Income Tax Appellate Tribunal - Mumbai
Dena Bank, vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH "D",MUMBAI
BEFORE SHRI R.S. SYAL (AM) & SHRI R.S. PADVEKAR (JM)
I.T.A.No.3676/Mum/2000 :: A.Y. 1996-97
Jt.Commr. of Income-tax, M/s. Dena Bank,
S.R. 27, 17, Horniman Circle,
R.No.671, Aaykar Bhavan, 6th floor, 2nd floor, Fort,
M.K.Rd., Mumbai-400 020. Vs. Mumbai-400 023.
PAN: AAACD4249B
Appellant Respondent
I.T.A.No. 237/Mum/2002 :: A.Y. 1997-98
I.T.A.No. 238/Mum/2002 :: A.Y. 1998-99
I.T.A.No.5062/Mum/2004 :: A.Y. 1999-2000
I.T.A.No.2195/Mum/2004 :: A.Y. 2000-2001
I.T.A.No.4789/Mum/2008 :: A.Y. 2003-2004
M/s. Dena Bank, Jt.Commr. of Income-tax,
17, Horniman Circle, S.R. 27,
2nd floor, Fort, R.No.671, Aaykar Bhavan, 6th
Mumbai-400 023. Vs. floor,
PAN: AAACD4249B M.K.Rd., Mumbai-400 020.
Appellant Respondent
Department by Shri Narendra Singh.
Assessee by Shri S.Ananthan & Mrs. Lalitha
Rameswaran.
ORDER
PER BENCH :
This batch of six appeals - one by the Revenue for Asstt. year 1996- 97 and the other five by the assessee for Asstt. years 1997-98, 1998-99, 1999-2000, 2000-01 and 2003-04 - involve some common issues. We 2 ITA Nos.3676 + 5 other appeals Dena Bank are, therefore, proceeding to dispose them of by this consolidated order for the sake of convenience.
A.Y. 1996-97:
2. The first issue in this appeal is against allowing of deduction towards provision for bad debts. Briefly stated facts of the case are that the assessee debited a sum of Rs.52,30,30,064/- towards specific provision on account of non-performing assets. These assets included sub-standard assets, doubtful assets and loss assets. According to the AO, the classification was done by the assessee as per the guidelines issued by the RBI. The AO noted, during the course of assessment proceedings, that a sum of Rs.42,81,94,064/- represented bad debts written off during the year, which were adjusted against similar specific provision for an earlier year. According to the AO, the entire provision created by the assessee was not deductible. He splitted this provision into two parts, viz., provision for rural debts amounting to Rs.11.05 crores and the remaining provision towards non-rural debts. In his opinion, the provision for rural debs was allowable u/s.36(1)(viia). As regards the other provision, he held that only the actual amount of bad debts written was deductible u/s.36(1)(vii).This amount was determined at Rs.31,76,36,641/-. The excess provision of Rs.9,48,36,000/- was disallowed. The ld. CIT(A) overturned the impugned order on this issue and deleted the said addition.
3. We have heard the rival submissions and perused the relevant material on record. Sec. 36(1)(vii) grants deduction for any amount of bad 3 ITA Nos.3676 + 5 other appeals Dena Bank debt or part thereof written off by the assessee as irrecoverable in the accounts subject to the provisions of sec. 36(2) of the Act. Sec.
36(1)(viia) deals with the granting of deduction in respect of provision for any bad or doubtful debts made by a scheduled bank, etc. The case of the AO is that the deduction on account of provision for non-rural debts should be allowed only to the extent of the amount of debts actually written off. On the other hand, the assessee is contending that the provision made by it in accordance with the RBI guidelines should be allowed as deduction. Here, it is important to mention that there is no dispute on the claim of provision for rural debts which has been allowed by the AO at the amount claimed. The Hon'ble Supreme Court in Vijaya Bank vs. CIT (2010) 323 ITR 166 (SC) considered a case in which the assessee claimed deduction in respect of provision for bad debts u/s.36(1)(vii). The AO held that it was only a provision and hence could not be equated with actual write off of bad debts as per the requirements of sec. 36(1)(vii). The Hon'ble Supreme Court, after considering the issue at length, held that if an assessee debits an amount of doubtful debts to the P & L a/c. and credits the assests account like sundry debtors account, that would constitute a write off of an actual debt. It was further held that if an assessee debits provision for doubtful debts to the P & L a/c. and makes a corresponding credit to the to the "liabilities and provisions" on the liabilities side of the balance-sheet, then it would constitute a provision for doubtful debts and in such a case the assessee would not be entitled to deduction after 1-4- 1989. The year under consideration is Asstt. year 1996-97. As per the 4 ITA Nos.3676 + 5 other appeals Dena Bank judgment of the Hon'ble Apex Court in Vijaya Bank (supra), deduction for bad debts is allowable provided it is firstly debited to the P & L a/c. and then it is reduced from the figure of debtors in the balance-sheet. We have perused the Annual report of the assessee bank for the year under consideration. It is noticed that the assessee has reduced the ultimate amount of provision for bad debts from the figure of debtors in the balance-sheet and it is only after reducing the amount of provision from the gross figure of debtors that the net figure is reflected. Such a computation can be seen from pages 24, 29 and 47 of the paper book. In so far as the figure of provision for non-performing assets at the year ending is concerned, the calculation can be seen at page 51 of the paper book, from where it is discernible that the amount of provision for NPA made during the year is added to the amount of opening balance of the provision and after reducing the amount of bad debts written off/provision written back during the year, the net amount is reflected by way of reduction from the amount of debtors in the balance sheet. It is, therefore, vivid that the assessee has complied with the requirements of sec. 36(1)(viia) as interpreted by the Hon'ble Supreme Court in the case of Vijaya Bank (supra). Thus the impugned order on this score is upheld and ground nos. 1 & 2 are not allowed.
4. The second issue in this appeal is against the deletion of disallowance of Rs.81,21,716/- being the broken period interest. The facts apropos this ground are that the assessee received broken period interest of Rs.4,78,73,191/- on securities in its opening stock which were sold 5 ITA Nos.3676 + 5 other appeals Dena Bank during the year. It also paid an amount of Rs.5,50,74,387/- as broken period interest on securities purchased and sold during the year. Further, the assessee paid a sum of Rs.2,95,13,008/- as broken period interest on securities purchased during the year as reflected in the closing stock. On being called upon to justify the deduction of interest for broken period, the assessee stated that similar practice was followed by it in the past treating the interest component as revenue item. It was further clarified that in trading of securities, purchase or sale price included a component of interest due on the securities till the date of purchase/sale. It was claimed that since such interest related to current investments, the same was liable to be considered as revenue income/expenditure. Not convinced, the AO came to hold hat the broken period interest paid on securities in closing stock amounting to Rs.81,21,716/-, which was debited to the P & L a/c., was to be disallowed. The ld. CIT(A) got convinced with the submissions advanced on behalf of the assessee and ordered for the deletion of addition.
5. After considering the rival submissions and perusing the relevant material on record, it is noted as an undisputed fact that the assessee was holding the securities as current assets. At the time of purchasing securities, the assessee was bifurcating the purchase consideration into two parts, viz., first part towards the interest for the period from the date it was last granted upto the date of purchase and the remaining part towards the purchase price of securities. Similarly, in respect of sale of securities, the assessee was bifurcating the sale consideration into two 6 ITA Nos.3676 + 5 other appeals Dena Bank parts, viz., the first part towards interest for the period from which it was last granted upto the date of sale and the remaining part towards the value of securities purchased. However, on receipt of the actual interest, the assessee was offeing the total amount as income. To put it in different words, suppose, a security was purchased on 1st September for Rs.110/- and the interest for the period 1st July to 31st August is Rs.10/- (with the presumption that interest is payable on 30th June and 31st December), the assessee was accounting for securities at Rs.100/- and claiming deduction for Rs.10/-. When it was receiving interest on 31st December for the period 1st July to 31st December, the entire amount, say, Rs.30/- (including Rs.10/- for the period 1st July to 31st August) was offered for taxation. The same treatment was given in respect of securities sold inasmuch as the interest for the broken period was accounted for as income at the time of sale of securities itself because such interest was to be ultimately received by the purchaser on the cut off dates. When such securities are admittedly held as stock in trade, we fail to understand as to how the interest for the broken period, which is income/expenditure from such security, should not be considered as revenue item. The AO has albeit granted deduction in respect of broken period interest in respect of securities which were purchased and sold during the year but made addition in respect of broken period interest paid on the securities in the closing stock. The assessee was regularly following this method of accounting. If the AO was not satisfied with such treatment, he was obliged to correspondingly increase the value of opening stock of securities 7 ITA Nos.3676 + 5 other appeals Dena Bank by way of such broken period interest for the last year. Be that as it may, since the securities are current assets of the assessee, the broken period interest expenditure or income has to be allowed as deduction. Recently, Special Bench of the Tribunal in DCIT vs. Bank of Bahrain & Kuwait (2010) 132 TTJ (Mumbai) (SB) 505 has decided this issue in favour of the assessee by holding that there cannot be any disallowance on account of broken period interest paid by the assessee. In reaching its conclusion, the Tribunal relied on the judgement of the Hon'ble jurisdictional High Court in American Express International Banking Corpn. Vs. CIT (2002) 177 CTR (Bom) 442. Respectfully following the judgment of the Hon'ble jurisdictional High Cour and the aforenoted Special Bench order, we dismiss this ground raised by the Revenue.
6. The next issue in this appeal is against granting of depreciation on value of securities to the tune of Rs.55,53,09,959/-. The facts of this ground are that the assessee added back an amount of Rs.29,16,97,241/- representing the decrease in the value of current investments and claimed as deduction a sum of Rs.84,70,07,200/- which represented depreciation in the value of securities in the computation of total income filed along with the return of income. On being called upon to justify this deduction, the assessee stated that the Bank treated whole of its investment as stock in trade. As the Bank was valuing such securities on the balance-sheet date as per its regular method of valuing the stock, there was net decrease in the value of such securities, which amount was claimed as deduction. The AO made addition of Rs.55,53,09,959/- by 8 ITA Nos.3676 + 5 other appeals Dena Bank considering the amortization loss on permanent securities as not allowable. The ld. CIT(A) accepted the assessee's claim.
7. We have heard the rival submissions and perused the relevant material on record. It is noticed that the assessee was holding securities (excluding securities to the tune of Rs.275.63 crores received from Govt. of India in view of capital contribution) as its stock in trade. According to the uncontroverted submission made by the ld. A.R., the assessee was following the method of valuing such securities at 'cost of market price whichever is less'. There is no dispute on the valuation aspect. The view of the AO was that such deduction was not allowable. To exemplify the issue, if some securities are purchased at Rs.100/-, the market price of which as at the end of the year one is Rs.90/-, the assessee will value such stock at Rs.90/- (being market price of Rs.90/- which is less than the cost price of Rs.100/-). Suppose, in the second year, the market price of such securities which were purchased by the assessee in year one at Rs.100/- and valued at Rs.90/- at that year end, went up to Rs.95/-, there would be net income of Rs.5/- in the second year (Rs.95/- minus Rs.90/-) and there would be automatic loss of Rs.10/- in the first year because the cost price on the debit side shall stand reflected at Rs.100/- and the closing stock at Rs.90/- resulting into loss of Rs.10/-. When the method of 'cost or market price, whichever is less' is followed by any assessee for valuing its stock, the effect has to be given accordingly. In other words, if the value of stock has come below its purchase price, it is only the market price which would stand reflected as closing stock at the end of the year. 9 ITA Nos.3676 + 5 other appeals
Dena Bank If, however, the market price exceeds the cost price, then the stock would continue to be valued at the cost price only, because of the method of valuing the closing stock at 'cost or market price whichever is less'. Continuing with the same example, suppose, in the third year the market value of the security rises to Rs.120/-, in such a situation, it shall be valued at Rs.100/- (being its purchase price) and there would be an income of Rs.5/- (Rs.100/- minus Rs.95/-). The excess over the cost price would not be considered for valuing the closing stock. It is only when such security is sold that the profit would stand reflected accordingly. In view of these reasons, we are satisfied that depreciation on account of fall in value of securities held by the assessee as stock in trade, was liable to be considered at the market value, being less than its cost price, as reflected by the assessee. This ground fails.
8. The last effective ground is against the deletion of disallowance of Rs7,48,104 on account of entertainment expenses. The assessee offered disallowance of Rs.11,17,081/- on account of entertainment expenses. The AO noted that the total entertainment expenses were to the tune of Rs.37,40,269/-. He held that an order passed by the Tribunal in an earlier year in the assessee's own case was not liable to be considered. He, therefore, made disallowance of Rs.11,17,081/-. The ld. CIT(A) deleted the addition.
9. We have heard the rival submissions and perused the relevant material on record. The assessee has placed on record a copy of the order passed by the Tribunal in the assessee's own case for the Asstt. year 10 ITA Nos.3676 + 5 other appeals Dena Bank 1983-84 in ITA No.5550/Bom/86. Vide order dated 15-11-1990, the Tribunal has held that "it would be reasonable to estimate 40 percent of the total expenses as not in the nature of entertainment expenses". Nothing has been brought to our notice to demonstrate that the said order has been modified or set aside by the Hon'ble High Court. Respectfully following the precedent, we hold that 40% of total expenses be considered as not in the nature of entertainment expenses. The AO is directed to work out the amount of disallowance accordingly.
10. In the result, the appeal is partly allowed for statistical purposes. A.Y. 1997-98 :
11. This is an appeal by the assessee against the order of the CIT(A) dated 19-11-2001. The first ground is against the sustenance of addition on account of provision of bad debts u/s.36(1)(vii). As against the ld. CIT(A) deciding such issue in assessee's favour in asst. year 1996-97, the ld. first appellate authority in the instant year, took opposite view and sustained the disallowance. Both the sides are in agreement that the facts and circumstances of this ground are mutatis mutandis similar to those the preceding year. Following the view taken hereinabove, we order for the deletion of this addition. This ground is allowed.
12. Ground no. 2 is against confirmation of disallowance of broken period interest. In this year also, again, the ld. CIT(A) took contrary view from the one taken in Asstt. year 1996-97. As the facts are admittedly 11 ITA Nos.3676 + 5 other appeals Dena Bank similar, following our order taken in the immediately preceding year, we allow this ground of appeal.
13. Ground no. 3 is against disallowance of provision for loss on forward exchange contract. The assessee booked a loss on forward foreign exchange contracts which were unmatured on the date of balance-sheet for an amount of Rs.17,84,97,527/-. The AO, while making disallowance for this amount also reduced such disallowance by a sum of Rs.5.96 crores which was disallowed by him in Asstt. year 1996-97. The ld. CIT(A) upheld the assessment order on this issue.
14. Having heard both the sides and perused the relevant material on record, we find that the Special Bench of Tribunal in DCIT vs. Bank of Bahrain & Kuwait (supra) has disposed of this issue by holding that where a forward contract is entered into by the assessee to buy or sell the foreign currency at an agreed price at a future date falling beyond the last date of the accounting period, the loss incurred by the assessee on account of evaluation of the contract on the last date of the relevant accounting period, i.e., before the date of maturity of the forward contract, is allowable as deduction. A detailed discussion has been made in the said order. In our considered opinion, it would be just and fair if the impugned order on this issue is set aside and the matter is restored to the file of AO for deciding it afresh on the touchstone of the prescription given by the Special Bench in the aforenoted order. Needless to say the assessee would be allowed a reasonable opportunity of being heard. 12 ITA Nos.3676 + 5 other appeals
Dena Bank
15. The next ground is against the confirmation of disallowance of entertainment expenses. Here also, both the sides are in agreement that the facts and circumstances of this ground are similar to that of Asstt. year 1996-97. Following the view taken hereinabove, we direct the AO to compute the disallowance of entertainment expenses in accordance with the earlier order of the Tribunal.
16. Ground no. 5 is against the confirmation of disallowance u/s.35D. No permission has been granted by the COD to prosecute this ground. In the absence of any approval given by COD, this ground is dismissed.
17. Ground no. 6 is against disallowance of exemption u/s.10. The assessee claimed interest received on tax free securities amounting to Rs.2.21 crores as exempt u/s.10(15)(iv)(a). Relying on the judgment of the Hon'ble Supreme Court in the case of Rajasthan State Warehousing Corporation vs. CIT 209 ITR 271 and certain other judgments, the AO came to hold that exemption was claimed by the assessee for gross interest received which was not correct. He reduced the quantum of interest income by proportionately reducing expenses at 36.93% of such income. No relief was allowed in the first appeal.
18. After considering the rival submissions and perusing the relevant material on record, it is noticed that the AO made disallowance by reducing proportionate expenses from the interest receipt by determining the correct amount of income which was exempt u/s.10(15). In other words, he applied the prescription of sec. 14A. We find that this issue is no more res integra in view of the judgment of the Hon'ble jurisdictional High 13 ITA Nos.3676 + 5 other appeals Dena Bank Court in Godrej & Boyce Mfg. Ltd. vs. DCIT (2010) 328 ITR 81 (Bom) in which it has been held that disallowance is called for u/s.14A in such circumstances. However, the manner of computation of such disallowance has been restored to the file of AO for making on some reasonable basis. It has further been held in this case the provisions of Rule 8D are not applicable as these are prospective. Respectfully following the precedent, we set aside the impugned order and direct the AO to compute disallowance u/s.14A in accordance with the ratio laid down by the Hon'ble jurisdictional High Court in the aforenoted case of Godrej & Boyce Ltd. The ld. A.R. has contended before us that it was having sufficient interest-free funds at its disposal which were invested in securities earning exempt income and hence no disallowance of interest was called for. The AO, while computing disallowance u/s.14A, will also examine this contention of the assessee as per law.
19. The last ground is against restricting the deduction u/s.80M. The assessee claimed that gross dividend received by it as eligible for deduction u/s.80M. The AO came to hold that deduction should be allowed u/s.80M at 60% of the income from dividend, presumably considering 40% towards expenses. The ld. CIT(A) upheld the assessment order on this issue.
20. We have heard the rival submissions and perused the relevant material on record. The ld. A.R. has relied on the judgment of the Hon'ble Bombay High Court in CIT vs. Central Bank of India (2003) 130 Taxman 116 (Bom.) in which it has been held that the department was not entitled 14 ITA Nos.3676 + 5 other appeals Dena Bank to import the rule of proportionate expenditure and interest into sec. 80M. The mandate of this judgment is that indirect expenses cannot be reduced from the amount of dividend for the purposes of granting deduction u/s.80M. The ld. A.R. came forward with a submission that a disallowance of 1 or 2% of the gross dividend income may be made towards such direct expenses. We are unable to make any order for reduction from the dividend income towards the expenses on an ad hoc basis. In our considered opinion, it would be just and fair if the impugned order is set aside on his issue and the matter is restored to the file of AO for reducing the direct expenses from the amount of gross dividend for the purpose of deduction u/s.80M.
21. In the result, the appeal is partly allowed.
A.Y. 1998-99:
22. Ground no. 1 of the assessee's appeal is against the confirmation of addition towards provision for bad debts u/s.36(1)(vii). As the facts of this ground are admittedly similar to those decided by us for the earlier year, following the view taken hereinabove, we allow this ground of appeal.
23. Ground no. 2 is against the confirmation of disallowance on broken period interest. The facts of this ground are also admittedly similar to those already discussed in the earlier years. Following the view hereinabove, we allow this ground of appeal.
24. Ground no. 3 is against appreciation on the revaluation of securities. The assessee added back a sum of Rs.27,35,38,282/- representing 15 ITA Nos.3676 + 5 other appeals Dena Bank appreciation in the value of current investments. It was claimed that the Bank was treating the whole of its investments as stock in trade. Considering the fact that in earlier years the Department did not allow any deduction towards appreciation in the value of such securities as stock in trade, the AO held that the Bank should be allowed a deduction of the amount of appreciation. Since the assessee did not accept the decision of the Department on such issue in earlier years and preferred appeal to the CIT(A), this income was taxed by the AO on protective basis.
25. After considering the rival submissions and perusing the relevant material on record, it is noticed that similar issue raised by the assessee in earlier years for grant of deduction on account of depreciation in the value of securities, held as stock in trade, has been decided in assessee's favour by holding that depreciation in the value of securities is allowable as deduction. In that view of the matter and applying the same analogy, the appreciation in the value of such securities in the instant year at Rs.27.35 crores is liable to be taxed on substantive basis rather than protective basis as done by the AO. This ground is, therefore, not allowed.
26. Ground no. 4 is against loss on forward exchange contract. Similar issue has been discussed by us in an earlier year restoring the matter to the file of AO for taking a fresh decision in accordance with the Special Bench order in the case of Bank of Bahrain & Kuwait (supra). Following the view taken hereinabove, we set aside the impugned order on this issue and remit the matter to the file of AO for taking a fresh decision accordingly.
16 ITA Nos.3676 + 5 other appeals
Dena Bank
27. Ground no. 5 is against confirmation of disallowance u/s.35D. COD has not granted approval to the assessee Bank for prosecuting this ground. As such, this ground is dismissed.
28. Ground no.6 is against disallowance of exemption u/s.10. Following the view taken in earlier years, the AO reduced the exempt income by proportionate expenditure. This issue has been dealt with us in the immediately preceding year by which the matter has been restored to the file of AO for a fresh decision. Following the same view, we set aside the impugned order on this issue and remit the matter to the file of AO for deciding accordingly.
29. Ground no. 7 is against charging of interest u/s.201(1A). The AO passed assessment order on 24-01-2001. At the end of the order, he directed for charging interest under sections 234B and 234C. While issuing notice of demand in ITNS 150, interest was also charged u/s.201(1A) at Rs.55,270/-. The assessee is aggrieved against the charging of such interest.
30. We have heard both the sides and perused the relevant material on record. Section 201 deals with the consequences of failure to deduct or pay tax at source. Sub-sec. (1) provides that where any person who is required to deduct any sum in accordance with the provisions of this Act or an employer u/s. 192(1A), does not deduct or does not pay or after so deducting fails to pay the whole or any part of the tax as required by or under this Act, then such person shall be deemed to be an assessee in default in respect of such tax. Sub-sec. (1A) of sec. 201 provides that if 17 ITA Nos.3676 + 5 other appeals Dena Bank any such person as referred to in sub-sec. (1) does not deduct the whole or any part of tax or after deducting fails to pay the tax, he shall be liable to pay simple interest at the prescribed rate . On going through sub- sections (1) and (1A) of sec. 201, it transpires that before charging any interest u/s.201(1A) the assessee should be deemed to be in default in respect of such tax. Treating a person as assessee in default is subject matter of provisions u/s. 201(1), which aspect is decided by the AO (TDS).The AO, while framing assessment u/s.143(3) of the Act, cannot charge interest u/s.201(1A). We, therefore, allow this ground of appeal.
31. The last ground about confirmation of disallowance of set off of unabsorbed depreciation/carried forward loss is stated to be consequential. This ground is accordingly disposed of.
32. In the result, this appeal is partly allowed.
A.Y. 1999-2000 :
33. The first ground of the assessee's appeal is against confirmation of disallowance of provision of bad debts u/s.36(1)(vii). As the facts of this ground are admittedly similar to those decided by us for the earlier year 1998-99, following the view taken hereinabove, we allow this ground of appeal.
34. Ground no. 2 is for not taxing appreciation in the value of securities. This ground has been dealt with by us in asstt. year 1998-99 holding that such appreciation in the value of securities is liable to be taxed. This ground is not allowed.
18 ITA Nos.3676 + 5 other appeals
Dena Bank
35. Ground no.3 is against confirmation of disallowance of provision for loss on forward exchange contract. Similar issue has been discussed by us in an earlier year restoring the matter to the file of AO for taking a fresh decision in accordance with the Special Bench order in the case of Bank of Bahrain & Kuwait (supra). Following the view taken hereinabove, we set aside the impugned order on this issue and remit the matter to the file of AO for taking a fresh decision accordingly.
36. Ground no. 4 is against confirmation of disallowance u/s.35D for the expenses on public issue of equity shares. The facts of this ground are that in an earlier year the Bank issued to the public certain shares. Total expenditure on this public issue amounted to Rs.9.36 crores. The assessee claimed deduction at 1/10th of the issue expenses u/s.35D amounting o Rs.93.62 lakhs. The AO, following the judgment of the Hon'ble Supreme Court in the case of Brooke Bond India Ltd. vs. CIT (1997) 225 ITR 798 and another judgment of the Hon'ble Supreme Court in Punjab State Industrial Development Corporation vs. CIT (1997) 225 ITR 792 (SC) held that such expenses cannot be allowed as deduction u/s.35D. He, therefore, made disallowance as done in the past. The ld. CIT(A), following the view taken by his predecessors in earlier years, upheld the disallowance.
37. The ld. counsel for the assessee has relied on he judgment of Hon'ble Rajasthan High Court in CIT. vs. Neha Proteins Ltd. (2008) 171 Taxman 455 (Raj.) to contend that the interest accrued on share application money lying with the Bank should be adjusted against public 19 ITA Nos.3676 + 5 other appeals Dena Bank issue expenses so as reduce the amount of public issue expenses for enabling the assessee to claim amortization under and in accordance with the provisions of sec. 35D. The ld. D.R. argued that this point was never agitated by the assessee before the authorities below and has come up before the Tribunal for the first time.
38. We have observed from the assessment as well as the impugned order that there is no discussion on this aspect of the matter. Under such circumstances, we are of the considered opinion that it would be just and fair if the impugned order on this issue is set aside and the matter is restored to the file of AO. We order accordingly and direct him to decide this question afresh as per law after allowing a reasonable opportunity of being heard to the assessee.
39. The next ground is against confirmation of disallowance of exemption u/s.10. After considering the rival submissions and perusing the relevant material on record, it is noticed that the AO made disallowance by reducing proportionate expenses from the interest receipt by determining the correct amount of income which was exempt u/s.10(15). This is also a recurring issue, which has been dealt with by us in an earlier year supra. Following the same view, we set aside the impugned order and direct the AO to decide this issue afresh in accordance with our view expressed above.
40. In the result, this appeal is partly allowed.
20 ITA Nos.3676 + 5 other appeals
Dena Bank A.Y. 2000-01 :
41. The first ground is against allowing of deduction towards provision for bad debts. This is a recurring issue, which has been decided by us in the years dealt with above. In the absence of the ld. DR, pointing out any distinguishing feature in the facts of this year vis-à-vis those of the earlier year, we allow this ground of appeal.
42. The second ground is against disallowance of provision for loss on forward exchange contract. It is again noticed that this issue has also been dealt with by us in earlier years. Following the same view taken supra, we remit this matter to the file of AO for deciding it afresh in accordance with our observations recorded above.
43. The next ground is against confirmation of disallowance u/s.35D. This is also a recurring issue in as much as we have dealt with it in earlier years. Following the same view, we set aside the impugned order and direct the AO to decide it afresh as per our above observations.
44. The last ground is against disallowance of exemption u/s.10. Here again it is noticed that this issue has been decided by us in an earlier year supra. Following the same view, we direct the AO to compute the disallowance u/s 14A, if any, as per our above observations.
45. In the result, the appeal is partly allowed.
A.Y. 2003-04 :
21 ITA Nos.3676 + 5 other appeals
Dena Bank
46. The first ground is against allowing of deduction towards provision for bad debts. This issue has also been dealt with by us in earlier years above. Following the same view, this ground is allowed.
47. The second ground is against disallowance of provision for loss on forward exchange contract. This is also a recurring issue in as much as we have dealt with it supra in earlier years. Following the same view, we set aside the impugned order and direct the AO to decide this issue in accordance with our above observations.
48. Ground no. 3 is against the confirmation of disallowance u/s.35D. No permission has been granted by the COD to prosecute this ground. In the absence of any approval given by COD, this ground is dismissed.
49. Ground no. 4 is against disallowance u/s.14A. The COD has not granted permission to the assessee to agitate this ground before the tribunal. This ground is, as such, dismissed.
50. In the result, the appeal is partly allowed.
Order pronounced on the 23rd day of February, 2011.
Sd/- Sd/- (R.S. PADVEKAR) (R.S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai: 23rd February , 2011. NG: 22 ITA Nos.3676 + 5 other appeals Dena Bank Copy to : 1. Department. 2.Assessee. 3 CIT(A)-XVI,,Mumbai. 4 CIT,MC-III,Mumbai. 5.DR,"D" Bench,Mumbai. 6.Master file. (TRUE COPY) BY ORDER, Asst.Registrar, ITAT, Mumbai. 23 ITA Nos.3676 + 5 other appeals Dena Bank Details Date Initials Design ation 1. Draft dictated on 15-02- Sr.PS/ 2011 2. Draft Placed before author 18-02- Sr.PS/ 2011 3. Draft proposed & placed before the JM/AM Second Member 4. Draft discussed/approved by Second JM/AM Member 5. Approved Draft comes to the Sr.PS/PS Sr.PS/ 6. Kept for pronouncement on Sr.PS/ 7. File sent to the Bench Clerk Sr.PS/ 8. Date on which the file goes to the Head clerk 9. Date on which file goes to the AR 10 Date of dispatch of order . *