Vijaya Bank, Bangalore V. JCIT, Bangalore

ITA 660/BANG/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 8675 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G R REDDY CIT DRI
• Keywords: Capital asset; Depreciation; Earning of tax free income; Bad and doubtful debts
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE A BENCH, BANGALORE BEFORE SMT ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER ITA NO.660(BNG)/2010 (ASSESSMENT YEAR : 2006-07) M/S VIJAYA BANK, HO: CENTRAL ACCOUNTS DEPT. 41/2, MG ROAD, BANGALORE-560 001 PAN NO.AAACV4791J APPELLANT VS THE JOINT COMMISSIONER OF INCOME-TAX LTU UNIT, BANGALORE RESPONDENT ITA NO.596(BNG)/2010 (ASSESSMENT YEAR : 2006-07) THE JOINT COMMISSIONER OF INCOME-TAX LTU UNIT, BANGALORE APPELLANT VS M/S VIJAYA BANK, HO: CENTRAL ACCOUNTS DEPT. 41/2, MG ROAD, BANGALORE-560 001 RESPONDENT PAN NO.AAACV4791J ITA NO.747(BNG)/2011 (ASSESSMENT YEAR : 2007-08) THE ADDL.COMMISSIONER OF INCOME-TAX LTU UNIT, BANGALORE APPELLANT VS M/S VIJAYA BANK, HO: CENTRAL ACCOUNTS DEPT. 41/2, MG ROAD, BANGALORE-560 001 RESPONDENT PAN NO.AAACV4791J 2 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 AND ITA NO.760(BNG)/2011 (ASSESSMENT YEAR : 2007-08) M/S VIJAYA BANK, HO: CENTRAL ACCOUNTS DEPT. 41/2, MG ROAD, BANGALORE-560 001 APPELLANT PAN NO.AAACV4791J VS THE JOINT COMMISSIONER OF INCOME-TAX LTP UNIT, BANGALORE RESPON DENT ASSESSEE BY : SMT. LALITHA RAMESWARAN, CA REVENUE BY : SHRI G.R.REDDY, CIT, DR-I DATE OF HEARING : 26-08-201 5 DATE OF PRONOUNCEMENT : 11-09-2015 O R D E R PER SMT ASHA VIJAYARAGHAVAN, JM: THE APPEALS AND THE CROSS APPEALS ARE BY THE ASSES SEE AND THE REVENUE DIRECTED AGAINST THE ORDERS OF THE CIT(A)LT U, BANGALORE, DATED 13-01-2010 & 15-01-2010, FOR THE ASSESSMENT YEARS : 2006-07 & 2007-08 RESPECTIVELY. 3 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 ITA NO.660(BNG)/2010 ASSESSMENT YEAR 2006-07 (ASSES SEES APPEAL) 2. THE ASSESSEE IS A NATIONALIZED BANK IN WHICH MAJ ORITY OF THE SHARES ARE HELD BY THE CENTRAL GOVERNMENT, WHILE CO MPUTING THE TAXABLE INCOME THE AO HAS ALSO COMPUTED BOOK PROFITS DETERM INING THE SAME AT RS.185,03,00,106/-. 2.1 AGGRIEVED, THE ASSESSEE FILED APPEAL AMONG OTH ER GROUNDS BEFORE THE CIT(A). THE CIT(A) CONFIRMED THE ORDER OF THE AO. ON FURTHER APPEAL BEFORE US, THE ASSESSEE HAS RAISED GROUND NOS.1 TO 5 AS UNDER; 1. THE ORDER OF THE LEARNED CIT(A) IS AGAINST TH E LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN NOT ACCEPTING THE R EVISED RECASTED PROFIT & LOSS ACCOUNTS AS SUBMITTED BY THE BANK. 3. THE LEARNED CIT(A) ERRED IN TREATING THAT COMPU TATION OF AO WAS GOOD EVEN WHEN IT WAS ACCEPTED THAT THE F INANCIAL STATEMENT PREPARED BY THE BANK WAS NOT ACCORDANCE W ITH THE PROVISIONS OF PART-II AND III OF COMPANIES ACT, 195 6 BUT AS PER BANKING REGULATION ACT. 4. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FAC T THAT NON-SUBMISSIONS OF FORM NO.29B WAS ONLY A TECHNICAL ERROR. 4 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 5. THE LEARNED CIT(A)-II ERRED IN CONFIRMING THE A DDITION MADE FOR COMPUTATION OF MAT U/S 115JB EXPENDITURE INCURRED FOR EARNING TAX FREE INCOME AS THE SAME IS ALLOWED IN REGULAR COMPUTATION. 3. HOWEVER, THE ASSESSEE HAS NOW RAISED ADDITIONAL GROUND AGAINST THE ORDER PASSED U/S 250 OF THE IT ACT, 1961 WHICH READS AS UNDER; WITHOUT PREJUDICE TO THE OTHER GROUNDS, THE LEARN ED CIT(A) FAILED TO APPRECIATE THE FACT THAT THE PROV ISIONS OF SECTION 115JB OF THE IT ACT, 1961 ARE NOT APPLICABL E TO THE APPELLANT. 4. THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR AT TENTION TO THE FOLLOWING DECISIONS; A) ITA NO.339/MUM/09 DT.30-09-2010 IN THE CASE OF KRUNG THAI BANK PCL VS JOINT DIRECTOR OF (ITAT) (MUMBAI) B) ITA NOS.4702 TO 4706/MUM/2010 DT.30-06-2011 IN T HE CASE OF UNION BANK OF INDIA VS ACIT, LTU(ITAT) (MUMBAI) C) ITA NO.469/MDS/2010 DT.3.8.2011 IN THE CASE OF I NDIAN BANK VS ADDL.CIT (ITAT) (CHENAI) D) ITA NOS.4155 TO 4161 OF 2011 DT.27-3-2012 IN THE CASE OF UNION BANK OF INDIA (UTAT) (MUMBAI) 5 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 5. IN THE CASE OF M/S INDIAN BANK VS ADDL.CIT IN I TA NO.469(MDS/2010 FOR ASSESSMENT YEAR 2000-01, IT HAS BEEN HELD AS FOLLOWS; 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIA L AVAILABLE N RECORD. IN THE INSTANT CASE, THE ONLY DISPUTE RA ISED BY THE ASSESSEE IS THAT SINCE IT IS A BANK AND IS REQUIRED TO PREPARE ITS ACCOUNTS ACCORDING TO BANKING REGULATION ACT, 1 949 AND NOT ACCORDING TO SCHEDULE VI PART II & III OF THE C OMPANIES ACT, 1956, THE PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE TO IT WHILE COMPUTING THE INCOME UNDER THE MAT. WE FIND THAT RECENTLY THE MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF KRUNG THAI BANK PCLO VS JOINT DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) (2010) 45 DTR 218 HAS HELD AS UNDER; 7. THE PLEA OF THE ASSESSEE IS INDEED WELL TAKEN, AND IT MEET OUR APPROVAL. THE PROVISIONS OF SEC.115JB CA N ONLY COME INTO PLAY WHEN THE ASSESSEE IS REQUIRED TO PRE PARE ITS P&L ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF PA RTS II & III OF SCHDULE VI TO THE COMPANIES ACT. THE STARTI NG POINT OF COMPUTATION OF MAT UNDER SEC.115JB IS THE RESULT SH OWN BY SUCH A P&L ACCOUNT. IN THE CASE OF BANKING COMPA NIES, HOWEVER, THE PROVISIONS OF SCHEDULE VI ARE NOT APPL ICABLE IN 6 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 VIEW OF THE EXEMPTION SET OUT UNDER PROVISO TO SEC. 211(2) OF THE COMPANIES ACT. THE FINAL ACCOUNTS OF THE BANK ING COMPANIES ARE REQUIRED TO BE PREPARED IN ACCORDANCE WITH THE PROVISIONS OF THE BANKING REGULATION ACT. THE P ROVISIONS OF SEC.115JBCANNOT THUS BE APPLIED TO THE CASE OF A BANKING COMPANY. 6. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND A LLOW THE APPEAL OF THE ASSESSEE ON THE GROUND THAT THE BANK IS NOT REQUIRE D TO PREPARE ITS P&L ACCOUNTS IN ACCORDANCE WITH THE PROVISIONS OF PART- II & OF SCHEDULE VI OF COMPANIES ACT, 1956 AND THEREFORE, THE PROVISIONS O F MAT INSEC.115JB OF THE IT ACT, IS NOT APPLICABLE TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ITA NO.596(BNG)/2010 : ASSESSMENT YEAR : 2006-07 D EPT. APPEAL 8. WE SHALL TAKE UP GROUND NO.2 IN ITA NO.596(B)/2 010. WITH RESPECT TO DEDUCTION U/S 36(1)(VIIA) OF THE IT ACT, 1961. 7 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 2. THE CIT(A) ERRED IN DIRECTING THE AO TO ALLOW THE CLAIM OF DEDUCTION U/S36(1)(VIIA) AMOUNTING TO RS.143,12,69,349/- IN EXCESS OF THE PROVISIONS MADE IN THE ACCOUNTS WITHOUT APPRECIATING THAT THE PROVISIONS OF SECTION 36(1)(VIIA) PROVIDES FOR LIMITING THE DEDUCTION TOT EH AMOUNT OF PROVISIONS MADE IN THE ACCOUNTS. WE FIND FROM THE AY: 2008-09 IN ITA NO.578(BANG)/20 12 DATED 27-02- 2015 THE CO-ORDINATE BENCH OF THIS TRIBUNAL HAS DIS CUSSED THE SIMILAR ISSUE AS UNDER; 4. THE AO DISALLOWED CLAIM FOR DEDUCTION OF RS. 192,57,72,764/- OUT OF THE TOTAL CLAIM OF THE ASSES SEE FOR DEDUCTION OF RS.200,03,24,219/- ON THE GROUND THAT THE PROVISION FOR BAD AND DOUBTFUL DEBTS IN RESPECT OF RURAL ADVANCES WAS CREATED BY DEBIT TO PROFIT AND LOSS AC COUNT OF ONLY A SUM OF RS.7,45,51,455 WHEREAS THE CLAIM FOR DEDUCTION ACTUALLY MADE U/S.36(1)(VIIA) OF THE ACT WAS A SUM OF RS.200,03,24,219/-. THE AO WAS OF THE VIEW THAT AS LAID DOWN BY THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF STATE BANK OF PATIALA VS. CIT 272 ITR 53 (P & H), CLAIM FOR DEDUCTION U/S.36(1)(VIIA) OF THE ACT CANNOT BE GREATER THAN THE AMOUNT DEBITED TO THE PR OFIT AND LOSS ACCOUNT AS PROVISION. THE AO THEREFORE PROPOS ED TO 8 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 DISALLOWED A SUM OF RS. 192,57,72,764/- (DIFFERENCE BETWEEN RS.200,03,24,219 AND RS.7,45,51,455). THE CIT(A) DELETED THE ADDITION MADE BY THE AO BY FOLLO WING THE DECISION OF THE DECISION OF THE ITAT IN THE CAS E OF SYNDICATE BANK REPORTED IN 78 ITD 103 WHEREIN IT WA S HELD THAT IRRESPECTIVE OF THE DEBIT TO THE PROFIT AND LO SS ACCOUNT ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS (PBDD), AN ASSESSEE IS ENTITLED TO 10% OF THE AARA AS DEDUC TION U/S.36(1)(VIIA) OF THE ACT. THE RELEVANT OBSERVAT IONS OF THE TRIBUNAL IN THE AFORESAID DECISION WAS AS FOLLOWS: 20. THE LEARNED CIT HAS ALSO ACTED UNDER THE MISCONCEPTION THAT DEDUCTION UNDER CL. (VIIA) IS RE LATED TO THE ACTUAL AMOUNT OF PROVISION MADE BY THE ASSESSEE FOR BAD AND DOUBTFUL DEBTS. THE TRUE MEANING OF THE CLA USE, AS INDICATED EARLIER, IS THAT ONCE A PROVISION FOR BAD AND DOUBTFUL DEBTS IS MADE BY A SCHEDULED BANK HAVING R URAL BRANCHES, THE ASSESSEE IS ENTITLED TO A DEDUCTION W HICH IS QUANTIFIED NOT WITH RESPECT TO THE AMOUNT PROVIDED FOR IN THE ACCOUNTS, BUT WITH RESPECT TO A CERTAIN PERCENT AGE OF THE TOTAL INCOME AND ALSO A CERTAIN PERCENTAGE OF THE A GGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES OF THE BANK. IN OTHER WORDS, THIS IS A SPECIFIC DEDUCTION GIVEN BY THE STATUTE IRRESPECTIVE OF THE QUANTUM PROVIDED BY THE 9 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 ASSESSEE IN ITS ACCOUNTS TOWARDS PROVISION FOR BAD AND DOUBTFUL DEBTS. THE LEARNED DR RELIED ON THE DECISION OF THE ITAT BANGALORE BENCH IN THE CASE OF CANARA BANK IN ITA NO.58/BANG/2004 DATED 9.6.2006. IN THE AFORESAID D ECISION THIS BENCH CONSIDERED THE DECISION OF THE ITAT IN T HE CASE OF SYNDICATE BANK 78 ITD 103(BANG) AND THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O F STATE BANK OF PATIALA (SUPRA) AND HELD THAT THE DECISION RENDERED BY THE HONBLE HIGH COURT HAS TO BE FOLLOWED. THE ABO VE DECISION IS THE DECISION BROUGHT TO OUR NOTICE ON THE ISSUE RENDERED AFTER THE DECISION IN ASSESSEES OWN CASE. JUDICIA L DISCIPLINE DEMANDS THAT WE FOLLOW THE LATER DECISION WHICH HAS CONSIDERED BOTH THE DECISIONS ON THE ISSUE. WE THE REFORE RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF CANARA BANK (SUPRA), HOLD THAT CLAIM FOR DEDUCTI ON U/S.36(1)(VIIA) OF THE ACT CANNOT BE GREATER THAN T HE AMOUNT DEBITED TO THE PROFIT AND LOSS ACCOUNT AS PROVISION . 0 9. TO THE ALTERNATE SUBMISSIONS MADE BY THE RESPON DENT BANK THAT THE ASSESSEE SHOULD BE ALLOWED DEDUCTION ON ACCOUNT OF PROVISION FOR BAD & DOUBTFUL DEBTS (PBDD) U/S 36(1)(VIIA) OF THE IT ACT, 1961 FOR THE ENTIRE PERMISSIBLE LIMIT BECAUSE THE PROVISION IS WHATEVER IS THE SHORTFALL 10 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 BETWEEN THE ELIGIBLE LIMIT AND THE PBDD MADE IN THE BOOKS OF ACCOUNTS BY THE ASSESSEE WAS MADE EXCESS PROVISION IN SUBSEQUEN T YEARS AND THEREFORE, THE ENTIRE AMOUNT SHOULD BE MADE AS DEDU CTION. IT WAS FURTHER SUBMITTED IN THE ALTERNATE CLAIM THE PROVISION MADE IN SUBSEQUENT YEARS WAS MUCH MORE THAN THE ELIGIBLE LIMITS U/S 36(1)(VI IA) OF THE ACT AND SUCH EXCESS WILL TAKE CARE OF THE SHORTFALL OF PBDD IN T HE BOOKS OF ACCOUNTS. THE LEARNED COUNSEL FOR THE ASSESSEE FILED A CHART BEFORE US WHICH IS ANNEXED IN THE ANNEXURE HEREIN. (ANNEXURE-I) 10. THE LEARNED COUNSEL FOR THE ASSESSEE IN SUPPORT OF THE PROPOSITION THAT IF THERE IS SHORTFALL IN THE PBDD MADE IN THE BOOKS OF ACCOUNTS TO THE ELIGIBLE LIMITS AND IF THE SHORTFAL L IS MADE GOOD BY PROVIDING EXCESS PROVISION IN SUBSEQUENT YEARS THE UPPER LIMIT PERMISSIBLE U/S 36(1)(VIIA) OF THE ACT SHOULD BE AL LOWED AS DEDUCTION, REFERRED TO DECISION OF THE HONBLE PUNJAB & HARYAN A HIGH COURT IN THE CASE OF CIT VS. PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORA TION 323 ITR 495 ( PUN.& HAR.) AND THE SPECIAL BENCH ITAT CHANDIGARH BENCH IN THE CASE OF PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD . 102 11 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 ITD 1 (CHD.)(SB) . IN THE AFORESAID DECISIONS THE ASSESSEE CLAIMED DEDUCTION U/S.36(1)(VIII) OF THE ACT IN RESPECT OF SPECIAL RESERVE CREATED AND MAINTAINED BY A SPECIFIED ENTITY, AN AMOUNT NOT EXCEEDING TWENTY PER CENT OF THE PROFITS DERIVED FROM ELIGIBLE BUSINESS COMPUTED UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' (BEFORE MAKING ANY DEDUCTION UNDER THIS CLAUSE) CARRIED TO SUCH RESERV E ACCOUNT. THE ASSESSEE DID NOT CREATE SPECIAL RESERVE TO THE EXTE NT OF 20% OF THE PROFITS DERIVED FROM ELIGIBLE BUSINESS. IT WAS HELD THAT T HE ASSESSEE SHOULD BE AFFORDED AN OPPORTUNITY TO ASSESSEE TO CREATE FURTH ER RESERVE. REFERENCE WAS MADE TO THE DECISION OF ITAT DELHI IN THE CASE OF POWER FINANCE CORPORATION LTD. 2008-TIOL-475-ITAT-DEL WHEREIN IN THE CONTEXT OF DEDUCTION U/S.32A OF THE ACT, THE TRIBUNAL HELD THA T THE RESERVE CREATED BY HOLDING A SECOND ANNUAL GENERAL MEETING AND WHER E ACCOUNTS WERE AMENDED CREATING RESERVE REQUIRED U/S.32A OF THE AC T, THE ASSESSEE SHOULD BE ALLOWED DEDUCTION U/S 36(1)(VIIA) OF THE ACT. 11. THE CO-ORDINATE BENCH HAS HELD AS FOLLOWS; WE HAVE CONSIDERED THE SUBMISSIONS AND ARE OF THE VIEW THAT THE SAME CANNOT BE ACCEPTED. THE CREATION OF A SPECIAL RESERVE U/S.32A OR SEC.36(1)(VIII) OF THE ACT CANNO T BE 12 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 EQUATED WITH CREATION OF PBDD U/S.36(1)(VIIA) OF TH E ACT. CREATION OF PROVISION U/S.36(1)(VIIA) OF THE ACT IS GOVERNED BY CERTAIN RULES LIKE RULE 6ABA OF THE RULES IN RES PECT OF RURAL ADVANCES. IT CANNOT BE CREATED AT THE BANKS WHIMS AND FANCY. MOREOVER THE ASSESSEE IS NOT MAKING A C LAIM FOR CREATION OF PBDD IN THE BOOKS OF ACCOUNTS OF PY REL EVANT TO AY 08-09. THE EXCESS RESERVE CREATED IN THE SUBSEQ UENT YEAR CANNOT BE EQUATED TO THE PBDD CREATED IN THE B OOKS FOR THE PRESENT AY. THE DECISIONS RELIED UPON BY T HE LEARNED COUNSEL FOR THE ASSESSEE DO NOT LAY DOWN A PROPOSITION THAT EXCESS PROVISION CREATED IN THE SU BSEQUENT YEAR CAN SUPPLEMENT THE INADEQUATE CREATED IN AN EA RLIER YEAR. THE DECISIONS RELIED UPON BY THE LEARNED COU NSEL FOR THE ASSESSEE LAY DOWN PROPOSITION THAT THE ASSESSEE SHOULD BE GIVEN LIBERTY TO CREATE A RESERVE IN THE BOOKS O F ACCOUNTS OF THE RELEVANT AY. FOR THE REASONS GIVEN ABOVE, W E REJECT THE SECOND ALTERNATE SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE. THUS THE ASSESSEE WILL BE ENTITLED TO DEDUCTION U/S.36(1)(VIIA) OF THE ACT OF RS.100,5 5,67,213/- GROUND NO.2 OF THE REVENUE IS ALLOWED TO THIS EXTEN T. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDI NATE BENCH OF THIS TRIBUNAL THE REVENUE APPEAL IS PARTLY ALLOWED. 13 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 12. GROUND NO.3 READS AS FOLLOWS; 3. THE CIT(A) ERRED IN DIRECTING THE AO TO ALLOW DEDUCTION OF RS.34,45,27,639/- U/S 36(1)(VIIA) OF T HE IT ACT IN RESPECT OF BAD DEBTS WRITTEN OFF PERTAINING TO N ON-RURAL BRANCHES WITHOUT ADJUSTING THE SAME AGAINST THE PRO VISIONS MADE U/S 326(1)(VIIA). THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE O F SOUTH INDIAN BANK VS CIT (262 ITR 579) HAS BEEN REVERSED BY THE FULL BENCH OF THE HONBLE HIGH COURT ON 16-12-2009 . 12.1 WE FIND THAT THE ISSUE IS COVERED BY THE HONB LE SUPREME COURT IN THE CASE OF CATHOLIC SYRIAN BANK LTD., 18 TAXMANN.COM 282 (SC) HELD AS FOLLOWS; UNDER SECTION 36(1)(VII) THE TAXPAYER CARRYING ON BUSINESS IS ENTITLED TO A DEDUCTION IN THE COMPUTATION OF TA XABLE PROFITS OF THE AMOUNT OF ANY DEBT WHICH IS ESTABLIS HED TO HAVE BECOME A BAD DEBT DURING THE PREVIOUS YEAR, SU BJECT TO CERTAIN CONDITIONS. HOWEVER, A MERE PROVISION FOR BAD AND DOUBTFUL DEBT(S) IS NOT ALLOWED AS A DEDUCTION IN T HE COMPUTATION OF TAXABLE PROFITS. IN ORDER TO PROMOT E RURAL BANKING AND IN ORDER TO ASSIST THE SCHEDULED COMMER CIAL BANKS IN MAKING ADEQUATE PROVISIONS FROM THEIR CURR ENT PROFITS TO PROVIDE FOR RISKS IN RELATION TO ADVANCE S MADE BY 14 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 THEIR RURAL BRANCHES. THE DEDUCTION IS LIMITED TO A SPECIFIED PERCENTAGE OF THE AGGREGATE AVERAGE ADVANCES MADE B Y THE RURAL BRANCHES COMPUTED IN THE MANNER PRESCRIBED BY THE IT RULES, 1962. THUS, THE PROVISIONS OF CLAUSE(VIIA) OF SECTION 36(1) RELATING TO THE DEDUCTION ON ACCOUNT OF THE PROVISION FOR BAD AND DOUBTFUL DEBT(S) ARE DISTINCT AND INDEP ENDENT OF THE PROVISIONS OF SECTION 36(1)(VII) RELATING TO AL LOWANCE OF THE BAD DEBT(S). IN OTHER WORDS, THE SCHEDULED COMMER CIAL BANKS WOULD CONTINUE TO GET THE FULL BENEFIT OF THE WRITE OFF OF THE IRRECOVERABLE DEBT(S) UNDER SECTION 36(10(VI I) IN ADDITION TO THE BENEFIT OF DEDUCTION FOR THE PROVIS ION MADE FOR BAD AND DOUBTFUL DEBT(S) UNDER SECTION 36(1)(VI IA). A READING OF THE CIRCULARS ISSUED BY THE CBDT INDICAT ES THAT NORMALLY A DEDUCTION FOR BAD DEBT(S) CAN BE ALLOWED ONLY IF THE DEBT IS WRITTEN OFF IN THE BOOKS AS BAD DEBT(S) . NO DEDUCTION IS ALLOWABLE IN RESPECT OF A MERE PROVISI ON FOR BAD AND DOUBTFUL DEBT(S). BUT IN THE CASE OF RURAL AD VANCES, A DEDUCTION WOULD BE ALLOWED EVEN N RESPECT OF A MERE PROVISION WITHOUT INSISTING ON AN ACTUAL WRITE OFF. HOWEVER, THIS MAY RESULT IN DOUBLE ALLOWANCE IN THE SENSE TH AT IN RESPECT OF SAME RURAL ADVANCE THE BANK MAY GET ALLO WANCE ON THE BASIS OF CLAUSE(VIIA) AND ALSO ON THE BASIS OF ACTUAL WRITE OFF UNDER CLAUSE (VIIA) THIS SITUATION IS T AKEN CARE OF BY THE PROVISO TO CLAUSE (VII) WHICH LIMITS THE ALL OWANCE ON 15 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 THE BASIS OF THE ACTUAL WRITE OFF TO THE EXCESS, IF ANY OF THE WRITE OFF OVER THE AMOUNT STANDING TO THE CREDIT OF THE ACCOUNT CREATED UNDER CLAUSE (VII). HOWEVER, THE R EVENUE DISPUTES THE POSITION THAT THE PROVISO TO CLAUSE (V II) REFERS ONLY TO RURAL ADVANCES. IT SAYS THAT THERE ARE NO SUCH WORDS IN THE PROVISO WHICH INDICATES THAT THE PROVISO APP LY ONLY TO RURAL ADVANCES. THERE IS NO MERIT IN THE OBJECTION RAISED BY THE REVENUE. FIRSTLY, THE CBDT ITSELF HAS RECOGNIZ ED THE POSITION THAT A BANK WOULD BE ENTITLED TO BOTH THE DEDUCTION, ONE UNDER CLAUSE (VII) ON THE BASIS OF ACTUAL WRITE OFF AND ANOTHER, ON THE BASIS OF CLAUSE (VIIA) IN RESPECT O F A MERE PROVISION. FURTHER, TO PREVENT DOUBLE DEDUCTION, T HE PROVISO TO CLAUSE (VII) WAS INSERTED WHICH SAYS THAT IN RES PECT OF BAD DEBT(S) ARISING OUT OF RURAL ADVANCES, THE DEDUCTIO N ON ACCOUNT OF ACTUAL WRITE OFF WOULD BE LIMITED TO THE EXCESS OF THE AMOUNT WRITTEN OFF OVER THE AMOUNT OF THE PROVI SION ALLOWED UNDER CLAUSE (VIIA). THUS, THE PROVISO TO CLAUSE (VII) STOOD INTRODUCED IN ORDER TO PROTECT THE REVENUE. IT WOULD BE MEANINGLESS TO INVOKE THE SAID PROVISO WHERE THERE IS NO THREAT OF DOUBLE DEDUCTION IN CASE OF RURAL ADVANCE S, WHICH ARE COVERED BY THE PROVISIONS OF CLAUSE (VIIA) THER E 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 16 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 EXPLAINED BY THE CIRCULARS ISSUED BY THE CBDT. THU S, THE PROVISO INDICATES THAT IT IS LIMITED IN ITS APPLICA TION TO BAD DEBT(S) ARISING OUT OF RURAL ADVANCES OF A BANK. I T FOLLOWS THAT IF THE AMOUNT OF BAD DEBT(S) ACTUALLY WRITTEN OFF N THE ACCOUNTS OF THE BANK REPRESENTS ONLY DEBT(S) ARISIN G OUT OF URBAN ADVANCES, THE ALLOWANCE THEREOF IN THE ASSESS MENT IS NOT AFFECTED, CONTROLLED OR LIMITED IN ANY WAY BY T HE PROVISO TO CLAUSE (VII). RESPECTFULLY FOLLOWING THE APEX COURT DECISION WE D ISMISS REVENUES APPEAL ON THIS ISSUE. 13. GROUND NO.4 OF THE REVENUE READS AS FOLLOWS; 4. THE CIT(A) ERRED IN ALLOWING THE CLAIM OF DEPRECIAT ION ON HELD TO MATURITY(HTM) INVESTMENT AMOUNTING TO RS.349,47,34,269/-. THE CIT(A) OUGHT TO HAVE APPRE CIATED THE FACT THAT THE HTM SECURITIES HELD BY THE ASSESS EE DO NOT POSSESS THE CHARACTERISTICS OF STOCK IN TRADE BUT I T IS A CAPITAL ASSET. 17 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 14. WE FIND THAT THIS ISSUE IS COVERED BY THE DECI SION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN ITA NO.578(B)/20 12 WHICH IS AS UNDER; 33. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. SIMILAR ISSUE AS TO WHETHER DEPRECIATION ON INVESTM ENTS HELD UNDER THE CATEGORY HELD TO MATURITY OR AVAI LABLE FOR SALE CAN BE ALLOWED AS DEDUCTION CAME UP FOR CONSIDERATION IN ASSESSEES OWN CASE IN AY 10-11 IN ITA NO.1310/BANG/2012 AND THIS TRIBUNAL UPHELD SIMILAR ORDER OF CIT(A). THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE TRIBUNAL: - 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. SIMILAR ISSUE AS TO WHETHER DEPRECIATION ON INVESTM ENTS HELD UNDER THE CATEGORY HELD TO MATURITY CAN BE ALLOWED AS DEDUCTION CAME UP FOR CONSIDERATION IN T HE CASE OF SYNDICATE BANK (SUPRA) BEFORE THE ITAT BANG ALORE BENCH. THE TRIBUNAL ON THE ISSUE HELD AS FOLLOWS: 58. WE HAVE HEARD THE SUBMISSIONS OF THE LD. DR AND THE LD. COUNSEL FOR THE ASSESSEE. THE LD. D R RELIED ON THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT V. ING VYSYA BANK LTD. IN ITA NO.2886/2005 DATED 06.06.2012. IN THE AFORESAI D 18 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 DECISION, THE HONBLE HIGH COURT OF KARNATAKA TOOK A VIEW THAT THE GUIDELINES ISSUED BY THE RBI WILL NOT BE RELEVANT WHILE COMPUTING INCOME UNDER THE INCOME-TA X ACT. THE HONBLE COURT FURTHER TOOK THE VIEW THAT EVERY INVESTMENT HELD BY A BANK CANNOT BE CONSIDERED AS STOCK-IN-TRADE. THE HONBLE HIGH COURT FINALLY CON CLUDED THAT 30% OF THE INVESTMENTS CAN BE CLOTHED TO THE CHARACTER OF STOCK-IN-TRADE AND THAT THE REMAINING AMOUNTS WILL BE INVESTMENTS AND THEREFORE DIMINUTIO N IN THEIR VALUE CANNOT BE ALLOWED AS A DEDUCTION. 59. THE LD. COUNSEL FOR THE ASSESSEE, HOWEVER, SUBMITTED THAT IN THE ASSESSEES OWN CASE FOR THE A .Y. 2005-06, THIS TRIBUNAL HAS CONFIRMED THE ORDER OF T HE CIT(A), DELETING IDENTICAL ADDITION MADE BY THE AO. OUR ATTENTION WAS ALSO DRAWN TO THE ORDER OF THE TRIBUN AL IN ASSESSEES OWN CASE IN ITA NO.492/BANG/2009 FOR THE A.Y. 2005-06, ORDER DATED 13.01.2012, WHEREIN THE TRIBUNAL HAD TO DEAL WITH IDENTICAL ISSUE AS TO WHE THER THE CIT(A) WAS CORRECT IN DELETING THE ADDITION MAD E BY THE AO ON ACCOUNT OF PROFIT ON SALE OF INVESTMENTS OF RS.200,77,13,662/- AND DELETING THE ACTION OF THE A O IN DISALLOWING LOSS CLAIMED ON TREATING INVESTMENTS AS STOCK-IN-TRADE BY DRAWING THE INVESTMENT TRADING ACCOUNT OF RS.775,96,55,047. THE TRIBUNAL HELD 19 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 16. WE HAVE HEARD BOTH SIDES AND FIND THAT THE SUPREME COURT IN THE CASE OF UCO BANK IN 240 ITR 355 HAS HELD AS UNDER : 'IN OUR VIEW, AS STATED ABOVE, CONSISTENTLY FOR 30 YEARS, THE ASSESSEE WAS VALUING THE STOCK-IN- TRADE AT COST FOR THE PURPOSE OF STATUTORY BALANCE- SHEET, AND FOR THE INCOME-TAX RETURN, VALUATION WAS AT COST OR MARKET VALUE, WHICHEVER WAS LOWER. THAT PRACTICE WAS ACCEPTED BY THE DEPARTMENT AND THERE WAS NO JUSTIFIABLE REASON FOR NOT ACCEPTING THE SAME. PREPARATION OF THE BALANCE-SHEET IN ACCORDANCE WITH THE STATUTORY PROVISION WOULD NOT DISENTITLE THE ASSESSEE IN SUBMITTING THE INCOME-TAX RETURN ON THE REAL TAXABLE INCOME IN ACCORDANCE WITH THE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE CONSISTENTLY AND REGULARLY. THAT CANNOT BE DISCARDED BY THE DEPARTMENTAL AUTHORITIES ON THE GROUND THAT THE ASSESSEE WAS MAINTAINING THE BALANCE-SHEET IN THE STATUTORY FORM ON THE BASIS OF THE COST OF THE INVESTMENTS. IN SUCH CASES, THERE IS NO QUESTION OF FOLLOWING TWO DIFFERENT METHODS FOR VALUING ITS STOCK-IN-TRADE (INVESTMENTS) BECAUSE THE BANK WAS REQUIRED TO PREPARE THE BALANCE-SHEET IN THE 20 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 PRESCRIBED FORM AND IT HAD NO OPTION TO CHANGE IT. FOR THE PURPOSE OF INCOME TAX AS STATED EARLIER, WHAT IS TO BE TAXED IS THE REAL INCOME WHICH IS TO BE DEDUCED ON THE BASIS OF THE ACCOUNTING SYSTEM REGULARLY MAINTAINED BY THE ASSESSEE AND THAT WAS DONE BY THE ASSESSEE IN THE PRESENT CASE.' THE BANGALORE BENCH OF ITAT IN CORPORATION BANK (SUPRA) HAS ALSO FOLLOWED THE ABOVE DECISION OF THE HON'BLE SUPREME COURT AS ALSO THE ITAT, MUMBAI AND ITAT, CHENNAI. FOLLOWING THE ABOVE DECISIONS, WE ARE DECIDING THIS ISSUE IN FAVOUR OF THE ASSESSE E. THIS GROUND OF APPEAL BY THE REVENUE IS DISMISSED. 60. APART FROM THE ABOVE, THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE DECISION RENDERED BY THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF ING VYSYA BANK (SUPRA) IS PER INCURIAM THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF UCO BANK V. CI T, 240 ITR 355 (SC). HE BROUGHT TO OUR NOTICE THAT TH E HONBLE SUPREME COURT APPROVED THE PRACTICE OF NATIONALIZED BANK GOVERNED BY BANKING REGULATION AC T, FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING BOTH FOR BOOK KEEPING AS WELL FOR INCOME-TAX PURPOSES. THE HON BLE APEX COURT UPHELD THE METHOD ADOPTED BY THE BANKS 21 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 VALUING STOCK-IN-TRADE (INVESTMENTS) AT COST IN BAL ANCE SHEET IN ACCORDANCE WITH THE BANKING REGULATION ACT AND VALUING THE SAME AT COST OR MARKET VALUE, WHICHEVER WAS LOWER FOR INCOME-TAX PURPOSES. THE HONBLE COURT TOOK THE VIEW THAT ALL INVESTMENTS HE LD BY A BANK ARE TO BE REGARDED AS STOCK-IN-TRADE. 61. THE LD. COUNSEL FOR THE ASSESSEE FURTHER DREW OUR ATTENTION TO A VERY RECENT DECISION OF THE HONBLE HIGH COURT OF KARNATAKA RENDERED ON 11.03.2013 IN THE CA SE OF CIT V. VIJAYA BANK, ITA NO.687/2008. THE HONBL E HIGH COURT OF KARNATAKA IN THE AFORESAID CASE FOLLO WED ITS OWN DECISION RENDERED IN THE CASE OF KARNATAKA BANK LTD. V. CIT IN ITA NO.172/2009 RENDERED ON 11.01.2013, WHEREIN THE COURT TOOK THE VIEW THAT DEPRECIATION CLAIMED ON INVESTMENTS HELD ON MATURI TY BY A BANK HAS TO BE TREATED AS STOCK-IN-TRADE IN ACCORDANCE WITH RBI GUIDELINES AND CBDT CIRCULAR. IT WAS HIS SUBMISSION THAT THE LATER DECISION OF THE HONBLE KARNATAKA HIGH COURT HAS TO BE FOLLOWED. 62. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS AND ARE OF THE VIEW THAT THE CONTENTION S PUT FORTH ON BEHALF OF THE ASSESSEE DESERVE TO BE ACCEPTED. THE TRIBUNAL IN ASSESSEES OWN CASE ON A N 22 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 IDENTICAL ISSUE FOR THE A.Y. 2005-06 HAS UPHELD THE CLAIM OF THE ASSESSEE. THE LATER DECISION OF THE H ONBLE HIGH COURT OF KARNATAKA IS ALSO IN FAVOUR OF THE ASSESSEE. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIE W THAT THE ISSUE RAISED BY THE REVENUE IN ITS APPEAL IS WITHOUT MERIT. CONSEQUENTLY, THE SAME IS DISMISSED . THE ABOVE DECISION SQUARELY COVERS THE ISSUE IN FAV OUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE SAME, WE U PHOLD THE ORDER OF THE CIT(A) AND DISMISS THE RELEVANT GR OUNDS OF APPEAL OF THE REVENUE. RESPECTFULLY FOLLOWING THE CO-ORDINATE BENCH DECISI ON IN ITA NO.578(B)/2012, WE DISMISS THE GROUND NO.4 RAISED B Y THE REVENUE. 15. GROUND NO.5 OF THE REVENUE READS AS FOLLOWS; 5. THE CIT(A ERRED IN DELETING THE ADDITION OF RS.2 0CR U/S 36(1)(VIII) SINCE THE ASSESSSEE IS NOT A SPECIF IED ENTITY PRIOR TO AMENDMENT IN THE IT ACT,W.E.F.1/4/2008 AND NOT DOING AN ELIGIBLE BUSINESS TO BE ENTITLED FOR DEDUC TION U/S 326(1)(VIII). 23 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 16. WE FIND THAT THIS ISSUE IS COVERED BY THE DECI SION OF MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF UNION BANK OF INDIA VS ACIT,LTU, MUMBAI IN ITA NOS.4702 TO 4706/MUM/2010 FOR THE ASS ESSMENT YEARS 2002-03 TO 2006-07 WHEREIN THE CO-ORDINATE BENCH HE LD AS FOLLOWS; EVEN OTHERWISE THE ASSESSEE IS A GOVT. COMPANY S INCE THE CENTRAL GOVERNMENT HOLDS MORE THAN 51% OF THE SHARE CAPITAL OF THE BANK AND AS DEFINED INSEC.617 OF THE COMPANIES ACT, THE ASSESSEE IS A GOVERNMENT COMPAN Y. HENCE THE DEDUCTION U/S 36(1)(VIII) HAS TO BE ALLOW ED TO THE ASSESSEE AS IT IS ENGAGED IN THE BUSINESS OF PROVID ING LONG TERM FINANCE FOR INDUSTRIAL, AGRICULTURE AND INFRAS TRUCTURE DEVELOPMENT IN INDIA AND IS A GOVERNMENT COMPANY. THE ASSESSEE IS A FINANCIAL CORPORATION WITHIN THEMEAN ING OF SEC.36(1)(VIII) SINCE IT IS A GOVERNMENT COMPANY. HOWEVER, THE DEDUCTION AVAILABLE UNDER THIS SECTION WILL BE RESTRICTED TO THE AMOUNT TRANSFERRED TO SPECIAL RESERVE SUBJEC T TO THE LIMIT OF PRESCRIBED PERCENTAGE OF PROFITS DERIVED F ROM PROVIDING LONG TERM FINANCE FOR THE APPROVED PURPOS ES MENTIONED IN SEC.36(1)(VIII). FOR THE PURPOSE OF D ETERMINING THE DEDUCTION AVAILABLE TO THE ASSESSEE U/S 36(1)(V II) THE ISSUE IS REMITTED BACK TO THE FILE OF THE AO SUBJEC T TO THE ABOVE DIRECTION THE APPEAL OF THE ASSESSEE ON THIS ISSUE IS ALLOWED. 24 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 RESPECTFULLY FOLLOWING THE CO-ORDINATE BENCH (SUPR A), WE DISMISS THE REVENUES APPEAL ON THIS ISSUE. 17. THE REVENUE HAS RAISED THE FOLLOWING GROUND NO .6 AS FOLLOWS; 6. THE CIT(A) HAS ERRED IN DELETING THE DISALLOWAN CE MADE U/S 14A RS.3,43,28,658/- CONSIDERING IT IS AN EXPENDITURE INCURRED TO EARN EXEMPT INCOME U/S 14A. IN THE CASE OF STATE BANK OF MYSORE, THE CIT(A) HAS UPHELD DISALLOWANCE OF 2% OF THE EXEMPT INCOME VIDE ORDER DATED 22-06-2007 FOR AY: 2003-04 AND ORDER DATED 5/9/2007 FOR AY: 2004-05.. 18. WE FIND THAT THIS ISSUE IS COVERED BY THE ORDER OF ITAT, BANGALORE BENCH IN ASSESSEES OWN CASE IN ITA NO.57 8(B)/2012 (SUPRA), WHEREIN IT HAS BEEN HELD AS UNDER; WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. IN THE PRESENT CASE, THE CLAIM OF THE ASSESSEE BEFORE THE AO THAT TAX FREE INCOME FOR THE BANK IS MAINLY FROM INVESTMENTS HELD BY THE BANK. THE INVESTMENT ACTIV ITIES OF THE BANK ARE CARRIED OUT BY THE TREASURY DEPARTM ENT AT HEAD 25 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 OFFICE. EVEN WITHOUT EARNING ANY FREE INCOME, THES E EXPENDITURE WOULD HAVE BEEN INCURRED BY THE BANK SI NCE THE BANK HAS TO HOLD SLR SECURITIES TO CARRY ON THE BUS INESS AND THE EXPENDITURE IS OF FIXED IN NATURE. THEREFORE, THERE IS NO EXPENDITURE INCURRED DIRECTLY BY THE BANK FOR EARNI NG ANY TAX FREE INCOME. SINCE THE EXPENDITURE WOULD HAVE BEEN INCURRED BY THE BANK EVEN WITHOUT THE EARNING OF TAX FREE IN COME, NO PART OF THE EXPENDITURE CAN BE RELATED TO EARNING T HE TAX FREE INCOME. IN THE LIGHT OF THE ABOVE UNDISPUTED FACT AND IN VIEW OF THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CCI LTD. (SUPRA), WE ARE OF THE VIEW THAT N O DISALLOWANCE CAN BE MADE U/S.14A OF THE ACT. THE AD DITION MADE IN THIS REGARD IS DIRECTED TO BE DELETED. THE RELEVANT GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. FOLLOWING THE CO-ORDINATE BENCH DECISION IN ITA NO.578(B)/2012(SUPRA) WE DISMISS THE REVENUES APPE AL ON THIS ISSUE. 19. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. 20. ITA NO.747 (B)/2011 FOR ASSESSMENT YEAR : 2007-08 THIS APPEAL HAS BEEN FILED BY THE REVENUE. THE G ROUNDS IN ITA NO.747(B)/2011 ARE SIMILAR AS IN ITA NO.596(BNG)/2 010 FOR AY: 2006- 26 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 07. HENCE, THE CONCLUSIONS DRAWN WITH RESPECT TO T HE GROUNDS RAISED ARE TO BE FOLLOWED FROM THE ORDER FOR THE ASSESSMENT YE AR 2006-07. 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 22. ITA NO.760(B)/2011 FOR ASSESSMENT YEAR : 2007-08 THE ASSESSEE HAS FILED ADDITIONAL GROUNDS OF APPEA L WITH RESPECT TO SEC.115JB OF THE IT ACT, 1961 AS IN ASSESSMENT YEAR 2006-07, WE HAVE ADMITTED THE ADDITIONAL GROUNDS AND HENCE, THE CONC LUSIONS DRAWN FOR THE ASSESSMENT YEAR 2006-07 AT PARAS 5 & 6 IN ITA N O.660(B)/2010 ARE TO BE FOLLOWED. 23. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON THE 11 TH SEPTEMBER, 2015. SD/- (ABRAHAM P GEORGE) SD/- (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE: D A T E D : 11-09-2015 AM* 27 ITA NOS.660,596 (B)/10 & 760,747(B)/2014 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER, AR,ITAT, BANGALORE