DCIT, Thrissur V. South Indian Bank Ltd, Thrissur

ITA 722/COCH/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4557 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 24-02-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 06-06-2008
• Court: TRIBUNAL
• Department Lawyers: S C SONKAR
• Assessee Lawyers: P BALAKRISHNAN SR ADV
• Keywords: Capital asset; Depreciation; Cost of acquisition; Bad and doubtful debts; Competent authority; Commercial expediency; Revised return
• Section: 234B; 14A; 37(1); 139(5); 11

Judgement Text

1 IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.A. NOS. 722 & 1003/COCH/2008 ASSESSMENT YEARS : 2002-03 & 2005--06 1.THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, TRICHUR. 2.THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE- 1(1), TRICHUR. VS. THE SOUTH INDIAN BANK LTD., SIB HOUSE, P.B. NO. 28, MISSION QUARTERS, TRICHUR-1. [PAN:AABCT0022F] (REVENUE -APPELLANT) (ASSESSEE - RESPONDENT) I.T.A. NO. 935/COCH/2008 ASSESSMENT YEAR : 2005--06 THE SOUTH INDIAN BANK LTD., SIB HOUSE, MISSION QUARTERS, TRICHUR. VS. THE ADDL. COMMISIONER OF INCOME-TAX, RANGE-1, TRICHUR. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI P.BALAKRISHNAN, SR. ADV.-AR REVENUE BY SHRI S.C.SONKAR, CIT-DR O R D E R PER SANJAY ARORA, AM: THESE ARE A SET OF THREE APPEALS, I.E., BY THE REVENUE FOR ASSESSMENT YEAR (A.Y.) 2002-03 AND CROSS APPEALS BY THE ASSESSEE AN D THE REVENUE FOR A.Y. 2005-06, ARISING OUT OF SEPARATE ORDERS BY THE COMM ISSIONER OF INCOME-TAX (APPEALS)-V, KOCHI (CIT(A) FOR SHORT) DATED 25.2. 2008 AND 29.8.2008 FOR THE CONSECUTIVE YEARS RESPECTIVELY. 2 2. THE APPEALS RAISING COMMON GROUNDS, WERE HEARD T OGETHER AND ARE BEING DISPOSED OF BY A COMMON, CONSOLIDATED ORDER. WE SH ALL BEGIN WITH THE REVENUES APPEAL FOR THE FIRST YEAR, I.E., A.Y. 2002-03 ADVER TING TO THE OTHER APPEALS, IN RESPECT OF COMMON GROUNDS. 3. THE SECOND GROUND OF THE REVENUES APPEAL AND LI KEWISE GROUND # 2 OF THE ASSESSEES APPEAL FOR A.Y. 2005-06 (ITA # 935/COCH /2008), IS IN RESPECT OF THE DISALLOWANCE EFFECTED BY THE ASSESSING OFFICER (AO) UNDER SECTION 14A OF THE INCOME-TAX ACT, 1961 ('THE ACT' HEREINAFTER) IN RE SPECT OF THE EXPENDITURE ESTIMATED TO HAVE BEEN INCURRED BY THE ASSESSEE FO R EARNING INTEREST ON TAX-FREE BONDS AND DIVIDENDS, BOTH OF WHICH ARE EXEMPT U/S. 10 OF THE ACT. THE LD. AR, DURING THE COURSE OF ARGUMENTS, INFORMED THE COURT THAT THE ASSESSEE CONTESTS THE RETROSPECTIVE APPLICATION OF SECTION 14A(2), WHICH PRESCRIBES THE MANNER OF COMPUTING THE DISALLOWABLE EXPENDITURE PER RULE 8D OF THE INCOME TAX RULES, 1962 (THE RULES HEREINAFTER), ISSUED ON 24.3.2008 , SO THAT IT COULD HAVE APPLICATION ONLY FROM A.Y. 2008-09 AS AGAINST THE F INDING BY THE LD. CIT(A) (FOR A.Y. 2005-06) THAT THE SAME WOULD BE APPLICABLE FOR ALL THE ORDERS ISSUED AFTER 24.3.2008. THOUGH THE ASSESSEES STAND STANDS UPHEL D BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ BOYCE VS. DY. CIT (PLACING A GIST OF THE ORDER ON RECORD), HOLDING SO, THE JURISDICTIONAL HIGH COURT PER ITS RECENT DECISION IN THE CASE OF CIT V. DHANALAKSHMI BANK LTD. AND OTHERS (I.T.A. NO. 1324/COCH/2009 DATED 21.10.2010 (COPY ON RECORD/EXHIBIT P1) HAS HELD OTH ERWISE. AS SUCH, THE SAME BEING BINDING ON ALL THE AUTHORITIES OPERATING UNDE R ITS TERRITORIAL JURISDICTION, THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE AO W ITH DIRECTIONS TO COMPLY WITH THE DECISION BY THE JURISDICTIONAL HIGH COURT. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD. THE JURISDICTIONAL HIGH COURT HAS CONFIRMED THE RETROSP ECTIVE APPLICATION OF S. 14A, INCLUDING RULE 8D R.W.S. 14A(2), STATING THAT WHERE SEPARATE ACCOUNTS ARE NOT 3 MAINTAINED IN RESPECT OF FUNDS UTILISED FOR INVESTM ENT IN TAX-FREE SECURITIES AND OTHERS, THE AO IS OBLIGED TO WORK OUT THE SAME BY A DOPTING A RATIONAL, REASONABLE BASIS. IT, IN EFFECT, UPHELD THE DECISION BY THE SP ECIAL BENCH OF THE TRIBUNAL IN THE CASE OF I.T.O. VS. DAGA CAPITAL MANAGEMENT PVT. LTD ., 312 ITR (AT) 1 (MUM.) (SB), WHICH STOOD FOLLOWED BY THE COCHIN BENCH OF T HE TRIBUNAL IN THE CASE OF THE APPEAL UNDER REFERENCE. THE FORMULA ADOPTED BY THE ASSESSING AUTHORITY, WHICH IS THE SAME AS APPLIED BY THE AO IN THE INSTANT CASE/S AS WELL, WAS FOUND NOT ACCEPTABLE BY THE HONBLE HIGH COURT INASMUCH AS TH E AO HAD PRESUMED THE DEPOSITS OR INTEREST-BEARING BORROWINGS AS ONLY FUN DING THE TAX-FREE INVESTMENTS (SO THAT THE AVERAGE COST OF DEPOSITS FOR THE YEAR/ S WAS APPLIED BY THE AO TO ARRIVE AT THE COST OF THE FUNDS INVESTED IN THE TAX-FREE I NVESTMENTS), WHILE, CLEARLY, THE BANK HAD OWN, AS WELL AS ACCESS TO, NON-INTEREST BE ARING FUNDS AS WELL, WHICH WOULD BE AVAILABLE FOR SUCH INVESTMENT. IN FACT, IN THE PRESENT CASE, THE AO HIMSELF ADMITS OF THE SAME WHEN HE SAYS THAT THE FU NDS FOR THE PURPOSE COME FROM THE COMMON POOL OF BORROWED AND NON-BORROWED FUNDS. FURTHER, THE AVERAGE COST OF DEPOSITS HAS BEEN FURNISHED BY THE ASSESSEE ITSE LF, IT IS NOT CLEAR IF THE SAME INCLUDED INTEREST-FREE (DEMAND) DEPOSITS AND/OR OWN FUNDS IN THE WORKING OR NOT. WITHOUT DOUBT, IT IS AVERAGE COST FOR THE YEAR, AS WELL AS THE AVERAGE INVESTMENT IN TAX-FREE SECURITIES, THAT WOULD BE RELEVANT FOR THE PURPOSE. THE HONBLE COURT, IN FACT, EVEN WENT ON TO SUGGEST A FORMULA FOR A REASO NABLE ESTIMATION OF THE CORRESPONDING INTEREST EXPENDITURE INCURRED IN EARN ING TAX-FREE INCOME (BY APPORTIONING THE TOTAL INTEREST LIABILITY IN THE RA TIO OF THE TAX-FREE INCOME TO THE TOTAL INCOME). WE OBSERVE THAT THE `TOTAL INCOME WOULD REFER TO THE GROSS INCOME, AS NET INCOME, I.E., NET OF EXPENSES, WOULD RENDER THE NUMERATOR AND DENOMINATOR AS NOT COMPARABLE. SECONDLY, THE YIELD ON TAX-FREE SECURITIES IS GENERALLY LOWER THAN THAT WOULD OBTAIN IN RESPECT OF REGULAR, BUSIN ESS INVESTMENTS, SO THAT THIS ASPECT WOULD NEED TO BE CONSIDERED WHILE ADOPTING A REASONABLE FORMULA FOR ESTIMATING THE ACTUAL INTEREST COST THAT COULD BE C ONSIDERED AS INCURRED TOWARD THE SAME. IN FACT, THE HONBLE COURT ITSELF CLARIFIED T HAT THE FORMULA BEING SUGGESTED BY 4 IT WAS ONLY BY WAY OF AN ILLUSTRATION, AND THAT THE ASSESSEE WAS FREE TO ESTABLISH THE DISALLOWABLE EXPENDITURE BY SUGGESTING ANY FORMULA WITH REFERENCE TO ITS ACCOUNTS THAT WOULD ENABLE ESTIMATING THE SAME MORE PRECISEL Y, AS ALSO THE AO TO ADOPT AN APPROACH AND METHOD WHICH WOULD ESTIMATE THE EXPEND ITURE AS ACCURATELY AS THE SITUATION ADMITS; THAT THE ESTIMATION IS PERMISSIBL E IN DOING SO, HAVING BEEN AFFIRMED BY THE APEX COURT IN THE CASE OF CIT V. WALFORT SHARES AND STOCKBROKERS PVT. LTD. (2010) 326 ITR 1 (SC), EVEN AS IT CLARIFIED THAT R . 8D WOULD SPECIFICALLY APPLY ONLY FROM A LATER DATE (WHEN THE SAME BECAME APPLICABLE). IN VIEW OF THE FOREGOING, THE MATTER FOR BOTH THE YEARS IS REMITTE D BACK TO THE FILE OF THE AO TO AFFORD AN OPPORTUNITY TO THE REVENUE AS WELL AS THE ASSESSEE TO COMPLY WITH THE AFORE-CITED DECISION BY THE JURISDICTIONAL HIGH COU RT IN LETTER AND SPIRIT. WE DISPOSE OF THE RELEVANT GROUNDS ACCORDINGLY. 5. GROUND NOS. 3 AND 4 OF THE REVENUES APPEAL IS I N RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS IN RESPECT OF RURAL BRANCHES OF THE BANK U/S. 36(1)(VIIA) OF THE ACT. CLAUSE (A) OF SECTION 36(1)(VIIA) ALLOWS A SCHEDULED BANK AS THE ASSESSEE, DEDUCTION IN RESPECT OF PROVISION FOR BAD AND DOUBT FUL DEBTS AT AN AMOUNT WHICH IS TO BE COMPUTED BY INCLUDING THEREIN 10% OF THE AGGR EGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES OF THE BANK. THE TERM RURAL BRANCH STANDS DEFINED PER EXPLANATION (IA) TO THE SECTION AS A PLACE WHICH HAS A POPULATION O F NOT MORE THAN 10,000 ACCORDING TO THE LAST PRECEDING CENSUS FOR W HICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE RELEVANT PREVIOUS YEAR. THE WORD PLACE CAME UP FOR INTERPRETATION, AND STOOD INTERPRETED B Y THE TRIBUNAL AS MEANING ANY PLACE FOR WHICH THE POPULATION MEASURE IS OFFICIALL Y AVAILABLE, AS A WARD OF A LOCAL AUTHORITY. THE FIRST APPELLATE AUTHORITY HAS ALLOWED RELIEF TO THE ASSESSEE FOLLOWING THE SAME. HOWEVER, THE MATTER STANDS SIN CE SETTLED BY THE JURISDICTIONAL HIGH COURT PER ITS DECISION IN THE CASE OF CIT VS. LORD KRISHNA BANK LTD . (IN I.T.A. NO. 234/COCH/2009 DATED 7.10.2010 PER PARAS 4 & 5 / COPY ON RECORD / EX. P2). THE HIGH COURT, REVERSING THE TRIBUNALS VIEW, UPHE LD THAT OF THE REVENUE, HOLDING 5 THAT THE BASIC UNIT AS PER THE CENSUS REPORT FOR TH E RURAL AREA IS A `REVENUE VILLAGE, WITH DEFINED, SURVEYED BOUNDARIES. THE LEGISLATURE HAD ADOPTED POPULATION AS A BASE FOR THE CLASSIFICATION OF RURAL BRANCHES, AND THAT TOO WITH REFERENCE TO THE LAST CENSUS REPORT, SO THAT IT IS THIS BASIC UNIT AS AVA ILABLE FOR IDENTIFICATION OF A RURAL AREA IN THE CENSUS REPORT THAT HAD TO BE ADOPTED. T HE DEFINITION CLAUSE, IT OPINED, DID NOT EXCLUDE THE LITERAL MEANING OF `RURAL BRANC H, SO THAT THE URBAN AREAS HAD NECESSARILY TO BE EXCLUDED. GOING BY THE TRIBUNALS VIEW, IT FELT THAT THERE COULD BE EVEN PLACES COMING UNDER THE PURVIEW OF A MUNICIPAL ITY OR CORPORATION WHICH WOULD HAVE POPULATION OF LESS THAN 10,000, SO AS TO BE CONSIDERED AS `RURAL BRANCHES. AS SUCH, IT IS ONLY THE RURAL BRANCH LOC ATED IN A REVENUE VILLAGE WHICH IS TO BE TAKEN AS THE UNIT OF MEASUREMENT OF POPULATIO N, AND THOSE WITH THE POPULATION OF LESS THAN TEN THOUSAND AS PER THE LAS T CENSUS REPORT BE CONSIDERED AS RURAL BRANCHES. WE, ACCORDINGLY, RESPECTFULLY FOLL OWING THE SAID DECISION, SET ASIDE THE IMPUGNED ORDER, AND RESTORE THE MATTER B ACK TO THE FILE OF THE AO TO WORK OUT THE DISALLOWANCE IN ACCORDANCE WITH THE GU IDELINES STATED, AND THE PROVISION OF LAW AS EXPLAINED BY THE JURISDICTIONAL HIGH COURT PER ITS SAID DECISION. WE DECIDE ACCORDINGLY. 6. THE FIFTH GROUND IS IN RESPECT OF THE ASSESSEES CLAIM QUA WRITE OFF, AS BAD AND DOUBTFUL, OF DEBTS IN ACCOUNTS U/S. 36(1)(VII) OF THE ACT. THE AO DISALLOWED THE ENTIRE SUM CLAIMED AT ` 1427.71 LAKHS IN VIEW OF THE ASSESSEE BEING UNABLE TO SHOW AS TO HOW THE SAME WAS IN ACCORDANCE WITH LAW, I.E., IN TERMS OF THE PROVISO TO SECTION 36(1)(VII) R/W S. 36(2)(V) OF THE ACT, W HICH PRESCRIBES THE CLAIM TOWARD WRITE OFF OF DEBTS AS BAD AND DOUBTFUL, IN CASE OF AN ASSESSEE TO WHICH THE PROVISIONS OF S. 36(1)(VIIA) APPLY, AS THE ASSESSEE , AS TO THE EXTENT THE SAME EXCEEDS THE PROVISION U/S. 36(1)(VIIA). THE LD. CI T(A) ALLOWED RELIEF TO THE ASSESSEE FOLLOWING THE DECISION BY THE JURISDICTIO NAL HIGH COURT IN THE CASE OF SOUTH INDIAN BANK LTD. VS. CIT , 262 ITR 579 (KER.). 6 7. IT WAS THE COMMON CONTENTION OF THE PARTIES BEFO RE US THAT THE FOLLOWED JUDGMENT BY THE JURISDICTIONAL HIGH COURT STANDS SI NCE OVER-RULED BY THE FULL BENCH DECISION BY THE SAID COURT [REPORTED AT CIT VS. SOUTH INDIAN BANK LTD. , 326 ITR 174 (KER) (FB)]. VIDE THE SAID JUDGMENT, THE POSITI ON OF LAW IN RESPECT OF THE RELEVANT PROVISIONS STANDS FULLY EXPLAINED BY THE H ONBLE COURT, DISAPPROVING OF ITS EARLIER DECISION IN THE CASE OF THE RESPONDENT BANK (AT 262 ITR 579). IN VIEW THEREOF, WE RESTORE THE MATTER BACK TO THE FILE OF THE AO TO ALLOW THE ASSESSEE AN OPPORTUNITY TO PRESS ITS CLAIM U/S. 36(1)(VII) R/W S. 36(2) WITH REFERENCE TO THE SAID FULL-BENCH DECISION, FURNISHING THE RELEVANT DETAIL S TO THE AO, IN THE ABSENCE OF WHICH, HE WOULD BE AT A LIBERTY TO TAKE THE COURSE AS PERMISSIBLE IN LAW, ALBEIT PER A SPEAKING ORDER. WE DECIDE ACCORDINGLY. 8. THE SIXTH GROUND OF APPEAL (AND GROUND # 2(III) & 5 OF THE REVENUES APPEAL FOR AY 2005-06) RELATES TO THE DISALLOWANCE OF THE PROPORTIONATE AMORTIZED EXPENSES ON THE PREMIUM PAID ON THE PURCHASE OF PER MANENT CATEGORY INVESTMENTS BY THE ASSESSEE-BANK. WHILE THE AO DISALLOWED THE SAME AS BEING ONLY A PART OF THE ASSESSEES COST OF THE CAPITAL ASSET/INVESTMENT ; THE RELEVANT INVESTMENTS BELONGING TO THE PERMANENT OR HOLD-TO-MATURITY (HTM ) CATEGORY, THE LD. CIT(A) DISALLOWED THE ASSESSEES CLAIM IN VIEW OF THE DECI SION BY THE JURISDICTIONAL TRIBUNAL IN THE CASE OF LORD KRISHNA BANK LTD. VIDE ITS ORDER DATED 29.7.2003 (IN ITA NO. 54/COCH/2000 FOR AY 1994-95 / ANN. II), AS WELL AS IN THE ASSESSEES OWN CASE FOR A.Y. 2003-04 (IN I.T.A. NO. 394/COCH/2006 DATED 27.9.2007). 9. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE ASSESSEE HAS BEEN CONSISTENTLY FOLLOWING THE DECISI ON BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. NEDUNGADI BANK LTD . 264 ITR 545 (KER.), WHEREIN IT HAS BEEN HELD THAT THE SECURITIES PURCHA SED BY THE RESPONDENT BANK TO MEET THE STATUTORY LIQUIDITY RATIO (SLR) REQUIREMEN T BY IT WERE ONLY A STOCK-IN- TRADE OF ITS BUSINESS. AS SUCH, THE VALUATION CRITE RION OF COST OR MARKET VALUE WOULD 7 APPLY. IN THE INSTANT CASE, THE SECURITIES BEING U NQUOTED, SO THAT MARKET RATE IS NOT AVAILABLE, THE RESERVE BANK OF INDIA (RBI) HAS ISSU ED GUIDELINES FOR VALUATION BY ADOPTION OF NOTIONAL YIELD RATE/S, SO THAT THE SECU RITIES ARE DEEMED TO BE HELD TO YIELD A PARTICULAR RATE OF RETURN. IF THE CURRENT MARKET YIELD INCREASES, THE SECURITIES ARE DE-VALUED SO AS TO REFLECT THE OBTAINING YIELD, AND VICE VERSA , IF THE MARKET YIELD WAS TO DECREASE. THE RBI IS THE APEX BODY REG ULATING THE BANKING INDUSTRY, SO THAT ANY GUIDELINES ISSUED BY IT WERE BINDING ON THE BANKS. THE TRIBUNAL HAS ALLOWED THE ASSESSEES CLAIM ON THAT BASIS. THE LD. AR DURING HEARING RELIED ON THE DECISION BY THE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT V . THE LORD KRISHNA BANK LTD. (IN ITA NO. 234/COCH/2009 DTD. 7/10/2010 / EX. P2) . THE SAME, FOLLOWING THE RATIO LAID DOWN IN CIT VS. NEDUNGADI BANK LTD . (SUPRA), RATIFIES THE LOSS ON VALUATION OF YTM SECURITIES SIMILARLY BY AD OPTION OF YTM RATES PUT UP BY PDAI/FIMMDA AT PERIODICAL INTERVALS; THE SAME BEING ENDORSED BY THE RBI. THE SAME WOULD BE APPLICABLE EQUALLY FOR HTM SECURITIES AS WELL. IN THIS REGARD, WE OBSERVE TWO THINGS, BOT H OF WHICH WOULD NEED TO BE ADDRESSED BEFORE THE MATTER COULD BE ADJUDICATED. T HE FIRST IS THE APPLICABILITY OF THE DECISION BY THE HONBLE COURT IN THE CASE OF CIT V . THE LORD KRISHNA BANK LTD. (SUPRA). THIS IS FOR SEVERAL REASONS. THE SAID DECI SION IS IN RESPECT OF YTM SECURITIES/BONDS WHICH, BY DEFINITION, ARE HELD TO YIELD A PARTICULAR RATE OF RETURN, WHICH CRITERION MAY OR MAY NOT OBTAIN IN THE CASE O F HTM SECURITIES. AS SUCH, WHAT WOULD BE REQUIRED TO BE SEEN IS IF THE SAID RB I GUIDELINES, AND THE YIELD RATES ISSUED BY PDAI/FIMMDA, ON THE BASIS OF WHICH THE SE CURITIES ARE OSTENSIBLY VALUED, ARE APPLICABLE FOR THE VALUATION OF THE IMP UGNED SECURITIES AS WELL. AS SOUGHT TO BE EMPHASIZED BY THE LD. DR, WHILE THE DE CISION BY THE HONBLE COURT IS RESTRICTED TO GOVERNMENT UNQUOTED SECURITIES, THOSE UNDER REFERENCE INCLUDE DEBENTURES ISSUED BY PRIVATE PARTIES AS WELL, SO TH AT THE SAME WOULD NOT APPLY. THE ORDER BY THE TRIBUNAL FOR AY 1994-95 ALSO DOES NOT SPEAK SPECIFICALLY OF HTM SECURITIES, NOR SPECIFIES ANY RBI GUIDELINE BEING F OLLOWED, TO DETERMINE IF THE SAME WOULD HOLD THEREFOR AS WELL. THE SECOND, AND E QUALLY IMPORTANT ASPECT, 8 WHICH STOOD ALSO POINTED OUT BY THE BENCH DURING HE ARING IS IN RESPECT OF DEPRECIATION CLAIMED ON HTM SECURITIES. WITHOUT DOU BT, EVEN AS ADMITTED BY THE LD. AR DURING HEARING, THE QUESTION OF WHETHER A PA RTICULAR SECURITY IS BEING HELD AS AN INVESTMENT OR STOCK-IN-TRADE OF ITS BUSINESS IS A QUESTION OF FACT, TO BE DETERMINED ON THE BASIS OF THE RELEVANT CONSIDERATI ONS, INCLUDING THE TREATMENT ACCORDED IN ITS BOOKS BY THE ASSESSEE-BANK THERETO (ALSO REFER: VIJAYA BANK LTD. V. CIT , 187 ITR 541 (SC)). IF THE ASSESSEE IS HOLDING TH E SECURITIES UNDER REFERENCE AS AN `INVESTMENT, CHARGING AND CLAIMING DEPRECIAT ION THEREON, AGAIN OSTENSIBLY IN TERMS OF THE GUIDELINES ISSUED BY RBI, HOW COULD TH E CLAIM, BASED ON MARKET VALUATION DETERMINED ON YTM BASIS, BE ALLOWED TO IT . THE MATTER WE FIND STANDS RESTORED BY THE TRIBUNAL TO THE FILE OF THE AO FOR AY 2000-01 & 2001-02 (ANN. I). UNDER THE CIRCUMSTANCES, WE ONLY CONSIDER IT FIT AN D PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING AUTHORITY, TO BE DECIDED DE NOVO , AFTER CONSIDERING ALL THE RELEVANT ASPECTS, ISSUING CLEAR FINDINGS OF FACT AND LAW, AFTER HEARING THE ASSESSEE IN THE MATTER. THE EARLIER FINDINGS BY TH E REVENUE AUTHORITIES, NEEDLESS TO ADD, STAND VACATED. WE DECIDE ACCORDINGLY. 10. GROUND NO. 7, OF THE REVENUES APPEAL RELATES T O THE DISALLOWANCE IN RESPECT OF `CONTRIBUTION BY THE ASSESSEE-EMPLOYER TO THE EMPLOYEES PENSION FUND AT ` 452 LAKHS, DISALLOWED UNDER SECTION 43B(B) OF THE A CT. THE LD. CIT (A) HAS RESTORED THE MATTER BACK TO THE FILE OF THE AO, FOL LOWING THE DECISION BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR EARLIER YEA RS, I.E., A.Y. 2000-01 AND 2001- 02 (IN I.T.A. NOS. 1031 & 1032/COCH/2004 DATED 28.9 .2006). 11. THE ASSESSEE HAS, PER ITS WRITTEN SUBMISS IONS, AS WELL AS WE FIND QUA ITS APPEAL FOR AYS 2000-01 & 2001-02, ARGUED ITS CASE O N MERITS. THAT IS, THAT THE LIABILITY FOR THE YEAR IS AS DETERMINED ON ACTUARIA L BASIS; THE SCHEME FOR PENSION BEING INTRODUCED BY THE ASSESSEE-BANK IN THE FINANC IAL YEAR 1998-99, AMORTIZING THE ADDITIONAL LIABILITY OF `22 76 LAKHS, ASCERTAINED THUS, OVER A PERIOD OF TEN YE ARS 9 FOLLOWING. BOOK-KEEPING IS RELEVANT ONLY TO THE EXT ENT THAT IT RECOGNIZES A LIABILITY IN BOOKS, AND IS NOT CONCLUSIVE OF THE MATTER, AS T HE DEDUCTION HAS, NEVERTHELESS, TO BE IN TERMS OF THE RELEVANT PROVISION/S OF THE ACT. THE EMPLOYERS CONTRIBUTION TO AN APPROVED PROVIDENT FUND IS COVERED U/S. 36(1)(IV ) OF THE ACT. THERE IS NO FINDING AS TO WHETHER THE DEDUCTION SATISFIES THE T EST OF S. 36(1)(IV), UNDER WHICH IT IS OSTENSIBLY CLAIMED, OR NOT, EVEN AS THE ASSESSEE CLAIMS THE FUND TO BE RECOGNIZED BY THE COMPETENT AUTHORITY UNDER THE ACT. IN FACT, A READING OF THE ORDERS DOES NOT CLARIFY IF THE SAID STATEMENT IS WITH REFERENCE TO THE `PROVIDENT FUND OR THE SUBSEQUENTLY ESTABLISHED `PENSION FUND. AGAIN, THE QUESTION WOULD BE IF THERE IS SOME RELATION BETWEEN THE TWO, AND IF SO, WHAT ? THE BASIC AND PRIMARY FACTS OF THE CASE, EVEN AS OBSERVED BY THE TRIBUNAL WHILE ADJUDI CATING THE ISSUE FOR EARLIER YEARS, ARE NOT CLEAR. FURTHER, THE AO HAS INVOKED S . 43B(B), WHICH IS A NON OBSTANTE CLAUSE, APPLICABLE ONLY WHERE THE SUM UNDER REFERE NCE IS OTHERWISE ALLOWABLE, SO THAT, FIRSTLY, IT WOULD APPLY IRRESPE CTIVE OF WHETHER THE DEDUCTION IS BEING CLAIMED U/S. 36(1)(IV) OR S. 37(1) AND, SECON DLY, IS A CHARGE TO WHICH WE FIND NO SPECIFIC ANSWER AS FORTHCOMING PER THE ASSESSEE S SUBMISSIONS; THE IMPUGNED CONTRIBUTION BEING PAYABLE (UNPAID) AS AT THE END O F THE YEAR, AS ALSO, AS IT APPEARS, UP TO THE DUE DATE OF THE FILING OF THE RETURN (REF ER ANN. VII TO THE TAX AUDIT REPORT FOR THE RELEVANT YEAR). THE REVENUE BEFORE US HAS C HALLENGED THE COMPETENCE OF THE FIRST APPELLATE AUTHORITY IN VIEW OF THE AMENDE D S. 251 OF THE ACT, PRECLUDING A SET ASIDE OF THE MATTER IN APPEAL BACK TO THE ASSES SING AUTHORITY. THOUGH THE LD. CIT(A) HAS ONLY DIRECTED THE AO IN TERMS OF THE RES TORATION BY THE TRIBUNAL FOR THE ASSESSMENT YEARS 2000-01 AND 2001-02, IT IS NOT CLE AR AS TO WHAT WAS THE EXACT GROUND ASSUMED BY THE ASSESSEE BEFORE IT IN THAT CA SE AND, SECONDLY, IF S. 251 STOOD AMENDED PRIOR TO THE FIRST APPELLATE ORDERS FOR THO SE YEARS. UNDER THE CIRCUMSTANCES, WE ONLY CONSI DER THE ISSUE AS INDETERMINATE, BOTH FACTUALLY AND LEGALLY, AND ACCORDINGLY RESTORE THE MATTER BACK TO THE FILE OF THE FIRST APPELLATE AUTHORITY TO ADJUDICATE THE SAME AF RESH BY ISSUING CLEAR AND DEFINITE 10 FINDINGS, AFTER ALLOWING OPPORTUNITY OF HEARING TO BOTH THE PARTIES, IN ACCORDANCE WITH THE LAW. WE DECIDE ACCORDINGLY. 12. THE LAST AND THE EIGHTH GROUND OF THE REVENUE APPEAL IS IN RESPECT OF DISALLOWANCE OF LOSS ON WRITE OFF THE CURRENT INVES TMENTS CONSIDERED BAD AND DOUBTFUL. THE AO DISALLOWED THE SAID CLAIM, MADE A T ` 245.92 LAKHS, AS THE WRITE OFF WAS OF INVESTMENT AND NOT OF MONIES LENT OR ADV ANCED IN THE ORDINARY COURSE OF ITS BUSINESS BY THE ASSESSEE-BANK, SO THAT THERE WA S NO CASE FOR ALLOWANCE U/S. 36(1)(VII) R/W S. 36(2) QUA DEBTS WRITTEN OFF AS IRRECOVERABLE. THE LD. CIT(A) HAS, FOLLOWING THE ORDER BY THE TRIBUNAL IN THE ASSESSEE S OWN CASE FOR A.Y.S 2000-01 AND 2001-02, RESTORED THE MATTER BACK TO THE FILE O F THE AO FOR DECIDING THE SAME IN LIGHT OF THE DECISION BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF NEDUNGADI BANK LTD. (SUPRA). 13. WE HAVE HEARD THE PARTIES; LIKE CONTENTIONS BEI NG RAISED BEFORE US, AND ALSO PERUSED THE MATERIAL ON RECORD, INCLUDING THE DECIS ION BY THE TRIBUNAL IN THE ASSESSEES OWN CASE (SUPRA). IT OBSERVED THAT THE L OSS ON VALUATION OF INVESTMENTS HELD AS STOCK-IN-TRADE, FOLLOWING THE PRINCIPLE OF COST OR MARKET VALUE WHICHEVER IS LESS, IS WELL SETTLED. ACCORDINGLY, IT RESTORED TH E MATTER BACK TO THE FILE OF THE AO FOR ALLOWING THE ASSESSEE AN OPPORTUNITY TO PROVE T HE DEVALUATION AS A FACT, FINDING THE WRONG MENTION OF THE SECTION BY THE ASSESSEE, I .E., S. 36(1)(VII), AS AGAINST S. 28(1), AS OF NO CONSEQUENCE. WE ARE IN AGREEMENT; T HE JURISDICTIONAL HIGH COURT HAVING IN THE CASE OF CIT V. NEDUNGADI BANK LTD. (SUPRA) CLARIFIED THE INVESTMENTS TO BE A PART OF THE ASSESSEE-BANKS STOCK-IN-TRADE. SO HOWEVER, TWO THINGS ARE RELEVANT AND NEED TO BE EMPHASIZED. FIRSTLY, THE AO IS NOT OBLIGED TO, ON HIS OWN, TRAVEL OUTSIDE THE ASSESSEES PRINCIPAL CASE, SO TH AT WHEN THE ASSESSEE CHANGES ITS POSITION BEFORE AN APPELLATE AUTHORITY, WHICH COULD NO DOUBT REPRESENT A VALID PROPOSITION, THE AO MUST BE GIVEN AN OPPORTUNITY TO EXAMINE THE CASE FROM THAT STAND POINT, AFTER GIVING A FINDING AS TO THE MAINT AINABILITY OF THE ASSESSEES CLAIM. 11 SECONDLY, THE REVENUE HAS BEFORE US, AS IN RESPECT OF GROUND # 7, NOT CHALLENGED THE DECISION OF THE FIRST APPELLATE AUTHORITY ON ME RITS PER SE , BUT ON HIS COMPETENCE TO DECIDE THUS. WE, THEREFORE, UNDER THE CIRCUMSTAN CES, ONLY CONSIDER IT FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF TH E LD. CIT(A) TO DECIDE THE ISSUE AFRESH BY ISSUING DEFINITE FINDING/S OF FACT, AFTER HEARING BOTH THE PARTIES, IN ACCORDANCE WITH LAW, INCLUDING AS TO PROCEDURE. WE DECIDE ACCORDINGLY. 14. IN THE RESULT, THE REVENUES APPEAL FOR AY 2 002-03 (ITA 722/COCH/2008) IS ALLOWED FOR STATISTICAL PURPOSES. ASSESSEES APPEAL (ITA # 935/COCH/2008 FOR A.Y. 2005-06) 15. THE SECOND GROUND; THE FIRST BEING GENERAL IN NATURE WARRANTING NO ADJUDICATION, STANDS CONSIDERED BY US TOGETHER WITH THE SECOND GROUND OF THE REVENUES APPEAL FOR AY 2002-03 (ITA 722/COCH/2008) , VIDE PARAS 3 & 4 OF THIS ORDER. 16. GROUND # 3 OF THE ASSESSEES APPEAL AGITAT ES THE MATTER AS ARISING PER THE REVENUES GROUND # 8 FOR AY 2002-03, WHICH STANDS D ISPOSED OF VIDE PARAS 12 & 13 OF THIS ORDER; THE CLAIM BEING AT ` 253.65 LAKHS. WE ALSO OBSERVE AN IDENTITY IN THE RESPECTIVE CASES OF BOTH THE PARTIES, THE ASSES SEE AND THE REVENUE. ACCORDINGLY, WE HAVING ALREADY REMITTED THE MATTER BACK TO THE FILE OF THE LD. CIT(A), DO LIKE-WISE FOR THE CURRENT YEAR AS WELL. ALSO, IT NEEDS TO BE BROUGHT FORTH THAT THE AOS PRINCIPAL OBJECTION IS THE NON-FURNIS HING OF THE RELEVANT MATERIALS/EVIDENCES, VIZ. MARKET RATE, BREAK-UP VAL UE, THE RELEVANT GUIDELINES OF THE RBI, ETC. THE LAW AS CLARIFIED BY THE DECISION IN T HE CASE OF CIT V. NEDUNGADI BANK LTD. (SUPRA) AND OTHER RELEVANT DECISIONS BY THE APEX C OURT WOULD NEED TO BE BORNE IN MIND. WE DECIDE ACCORDINGLY. 12 17. THE FOURTH GROUND OF APPEAL RELATES TO THE DISALLO WANCE OF SHARE ISSUE EXPENSES, CLAIMED IN THE SUM OF ` 106.60 LAKHS, CONFIRMED BY THE LD. CIT(A) AFTER EXAMINING BOTH THE LAW IN THE MATTER AS WELL AS THE FACTS OF THE CASE, FINDING THE DECISION BY THE APEX COURT IN THE CASE OF CIT V. BROOKE BOND LTD ., 225 ITR 798 (SC), AS DID THE AO BEFORE HIM, AS FULLY APPLICABLE . 18. THE ASSESSEE HAS NOT BEEN ABLE TO POINT OUT ANY INFIRMITY IN THE IMPUGNED ORDER, WHICH DISCUSSES THE ISSUE FROM THE STAND POI NT OF THE ASSESSEE, FINALLY ENDORSING THE AOS VIEW. THE ASSESSEES CLAIM THAT THE RIGHTS SHARES WERE ISSUED TO MAINTAIN THE CAPITAL ADEQUACY RATIO AND, THUS, N OT NECESSARILY REQUIRED TO MAINTAIN ITS CAPITAL BASE OR FOR EXPANSION OF BUSIN ESS, IS GROSSLY MISPLACED. THIS FOR THE REASON THAT THE CAPITAL RAISED, IRRESPECTIV E OF THE REASONS LEADING THERETO, IS ONLY TOWARD `CAPITAL. SECONDLY, AS THE NAME SUGGES TS, AND AS ALSO DISCUSSED BY THE LD. CIT(A), THE SAME WAS ONLY AS THE CAPITAL WAS DE EMED DEFICIT AS PER THE NORMS PRESCRIBED FOR THE BANKING INDUSTRY BY THE REGULATO RY AUTHORITY, AND THUS NECESSARILY REQUIRED TO RAISE ADDITIONAL CAPITAL. A S SUCH, TO CONTEND THAT THE SAME IS NOT TOWARD ITS CAPITAL BASE OR TOWARD ITS PROFIT MA KING APPARATUS IS A CONTRADICTION IN TERMS. WE, ACCORDINGLY, FIND NO MERIT IN THE ASS ESSEES CLAIM. 19. THE NEXT ISSUE AGITATED BY THE ASSESSEE I S IN RESPECT OF THE DISALLOWANCE, IN THE SUM OF ` 485.03 LAKHS OF THE AMOUNT OF PENSION PAID DIRECTLY BY THE ASSESSEE TO ITS RETIRED EMPLOYEES, OSTENSIBLY IN PURSUANCE TO A N AGREEMENT WITH THE EMPLOYEES UNION. THE AO DISALLOWED THE SAME AS IN HIS VIEW T HE SAME DID NOT MEET THE REQUIREMENT/S OF S. 36(1)(IV), WHEREUNDER ONLY THE CLAIM IN RESPECT OF PENSION PAYMENTS COULD BE CONSIDERED, MORE SO AS THE ASSESS EE WAS MAINTAINING AN APPROVED FUND FOR THE PURPOSE. THAT IS, WHERE THE S TATUTE HAS PROVIDED FOR A SPECIFIC SECTION/S FOR DEDUCTION QUA A PARTICULAR CATEGORY OF PAYMENT/S, IT WAS NOT PERMISSIBLE TO TAKE RECOURSE TO THE GENERAL PROVISI ON OF S. 37(1) FOR THE PURPOSE. THE LD. CIT(A) HAS REMITTED THE MATTER BACK TO THE FILE OF THE AO IN LINE WITH THE 13 DECISION BY THE TRIBUNAL ON THE ISSUE FOR IMMEDIATE LY PRECEDING YEARS, BEING AY 2003-04 & 2004-05 (IN ITA NOS. 359 & 360/COCH/2006 DTD. 27/9/2007). 20. WE HAVE HEARD THE PARTIES; THE ASSESSEE PRA YING FOR A RESTORATION BACK TO THE FILE OF THE ASSESSING AUTHORITY WITH REFERENCE TO T HE CITED DECISION BY THE TRIBUNAL IN ITS CASE (COPY ON RECORD), AND ALSO PERUSED THE MAT ERIAL ON RECORD. IN OTHER WORDS, IT PLEADS FOR EXACTLY WHAT THE LD. CIT(A) HAS ACTUA LLY DONE, MAKING ITS APPEAL, AS IN THE CASE OF THE PRECEDING GROUNDS (OTHER THAN SHARE ISSUE EXPENSES), INCOMPREHENSIBLE. NEVERTHELESS, WE FIND MERIT IN I TS CLAIM. THE TRIBUNAL HAS PER ITS SAID ORDER EXAMINED THE ISSUE AND ISSUED DEFINI TE FINDINGS IN THE MATTER. FIRSTLY, IT FOUND THE AOS OBJECTION AS NOT VALID. THIS IS F OR THE REASON THAT THE DEDUCTION CLAIMED IS NOT IN RESPECT OF A CONTRIBUTION TO ANY FUND BUT A DIRECT PAYMENT, SO THAT THE PROVISION OF S. 36(1)(IV) WOULD NOT APPLY. SO H OWEVER, IT FOUND THAT THE FUNDAMENTAL ISSUE OF HOW THE LIABILITY HAS ACTUALLY RISEN HAD NOT BEEN ADDRESSED. THEN THERE WAS THE QUESTION OF COMMERCIAL EXPEDIENC Y. WE ARE, APART FROM THE CONSIDERATIONS OF PRECEDENCE AND PROPRIETARY, IN FU LL AGREEMENT. ANY PAYMENT TO AN EMPLOYEE COULD EITHER BE CONTRACTUAL OR EX-GRATI A. IN THE PRESENT CASE, IT IS ADMITTEDLY CONTRACTUAL. BUT THERE WAS, AS WE ALSO O BSERVE IN THE INSTANT CASE, NO REFERENCE TO THE SAME IN THE ORDERS BY THE REVENUE AUTHORITIES. THE IMPUGNED PAYMENT/S PRESUMABLY DID NOT ARISE OUT OF THE EXTAN T CONTRACT OF EMPLOYMENT, BUT AS A RESULT OF A POST RETIREMENT AGREEMENT; THE PEN SION TO THE SERVING, CURRENT EMPLOYEES BEING COVERED BY THE CONTRIBUTION TO THE PENSION FUND SET UP BY THE ASSESSEE AND DULY APPROVED. IT NEEDS TO BE APPRECIA TED THAT THERE IS NO SUBSISTING EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE AND ITS RETIRED EMPLOYEES. THIS IS WHAT LED THE TRIBUNAL TO SEEK ANSWER/S TO T HIS BASIC ISSUE, AS WELL AS THE CONCOMITANT ISSUE OF COMMERCIAL EXPEDIENCY. EVEN IF THE AGREEMENT HAS BEEN ENTERED TOWARD THE END OF THE EMPLOYMENT OF AN EMPL OYEE, THE QUESTION WOULD BE AS TO HOW WOULD THE PENSION AGREEMENT, WHICH IS CLE ARLY TOWARD THE ENTIRE SERVICE PERIOD, POSSIBLY COVER THE PERIOD OF SERVICE LAPSED PRIOR THE AGREEMENT, WHICH 14 WOULD BE GOVERNED BY A DIFFERENT EMPLOYMENT CONTRAC T. THESE FACTUAL ISSUES ARE VITAL TO ANY DECISION QUA THE ADMISSIBILITY OF THE CLAIM. WE, THEREFORE, LIK EWISE, RESTORE THE MATTER BACK TO THE FILE OF THE AO TO DE TERMINE THE ISSUE BOTH FACTUALLY AND LEGALLY. 21. THE SIXTH GROUND CONCERNS THE ADDITION IN RESPECT OF EXCESS CASH FOUND AT ` 52650/-; THE ASSESSEE BEING UNABLE TO FURNISH ANY D ETAILS IN ITS RESPECT. THE SAME STOOD CONFIRMED BY THE LD. CIT(A), OBSERVING THAT T HEREFORE THE SAME COULD NOT BE CONSIDERED AS AN ASCERTAINED LIABILITY, AND THAT TH E PRINCIPLES OF `OWNERSHIP AS EXPLAINED BY THE APEX COURT IN ITS DECISION IN THE CASE OF SHREE DIGVIJAY CEMENT MILLS LTD. VS. UNION OF INDIA (2002) 259 ITR 705 (SC) AS MET. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 22. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEES CASE IS THAT THE SAME DOES NOT REPRESENT ITS OWN MONIES, AND AS AND WHEN CLAIMS ARE RECEIVED FROM THE CUSTOMERS, THE SA ME WOULD, AND RATHER HAVE TO, AFTER VERIFICATION AND IDENTIFICATION, BE REPAID TH ERETO. ADMITTEDLY, NO CLAIMS HAVE BEEN RECEIVED BY THE ASSESSEE EVEN UP TO THE FIRST APPELLATE STAGE, YEARS AFTER HAVING BEEN FOUND IN EXCESS, OR FOR THAT MATTER, UP TO THE SECOND APPELLATE STAGE. THE SAME, ARISING INCIDENTAL TO ITS BUSINESS, THUS, DEFINITELY ASSUMES THE NATURE OF A `MISCELLANEOUS INCOME OF ITS TRADE. THE COCHIN BEN CH OF THE TRIBUNAL HAD AN OCCASION TO CONSIDER THIS MATTER IN THE CASE OF CATHOLIC SYRIAN BANK LTD. V. CIT (ADDL.) [IN ITA NO. 10/COCH/2009 DTD. 11/2/2011]. IT, AFT ER EXTENSIVELY EXAMINING THE ISSUE, DECIDED IN FAVOUR OF THE REVENUE. THE AM OUNT, AS CONTENDED, COULD NOT BE CONSIDERED, UNDER THE FACTS AND CIRCUMSTANCES OF NO OUTSTANDING CLAIMS, AS REPRESENTING AN EXISTING LIABILITY, BUT, AT BEST, A CONTINGENT ONE. THE PRINCIPLES ENUMERATED BY THE APEX COURT IN THE CASE OF SHREE DIGVIJAY CEMENT MILLS LTD. VS. UNION OF INDIA (SUPRA) AND CIT VS. T.V. SUNDARAM IYENGAR & SONS LTD. (1996) 222 ITR 344 (SC), WERE FOUND APPLICABLE IN THE UNDISPUT ED FACTS AND CIRCUMSTANCES OF 15 THE CASE. FURTHER, NEEDLESS TO ADD, ANY CLAIM/S ARI SING AND HONOURED IN FUTURE QUA CASH CONSIDERED AS INCOME FOR THE YEAR WOULD QUALIF Y FOR DEDUCTION FOR THAT YEAR. WE DECIDE ACCORDINGLY, AND THE ASSESSEES RELEVANT GROUND(S) ARE DISMISSED. THE DECISIONS BY THE APEX COURT IN THE CASE OF SINCLAIR MURRAY & CO. (P.) LTD. V. CIT (1974) 97 ITR 615 (SC) AND CHOWRINGHEE SALES BUREAU (P.) LTD. V. CIT (1973) 87 ITR 542 (SC) MAY BE REFERRED TO IN THIS REGARD, WHE REIN THE APEX COURT, WHILE HOLDING THE AMOUNT COLLECTED (THOUGH HELD IN A SEPA RATE ACCOUNT) AS THE ASSESSEES TRADE RECEIPT, CLARIFIED THAT IT WOULD NONETHELESS QUALIFY FOR DEDUCTION FOR THE YEAR OF PAYMENT, EVEN THOUGH THE ASSESSEE FOLLOWED THE M ERCANTILE METHOD OF ACCOUNTING. WE DECIDE ACCORDINGLY. 23. THE NEXT AND THE SEVENTH GROUND RAISED BY THE ASSESSEE RELATES TO THE NON- GRANT OF THE ALLOWANCE IN RESPECT OF THE PROVISION IN RESPECT OF LEAVE ENCASHMENT, CLAIMED IN THE SUM OF ` 376 LACS. THE AO DID SO FOR TWO REASONS. FIRSTLY, THE ASSESSEES CLAIM WAS NOT MAINTAINABLE, HAVING NOT B EEN MADE EITHER PER THE ORIGINAL RETURN OR THE REVISED RETURN OF INCOME, BU T ONLY PER A LETTER DATED 19/9/2007, SO THAT THE DECISION BY THE APEX COURT I N THE CASE OF GOTEZE (INDIA) LTD. V. CIT (2006) 284 ITR 323 (SC) WOULD APPLY. SECONDLY, ON MERITS, HE FOUND THE CLAIM AS HIT BY THE PROVISION OF S. 43B(F) OF THE A CT; THE LAW POSTULATING DEDUCTION IN RESPECT OF THE IMPUGNED PAYMENT ONLY ON ITS ACTU AL PAYMENT. THE LD. CIT(A), IN APPEAL, CONFIRMED THE SAME ON BOTH THE GROUNDS. THE RETURN COULD HAVE BEEN REVISED UP TO 31/3/2007, WHILE ADMITTEDLY THE CLAIM WAS MADE, PER A LETTER, ONLY SUBSEQUENTLY. FURTHER, THE CLAIM WAS NOT OCCASIONED BY OR TO MAKE GOOD ANY INADVERTENT MISTAKE OR OMISSION BY THE ASSESSEE, WH ICH IS THE VERY ESSENCE OR THE RAISON DETRE OF REVISION (REFER: BHARAT ALMUNIUM CO. LTD. V. CIT , 303 ITR 256 (DEL.)), BUT IN WAKE OF THE DECISION BY THE HONBLE HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD. V. UNION OF INDIA , 292 ITR 470 (CAL.). PER THE SAME, THE HONBLE COURT HELD THE PROVISION OF S. 43B(F) AS UNCONSTITU TIONAL. AS SUCH, THE CLAIM COULD 16 NOT BE CONSIDERED AS WITHIN THE PARAMETERS OF A `RE VISION. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 24. WE HAVE HEARD THE PARTIES, AND PERUSED TH E MATERIAL ON RECORD. WE SHALL CONSIDER BOTH THE OBJECTIONS BY THE REVENUE TO THE ASSESSEES CLAIM. THE FIRST IS THE NON-CLAIM PER THE RETURN OF INCOME OR PER THE R EVISED RETURN U/S. 139(5). WITHOUT DOUBT, THE SAME DOES NOT REPRESENT A TECHNI CAL FORMALITY, SO THAT A CLAIM COULD BE PRESSED BY THE ASSESSEE WITH ABANDON AT AN Y TIME. THE APEX COURT IN THE CASE OF JUTE CORPORATION OF INDIA LTD. V. CIT (1991) 187 ITR 688 (SC) HAS CLARIFIED THAT WHILE A NON-CONSIDERATION BY THE AO COULD NOT NORMALLY BE OBJECTED TO BY THE ASSESSEE WHERE NOT PRESSED AS REQUIRED BY LAW, THERE COULD BE SEVERAL REASONS FOR A NON-CLAIM EARLIER BY THE ASSESSEE. TH E FIRST APPELLATE AUTHORITY, WHO IS INVESTED WITH ALL THE POWERS OF THE ASSESSING AU THORITY, WOULD THEREFORE BE REQUIRED TO BE SATISFIED THAT THE ASSESSEE WAS ACTI NG BONA FIDE , AND THAT THE GROUND BEING NOW RAISED COULD NOT BE SO EARLIER, AND USE H IS DISCRETION IN ACCORDANCE WITH LAW AND REASON, SO THAT WHERE THERE IS A CHANGE IN CIRCUMSTANCE OR IN LAW, HE WOULD BE JUSTIFIED IN ADMITTING THE ASSESSEES CLAI M RAISED BEFORE HIM FOR THE FIRST TIME. EACH CASE WOULD DEPEND ON ITS OWN FACTS, AND NO HARD AND FAST RULE COULD BE LAID DOWN. IN THE PRESENT CASE, WE CONSIDER THE ASS ESSEE AS JUSTIFIED IN RAISING THE CLAIM IN THE MANNER IT DOES. BEING OF THE VIEW THA T ITS CLAIM STOOD HIT BY S. 43B(F), THE ASSESSEE ITSELF DISALLOWED THE SAME PER ITS COM PUTATION OF INCOME FORMING PART OF ITS RETURN. THE SUBSEQUENT DECISION BY THE HONB LE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD . (SUPRA), WHICH IS DATED 27/6/2007, HOLDING THE PR OVISION OF S. 43B(F) AS ULTRA VIRES , PROMPTED IT TO LODGE A CLAIM IN ITS RESPECT, AND WHICH COULD, THE DATE FOR FURNISHING THE REVISED RETURN U /S. 139(5) HAVING EXPIRED, ONLY BE DONE BY WAY OF A WRITTEN COMMUNICATION, AND WHICH W AS DONE SOON AFTER. AGREEABLY, THE `REVISION SOUGHT TO BE MADE WAS NOT ON ACCOUNT OF ANY OMISSION OR INADVERTENT MISTAKE, BUT, NONETHELESS, BONA FIDE AND JUSTIFIED UNDER THE CIRCUMSTANCES. COULD THE ASSESSEE BE POSSIBLY PENALIZED FOR ACTING IN ACCORDANCE 17 WITH THE LAW, AS UNDERSTOOD ? AS SUCH, THE REFUSAL TO CONSIDER THE ASSESSEES C LAIM ON MERITS BY THE REVENUE IS NOT JUSTIFIED. COMING TO SECOND GROUND, I.E., ON MER ITS, THE DECISION IN THE CASE OF EXIDE INDUSTRIES LTD . (SUPRA) HAS SINCE BEEN STAYED BY THE APEX COURT ( IN SLA (CIVIL) CC 12060 DTD. 8/9/2008, COPY ON RECORD AS ANNEXURE D T O THE ASSESSEES WRITTEN SUBMISSIONS DATED 2/9/2010). THE SAID DECISION BEI NG THE BASIS ON WHICH THE ASSESSEES CLAIM RESTS, THERE IS NO SCOPE FOR ALLOW ANCE OF THE ASSESSEES CLAIM, DISALLOWED BY THE REVENUE U/S. 43B(F). WE DECIDE AC CORDINGLY. 25. THE EIGHTH AND LAST GROUND OF THE ASSESSEES APPEAL RELATES TO THE LEVY OF INTEREST U/S. 234B OF THE ACT, WHICH WAS FOUND TO B E IN ORDER BY THE LD. CIT(A) IN VIEW OF IT BEING MANDATORY, PLACING RELIANCE ON THE DECISIONS IN THE CASE OF ANJUM M. H. GHASWALA (2001) 252 ITR 1 (SC) AND R.M. CHINNIAH V. ITO , 303 ITR (AT) 154 (CHENNAI). THE ASSESSEES PRINCIPAL CASE, HOWEV ER, IS WITH REGARD TO THE INTERPRETATION OF S. 234B(3), SO THAT THE INTEREST UNDER THE PROVISION WOULD NOT APPLY WHERE THERE HAS BEEN NO LEVY (OF INTEREST) U/ S. 234B IN THE FIRST INSTANCE, I.E., ON PROCESSING U/S. 143(1), AS IN THE INSTANT CASE. THE ISSUE STANDS SINCE ADMITTEDLY SETTLED BY THE JURISDICTIONAL HIGH COURT IN THE ASS ESSEES OWN CASE [REPORTED AT 325 ITR 517 (KER.)], EXPLAINING OF NO SUCH EXCEPTION, A ND THAT THE INTEREST WOULD HOLD IN ALL CASES WHERE THE CONDITION/S FOR ITS LEVY ARE MET. ACCORDINGLY, WE FIND NO LEGAL INFIRMITY IN THE ORDERS BY THE REVENUE AUTHOR ITIES; THE LAW IN THE MATTER BEING WELL-SETTLED, SO THAT THE LEVY OF INTEREST IS COMPE NSATORY AND, ACCORDINGLY, MANDATORY. WITH REGARD TO THE CONTENTION THAT THE A DDITION/S MADE TO THE RETURNED INCOME COULD NOT POSSIBLY BE ANTICIPATED, SO AS TO BE SUBJECT TO ADVANCE-TAX, SUFFICE IT TO SAY THAT NO SUCH SPECIFIC ADDITION HA S BEEN BROUGHT TO OUR NOTICE, FOR US TO CONSIDER THE APPLICATION OF THE DECISION AS I N THE CASE OF CIT V. SEDCO FOREX INTERNATIONAL DRILLING CO. LTD ., 264 ITR 320 (UTTR.), RELIED UPON, WHICH HAS TO B E NECESSARILY FACT-SPECIFIC, AND NOT GENERALIZED; THE ADDITIONS TO THE RETURNED INCOME MADE BEING ONLY IN ACCORDANCE WITH THE PROVISIONS O F LAW, WITH THE PROVISION 18 CONTAINING AN INBUILT CHECK FOR THE LEVY TO BE CORR ESPONDINGLY REDUCED ON THE INCOME SUBJECT TO ADVANCE TAX (ASSESSED INCOME) BEI NG REDUCED IN APPEAL, AGAIN, ON THE SAME PREMISES. FURTHER, WE MAY ADD THAT THE SCOPE AND AMBIT FOR THE EXERCISE OF DISCRETION IN THE MATTER IN CASES OF GE NUINE HARDSHIP STANDS RECOGNIZED BY LAW, AND IS SUBJECT TO ENUMERATION AND PROVIDED FOR. WE DECIDE ACCORDINGLY. 26. IN THE RESULT, THE ASSESSEES APPEAL (IN I TA 935/COCH/2008) IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. REVENUES APPEAL (ITA # 1003/COCH/2008 FOR A.Y. 2005-06) 27. THE FIRST ISSUE (PER GROUND NOS. 2(I) & 3 ) RAISED BY THE REVENUE RELATES TO THE DISALLOWANCE OF THE ASSESSEES CLAIM FOR BAD AN D DOUBTFUL DEBTS WRITTEN OFF AS IRRECOVERABLE U/S. 36(1)(VII), MADE IN RESPECT OF N ON-RURAL ADVANCES IN THE SUM OF `968 .45 LAKHS. THE SAME STOOD DISALLOWED BY THE AO IN V IEW OF S. 36(2)(V) OF THE ACT; THE CLAIM NOT EXCEEDING THE PROVISION TOWARD T HE SAME MADE IN BOOKS, WHICH REFLECTED A BALANCE OF ` 7659.23 LAKHS AS AT THE END OF THE YEAR, I.E., AFTE R ABSORBING THE DEBIT OF THE WRITE OFF OF ` 2972.26 LAKHS TO THE PROVISION ACCOUNT (REFER PARAS 14 TO 16/PG. 9-13 OF THE ASSESSMENT ORDER). THE LD. CI T(A), IN APPEAL, ALLOWED THE ASSESSEES CLAIM FOLLOWING THE DECISION BY THE TRIB UNAL IN ITS OWN CASE FOR AY 2000-01 & 2001-02 (IN ITA 1031 & 1032/COCH/2004 DAT ED 28/9/2006), WHICH IN TURN FOLLOWED THE DECISION BY THE HONBLE HIGH COUR T IN THE ASSESSEES OWN CASE REPORTED AT SOUTH INDIAN BANK LTD. VS. CIT , 262 ITR 579 (KER.). 28. THE ISSUE ARISING IS IDENTICAL TO THAT AGITA TED BY THE REVENUE PER ITS FIFTH GROUND FOR AY 2002-03 (IN ITA 722/COCH/2008), AND W HICH STANDS ADJUDICATED BY US VIDE PARA 6 & 7 OF THIS ORDER, BY REMITTING THE MATTER BACK TO THE FILE OF THE AO TO APPLY IN LETTER AND IN SPIRIT THE DECISION BY TH E HONBLE JURISDICTIONAL HIGH COURT IN AGAIN THE ASSESSEES OWN CASE IN CIT VS. SOUTH INDIAN BANK LTD. , 326 ITR 174 19 (KER) (FB), FINDING THE SAID DECISION AS FULLY COVE RING THE ISSUE IN APPEAL. WE DECIDE LIKE-WISE. 29. THE NEXT GROUND (# 2(II) AND 4) OF THE RE VENUES APPEAL RELATES TO THE DISALLOWANCE IN THE SUM OF ` 7306.49 LAKHS, OF DEPRECIATION CLAIMED IN RESPECT O F HTM (HOLD TO MATURITY) OR PERMANENT CATEGORY INVEST MENTS HELD BY THE BANK. THE BASIS OF THE DISALLOWANCE WAS THAT THE SAME REPRESE NTS AN INVESTMENT, AS AGAINST STOCK-IN-TRADE, SO THAT THERE IS NO REQUIREMENT TO MARK IT TO MARKET. THE SAME ARE REQUIRED TO BE STATED AT ACQUISITION COST, EXCEPT W HERE IT IS IN EXCESS OF THE FACE VALUE, IN WHICH CASE THE EXCESS IS TO BE WRITTEN OF F OVER THE TERM OF THE SECURITY. THE AO INVOKED A CIRCULAR BY THE CBDT AS WELL AS TH E RELEVANT INSTRUCTION BY THE RBI (CIRCULAR NO. DBOD .PB.BC.32/21.04.048/2000-01 DATED 16/10/2000) FOR THE PURPOSE. IN APPEAL, THE ASSESSEE WAS ABLE TO SECUR E A FAVOURABLE VERDICT IN VIEW OF THE LIKE DECISION BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR AY 2000-01 (IN ITA NO. 1031/COCH/2004 DATED 28/9/2006). AGGRIEVED, THE REVENUE IS IN APPEAL. 30. THE REVENUE BEFORE US HAS NOT BEEN ABLE TO POINT OUT ANY INFIRMITY IN THE ORDER OF THE TRIBUNAL RELIED UPON BY THE LD. CIT(A) . THE TRIBUNAL, IN PASSING THE SAID ORDER, HAS RELIED ON THE DECISION BY THE HONB LE HIGH COURT IN THE CASE OF CIT V. NEDUNGADI BANK LTD. (SUPRA). IT IS NOT THE REVENUES CASE THAT THE TRI BUNAL HAS NOT PROPERLY APPRECIATED THE SAID DECISION BY THE H ONBLE COURT, OR THAT THE SAME IS NOT APPLICABLE TO THE FACTS OF THE CASE. WE STATE SO AS, WHERE APPLICABLE, AS FOUND BY THE TRIBUNAL IN THE ASSESSEES CASE FOR AY 2000- 01, THE SAME IS BINDING ON THE TRIBUNAL, SO THAT IT WAS INCUMBENT FOR THE REVENUE TO EXHIBIT THE INAPPLICABILITY OF THE SAID DECISION IF IT WERE TO SECURE A FAVOURABLE FROM, OR ANY MODIFICATION/VARIATION FROM ITS EARLIER DECISION BY , THE TRIBUNAL. THE SAME, IN FACT, AND FOR THE SAME REASONS, REPRESENTS THE CONSISTENT VIEW OF THE TRIBUNAL (REFER: DY. CIT V . FEDERAL BANK LTD. V. CIT , IN ITA NO.718/COCH/2008 DATED 17/9/2010 FOR AY 2006-07). WE DECIDE ACCORDINGLY, DISMISSING THE REVENUES GROUND. 20 31. GROUND # 2(III) (AND # 5) OF THE REVENUE S APPEAL ( ` 578.34 LAKHS) STANDS ALREADY ADJUDICATED BY US VIDE PARA NUMBERS 8 & 9 O F THIS ORDER, RESTORING THE MATTER BACK TO THE FILE OF THE AO, AS DONE BY THE T RIBUNAL IN THE PAST, MAKING OBSERVATION ON ASPECTS DEEMED RELEVANT. 32. GROUND NOS. 2(IV) AND 6 OF THE REVENUES APP EAL RELATE TO THE ADDITION MADE BY THE AO IN THE SUM OF ` 341.94 LAKHS IN RESPECT OF UNCLAIMED DEPOSITS HELD BY THE BANK. THE SAME HAVING NOT BEEN CLAIMED BY THE C ONCERNED DEPOSITORS SINCE LONG, THERE HAD BEEN A CHANGE IN THEIR CHARACTER, S O THAT THE SAME ASSUMED THE NATURE OF A TRADE SURPLUS, ASSESSABLE U/S. 28(I), R ELYING ON THE DECISION IN THE CASE OF CIT V. T.V. SUNDARAM IYENGAR & SONS (P.) LTD. , 222 ITR 344 (SC). THE ASSESSEE, HOWEVER, FOUND FAVOUR WITH THE LD. CIT(A) , WHO, ON EXAMINATION OF THE RELEVANT PROVISIONS OF THE BANKING LAW AS WELL AS T HE LAW ON LIMITATION, FOUND THAT AT NO POINT OF TIME THE PROPERTY IN THE SAID DEPOSI TS ACCRUED TO THE BANK; THE RELEVANT GUIDELINES NOT PERMITTING THE BANK TO APPR OPRIATE THE SAME. THERE WAS AS SUCH NO CESSATION OF LIABILITY OF THE BANK, AND THE PROVISION OF S. 41(1) DID NOT APPLY. THE DECISION BY THE APEX COURT IN THE CASE O F T.V. SUNDARAM IYENGAR & SONS (P.) LTD . (SUPRA) WAS ON A DIFFERENT SET OF FACTS AND, THUS , NOT APPLICABLE. 33. WE HAVE HEARD THE PARTIES, WHOSE RESPECTIVE CASES ARE THE SAME, I.E., AS BEFORE THE FIRST APPELLATE AUTHORITY. THE ISSUE WE FIND HAS BEEN A SUBJECT MATTER OF CONSIDERATION BY THE TRIBUNAL (COCHIN BENCH) IN THE CASE OF CIT (ASSTT.) V. CATHOLIC SYRIAN BANK LTD . (IN ITA NO. 66/COCH/2009 DATED 11/2/2011), WHEREI N, AFTER EXAMINING THE RELEVANT ASPECTS AND THE LAW IN THE M ATTER, THE REVENUES GROUND STOOD DISMISSED. THE RELEVANT FINDINGS, BEING SQUAR ELY APPLICABLE IN THE INSTANT CASE AS WELL, ARE REPRODUCED AS UNDER: ` 15. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD. THE ASSESSEE CASE IS THAT THERE IS NO CESSATION OF LIA BILITY WITH TIME, SO THAT THE DECISION IN THE CASE OF CIT VS. T.V. SUNDERAM IYENGAR & SONS PVT. LTD . (SUPRA) 21 WOULD NOT APPLY. FURTHER, AS SOUGHT TO BE EMPHASIZ ED BY THE LD. AR, INOPERATIVE DEPOSIT ACCOUNTS OUTSTANDING FOR THE PAST YEARS COU LD NOT BE BROUGHT TO TAX FOR THE CURRENT YEAR, DURING WHICH THERE HAS BEEN AN ACCRET ION OF ` 28.12 LAKHS ONLY TO THE UNCLAIMED DEPOSIT ACCOUNT PORTFOLIO; WHILE SOME CLA IMS STOOD SATISFIED, RESULTING IN OUTSTANDING AS AT YEAR-END AT ` 27892582/-. WE FIND CONSIDERABLE MERIT IN THE ASSESSEES CLAIM. THE ONLY QUESTION TO BE SEEN IS THAT IF THERE HAS BEEN A CESSATION OF LIABILITY IN RESPECT OF THE IMPUGNED DEPOSITS OR NOT. IF THEY NO LONGER CONTINUE TO REPRESENT THE ASSESSEES LIABILITY, I.E., AS AT THE YEAREND, HAVING BEEN RECEIVED ONLY IN THE COURSE OF ITS BUSINESS, THE SAME WOULD DEFINITELY REPRESENT A TRADE SURPLUS OF THE ASSESSEE-BANK. HOWEVER, WE FIND NO BASIS FOR THE REVENUE TO HOLD SO, I.E., THAT THESE DO NOT CONSTITUTE THE ASSESSEE S LIABILITY. THERE IS NO WRITE BACK IN THE ACCOUNTS. THE ACCOUNTING ENTRIES, THOUGH NO T CONCLUSIVE OF THE MATTER, ARE YET RELEVANT, BEING PURPORTEDLY PASSED ONLY TO EXHI BIT THE TRUE AND FAIR STATE OF AFFAIRS OF THE REPORTING ENTITY. THE SAME, THUS, C OULD BE IGNORED ONLY WHERE THEY ARE NOT IN CONFORMITY WITH THE SUBSTANCE OF THE TRA NSACTIONS THEY PURPORT TO REPRESENT AND, THUS, DO NOT REPRESENT, OR DO NOT DO SO CORRECTLY OR ACCURATELY, WHAT THEY PURPORT TO. IN THE INSTANT CASE, THERE IS NO L IMITATION. THE BANKING REGULATION ACT PROVIDES FOR THE MECHANISM FOR REPORTING THE IN FORMATION THEREON TO THE RBI, WITH IT HAVING THE POWER TO DIRECT THE BANKS TO TRA NSFER THE SAME, WHERE INOPERATIVE FOR 10 YEARS, TO THE ACCOUNT OF THE CEN TRAL GOVERNMENT. THAT THE RBI HAS NOT DIRECTED SO, AND THAT THE AMOUNTS, AS WE OB SERVE, CONTINUE TO OUTSTAND IN THE BOOKS OF THE ASSESSEE SINCE 1950, IS AN ALTOGET HER DIFFERENT MATTER. IN OTHER WORDS, THE SAID DEPOSITS ARE UNDER LAW WITHIN THE R EGULATORY MECHANISM OF THE CENTRAL BANK, WHICH PROVIDES FOR GUIDELINES IN ITS RESPECT TO THE BANKS FROM TIME TO TIME. ITS RECENT ADVISORY OF AUGUST, 2008 (COPY ON RECORD) REQUIRES THE BANKS TO REVIEW ITS ACCOUNTS ANNUALLY FOR THE SAME, CLASSIFY ING SUCH ACCOUNTS AS INOPERATIVE WHERE THERE ARE NO TRANSACTIONS DEBIT OR CREDIT FOR A PERIOD OF TWO YEARS, WHILE BEING PUT ON ENQUIRY AND INITIATING STEPS TO LOCATE THE CUSTOMERS AND, IN THEIR ABSENCE, OTHER CLAIMANTS, ETC. ON ONE YEAR OF NO TR ANSACTION. THE BANKS ARE ALSO REQUIRED TO PROVIDE INTEREST ON THE DEPOSITS AT THE EXTANT RATE(S). IT HAS ALSO ADVISED CAUTION IN DEALING WITH SUCH ACCOUNTS, BEIN G PRONE TO FRAUDS ETC., ALBEIT, WITHOUT PUTTING THE CUSTOMERS TO INCONVENIENCE. TH E BANK IS AN INCORPOREAL ENTITY, A SEPARATE LEGAL PERSON, WITH PERPETUAL EXISTENCE. UNDER THE CIRCUMSTANCES, WE CANNOT SEE AS TO HOW THE UNCLAIMED, INOPERATIVE DEP OSIT ACCOUNTS COULD BE CONSIDERED AS NOT BEING THE BANKS LIABILITY. THE MATTER HAS BOTH FACTUAL AND LEGAL DIMENSIONS TO IT. IN A GIVEN CASE, IT COULD BE THA T THERE ARE NO CLAIMS, AS SAY, WHETHER AN INDIVIDUAL DEPOSITOR DIES WITH NO KNOWN LEGAL HEIRS. IN SUCH A CASE, SUBJECT TO LAW OF ESCHEAT, IT COULD BE SAID TO REPR ESENT THE ASSESSEE-BANKS MONEY, ASSESSABLE AS INCOME U/S. 28(I) OR, SAY, WHERE AN I NCORPORATED ENTITY BECOMES DEFUNCT, WITH THE TIME LIMITATION FOR ITS RESTORATI ON HAVING EXPIRED. HOWEVER, EVEN HERE, UNLESS THE BANK CAN ASSUME PROPRIETARY RIGHTS OVER THE SAME, AND FOR WHICH THE RELEVANT PROVISIONS OF THE APPLICABLE LAWS MAY HAVE TO BE EXAMINED, IT CANNOT BE SAID THAT IT NO LONGER REPRESENTS A LIABILITY OF THE BANK, WHICH MUST, IN ORDER TO 22 BE SO, BE SATISFIED ON BOTH FACTUAL AND LEGAL COUNT S. THE REVENUE RELEVANT GROUND(S) IS DISMISSED . AS OBSERVED HEREINBEFORE, WE OBSERVE NO CHANGE IN E ITHER THE FACTS OR IN LAW FOR US TO REVISIT THE ORDER AFORESAID ON THE SAID ISSUE, S O THAT THE SAME WOULD HOLD FOR THE INSTANT CASE AS WELL. WE DECIDE ACCORDINGLY, DISMIS SING THE REVENUES RELEVANT GROUNDS. 34. GROUND NOS. 2(V) AND 6 OF THE REVENUES APP EAL ARE IN RESPECT OF AN ADDITION (EFFECTED IN THE SUM OF ` 63,842/-) ON ACCOUNT OF THE SURPLUS REALIZED BY THE ASSESSEE-BANK ON THE SALE OF JEWELLERY PAWNED WITH IT, SOLD IN SATISFACTION OF THE DEBT/S DUE FROM THE CONCERNED BORROWER/S. THE AMOUN T STOOD HELD BY THE ASSESSEE UNDER THE HEAD `SUNDRIES, WITH IT BEING UNABLE TO FURNISH THE BREAK-UP OF THE AMOUNT AS WELL AS THE DATE/S FROM WHICH THE SAME OU TSTOOD, SO THAT THE DOCTRINE OF UNJUST ENRICHMENT WAS CONSIDERED AS APPLICABLE BY T HE AO. THE LD. CIT(A) FOUND THAT THERE WAS, AGAIN, NO CESSATION OF LIABILITY, A ND THAT THE DOCTRINE OF UNJUST ENRICHMENT WOULD NOT APPLY; THE FACTS IN THE CASE O F SHREE DIGVIJAY CEMENT MILLS LTD. VS. UNION OF INDIA (SUPRA) BEING DISTINGUISHABLE. 35. EVEN AS ALSO OBSERVED BY THE BENCH DURING H EARING, THIS ISSUE HAS AGAIN BEEN A SUBJECT MATTER OF ADJUDICATION BY THE TRIBUN AL (COCHIN BENCH) IN THE CASE OF CATHOLIC SYRIAN BANK LTD . (SUPRA). THE IMPUGNED SURPLUS WAS CONSIDERED AS A PART OF THE ASSESSEE-BANKS INCOME, PRIMARILY ON ACCOUNT OF THE CONCERNED BORROWERS BEING NOT TRACEABLE, IN WHICH CASE THEY WOULD HAVE EITHER PREVENTED THE AUCTION OF THEIR JEWELLERY, OR EVEN CONSIDERING THEIR INCAPACI TY TO DO SO FOR LACK OF FUNDS, WOULD HAVE COLLECTED THE SURPLUS OUTSTANDING IN THE IR ACCOUNTS, WHICH CONTINUES TO DO SO FOR YEARS. THE SAME THUS ACQUIRED THE CHARACT ER OF A TRADE SURPLUS, AND THE PRINCIPLES AS ENUNCIATED IN THE CASE OF CIT V. T.V. SUNDARAM IYENGAR & SONS (P.) LTD. (SUPRA) AND SHREE DIGVIJAY CEMENT MILLS LTD. VS. UNION OF INDIA (SUPRA) WERE 23 FOUND AS APPLICABLE. WE FIND NO CHANGE IN THE FA CTS, SO THAT THE SAID DECISION WOULD APPLY IN THE INSTANT CASE AS WELL. WE DECIDE ACCORDINGLY. 36. IN THE RESULT, THE REVENUES APPEAL FOR AY 2005-06 (IN ITA 1003/COCH/2008) IS PARTLY ALLOWED AND PARTLY ALLOWE D FOR STATISTICAL PURPOSES. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 31ST MAY, 2011 GJ COPY TO: 1. THE SOUTH INDIAN BANK LTD., CFM DEPARTMENT, MISS ION QUARTERS, TRICHUR-680 001. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1(1), TRICHUR. 3. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, TRICHUR. 4. THE ADDL. COMMISSIONER OF INCOME-TAX, RANGE-1, T RICHUR. 5. THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, KOCH I 6. THE COMMISSIONER OF INCOME-TAX, TRICHUR. 7. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 8. GUARD FILE.