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2012 (12) TMI 416 - AT - Income TaxAssessment of interest on securities, allowability of depreciation on leased assets, disallowance of entertainment expenses, disallowance of bad debt and disallowance of loss on unmatured foreign exchange contracts. - One of the due dates fell after the end of the previous year i.e. after 31st March. The issue is whether any income on account of interest had accrued to the assessee during the broken period from the previous due date till 31st March of the previous year which was not the due date. - held that:- the issue is fully covered by the judgment of Hon'ble High Court of Bombay in case of Director (International Taxation) vs. Credit Suisse First Boston (Cyprus) Ltd. (2012 (8) TMI 17 - BOMBAY HIGH COURT). - interest from securities for the broken period till the end of the previous year is not assessable in case of the assessee. - Decided in favor of assessee Depreciation on leased assets - held that:- The Special Bench has since decided the issue in M/s.IndusInd Bank Limited Versus The Addl.Commissioner of Income-tax [2012 (3) TMI 212 - ITAT MUMBAI] in which it has been held that it was a case of mere advancing of loan by the assessee to Indo Gulf Fertilizers & Chemical Corpn. and there was no genuine leasing of the boiler. The Special Bench therefore held that no depreciation was allowable in case of the assessee lessor. - Decided against the assessee. Disallowance of entertainment expenses on estimate basis - held that:- from assessment year 1988-89 there is no provision for disallowance of entertainment expenses. The expenses incurred by the assessee bank on employees during the official visits and in connection with clients and business visitors have to be allowed as incurred wholly and exclusively for business purposes. - Decided in favor of assessee. Loss amounting to Rs.2,37,82,608/- on unmatured foreign exchange contracts - held that:- The assessee had made the claim as per the method of accounting and as per FEDAI guidelines which is allowable. - Decided in favor of assessee. Reduction of claim of bad debt under section 36(1)(vii) - held that:- In the first place, the ad hoc deduction under s. 36(1)(viia) (b) being the last item on the computation of taxable business profits, it cannot be taken into account at the time of allowing deduction under s 36(1)(vii), and, to that extent, the actual deduction attributable to bad debts [i.e. 36(1)(vii) plus 36)(1)(vii)(b)] will indeed be more than the actual bad debts in that year However, since the provision so allowed under s 36(1)(viia)(b) is be taken into account while allowing deduction for actual bad debts in the subsequent year, the effect of excess deduction, if any, will be squared up in that subsequent year. Secondly, a view seems perfectly acceptable that the provision for bad debts allowable under s. 36(1)(viia)(b) being inherently attributable to the debts outstanding at the end of the year, provision allowable as such is against future bad debts out of debts outstanding at the year end, and, therefore, It need not he mixed up with actual bad debts incurred during the year. - AO to compute deduction allowable on account of bad debt in line with the decision of the Tribunal in case of Oman International Bank, SAOG vs. DCIT [2003 (11) TMI 286 - ITAT BOMBAY-H]
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