Citation Codes

Equivalent Citations

citation codes

Case Number

I.T.A. No. 215/Coch/2018 Assessment Year: 2012-13 and I.T.A. No. 219/Coch/2018 Assessment Year: 2012-13

Advocates

Revenue by Shri Sudhanshu Shekhar Jha, CIT(DR)
Assessee byShri Mohan Pulickal, CA

Judges

Chandra Poojari, A.M.
George George K., J.M.

Acts

Finance (No.2) Act, 2009."17. Special deduction under section 36(1) (viii) to National Housing Bank (NHB)17.1 Clause (viii) of sub-section (1) of Section 36 [section 36(1)(viii)]
sub-section (2) of Section 14A and Rule 80 of the Income Tax rules.6.
Section 4A of the Companies Act, 1956 (1 of 1956); (ii)
Finance (No.2) Act, 2009 Page 22 of 6317.2 National
provisions of section 36(1)(viii) of the IT Act,
section 4A of the Companies Act.17.3
u/s 234B of the Income-tax Act, 1961.
provisions of Section 36(1)(viii),
u/s 36(1)(viii) of IT Act
Section 36(1)(viii).9.1
Section 36(1)(viii).(b)
FINANCE ACT 2009
INCOME TAX ACT

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Smart Summary

Tribunal Order Summary — ITA Nos. 215 & 219/Coch/2018 (Assessment Year 2012-13)

Factual and Procedural Background

This is an order by the Income Tax Appellate Tribunal (Accountant Member: Chandra Poojari) disposing of appeals filed by both the assessee and the Revenue against the order of the Commissioner of Income Tax (Appeals), Thrissur dated 21/02/2018 for assessment year 2012-13. The principal contested items in the appeals were:

Disallowance of Rs. 10,10,99,840 under section 14A read with Rule 8D (expenditure related to income not includible in total income).
Disallowance/allowance of deduction claimed as special reserve under section 36(1)(viii) (initially Rs. 10,79,80,515, later revised to Rs. 9,53,09,753) for long-term finance in relation to development activities including housing.
Charging of interest under section 234B of the Income-tax Act, 1961.
Deletion by CIT(A) of an addition of Rs. 1,16,00,57,121 relating to depreciation claimed on investments classified as 'Held to Maturity' (HTM).

The Tribunal heard rival submissions, considered earlier decisions (including the assessee's own earlier appeals and jurisdictional High Court decisions), and disposed of the appeals by reference to those precedents and statutory interpretation.

Legal Issues Presented

Whether the Assessing Officer's disallowance of Rs. 10,10,99,840 under section 14A read with Rule 8D was justified for the assessment year in question.
Whether the assessee (a banking company) is entitled to deduction under section 36(1)(viii) for amounts attributable to income from long-term finance for (a) industrial or agricultural development, (b) development of infrastructure, and (c) development of housing — specifically whether loans for construction/purchase of individual houses qualify as "development of housing".
Whether interest under section 234B could be legitimately charged on the assessee for the assessment year concerned.
Whether depreciation claimed on investments in the 'Held to Maturity' category (and treated as stock-in-trade/current assets) may be disallowed, and whether the deletion of the addition of Rs. 1,16,00,57,121 by CIT(A) should be interfered with.

Arguments of the Parties

Assessee (Appellant) — positions recorded in the opinion

The learned AR (assessee's representative) made "elaborate submissions" (the opinion notes these were extracted in the CIT(A)'s order), including adopting a new, more objective methodology for computing the deduction under section 36(1)(viii) which reduced the claim; the CIT(A) directed the AO to apply that new computation.
In relation to the section 14A issue, the assessee's counsel "fairly conceded" that the issue was covered against the assessee by earlier jurisdictional authority (the opinion explicitly records this concession).

Revenue (Respondent) — positions recorded in the opinion

The learned Departmental Representative (Ld. DR) relied generally on the Assessing Officer's order and contended that the assessee had not advanced loans for eligible business under section 36(1)(viii) (i.e., long-term finance for industrial/agricultural development, infrastructure development, or development of housing in India).
The Revenue specifically raised that the CIT(A) ought to have considered CBDT Circular No. 665 dated 05/10/1993 and Instruction 17/2008 dated 26/11/2008 read with Reserve Bank of India guidelines relied upon by the Assessing Officer (this ground was advanced as Ground No. 4 in ITA No. 219/Coch/2018).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Hon'ble Jurisdictional High Court — assessee's own case (ITA 730 of 2009) (as quoted)	Guidance on estimation of disallowance under section 14A where exact interest attributable to exempt income cannot be precisely established; direction that proportionate disallowance should be limited to interest liability and not overheads/administrative expenditure until Rule 80 came into force; remand for AO to reasonably estimate disallowance.	The Tribunal relied on and followed this High Court guidance to conclude that from AY 2010-11 onwards disallowance under section 14A should be made under Rule 8D; for the impugned year the CIT(A) was upheld in following that High Court decision, and the assessee conceded the issue was covered against it.
ITAT — Ernakulam District Co-op. Bank Ltd. v. Jt. Director of Income-tax (TS-7866-ITAT-2017)	Interpretation of "eligible business" under section 36(1)(viii) and holding that various long-term loans (including for industrial/agricultural/infrastructure/housing categories as listed) fell within eligible business such that deduction under section 36(1)(viii) could be allowed.	The CIT(A) followed this ITAT decision to allow the assessee deduction under section 36(1)(viii) for income from loans advanced for industrial/agricultural development and development of infrastructure. The Tribunal here found no infirmity in that approach and confirmed the CIT(A)'s allowance for those categories.
Supreme Court — Commissioner of Income Tax v. Anjum M.H. Ghaswala (252 ITR 1) (as cited)	Authority on mandatory nature of interest under sections 234A, 234B and 234C (i.e., charging of interest under these provisions is mandatory).	The Tribunal cited this Supreme Court authority (as quoted in the jurisdictional High Court order) and, following the earlier High Court decision in the assessee's own case, upheld charging of interest under section 234B; both parties agreed the issue was covered against the assessee.
High Court — CIT v. Nedungadi Bank Ltd. (reported 264 ITR 545 (Ker))	Held that depreciation on investments which are 'Held to Maturity' and forming part of stock-in-trade is deductible (as applied to valuation and taxation under the Income-tax Act, with reference to RBI guidelines followed by the bank).	The Tribunal applied this principle and the Tribunal's own earlier coordinate-bench orders in the assessee's own case for prior years to uphold the CIT(A)'s deletion of the addition relating to depreciation on HTM investments, and dismissed the Revenue's ground attacking that deletion.
Tribunal's earlier orders in the assessee's own case (various ITA Nos. including ITA No.29/Coch/2017; ITA Nos. 503 & 504/Coch/2016; prior years A.Y.2005-06 to 2009-10 etc.)	Applied as co-ordinate bench precedents and factual precedents specific to the assessee on issues of section 14A disallowance, section 36(1)(viii) claims, section 234B interest, and HTM valuation/depreciation.	The Tribunal repeatedly relied on its own earlier findings in the assessee's prior appeals to dispose of the respective grounds in the present appeals, treating those findings as binding/controlling on the present assessments where facts were similar or identical.

Court's Reasoning and Analysis

The Tribunal's analysis proceeded issue by issue and relied heavily on prior decisions (both the jurisdictional High Court and coordinate-bench ITAT decisions), applying statutory text and dictionary meaning where statutory terms were undefined. The Tribunal's reasoning can be summarized as follows:

1. Section 14A disallowance (Rs. 10,10,99,840)

The Tribunal noted that the same issue had been considered in the assessee's own earlier appeal (ITA No.29/Coch/2017 dated 13/12/2017) and that the jurisdictional High Court's decision in the assessee's own case provided the controlling guidance.
The High Court had instructed that where accurate attribution of interest to tax-free income cannot be established, the AO should reasonably estimate the disallowance, limiting proportionate disallowance to interest liability (not overheads) until Rule 80 existed, and thereafter follow subsection (2) of section 14A and Rule 80. The Tribunal applied that approach and observed that for assessment years from 2010-11 onwards disallowance should be under Rule 8D.
The assessee's counsel conceded that the issue was covered against the assessee; accordingly, the Tribunal upheld the CIT(A)'s order and rejected the assessee's ground on this point.

2. Deduction under section 36(1)(viii) (special reserve for long-term finance)

Threshold determination: The Tribunal first confirmed the assessee is a "Specified entity" under Explanation (a) to section 36(1)(viii) because it is a banking company (clause (iii)).
Statutory distinction: The Tribunal examined Explanation (b) which differentiates eligible business for different specified entities. For banking companies, eligible business includes "providing long-term finance for industrial or agricultural development; development of infrastructure facility in India; or development of housing in India." For housing finance companies, the provision explicitly covers "construction or purchase of houses in India for residential purposes."
Interpretive conclusion: Because the statute treats housing finance companies and banking companies differently, the Tribunal concluded that "providing long-term finance for construction or purchase of houses ... for residential purposes" (explicitly covered for housing finance companies) is conceptually different from "development of housing in India" (the phrase used for banking companies). The term "Development of Housing" is not defined in the Act, so the Tribunal turned to dictionary meanings.
Use of dictionary meanings: The Tribunal quoted dictionary definitions (Merriam Webster, Cambridge, Collins) indicating "housing" connotes a group/area/large number of houses/apartments typically built together — i.e., a development of housing in the collective sense, not individual residential house construction/purchase.
Legislative history considered: The Tribunal reviewed the Finance Act, 2009 amendment (Explanatory Circular) which extended the benefit to entities such as National Housing Bank and substituted wording with "development of housing." The Tribunal interpreted that substitution as incorporating the plain dictionary meaning of "development of housing," and declined to read into the provision a broader meaning that would cover loans for individual house construction/purchase by a banking company.
Precedent and factual application: The Tribunal observed that the Ernakulam District Co-op. Bank Ltd. ITAT decision (TS-7866-ITAT-2017) was relied upon by the CIT(A) to allow deduction for loans advancing industrial/agricultural development and infrastructure development; the Tribunal found that decision applicable and upheld the CIT(A)'s allowance for those categories. However, the Tribunal held that the Ernakulam decision did not help the assessee on the point that loans for individual houses amount to "development of housing."
Final outcome on this issue: The Tribunal concluded that loans/advances for construction/purchase of individual houses do not amount to "development of housing" and therefore such amounts are not eligible for deduction under section 36(1)(viii) for a banking company; conversely, the CIT(A)'s allowance for loans advancing industrial/agricultural development and infrastructure development was confirmed based on Ernakulam ITAT precedent and the CIT(A)'s computation (with direction to the AO to apply the new computation methodology adopted by the assessee where applicable).

3. Interest under section 234B

The Tribunal noted that the CIT(A) had upheld charging interest under section 234B by following the jurisdictional High Court's decision in the assessee's own earlier case (ITA No. 189 of 2011 for AY 2005-06).
The Tribunal cited the High Court's reliance on the Supreme Court decision in Commissioner of Income Tax v. Anjum M.H. Ghaswala, which holds that interest under sections 234A, 234B and 234C is mandatory in nature.
Both parties accepted that the matter was covered against the assessee by the High Court decision; accordingly, the Tribunal upheld the CIT(A)'s confirmation of the interest charge under section 234B and dismissed the assessee's ground on this point.

4. Depreciation on 'Held to Maturity' investments (Revenue's challenge)

The Tribunal observed that in the assessee's prior appeals (ITA Nos. 503 & 504/Coch/2016 and earlier years) the bank had treated HTM securities as current assets/stock-in-trade and valued them at lower of cost or market, offering depreciation/appreciation for taxation in accordance with RBI guidelines.
Relying on the coordinate-bench Tribunal orders in the assessee's own case for earlier assessment years and the jurisdictional High Court decision in CIT v. Nedungadi Bank Ltd. (264 ITR 545 (Ker)), the Tribunal held that depreciation on HTM investments forming part of stock-in-trade is deductible.
As no higher court decision reversing those coordinate-bench findings had been brought to the Tribunal's notice, the Tribunal saw no reason to depart from those prior findings and therefore upheld the CIT(A)'s deletion of the addition; the Revenue's ground was dismissed.

Holding and Implications

Final Disposition: Both appeals are dismissed — the appeal filed by the assessee and the appeal filed by the Revenue were dismissed in the result (paragraph 14 of the order).

Direct consequences for the parties (as derived from the order):

The Tribunal upheld the CIT(A)'s confirmation of the AO's disallowance under section 14A (Rule 8D approach and application in line with the jurisdictional High Court guidance) — the assessee's ground on this issue was rejected.
The Tribunal confirmed the CIT(A)'s allowance of deduction under section 36(1)(viii) for income from loans provided for industrial/agricultural development and development of infrastructure (following the Ernakulam ITAT decision), but upheld disallowance for advances/loans given for individual residential houses (not amounting to "development of housing").
The Tribunal upheld charging of interest under section 234B (following the jurisdictional High Court and Supreme Court authority) — the assessee's challenge on this point was dismissed.
The Tribunal confirmed the CIT(A)'s deletion of the addition regarding depreciation on HTM investments, following the Tribunal's earlier decisions in the assessee's own case and the Nedungadi Bank High Court decision — the Revenue's ground on this point was dismissed.

Broader precedent implications: The Tribunal's order primarily applies earlier decisions (jurisdictional High Court and coordinate-bench ITAT precedents) to the facts before it. The Tribunal did not purport to lay down any new legal principle; rather, it applied and followed existing authorities and statutory/dictionary interpretation to resolve the disputes in the present appeals.

If any specific factual computations (for example the AO's estimation under section 14A or the CIT(A)'s directed new computation under section 36(1)(viii)) are required, those were to be worked out by the Assessing Officer in accordance with the directions and precedents referenced in this order.

Order concluded and the appeals dismissed.

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South Indian Bank Ltd. (Assessee-) v. Assistant Commissioner Of Income Tax, Circle-1(1), Thrissur (Revenue-).

ORDER

Chandra Poojari, Accountant Member. - These appeals filed by the assessee as well as the Revenue are directed against the order passed by the CIT(A), Thrissur dated 21/02/2018 and pertain to the assessment year 2012-13.

2. The first ground in assessee's appeal in ITA No. 215/Coch/2018 is with regard to disallowance of Rs.10,10,99,840/-.

3. The facts of the case are that the Assessing Officer disallowed an amount of Rs.10,10,99,840/- u/s. 14A r.w.r. 8D towards expenditure incurred in relation to income not includible in total income.

4. We have heard the rival submissions and perused the record. In our opinion, a similar issue came up for consideration before this Tribunal in assessee's own case in ITA No.29/Coch/2017 dated 13/12/2017 wherein it was held as under:

4. We have heard the rival submissions and perused the material on record. We find, that this issue is covered against the assessee and in favour of the Revenue by the decision of the Hon'ble jurisdictional High Court, in assessee's own case in ITA 730 of 2009. The relevant para of the Hon'ble jurisdictional High Court reads as follow:—

"5. What we have stated above is only a reasonable suggestion for the Assessing Officer to adopt which arises only if assessee is not able to establish more accurately the interest spent on earning tax free income. We, therefore, leave this matter to be decided by the Assessing Officer with reference to the accounts of the assessee-Banks for each year. Since we find that the rationale adopted by the Assessing Officer to estimate the expenditure for the purpose of disallowance under Section 14A is not tenable, we feel the matter should be restored to the Assessing Officer for making disallowance under section 14A by reasonably estimating as nearly as possible the expenditure incurred for earning the tax free income. This should be done after giving opportunity to '.he asses see-banks to suggest their own formula with reference to accounts for the purpose of arriving at the actual amount or near actual amount The disallowance on estimated basis has to be done as above until Rule 80 was framed and thereafter it is for the Assessing Officer to make disallowance by following sub-section (2) of Section 14A and Rule 80 of the Income Tax rules.

6. So far as the disallowance of administrative expenditure is concerned, we feel considering the fact that there is no precise formula for proportionate disallowance, no disallowance is called for, for proportionate administrative cost attributable to earning of tax free income until Rule 80 came into force. We, therefore, dispose of the appeals by setting aside the orders of the Tribunal and that of the first appellate authority on this issue and remand all the assessments back to the Assessing Officer for reworking disallowance under section 14A in the case of each assessee for each assessment year. The proportionate disallowance under Section 14A should be limited to only interest liability and not overheads or administrative expenditure; which should be considered for disallowance under rule 80 from 2007-08 onwards."

5. From the above, in our opinion, it is very clear that the assessment for the assessment year 2010-2011 onwards, the disallowance u/s 14A should be made under Rule 8D by the A.O. In the impugned assessment year, i.e., 2009-2010, the CIT(A) has rightly upheld the order of the A.O. by following the judgment of the Hon'ble jurisdictional High Court, in assessee's own case. The learned Counsel for the assessee fairly conceded that this issue is covered against the assessee. Therefore, respectfully following the decision of the Hon'ble jurisdictional High Court, we uphold the order of the CIT(A). It is ordered accordingly.

4.1 In view of the above order of the Tribunal, we are inclined to reject this ground of appeal of the assessee.

5. The next common ground in assessee's appeal in ITA No.215/Coch/2018 and Revenue's appeal in ITA No. 219/Coch/2018 is with regard to disallowance of deduction of Rs.10,79,80,515/- (later re-worked and revised at Rs.9,53,09,753/-) during the course of the appeal) claimed in respect of special reserve u/s. 36(1)(viii) of the Act.

6. The facts of the case are that the Assessing Officer had disallowed an amount of Rs.10,79,80,515/- being the deduction claimed u/s. 36(1)(viii) of the Act holding that the assessee had not advanced any loan as long term finance for development of housing in India, industrial or agricultural development or development of infrastructure facility in India.

7. On appeal, the CIT(A) allowed deduction u/s. 36(1)(viii) of the Act for the income generated from advancing loans to industrial or agricultural development and development of infrastructure facility in India by following the decision of this Tribunal in the case of Ernakulam District Co-op. Bank Ltd. v. Jt. Director of Income-tax (TS-7866-ITAT-2017), However, with regard to long term finance for development of housing in India, he observed that construction/purchase of individual houses does not tantamount to housing development. Hence, he upheld the action of the Assessing Officer in so far as the disallowance of the claim of the assessee for advances given for development of housing is concerned u/s. 36(1)(viii) of the Act.

8. Against this, both the Revenue as well as the assessee are in appeal before us. The Ld. AR had made elaborate submissions which has been extracted in the CIT(A)'s order. The Ld. DR relied on the order of the Assessing Officer.

9. We have heard the rival submissions and perused the record. As regards the eligibility of the assessee for deduction u/s 36(1)(viii), first point to be considered is whether the assessee is a Specified Entity. For this we will have to consider Explanation (a) to Section 36(1)(viii) which is reproduced below:

(i) A Financial Corporation specified in Section 4A of the Companies Act, 1956 (1 of 1956);

(ii) A financial corporation which is a public sector company

(iii) A banking Company

(iv) A co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank;

(v) A housing finance company and

(vi) Any other financial corporation including a public company

Being a Banking Company, it is clear that the assessee is a Specified entity within Clause (iii) of Explanation (a) to Section 36(1)(viii).

9.1 Next point to be considered is whether the assessee will be entitled to deduction u/s. 36(1)(viii) for income generated by giving loans to their customers for purchase/construction of individual houses. For this we will have to consider Explanation (b) to Section 36(1)(viii).

(b) eligible business means —

(i) in respect of the specified entity referred to in sub-clause (i) or sub-clause (ii) or sub-clause (iii) or sub-clause (iv) of clause (a), the business of providing long-term finance for -

(A) industrial or agricultural development

(B) Development of Infrastructure facility in India; or

(ii) in respect of the specified entity referred to in sub-clause (v) of clause (a), the business of providing long-term finance for the construction or purchase of houses in India for residential purposes; and

9.2 Here it is quite apparent that a Housing Finance Company will be entitled to the deduction u/s 36(1)(viii) from income generated out of the business of providing long-term finance for the construction or purchase of houses in India for residential purposes. A Banking Company will be entitled to the deduction u/s 36(1)(viii) from income generated out of the business of providing long-term finance for only Development of Housing in India. This makes it abundantly clear that for the purposes of section 36(1)(viii) providing long-term finance for the construction or purchase of houses in India for residential purposes and providing long-term finance for only Development of Housing in India are different.

9.3 The words Development of Housing or Housing has not been defined in he Act. Hence, we will have to take the dictionary meaning. Housing means as per dictionary meaning : —

Merriam Webster - Is a group of individual dwellings or apartment houses typically of similar design that are usually built and sold or leased by one management.

Cambridge : An area containing large number of houses or apartments built close together at the same time.

Collins: A large number of houses or flats built together at the same time.

9.4 However, the assessee referred to legislative history of Section 36(1)(viii). Prior to its amendment by the Finance Act, 2009 all Banking Companies were entitled to deduction u/s 36(1)(viii) for the profits generated from the business of providing long-term finance for the construction or purchase of houses in India for residential purposes. Now let us quote from the Explanatory Circular for Finance (No.2) Act, 2009.

"17. Special deduction under section 36(1) (viii) to National Housing Bank (NHB)

17.1 Clause (viii) of sub-section (1) of Section 36 [section 36(1)(viii)] provides special deduction to financial corporations and banking companies of an amount not exceeding 20% of the profits subject to creation of a reserve. Explanatory Circular for Finance (No.2) Act, 2009 Page 22 of 63

17.2 National Housing Bank (NHB) is wholly owned by Reserve Bank of India and is engaged in promotion and regulation of housing finance institutions in the country. It provides re-financing support to housing finance institutions, banks, ARDBs, RRBs etc., for the development of housing in India. It also undertakes financing of slum projects, rural housing projects, housing projects for EWS and LIG categories etc. NHB is also a notified financial corporation under section 4A of the Companies Act.

17.3 A view has been expressed that NHB is not entitled to the benefits of section 36(1)(viii) on the ground that it is not engaged in the long-term financing for construction or purchase of houses in India for residential purpose. Hence the Act has been amended to provide that corporations engaged in providing long-term finance (including refinancing) for development of housing in India will be eligible for the benefit under section 36(1)(viii).

17.4 Applicability - These amendments will be effective from the 1st April, 2010 and will accordingly apply in respect of assessment year 2010-11 and subsequent assessment years."

9.5 It is true that the Amendment provided the deduction to National Housing Bank. But the amendment also substituted the previous words with words 'Development of Housing' which has to be interpreted in its plain dictionary meaning in absence of any definition given. We cannot read into law anything that is not specifically provided therein.

9.6 The assessee referred to the order of the Tribunal in the case of Ernakulam District Co-Op Bank Ltd. (supra). It is stated that development of housing was not issue for adjudication before the in this case. The ITAT had adjudicated upon the issue of development of infrastructure vide the aforesaid order. Thus, the said case is of no help to the assessee.

9.7 From the above, it is clear that construction/purchase of individual houses does not tantamount to Housing Development. Hence, we uphold the action of the lower authorities in so far as the disallowance of the claim of the assessee for advances/loans given for Development of Housing is concerned. No deduction shall be allowed to assessee u/s 36(1)(viii) for the amount claimed by assessee in respect of advances/loans given for individual houses.

10. The Revenue has also raised the following ground as Ground No. 4 in ITA No. 219/Coch/2018:

The learned Commissioner of Income Tax(Appeals) ought to have considered the CBDT circular No.665 dated 05/10/1993 and Instruction 17/2008 dated 26/11/2008 read with guidelines issued by Reserve Bank of India relied on by the Assessing Officer.

10.1 The Ld. DR submitted that as per sec.36(1)(viii), deduction is allowable to a banking company for eligible business of providing long term finance for:

(a) Industrial or agricultural development.

(b) Development of infrastructure facility in India or

According to the Ld. DR, with regard to eligibility for deduction u/s. 36(1)(viii), the assessee should advance loan for eligible business, however, the assessee had not advance any loan for such purposes.

10.1.1 We have heard the rival submissions and perused the record. The CIT(A) has placed reliance on the decision of the ITAT in the case of Ernakulam District Co-op. Bank Ltd. (supra) wherein it was held as under:

'9. Briefly stated the facts in relation to the revenue's appeal is that during the assessment year 2010-11, the assessee had claimed an amount of Rs.1,73,33,833/- as deduction u/s.36(1)(viii) of the IT Act. However, while completing the assessment, the Assessing Officer restricted the same to Rs. 45,93,784/-. For restricting the deduction, the Assessing Officer held that the assessee is not entitled for deduction in respect of the loans for hospital construction, educational institutions, industrial purposes, small scale projects. According to the Assessing Officer, only the loans under the category of housing loans is eligible for deduction and accordingly restricted the claim of deduction to the interest income earned from housing loans.

9.1 On appeal, the CIT(A) read as follows:—

"8.5 Further, as per the provisions of Section 36(1)(viii), eligible business means business of providing long term finance for industrial or agricultural development, development of infrastructure facility in India and development of housing in India. The break up of the long term finance was also furnished by the appellant, as below:—

Description	Interest (Rs.)	Income purposes
Long Term A/on housing loan Agri.	11,19,104	Housing Loan
Agri. Loan	37,89,067	Agri. Purposes
Mithra SHG/NHG loans	12,59,494	Carry bag mfg. units (Industrial purposes)
Term loans	64, 17 ,383	For establishment of new Industries and allied activities societies and expansion of existing industries
Housing Loans	42,85,34,630	Housing
Project loans	2,32,48,158	Small Scale industrial projects etc.
Other Long Term	4,54,60,679	For purchase of property loans housing (construction of flats/purchase of property for construction of house/flats
Total	50,98,18,515

8.6. From the above discussions, it is clear that the said loans falls under the eligible business of providing long term finance for industrial or agricultural development, development of infrastructure facility in India and development of housing in India and hence is eligible for deduction u/s.36(1)(viii). Accordingly, deduction of Rs.1, 56,78,943 is allowed to the assessee."

9.2 Aggrieved by the order of the CIT(A), the revenue is in appeal before us. The Id. DR strongly supported the order of the Assessing Officer and contended that the new order of the CIT(A) is a non-speaking order and the same needs to be quashed. The Ld. Counsel for the assessee, on the other hand, reiterated the submission made before the Income Tax Authorities.

Joint Director of Income tax {TS-7866-IT AT-2017 (Cochin)-O}

9.3 We have heard the rival submissions and perused the material on record. As per provisions of section 36(1)(viii) of the IT Act, the eligible business means business of providing long term finance for industrial or agricultural development, development of infrastructure facility in India and development of housing in India. In our view, industrial purposes includes all types of industries both manufacturing as well as service industry. Admittedly, these are loans advanced by the assessee for long term finance and the details of the purpose for which the loans are advanced are enumerated in para 8.5 of the impugned order of the CIT(A). The CIT(A), after examining the purpose for which the loans were advanced had categorically held that the interest income, out of loans enumerated, clearly falls within the definition of 'eligible business' under section 36(1)(viii) of the Act. This factual finding of the CIT(A) was not dispelled by the revenue by any contrary material on record. Moreover, on identical facts, the claim u/s. 36(1)(viii) of the Act for earlier assessment years namely A.Y.2008-09 and 2009-10 were disallowed by the CIT(A) and department had accepted the same. It is well settled that department having accepted the CIT(A)'s order for earlier years cannot agitate the issue for the current assessment years, unless department is able to prove that for earlier years CIT(A) orders were accepted on account of low tax effect. Therefore, we are of the view that the order of the CIT(A) is correct and in accordance with law on this issue and no interference is called for. It is ordered accordingly.

10. In the result, the appeal filed by the revenue is dismissed.'

10.2 Accordingly, the CIT(A) observed that the assessee is entitled to deduction in accordance with Section 36(1)(viii) for the income generated from advancing to (A) industrial or agricultural development and (B) development of infrastructure facility in India. Therefore, this ground was partially allowed. However, the CIT(A) found that the assessee had adopted a new methodology for claiming deduction u/s 36(1)(viii) of IT Act which is more objective and had resulted in reduction of assessee's claim. Thus, while allowing deduction u/s 36(1)(viii) of IT Act, the CIT(A) directed the assessing officer to allow such deduction as per the new computation.

10.3 In view of the above order of the Tribunal in the case of Ernakulam District Co-op. Bank Ltd. (supra), we do not find any infirmity in the order of the CIT(A) in granting relief to the assessee u/s. 36(1)(viii) of the Act with regard to providing long term finance for industrial or agricultural development or development of infrastructure facility in India and the same is confirmed. Thus, this ground of appeals of both the assessee as well as the Revenue are dismissed.

11. The next ground in assessee's appeal in ITA No. 215/Coch/2018 is with regard to addition of interest charged u/s 234B of the Income-tax Act, 1961. On this issue also, the CIT(A) has upheld the view of the AO in charging interest u/s 234B, by following the decision of the Hon'ble jurisdictional High Court in assessee's own case in ITA No. 189 of 2011, for assessment year 2005-2006.

11.1 We have heard both the parties and perused the record. We find that a similar issue had come up for consideration in assessee's own case in ITA No.29/Coch/2017 dated 13/12/2017 wherein it was held as under:

10. After hearing both the parties and perusing the relevant material on record, we find that the learned CIT(A) has rightly confirmed the charging of interest u/s 234B by following the decision of the Hon'ble jurisdictional High Court in assessee's own case in the preceding assessment year, i.e. A.Y. 2005- 2006. The relevant part of the High Court order is reproduced as under. -

"It was contended by the assessee that the charging of interest under Section 234B is erroneous as the assessee cannot anticipate the conditions likely to be made by the assessing officer in regular assessment on a future date. Section 234B provides that short falls has to be taxed under Section 43(3). The matter is covered by the judgment of the Supreme Court in the case of Commissioner of Income Tax v. Anjum M.H. Ghaswala ( 252 ITR 1 ) and

It was held that interest contemplated under Sections 234A, 2348 and 234C is mandatory in nature. In view of the fact that the appellate authorities have considered the matter based on "the judgment of the Supreme Court, this issue is also answered against the appellant".

11. Here again, both the parties agreed that this issue is covered against the assessee and in favour of the Revenue by the decision of the Hon'ble Jurisdictional High Court, in assessee's own case. Respectfully following the same, we uphold the order of the CIT(A). It is ordered accordingly.

11.2 In view of the above order of the tribunal, we are inclined to dismiss this ground of appeal of the assessee.

12. The next ground in Revenue's appeal in ITA No.219/Coch/2018 is with regard to deletion of addition of Rs.1,16,00,57,121/- on account of depreciation claimed on 'Held to Maturity' category investments.

13. We have heard the rival submissions and perused the record. We find that a similar issue had come up for consideration before the Tribunal in assessee's own case in ITA Nos. 503 & 504/Coch/2016 dated 01/12/2017 wherein it was held as under:

5. We have heard the rival submission and perused the relevant material on record. The assessee-bank had treated securities which are HTM as current assets / stock-in-trade. The value of the current assets / stock-in-trade was calculated at the end of the each financial year on cost or market price whichever is lower. By adopting such valuation of security, the depreciation / appreciation was duly offered for taxation under the Income-tax Act. The bank was consistently adopting the above method of valuation of security as per the RBI Guideline. The Income-tax Appellate Tribunal in assessee's own case for assessment years 2005-2006 to 2007-2008 (supra) by following the judgment of the Hon'ble jurisdictional High Court in the case of CIT v. Nedungadi Bank Ltd. reported in 264 ITR 545 (Ker) had held that the depreciation on investment which are "Held to Maturity' and forming part of stock-in-trade is entitled to claim the same as a deduction. The CIT(A) had followed the orders of the Tribunal in assessee's own case, for Asst.Years 2005-2006 to 2007-2008 (supra). No judgment of the Hon'ble High Court has been brought to our notice reversing the orders of ITAT in assessee's own case for Asst.Years 2005-2006 to 2007-2008 (supra). Hence, we see no reason to deviate from the findings of the co-ordinate Bench orders of the Tribunal in assessee's own case for assessment years 2005-2006 to 2007-2008 (supra). Therefore, we uphold the order of the CIT(A) as correct and in accordance law. It is ordered accordingly.

13.1 In view of the above order of the tribunal, we are inclined to dismiss this ground of appeal of the Revenue.

14. In the result, both the appeal filed by the assessee as well as the appeal filed by the Revenue are dismissed.

South Indian Bank Lt... v. Assistant Commission...