The captioned bunch of appeals have been preferred by the assessee against the separate orders of the Commissioner of Income ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 2 Tax(A), Panchkula [hereinafter referred to as CIT(A)] dated

30.10.2014 (ITA Nos. 1157 & 1158/Chd/2014), dated 26.11.2015 (ITA Nos. 154 & 155/Chd/2014) and dated 4.12.2015 (ITA No. 156/Chd/2014).

2. Since identical issue has been raised in the aforesaid appeals, they were heard together and are being disposed of by this common and consolidated order. For the sake of convenience, the facts are taken from ITA No. 1157/Chd/2014.

3. The assessee in its appeal has taken the following effective grounds:- 1 That the Ld. CIT(A) has erred in upholding an addition of Rs. 3,22,00,879/- on account of interest on Agricultural Credit Stabilization Fund.

2. That the Ld. CIT(A) has erred in upholding the addition of Rs. 33,85,0000/- on account of excess provisioning of standard assets. Ground No.1 : The brief facts relating to the issue are that the Assessing officer during the course of assessment proceedings noted that the assessee had created an Agricultural Credit Stabilization Fund (ACSF) which was part of reserves and surpluses of the assessee bank. On this fund, the assessee had also contributed interest of Rs. 3,22,00,879/- for the assessment year 2010-11 and Rs. 3,56,54,370/- of the assessment year 2011-12 by charging 3% p.a. on total amount at the opening balance of the fund. The amounts of Rs. 3,22,00,879/- and Rs. 3,36,54,370/- were claimed as ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 3 expenditure in the P&L account by the assessee on account of interest paid / contributed. The Assessing officer, however, was of the view that interest credited to the Agricultural Credit Stabilization Fund was not expenditure. That the said amount was just an addition to the Agricultural Credit Stabilization Fund retained by the assessee itself. He, therefore, added the amount of Rs. 3,22,00,879/- claimed by the assessee as expenditure on account of interest credited to the Agricultural Credit Stabilization Fund.

4. In appeal before the CIT(A), the assessee relied upon the decision of this Tribunal in the case of M/s Haryana State Cooperative Agricultural and Rural Development Bank, Panchkula (ITA No. 228 & 241/Chd/20011 dated 28.4.2011 for the assessment year 2007-08) and submitted that in the similar facts and circumstances, theAT has upheld the findings of the CIT(A) in that case, allowing the deduction in respect of interest credited to the Agricultural Credit Stabilization Fund. It was further submitted that the assessee was a cooperative society engaged in the business of banking in the state of Haryana whose main objective was to provide credit facilities in the agricultural sector and taking care of interest of the poor farmers in the state of Haryana. The business of banking was governed as per the norms fixed by the Reserve Bank of India and work purely under the instruction of NABARD / Registrar Co-operative Societies and the ministry of agriculture. The assessee further submitted that the ministry of agriculture / department of co-operation issued ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 4 instructions vide their letter dated 15.7.2012 to the Registrar of Cooperative societies in all the states / UTs throughout India for the creation, formation and maintenance of stabilization fund known as Agricultural Credit Stabilization Fund. The assessee had further submitted that the fund was only to deal with the natural calamities which was a natural phenomenon in the agricultural sector. At the time of creation of fund, 15% of the net profits was required to be appropriated from the net profits of concerned bank as described in para 1 of the stated letter. Since natural calamities were regular phenomenon in the agricultural sector, the maintenance was much more required to deal with unforeseen circumstances. The Government found it fit and appropriate to charge 3% on opening balance of the fund as expenditure in each respective financial year as it was evident from para 2 of the letter. The assessee charged an interest of Rs. 3,22,00,879/- for the A.Y. 2010-11 and interest of Rs. 3,56,54,370/- for the A.Y. 2011-12 in pursuance to the instructions given by Government of India through Ministry of Agriculture. The assessee claimed the same as expenditure on account of interest @ 3% per annum as per the para 2 of the instruction and that the same was apart from the appropriation of 15% of net profits as per para 1 of the instruction. The Ld. CIT(A,) however, did not agree with the above submissions of the assessee and upheld the disallowance made by the Assessing officer on this issue, observing as under:-

5.2 I have gone through the facts of the case and written submission filed by the appellant. It is noted chat the appellant has appropriated 15% of the net profit and credited 3% of interest on the total amount at the credit of ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 5 fund at the beginning of year for building up stabilization fund in accordance with letter dated 15.07.1972 of Ministry of Agricultural. Department of Co-operation, (Government. of India addressed to the Registrar of Coop. Societies. Though, the appropriation of 15% of the net profit has been considered by the appellant as appropriated amount for the stabilization fund but the credit of interest at 3% of opening balance of fund has been claimed as expenditure. The AO has disallowed the claim of expenditure on the ground that interest provision has resulted into addition in agricultural credit stabilization fund which is a part of reserves and surplus meaning thereby that it is an appropriation of profit and as per accounting principles appropriation of profit can only be made from the profit after tax. Further, there has been no actual payment of interest.

5.3 On the other hand, the appellant has referred to the letter issued by Department of Co-operation dated

15.07.1972 and made distinction in sub para (1) and (2) of para 2 of the letter. The appellant submits that as per sub para (1), the words used are "appropriation of 15% of the net profit whereas as per sub para (2) the interest is required to be credited to the fund at the beginning of each year irrespective of profit. Based on this logic, the appellant considers 15% of the net profit as appropriation of fund and credit of interest at 3% of the fund as expenditure, The appellant has also relied on the decision of Honble ITAT Chandigarh Bench in the case of M/s Haryana State Coop. Agricultural & Rural Development Bank dated 28.04.2011 for A.Y. 2007-08.

5.4 After considering the facts and submissions, the order of Honble ITAT is referred for finding given by Honble ITAT. It is noted that in the order in case of M/s Haryana State Co-op. Agricultural & Rural Development ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 6 Bank, the Honble ITAT upheld the reasoning given by CIT(A). The Ld. CIT(A) on the basis of submissions made by the appellant observed that the interest @ 3% is to be credited irrespective of profitability of the bank and therefore, it is not in the nature of appropriation of profit and it is in the nature of expenditure incurred as claimed by the appellant. However, in my opinion, the Ld. CIT(A)s observation does not include the appreciation of facts in the instant case as brought by the AO in the assessment order. The Ld. CIT(A) has not given any observation on the fact that interest added to the agricultural credit stabilization fund, which is a part of reserves and surplus, in fact, makes addition to the same stabilization fund. Further, there was no actual payment of interest by the appellant. In another similar case of Karnal Central Co-op. Bank Ltd for A.Y. 2008-09, the Ld. CIT(A), Karnal has upheld the disallowance of similar interest credited to the stabilization fund. Therefore, on the same issue two CIT(A)s have different observations. The appellant reliance of decision of Honble ITAT only confirms the observations of CIT(A) without any further discussion on merit. Therefore, respectfully I intend to differ from the decision of Honble 1TAT given in another separate case by making further elaboration on the facts of instant case as in subsequent para.

5.5 Normally, the profits and gtains of business are Computed on ordinarily commercial principles. However, when there is a statutory stipulation, regardless of ordinarily commercial principles, the statute has to be followed. In the instant case the interpretation of credit of interest is based on a letter issued in 1972 by a Department of Govt. of India. Since, the word appropriation has not been mentioned in sub para (2) of para 2 of the letter, the appellant has interpreted the credit of interest as expenditure. In fact, the credit of ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 7 interest is also parted from the available capital with the appellant and added to the same stabilization fund which is in nature of Reserves and Surplus. Here, 1 would like to refer to the dictionary meaning of words, interest 1 and appropriation as given in Webstars Dictionary as under :- Interest: - a sum paid or charged for the use of money or for burrowing money or such a sum expressed as a percentage of money borrowed to be paid over a given period. Appropriation: - anything appropriated for a specific purpose specially money. Appropriate: - to set apart, authorized or legislate for some specific purpose or use. The above meaning of interest clarities that interest is a sum paid for use of borrowed money. Even in the Income Tax Act, the deduction on account of interest is specifically governed by provisions of section 36(1)(iii) which allows deduction of interest on borrowed capital. In the instant case the appellant has not claimed interest on any such borrowed capital. No fund has been utilized by the appellant for the purpose of its business on which the interest expenditure has been claimed nor has any interest been actually paid. The appellant by following the instruction of the letter has further credited the stabilization fund by another 3% on the credit balance of the fund which means the capital available with the appellant has been further added in the name of interest to the same reserves and surplus. The dictionary meaning of word appropriate clarifies that the money has been set apart or authorized for specific purpose or use of stabilization fund. This clarifies that interest credited to the stabilization fund is in the nature of appropriation to the fund which has been appropriated from the capital ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 8 available with the appellant. So, such appropriation or charge is not in accordance with any provision of statute. The appellants claim does not fall within the provision of section 36(1)(iii) which has been specifically provided under the Income Tax Act for claim of deduction on account of interest. Even otherwise, the appellants claim also does not fall as per provisions of residuary section 37 of theas the expense has not been incurred wholly and exclusively for the business purposes of the appellant because the stabilization fund is not being used by the appellant for its own business purposes. No gain or profit is being derived by the appellant by any use of stabilization fund. In the normal banking business the interest paid by the banks on the deposits available with bank are on the basis of commercial gains received by the banks on the deposits. No such activity is available in the appellants case. So, there is no statutory provision for the claim of such interest which is only based on a letter that interest has to be credited to the fund maintained for some specific purpose. The appellant will be entitled to a particular expenditure or deduction depending upon provisions of law and not on the basis of existence of entry in its books which is not conclusive.

5.6 Therefore, in view of above discussed facts. I am of the opinion that the amount of Rs. 3,22,00,879/- and Rs.3,56,54,370/- on account of interest credited to agricultural credit stabilization fund for A.Ys. 2010-11 and 2011-12 respectively are not allowable deduction as per the provisions of the. The grounds of appeal in both the years are dismissed.

5. Being aggrieved by the above order of the CIT(A), the assessee has, thus, come in appeal before us. ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 9

6. We have heard the rival contentions and have also gone through the records. The Ld. Counsel for the assessee has submitted that the Agricultural Credit Stabilization Fund was created in pursuance to the instructions issued by the Department of Co-operation, Ministry of Agriculture vide file No. K11011/24/17-Credit dated 15.7.1972 and by Reserve Bank of India dated 8.10.1971 wherein it was recommended that in order ensure uninterrupted flow of long term development, finance for agriculture in the area affected by natural calamities like flood, drought, etc., the possibility of introducing stabilization arrangements in the long term co-operative credit structure also should be examined. Accordingly, it was decided to start building stabilization fund by Mortgage / Development banks at various levels. As per the instructions, 15% of the net profits are required to be appropriated from the net profits of the concerned bank and further interest @ 3% on the opening balance of the fund is also required to be credited to the fund in each respective financial year. The said fund is created and maintained to deal with the natural calamities in the agricultural sector. As per the instructions, till the usage of the funds, the unutilized funds shall be invested in the government or trustee securities. The Ld. counsel has also submitted that as per the NABARD guidelines, the said Agricultural Credit Stabilization Fund is neither a part of free reserves out of which the bank can declare the dividend nor it is a part of lendable resources which the bank can lend out of available fund. That during the financial years 2009-10 and 2010-11, the assessee invested the entire amount of agriculture stabilization fund and Rs. 109.07 crores in theA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 10 government securities for the period ending 31.3.2011. That the usage of the Agricultural Credit Stabilization Fund had been proposed to be made by converting the short term loans into the medium term loans in the event of natural calamity. That based on the request, the State co-operative Apex bank sanctioned the proposal given by the District Co-operative banks by converting the short term loans in to medium term loans to enable the farmers to repay their loan over a period of time.

7. The Ld. Counsel has further submitted that in terms of the RBI Circular No. ACD.Plan.1060/PR.26(Gen|) -71/72 dated 8.10.1971 under Rule 4D, the Central Cooperative and Apex banks shall pay to the fund an interest @ 3% per annum on the amounts of credit of fund at the commencement of the year. He has further submitted that, thus, in all the instructions, the appropriation at the time of creation of fund and further provisioning of interest during the year @ 3% per annum are two different things. The appropriation was made only out of profits whereas the provisioning of interest made in each year on the opening balance of the Agriculture Credit Stabilization Fund was an expense which was to be incurred irrespective of the fact whether the assessee made profits or not. It was further stated that in the assessment year 2010-11, when the assessee incurred the loss, there was no provision of the appropriation of the agricultural stabilization fund whereas the assessee provided the interest of Rs. 3,22,00,879/-. The Ld. counsel has further relied upon the decision of the Tribunal in the case of ITO Vs. M/s Haryana State Co-op Agri. & Rural Dev. Bank Ltd., ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 11 Panchkula ITA Nos. 228 & 241/Chd/2011 order dated 28.4.2011 and has stated that the issue is squarely covered in favour of the assessee by the above decision of the Tribunal. The Ld. Counsel has further relied on - a) CIT Vs. Orissa Industries Ltd 91993) 203 ITR 0449 dated 8.2.1993 Orissa High Court. - It was concluded that the production & maintenance bonus over and above maximal allowable u/s 36(1)(iii) or facts having been found not being bonus as such but incentive wages same allowable u/s 37(1) of the Income-tax Act, 1961. b) The Karnataka State Co-op Apex Bank Ltd Vs. DCIT, Banglore dated 29.2.2016 ITAT, Banglore Bench wherein the only controversy is whether the amount spent out of above funds is an expenditure laid out wholly and exclusively for the purpose of business u/s 37 of the Income-tax Act, 1961. It was concluded that the said expenditure was a statutory obligation to spend money for the above purposes as the provision of the Karnataka Co-operative Societies Act stipulates that certain percentage of profits should be spent towards the specified purpose which is wholly and exclusively for the purpose of business and we direct the Assessing officer to allow the amount as deduction u/s 37(1) of the while computing income of the assessee co- operative bank.

8. The Ld. Counsel, therefore, summed up his submissions as under:- - That the fund has been created to deal with the position arising out of the natural calamities like flood, drought etc. ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 12 - That the fund cannot be used for any other purposes like free reserve or any other lendable resources by assessee. - Till its usage or occurring of eventuality as mentioned above the fund will be invested only in government securities or trustee securities. - That the creation and maintenance of land is a socio- economic need of the institution will be utilized only for the business purposes. - That the charge of interest and the appropriation of profits are two different things which should not be clubbed together. As the interest is to be provided even in the year when the assessee does not earn any profit and whereas the creation of fund will be done only when the assessee earns the profits which is evident from assessment year 2010-11.

9. The Ld. DR, on the other hand, has relied on the findings of the lower authorities and has submitted that the said fund lying with the assessee though had a specific purpose, but the amount of interest apportioned on the funds cannot be said to be allowable expenditure spent for business purposes. The amount was further invested by the assessee in the government securities and, hence, the assessee had not parted with the funds as a business expenditure.

10. We have considered the rival submissions. Admittedly, there are two components of contribution of the Agricultural Credit Stabilization Fund (ACSF) which the assessee is required to create and maintained as per the Governments statuary instructions / ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 13 guidelines. The first part is the 15% appropriation out of the profits and the second part is the interest @ 3% on the opening balance of the fund. So far as the appropriation of the 15% on the profits towards the funds is concerned, the assessee has not claimed the same as deduction. The dispute is regarding the claim on the interest amount credited to the funds. The main contention of the Ld. Counsel for the assessee is that the said credit of interest was not out of apportionment of the profits. That even if, the assessee runs into losses, still the assessee is required to credit 3% of the interest on the opening balance of the fund. The Ld. Counsel has referred to the instructions of the Government of India dated 15.7.1972 (supra) to state that so far as the credit out of the profits is concerned the words used appropriation of 15% of the net profits whereas regarding the second part of contribution, the words used are credit of interest of 3% per annum has been used. He, therefore, has submitted that the second part i.e. credit of interest to the fund is an admissible expenditure u/s 36(1)(iii) of the.

11. We, however, are not convinced by the above submission of the Ld. Counsel of the assessee. Though, the Agricultural Credit Stabilization Fund was required to be created and maintained as per the government instructions / guidelines, however, the fund contributed remained with the assessees bank which the assessee invested in government securities and earned income thereupon . It is not a payment of amount to a third party. Even the income ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 14 received from further investment of the fund does not go to any third party but to the assessee only. The contribution to the said fund is not an outgo of the assessee that can be termed as expenditure. The Ld. CIT(A) has rightly referred to the definition of interest that is a sum paid or charged for the use of money or for borrowing money or such a sum expressed as a percentage of money borrowed to be paid over a given period. The Ld. CIT(A) has rightly pointed out that even as per the provisions of section 36(1)(iii) of the Act, the deduction is allowable on the interest on borrowed capital. However, in the instant case, the assessee has not claimed interest on any such borrowed capital. The fund, in question, was created to be used by the assessee itself in peculiar circumstances. Though, the fund had two components, one is out of appropriation of profits @ 15% and the other is interest @ 3% on the opening balance of the fund, however, the fact is that the said amount credited by the assessee towards the Agricultural Credit Stabilization Fund is not parted with by the assessee. As pointed out in the relevant notification, as also claimed by the assessee, the fund is used in the case of need to convert the short term crop loans in the case of natural calamity into term loan. Whenever, the assessee has to incur such an expenditure from the fund maintained by it, that it can of course be claimed as deduction. However, mere contrition to the fund maintained and retained by the assessee, which is further invested by the assessee, government securities and the income is also earned by the assessee on such investments, cannot be claimed as expenditure. ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 15 So far as the reliance of the Ld. Counsel for the assessee on the decision of the Coordinate Bench of the Tribunal in ITO Vs. M/s Haryana State Co-op Agri. & Rural Dev. Bank Ltd., Panchkula ITA Nos. 228 & 241/Chd/2011 order dated 28.4.2011 is concerned, we agree with the findings of the CIT(A) that the only point taken into consideration by theAT while upholding the order of the CIT(A) in that case was that contribution towards the funds @ 3% on the opening balance of the fund is not from the appropriation of profits. However, the fact that the fund so created and maintained is retained by the assessee itself and is used and invested by the assessee itself, though as per the relevant guidelines / instructions has been missing in the said decision of theAT in the case of M/s M/s Haryana State Cooperative Agricultural and Rural Development Bank, Panchkula(supra). The said distinguishing facts have neither been brought to the knowledge of the Tribunal nor the same has been considered or discussed in the above referred to decision of the Tribunal. However, the issue is squarely covered by the direct decision of the Pune Bench of the Tribunal in the case of Solapur District Central Coop Bank Ltd [2014] 52 taxman.com 358. The facts and issues involved in other case laws relied upon by the assessee are different, hence, they are not relevant for the purpose of adjudication of this case. The mere contribution to the fund, in our view, cannot be claimed as expenditure for the purpose of business. The assessee no doubt can claim the expenditure when such fund or part of such fund is expended as per the prescribed procedure, instructions or guidelines. The reliance in this respect ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 16 can also be placed on the decision of theAT Bangalore Bench in the case of Karnataka State Co-operative Apex Bank Ltd. Vs. DCIT [2017] 83 taxmann.com 327 (Banglore-Trib) and of ITAT Hyderabad Bench in the case of A.P Mahesh Co-op Urban Bank Ltd v DCIT [2015] 55 taxmann.com 429 (Hyderabad Trib).

12. In view of the above, we do not find any infirmity in the order of the CIT(A) on this issue and uphold the same.

13. Ground No.2 is relating to the provisioning of the disallowance on account of excess provisioning of standard assets.

14. The brief facts relating to the issue are that the Assessing officer noted from the annual report that the assessee was required to make provision of loans and advances as per RBI guidelines to the tune of Rs. 842.31 lacs for the A.Y. 2010-11 and Rs. 1378.74 lacs for the A.Y. 2011-12, whereas it had already made provisions of Rs.4364.21 lacs for the A.Y. 2010-11 and Rs.3886.49 lacs for A.Y. 2011-12 in the books of account. Therefore, as per section 41 of the Act, a sum of Rs.3721.90 lacs for the A.Y, 2010-11 and Rs.3886.49 lacs for the A.Y. 2011-12 being excess provisions were required to be added back to the returned income as assessee had already charged excess provisions than required. Therefore, the assessee bank was asked as to why this amount not be added to its returned income. The assessee filed reply which was reproduced in para 3 of the assessment orders. As per assessees reply, it was found from P&L account and also from Annexure B to the financial ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 17 statements that the assessee had not charged the bad and doubtful debt reserve to P&L account, but the provision on standard assets was being charged to the P&L account. The opening balance of provisions against standard assets was Rs.780.51 lacs for the A.Y. 2010-11 and Rs.940.51 lacs for the A.Y. 2011-12, whereas, as per annexure B to P&L account, the provisions required to be maintained during the year under consideration was Rs.746.66 laes for the A.Y. 2010-11 and Rs.934 19 lacs for the A.Y. 2011-12. Therefore, sum of Rs.33.85 lacs for the A.Y. 2010-11 and Rs.6.32 lacs for the A.Y. 2011-12 was added to the returned income of the assesses u/s 4I(l)(a) of the.

15. In appeal, the Ld. CIT(A) confirmed the additions so made by the Assessing officer observing as under:-

6.2 I have gone through the facts of the case and written submissions filed by the appellant. It is noted that on the basis of annexure B, the financial statement, the AO observed there were provisions against Standard Assets debited in P&L account which were in excess to the provisions required to be maintained during the year. Therefore, the AO disallowed the provision in excess to the required provision to be maintained and added to the income u/s 41(l)(a) of the. On the other hand, the appellant has submitted that the AO has taken figures of Rs.746.66 lacs and Rs.934.9 lacs for A.Y. 2010-11 and 2011-12 but forgot to consider the figures of loss assets of Rs.

211.6 lacs and Rs.212.51 lacs for A.Ys. 2010-11 and 2011-12 as disclosed in para 4 of Annexure B under the head provisioning. The sum of both these items ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 18 amounts to Rs.958.26 lacs and Rs. 1146.70 lacs for the A.Ys. 2010-11 and 2011-12 respectively. This is far less than the amounts considered by the AO. In nutshell, the appellant contention is that the AOs finding is not applicable as the provisions in the balance sheet are less than the combined provisions recommended in Annexure B to the balance Sheet.

6.3 After considering the facts and submissions, the financial statement at Annexure B to the balance sheet is referred.The annexure deals with assets classification and provisioning statement. The Sr. No. Ill of annexure B deals with provisioning required having three sub items on standard. Sub standard and doubtful assets. The Sr. No. 4 of annexure B deals with loss assets of item number 11(4) under the asset classification. So, both heads under two Sr. Nos. deal provisioning and cannot be clubbed together. The reason for non-clubbing is gathered from the perusal of P&L account where under item No. 10(x) and I0(xi) separate provision for NPA and against standard assets have been debited. So, the provisioning of Standard Assets under Sr.no. III is to be considered separately from the provisioning over and above as required to be maintained in the case of case of Standard Assets only. Therefore, in my opinion the AO was justified in disallowance of excess provisioning on account of Standard Assets as the same cannot be clubbed together with separate provisioning on loss assets against which the provision on NPA has been separately debited in the P&L account. The grounds of appeal for both years are dismissed.

ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 19

16. We have heard the rival submissions. As per the provisions of the Income Tax Act, generally the deduction of expenditure actually incurred solely for the business purposes are allowed, however, the provision for an expenditure is allowed as a special measure in the case of expected expenditure / losses that are likely to occur in such circumstances and, hence, deduction as a provision of said expenditure is allowed even before the expenditure is actually incurred. However, such provisions is required to be squared off at the end of the year when the actual expenditure is incurred by the assessee against the provision is allowed. If the actual expenditure is less than the provision made of the estimating amount, it is to be added to the income of the assessee and if the actual expenditure is more than the provision made for, the assessee certainly can claim the balance expended amount. However, all these adjustments are subject to the provisions made in the next assessment year. Under the circumstances, if the provisions made as per RBI guidelines in earlier years is more than the provision of expenditure for which the assessee is entitled to make in the relevant assessment year under consideration, then the assessee cannot claim the benefit of perpetuity of the excess provision made. That at the end of the year is required to be squared off and, hence, the excess provisioning made by the assessee is required to be added to the income of the assessee. However, the contention of the assessee that while considering the provisions allowable to the assessee on the allowable standard assets, the lower authorities have not considered the figures of lost assets, we are of the view, that this requires to be ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 20 examined at the end of the Assessing officer. We, therefore, direct the Assessing officer to consider the expenditure / provision for expenditure / loss on the standard assets / sub-standard assets and loss assets and then to decide, if any, disallowance is attracted for excess provisioning in accordance with law. This ground of appeal is treated as partly allowed.

17. Ground No.3 is general in nature and does not require any adjudication. In the result, the appeal of the assessee is treated as partly allowed. ITA No. 1158/Chd/2014 (assessment year 2011-12)

18. The grounds taken by the assessee in this appeal are identical to that have been taken by the assessee for assessment year 2010-11 in ITA No. 1157/Chd/2014.

19. In view of our findings given above, on similar lines, the ground No.1 of the appeal is dismissed and ground No.2 is restored to the file of the Assessing officer with identical directions. This appeal of the assessee is also treated as partly allowed. ITA No. 154/Chd/2016 (assessment year : 2008-09)

20. The appeal is barred by limitation of 21 days. The assessee has moved an application dated 29.2.2016 for condonation of delay, wherein, detailed reasons have been furnished. ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 21

21. In view of the reasons given in the application and also considering the shortness of the period of delay, the delay of 21 days in filing the appeal is hereby condoned.

22. Ground No.1 is general in nature and does not require any specific adjudication, hence, dismissed.

23. Vide ground No.2, the assessee has agitated the action of the Ld. CIT(A) in upholding the disallowance of interest expenditure on the Agricultural Credit Stabilization Fund, which is identical to that of ground No.1 of the appeal for assessment year 2010-11 (ITA No. 1157/Chd/2014). In view of our findings given above, this ground is dismissed. In the result, the appeal of the assessee is dismissed. ITA No. 155/Chd/2016 (assessment year : 2009-10)

24. Ground No.1 is general in nature and does not require any adjudication, hence, dismissed.

25. Vide ground No.2, the assessee has agitated the action of CIT(A) in upholding of disallowance of conveyance deed charges of Rs. 44,71,550/- holding the same as capital in nature.

26. The brief facts relating to the issue are that the Assessing officer noted that the assessee had debited Rs. 1,55,35,789/- under the head other expenditure which included a sum of Rs. 44,71,550/- towards conveyance deed charges paid to Estate Officer, Panchkula @ 8% of the cost of plot No. GH-92, Sector 20 : Panchkula. The AO ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 22 asked that why the addition of Rs. 44,71,550/- on this ground should not be made. The assessee replied that amount of Rs.44,71,550/- paid for conveyance deed to HUDA is revenue in nature as it does not result to any new capital asset. The AO found that the asset being capital in nature and the said expenditure was incurred on the said assets; therefore, the expenditure claimed was a capital expenditure. Thus, the addition of Rs.44,71.550/- was made to the total income.

27. Before the CIT(A), the counsel for the appellant submitted that the said plot was purchased by the assessee from HUDA which was allotted to the assessee for constructing the flats which were later on allotted to the employees working with the assessee. The plot was allotted by the way of allotment letter and based on the allotment letter, the assessee could avail loan facility from any bank / financial institutions. In order to mortgage the land with the bank / financial institutions to avail loan for the purpose of constructing flats on the said plot, it was necessary to execute the conveyance deed which in no way lead to enhancing the value of the plots or any addition thereto. It was the need of the time to create the mortgage on the said plot by way of execution of the conveyance deed. For executing the conveyance deed, the assessee incurred the stamp duty to the extent of Rs.44,71,550/- which expenditure was revenue in nature. However, the Ld. CIT(A) disallowed the claim of the assessee observing as under:- ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 23

4.2 1 have gone through the facts of the case and written submissions filed by the appellant. It is noted that the appellant claimed expenditure of Rs. 44,71,550/- on account of conveyance deed charges in respect of a plot purchase from HUDA for construction of flats. The appellants argument is that the expenditure did not create any new capital asset. However, the expenditure relates to plot of land which is a capital asset and the conveyance deed was made in order to create mortgage on the said plot. Therefore, the charges were related to the title of the land which was a capital asset and any expenditure related to title of capital asset was also in nature of capital expenditure. Here, the reliance is placed on the decision of Honble Supreme Court in the case of V Jaganmohan Rao Vs. CIT 75 ITR 373 where the Honble Apex Court held that where money is paid to perfect a title or as consideration for getting rid of a defect in the title or a threat of litigation, the payment would be capital payment and no revenue payment. Therefore, the Assessing officer was justified in holding the conveyance deed charges of Rs. 44,71,550/- as capital expenditure. Thus, this ground of appeal is dismissed.

28. We have considered the rival submissions. Admittedly, the contention of the assessee is that the conveyance deed charges were incurred for getting loan for construction of flats on the land. That conveyance deed charges did not in any manner lead to enhancing the value of the plot or any addition thereto. That the said flats were used for the employees of the assessee. No doubt, the conveyance deed / mortgage deed of the land was made by the assessee for taking loan for construction of flats. The said ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 24 expenditure incurred by the assessee can be safely considered towards the construction of flats. No doubt, the said flats are constructed for the employees of the assessee but that, in our view, is a capital expenditure having enduring benefit. The construction of flat over the land has added to the value and utility of the land, hence, the expenditure incurred by the assessee on the stamp duty for mortgage of the land cannot be said to be Revenue expenditure. In view of this, we do not find any infirmity in the order of the CIT(A) on this issue and the issue is decided against the assessee.

29. Ground No.3 taken by the assessee is regarding the disallowance of interest credited to the expenditure on the Agricultural Credit Stabilization Fund, which is identical to that of ground No.1 of the appeal for assessment year 2010-11 (ITA No. 1157/Chd/2014). In view of our findings given above, this issue is accordingly decided against the assessee. In the result the appeal of the assessee is dismissed. ITA No. 156/Chd/2016 (assessment year : 2012-13)

30. We find that both the grounds taken by the assessee in this appeal are identical to that have been taken by the assessee for assessment year 2010-11 in ITA No. 1157/Chd/2014.

31. In view of our findings given above, on similar lines, the ground No.1 of the appeal is dismissed and ground No.2 is restored to the file of the Assessing officer with identical directions. This appeal of the assessee is also treated as partly allowed ITA Nos.1157 & 1158/Chd/2014 & 154 to 156/Chd/2016/Chd/2016- Haryana State Coop Apex Bank Ltd., Chandigarh 25 Order pronounced in the Open Court on 05.06.2018. Sd/- Sd/- (B.R.R.KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 05.06.2018 Rkk Copy to: The Appellant The Respondent The CIT The CIT(A) The DR