2017 (1) TMI 1404 - ITAT HYDERABAD

Disallowance of gratuity payment - Held that:- From a bare reading of Section 36(l)(v) of the Act, it is manifest that the real intention behind the provision is that the employer should not have any control over the funds of the irrevocable trust created exclusively for the benefit of the employees. In the instant case, it is evident from the findings recorded by the Commissioner and affirmed by the Tribunal that the assessee had absolutely no control over the fund created by the LIC for the benefit of the employees of the assessee and further all the contribution made by the assessee in the said fund ultimately came back to the Textool Employees Gratuity Fund, approved by the Commissioner with effect from the following previous year. Thus, the conditions stipulated in Section 36(1)(v) of the Act were satisfied. - Decided in favour of assessee

Addition towards “provision for standard assets” under the head “provisions and contingencies” - Held that:- Having regard to the rival contentions and material on record, we find that this issue is already decided by the coordinate bench of this tribunal in the earlier A.Ys against the assessee and respectfully following the same, we confirm the order of the CIT(A) on this issue.

Loss on valuation of mutual funds - Held that:- CIT(A) has followed his own order for the A.Y 2009-10 for upholding the disallowance. We find that this issue had come up for consideration before the coordinate bench of this tribunal for the A.Y 2009-10 and the Tribunal had remanded the issue to the file of the A.O with a direction to reconsider the issue in accordance with the decision of the Hon'ble Apex Court in the cases of the Catholic Syrian Bank (2012 (2) TMI 262 - SUPREME COURT OF INDIA) and Vijaya Bank reported in [2010 (4) TMI 46 - SUPREME COURT ]. Respectfully following the same, we remand this issue also to the file of the A.O for reconsideration in accordance with the directions as above.

Disallowance of claim u/s 36(1)(viia)- Held that:- This issue is covered against the assessee by the decision of the coordinate bench of this tribunal in the assessee’s own case for the A.Y. 2008-09

Disallowance of salary arrears - Held that:- We deem it fit and proper to admit the additional ground of appeal and remit it to file of the A.O for reconsideration in accordance with law and the judicial pronouncements on the issue. AO is therefore to directed to decide the same afresh after giving the assessee a fair opportunity of hearing

Disallowance of broken period interest - Held that:- The issue is covered in favour of the assessee by the decisions of Mumbai High Court in case of American Express International Banking Corporation Vs CIT (2002 (9) TMI 96 - BOMBAY High Court) wherein it has been held that the broken period interest is an allowable deduction.

Disallowance of provision for staff frauds - Held that:- Circular No.35 dated 24.11.1965 of CBDT also clarifies that the loss to embezzlement by an employee is an allowable expenditure u/s 37 of the Act. No infirmity in the order in allowing the expenditure claimed by the assessee on account of staff fraud.

Interest income on NPAs - Held that:- Various other High Courts in a number of cases and the respective High Courts have held that such income would accrue only when it is actually received