City Union Bank Limited, Kumbakonam v. DCIT, Kumbakonam

ITA 914/CHNY/2010 | 2006-2007
Pronouncement Date: 08-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 91421714 RSA 2010
Assessee PAN AAACC1287E
Bench Chennai
Appeal Number ITA 914/CHNY/2010
Duration Of Justice 1 year(s) 1 month(s) 1 day(s)
Appellant City Union Bank Limited, Kumbakonam
Respondent DCIT, Kumbakonam
Appeal Type Income Tax Appeal
Pronouncement Date 08-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 08-07-2011
Date Of Final Hearing 06-06-2011
Next Hearing Date 06-06-2011
Assessment Year 2006-2007
Appeal Filed On 07-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI BEFORE SHRI U.B.S. BEDI J.M. AND SHRI N.S. SAINI AM .. I.T.A. NO. 935/MDS/2010 ASSESSMENT YEAR 2002-03 ITA NO. 937/MDS/2010 ASSESSMENT YEAR 2004-05 ITA NO. 939/MDS/2010 ASSESSMENT YEAR 2005-06 ITA NO. 940/MDS/2010 ASSESSMENT YEAR 2006-07 ITA NO.770/MDS/2010 ASSESSMENT YEAR 2007-08 THE DY.C.I.T CIRCLE I KUMBAKONAM VS. M/S CITY UNION BANK LTD 149 T.S.R. BIG STREET KUMBAKONAM (PAN NO. AAACC 1287 E) (APPELLANT) (RESPONDENT) I.T.A. NO. 910/MDS/2010 ASSESSMENT YEAR 2002-03 ITA NO. 914/MDS/2010 ASSESSMENT YEAR 2006-07 ITA NO. 915/MDS/2010 ASSESSMENT YEAR 2007-08 PAGE 2 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM M/S CITY UNION BANK LTD 149 T.S.R. BIG STREET KUMBAKONAM (PAN NO. AAACC 1287 E) VS. THE D.C.I.T CIRCLE I KUMBAKONAM (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G. SEETHARAMAN DEPARTMENT BY : SHRI P.B. SEKARAN O R D E R PER BENCH : THESE ARE BUNCH OF EIGHT APPEALS FILED BY THE REVEN UE AND ASSESSEE RESPECTIVELY DIRECTED AGAINST THE COMMON O RDER OF THE LD. CIT(A) TIRUCHIRAPALLI DATED 26.03.2010. SINCE THE ISSUES INVOLVED IN ALL THESE APPEALS ARE SAME WE ARE DISPOSING THEM O FF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF BREVITY AND CONV ENIENCE. 2. FIRST WE TAKE UP ASSESSEES APPEAL FOR ASSESSMEN T YEAR 2002- 03. FIRST GROUND OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) CONFIRMING THE ADDITION OF RS. 2.97 LAK HS TOWARDS SALE OF OLD NEWSPAPERS. PAGE 3 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CL AIMED DEDUCTION FOR PURCHASE OF NEWSPAPERS OF RS. 19.81 LAKHS. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NO T SHOWN SALE OF OLD NEWSPAPERS. HE THEREFORE MADE AN ESTIMATED D ISALLOWANCE OF RS. 2.97 LAKHS ON ACCOUNT OF SALE OF OLD NEWSPAPER S. 4. ON APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED THAT THE OLD NEWSPAPERS WERE EITHER USED BY THE ASSESSEE ITSELF OR BROUGHT TO SALE AT PERIODICAL INTERVALS. THE SALE RECEIPTS IF ANY WERE ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. THEREF ORE THE ADDITION MADE BY THE ASSESSING OFFICER SHOULD BE DE LETED 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE OBSERVED THAT IT WAS THE DUTY OF THE ASSES SEE BANK TO FURNISH DETAILS REGARDING SALE OF OLD NEWSPAPERS AN D SINCE THIS WAS NOT DONE BY THE ASSESSEE THEREFORE DISALLOWANCE M ADE BY THE ASSESSING OFFICER WAS FULLY JUSTIFIED. PAGE 4 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM 6. AT THE TIME OF HEARING BOTH THE PARTIES BEFORE US AGREED THAT THE MATTER SHOULD BE REMANDED BACK TO THE FILE OF T HE ASSESSING OFFICER TO VERIFY IF THE SALE PROCEEDS OF OLD NEWSP APERS WAS SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT OR NOT. WE THEREFORE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND RESTO RE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATI NG THE ISSUE AFRESH AFTER VERIFICATION OF THE DETAILS AND ACCOUNTS OF T HE ASSESSEE; WHETHER THE ASSESSEE HAS SHOWN THE SALE OF OLD NEWS PAPERS OR NOT AND THEREAFTER DECIDE THE ISSUE AS PER LAW. ASSESSE E IS ALSO DIRECTED TO FILE ALL RELEVANT DETAILS AND DOCUMENTS AS AND W HEN CALLED UPON TO DO SO BY THE ASSESSING OFFICER. THE ASSESSING O FFICER SHALL ALLOW REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE B EFORE ADJUDICATING THE ISSUE AFRESH. THEREFORE THIS GRO UND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7. GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE IS DI RECTED AGAINST THE ORDER OF THE LD. CIT(A) CONFIRMING THE DISALLOW ANCE OF RS. 4.09 LAKHS TOWARDS PERSONAL USE OF CAR. PAGE 5 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM 8. THE ASSESSING OFFICER DISALLOWED 25% OUT OF TOTA L EXPENSES ON CAR CLAIMED BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE FAILED TO PRODUCE LOG BOOKS FOR VERIFICATION BEFORE THE AS SESSING OFFICER. IN APPEAL THE LD. CIT(A) CONFIRMED THE DISALLOWANCE M ADE BY THE ASSESSING OFFICER. 9. BEFORE US THE LD. A.R. OF THE ASSESSEE SUBMITTE D THAT NO DISALLOWANCE SHOULD BE MADE ON ACCOUNT OF PERSONAL USE OF CAR IN THE HANDS OF THE ASSESSEE AS IT WAS A LIMITED COMPA NY. 10. THE LD. D.R. ON THE OTHER HAND RELIED ON THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF NEW AMBADI ASSOCIATES P. LTD. VS. STATE OF TAMIL NADU 256 ITR 64 [MAD]. 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIN D THAT IN THE INSTANT CASE THE ASSESSING OFFICER DISALLOWED 25% OUT OF MOTOR CAR EXPENSES CLAIMED BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE DID NOT PRODUCE LOG BOOKS FOR VERIFICATION BEFORE T HE ASSESSING PAGE 6 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM OFFICER. THE SAME WAS ALSO NOT PRODUCED BEFORE THE LD. CIT(A) NOR BEFORE US. 12. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CA SE OF NEW AMBADI ASSOCIATES P. LTD [SUPRA] HAS HELD THAT REGA RDING MOTOR CAR EXPENSES THE ONUS IS NOT ON THE AUTHORITIES TO PRO VE THAT IT HAD USED THE CAR FOR PERSONAL USES. ON THE OTHER HAND IT LAY ON THE ASSESSEE WHO CLAIMED THAT IT WAS NOT USED FOR PERSO NAL USES. IN THE ABSENCE OF ANY SUCH EVIDENCE DISALLOWANCE OF 25%OF THE EXPENSES WAS VALID. NO CONTRARY DECISION WAS CITED BEFORE U S BY THE LD. A.R. OF THE ASSESSEE. WE THEREFORE AFTER CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 13. GROUND NO. 3 OF THE APPEAL OF THE ASSESSEE IS D IRECTED AGAINST THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE ADDIT ION OF RS. 3.5 CRORES ON ACCOUNT OF PROVISION FOR DEPRECIATION ON INVESTMENTS WRITTEN BACK AND OFFERED FOR ASSESSMENT BY THE BANK . PAGE 7 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM 14. AT THE TIME OF HEARING THE LD. A.R. SUBMITTED THAT HE IS NOT PRESSING THIS GROUND OF APPEAL. THEREFORE THIS GR OUND OF APPEAL OF THE ASSESSEE IS DISMISSED FOR WANT OF PROSECUTION. 15. GROUND NOS. 1 AND 2 IN ASSESSMENT YEARS 2006-07 AND 2007-08 ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) CO NFIRMING THE ADDITION OF RS. 70 634/- IN ASSESSMENT YEAR 2006-0 7 AND RS. 66 931/- IN ASSESSMENT YEAR 2007-08 TOWARDS LOCKER RENT ON ACCRUAL BASIS. 16. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AD SHOWN LOCKER RENT INCOME ON RECEIPT BASIS IN THE RETURN OF INCOM E. THE ASSESSING OFFICER WHILE MAKING ASSESSMENT CONSIDERING THE I NCOME FROM LOCKER RENT ON ACCRUAL BASIS WHICH IS REGULARLY FOL LOWED METHOD OF ASSESSEE MADE ADDITION OF RS. 70 634/- IN ASSESSME NT YEAR 2006-07 RS. 66 931 IN ASSESSMENT YEAR 2007-08. 17. IN APPEAL THE LD. CIT(A) CONFIRMED THE ADDITIO N MADE BY THE ASSESSING OFFICER. PAGE 8 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM 18. THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS REGULARLY FOLLOWING THE METHOD OF ACCOUNTING FOR LO CKER RENT ON RECEIPT BASIS AND THEREFORE ADDITION MADE WAS NOT JUSTIFIED. IN THE ALTERNATIVE THE LD. A.R. SUBMITTED THAT IF THE ADD ITION WAS MADE IN THIS YEAR ON ACCRUAL BASIS THEN THE ADDITION OF TH E SAME INCOME MADE IN THE SUBSEQUENT ACCOUNTING YEAR ON RECEIPT B ASIS AS SHOWN BY THE ASSESSEE SHOULD BE DELETED. 19. THE LD. D.R. SUPPORTED THE ORDERS OF THE AUTHOR ITIES BELOW. 20. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIN D THAT IN THE INSTANT CASE THE ADDITION MADE BY THE ASSESSING OF FICER OF RS. 70 634/- IN ASSESSMENT YEAR 2006-07 AND RS. 66 931 /- IN ASSESSMENT YEAR 2007-08 TOWARDS LOCKER RENT AS ASSESSEE HAD SH OWN INCOME FROM LOCKER RENT ON RECEIPT BASIS WHEREAS THE METHO D OF ACCOUNTING FOLLOWED BY THE ASSESSEE WAS MERCANTILE. IN OUR CO NSIDERED OPINION INCOME OF THE ASSESSEE HAS TO BE ASSESSED ACCORDING TO THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE AS PER SECTI ON 145 OF THE I.T. ACT 1961. THE ASSESSEE CAN FOLLOW EITHER MERCANTIL E OR CASH SYSTEM PAGE 9 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM OF ACCOUNTING BUT NOT A MIXED SYSTEM OF MERCANTILE AND CASH SYSTEM OF ACCOUNTING. IT IS NOT IN DISPUTE THAT THE ASSESS EE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THEREFORE THE A SSESSING OFFICER WAS FULLY JUSTIFIED IN CONSIDERING THE INCOME FROM LOCKER RENT ON ACCRUAL BASIS IN PLACE OF CASH BASIS SHOWN BY THE A SSESSEE AND THEREBY MAKING ADDITION TO THE INCOME OF THE ASSESS EE. HOWEVER WE ARE ALIVE TO THE FACT THAT THE SAME INCOME CANNO T BE TAXED TWICE IN THE SAME HANDS ONCE IN THIS YEAR AND AGAIN IN TH E SUBSEQUENT YEAR. HENCE WE RESTORE THE MATTER TO THE FILE OF T HE ASSESSING OFFICER AND DIRECT HIM TO TAKE THE INCOME FROM LOCK ER RENT OF THE ASSESSEE FOR THE YEAR UNDER APPEAL ON ACCRUAL BASIS BUT IN THE SUBSEQUENT YEAR WHERE THE ASSESSEE HAS SHOWN SAME I NCOME FROM LOCKER RENT ON RECEIPT BASIS THEN HE SHOULD EXCLUD E THE SAME IN THAT YEAR. WITH THIS DIRECTION GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 21. GROUND NO. 3 IN ASSESSMENT YEAR 2006-07 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) CONFIR MING THE DISALLOWANCE OF RS. 5 LAKHS ON ACCOUNT OF DONATION . PAGE 10 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM 22. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE P AID RS. 5 LAKHS TO ISHWAR SCHOOL FOR HANDICAPPED PERSONS ON 14.10.2005 WHICH WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND T HAT EXEMPTION U/S 80G OF THE ACT WAS NOT AVAILABLE TO THE ASSESSE E. 23. BEFORE THE LD. CIT(A) ASSESSEE SUBMITTED THAT IT WAS REVENUE EXPENDITURE AND SHOULD BE ALLOWED TO THE ASSESSEE. THE LD. CIT(A) HELD THAT THE AMOUNT WAS DONATION IN CHARITY AND WA S FOR NON BUSINESS PURPOSES. THEREFORE THE SAME CANNOT BE A LLOWED AND CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 24. BEFORE US THE LD. A.R. REITERATED THE SUBMISSI ONS MADE BEFORE THE LOWER AUTHORITIES AND ALSO FILED LETTER DATED 1 5.10.2001 COPY OF WHICH IS PLACED ON RECORD FROM ISHWAR SCHOOL FOR HA NDICAPPED PERSONS WHEREIN IT WAS STATED THAT THE AMOUNT OF RS . 5 LAKHS WAS PAID TOWARDS EXHIBITING/ADVERTISING THE BANKS NAME IN THE SCHOOL BUILDING YET TO BE CONSTRUCTION FOR SCHOOL. 25. THE LD. D.R. SUPPORTED THE ORDERS OF THE AUTHOR ITIES BELOW. PAGE 11 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM 26. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIN D THAT IN THE INSTANT CASE THE DISALLOWANCE FOR DEDUCTION OF RS. 5 LAKHS PAID TO ISHWAR SCHOOL FOR HANDICAPPED PERSONS WAS MADE BY T HE ASSESSING OFFICER AS THE SAME WAS NOT ALLOWABLE U/S 80G OF TH E ACT AND WAS CONFIRMED BY THE LD. CIT(A) ON THE GROUND THAT DONA TION AND CHARITY DONE BY THE ASSESSEE WERE NOT FOR BUSINESS PURPOSES OF THE ASSESSEE. THE LD. A.R. OF THE ASSESSEE HAS FILED A LETTER DAT ED 15.10.2005 FROM ISHWAR SCHOOL FOR HANDICAPPED PERSONS FROM WHICH IT IS OBSERVED THAT RS. 5 LAKHS WAS PAID BY THE ASSESSEE TOWARDS EXHIBITING/ADVERTISING BANKS NAME IN THE NEW BUILD ING YET TO BE CONSTRUCTED FOR SCHOOL. AS THERE WAS NO BUILDING O F THE SCHOOL IN THE YEAR UNDER CONSIDERATION AND NO ADVERTISEMENT OF TH E BANKS NAME WAS DONE IT WAS NOT AN EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION THEREFORE THE SAID EXPENDITURE HAS BEEN RIGHTLY DISALLOWED BY THE LOWER AUTHORITIES. HENCE WE CON FIRM THE ORDERS OF THE AUTHORITIES BELOW AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. PAGE 12 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM 27. GROUND NO. 2 OF THE APPEAL OF THE REVENUE IN AS SESSMENT YEAR 2007-08 GROUND NO. 2 IN ASSESSMENT YEAR 2002-03 G ROUND NO. 3 IN ASSESSMENT YEAR 2004-05 AND GROUND NO. 2 IN ASSESSM ENT YEAR 2006- 07 ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION OF INTEREST ACCRUED ON SECURITIES OF RS. 4 12 25 930/- IN ASSESSMENT YEAR 2007-08 RS. 6 93 46 887/- IN ASSES SMENT YEAR 2002-03 RS. 3 95 06 448/- IN ASSESSMENT YEAR 2004 -05 AND RS. 2 05 71 564/- IN ASSESSMENT YEAR 2006-07. 28. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER MADE ADDITION TOWARDS ACCRUED INTEREST ON SECURITIES IN VIEW OF THE PROVISIONS OF SECTION 145 OF THE ACT AMENDED W.E.F. 1.4.1997 WHICH PROVIDES THAT SYSTEM OF ACCOUNTING TO BE FOLLOWED B Y THE ASSESSEE SHOULD BE EITHER MERCANTILE OR CASH SYSTEM AND CANN OT BE A COMBINATION OF BOTH. THE ASSESSING OFFICER FURTHER OBSERVED THAT THOUGH THE HON'BLE MADRAS HIGH COURT IN ASSESSEES OWN CASE REPORTED IN 291 ITR 144 HAS DECIDED THE ISSUE IN FA VOUR OF THE ASSESSEE BUT SLP AGAINST THE SAID ORDER WAS PENDING BEFORE THE HON'BLE SUPREME COURT. ON APPEAL THE LD. CIT(A) F OLLOWING THE PAGE 13 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM ORDER OF THE HON'BLE MADRAS HIGH COURT IN THE ASSES SMENT YEAR 1992- 93 AND 1993-94 IN ASSESSEES OWN CASE REPORTED IN 2 91 ITR 144 ALLOWED RELIEF TO THE ASSESSEE. 29. AT THE TIME OF HEARING THE LD. D.R. VERY FAIRL Y CONCEDED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY T HE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT [SUPRA]. THEREFO RE WE CONFIRM THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS T HIS GROUND OF APPEAL OF THE REVENUE IN ALL THE YEARS UNDER CONSIDERATION . 30. GROUND NO. 2 OF THE APPEAL OF THE REVENUE IN AS SESSMENT YEAR 2007-08 GROUND NO. 5 IN ASSESSMENT YEAR 2002-03 G ROUND NO. 2 IN ASSESSMENT YEAR 2004-05 GROUND NO. 2 IN ASSESSMENT YEAR 2005-06 AND GROUND NO. 2 IN ASSESSMENT YEAR 2006-07 ARE DIR ECTED AGAINST THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITIO N OF RS. 27 19 09 845/- IN ASSESSMENT YEAR 2007-08 RS. 28 13 95 360/- IN ASSESSMENT YEAR 2002-03 RS. 4 78 50 242/- IN ASSES SMENT YEAR 2004-05 RS. 9 33 17 162/- IN ASSESSMENT YEAR 2005- 06 AND RS. PAGE 14 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM 15 98 84 207/- IN ASSESSMENT YEAR 2006-07 ON ACCOUN T OF BROKEN PERIOD INTEREST AND ALLOWING THE SAME AS REVENUE EX PENDITURE. 31. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER MADE ADDITION TOWARDS BROKEN PERIOD INTEREST STATING THA T THE ISSUE WAS DISCUSSED EXTENSIVELY IN EARLIER ASSESSMENT ORDERS WITH EXAMPLES. FOLLOWING THE SAME IN THE CURRENT ASSESSMENT YEAR ALSO EXPENSES NEED TO BE CAPITALIZED AND ASSESSEES CLAIM IRRESPE CTIVE OF THE MANNER IN WHICH IT IS ACCOUNTED FOR UNDER COMMERCIA L PRINCIPLES CANNOT BE CONSIDERED FOR I.T. PURPOSES IN VIEW OF T HE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TUTICORN ALKAL INE CHEMICALS AND FERTILIZERS LIMITED REPORTED IN 227 ITR 172. 32. ON APPEAL THE LD. CIT(A) FOLLOWING THE DECISI ON OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KARUR VYSY A BANK REPORTED IN 273 ITR 510 AND IN THE CASE OF CIT VS. LAXMI VILAS BANK 284 ITR 93 WHEREIN IT WAS HELD THAT GOVERNMENT SECURITIES HELD BY THE BANK ARE TO BE TREATED AS STOCK IN TRADE AND NOT INVESTMENT. CONSEQUENTLY THE BROKEN PERIOD INTEREST PAID ON PURCHASE OF SECU RITIES SHOULD PAGE 15 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM HAVE BEEN TREATED ONLY AS REVENUE EXPENDITURE BY TH E ASSESSING OFFICER. 33. AT THE TIME OF HEARING THE LD. D.R. SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE REVENUE BY THE ORDER OF TH IS TRIBUNAL DATED 30.10.2009 IN ASSESSEES OWN CASE IN ASSESSMENT YEA R 2003-04 VIDE CONSOLIDATED ORDER IN ITA NOS. 1485 AND 1507/MDS200 7. 34. THE LD. A.R. OF THE ASSESSEE AGREED WITH THE SU BMISSIONS OF THE LD. D.R. 35. WE FIND THE TRIBUNAL HAS HELD AS UNDER: FIRST GROUND IS AGAINST HOLDING THAT BROKEN PERIOD INTEREST ON INVESTMENTS HELD AS HTM SECURITIES SHOULD BE TREATED AS CAPITAL THOUGH THEY WERE STOCK IN TRADE. IT IS FAI RLY CONCEDED BY THE LD. COUNSEL THAT THE ISSUE HAS TO BE DECIDED A GAINST THE ASSESSEE FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 1737/MDS/97 DATED 28 .6.2004 FOR ASSESSMENT YEAR 1994-95. ACCORDINGLY THIS GRO UND OF THE ASSESSEE FAILS. PAGE 16 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM AS BOTH THE PARTIES BEFORE US HAVE AGREED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE REVENUE BY THE ORDER OF THE TRIBUN AL IN ASSESSMENT YEAR 2003-04 WE REVERSE THE ORDER OF THE LD. CIT(A ) AND RESTORE BACK THE ORDER OF THE ASSESSING OFFICER THEREBY AL LOWING THE GROUND OF APPEAL OF THE REVENUE. 36. GROUND NO. 2 OF THE APPEAL OF THE REVENUE IN AS SESSMENT YEAR 2007-08 GROUND NO. 4 IN ASSESSMENT YEAR 2002-03 G ROUND NO. 4 IN ASSESSMENT YEAR 2004-05 GROUND NO. 4 IN ASSESSMENT YEAR 2005-06 AND GROUND NO. 4 IN ASSESSMENT YEAR 2006-07 ARE DIR ECTED AGAINST THE ORDER OF THE LD. CIT(A) IN DELETING THE DISALLO WANCE OF RS. 12 62 30 881/- IN ASSESSMENT YEAR 2007-08 RS. 49 66 81 665/-/- IN ASSESSMENT YEAR 2002-03 RS. 8 23 62 000/- IN ASSES SMENT YEAR 2005-06 AND RS. 10 35 71 599/- IN ASSESSMENT YEAR 2006-07 U/S 36(1)(VII) OF THE ACT. 37. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER MADE DISALLOWANCE ON ACCOUNT OF DEDUCTION U/S 36(1)(VIIA ) TOWARDS RURAL ADVANCE ON THE GROUND THAT THE ASSESSEE HAD NOT MAD E ANY PROVISION PAGE 17 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM IN ITS BOOKS OF ACCOUNT. ON APPEAL THE LD. CIT(A) VACATED THE DISALLOWANCE FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE REPORTED IN 291 I TR 144 WHERE IT WAS HELD THAT CLAIM OF BAD DEBTS IN RELATION TO NON RURAL BRANCHES OF THE ASSESSEE BANK IS ALLOWABLE WITHOUT FIRST SETTIN G OFF AGAINST THE PROVISION ALREADY ALLOWED U/S 36(1)(VIIA) WHEN NO D ISTINCTION BETWEEN ADVANCE RELATING TO NON RURAL AND RURAL HAS BEEN MADE IN SECTION 36(1)(VIIA) OF THE ACT. 38. AT THE TIME OF HEARING THE LD. D.R. FAIRLY CON CEDED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE O RDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2003-04 VIDE CONSOLIDATED ORDER DATED 30.10.2009 IN ITA NOS. 148 5 AND 1507/MDS2007. WE FIND THAT THE TRIBUNAL IN THAT YEA R HAS HELD AS UNDER: SIMILAR QUESTION HAD COME UP BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE WH EREIN THE HIGH COURT HELD THAT THE BANK WILL BE ENTITLED TO THE DEDUCTION OF THE ENTIRE BAD DEBT RELATING TO ADVANC ES MADE BY THE URBAN BRANCHES WRITTEN OFF IN THE BOOKS AND ALSO THE PAGE 18 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM DIFFERENCE BETWEEN THE AMOUNT WRITTEN OFF IN THE BO OKS RELATING TO ADVANCES MADE BY THE RURAL BRANCHES DUR ING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR A N D THE CRED I T B ALANCE I N THE PR OV IS I O N S F O R BAD 2 L R T D DO UB TFUL DEBT S A CC O U NT R EL ATIN G T O A D V AN CE S MA D E BY TH E UNDER BRAN CHE S M A D E U N DER CL AUSE (VIIA ) I F T HE BAD W R I T T EN OFF RELA T E S T O DEB T S OT H ER T HAN F OR W HIC H PROVISION I S MAD E UNDER CLA U S E ( V I I A ) SUC H DEBT WI LL FALL S QU AR ELY UNDER TH E MAIN PA R T OF C LA U S E (V I I) WHIC H IS ENTI T L E D T O D ED U CT I O N AND IN RE S P E CT O F THA T PART O F THE DE B T WI T H R EFER E NCE T O WHIC H A P ROVISI O N I S MA D E UND E R CLAUSE ( VII A ) THE PROVI S O W I L L O P ERAT E T O LI M IT TH E DE DU CT ION T O T H E E X T ENT O F TH E DIF F ERENCE BE T W E EN THAT PART OF DEBT WRITTEN OF F I N THE PREV IOUS YEAR AND THE CREDIT BALANCE IN THE PROVISION FOR BAD AND DOUB TFUL DEBT S ACCOUNT MADE UNDER CL AUSE (VIIA). THE COURT HAD RELIED UPON THE DECISION OF THE K ERALA HIGH COURT IN SOUTH INDIAN BANK LTD VS CIT 262 ITR 129. ACCORD I NGLY THE COURT AFTER CONSIDERING T HE FIND I NG OF THE TRIBUNAL THAT THE ASSESSEE HAS NOT CLAIMED ANY DEBTS WRITTEN OFF IN RESPECT OF RURAL B RANCH IN THE EARLIER YEAR ALLOWED THE CLAIM OF THE ASSESSEE. IT IS N OT DISPUTED THAT THE FACTS IN THE PRESENT YEAR ARE IDENTICAL TO THE FACTS IN T HE YEAR WHICH WAS BEFORE THE MADRAS HIGH COURT. THEREFORE WE UPHOLD THE ORDE R OF THE CIT(A) ALLOWING DEDUCTION OF RS.12.63 CRORES. PAGE 19 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM THEREFORE THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED FOR ALL THE YEARS. 39. GROUND NO. 3 OF THE APPEAL OF THE REVENUE IN AS SESSMENT YEAR 2002-03 AND GROUND NO. 4 IN ASSESSMENT YEAR 2004-05 ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE OF DEDUCTION OF RS. 20 71 61 636/- IN ASSESSMENT YEAR 2002-03 AND RS. 20 71 61 636/- IN ASSESSMENT YEAR 2004-05 U/S 3 6(1)(VII) OF THE ACT. 40. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER DISALLOWED DEDUCTION CLAIMED BY THE BANK ON ACCOUNT OF BAD DEB T ON URBAN BRANCHES ON THE GROUND THAT THE ASSESSEE HAS CLAIME D DEDUCTION OF BAD DEBT WRITTEN OFF AND IF THE AMOUNT WRITTEN OFF IS WELL WITHIN THE CREDIT BALANCE IN RESERVE ACCOUNT THEN NO DEDUCTIO N IS ALLOWABLE TO THE ASSESSEE AND IN CASE THE AMOUNT WRITTEN OFF EXC EED CREDIT BALANCE IN THE RESERVE ACCOUNT THEN SUCH EXCESS A MOUNT ALONE IS TO BE ALLOWED AS DEDUCTION TO THE ASSESSEE. PAGE 20 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM 41. ON APPEAL THE LD. CIT(A) VACATED THE DISALLOWA NCE FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COU RT IN ASSESSEES OWN CASE REPORTED IN 291 ITR 144 WHERE IT WAS HELD THAT CLAIM OF BAD DEBTS IN RELATION TO NON RURAL BRANCHES OF THE ASSESSEE BANK IS ALLOWABLE WITHOUT FIRST SETTING OFF AGAINST THE PRO VISION ALLOWED U/S 36(1)(VII) WHEN DISTINCTION BETWEEN ADVANCE RELATIN G TO NON RURAL AND RURAL HAS NOT BEEN MADE IN SECTION 36(1)(VIIA) OF THE ACT. 42. THE LD. D.R. VERY FAIRLY CONCEDED THAT IN VIEW OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSE ES OWN CASE IN FAVOUR OF THE ASSESSEE THE REVENUES APPEAL ON THI S GROUND HAS TO BE DISMISSED. THEREFORE THIS GROUND OF APPEAL OF T HE REVENUE IS DISMISSED IN BOTH THE YEARS. 43. GROUND NO. 4 OF THE APPEAL OF THE REVENUE IN AS SESSMENT YEAR 2007-08 GROUND NO. 3 IN ASSESSMENT YEAR 2005-06 AN D GROUND NO. 7 IN ASSESSMENT YEAR 2006-07 ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) IN DELETING THE DEPRECIATION ON INVESTMENTS TO THE EXTENT OF RS. 25 12 31 330/- IN ASSESSMENT YEAR 2007-08 RS. 15 32 06 000/- PAGE 21 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM IN ASSESSMENT YEAR 2005-06 AND RS. 16 29 47 730/- IN ASSESSMENT YEAR 2006-07. 44. BRIEF FACTS ARE THAT THE ASSESSING OFFICER MADE ADDITION TOWARDS DEPRECIATION ON INVESTMENTS ON THE GROUND T HAT THE ASSESSEE HAS ADMITTED DIFFERENT METHODS OF VALUATIO N FOR DIFFERENT SECURITIES WHEREAS IT SHOULD HAVE ADOPTED UNIFORM P OLICY OF VALUING THE SECURITIES. THEREFORE HE HELD THAT THE DEPREC IATION CLAIMED ON INVESTMENTS IN SECURITIES IS INCORRECT AND ADDED TH E SAME TO THE INCOME OF THE ASSESSEE. 45. ON APPEAL THE LD. CIT(A) FOLLOWING THE DECIS ION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE REPORTED IN 291 ITR 144 WHERE IT WAS HELD THAT DEPRECIATION IN INVESTMENTS WAS ALLOWABLE DEDUCTION ALLOWED THE CLAIM OF THE ASSES SEE. 46. AT THE TIME OF HEARING THE LD. D.R. FAIRLY CON CEDED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT REPORTED IN 291 I TR 144 [SUPRA]. PAGE 22 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM THEREFORE THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED IN ALL THE YEARS UNDER CONSIDERATION. 47. GROUND NO. 5 OF THE APPEAL OF THE REVENUE IN AS SESSMENT YEAR 2007-08 GROUND NO. 6 IN ASSESSMENT YEAR 2004-05 G ROUND NO. 6 IN ASSESSMENT YEAR 2005-06 AND GROUND NO. 5 IN ASSESSM ENT YEAR 2006- 07 ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) IN ALLOWING THE CLAIM OF AMORTIZATION EXPENSES AS REVENUE EXPENSES AMOUNTING TO RS. 5 61 49 818/- IN ASSESSMENT YEAR 2007-08 RS. 52 72 583/-IN ASSESSMENT YEAR 2004-05 RS. 76 55 177/- IN ASSESS MENT YEAR 2005- 06 AND RS. 4 82 50 000/- IN ASSESSMENT YEAR 2006 -07. 48. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER MADE ADDITION TOWARDS AMORTIZATION EXPENSES OBSERVING TH AT AMORTIZATION EXPENSES WAS TO BE TREATED LIKE INTEREST ON PURCHAS E OF SECURITIES. THEREFORE HE HELD THAT THE SAID AMOUNT WAS TO BE C APITALIZED AND ADDED TO THE INCOME OF THE ASSESSEE. PAGE 23 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM 49. ON APPEAL THE LD. CIT(A) FOLLOWING THE DECIS ION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE REPORTED IN 291 ITR 144 ALLOWED THE CLAIM OF THE ASSESSEE. 50. AT THE TIME OF HEARING THE LD. D.R. FAIRLY CON CEDED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT REPORTED IN 291 I TR 144 [SUPRA]. THE HON'BLE MADRAS HIGH COURT HAS HELD THAT THE INV ESTMENTS ARE MADE IN ACCORDANCE WITH THE REQUIREMENTS OF THE ACT WHEREIN THE MARKET PRICE CHARGED FROM THE VALUE SHOWN IN THE OP ENING BALANCE AND AT THE END OF THE YEAR THE SAME COULD BE ALLOW ED AS DEPRECIATION. THEREFORE THIS GROUND OF APPEAL OF T HE REVENUE IS DISMISSED IN ALL THE YEARS UNDER CONSIDERATION. 51. GROUND NO. 6 OF THE APPEAL OF THE REVENUE IN AS SESSMENT YEAR 2007-08 GROUND NO. 7 IN ASSESSMENT YEAR 2004-05 AN D GROUND NO. 9 IN ASSESSMENT YEAR 2006-07 ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION ON ACCOUNT OF CESSA TION OF LIABILITY OF RS. 28 87 925/- IN ASSESSMENT YEAR 2007-08 RS. 1 5 84 884/- IN PAGE 24 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM ASSESSMENT YEAR 2004-05 AND RS. 34 96 110/- IN AS SESSMENT YEAR 2006-07 ON ACCOUNT OF STALE DRAFTS. 52. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER MADE ADDITION TOWARDS CESSATION OF LIABILIT IES ON STALE DRAFTS STATING THAT THOUGH IN ASSESSMENT YEAR 2001-02 THE TRIBUNAL HAS HELD THAT THE SAME IS NOT TO BE ASSESSED AS INCOME OF TH E ASSESSEE BUT AS THE MATTER HAS NOT REACHED FINALITY HE ADDED THE S AME TO THE INCOME OF THE ASSESSEE. 53. ON APPEAL THE LD. CIT(A) FOLLOWING THE DECIS ION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEA RS 2001-02 AND 2002-03 ALLOWED THE CLAIM OF THE ASSESSEE TOWARDS STALE DRAFTS. 54. AT THE TIME OF HEARING THE LD. D.R. MERELY REL IED UPON THE ORDER OF THE ASSESSING OFFICER. HE COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE LD. CIT(A). FURTHER HE COULD NOT PRODUCE ANY MATERIAL BEFORE US TO SHOW THAT THE ORDER OF TH E TRIBUNAL FOR ASSESSMENT YEARS 2001-02 AND 2002-03 WAS REVERSED I N APPEAL BY A PAGE 25 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM HIGHER FORUM. WE THEREFORE DISMISS THIS GROUND O F APPEAL OF THE REVENUE IN ALL THE YEARS UNDER CONSIDERATION. 55. GROUND NO. 6 OF THE APPEAL OF THE REVENUE IN AS SESSMENT YEAR 2002-03 IS DIRECTED AGAINST THE ORDER OF THE LD. CI T(A) IN DELETING THE ADDITION ON OF RS. 1 17 000/- ON ACCOUNT OF SHARE LISTING FEES AS CAPITAL EXPENDITURE AND DISALLOWED THE DEDUCTION OF THE ASSESSEE. 56. ON APPEAL THE LD. CIT(A) FOLLOWING THE DECIS ION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. A LEMBIC CHEMICAL WORKS [1993] 201 ITR 360 [GUJ] ALLOWED THE CLAIM OF THE ASSESSEE WHEREIN IT HAS BEEN HELD THAT LISTING FEES HAVE TO BE PAID BY A COMPANY TO THE STOCK EXCHANGE EVERY YEAR BUT NO END URING BENEFIT ARISES TO THE COMPANY BY PAYMENT OF ANNUAL LISTING FEES. THEREFORE BENEFIT WHICH THE COMPANY WOULD DERIVE WOULD NOT GO TO AUGMENT ITS CAPITAL STRUCTURE. SUCH LISTING ADDS SEVERAL A DVANTAGES TO THE BUSINESS CARRIED ON BY THE COMPANY PARTICULARLY IN THE MATTER OF CONFIDENCE TO CUSTOMERS AND LOYALTY OF EMPLOYEES WH ICH GENERATE VALUE. IT IS THEREFORE A REVENUE EXPENDITURE. T HE HON'BLE HIGH PAGE 26 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM COURT FURTHER OBSERVED THAT THE DEPARTMENTAL CIRCUL AR IN F NO. 10/67-65 I.T. [A.1] DATED 26.8.1965 HAS ALSO LAID D OWN THAT ANNUAL LISTING FEES PAID TO STOCK EXCHANGE BY THE COMPANY SHOULD BE ALLOWED AS REVENUE EXPENDITURE. 57. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE MATERIAL ON RECORD WE FIND THAT IN THE INSTANT CAS E THE LD. D.R. RELIED UPON THE ORDER OF THE ASSESSING OFFICER. HE COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE LD. CIT( A). FURTHER HE COULD NOT CITE ANY CONTRARY DECISION TO THE ONE REL IED UPON BY THE LD. CIT(A). HENCE WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THEREFORE THE SAME IS DISMISSED. 58. GROUND NO. 7 OF THE APPEAL OF THE REVENUE IN AS SESSMENT YEAR 2002-03 IS DIRECTED AGAINST THE ORDER OF THE LD. CI T(A) IN ALLOWING THE PROVISION FOR BONUS RS. 4 05 857/- U/S 43B OF THE ACT. 59. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF PROVISION FOR BOOKS OF RS. 4 05 857/-. ON PAGE 27 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM APPEAL THE LD. CIT(A) HAS ALLOWED DEDUCTION OBSERV ING THAT THE PROVISION FOR BONUS OF RS. 1 44 042/- WAS ALREADY OFFERED BY THE ASSESSEE BANK IN COMPUTATION OF INCOME U/S 43B OF T HE ACT AND THEREFORE THERE WAS NO NEED FOR MAKING ADDITION. 60. AFTER GOING THROUGH THE ORDER OF THE ASSESSING OFFICER IT IS OBSERVED THAT THE ASSESSING OFFICER HAS MADE DISALL OWANCE OF RS. 4 05 857/- ON ACCOUNT OF PROVISION FOR BOOKS. THE L D. CIT(A) HAS ALLOWED DEDUCTION AS PAYMENT ON ACCOUNT OF BONUS. IT IS UNFORTUNATE THAT THE LD. D.R. AS WELL AS THE LD. A. R. AT THE TIME OF HEARING COULD NOT TELL US WHETHER THE DISALLOWANCE WAS FOR BONUS OR PROVISION FOR BOOKS. AS FACTS ARE NOT CLEAR WE AR E UNABLE TO ADJUDICATE THE ISSUE. HENCE WE RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO ADJUDICATE THE ISSUE AF RESH AFTER BRINGING ON RECORD THE ENTIRE FACTS OF THE ISSUE AND AFTER A LLOWING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GR OUND IS ALLOWED FOR STATISTICAL PURPOSES. PAGE 28 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM 61. GROUND NO. 5 OF THE APPEAL OF THE REVENUE IN AS SESSMENT YEAR 2005-06 AND GROUND NO. 6 IN ASSESSMENT YEAR 2006-07 ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) IN ALLOWING THE CLAIM OF DEPRECIATION OF RS. 2 79 74 150/- IN ASSESSMENT YE AR 2005-06 AND RS. 2 00 56 900/- IN ASSESSMENT YEAR 2006-07 ON AC COUNT OF SHIFTING OF SECURITIES AVAILABLE FOR SALES TO SECURITIES HEL D TO MATURITY. 62. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER DISALLOWED DEPRECIATION ON SECURITIES ON TH E GROUND THAT THE BANK HAD CLAIMED DEPRECIATION ON SECURITIES BUT HAS IGNORED THE APPRECIATION IN VALUE OF SECURITIES. 63. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE BANK HAS CLAIMED DEPRECIATION ON SECURITIES BECAUSE THEY ARE HELD AS STOCK IN TRADE AND NOT AS INVESTMENT WHICH WAS NOT AGREED TO BY THE ASSESSING OFFICER WHO MADE THE ADDITION. 64. ON APPEAL THE LD. CIT(A) OBSERVING THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HO N'BLE JURISDICTIONAL PAGE 29 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM HIGH COURT IN ASSESSEES OWN CASE REPORTED IN 291 I TR 144 ALLOWED THE CLAIM OF THE ASSESSEE. 65. AT THE TIME OF HEARING THE LD. D.R. FAIRLY CON CEDED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT REPORTED IN 291 I TR 144 [SUPRA]. THEREFORE THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED FOR BOTH THE YEARS UNDER CONSIDERATION. 66. GROUND NO. 8 OF THE APPEAL OF THE REVENUE IN AS SESSMENT YEAR 2006-07 IS DIRECTED AGAINST THE ORDER OF THE LD. CI T(A) IN DELETING THE ADDITION OF RS. 53 500/- ON ACCOUNT OF DEEMED INT EREST RECEIVED ON ECGC/DICGC. 67. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS RECEIVED CLAIM FROM ECGC AMOU NTING TO RS. 53 500/- AND THAT THE SAID AMOUNT IS INCLUSIVE OF I NTEREST. HE THEREFORE ESTIMATED 10% OF THE AMOUNT AS RELATING TO INTEREST AND THEREBY ADDED RS. 53 500/- TO THE INCOME OF THE AS SESSEE. PAGE 30 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM 68. ON APPEAL THE LD. CIT(A) RESTORED THE MATTER B ACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY WHETHER THE AMOU NT RECEIVED FROM ECGC/DIGC PERTAINED TO THE PRINCIPAL OUTSTANDING ON LY OR INCLUDES INTEREST ALSO AND ON VERIFICATION IF IT IS FOUND TH AT THE AMOUNT RECEIVED PERTAINED TO PRINCIPAL OUTSTANDING AND NO INTEREST WAS RECEIVED THEN DELETE THE ADDITION. 69. AT THE TIME OF HEARING THE BENCH ENQUIRED FROM THE LD. D.R. THAT THE ISSUE HAS BEEN RESTORED BACK TO THE FILE O F THE ASSESSING OFFICER FOR VERIFICATION AT THE ASSESSING OFFICERS END WHETHER AMOUNT RECEIVED FROM ECGS/DIGC INCLUDED INTEREST OR NOT AND TO MAKE ADDITION TO INCOME AS PER INTEREST INCLUDED IN THE AMOUNT RECEIVED FROM ECGS/DIGC? THUS WHAT IS THE GRIEVANC E OF THE REVENUE AGAINST SUCH DIRECTION OF THE LD. CIT(A). THE LD. D.R. COULD NOT POINT OUT ANY ERROR IN THE ORDER OF THE LD. CIT (A) AND THEREFORE THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. PAGE 31 OF 31 I.T.A. NO. 935 & ORS//MDS/2010 CITY UNION BANK LTD. KUMBAKONAM 70. TO SUM UP IN THE RESULT APPEAL OF THE ASSESSE E FOR ASSESSMENT YEAR 2002-03 STANDS DISMISSED FOR ASSESSMENT YEAR 2006-07 STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND FOR ASS ESSMENT YEAR 2007- 08 STANDS ALLOWED APPEAL FILED BY THE REVENUE IN I TA NO 770/MDS/10 FOR ASSESSMENT YEAR 2007-08 STANDS DISMI SSED. APPEAL FILED BY THE REVENUE IN ITA NO 235/MDS/10 FOR ASSES SMENT YEAR 2002-03 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND APPEAL FILED BY THE REVENUE IN ITA NO 939/MDS/10 FOR ASSESSMENT YEA R 2005-06 ITA NO 940/MDS/10 FOR ASSESSMENT YEAR 2006-07 AND ITA N O 937/MDS/10 FOR ASSESSMENT YEAR 2004-05 STAND DISMISSED. ORDER PRONOUNCED IN THE COURT ON 8 TH JULY 2011. SD/- SD/- (U.B.S BEDI ) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 8 TH JUNE 2011. VL COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE