Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (4) TMI 770 - AT - Income TaxAddition on broken period interest - Held that:- The conclusion arrived at by the assessing officer that the HTM category of securities are investments and cannot be considered as stock in trade is also found to be not the correct view. The Hon’ble AP High Court in case of SBH (1984 (7) TMI 66 - ANDHRA PRADESH High Court) has held that the amount required to be kept in India as per section 24 of the banking Regulation Act, 1949 in the form of cash, gold and encumbered securities is part of stock in trade of the assessee. Hence, it cannot be held that HTM category of securities is not stock in trade of the assessee. In aforesaid view of the matter, we uphold the conclusion of the CIT (A) to the effect that broken period interest is an allowable deduction. Accordingly, we dismiss the ground raised by the revenue on this issue. Disallowance of amortisation of government securities - Held that:- After perusing the order of the CIT (A), we do not find any infirmity in his view. As has been held by us in the earlier part of this order (supra), HTM category of securities being stock in trade, the assessee is entitled to claim amortization. Hence, the order passed by the CIT (A) is upheld and the ground raised by the revenue is dismissed. Addition being 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. In aforesaid view of the matter, we do not find any infirmity in the order of the CIT (A) in allowing the expenditure claimed by the assessee on account of staff fraud. Hence, this ground raised by the Revenue is dismissed. Accrued interest on non performing assets (NPAs) - Held that:- Assessing Officer has not denied the fact that the amount represents unrealized interest on NPA. Admittedly, so far as interest on NPA is concerned the assessee was recognizing it as per the prudential norms for income recognition issued by the RBI for recognition and asset classification and accordingly has not included the interest on NPA as its income. In our view, such recognition of income by the assessee is in accordance with law and as per accepted accounting norms. When the recovery of the principal amount itself has become doubtful, it cannot be said that interest on such amount has accrued as income to the assessee. Disallowance of provision made for gratuity - Held that:- The assessee has submitted certain documents in support of his claim that the group gratuity scheme of the SBI Life Insurance Company is an approved gratuity fund and it is also a fact on record that the payment to the said fund was made before the due date of submission of return of income for the relevant assessment year. In aforesaid view of the matter, assessee’s claim is required to be examined. Therefore, considering the fact that the evidence produced by the assessee were not considered by the revenue authorities while disallowing the claim of the assessee, we remit the matter back to the file of the assessing officer who shall decide the issue afresh after taking into account all the evidences available on record and further evidences that may be produced by the assessee before him. We direct the assessing officer to afford a reasonable opportunity of being heard to the assessee before deciding the issue. Deduction u/s 36(1)(viia) - Held that:- Keeping in view the ratio laid down by the Hon’ble Supreme Court in case of Goetz India Ltd. (2006 (3) TMI 75 - SUPREME Court ) we direct the assessing officer to examine the claim of deduction made by the assessee u/s 36(1)(viia) of the Act and decide the same in accordance with law after considering all the materials and evidences that may be produced by the assessee Revision u/s 263 - to bring to tax an amount being the provision made towards standard assets - Held that:- Standard assets cannot be equated with bad and doubtful debts which in other words is known as NPAs. CIT in our opinion was legally correct in coming to a conclusion that the assessment order passed u/s 143(3) of the Act is erroneous and prejudicial to the interest of revenue as the assessing officer has allowed the deduction claimed towards provision made on standard assets without proper application of mind. So far as the decision of Hon’ble Supreme Court in case of Catholic Syrian Bank Ltd. Vs. CIT (2012 (2) TMI 262 - SUPREME COURT OF INDIA ) is concerned the same is not applicable to the facts of the instant case. The allowance of deduction on standard assets was not an issue for consideration before the Hon’ble Supreme Court. We uphold the order of the CIT on this issue and dismiss the appeal.
|