATIVE BANKS AS WELL, AS THEY COULD NOT TAKE SHELTER UNDER SECTION 80P OF THE INCOME TAX ACT ANY MORE. BY RESTRICTING THE SCOPE OF THE PROVISIONS, THE VERY PURPOSE OF INCLUSION OF COOPERATIVE BANK WOULD BE LOST. SUB CLAUSE (A) CONSISTS OF TWO TYPES OF DEDUCTION. ONE REFERS TO DEDUCTION OF AN AMOUNT NOT EXCEEDING 7.5% OF THE TOTAL INCOME (COMPUTED BEFORE MAKING ANY DEDUCTION UNDER THIS CLAUSE AND CHAPTER VIA). SECTION ONE REFERS TO DEDUCTION OF AN AMOUNT NOT EXCEEDING10% OF THE AGGREGATE AVERAGE ADVANCES MADE BY RU LE BRANCHES OF SUCH BANK WHILE COMPUTING IN THE PRESCRIBED MANNER. SO FAR AS BENEFIT OF 7.5% OF THE TOTAL INCOME, THERE IS NO CONDITION THAT IT SHOULD BE IN RESPECT OF ANY RURAL BRANCH. ALL TYPES OF BANKS DESCRIBED UNDER SUB CLAQUE (A) OF CLAUSE (VIIA) ARE ENTITLED TO SEEK DEDUCTION OF AN AMOUNT OF EXCEEDING 7.5% OF THE TOTAL INCOME. ONLY CONDITION IS THERE SHOULD BE A PROVISION FOR BAD AND DOUBTFUL DEBTS 10. 11. 12 .. SO FAR AS SUB - CLAUSE (A) OF CLAUSE (VIIA) TO SECTION 36(1), TWO TYPES OF DEDUCTIONS ARE PROVIDED TO NON - SCHEDULED BANK, A SCHEDULED BANK AND A CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL SOCIETY, ETC. IT IS TO BE NOTED THAT APPELLANTS/ASSESSEES AR E NOT PRIMARY AGRICULTURAL CREDIT CO - OPERATIVE SOCIETY OR OTHER KIND OF BANK SO AS TO GO OUT OF THE DEFINITION OF CO - OPERATIVE BANK UNDER SUB - CLAUSE (A) TO CLAUSE (VIIA) OF SECTION 36(1). NO DOUBT, EXPLANATION (IA) TO SECTION 36(1)(VIIA) DEFINES WHAT IS A RURAL BRANCH. IT IS WITH REFERENCE TO A PLACE AND CERTAIN NUMBER OF POPULATION. IT REFERS TO BRANCH OF A SCHEDULED BANK OR A NON - SCHEDULED BANK. APPARENTLY, WE DO NOT FIND THE TERM CO - OPERATIVE BANK. SECTION 5(CCI) OF BANKING REGULATION ACT THOUGH HAS BROUGHT IN DEFINITION OF CO - OPERATIVE BANK, VIRTUALLY EVERY BANK WHICH IS NOT A SCHEDULED BANK WOULD FALL UNDER THE DEFINITION OF NON - SCHEDULED BANK. READING OF DEFINITION OF NON - SCHEDULE BANK ALONG WITH MEANING OF RURAL BRANCH UNDER EXPLANATION TO SECTI ON 36(1) OF THE ACT, CLEARLY INDICATE THAT CO - OPERATIVE BANK ALSO FALLS UNDER THE CATEGORY OF NON - SCHEDULE BANK FOR THE PURPOSE OF THIS SECTION. THEREFORE, READING OF ENTIRE SECTION 36(1)(VIIA)(A) ALONG WITH EXPLANATION WOULD MEAN TWO KINDS OF DEDUCTIONS REFERRED TO IN THE SECTION WILL BE ALLOWED TO ALL THOSE BANKS ONLY IF THEY SATISFY THE TERMS AND CONDITIONS REFERRED TO IN THE PROVISION. 15 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS 13. THEREFORE, WE ARE OF THE OPINION, AUTHORITIES BELOW WERE JUSTIFIED IN OPINING THAT BENEFIT OF DEDUCTION OF 10% O F THE AGGREGATE AVERAGE ADVANCES IS APPLICABLE TO CO - OPERATIVE BANK ALSO PROVIDED THEIR RURAL BRANCHES HAVE ADVANCED SUCH AMOUNTS. SUCH RURAL BRANCH MEANS A BRANCH AS EXPLAINED UNDER EXPLANATION (IA), AS OPINED IN THE DECISION OF LORD KRISHNA BANKS CASE (SUPRA). (UNDERLINE PROVIDED BY US FOR EMPHASIS) 1 8 . THE HONBLE HIGH COURT OF KERALA THUS, LAID DOWN THE PROPOSITION THAT EXISTING CO - OPERATIVE BANKS WHICH DO NOT ENJOY THE BENEFIT OF DEDUCTION PROVIDED UNDER SECTION 80P OF THE ACT AFTER 01.04.2 007 BUT WOULD BE ENTITLED TO THE BENEFIT PROVIDED UNDER SECTION 36(1)(VIIA) OF THE ACT, THEN THE PROVISIONS HAVE TO BE UNDERSTOOD TAKING INTO CONSIDERATION THE AMENDMENT MADE BY THE LEGISLATURE. THE HONBLE HIGH COURT HAS CLEARLY NOTED THE FACT THAT FOR A VAILING THE BENEFIT OF 7.5% OF TOTAL INCOME, THERE IS NO CONDITION THAT IT SHOULD BE IN RESPECT OF ANY RURAL BRANCHES. IT HAS FURTHER OBSERVED THAT ALL TYPES OF BANKS DESCRIBED UNDER SUB - CLAUSE (A) OF CLAUSE (VIIA) ARE ENTITLED TO SEEK DEDUCTION OF AN AMO UNT NOT EXCEEDING 7.5% OF TOTAL INCOME AND ONLY CONDITION IS THAT THERE SHOULD BE PROVISION FOR BAD AND DOUBTFUL DEBTS IN THE BOOKS OF ACCOUNT . THE SECOND LINKED ISSUE WHICH WAS CONSIDERED WAS WHETHER CO - OPERATIVE BANK IN RESPECT OF HAVING RURAL BRANCHES WAS ENTITLED TO HAVE THE BENEFIT OF SECOND PART OF SECTION 36(1)(VIIA)(A) OF THE ACT. THE HONBLE HIGH COURT CLEARLY HELD THAT READING THE DEFINITION OF NON - SCHEDULED BANK ALONG WITH MEANING OF RURAL BRANCH UNDER EXPLANATION TO SECTION 36(1) OF THE ACT CL EARLY INDICATE THAT CO - OPERATIVE BANK ALSO FALLS UNDER THE CATEGORY OF NON - SCHEDULED BANK FOR THE PURPOSE OF SAID SECTION. IT FURTHER GOES ON TO HOLD THAT READING THE ENTIRE SECTION ALONG WITH EXPLANATION WOULD MEAN TWO KINDS OF DEDUCTIONS REFERRED TO IN SECTION WOULD BE ALLOWED TO ALL THOSE BANKS ONLY IF THEY SATISFY THE TERMS AND CONDITIONS REFERRED TO IN THE PROVISION. SINCE THE ASSESSEE BANK IN THE SAID CASE DID NOT HAVE ANY RURAL BRANCHES, IT WAS HELD THAT THE BENEFIT OF DEDUCTION OF 10% OF AGGREGATE AVERAGE 16 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS ADVANCES WAS NOT AVAILABLE TO THEM. HENCE, APPEAL OF REVENUE WAS DECIDED IN THEIR FAVOUR I.E. ON THE SECOND ISSUE OF DEDUCTION IN RESPECT OF RURAL BRANCHES. 1 9 . THE COCHIN BENCH OF TRIBUNAL IN A SUBSEQUENT DECISION RELATING TO ASSESSMENT YEAR 20 10 - 11 IN THE CASE OF KODUNGALLUR TOWN CO - OP. BANK LTD. VS. ACIT (SUPRA) AGAIN DECIDED THE AFORESAID ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 36(1)(VII) OF THE ACT, ESPECIALLY IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CATHOLIC SYRIAN B ANK LTD. VS. CIT (SUPRA) RELIED UPON BY THE COMMISSIONER WHILE INVOKING REVISIONARY JURISDICTION UNDER SECTION 263 OF THE ACT. THE TRIBUNAL HELD THAT THE HON'BLE SUPREME COURT HAD CONSIDERED THE ISSUE WHETHER THE DEDUCTION WAS ALLOWABLE TO SCHEDULED BANKS UNDER SECTION 36(1)(VII) OF THE ACT IN RESPECT OF BAD DEBTS WRITTEN OFF AND HAD HELD THAT THE SAME SHALL BE LIMITED TO THE EXTENT THE SAID DEBTS CREDIT BALANCE IN THE PROVISION FOR BAD AND DOUBTFUL DEBTS ACCOUNT MADE UNDER CLAUSE (VIIA). IT WAS FURTHER O BSERVED BY THE TRIBUNAL THAT THE ASSESSMENTS IN THE SAID CASE RELATED TO ASSESSMENT YEAR 2002 - 03 AND PRIOR YEARS AND THE APEX COURT HAD CONSIDERED THE LAW WITH REFERENCE TO THE FACT SITUATION; WHEREAS THE ASSESSEE BEFORE THEM WAS CO - OPERATIVE BANK, WHICH W AS INCLUDED IN THE CATEGORY OF BENEFICIARIES UNDER CLAUSE (VIIA) BY THE FINANCE ACT, 2007 W.E.F. 01.04.2007. THE TRIBUNAL FURTHER GOES ON TO HOLD THAT THE DEDUCTION PROVIDED IN THE FIRST PART OF CLAUSE (VIIA)(A) OF 7.5% OF TOTAL INCOME, EITHER TO ENJOYED BY THE ASSESSEE SINCE INCLUSION OF CO - OPERATIVE BANKS WITHIN AMBIT OF CLAUSE (VIIA)(A) BY THE FINANCE ACT, 2007 IS UNCONCERNED WITH THE ADVANCES MADE BY RURAL BRANCHES OF BANKS. FURTHER, REFERRING TO PARA 27 OF THE JUDGMENT OF APEX COURT, THE TRI BUNAL HELD AS UNDER: - 7..THE DEDUCTION PROVIDED IN THE FIRST PART OF CLAUSE (VIIA)(A) OF 7.5% OF THE TOTAL INCOME, HITHERTO ENJOYED BY THE ASSESSEE SINCE THE INCLUSION OF COOPERATIVE BANKS WITHIN THE AMBIT OF CLAUSE (VIIA)(A) BY FINANCE ACT, 2007, IS UNC ONCERNED WITH ADVANCES MADE BY THE RURAL BRANCHES OF THE BANKS. A READING OF PARAGRAPH 27 OF THE JUDGMENT OF THE HONBLE APEX COURT WOULD SHOW THAT WHILE MAKING THE 17 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS OBSERVATION 'INDISPUTABLY, CLAUSE (VIIA)(A) APPLIES ONLY TO RURAL ADVANCES, THE HONBLE AP EX COURT WAS EXAMINING THE ISSUE IF THERE WOULD BE DOUBLE DEDUCTION OF ACTUAL BAD DEBTS WRITTEN OFF UNDER CLAUSE (VII) AND DEDUCTION IN RESPECT OF RURAL ADVANCES PROVIDED UNDER THE SECOND PART OF CLAUSE (VIIA). THE HONBLE APEX COURT HAS NOT HELD THAT THE FIRST PART OF CLAUSE (VIIA) PROVIDING FOR DEDUCTION OF 7.5% OF THE TOTAL INCOME APPLIES ONLY TO RURAL ADVANCES. (UNDERLINE PROVIDED BY US FOR EMPHASIS) 20 . THEN, REFERENCE WAS MADE TO THE DECISION OF JURISDICTIONAL HIGH COURT I.E. HONBLE HIGH CO URT OF KERALA IN THE KODUNGALLUR TOWN CO - OP. BANK LTD. VS. ACIT (SUPRA), JUDGMENT DATED 03.04.2014 AND IT WAS HELD THAT INVOKING OF JURISDICTION BY THE COMMISSIONER WAS HELD TO BE NOT JUSTIFIED, RELYING ON THE RATIO LAID DOWN BY THE APEX COURT IN CATHOLIC SYRIAN BANK LTD., WHICH IS DATED 17.02.2012. 2 1 . THE BANGALORE BENCH OF TRIBUNAL IN DCIT VS. ING VYSYA BANK LTD. (2014) 149 ITD 611 (BANGALORE) VIDE ITS ORDER DATED 25.10.2013 HAD HELD VIDE PARA 32 THAT THE OBJECT OF SUBSTITUTION OF CLAUSE (VIIA) AS EXPLAINED IN PARA 5 OF CBDT CIRCULAR NO.464, DATED 18.07.1986 WAS TO GIVE SEPARATE DEDUCTION. THE FIRST WAS IN RESPECT OF RURAL ADVANCES AND SECOND FOR PROVISION FOR BAD AND DOUBTFUL DEBTS IN GENERAL. 2 2 . SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE HYDERABAD BENCH OF TRIBUNAL IN STATE BANK OF HYDERABAD VS. DCIT (2015) 63 TAXMANN.COM 322 (HYDERABAD - TRIB.) , ORDER DATED 14.08.2015 AND ALSO BY VISAKH APATNAM BENCH OF TRIBUNAL IN ACIT VS. CHAITANYA GODAVARI GRAMEENA BANK (SUPRA), JUDGMENT DATED 04.05.2016). 2 3 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS POINTED OUT BEFORE US THAT NO OTHER DECISION OF ANY HONBLE HIGH COURT , WHETHER IN FAVOUR OR 18 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS CONTRARY , IS AVAILABLE. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS NOT POINTED OUT ANY CONTRARY DECISION OR ANY DECISION OF JURISDICTIONAL HIGH COURT ON THE ISSUE. THE POSITION AS SETTLED BY THE HONBLE HIGH COURT IS THAT DEDU CTION UNDER SECTION 36(1)(VIIA) OF THE ACT IS AVAILABLE TO NON - SCHEDULED BANK I.E. CO - OPERATIVE BANK @ 7.5% OF TOTAL INCOME OR IN CASE THERE ARE RURAL BRANCHES, THEN FURTHER DEDUCTION OF 10% OF AGGREGATE AVERAGE ADVANCES AS PER PRESCRIBED PROCEDURE. 2 4 . THE ISSUE BEFORE US IS SIMILAR TO THE ISSUE BEFORE THE HONBLE HIGH COURT OF KERALA AND THOUGH THE DECISION IS BY NON - JURISDICTIONAL HIGH COURT BUT IN THE ABSENCE OF ANY DECISION TO THE CONTRARY BY THE JURISDICTIONAL HIGH COURT, THE DECISION OF HIGH COURT IS BINDING UPON THE TRIBUNAL. IN ANY CASE, NO OTHER DECISION OF ANY HIGH COURT HAS BEEN BROUGHT TO OUR KNOWLEDGE CONTRADICTING OR FAVOURING THE VIEW TAKEN BY THE HONBLE HIGH COURT OF KERALA. IN SUCH CIRCUMSTANCES, WE ARE GUIDED BY THE PROPOSITION LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. SMT. GODAVARIDEVI SARAF (SUPRA) , WHEREIN IT WAS HELD THAT UNTIL A CONTRARY DECISION IS GIVEN BY ANY OTHER COMPETENT HIGH COURT, WHICH IS BINDING ON TRIBUNAL IN THE STATE OF BOMBAY, IT HAS TO PROCEED ON THE F OOTING WITH THE LAW DECLARED BY THE HIGH COURT, THOUGH OF ANOTHER STATE, IS THE FINAL LAW OF THE LAND. IN THE FACTS BEFORE THE HONBLE BOMBAY HIGH COURT , THE TRIBUNAL HAD DECIDED THE ISSUE RELYING ON THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF MADRAS , WHICH WAS NOT JURISDICTIONAL HIGH COURT. HOWEVER, DISMISSING THE APPEAL FILED BY REVENUE, THE HONBLE BOMBAY HIGH COURT FOUND FAVOUR WITH THE VIEW TAKEN BY TRIBUNAL RELYING ON THE LAW DECLARED BY THE HONBLE HIGH COURT THOUGH OF ANOTHER STATE, WHICH WAS FINAL LAW OF THE LAND. 19 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS 2 5 . THE PUNE BENCH OF TRIBUNAL IN ACIT VS. AURANGABAD HOLIDAY RESORTS (P) LTD. (SUPRA) HAS REFERRED TO THE AFORESAID RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SMT. GODAVARIDEVI SARAF (SUPRA) AND HELD AS UNDER: - 11. LET US NOW TAKE A LOOK AT THE HON'BLE JURISDICTIONAL HIGH COURT'S JUDGMENT IN THE CASE OF GODAVARI DEVI SARAF (SUPRA). IN THIS CASE, QUESTION BEFORE. THEIR LORDSHIPS WAS AS FOLLOWS: WHETHER, AN THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN VIEW OF DECISION IN THE CASE OF A.M. SALI MARICAR 90 ITR 116, THE PENALTY IMPOSED ON THE ASSESSEE UNDER SECTION 140A(3) WAS LEGAL? 12. THE SPECIFIC QUESTION BEFORE. THEIR LORDSHIPS WAS WHETHER THE TRIBUNAL, WHILE SITTING IN BOMBAY, WAS JUSTIFIED IN FOLLOWING THE MADRAS HIGH COURT DECISION HOLDING THE RELEVANT SECTION AS UNCONSTITUTIONAL HON'BLE HIGH COURT CONCLUDED AS FOLLOWS: IT SHOULD NOT BE OVERLOOKED THAT INCOME TAX ACT IS AN ALL INDIA STATUTE, AND IF A TRIBUNAL IN MADRAS HAS TO PROCEED ON THE FOOTING THAT SECTION 140A(3) WAS NON EXISTENT, THE ORDER OF PENALT Y UNDER THAT SECTION CANNOT BE IMPOSED BY ANY AUTHORITY UNDER THE ACT. UNTIL A CONTRARY DECISION IS GIVEN BY ANY OTHER COMPETENT HIGH COURT, WHICH IS BINDING ON THE TRIBUNAL IN THE STATE OF BOMBAY (AS IT THEN WAS), IT HAS TO PROCEED ON THE FOOTING THAT THE LAW DECLARED BY THE HIGH COURT, THOUGH OF ANOTHER STATE, IS THE FINAL LAW OF THE LAND...AN AUTHORITY LIKE TRIBUNAL HAS TO RESPECT THE LAW LAID DOWN BY THE HIGH COURT, THOUGH OF A DIFFERENT STATE, SO LONG AS THERE IS NO CONTRARY DECISION ON THAT ISSUE BY A NY OTHER HIGH COURT.... 2 6 . THE TRIBUNAL HAD ALSO REFERRED TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. THANA ELECTRICITY SUPPLY LTD. (1994) 206 ITR 727 (BOM), WHEREIN THE LIMITED QUESTION WAS WHETHER OR NOT THE DECISION OF ONE OF THE HIGH COU RT WAS BINDING ON ANOTHER HIGH COURT. THE TRIBUNAL IN THIS REGARD OBSERVED AS UNDER: - 10. IN THIS LIGHT, AND BEARING IN MIND THE FACT THAT LIMITED QUESTION BEFORE. THEIR LORDSHIPS WAS WHETHER OR NOT DECISION OF ONE OF THE HIGH COURT'S IS BINDING ON ANOTH ER HIGH COURT, IT WOULD APPEAR TO US THAT RATIO DECIDENDI IN THANA ELECTRICITY CO. LTD. (SUPRA), IS ON THE NON BINDING NATURE OF A HIGH COURT'S JUDGMENT ON ANOTHER HIGH COURT. IN ANY CASE, THIS DIVISION BENCH DID NOT, AND AS STATED IN THIS JUDGMENT ITSELF, COULD NOT HAVE DIFFERED WITH ANOTHER DIVISION BENCH OF THE SOME STRENGTH IN THE CASE OF GODAVARI DEVI SARAF (SUPRA). THEREFORE, IT CANNOT BE OPEN TO A SUBORDINATE TRIBUNAL LIKE US TO DISREGARD ANY OF THE JUDGMENTS OF THE HON'BLE BOMBAY HIGH COURT, WHETHER IN THE CASE OF THANA ELECTRICITY CO. LTD. (SUPRA) OR IN THE CASE OF GODAVARI DEVI SARAF. IT IS INDEED OUR DUTY TO LOYALLY EXTEND UTMOST RESPECT AND REVERENCE TO THE HON'BLE HIGH COURT, AND TO READ THESE TWO JUDGMENTS BY THE DIVISION BENCHES OF EQUAL STREN GTH OF THE HON'BLE JURISDICTION HIGH COURT, I.E. IN THE CASE OF THANA ELECTRICITY CO. LTD. {SUPRA) AND GODAVARI DEVI SARAF (SUPRA), IN A HARMONIOUS MANNER. 20 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS 2 7 . THEN, ANALYZING THE TWO DECISIONS OF HONBLE BOMBAY HIGH COURT, IT WAS HELD THAT WHERE TWO INTE RPRETATIONS ARE POSSIBLE; ONE IN FAVOUR OF ASSESSEE MUST BE ADOPTED, IN TURN, RELYING ON THE DECISION OF THE HON'BLE SUPREME COURT IN CIT VS. VEGETABLE PRODUCTS LTD. (SUPRA). IT WAS ALSO NOTED THAT THERE WERE VARIOUS OTHER HIGH COURTS WHICH WERE NOT IN FA VOUR OF VIEW TAKEN IN CIT VS. SMT. GODAVARIDEVI SARAF (SUPRA). THE TRIBUNAL DECIDED THE ISSUE IN TURN, RELYING ON THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF GAUHATI IN SMT. BANDANA GOGOI VS. CIT & ANR. (2007) 289 ITR 28 (GAU) IN THE ABSENCE OF ANY O THER DECISION OF ANY HIGH COURT IN OTHER STATE. IN VIEW OF THE ABOVE SAID POSITION OF LAW, WE ARE DEPARTING FROM THE VIEW TAKEN BY PUNE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2010 - 11 , WHEREIN THE ORDER IS DATED 29.05.2015 BUT DECISION OF THE HONBLE HIGH COURT OF KERALA ON THE ISSUE IS DATED 03.04.2014 WAS NEITHER RELIED UPON NOR BROUGHT TO THE KNOWLEDGE OF TRIBUNAL AND THE ISSUE WAS DECIDED AGAINST ASSESSEE. THE ISSUE RAISED IN THE PRESENT APPEAL STANDS FULLY COVERED BY THE DECISION OF THE HONBLE HIGH COURT OF KERALA (SUPRA) THOUGH NOT THE JURISDICTIONAL HIGH COURT , BUT THE ONLY DECISION AVAILABLE ON THE SAID ISSUE SQUARELY BINDS THE TRIBUNAL AND HENCE, APPLYING THE SAID RATIO, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT TO THE EXTENT OF 7.5% OF TOTAL INCOME. THE ASSESSEE CO - OPERATIVE BANK DO NOT HAVE ANY RURAL BRANCHES, HENCE IS NOT ENTITLED TO THE SECOND PART CLAIM OF 10% OF ADVANCES MADE BY RURAL BRANCHES . THE DEDUCTION IS ALLOWABLE WITH A RIDER TO SATISFY THE PROVISIONS OF SAID SECTION I.E. MAKING A PROVIS ION TO THAT EXTENT IN THE BOOKS OF ACCOUNT. THE FIRST ISSUE WHICH IS RAISED IN THE CASE OF DIFFERENT CO - OPERATIVE BANKS STANDS DECIDED IN FAVOUR OF ASSESSEE. 21 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS 2 8 . NOW, COMING TO THE INDIVIDUAL APPEALS FILED BY DIFFERENT ASSESSEES FOR DIFFERENT ASSESSMENT YEARS AND WE PROCEED TO DECIDE OTHER ISSU ES RAISED IN THE SAID APPEALS. 2 9 . FIRST, WE TAKE UP THE APPEAL IN ITA NO.167/PUN/2015, WHERE THE ASSESSEE HAS RAISED BALANCE GROUNDS OF APPEAL WHICH READ AS UNDER: - 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER FOR VERIFYING THE INTEREST ON NPA OF RS.43,10,333/ - AS TO EXAMINE REALISABILITY OF INTEREST ON EACH NPA ACCOUNT AND IGNORING THE RBI GUIDELINES AS ALSO THE CONSISTENT PRECEDENTS OF THE HON PUNE TRIBUNAL. 3. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.45,000/ - TOWARDS DISALLOWANCE OF AMORTIZATION OF PREMIUM ON HTM SECURITIES. 4. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS ADDITION OF RS.71,302/ - TOWARDS UNCLAIMED DIVIDEND IN THE HANDS O F THE APPELLANT. 30. THE ISSUE IN GROUND OF APPEAL NO.2 IS AGAINST ADDITION MADE ON ACCOUNT OF INTEREST ON NPAS. THE SAID ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. DEOGIRI NAGARI SAHAKARI BANK LTD. REPORTED IN 379 ITR 24 (BOM) . IN VIEW OF THE ISSUE BEING COVERED, WE FIND NO MERIT IN THE AFORESAID ADDITION AND THE SAME IS DELETED. THE GROUND OF APPEAL NO.2 RAISED BY ASSESSEE IS THUS, ALLOWED. 31. NOW, COMING TO GROUND OF APPEAL NO.3 WHICH IS AGAINST ADDITION O F 45,000/ - MADE ON ACCOUNT OF AMORTIZATION OF PREMIUM ON HTM SECURITIES, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE BY PUNE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE RELATI NG TO ASSESSMENT YEAR 2009 - 10 IN ITA NO.690/PN/2013, ORDER DATED 27.11.2013. WE FIND THAT THE ISSUE IS FURTHER COVERED BY THE ORDER OF HONBLE BOMBAY HIGH COURT IN CIT VS. HDFC BANK LTD. REPORTED IN 366 ITR 505 22 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS (BOM), WHEREIN IT HAS BEEN HELD THAT THE ASS ESSEE - BANK WAS ENTITLED FOR DEDUCTION WITH RESPECT TO DIMINUTION IN VALUE OF INVESTMENT AND AMORTIZATION OF PREMIUM ON INVESTMENT HELD TO MATURITY ON GROUND OF MANDATE BY RBI GUIDELINES. FOLLOWING THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT AND PARITY OF REASONING AS IN THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009 - 10, THE SAID ISSUE IS ALSO TO BE DECIDED IN FAVOUR OF ASSESSEE, HENCE ADDITION OF 45,000/ - IS DELETED. THE GROUND OF APPEAL NO.3 RAISED BY ASSESSEE IS THUS, ALLOWED. 32. NOW, COMING TO GROUND OF APPEAL NO.4, WHEREIN THE ISSUE IS AGAINST ADDITION ON ACCOUNT OF UNCLAIMED DIVIDEND. THE S AID ISSUE ALSO STANDS COVERED BY THE RATIO LAID DOWN BY T HE HONBLE BOMBAY HIGH COURT IN CIT VS. DEOGIRI NAGARI SAHAKARI BANK LTD. (SUPRA), WHEREIN IT WAS HELD THAT UNCLAIMED DIVIDEND AMOUNTS TO EXCESS PROVISION FOR DIVIDEND MADE BY THE ASSESSEE ON AN EARLIER OCCASION, WHICH HAS BEEN REVERSED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION AND TRANSFERRED TO RESERVE ACCOUNT. THE HONBLE BOMBAY HIGH COURT FURTHER HELD THAT WHERE THE PROVISION FOR DIVIDEND MADE EARLIER WAS NOT CHARGED ON PROFITS BUT IT WAS APPROPRIATION PROFITS AVAILABLE POST TAXATION, THEN THERE IS NO MERIT IN THE TAXABILITY OF UNCLAIMED DIVIDEND. FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE ISSUE IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT AND CONSEQUENTLY, WE DELETE THE ADDITION OF 71,302/ - . THE GROUND OF APPEAL NO.4 RAISED BY ASSESSEE IS THUS, ALLOWED. 33. IN ASSESSMENT YEARS 2007 - 08 AND 2009 - 10, THE ASSESSEE HAS RAISED THE ISSUE OF REOPENING OF ASSESSMENT UNDER SECTION 147/148 OF THE ACT AND HAS 23 ITA NO. 167 /PUN/20 15 & ORS BHAGINI NIVEDITA SAH BANK LTD. & ORS RAISED VARIOUS ISSUES IN THIS REGARD. SINCE WE HAVE DECIDED THE ISSUE ON MERITS IN FAVOUR OF ASSESSEE, THE ISSUE OF REOPENING OF ASSESSMENT BECOMES ACADEMIC IN NATURE AND WE DO NOT ADJUDICATE THE SAME. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE THUS, ALLOWED AS INDICATED ABOVE. 34 . IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED ON THIS 3 0 T H DAY OF NOVEM BER , 201 8 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 3 0 T H NOVE MBER , 201 8 . G G C C V V S S R R / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. THE CONCERNED CIT(A); 4. THE CONCERNED CIT ; 5. 6. , , / DR A , ITAT, PUNE; / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE