Indian Bank, CHENNAI V. DCIT, CHENNAI

ITA 986/CHNY/2003

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6478 (ITAT-CHENNAI)
• Duration Of Justice: 8 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-06-2011
• Assessment Year: 1990-1991
• Appeal Filed On: 09-05-2003
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V RAMACHANDRAN
• Keywords: Reopening of assessment; Depreciation; Business expenditure; Retrospective amendment; Bad and doubtful debts; Difference of opinion; Reason to believe; Provision of bad debts; Change of opinion; Reassessment proceedings
• Section: 143(3); 14A; 260A; 147; 263; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER) .. I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 ASSESSMENT YEARS : 1993-94, 1987-88, 1986-87, 1989 -90, 1990-91, 1998-99, 1991-92, 1992-93, 1993-94, 1996-97, 1999-2000, 2000-01 & 2001-02 M/S INDIAN BANK, CENTRAL OFFICE, ACCOUNTS DEPARTMENT, 31, RAJAJI SALAI, CHENNAI 600 001. PAN : (APPELLANT) V. THE JT. COMMISSIONER OF INCOME TAX/DY. COMMISSIONER OF INCOME TAX/ASST. COMMISSIONER OF INCOME TAX, SPECIAL RANGE-I/COMPANY CIRCLE II(3), CHENNAI 600 034. (RESPONDENT) APPELLANT BY : SHRI V. RAMACHANDRAN RESPONDENT BY : SHRI SHAJI P. JACOB O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE ARE MATTERS RECALLED THROUGH ORDER DATED 31. 3.2010 IN M.P. NOS. 307 TO 329/MDS/2007. THE ORDERS WERE REC ALLED FOR LIMITED PURPOSE OF DISPOSING OF CERTAIN ISSUES NOT CONSIDER ED BY THE TRIBUNAL IN ITS EARLIER ADJUDICATION AND ON CERTAIN OTHER IS SUES ON WHICH COD I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 2 PERMISSION WAS RECEIVED, AFTER THE DATE OF ADJUDICA TION OF THE APPEALS ORIGINALLY. 2. THE TRIBUNAL HAD CLEARLY HELD IN ITS ORDER DATED 31.3.2010 ON THE MISCELLANEOUS PETITIONS FILED BY THE ASSESSEE, THAT IT WAS RECALLING THE ORDERS ON ISSUES MENTIONED IN THE CHART PRODUCE D BEFORE IT WHICH BECAME PART OF SUCH ORDER. THE ITEMS MENTIONED IN THE SAID CHART WERE THOSE ISSUES NOT CONSIDERED BY THE TRIBUNAL IN THE EARLIER ROUND OF PROCEEDINGS AND THOSE ISSUES WHERE COD APPROVAL WAS OBTAINED SUBSEQUENT TO EARLIER ADJUDICATION. ON 3 RD AUGUST, 2010, THE TRIBUNAL ISSUED A CORRIGENDUM TO ITS EARLIER ORDER IN M.P. N OS. 307 TO 329/MDS/2007 MENTIONED SUPRA, WHEREBY IT WAS CLARIF IED THAT THE APPEALS WHICH WERE RECALLED WERE LIMITED TO I.T.A. NOS. 131 & 388/MDS/2001, 984 TO 986/MDS/2003, 1082/MDS/2003, 1 654 & 1655/MDS/2004, 1900 & 1901/MDS/2004 & 682 TO 684/MD S/2006. THE ISSUES IN THE ABOVE APPEALS THAT WERE EARLIER N OT ADJUDICATED BY THE TRIBUNAL AND/OR ON WHICH COD APPROVALS WERE REC EIVED SUBSEQUENTLY ARE DISPOSED OF HEREUNDER. I.T.A. NO. 984/MDS/2003 3. THREE ISSUES ARE TO BE CONSIDERED BASED ON THE O RDER OF RECALL. FIRST ISSUE IS REGARDING REOPENING OF ASSESSMENT, S ECOND ISSUE IS I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 3 REGARDING TREATMENT OF DEPRECIATION ON SECURITIES A ND THIRD ISSUE IS REGARDING TREATMENT OF APPRECIATION ON SECURITIES. 4. ON THE ISSUE OF REOPENING OF ASSESSMENT, SUBMISS ION OF THE LEARNED A.R. WAS THAT LD. CIT(APPEALS) HAD NOT CONS IDERED THIS GROUND AT ALL, THOUGH IT WAS SPECIFICALLY RAISED BE FORE HIM. IT WAS ARGUED BY THE LEARNED A.R. THAT THE REOPENING WAS R ESORTED TO AFTER FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR EVEN WHEN THE ORIGINAL ASSESSMENTS WERE COMPLETED UNDER SECTION 1 43(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). ACCORDI NG TO LEARNED A.R., THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS RELATING TO ASSESSMENT AND THE REOPENING WAS RESORTED SO AS TO APPLY THE DECISION OF HON'BLE APEX COURT IN THE CAS E OF VIJAYA BANK V. ACIT (187 ITR 541). THEREFORE, ACCORDING TO HIM , SUCH A REOPENING BASED ON A SUBSEQUENT DECISION OF APEX CO URT COULD NOT BE CONSIDERED AS A PROPER REASON FOR SUCH REOPENING . 5. PER CONTRA, LEARNED D.R. SUBMITTED THAT LD. CIT( APPEALS) HAD NOT ADJUDICATED THE GROUNDS RELATING TO REOPENING B UT THE REMEDY AVAILABLE WITH THE ASSESSEE WAS TO APPROACH LD. CIT (APPEALS) BY WAY OF RECTIFICATION AS HELD BY HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 4 OF CIT V. MALLADI PROJECT MANAGEMENT (P) LTD. (324 ITR 87) AND CIT V. COVANTA SAMALPATTI OPERATING PVT. LTD. [TC(A) NO .1437 OF 2008 DATED 5.9.2008)]. 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. WITHOUT DOUBT, REOPENING WAS RESORTED TO AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THERE IS ALSO NO DISPUTE THAT ORIGINAL ASSESSMENTS WERE COMPLETED UNDER SECTION 1 43(3) OF THE ACT, AND THE ASSESSEE HAD RAISED THE GROUND ASSAILI NG REOPENING BEFORE LD. CIT(APPEALS), WHO HAD NOT DEALT WITH THA T ISSUE. THE GROUND RAISED BY THE ASSESSEE GOES TO THE ROOT OF T HE JURISDICTION FOR MAKING A REASSESSMENT. NO DOUBT, ASSESSEE HAD NOT APPROACHED LD. CIT(APPEALS) THROUGH A RECTIFICATION APPLICATION. NEVERTHELESS, IN OUR OPINION, LD. CIT(APPEALS) WAS DUTY-BOUND TO ADJUDIC ATE ON EACH AND EVERY GROUND RAISED BY THE ASSESSEE UNLESS ASSESSEE HAD GIVEN IN WRITING THAT HE WAS NOT PRESSING THE GROUNDS. NOTH ING HAS BEEN BROUGHT ON RECORD BY LEARNED D.R. TO SHOW THAT ASSE SSEE HAD NOT PRESSED THIS GROUND BEFORE LD. CIT(APPEALS). AS FO R THE DECISION IN THE CASE OF MALLADI PROJECT MANAGEMENT (P) LTD. (SU PRA), RELIED ON BY THE LEARNED D.R., NO DOUBT, IT WAS HELD BY HON'BLE JURISDICTIONAL HIGH COURT THAT WHERE REVENUE HAD RAISED A GROUND IN APP EAL BEFORE THE I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 5 TRIBUNAL AND WHEN THE TRIBUNAL HAD FAILED TO ADJUDI CATE ON SUCH GROUND, IT WOULD NOT BE A GROUND BY ITSELF FOR FILI NG AN APPEAL BEFORE THE HIGH COURT. HON'BLE JURISDICTIONAL HIGH COURT HELD THAT REVENUE COULD HAVE VERY WELL APPROACHED THE TRIBUNAL POINTI NG OUT THE MISTAKE AND REQUESTING FOR AN ORDER FOR RECTIFICATI ON. BUT, IN OUR OPINION, THIS DECISION RENDERED WITH REGARD TO AN A PPEAL BEFORE TRIBUNAL CANNOT BE STRAIGHTAWAY APPLIED TO AN APPEA L BEFORE THE CIT(APPEALS). WHEN THERE IS A NON DISPOSAL OF A GR OUND BY CIT(APPEALS), A LEVEL OF ADJUDICATION IS LOST AND I F THE TRIBUNAL PROCEEDS TO ADJUDICATE THE ISSUE STRAIGHTAWAY, IT I S LOOSING THE WISDOM OF AN INTERMEDIARY LEVEL OF ADJUDICATION. I N AN APPEAL FILED BEFORE HON'BLE JURISDICTIONAL HIGH COURT UNDER SECT ION 260A OF THE ACT, THE ISSUES STAND ATLEAST ADJUDICATED ONCE BY T HE LOWER AUTHORITIES. HERE, ON THE OTHER HAND, THE ISSUE RE GARDING REOPENING OF ASSESSMENT WAS NEVER ADJUDICATED BY THE CIT(APPE ALS) AND IF THE TRIBUNAL STRAIGHTAWAY DEALS WITH THIS ISSUE, IT WOU LD BE LOOSING THE VIEW POINT OF THE LD. CIT(APPEALS), WHO WAS DUTY-BO UND TO ADJUDICATE ON EACH AND EVERY GROUND RAISED BEFORE HIM. HENCE, WE ARE OF THE OPINION THAT THE MATTER HAS TO GO BACK TO THE FILE OF LD. CIT(APPEALS) AND HE HAS TO ADJUDICATE THE GROUND RAISED BY THE A SSESSEE I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 6 REGARDING THE JURISDICTION OF A.O. TO REOPEN THE AS SESSMENTS. THIS ISSUE IS, THEREFORE, DECIDED IN FAVOUR OF ASSESSEE FOR STATISTICAL PURPOSES. 7. NEXT ISSUE RAISED IS REGARDING DEPRECIATION ON S ECURITIES. ASSESSEE WAS VALUING ITS INVESTMENTS ADOPTING COST OR MARKET VALUE, WHICHEVER WAS LOWER AND THE DIFFERENCE ON ACCOUNT O F VALUATION ON THE RESPECTIVE VALUATION DATES, VIZ. THE END OF THE RESPECTIVE PREVIOUS YEARS, WAS CONSIDERED EITHER AS A LOSS DEDUCTIBLE A GAINST ITS INCOME OR AS AN ADDITION TO ITS INCOME. HOWEVER, THE A.O. WAS OF THE OPINION THAT THE ASSESSEE, BEING A BANK, THERE WAS NO TRADI NG ACCOUNT MAINTAINED BY IT FOR SECURITIES AND THEREFORE, IT C OULD NOT BE CONSIDERED THAT ASSESSEE WAS HOLDING ANY STOCK OF I NVESTMENTS FOR TRADING. THEREFORE, AS PER THE A.O., THE LOSS ARIS ING ON SUCH VALUATION WAS ONLY NOTIONAL. RELIANCE WAS ALSO PLACED ON RBI CIRCULAR DATED 27.4.1992. 8. IN ITS APPEAL BEFORE LD. CIT(APPEALS), IT WAS HE LD THAT ASSESSEE WAS HOLDING SECURITIES ON TWO ACCOUNTS, VIZ. PERMAN ENT AND CURRENT. AS PER LD. CIT(APPEALS), THE SECURITIES UNDER THE H EAD PERMANENT FELL UNDER THE CATEGORY OF INVESTMENT WHILE THOSE UNDER THE HEAD I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 7 CURRENT FELL UNDER THE CATEGORY OF STOCK-IN-TRAD E. HE, THEREFORE, DIRECTED THE A.O. TO DETERMINE THE VALUE OF THE CUR RENT SECURITIES ON THE BASIS OF COST OR MARKET VALUE WHEREAS, IN RESPE CT OF PERMANENT SECURITIES, ON THE BASIS OF COST. RESULT WAS THAT THE DIRECTION WAS GIVEN TO RECOMPUTE THE DISALLOWANCE RELATING TO DEP RECIATION ON VALUATION OF SECURITIES. 9. NOW BEFORE US, LEARNED A.R. RELYING ON THE DECIS ION OF HON'BLE APEX COURT IN THE CASE OF UNITED COMMERCIAL BANK (U CO) V. CIT (240 ITR 355) SUBMITTED THAT METHOD OF ACCOUNTING A DOPTED BY A TAX PAYER COULD NOT BE DISCARDED WHEN IT WAS CONSISTENT LY FOLLOWED. AS PER LEARNED A.R., A.O. COULD NOT SAY THAT ASSESSEE SHOULD ADOPT A DIFFERENT METHOD FOR KEEPING ITS RECORD OR EMPLOY D IFFERENT METHOD FOR VALUATION. AS PER THE LEARNED A.R., HON'BLE APEX C OURT IN THE ABOVE CASE DID NOT MAKE ANY DIFFERENTIATION BETWEEN INVES TMENTS MADE BY BANK WHETHER IN SHARES, SECURITIES, BONDS OR OTHERS . ALL THE INVESTMENTS WERE TREATED BY THE HON'BLE APEX COURT AS FALLING IN THE SAME CLASS AND IT WAS HELD THAT METHOD OF VALUING S UCH STOCK AT COST OR MARKET VALUE WHICHEVER WAS LOWER WAS WITHIN THE DISCRETION OF ASSESSEE. LEARNED A.R. POINTED OUT THAT CIT(APPEAL S) DID REFER TO THE JUDGEMENT OF HON'BLE APEX COURT IN THE CASE OF UCO BANK I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 8 (SUPRA) BUT NEVERTHELESS, MISUNDERSTOOD THE SCOPE O F OBSERVATIONS OF HON'BLE APEX COURT BY WIDENING THE DEFINITION OF SE CURITIES TO TWO CATEGORIES, VIZ. PERMANENT AND CURRENT. LEARNE D A.R. FURTHER REFERRED TO A DECISION OF HON'BLE KERALA HIGH COURT IN THE CASE OF CIT V. NEDUNGADI BANK LTD. (264 ITR 545) WHEREIN, ACCOR DING TO HIM, THE SECURITIES COMPRISED OF THOSE TAKEN FOR SATISFYING THE SLR REQUIREMENTS. AS PER LEARNED A.R., SECURITIES PURC HASED FOR MAINTAINING SLR ALSO WERE TO BE VALUED AT COST OR M ARKET VALUE, WHICHEVER WAS LOWER, AND HON'BLE KERALA HIGH COURT HAD NOT MADE ANY DISTINCTION OR CATEGORIZATION. RELIANCE WAS AL SO PLACED ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT V. CITY UNION BANK LTD. (291 ITR 144). LEARNED A.R. ALSO R ELIED ON THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN T HE CASE OF BHARAT OVERSEAS BANK LTD. V. JCIT IN I.T.A. NOS. 231 TO 23 7/MDS/2001, ETC. DATED 7 TH JANUARY, 2005, FOR BUTTRESSING HIS CONTENTION THAT A DISTINCTION BETWEEN PERMANENT AND TEMPORARY SEC URITIES CANNOT BE CONSIDERED FOR THE PURPOSE OF VALUATION. 10. PER CONTRA, LEARNED D.R. SUBMITTED THAT RBI, VI DE ITS CIRCULAR DATED 27.4.1992, HAD CLEARLY BIFURCATED THE INVESTM ENT PORTFOLIO OF A BANK, TO PERMANENT AND CURRENT. AS PER LEARNED D.R., INVESTMENTS I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 9 FALLING UNDER PERMANENT CATEGORY MADE FOR MAINTAI NING SLR COULD BE CONSIDERED ONLY AS INVESTMENTS AND NOT AS A STOC K. IN ANY CASE, AS PER LEARNED D.R., NO BANK COULD HOLD ANY STOCK, BUT ONLY INVESTMENTS AND THE QUESTION OF VALUATION AT COST O R MARKET VALUE WHICHEVER WAS LOWER WOULD ARISE ONLY FOR STOCK. AS PER LEARNED D.R., ASSESSEE HAD NOT FILED ANY MATERIAL TO SHOW THAT SE CURITIES WERE HELD AS STOCK-IN-TRADE. LEARNED D.R. POINTED OUT THAT L D. CIT(APPEALS) HAD BIFURCATED THE SECURITIES TO PERMANENT AND CURRE NT CATEGORIES FOR VARIOUS YEARS AND SUCH DEMARCATION CLEARLY EVIDENCE D THAT THE CLASSIFICATION BASED ON PERMANENT AND CURRENT C ATEGORY WAS DONE AS PER DIRECTION OF RBI. THEREFORE, ACCORDING TO H IM, ASSESSEE COULD NOT CLAIM THAT THE INVESTMENTS WERE TRADING STOCK. LEARNED D.R. ALSO POINTED OUT THAT IN THE BALANCE SHEET PREPARED AS P ER BANKING REGULATION ACT, ASSESSEE WAS HOLDING SECURITIES AS INVESTMENTS AND IT WAS ONLY FOR THE PURPOSE OF I.T.ACT THAT IT HAD SHOWN SUCH SECURITIES AS TRADING STOCK. VIS--VIS RELIANCE PL ACED ON THE DECISION OF HON'BLE APEX COURT IN THE CASE OF UCO BANK, ARGU MENT OF LEARNED D.R. WAS THAT THE SAID DECISION WAS PERTAINING TO A SSESSMENT YEAR 1982-83 AND RBI CIRCULAR HAD COME ONLY IN THE YEAR 1992. THEREFORE, AS PER LEARNED D.R., THIS WAS THE REASON WHY BIFURCATION OF I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 10 SECURITIES AS PERMANENT AND CURRENT DID NOT FIN D A PLACE IN THE DECISION OF HON'BLE APEX COURT. 11. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. IN SO FAR AS INVESTMENTS HELD AS CURRENT, THERE IS N O DISPUTE AMONG BOTH PARTIES THAT IT HAS TO BE VALUED AT LOWER OF C OST OR MARKET PRICE. THE QUESTION IN DISPUTE IS, THEREFORE, REGARDING VA LUATION OF INVESTMENT HELD UNDER PERMANENT CATEGORY. AS PER LEARNED D.R., SUCH PERMANENT CATEGORY WAS TO MAINTAIN SLR REQUI REMENTS AND IT HAD TO BE VALUED AT COST ONLY. THOUGH IN THE CASE OF UCO BANK (SUPRA), HON'BLE APEX COURT WAS DEALING WITH ASSESS MENT YEAR 1982- 83, WHEN THE RBI CIRCULAR REGARDING BIFURCATION OF INVESTMENTS INTO PERMANENT AND CURRENT WAS NOT THERE, WE FIND TH AT IN SUBSEQUENT DECISIONS OF VARIOUS HIGH COURTS, INCLUDING THAT OF KERALA HIGH COURT IN THE CASE OF NEDUNGADI BANK LTD. (SUPRA) AND THAT OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. KARNATAK A STATE CO- OPERATIVE APEX BANK (251 ITR 194), NO SUCH BIFURCAT ION WAS ATTEMPTED BETWEEN PERMANENT AND CURRENT CATEGOR Y FOR VALUATION. THE COURTS HAVE CONSISTENTLY HELD THAT INVESTMENT H ELD BY BANK HAD TO BE VALUED AT LOWER OF COST OR MARKET PRICE. A B ANK BY VIRTUE OF BANKING REGULATION ACT, HAS TO MAINTAIN ITS ACCOUNT S AS PER SECTION I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 11 29 AND 30 THEREOF AND SCHEDULE III MENTIONED THEREU NDER, GIVES THE ASSESSEE AN OPTION TO GIVE THE VALUE OF INVESTMENT AT COST OR MARKET PRICE. HENCE, IN OUR OPINION, DIFFERENTIATION ATTE MPTED BY LD. CIT(APPEALS) BETWEEN PERMANENT AND CURRENT CATE GORIES OF INVESTMENTS WAS NOT WARRANTED. IN TAKING THIS VIEW , WE ARE FORTIFIED BY THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUN AL IN THE CASE OF BHARAT OVERSEAS BANK LTD. (SUPRA). ON THE SAME ISS UE, AFTER CONSIDERING ARGUMENTS OF BOTH PARTIES, THE TRIBUNAL AT PARA 11 HELD AS UNDER:- 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND REL EVANT MATERIAL ON RECORD, WE FIND FORCE IN THE CONTENTION S OF THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. THE HON'BLE SUPREME COURT IN THE CASE OF UNITED COMMERCIAL BANK V. CIT SUPRA, HAD CLEARLY HELD THAT EVEN IF THE SECURITIES ARE VALUED AT COST IN THE BALANCE SHEET IN ACCORDANCE WITH THE ST ATUTORY PROVISION, THIS ACTION WOULD NOT DISENTITLE THE ASS ESSEE BY SUBMITTING THE INCOME-TAX RETURNS ON THE REAL TAXAB LE INCOME IN ACCORDANCE WITH THE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE CONSISTENTLY AND REGULARLY. THE COURT FURTH ER APPROVED THAT IF SECURITIES WERE VALUED ON COST OR MARKET VA LUE WHICHEVER IS LOWER, THE SAME SHOULD BE ACCEPTED BY THE ASSESSI NG AUTHORITIES IF THE SAME METHOD HAS BEEN CONSISTENTL Y FOLLOWED. BEFORE US THE REVENUE HAS NOT DISPUTED THAT THE ASS ESSEE HAS NOT ADOPTED THE SAME METHOD OF ACCOUNTING CONSISTEN TLY. WE FIND THAT EVEN THE RBI HAD ALLOWED DISCRETION TO TH E BANKS TO VALUE EVEN THE PERMANENT CATEGORY OF SECURITIES ON T HE COST OR MARKET VALUE. RESPECTFULLY FOLLOWING THE DECISION O F THE HON'BLE SUPREME COURT, WE DECIDE THIS ISSUE IN FAVOUR OF TH E ASSESSEE, SET ASIDE THE ORDER OF THE LEARNED CIT(APPEALS) AND DIRECT THE I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 12 ASSESSING OFFICER TO ALLOW DEPRECIATION ON SECURITI ES WHICH HAS BEEN CLAIMED ON THE BASIS OF MARKET VALUE OF THE SE CURITIES. WE ARE, THEREFORE, OF THE OPINION THAT ASSESSEE HAS TO SUCCEED IN THIS GROUND. ITS INVESTMENTS CAN BE VALUED AT COST OR M ARKET VALUE WHICHEVER IS LOWER AND DEPRECIATION ARISING CAN BE DEDUCTED FROM ITS PROFIT BEFORE ARRIVING AT ITS TOTAL INCOME. SIMILA RLY, IF SUCH VALUATION RESULTS IN APPRECIATION, THE PROFITS WOULD ALSO GO TO INCREASE ITS TOTAL INCOME. THE ISSUE REGARDING DEPRECIATION ON SECURI TIES IS DECIDED IN FAVOUR OF ASSESSEE. 12. THE THIRD ISSUE TAKEN UP BY THE ASSESSEE IS REG ARDING ADDITION MADE ON APPRECIATION OF VALUE OF SECURITIES. AS AL READY HELD IN PARA 11 ABOVE, FOR VALUATION OF SECURITIES, ASSESSEE CAN TAKE COST OR MARKET PRICE WHICHEVER IS LOWER. SINCE THE LOSS DE PRECIATION ARISING, WOULD GO TO REDUCE ITS PROFITS, ANY PROFITS OR APPR ECIATION ARISING WOULD AUTOMATICALLY GO TO INCREASE ITS PROFIT. THE REFORE, WE DO NOT FIND ANY MERIT IN THIS ISSUE TAKEN BY THE ASSESSEE. IT IS DECIDED AGAINST THE ASSESSEE. 13. IN THE RESULT, APPEAL IN I.T.A. NO. 984/MDS/200 3 TO THE EXTENT IT IS RECALLED IS PARTLY ALLOWED. I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 13 I.T.A. NO. 388/MDS/2001 14. IN THIS APPEAL, WHEN IT WAS ORIGINALLY DECIDED, THE TRIBUNAL HAD GIVEN A CONCLUSION THAT THE APPEAL WAS ALLOWED. NO W BEFORE US, BOTH SIDES AGREED THAT THE APPEAL WAS NOT DECIDED FULLY IN FAVOUR OF ASSESSEE FULLY AND HENCE, THE CONCLUSION SHOULD STA ND CORRECTED AS APPEAL IS PARTLY ALLOWED. THEREFORE, THE CONCLUS ION PART OF THE ORDER OF THIS TRIBUNAL IN I.T.A. NO. 388/MDS/2001 DATED 2 5.10.2007 SHALL STAND CORRECTED AS APPEAL IS PARTLY ALLOWED. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IN I.T.A. NO. 388/MDS/2001 IS TO BE TREATED AS PARTLY ALLOWED. I.T.A. NO. 985/MDS/2003 16. FIRST ISSUE RAISED BY THE ASSESSEE IS ON REOPEN ING OF ASSESSMENT. AS PER THE ASSESSEE, THOUGH A GROUND W AS RAISED BEFORE LD. CIT(APPEALS) ASSAILING THE REOPENING, IT WAS NOT ADJUDICATED. THE ABOVE GROUND OF ASSESSEE IS AKIN TO ITS SIMILAR GROUND RAISED IN I.T.A. NO. 984/MDS/2003. FOR THE SAME REASONS AS GIVEN IN PARA 6 ABOVE, WE REMIT THE ISSUE BACK TO T HE FILE OF LD. CIT(APPEALS) FOR ADJUDICATION. I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 14 17. SECOND ISSUE RAISED BY THE ASSESSEE IS REGARDIN G DEPRECIATION ON SECURITIES. 18. THIS ISSUE HAS ALREADY BEEN RAISED BY THE ASSES SEE IN ITS APPEAL IN I.T.A. NO. 984/MDS/2003. WE HAVE ALREADY HELD THAT SUCH LOSS HAS TO BE ALLOWED IN PARA 11 ABOVE. ORDERED A CCORDINGLY FOR IMPUGNED ASSESSMENT YEAR ALSO. 19. THIRD ISSUE RAISED BY THE ASSESSEE IS REGARDING DISALLOWANCE UNDER SECTION 80M OF THE ACT. ASSESSING AUTHORITY HAD DISALLOWED A SUM OF ` 4,89,091/- FROM THE GROSS DIVIDEND WHILE GRANTING ASSESSEE DEDUCTION UNDER SECTION 80M OF THE ACT. THE SAID S UM REPRESENTED 10% OF GROSS DIVIDEND AND AS PER THE ASSESSING OFFI CER, THIS WOULD BE THE EXPENDITURE INCURRED IN EARNING THE DIVIDEND INCOME AND HENCE, VIDE SECTION 14A OF THE ACT, SUCH EXPENDITUR E HAD TO BE DISALLOWED. CLAIM OF THE ASSESSEE WAS THAT NO EXPE NDITURE WAS INCURRED FOR EARNING THE DIVIDEND INCOME BUT THIS W AS REJECTED BY THE ASSESSING OFFICER. 20. ASSESSEE ASSAILED THIS BEFORE LD. CIT(APPEALS) WHO CONFIRMED THE DECISION MADE BY THE A.O. BUT LIMITED THE DISAL LOWANCE TO 5% OF I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 15 THE GROSS DIVIDEND. IN OTHER WORDS, HE SUSTAINED D ISALLOWANCE TO THE EXTENT OF 5%. 21. NOW BEFORE US, LEARNED A.R. SUBMITTED THAT THOU GH THE COMMITTEE ON DISPUTES HAD DENIED IT PERMISSION TO P URSUE THIS ISSUE BEFORE THIS TRIBUNAL, BY VIRTUE OF DECISION OF HON' BLE APEX COURT IN THE CASE OF ELECTRONICS CORPORATION OF INDIA LTD. V. UO I (238 CTR 353), NO APPROVAL FROM COD WAS REQUIRED FOR PURSUING AN A PPEAL BY A PUBLIC SECTOR UNDERTAKING, BEFORE THIS TRIBUNAL OR ANY HIGHER FORUMS. AS PER LEARNED A.R., IN VIEW OF THE DECISION MENTIO NED SUPRA, ASSESSEE WAS ENTITLED TO RAISE THIS ISSUE NOW. 22. LEARNED D.R. STRONGLY OPPOSING THE ATTEMPT OF L EARNED A.R. TO TAKE UP AN ISSUE ON WHICH COD HAD SPECIFICALLY NOT GIVEN PERMISSION, SUBMITTED THAT THE DECISION OF HON'BLE APEX COURT I N THE CASE OF ELECTRONICS CORPORATION OF INDIA (SUPRA) DID NOT OB LITERATE WHATEVER WAS LEGALLY DONE BY THE COMMITTEE ON DISPUTES, PRIO R TO SUCH DECISION. ACCORDING TO LEARNED D.R., WHEN THE COMM ITTEE ON DISPUTES HAD SPECIFICALLY DENIED PERMISSION, IT COU LD NOT BE HELD THAT A SUBSEQUENT DECISION OF HON'BLE APEX COURT WOULD R ENDER SUCH DECISION OF COMMITTEE ON DISPUTES INFRUCTUOUS. THE REFORE, ACCORDING I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 16 TO HIM, THIS TRIBUNAL COULD NOT ADJUDICATE AN ISSUE ON WHICH COD HAD DENIED PERMISSION TO THE ASSESSEE TO PURSUE IN APPE AL. 23. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. IT IS NOT AT ALL DISPUTED THAT THE ISSUE REGARDING DIS ALLOWANCE MADE UNDER SECTION 80M WAS NOT ALLOWED BY THE COD TO BE PURSUED IN APPEAL BEFORE THIS TRIBUNAL. THE ORDER OF THE COD HAD COME BEFORE THE JUDGEMENT OF HON'BLE APEX COURT WHICH WAS PRONO UNCED ON 17 TH FEBRUARY, 2011 IN THE CASE OF ELECTRONICS CORPORATI ON OF INDIA (SUPRA). THE QUESTION BEFORE US IS WHETHER BY VIRT UE OF THIS DECISION OF HON'BLE APEX COURT, ALL THE EARLIER ORDERS PASSE D BY THE COD WOULD BE OBLITERATED. NO DOUBT, WHEN HON'BLE APEX COURT PRONOUNCES A JUDGEMENT, IT IS A DECLARATION OF LAW AS IT STOOD ALWAYS. BUT, IT IS ALSO TRUE THAT THE COMMITTEE ON DISPUTES WAS CONSTITUTED BASED ON DIRECTIONS OF HON'BLE APEX COURT. IN THE CASE OF ONGC V. COLLECTOR OF CENTRAL EXCISE (1992) 104 CTR 131, THE IR LORDSHIPS DIRECTED ALL COURTS AND TRIBUNAL NOT TO ENTERTAIN L ITIGATION BETWEEN GOVERNMENT AND PSUS, WITHOUT CLEARANCE FROM SUCH CO D. EVEN PENDING MATTERS CAME WITHIN THE PURVIEW OF COD BY V IRTUE OF A SUBSEQUENT DECISION OF HON'BLE APEX COURT REPORTED AS 116 CTR 643. THOUGH NOW VIDE THE DECISION IN ELECTRONICS C ORPORATION OF I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 17 INDIA (SUPRA), HON'BLE APEX COURT HAS RECALLED THE ORDERS IN THE ABOVE MENTIONED CASES OF ONGC (SUPRA), THE TRIBUNAL S ALL OVER INDIA WERE NOT ADMITTING ANY ISSUES OR APPEAL ON WHICH CO D PERMISSION WAS NOT THERE. NOW, THESE APPEALS BEFORE US, AS AL READY MENTIONED, ARE RECALLED MATTERS, RECALLED BY VIRTUE OF AN ORDE R OF THIS TRIBUNAL IN M.P. NOS. 307 TO 329/MDS/2007 DATED 31 ST MARCH, 2010. THE ORDER OF THIS TRIBUNAL IS CLEAR IN THAT THE RECALL WAS LIMIT ED TO ISSUES EARLIER NOT ADJUDICATED AND THE ISSUES WHERE COD APPROVAL WAS R ECEIVED SUBSEQUENT TO ITS EARLIER DECISION. IN FACT, OUR J URISDICTION THUS, IS NOW LIMITED TO ISSUES SPECIFIED BY THE TRIBUNAL IN ITS M.P. NO. 307 TO 329 MENTIONED SUPRA, AND THE CORRIGENDUM THERETO DATED 3.8.2010. THE REMITTED ISSUES DO NOT ALLOW US TO ADJUDICATE ON AN Y ITEMS ON WHICH COD APPROVAL HAS NOT BEEN OBTAINED. THUS, WE CANNO T ADJUDICATE THOSE ISSUES WHICH STOOD NOT REMITTED BY THE ORDER OF THE TRIBUNAL IN M.P. NO. 307 TO 309/MDS/2007. OF COURSE, HON'BLE APEX COURT IN THE CASE OF ELECTRONICS CORPORATION OF INDIA (SUPRA ) DOES MENTION THAT THE COD MECHANISM HAD NOT ACHIEVED THE RESULTS FOR WHICH IT WAS CONSTITUTED AND IT HAD OUTLIVED ITS UTILITY IN THE CHANGED SCENARIO. IN OUR OPINION, SUCH CHANGED SCENARIO MENTIONED BY THE IR LORDSHIPS COMES INTO PICTURE ON THE DATE OF PRONOUNCEMENT OF THE ORDER IN THE I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 18 CASE OF ELECTRONICS CORPORATION OF INDIA (SUPRA), V IZ. 17 TH FEBRUARY, 2011. HON'BLE APEX COURT WHILE RECALLING ITS EARLI ER ORDER IN ONGCS CASES, ALSO MENTIONED THAT TIME HAD COME FOR ITS RE CALL. IN OTHER WORDS, IT IS AN INDIRECT ACCEPTANCE THAT THE COD HA D ITS PERIOD OF UTILITY. UTILITY OF THE COD WAS IN FILTERING AND F INDING THOSE ISSUES WHICH COULD BE TAKEN UP IN AN APPEAL BY A PSU OR GO VERNMENT. ONCE A DECISION HAS BEEN TAKEN BY THE COD, DURING I TS PERIOD OF UTILITY, AFTER EXERCISING ITS MIND, THAT CERTAIN IS SUES NEED NOT BE TAKEN UP IN APPEALS, IT CANNOT BE GIVEN A GO-BYE. DECISI ON OF HON'BLE APEX COURT IN ELECTRONICS CORPORATION OF INDIAS CASE (S UPRA) CANNOT BE SO INTERPRETED TO RENDER NUGATORY DECISIONS ALREADY TA KEN BY COD. IN OTHER WORDS, NET EFFECT OF THE APEX COURT DECISION, IN OUR OPINION, IS THAT ALL APPLICATIONS PENDING BEFORE COD AS ON 17 TH FEBRUARY 2011 SHALL ABATE, ALL PERMISSIONS ALREADY GRANTED AND AL L DENIAL OF PERMISSION ALREADY COMMUNICATED WILL HAVE TO BE TAK EN COGNIZANCE AND EFFECT GIVEN. FURTHER IT IS NOT NECESSARY FOR ANY PSU AND/OR GOVERNMENT TO SEEK SUCH PERMISSIONS ANY MORE. THE FORMATION OF COD AS WELL AS DISBANDING THEREOF ALL RESULTING OUT OF HON'BLE APEX COURTS DECISIONS, ARE NOT TO BE SEEN IN THE SAME L IGHT AS AN INTERPRETATION OF A STATUTE OR LAW. IN THIS VIEW O F THE MATTER, WE ARE OF I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 19 THE OPINION THAT ASSESSEE CANNOT BE PERMITTED TO AS SAIL AN ISSUE ON WHICH COD HAD SPECIFICALLY DENIED PERMISSION TO PUR SUE AN APPEAL BEFORE US. THUS, THE GROUND RELATING TO DISALLOWAN CE UNDER SECTION 80M OF THE ACT STANDS DISMISSED. 24. IN THE RESULT, APPEAL OF THE ASSESSEE IN I.T.A. NO. 985/MDS/2003 TO THE EXTENT IT IS RECALLED IS PARTLY ALLOWED. I.T.A. NO. 986/MDS/2003 25. FIRST ISSUE RAISED BY THE ASSESSEE IS REGARDING DISALLOWANCE OF PROVISION FOR BAD AND DOUBTFUL DEBTS RELATING TO FO REIGN BRANCHES. PROVISION FOR BAD AND DOUBTFUL DEBTS RELATING TO FO REIGN BRANCHES, WHICH WAS DISALLOWED FOR THE IMPUGNED ASSESSMENT YE AR CAME TO ` 14,23,35,103/-. ASSESSEE CLAIMED THAT INCOME FROM FOREIGN BRANCHES WAS NOT LIABLE TO BE INCLUDED IN ITS TOTAL INCOME A ND THIS CLAIM WAS ACCEPTED BY LD. CIT(APPEALS). REVENUE ADMITTEDLY W AS NOT IN FURTHER APPEAL ON THIS ISSUE. THEREFORE, AS PER THE ASSESS EE, ADDITION MADE ON ACCOUNT OF PROVISION FOR BAD DEBTS RELATING TO S UCH FOREIGN BRANCHES HAD TO BE DELETED. AS PER THE ASSESSEE, W HEN FOREIGN INCOME WAS NOT INCLUDIBLE, THERE IS NO QUESTION OF ANY ADDITION OF PROVISION FOR BAD DEBTS RELATING TO FOREIGN BRANCHE S. ASSESSING I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 20 AUTHORITY AND LD. CIT(APPEALS) WERE OF THE OPINION THAT FOREIGN INCOME BEING SUBJECTED TO TAX, PROVISION FOR BAD DEBTS REL ATING TO FOREIGN BRANCHES WAS TO BE ADDED BACK IN THE TOTAL INCOME A ND SUBJECTED TO TAX. 26. BEFORE US, LEARNED D.R. ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE CIT(APPEALS) HAD ALLOWED THE CLAI M OF ASSESSEE FOR EXCLUSION OF INCOME OF FOREIGN BRANCHES FROM IT S TOTAL INCOME TAXABLE IN INDIA. THEREFORE, BOTH THE PARTIES AGRE ED THAT THE ISSUE REGARDING ADDITION MADE ON ACCOUNT OF BAD DEBTS NEE DED TO BE REMITTED BACK TO THE FILE OF ASSESSING OFFICER FOR CORRECT EXCLUSION THEREOF AFTER VERIFICATION. 27. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THERE IS NO DISPUTE THAT INCOME FROM FOREIGN BRANCH ES WAS NOT INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE TAXABL E IN INDIA. THEREFORE, THERE IS NO RELEVANCE FOR ANY ADDITION F OR PROVISION OF BAD DEBTS MADE OF SUCH FOREIGN BRANCHES IN THEIR ACCOUN TS. SINCE IN THE ACCOUNTS OF THE ASSESSEE, IN SO FAR AS IT RELATED T O ITS INDIAN OPERATIONS, DID NOT CHARGE ANY PROVISION FOR BAD DE BTS RELATABLE TO FOREIGN BRANCHES, THERE WAS NO QUESTION OF ANY ADDI TION BEING MADE I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 21 IN THIS REGARD. BUT, NEVERTHELESS, THIS ISSUE, IN OUR OPINION, HAS TO BE VERIFIED BY THE ASSESSING OFFICER. ASSESSING OFFIC ER IS DIRECTED TO FIND THE INCOME OFFERED FOR TAXATION IN INDIA AND WHETHE R THERE IS ANY CHARGE FOR PROVISION FOR BAD DEBTS RELATABLE TO FOR EIGN BRANCHES THEREIN. IF THE INCOME HAS BEEN WORKED OUT WITHOUT CONSIDERING THE PROVISION FOR BAD DEBTS RELATABLE TO FOREIGN BRANCH ES, THEN NO DOUBT, ANY ADDITION IN THIS REGARD IS NOT CALLED FOR. HEN CE, FOR VERIFICATION, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND REMIT BACK TO THE FILE OF ASSESSING OFFICER. ASSESSING OFFICER SHALL PROCEED IN ACCORDANCE WITH LAW. THIS ISSUE IS DECIDED IN FAVOUR OF ASSES SEE FOR STATISTICAL PURPOSES. 28. THE SECOND ISSUE RAISED BY THE ASSESSEE IS REGA RDING DISALLOWANCE OF DONATION GIVEN BY FOREIGN BRANCHES. THIS IS VERY SIMILAR TO THE ISSUE REGARDING PROVISION FOR BAD DE BTS RELATING TO FOREIGN BRANCHES, ADJUDICATED BY US IN PARA 27 ABOV E. SIMILAR DIRECTIONS ARE GIVEN HERE ALSO AND ASSESSING OFFICE R SHALL VERIFY AND PROCEED IN ACCORDANCE WITH LAW. THIS ISSUE IS ALLO WED FOR STATISTICAL PURPOSES. I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 22 29. THE OTHER ISSUES RAISED BY THE ASSESSEE IN THIS APPEAL ARE ON DISALLOWANCES OF FOREIGN BRANCHES ENTERTAINMENT EXP ENDITURE, DISALLOWANCE OF EXPENDITURE UNDER SECTION 14 OF THE ACT AND ADDITION/DISALLOWANCES MADE UNDER SECTION 115J OF T HE ACT, FOR SECTION 14A DISALLOWANCES, PROVISION FOR BAD AND DO UBTFUL DEBTS, TRANSFER FROM INVESTMENT RESERVE, AND TRANSFER FROM CONTINGENCY RESERVE. LEARNED D.R. SUBMITTED THAT COMMITTEE ON DISPUTES HAD SPECIFICALLY DENIED PERMISSION TO THE ASSESSEE TO P URSUE APPEALS ON THESE ISSUES BEFORE THE TRIBUNAL. LEARNED A.R. FAI RLY AGREED THAT THERE WAS NO APPROVAL FROM COD ON THESE ISSUES FOR MOVING THIS TRIBUNAL IN APPEAL. 30. WHETHER ASSESSEE CAN PURSUE A MATTER BEFORE THI S TRIBUNAL WHERE COD HAD SPECIFICALLY REFUSED PERMISSION, HAS ALREADY BEEN ADJUDICATED BY US AT PARA 23 ABOVE. ACCORDINGLY, W E HOLD THAT THESE ISSUES CANNOT BE TAKEN UP BY THE ASSESSEE, IN APPEA L BEFORE US. RELATED GROUNDS THEREOF STAND DISMISSED. 31. IN THE RESULT, I.T.A. NO. 986/MDS/2003 TO THE E XTENT RECALLED STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 23 I.T.A. NO. 1654/MDS/2004 32. FIRST ISSUE RAISED BY THE ASSESSEE IS AGAINST R EOPENING OF ASSESSMENT. LEARNED A.R. SUBMITTED THAT THE REOPEN ING WAS RESORTED FOR DISALLOWING CLAIM ON LOSS ON ACCOUNT O F DEPRECIATION ON INVESTMENTS. AS PER LEARNED A.R., ASSESSEE HAD GIV EN FULL DETAILS REGARDING SUCH CLAIM ALONG WITH ITS COMPUTATION. L EARNED A.R. SUBMITTED THAT THE REASON SHOWN FOR REOPENING WAS D ECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. U CO BANK (200 ITR 68) WHICH HAD HELD THAT VALUATION OF STOCK OF SECUR ITIES CONSIDERING COST OR MARKET PRICE WHICHEVER WAS LOWER COULD NOT BE ACCEPTED FOR BANKS. AS PER THE LEARNED A.R., THIS DECISION OF H ON'BLE CALCUTTA HIGH COURT WAS SUBSEQUENTLY REVERSED BY THE HON'BLE APEX COURT IN 240 ITR 355 AND HENCE, THE REASON ITSELF HAD DISAPP EARED. LEARNED A.R. POINTED OUT THAT LD. CIT(APPEALS) HAD WHILE UP HOLDING THE REOPENING OF ASSESSMENT RELIED ON CERTAIN OTHER ISS UES WHICH WERE NOT RECORDED BY THE ASSESSING OFFICER, LIKE CLASSIF ICATION OF SECURITIES AS PERMANENT AND CURRENT. LEARNED A.R. POINTED OUT THAT NOTHING STOPPED THE ASSESSEE TO TREAT SECURITIES AS INVESTM ENTS AKIN TO STOCK- IN-TRADE AND VALUE IT AT COST OR MARKET PRICE WHICH EVER WAS LESS AND I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 24 THEREFORE, ACCORDING TO HIM, THE REOPENING WAS BASE D ON CHANGE OF OPINION ONLY. 33. PER CONTRA, LEARNED D.R. SUBMITTED THAT IN THE ORIGINAL ASSESSMENT, ASSESSEE HAD CLAIMED DEPRECIATION ON IN VESTMENTS, AS PER THE STATEMENT OF COMPUTATION OF INCOME FILED AN D NO OTHER DETAILS WERE PROVIDED. AS PER THE LEARNED D.R., A.O. HAD N OT MADE ANY ENQUIRIES IN THIS REGARD DURING THE COURSE OF ORIGI NAL ASSESSMENT PROCEEDINGS AND HAD ALLOWED THE CLAIM WITHOUT DOING ANY VERIFICATION. LEARNED D.R. POINTED OUT THAT DURING ASSESSMENT PRO CEEDINGS FOR ASSESSMENT YEAR 1993-94 AND 1995-96, ASSESSEE HAD T REATED THE SECURITIES ON WHICH DEPRECIATION WERE CLAIMED AS I NVESTMENTS IN ITS STATEMENT FILED WITH RESERVE BANK OF INDIA, BUT HAD TREATED IT AS STOCK-IN-TRADE IN THE RETURN OF INCOME FILED FOR INCOME-TAX PURPOSES. FURTHER, AS PER LEARNED D.R., ASSESSEE HAD MADE BIF URCATION OF INVESTMENTS INTO PERMANENT AND CURRENT IN ITS C ORRESPONDENCE WITH RESERVE BANK OF INDIA AND THEREFORE, EXPLANATION 1 TO SECTION 147 WAS CLEARLY APPLICABLE. AS PER LEARNED D.R., PRODU CTION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENC E FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE BE DISCO VERED BY THE ASSESSING OFFICER WOULD NOT NECESSARILY AMOUNT TO D ISCLOSURE AS PER I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 25 FIRST PROVISO TO SECTION 147 OF THE ACT. LEARNED D .R., THEREFORE, SUBMITTED THAT ASSESSEE HAD NOT PLACED ALL PARTICUL ARS REGARDING ITS INCOME BEFORE THE A.O. THEREFORE, ACCORDING TO HIM , A.O. WAS JUSTIFIED IN RESORTING TO A REOPENING EVEN AFTER TH E LAPSE OF FOUR YEARS FROM END OF THE RELEVANT ASSESSMENT YEAR. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS BY THE LEARNED D.R.:- RAYMOND WOOLLEN MILLS LTD. V. ITO (SC) 236 ITR 34 CLAGGET BRACHI & CO. LTD. V. CIT (SC) 177 ITR 409 R.K. MALHOTRA V. KASTURBHAI LALBHAI (SC) 109 ITR 53 7 INDO-ADEN SALT MFG. TRADING CO.(P) LTD. V. CIT (SC) 159 ITR 624 K.R. VENKATESAN V. WTO (MAD) 237 ITR 293 VIRUDHNAGAR CO-OPERATIVE MILK SUPPLY SOCIETY LTD. V. CIT (MAD) 183 ITR 545 REVATHY C.P. EQUIPMENTS LTD. V. DCIT (MAD) 241 ITR 8 56 PRECOT MILLS LTD. V. CIT (MAD) 273 ITR 347 WCI (MADRAS) (P) LTD. V. ACIT (MAD) 324 ITR 181 PIAGGIO VEHICLES (P) LTD. V. CIT (BOM) 290 ITR 377 ACIT V. MAHINDRA HOLIDAYS & RESORTS (INDIA) LTD. (IT AT, SB- CHENNAI) 3 ITR (TRIB) 600 34. IN REPLY, LEARNED A.R. SUBMITTED THAT THE REASO NS ITSELF HAD DISAPPEARED, AND HENCE THERE WAS NO QUESTION OF THE REASSESSMENT PROCEEDINGS BEING VALID. ACCORDING TO HIM, DEPRECI ATION ON INVESTMENT WAS AN ALLOWABLE CLAIM AND THE REOPENING BASED ON THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF UCO BANK (SUPRA) COULD NOT BE HELD AS GOOD IN LAW SINCE THE SAID DECISION WAS I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 26 REVERSED BY THE HON'BLE APEX COURT ON APPEAL BY THE ASSESSEE CONCERNED. 35. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. AS PER THE ASSESSEE, IT HAD GIVEN FULL DETAILS FOR CLAIMING DEPRECIATION ON SECURITIES IN ITS COMPUTATION STATEMENT FILED AL ONG WITH RETURN OF INCOME. THERE IS NO DISPUTE THAT THE ASSESSING OFF ICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS HAD NOT MENTIONED ANYTHING R EGARDING THE CLAIM OF ASSESSEE IN THIS REGARD. NEVERTHELESS, IF WE LOOK AT THE REASONS RECORDED FOR REOPENING OF ASSESSMENT, AS PL ACED BY LEARNED D.R., IT WENT AS UNDER- THE ASSESSEE BANK HAS CLAIMED NOTIONAL LOSS ON ACCO UNT OF DEPRECIATION ON INVESTMENTS TO THE EXTENT OF RS.26, 10,16,274/-. THE ASSESSEE HAS BEEN VALUING THE CLOSING STOCK ON THE BASIS OF COST IN ITS BOOKS OF ACCOUNT WHEREAS IT HAS VALUED THE STOCK OF INVESTMENT ON THE BASIS OF MARKET VALUE OR COST PRI CE WHICHEVER IS LESS. THE HON'BLE CALCUTTA HIGH COURT IN CIT V. UCO BANK LTD. (200 ITR 68) HAS HELD THAT IT IS NOT OPEN TO THE AS SESSEE TO FOLLOW ONE METHOD IN ACCOUNTS AND ANOTHER FOR TAX P URPOSES. IN VIEW OF THE DECISION RENDERED BY THEIR LORDSHIPS OF THE CALCUTTA HIGH COURT, THE CLAIM OF NOTIONAL LOSS ON ACCOUNT O F DEPRECIATION ON INVESTMENT AMOUNTING TO RS.26,10,16,274/- CANNOT BE SUSTAINED IN THE EYES OF LAW. HENCE, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMEN T AND I SEEK COMMISSIONERS APPROVAL FOR REOPENING THE ASSE SSMENT U/S 147 BY ISSUE OF NOTICE U/S 148. I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 27 IT IS CLEAR THAT THE ABOVE REASON FOR REOPENING THE ASSESSMENT WAS BASED ON THE DECISION OF CALCUTTA HIGH COURT IN UCO BANK (SUPRA). AS POINTED OUT BY LEARNED A.R., HON'BLE APEX COURT HAD IN 240 ITR 355 ALLOWED THE APPEAL OF THE UCO BANK AND SET ASID E THE ORDER OF THE HIGH COURT. REOPENING WAS NOT DONE FOR A REASO N THAT THE ISSUE CONCERNED WAS NOT CONSIDERED DURING THE COURSE OF O RIGINAL ASSESSMENT PROCEEDINGS NOR FOR A REASON THAT ASSESS EE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ITS ASSESSMENT. REOPENING WAS DONE IN VIEW OF DECISION OF HON'BLE C ALCUTTA HIGH COURT IN UCO BANKS CASE (SUPRA). HON'BLE APEX COU RT IN THE CASE OF CIT V. MAX INDIA LTD. (295 ITR 282) HAS HELD THAT E VEN AN AMENDED LAW WITH RETROSPECTIVE EFFECT COULD NOT BE A REASON FOR REOPENING UNDER SECTION 147 OF THE ACT, OR FOR A REVISION UND ER SECTION 263 OF THE ACT. IN ANY CASE, THE VIEW THAT LOSS ON VALUAT ION OF INVESTMENT COULD NOT BE ALLOWED WAS ONLY ON CHANGE OF OPINION. EVEN OTHERWISE, AS ALREADY MENTIONED BY US, THE REASON CITED FOR RE OPENING WHICH WAS THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF UCO BANK (SUPRA), NO MORE EXISTED THE SAID DECISION HAV ING BEEN REVERSED BY HON'BLE APEX COURT. THE SUB STRATUM FO R THE REOPENING HAD THEREFORE DISAPPEARED. WE ARE OF THE OPINION T HAT THE REOPENING I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 28 DONE AFTER FOUR YEARS OF THE ORIGINAL ASSESSMENT CO MPLETED UNDER SECTION 143(3) OF THE ACT WAS NOT ON A SOUND FOOTIN G. SUCH A REOPENING IS, THEREFORE, HELD AS BAD IN LAW. GROUN D RAISED BY THE ASSESSEE IN THIS REGARD IS ALLOWED. 36. NEXT ISSUE RAISED BY THE ASSESSEE IS REGARDING ITS CLAIM FOR DEPRECIATION ON SECURITIES HELD UNDER INVESTMENTS . THIS ISSUE HAS ALREADY BEEN DEALT WITH BY US AT PARA 11 OF THE ORD ER IN RELATION TO THE APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 1986-87 IN I .T.A. NO. 984/MDS/2003. HENCE, ASSESSEE IS TO SUCCEED ON THI S GROUND ALSO. 37. IN THE RESULT, APPEAL OF THE ASSESSEE IN I.T.A. NO. 1654/MDS/2004 TO THE EXTENT IT HAS BEEN RECALLED ST ANDS ALLOWED. I.T.A. NO. 1655/MDS/2004 38. TWO ISSUES RAISED BY THE ASSESSEE ARE (I) REOPE NING OF ASSESSMENT AND (II) ITS CLAIM FOR DEPRECIATION ON S ECURITIES. BOTH ARE SIMILAR TO THE ISSUES RAISED BY IT IN ITS APPEAL IN I.T.A. NO. 1654/MDS/2004 FOR ASSESSMENT YEAR 1991-92. FOR THE REASONS MENTIONED AT PARAS 35 AND 36, WE ARE OF THE OPINION THAT ASSESSEE HAS TO SUCCEED IN THE GROUNDS TAKEN BY IT IN THIS R EGARD. I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 29 39. APPEAL OF THE ASSESSEE IN I.T.A. NO. 1655/MDS/2 004 TO THE EXTENT IT HAS BEEN RECALLED STANDS ALLOWED. I.T.A. NOS. 131/MDS/2001, 1900/MDS/2004, 1901/MDS/2 004, 682/MDS/2006, 683/MDS/2006 & 684/MDS/2006 40. IN ALL THESE APPEALS, THE RECALLED ISSUE IS REG ARDING DEPRECIATION ON SECURITIES WHICH HAS BEEN DENIED TO THE ASSESSEE . THE SAME IS THE ISSUE IN ITS APPEAL IN I.T.A. NO. 984/MDS/2003. WE HAVE ALREADY HELD AT PARA 11 ABOVE THAT SUCH LOSS ON ACCOUNT OF DEPRECIATION IN VALUATION IN SECURITIES HAS TO BE ALLOWED TO THE AS SESSEE. ORDERED ACCORDINGLY. 41. ASSESSEES APPEALS IN I.T.A. NOS. 131/MDS/2001, 1900/MDS/2004, 1901/MDS/2004, 682/MDS/2006, 683/MDS /2006 & 684/MDS/2006 TO THE EXTENT THESE HAVE BEEN RECALLED ARE ALLOWED. I.T.A. NO. 1082/MDS/2003 42. FIRST ISSUE RAISED BY THE ASSESSEE IS REGARDING DISALLOWANCE OF ITS CLAIM FOR BAD DEBT TECHNICAL WRITE OFF. 43. A.O. HAD DISALLOWED A PART OF THE CLAIM OF BAD DEBT ON A REASONING THAT THE WRITE-OFF WAS PURELY TECHNICAL, SINCE ASSESSEE HAD NOT REDUCED THE WRITTEN OFF AMOUNTS FROM THE INDIVI DUAL DEBTORS I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 30 ACCOUNT, THOUGH THE TOTAL AMOUNT OF WRITE-OFF WAS D EDUCTED FROM TOTAL OF THE ADVANCES. 44. WE FIND THIS ISSUE NOW STANDS SETTLED IN FAVOUR OF THE ASSESSEE BY HON'BLE APEX COURT, VIDE ITS DECISION IN VIJAYA BANK V. CIT (323 ITR 166). CRUX OF THIS DECISION AS APPEARING FROM THE HEAD NOTE RUNS AS UNDER:- BUSINESS EXPENDITURE BAD DEBT DEBT WRITTEN OFF IN THE BOOKS AFTER INSERTION OF EXPLANATION TO S. 36(1)(VII), ASSESSEE IS REQUIRED NOT ONLY TO DEBIT THE P&L A/C BUT SIMULTANE OUSLY ALSO REDUCE LOANS AND ADVANCES OR THE DEBTORS FROM THE A SSETS SIDE OF THE BALANCE SHEET TO THE EXTENT OF THE CORRESPONDIN G AMOUNT SO THAT AT THE END OF THE YEAR THE AMOUNT OF LOANS AND ADVANCES/DEBTORS IS SHOWN AS NET OF PROVISION FOR I MPUGNED BAD DEBT IN THE INSTANT CASE, BESIDES DEBITING THE P& L A/C AND CREATING A PROVISION FOR BAD AND DOUBTFUL DEBTS, TH E ASSESSEE- BANK HAD SIMULTANEOUSLY OBLITERATED THE SAID PROVISI ON FROM ITS ACCOUNTS BY REDUCING THE CORRESPONDING AMOUNT FROM L OANS AND ADVANCES/DEBTORS ON THE ASSETS SIDE OF THE BALANCE SHEET AND CONSEQUENTLY, AT THE END OF THE YEAR, THE FIGURE OF L OANS AND ADVANCES/DEBTORS WAS SHOWN AS NET OF THE PROVISION THEREFORE, ASSESSEE IS ENTITLED TO BENEFIT OF DEDUCTION UNDER S. 36(1)(VII) CONTENTION THAT IT IS IMPERATIVE FOR THE ASSESSEE-B ANK TO CLOSE THE INDIVIDUAL ACCOUNT OF EACH DEBTOR IN ITS BOOKS AND A MERE REDUCTION IN THE LOANS AND ADVANCES ACCOUNT OR DE BTORS TO THE EXTENT OF THE PROVISION FOR BAD AND DOUBTFUL DEBT I S NOT SUFFICIENT, IS NOT SUSTAINABLE APPREHENSION THAT IF THE ASSESSEE FAILS TO CLOSE EACH AND EVERY INDIVIDUAL ACCOUNT OF ITS DEBTORS, IT MAY RESULT IN CLAIMING DEDUCTION TWICE OVER IS NOT C ORRECT IT IS ALWAYS OPEN TO THE AO TO CALL FOR DETAILS OF INDIVID UAL DEBTORS ACCOUNT IF HE HAS REASONABLE GROUNDS TO BELIEVE THA T THE ASSESSEE HAS CLAIMED DEDUCTION TWICE OVER CONTENTION THAT WHERE A I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 31 BORROWERS ACCOUNT IS WRITTEN OFF BY DEBITING P&L A/ C AND CREDITING LOANS AND ADVANCES OR DEBTORS ACCOUNT, IT WOULD RESULT IN ESCAPEMENT OF INCOME FROM ASSESSMENT IF THE BORR OWER REPAYS THE LOAN IN THE SUBSEQUENT YEARS AS THE ASSESSEE WOU LD CREDIT THE REPAID AMOUNT TO LOANS AND ADVANCES ACCOUNT AND NOT TO THE P&L A/C HAS NO MERIT IN SUCH CIRCUMSTANCES THE AMOUNT S ARE DULY OFFERED FOR TAX AND THE AO IS SUFFICIENTLY EMPOWERED TO TAX SUCH SUBSEQUENT REPAYMENTS UNDER S. 41(4). HENCE THIS ISSUE STANDS DECIDED IN FAVOUR OF THE AS SESSEE. 45. NEXT ISSUE IS ON DISALLOWANCE OF EXPENDITURE UN DER SECTION 14A OF THE ACT. LEARNED D.R. POINTED OUT THAT ASSESSEE HAS BEEN DENIED PERMISSION BY THE COD FOR PURSUING THIS ISSUE BEFOR E THIS TRIBUNAL. AS HELD BY US AT PARA 23 IN ASSESSEES APPEAL FOR A SSESSMENT YEAR 1989-90 IN I.T.A. NO. 985/MDS/2003, WE ARE OF THE O PINION THAT THE ISSUES ON WHICH THERE HAS BEEN SPECIFIC REFUSAL BY THE COD FOR PURSUING THE MATTER BEFORE THIS TRIBUNAL, THERE CAN NOT BE AN APPEAL BEFORE US, SPECIFICALLY SO, SINCE THE ORDER IN MISC ELLANEOUS PETITION RECALLED THE APPEALS ONLY TO THE EXTENT WHERE COD A PPROVAL WERE GRANTED. 43. IN THE RESULT, APPEAL OF THE ASSESSEE IN I.T.A. NO. 1082/MDS/2003 TO THE EXTENT RECALLED STANDS PARTLY ALLOWED. I.T.A. NOS. 131 & 388/MDS/2001 I.T.A. NOS. 984, 985, 986 & 1082/MDS/2003 I.T.A. NOS. 1654, 1655, 1900 & 1901/MDS/2004 I.T.A. NOS. 682, 683 & 684/MDS/2006 32 44. RESULTS FOR APPEALS TO THE EXTENT THESE WERE RE CALLED ARE SUMMARIZED HEREUNDER:- (1) I.T.A. NO. 131/MDS/2001 IS ALLOWED (2) I.T.A. NO. 388/MDS/2001 IS PARTLY ALLOWED (3) I.T.A. NO. 984/MDS/2003 IS PARTLY ALLOWED (4) I.T.A. NO. 985/MDS/2003 IS PARTLY ALLOWED (5) I.T.A. NO. 986/MDS/2003 IS PARTLY ALLOWED FOR S TATISTICAL PURPOSES. (6) I.T.A. NO. 1082/MDS/2003 IS PARTLY ALLOWED (7) I.T.A. NO. 1654/MDS/2004 IS ALLOWED (8) I.T.A. NO. 1655/MDS/2004 IS ALLOWED (9) I.T.A. NO. 1900/MDS/2004 IS ALLOWED (10) I.T.A. NO. 1901/MDS/2004 IS ALLOWED (11) I.T.A. NO. 682/MDS/2006 IS ALLOWED (12) I.T.A. NO. 683/MDS/2006 IS ALLOWED (13) I.T.A. NO. 684/MDS/2006 IS ALLOWED THE ORDER WAS PRONOUNCED IN THE COURT ON 30 TH JUNE, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 30 TH JUNE, 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A) (4) CIT (5) D.R. (6) GUARD FILE