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2013 (4) TMI 751 - AT - Income TaxDepreciation on building including land disallowed as relying of assessee's own case for assessment year 1994-95 Disallowance of bad debts written off relating to rural branches - Held that:- Remand the issue back to the Assessing Officer to decide it afresh in accordance with the law laid down by the Hon’ble Supreme Court of India in the case of Catholic Syrian Bank Ltd [2012 (2) TMI 262 - SUPREME COURT OF INDIA] Restriction of claim in respect of deduction under section 36(1)(viia) to the extent of provision made in the books - Held that:- Tthis issue has already been decided against the assessee bank in the case of Bharat overseas Bank Ltd. [2012 (11) TMI 505 - ITAT CHENNAI]. Disallowance under section 14A based on Rule 8D - Held that:- Assessee’s claim is baseless, as many of such investments were continuing from preceding years and the Tribunal has already confirmed the disallowance under section 14A as the assessee has incurred expenditure to earn the income. From the assessment year 2008-09 the provisions of Rule 8D have become applicable therefore, it is mandatory to compute disallowance under section 14A in accordance with computation provided under Rule 8D and there is no scope to make modifications as it is a deeming provision to make a fair estimate - Decided against assessee Allowablility of provision for leave encashment - Held that:- he provision made by the appellant-company for meeting the liability incurred by it under the leave encashment scheme proportionate with the entitlement earned by employees of the company, inclusive of the officers and the staff, subject to the ceiling on accumulation as applicable on the relevant date, is entitled to deduction out of the gross receipts for the accounting year during which the provision is made for the liability. The liability is not a contingent liability - Decided in favour of assessee Depreciation on UPS @ 60% allowed. Deprecation on fixed assets taken over from Bank of Tamilnadu Ltd - Held that:- In the assessment year 1996-97 Tribunal remitted the issue back to the Assessing Officer as provisions of section 2(1B) were not taken into consideration by Assessing Officer while deciding the issue. In the instant case also the Assessing Officer has failed to consider the issue in the light of the provisions of section 2(1B). Thus we remit the issue back to the Assessing Officer for deciding it afresh on the similar directions as given by the Tribunal above. Disallowance of contribution to staff welfare fund - Held that:- This ground of appeal of the Revenue has already been adjudicated against the assessee for the assessment year 2002-03 wherein held that the claim of the assessee based upon the provision of section 43B has no merit. Before the provisions of section 43B can be applicable, deduction must otherwise be allowable under the Act. In view of the above discussion, we are constrained to hold that the contribution towards staff welfare fund is not allowable expenditure. Loss on revaluation of investments - Held that:- As in assessee's own case for AY 1996-97 assessee is entitled to change the method of valuation of Government securities to market value from cost and claim depreciation on the difference in the diminution value. The Tribunal also rightly pointed out the above ruling and held that the securities are trading assets of the bank and the loss arising on its sale is an allowable deduction. The loss on sale of securities is a revenue loss considering that the securities are trading assets and not investments. Hence, this question of law is answered in favour of the assessee and against the revenue. Disallowance of loss on revaluation of derivative contracts - Held that: Direct the Assessing Officer to allow the provision as reflecting in substance the loss arising on account of valuation of the closing stock. Recovery in respect of bad debts written off which has not been allowed as deduction in the earlier years - Held that:- Commissioner of Income Tax (Appeals) has only remitted the issue back to Assessing Officer to verify whether the bad debts written off has earlier been allowed as deduction or not. If earlier, it has not been allowed as deduction at the time of write off, the same be allowed now. There is no error in the findings of Commissioner of Income Tax (Appeals). Therefore, this ground of appeal of the Revenue is dismissed. Disallowance of provision towards leave travel allowance - Held that:- We are in concurrence with the findings of the CIT(A) that the expenditure on leave travel allowance to the staff is not prior period expenditure. The expenditure has been claimed on actual valuation. This ground of appeal of the Revenue is dismissed. Disallowance of the claim of debenture redemption reserve - Held that:- Assessee has taken over assets and liabilities of the Bharat Overseas Bank Ltd.. In the process of amalgamation, all the reserves and provisions created by the erstwhile Bharat Overseas Bank Ltd. were also taken over by the assessee bank. As pointed out by the AR, the reserve has been created after preparation of profits already charged to tax. The assessee bank steps into the shoes of the amalgamating company. It shall be deemed that reserve has been created out of profits charged to tax, taxing the same amount would result in double taxation which would be unfair. We agree with the findings of the Commissioner of Income Tax (Appeals) on the issue and dismiss this ground of appeal of the Revenue. Grant of double taxation relief - DTAA - Held that:- CIT(Appeals) hyper technically held that the only job of the Assessing Officer was to see whether there is a DTAA between India and Thailand. We are unable to understand the above conclusion made by the learned CIT(Appeals) that the job of the Assessing Officer is just to see whether there is a DTAA between India and Thailand. If there is a DTAA, the Assessing Officer has to allow the relief claimed by the assessee. That being so, in our opinion, the Tribunal need not refer it to the Assessing Officer as well just to see and pass an order. The Tribunal clearly directed the Assessing Officer to enquire into the existence of a DTAA between India and Bangkok. "Enquiry" means to investigate and apply the same. In our opinion, the Assessing Officer has rightly investigated and applied the same and decided the issue. We therefore hold that the finding given by the learned CIT(Appeals) is not correct. Accordingly, we reverse the order passed by the learned CIT(Appeals) on this count and uphold the order of the Assessing Officer. Applicability of provisions of section 115JB - Held that:- In the appeal of the assessee for the assessment year 2005-06 held in view of amendment to the provisions of section 115JB by the Finance Act, 2012, the provisions of section 115JB are applicable to the banks as well from assessment year 2013-14
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