DENA BANK, MUMBAI v. ASST CIT RG 2(3), MUMBAI

CO 138/MUM/2013 | 2008-2009
Pronouncement Date: 09-04-2014 | Result: Dismissed

Appeal Details

RSA Number 13819923 RSA 2013
Assessee PAN AAACD4249B
Bench Mumbai
Appeal Number CO 138/MUM/2013
Duration Of Justice 9 month(s) 4 day(s)
Appellant DENA BANK, MUMBAI
Respondent ASST CIT RG 2(3), MUMBAI
Appeal Type Cross Objection
Pronouncement Date 09-04-2014
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted Not Allotted
Tribunal Order Date 09-04-2014
Assessment Year 2008-2009
Appeal Filed On 05-07-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI [ [ BEFORE SHRI RAJENDRA ACCOUNTANT MEMBER AND SHRI SANJAY GARG JUDIC IAL MEMBER ./ ITA NO. 3676 /M/ 2012 ( [ [ / ASSESSMENT YEAR: 2008 - 09 ) M/S. DENA BANK ACCOUNTS DEPARTMENT DENA BANK BUILDING 2 ND FLOOR 17/B HORNIMAN CIRCLE FORT MUMBAI 400 023 PAN: AAACD4249B / VS. DY. COMMISSIONER OF INCOM E - TAX 2(3) ROOM NO.555 5 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI 20 ( / APPELLANT) ( / RESPONDENT) ./ ITA NO. 4113/M/2012 ( [ [ / ASSESSMENT YEAR: 2008 - 09) ACIT - 2(3) ROOM NO.55 2 5 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI 20 / VS. M/S. DENA BANK ACCOUNTS DEPARTMENT DENA BANK BUILDING 2 ND FLOOR 17/B HORNIMAN CIRCLE FORT MUMBAI 400 023 PAN: AAACD4249B ( / APPELLANT) ( / RESPONDENT) CO/138/M/2013 (ARISING OUT OF ITA NO. 4113/M/2012) ( [ [ / ASSESSMENT YEAR: 2008 - 09) M/S. DENA BANK ACCOUNTS DEPARTMENT DENA BANK BUILDING 2 ND FLOOR 17/B HORNIMAN CIRCLE FORT MUMBAI 400 023 PAN: AAACD4249B / VS. DY. COMMISSIONER OF INCOME - TAX 2(3) ROOM NO.555 5 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI 20 ( / APPELLANT) ( / RESPONDENT) ITA NO . 3676/M/2012 4113/M/2012 & CO/138/M/2013 M/S. DENA BANK 2 / ASSESSEE BY : SHRI S. ANANTHAN A.R. & MRS. LALITHA RAMESWARAN A.R. / BY REVENUE : SHRI GIRIJA DAYAL D.R. / DATE OF HEARING : 27.02.2014 / DATE OF PRONOUNCEMENT : 9.4.2014 / O R D E R PER SANJAY GARG JUDICIAL M EMBER: THE PRESENT ARE TWO CROSS APPEALS ONE FILED BY THE ASSESSEE AND THE OTHER BY THE REVENUE AND ONE CROSS OBJECTION FILED BY THE ASSESSEE ALL DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A) ] DATED 30.03.12. SINCE THE FACTS AND ISSUES INVOLVED ARE IDENTICAL IN NATURE HENCE THE ABOVE APPEALS/CROSS OBJECTIONS ARE BEING DISPOSED OF WITH THIS COMMON ORDER. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE. ITA NO.3676/M/2012 THE ASSESSEE HAS TAK EN THE FOLLOWING GROUNDS OF APPEAL: 1 ) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ACTION OF ASSESSING OFFICER IN NOT ALLOWING THE CLAIM FOR DEDUCTION U /S. 35D FOR THE EXPENSES INCURRED ON PUBLIC ISSUE OF EQUITY SHARES AMOUNTING TO RS.1 44 24 299/ - . YOUR APPELLANTS SUBMIT THAT THE ABOVE EXPENDITURE OUGHT TO HAVE BEEN ALLOWED AS CLAIMED BY YOUR APPELLANTS. WITHOUT PREJUDICE TO THE ABOVE YOUR APPELLANTS SUBMIT THAT THE INCOME EARNED FROM THE SHARE APPLICATION MONEY SHOULD BE NETTE D OFF AGAINST THE EXPENDITURE AND ONLY THE NET EXPENDITURE BE CONSIDERED FOR DISALLOWANCE. 2 ) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.1 36 08 000 / - UNDER SECTION 14A READ WITH RULE 8D. YOUR APPELLANTS SUBM IT THAT THE SAID DISALLOWANCE IS NOT CALLED FOR AND THE SAME BE DELETED. WITHOUT PREJUDICE TO THE ABOVE YOUR APPELLANTS SUBMIT THAT THE ITA NO . 3676/M/2012 4113/M/2012 & CO/138/M/2013 M/S. DENA BANK 3 DISALLOWANCE IS EXCESSIVE AND OUGHT TO BE REDUCED SUBSTANTIALLY. 3 ) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN COMPUTING THE INCOME OF YOUR APPELLANT U/S. 1I5JB OF THE INCOME TAX ACT 1961. YOUR APPELLANT SUBM ITS THAT THE PROVISIONS OF SEC. 115JB ARE NOT APPLICABLE TO YOUR APPELLANT'S CASE. WITHOUT PREJUDICE TO THE ABOVE: ( I ) YOUR APPELLANTS SUBMIT THAT THEY SHOULD BE ALLOWED TO RECAST THE PROFIT & LOSS ACCOUNT AS PER THE PROVISIONS OF COMPANIES ACT 1956 AND THE NET PROFIT AS PER THE RECASTED PROFIT & LOSS ACCOUNT SHOULD BE CONSIDERED FOR ARRIVING AT THE BOOK PROF IT. ( II ) YOUR APPELLANTS SUBMIT THAT THE DEDUCTION ON ACCOUNT OF THE EXPENDITURE ATTRIBUTABLE TO EXEMPT INCOME SHOULD BE RESTRICTED TO THE ACTUAL EXPENDITURE DEBITED TO THE PROFIT & LOSS ACCOUNT AND NOT THE AMOUNT DISALLOWED BY THE ASSESSING OFFICER U/ S . 14A R . W. RULE 8D. (III) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF R S. 263 99 90 158/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROVISION FOR NON PERFORMING ASSETS ( NP A) TO THE BOOK PROFITS COMPUTED UNDER MAT PRO VISIONS. YOUR APPELLANTS SUBMIT THAT THE PROVISION FOR NPA IS A WRITE OFF AND NOT A PROVISION AND THUS THE SAME IS NOT ATTRACTED BY ANY OF THE ITEMS IN THE EXPLANATION TO SECTION 115JB (2) OF THE INCOME TAX ACT 1961. HENCE THE SAME SHOULD NOT BE ADDED TO THE BOOK PROFITS COMPUTED UNDER MAT PROVISIONS. WITHOUT PREJUDICE TO THE ABOVE IN CASE PROVIS ION FOR NP A IS ADDED TO THE BOOK PROFITS THEN THE ACTUAL BAD DEBTS WRITTEN OFF DURING THE YEAR OUGHT TO BE ALLOWED AS A DEDUCTION FROM THE BOOK PROFITS COMPUT ED UNDER MAT PROVISIONS CONSIDERING THE SAME AS A WITHDRAWAL FROM RESERVES / PROVISIONS UNDER EXPLANATION 1 (I) OF SECTION 115JB. (IV) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF PROVISION FOR STANDARD ASSETS OF RS. 78 18 19 000/ - MADE BY THE ASSESSING OFFICER TO THE ITA NO . 3676/M/2012 4113/M/2012 & CO/138/M/2013 M/S. DENA BANK 4 BOOK PROFITS COMPUTED UNDER MAT PROVISIONS. YOUR APPELLANTS SUBMIT THAT THE PROVISION FOR STANDARD ASSETS IS NOT A PROVISION MADE IN DIMINUTION IN THE VALUE OF INVESTMENTS BUT IT REFLECTS AN ACTUAL LOSS INCURRED IN THE VALUE OF THE INVESTMENTS AND THUS SHOULD NOT BE ADDED TO THE BOOK PROFITS COMPUTED UNDER MAT PROVISIONS. (V) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS . 34 15 45 365/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF AMORTIZATION OF PREMIUM ON INVESTMENT TO THE BOOK PROFITS COMPUTED UNDER MAT PROVISIONS. YOUR APPELLANTS SUBMIT THAT THE AMORTIZATION OF PREMIUM ON INVESTMENT IS NOT A PROVISION MADE IN DIMINUTION IN THE VALUE OF INVEST MENTS BUT IT REFLECTS AN ACTUAL LOSS INCURRED IN THE VALUE OF THE INVESTMENTS AND THUS SHOULD NOT BE ADDED TO THE BOOK PROFITS COMPUTED UNDER MAT PROVISIONS. 4 ) YOUR APPELLANT SUBMIT THAT ADDITION OF RS . 27 58 29 642/ - AS MADE BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN PARA 6.6.2 OF THE APPELLATE OUGHT BE DELETED. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN 'CONFIRMING' THIS AMOUNT AS ADDITION IN COMPUTING THE BOOK PROFIT U/S . 115JB. YOUR APPELLANTS SUBMIT THAT THIS AMOUNT WAS NEVER ADDED BY THE ASSESSING OFFICER AND HENCE QUESTION OF CONFIRMING THE SAME DOESN'T ARISE AT ALL. FURTHER THIS AMOUNTS TO ENHANCEMENT OF INCOME OF YOUR APPELLANTS WITHOUT GIVING ANY NOTICE FOR ENHANCEMENT AND HENCE THE ADDITION IS ILLEGAL BAD IN LAW AND VOID. YOUR APPELLANTS FURTHER SUBMIT THAT E VE N ON MERITS THE ADDITION IS NOT WARRANTED AND OUGHT TO BE DELETED. 5) WITHOUT PREJUDICE TO GROUND NO. 4 YOUR APPELLANT SUBMIT THAT THE ADDITION OF RS.27 58 29 642/ - AS MADE BY THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) IS NOT TENABLE IN LAW IN AS MUCH AS THE SAME IS NOT A PROVISION TOWARDS DIMINUTION IN THE VALUE OF ASSETS BUT A WRITE OFF OF THE VALUE OF INVESTMENT. 6) YOUR APPELLANT FURTHER RESERVES THE RIGHT TO ADD AMEND OR ALTER THE AFORESAID GROUNDS OF APPEA L AS THEY MAY THINK FIT BY THEMSELVES OR BY THEIR REPRESENTATIVES. ITA NO . 3676/M/2012 4113/M/2012 & CO/138/M/2013 M/S. DENA BANK 5 GROUND NO.1 2. VIDE GROUND NO.1 THE ASSESSEE HAS AGITATED THE DISALLOWANCE OF CLAIM FOR DEDUCTION UNDER SECTION 35D FOR THE EXPENSES INCURRED ON PUBLIC ISSUE EQUITY SHARES AMOUNTING TO RS.1 44 24 299/ - . AT THE OUTSET THE LD. A.R. OF THE ASSESSEE HAS SUBMITTED THAT THE GROUND NO.1 IS COVERED BY THE DECISION OF THE TRIBUNAL PASSED IN ITA NOS.237 & 238/M/2002 VIDE ORDER DATED 10.04.13 IN THE OWN CASE OF THE ASSESSEE FOR ASSESSMENT YEARS 1997 - 98 AND 1998 - 99 . THE TRIBUNAL WHILE DEALING WITH THE IDENTICAL ISSUE HAS OBSERVED AS UNDER: 3.1.DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT BANK HAD ISSUED SHARES TO THE PUBLIC FOR WHICH AN EXPENDITURE AMOUNTING TO RS.9.36 CRORES WAS INCURRED T HAT THE ASSESSEE HAD CLAIMED DEDUCTI ON AT 1/10TH OF THE ISSUE EXPENSES U/S. 35D OF THE ACT AMOUNTING TO RS. 93.62 LAKHS. FOLLOWING THE JUDGMENTS OF HON'BLE SUPREME COURT DELIVERED IN THE CASES OF BROOKE BOND (225 ITR 798) AND PUNJAB STATE INDUSTRIAL DEVELO PMENT CORPORATION (225 ITR 792) HE HELD THAT EXPENDITURE CLAIMED BY THE ASSESSEE COULD NOT BE ALLOWED U/S. 35D OF THE ACT. IN THE APPELLATE PROCEEDINGS; FOLLOWING THE ORDERS OF HIS PREDECESSORS FOR EARLIER YEARS; FAA UPHELD THE ORDER OF THE AO. WHEN THE MATTER TRAVELLED TO THE TRIBUNAL AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE RELIED UPON THE JUDGMENT DELIVERED BY HON'BLE HIGH COURT OF RAJASTHAN IN THE CASE OF NEHA PROTEINS LTD. (171TAXMAN45) TO CONTEND THAT INTEREST ACCRUED ON SHARE APPLICATION MON EY LYING WITH BANK SHOULD BE ADJUSTED AGAINST PUBLIC ISSUE EXPENSES SO AS TO REDUCE THE AMOUNT OF PUBLIC ISSUE EXPENSES FOR ENABLING THE ASSESSEE TO CLAIM AMORTISATION UNDER AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 35D OF THE ACT. DEPARTMENTAL REPR ESENTATIVE (DR) ARGUED BEFORE THE TRIBUNAL AT THE TIME OF HEARING FOR THE A . Y. 1999 - 2000 (ITA NO.5062/M/04) THAT ISSUE RAISED BY THE AR WAS NEVER AGITATED BY THE ASSESSEE - BANK BEFORE THE AUTHORITIES BELOW. THEREFORE WHILE DECIDING THE APPEAL FOR THE AY.1 999 - 2000 (SUPRA) TRIBUNAL HELD AS UNDER: '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 FA IR IF THE IMPUGNED ORDER ON THIS ISSUE IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE 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.' 3.2 .BEFORE US AR SUBMITTED THAT SIMILAR ORDERS I.E. RESTORING THE MATTER TO THE FILE OF THE AO WAS PASSED BY THE TRIBUNAL FOR THE ITA NOS. 2195/ M/ 2004 AY.2000 - 01; 3608/M/2006 AY. 2001 - 02; 3609/M/2006 AY. 2002 - 03 & 3575/M/2009 AY. 2005 - 06 ALSO. DEPARTMENTA L REPRESENTATIVE (DR) SUBMITTED THAT HE HAD NO OBJECTION IF MATTER WAS RESTORED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION. RESPECTFULLY FOLLOWING THE ORDERS OF THE COORDINATING BENCHES IN THE INTEREST OF JUSTICE WE RESTORE BACK THE ISSUE TO THE F ILE OF THE AO TO DECIDE THE QUESTION AFRESH AS PER LAW AFTER ALLOWING A ITA NO . 3676/M/2012 4113/M/2012 & CO/138/M/2013 M/S. DENA BANK 6 REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE - BANK. GROUND NO.1 FILED BY THE ASSESSEE FOR BOTH THE AYS. IS PARTLY DECIDED IN FAVOUR OF THE ASSESSEE. 3. SO FOLLOWING THE ABOVE ORD ER OF THE TRIBUNAL FOR THE SAKE OF CONSISTENCY THE ISSUE IS ACCORDINGLY RESTORED TO THE FILE OF THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) IN TERMS OF THE DIRECTIONS OF THE TRIBUNAL VIDE ORDER DATED 10.04.13 AS REPRODUCED ABOVE. SO THIS GRO UND OF THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. GROUND NO.2 4. GROUND NO.2 OF THE APPEAL IS RELATING TO THE CONFIRMATION OF DISALLOWANCE OF RS.1 36 08 000/ - UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES. 5. DURING THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD CLAIMED THE TOTAL TAX FREE INCOME OF RS.3 28 09 651/ - WHICH CONSTITUTED INTEREST RECEIVED ON TAX FREE BONDS DIVIDEND ON SHARES UNITS OF MUTUAL FUNDS AND THE ASSESSEE HAD CLAIM ED THE SAME AS EXEMPT. THE AO NOTICED THAT THE ASSESSEE HAD NOT ATTRIBUTED ANY EXPENSES FOR EARNING THE ABOVE EXEMPT INCOME. HE THEREFORE MADE A DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D OF THE INCOME TAX RULES. THE LD. CIT(A) HOWEVER OBSERVED FR OM THE BALANCE SHEET OF THE ASSESSEE THAT THE ASSESSEE HAD SUFFICIENT OWN FUNDS FOR INVESTMENTS MADE FOR EARNING OF EXEMPT INCOME. HE THEREFORE DELETED THE DISALLOWANCE MADE BY THE AO UNDER RULE 8D(2) (II) OF THE I.T. RULES BUT HE CONFIRMED THE DISALLOWANC E ON ACCOUNT OF ADMINISTRATIVE EXPENSES UNDER RULE 8D(2)(III) OF THE I.T. RULES AMOUNTING TO RS. 13608000/ - . THE ASSESSEE IS THUS IN APPEAL BEFORE US. 6. THE LD. A.R. BEFORE US HAS CONTENDED THAT THE ASSESSEE IS ENGAGED IN THE BANKING BUSINESS AND CORE ACTIVITY OF THE ASSESSEE BANK IS TO ACCEPT DEPOSITS ITA NO . 3676/M/2012 4113/M/2012 & CO/138/M/2013 M/S. DENA BANK 7 FROM PUBLIC AND LENDING AND INVESTING THE SAME. MAJOR PART OF THE TOTAL REVENUE OF THE BANK IS INTEREST INCOME AND ON THE OTHER HAND INTEREST EXPENSES ARE MAJOR EXPENDITURE OF THE BANK. THE ASSESSEE HA D SUFFICIENT OWN FUNDS FOR MAKING INVESTMENTS WHICH WERE MADE AS PER THE RBI GUIDELINES. HE HAS DRAWN OUR ATTENTION TO THE BALANCE SHEET FOR THE RELEVANT FINANCIAL YEAR AND SUBMITTED THAT THE INVESTMENTS MADE FOR EARNING EXEMPT INCOME WERE VERY LOW WHEREA S THE ASSESSEE HAD CAPITAL OF RS. 286 C RORES AND RESERVES AND SURPLUS OF RS. 1513 CRORES . HE HAS FURTHER CONTENDED THAT APART FROM THAT THE ASSE S SEE HAD DEPO SITS IN CURR E NT ACCOUNTS OF RS. 215 CRORES ON WHICH NO INTEREST WAS PAYABLE. HE H AS FURTHER CONTENDED THAT SINCE THE MAIN BUSINESS OF THE ASSESSEE WAS TO ACCEPT DEPOSITS EARN AND GIVE INTEREST HENCE THE BUSINESS EXPENDITURE OF THE ASSESSEE WAS OUT OF THE BORROWINGS AND DEPOSITS WHEREAS THE OWN FUNDS OF THE ASSESSEE WERE EXCEPTIONAL LY HIGH IN COMPARISON T O THE INVESTMENTS MADE . HE HAS FURTHER CONTENDED THAT EVEN NO DISALLOWANCE WAS WARRANTED UNDER RULE 8D(2)(III) OF THE I.T. RULES CONTENDING THAT SECTIO N 14 A APPLIES TO DIRECT EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME AND NOT TO INDIRECT EXPENDITURE. HE HAS THEREFORE CONTENDED THAT NO DISALLOWANCE WAS WARRANTED U/S 14A IN THE CASE OF THE ASSESSEE. ON THE OTHER HAND THE LD. D.R. HAS RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. 7. WE HAVE CONSIDERED THE RESPECTIVE SUBMISSIONS OF THE LD. REPRESENT ATIVES OF THE PARTIES. WE MAY OBSERVE THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF 'CIT VS. RELIANCE UTILITIES AND POWER LTD.' (SUPRA) HAS OBSERVED THAT IF THERE ARE FUNDS AVAILABLE WITH THE ASSESSEE BOTH INTEREST FREE AND OVERDRAFT/LOANS TAKEN THEN PRESUMPTION WOULD ARISE THAT INVESTMENTS WOULD BE OUT OF THE INTEREST FREE FUND GENERATED OR AVAILABLE WITH THE ASSESSEE. THE LD. CIT(A) FROM THE BALANCE SHEET OF THE ASSESSEE OBSERVED THAT OWN FUNDS OF THE ITA NO . 3676/M/2012 4113/M/2012 & CO/138/M/2013 M/S. DENA BANK 8 ASSESSEE WERE SUFFICIENT FOR MAKING INVESTM ENTS YIELDING EXEMPT INCOME AND UNDER SUCH CIRCUMSTANCES NO DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D (2) (II) WAS CALLED FOR . IN VIEW OF ABOVE DISCUSSION OF THE MATER WE DONOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN THIS REGARD. SO FAR T HE CONTENTION OF THE LD. AR THAT EVEN NO DI S ALLOW A NCE IS WARRANTED UNDER RULE 8D(2)(III) ON THE GROUND THAT SECTION 14 A APPLIES TO DIRECT EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME AND NOT TO INDIRECT EXPENDITURE IS CONCERNED WE DO NOT FIND ANY MERIT IN THE SAME. THE DISALLOWANCE UNDER RULE 8D(2)(III) IS IN FACT RELATED TO INDIRECT EXPENDITURE INCURRED FOR EARNING OF EXEMPT INCOME. IN VIEW OF THE ABOVE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN RELATION TO THE ABOVE ISSUE AND AS SUCH T HE CONFIRMATION OF THE DISALLOWANCE UNDER 8D(2)(III) IS HEREBY UPHELD. GROUND NO.3 8 . VIDE GROUND NO.3 THE ASSESSEE HAS AGITATED THE APPLICATION OF SECTION 115JB OF THE ACT TO THE CASE OF THE ASSESSEE. IT HAS BEEN SUBMITTED THAT THE PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE BANK. THE LD. A.R. HAS SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE IN THE OWN CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2006 - 07 VIDE ORDER DATED 10.04.13 PASSED IN ITA NOS.23 3 7/ M/2 011. THE CO - ORDINATE BENCH OF THE TRIBUNAL WHILE DEALING WITH THE IDENTICAL ISSUE IN THE OWN CASE OF THE ASSESSEE HAS OBSERVED AS UNDER: 9. LAST GROUND OF APPEAL IS ABOUT APPLICABILITY OF SECTION 115 JB OF THE ACT. DURING THE ASSESSMENT PROCEEDING S AO FOUND THAT CALCULATION OF MAT FOR THE YEAR UNDER CONSIDERATION WAS WORKED OUT BY THE ASSESSEE AT RS. 87.29 CRORES. AO MADE CERTAIN ADDITIONS TO THE BOOK PROFIT WORKED OUT BY THE ASSESSEE. BESIDES HE ALSO DISALLOWED CERTAIN CLAIMS MADE BY THE ASSESSE E FOR WORKING OF MAT PROVISIONS AND FINALLY HE DETERMINED THE TAXABLE BOOK PROFIT AT RS.1 81 23 65 310/ - .ASSESSEE PREFER R ED AN APPEAL BEFORE THE FAA. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE FAA HELD THAT PROVISIONS OF SECTION 115JB WERE APPLICA BLE TO A BANKING COMPANY THAT PROVISIONS OF THE SAID SECTION APPLIED TO ALL COMPANIES AS DEFINED IN SECTION 2(17) OF ITA NO . 3676/M/2012 4113/M/2012 & CO/138/M/2013 M/S. DENA BANK 9 THE ACT THAT ASSESSEE WAS REQUIRED TO PREPARE THE ACCOUNTS AS PER THE PROVISIONS OF COMPANIES ACT 1956 THAT SUB - SECTION 2 OF THE SEC.115 JB DID NOT REQUIRE APPLICABILITY OF SCHEDULE VI OF COMPANIES ACT FOR COMPUTING BOOK PROFIT. ACCORDINGLY HE HELD THAT PROVISIONS OF SECTION 115JB WERE APPLICABLE IN THE CASE UNDER CONSIDERATION. 9.1.BEFORE US AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT PROVISIONS OF SECTION 115JB WERE NOT APPLICABLE TO THE ASSESSEE - BANK. HE RELIED UPON THE ORDERS OF UNION BANK OF INDIA(ITA/ 4702 &4706/M/2010DT.30 - 06 - 2011) DELIVERED BY THE ITAT 'B' BENCH MUMBAI AND INDIAN BANK (ITA NO.469/MDS/2010 DT.30 - 08 - 2011)DELIVERED BY THE 'C' BENCH OF CHENNAI AND THE MATTER OF ICICI LOMBARD GENERAL INSURANCE COMPANY LTD. REPORTED BY 2012 - TIOL - 690 - ITAT - MUM. DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDERS OF THE FAA. 9.2.WE FIND THAT THE ISSUE OF APPLICABILITY OF SECTION 115JB HAS BEEN DISCUSSED BY THE 'B' BENCH OF MUMBAI TRIBUNAL IN THE CASE OF UNION BANK OF INDIA (SUPRA) IN FAVOUR OF THE ASSESSEE. IN THAT MATTER TRIBUNAL HAS HELD AS UNDER: '18. GROUND NO. 5 (IN ITA NO. 4706/M/10 - A.Y.2006 - 07) RELATE S TO APPLICABILITY OF THE P ROVI SIONS OF SEC.115JB 19.THIS ISSUE IS COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF KURUNG THAI BANK PCL)(ITA NO. 3390/M/90 DT. 30.9.2010. THE LD.CIT(A)HOWEVER FOLLOWED THE DECISION OF THE ITAT IN ASSESSEE'S OWN CASE FOR THE ASS ESSMENT YEAR 2001 - 02 IN ITA NO. 9061 / M/0420.THE LD. AR OF THE ASSESSEE HAS SUBMITTED AS FOLLOWS: 'THE APPELLANT FURTHER SUBMITS THAT THE APPELLANT IS NOT A COMPANY UNDER COMPANIES ACT BUT IS ONLY DEEMED TO BE A COMPANY AS PER THE PROVISIONS OF SEC. 11 OF THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKING)ACT 1970.THEREFORE AS HELD BY THE JURISDICTIONAL ITAT IN THE CASE OF MAHARASHTRA STATE ELECTRICITY BOARD (82 I TD 422) THE PROVISIONS OF SEC. 11 5JB CANNOT BE MADE APPLICABLE TO THE APPELLANT. RELIANCE IS ALSO PLACED ON THE DECISION OF KERALA HIGH COURT IN THE CASE OF KERALA STATE ELECTRICITY BOARD (329 ITR 91).' 21. WE FIND THAT IN THE CASE OF KURUNG THAI BANK PCL) IN ITA NO. 3390/M/90 FOR A.Y. 2004 - 05 IT HAS BEEN HELD AS FOLLOWS: 'IN VIEW OF T HE ABOVE DISCUSSIONS AND FOLLOWING THE VIEW TAKEN BY A CO ORDINATE BENCH IN THE CASE OF MAHARASHTRA STATE ELECTRICITY BOARD VS JCIT (82ITD422) WHICH HOLDS THAT PROVISIONS OF MAT CANNOT BE APPLIED TO ELECTRICITY COMPANIES FOR MUTUALLY SIMILAR REASON WE UPH OLD THE PLEA OF THE ASSESSEE. THE PRO VISIONS OF SEC. 115JB DO NOT APPLY TO THE ASSESSEE AND AS SUCH THE AO WAS IN ERROR IN CONCLUDING THAT INCOME HAD ESCAPED ASSESSMENT IN THE HANDS OF THE ASSESSEE THE VENJ INITIATION OF REASSESSMENT PROCEEDINGS WAS BAD IN LAW AND WE QUASH THE SAME.' ITA NO . 3676/M/2012 4113/M/2012 & CO/138/M/2013 M/S. DENA BANK 10 22.THE DECISION OF THE LD. CIT(A) IS REVERSED AND WE HOLD THAT PROVISIONS OF SEC.115JB CANNOT BE MADE APPLICABLE TO THE ASSESSEE. THIS GROUND OF THE ASSESSEE IS DISMISSED.' 9.3.WE HAVE PERUSED THE OTHER ORDERS CITED BY THE AR OF THE ASSESSEE - BANK. WE FIND THAT ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. THEREFORE RESPECTFULLY FOLLOWING THE ORDERS OF THE COORDINATING BENCHES OF THE ITAT WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. APPEAL FILED BY THE ASSESSEE - BANK FOR THE AY.2006 - 07 STANDS PARTLY ALLOWED. 9 . THE LD. D.R. COULD NOT BRING BEFORE US ANY CONTRARY FACT OR CASE LAW WHICH MAY JUSTIFY DEPARTURE FROM THE ABOVE FINDING OF THE TRIBUNAL. SO RESPECTFULLY FOLLOWING THE PROPOSITION OF LAW LAID DOWN BY THE CO - ORDINATE BENCH OF THIS TRIBUNAL FOR THE SAKE OF CONSISTENCY THIS ISSUE IS ALLOWED IN FAVOUR OF THE ASSESSEE. 1 0 . THE LD. A.R. HAS STATED THAT IF THE GROUND NO.3 IS ALLOWED IN FAVOUR OF THE ASSESSEE THEN THE REMAINING GROUNDS OF APPEAL BEING ALTERNATIVE ARE RENDERED INFRUCTUOUS AND HENCE DO NOT NEED ANY FINDINGS AT THIS STAGE AND ARE RENDERED ACADEMIC. IT IS HELD ACCORDINGLY. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 1 1 . NOW WE TAKE UP THE REVENUES APPEAL. ITA NO.4113/M/2012 1 2 . THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN ALLOWING WHOLE OF THE BAD DEBTS OF RS.264 CRORES AS THIS WAS PROVISION AND NOT ACTUAL WRITE OFF OF BAD DEBTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE BAD DEBTS OF RS.288.96 CRORES WITHOUT CONSIDERING THAT ASSESSEE HAS NOT WRITTEN OFF BAD DEBTS IN THE BOOKS OF ACCOUNTS. 3 . ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO VERIFY THE CORRECT POSITION IN RELATION TO UNMATURED F OREX CONTRACTS WITHOUT GIVING ANY ITA NO . 3676/M/2012 4113/M/2012 & CO/138/M/2013 M/S. DENA BANK 11 SPECIFIC FINDING OR EXPLANATION. 4 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE CIT(A) ERRED IN RESTRICTING DISALLOWANCE U/S.14A TO RS. 1 36 08 000/ - HOLDING THAT ASSESSEE HAS NOT INVESTMENT BORROWED FUNDS WITHOUT GIVING ANY SPECIFIC REASON OR EXPLANATION. 5 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) E RRED IN RESTRICTING DISALLOWANCE U/S.14A TO RS. 1 36 08 000/ - FOR COMPUTATION OF BOOK PROFIT U/S. 115 JB WITHOUT GIVING ANY SPECIFIC REASON OR EXPLANATION. 6 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN DELETING THE ADDITION REGAR DING APPRECIATION IN VALUE OF INVESTMENT OF RS.132.4 5 CRORES WHILE COMPUTING THE TOTAL INCOME U/S. 115JB WITHOUT GIVING ANY SPECIFIC FINDING OR EXPLANATION. 7 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN DIRECTING TO ALLOW REBAT E U/ S. 88E FROM TAX PAYABLE U/S.14A WITHOUT APPRECIATING THE FACT THAT THE PROVISION OF SECTION 115 JB IS A SPECIAL PROVISION AND THEREFORE CLAIM FOR REBATE U/S.88E IS NOT ADMISSIBLE. 8 . FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING THE DECISION OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED. GROUND NO. 1 & 2 1 3 . THE LD. D.R. HAS STATED AT BAR THAT HE DOES NOT PRESS GROUND NOS.1 & 2 HENCE THE SAME ARE ACCORDINGLY DISMISSED BEING NOT PRESSED. GROUND NO.3 1 4 . THE LD. REPR ESENTATIVES OF THE PARTIES STATED AT BAR THAT THE REQUIRED RECTIFICATION HAS BEEN MADE RELATING TO THE ISSUE RAISED VIDE GROUND NO.3 UNDER SECTION 154 OF THE ACT HENCE THE SAME HAS BECOME INFRUCTUOUS. IT IS HELD ACCORDINGLY. GROUND NO.4 1 5 . IN VIEW OF OUR DISCUSSION MADE ABOVE WHILE DECIDING THE GROUND NO.2 OF THE ASSESSEES APPEAL IN RELATION TO DISALLOWANCE UNDER SECTION 14A OF THE ITA NO . 3676/M/2012 4113/M/2012 & CO/138/M/2013 M/S. DENA BANK 12 ACT THIS GROUND IS DECIDED ACCORDINGLY AND THE RESTRICTING OF DISALLOWANCE OF RS.1 36 08 000/ - UNDER RULE 8D(2)(III ) BY THE CIT(A) IS HEREBY UPHELD. GROUND NO.4 OF THE REVENUES APPEAL IS ACCORDINGLY DISMISSED. GROUND NOS.5 6 & 7 1 6 . THE ISSUE INVOLVED IN GROUND NOS.5 6 & 7 IS CORRELATED TO THE ISSUE DECIDED VIDE GROUND NO.3 OF THE ASSESSEES APPEAL AS ABOVE. I T HAS BEEN HELD BY US THAT PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE TO THE ASSESSEE BANK. IN VIEW OF OUR DISCUSSION MADE ABOVE THE GROUND NOS.5 6 & 7 OF THE REVENUES APPEAL ARE HEREBY DISMISSED. GROUND NO.8 17 . GROUND NO.8 OF THE REVENUES APPEAL IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. CROSS OBJECTION NO.138/M/2013 18 . THE CROSS OBJECTION RAISED BY THE ASSESSEE IS CORRELATED TO THE GROUND NO.2 OF THE REVENUES APPEAL. SINCE THE REVENUE HA S NOT PRESSED THE GROUND NO.2 AND THE SAME HAS BEEN DISMISSED HENCE THE CORRELATED CROSS OBJECTION RAISED BY THE ASSESSEE IS ALSO RENDERED INFRUCTUOUS AND THE SAME IS HEREBY DISMISSED. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE C ROSS OBJECTION OF THE ASSESSEE AND THE APPEAL OF THE REVENUE ARE DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 9. 04. 201 4 . 9 . 04.2014 SD SD ( / RAJENDRA ) ( [ / SANJAY GARG) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI ; / DATE D 9.4. 2014 ITA NO . 3676/M/2012 4113/M/2012 & CO/138/M/2013 M/S. DENA BANK 13 * KISHORE / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. / DR ITAT MUMBAI 6. [ / GUARD FILE. / BY ORDER //TRUE COPY// / ( DY./ASSTT. REGISTRAR) / ITAT MUMBAI