ITO Vs Jila Sahkari Kendriya Bank Maryadit (ITAT Indore)
The Revenue appealed against the order of the CIT(A) granting partial relief to a co-operative bank in relation to deduction claimed under Section 36(1)(viia) of the Income-tax Act for AY 2015-16. The dispute arose after the assessment was reframed under Section 143(3) read with Section 263, wherein the Assessing Officer (AO) allowed deduction only to the extent of 7.5% of the gross total income amounting to ₹66,10,745 and disallowed the balance claim of ₹3,33,89,255. The AO denied the second component of deduction, namely 10% of the aggregate average advances made by rural branches, on the ground that the assessee had not furnished the required details and data under Rule 6ABA of the Income-tax Rules, 1963.
Before the CIT(A), the assessee submitted details relating to rural branches and average advances, following which partial relief was granted. The Revenue challenged this relief, contending, among other grounds, that the rural branch classification and supporting data had not been properly verified and that no remand report had been obtained from the AO.
The ITAT observed that Section 36(1)(viia) comprises two distinct components: (i) 7.5% of the gross total income, which was undisputedly allowed by the AO, and (ii) 10% of the aggregate average advances made by rural branches. The Tribunal found that while the assessee had furnished relevant details before the CIT(A), those particulars had not been examined or verified by the AO, and the computation of the second component consequently remained unverified.
