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2013 (8) TMI 829 - AT - Income TaxDisallowance of interest on securities - CIT deleted disallowance made by A.O. - Whether in the case of Government securities, interest accrues on day to day basis or only on the coupon dates - Held that:- assessee cannot prepare the computation of its income for income tax purposes in a manner different from the method under which it keeps accounts - Assessee cannot be prevented from urging in the return that the interest on govt. securities accrued only on the specified coupon dates notwithstanding that credit has been taken in the profit & loss account for the interest on day to day basis - interest accrues only on the specified coupon dates and not on day to day basis - Following decision of Indusind Bank Limited Versus The Addl. CIT, Range 2(3), Mumbai. [2011 (1) TMI 1244 - ITAT MUMBAI] - Decided in favour 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] and M/s INDUSIND BANK LTD. Versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2(3), MUMBAI [2011 (1) TMI 1244 - ITAT MUMBAI] - Decided in favour of assessee. 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 - Held that:- where a forward contract is entered into by the assessee to sell the foreign currency at an agreed price at a future date falling beyond the last date of accounting period, the loss is incurred to the assessee on account of evaluation of the contract on the last date of the accounting period i.e. before the date of maturity of the forward contract - Following decision of DCIT vs. Bank of Bahrain and Kuwait (2010 (8) TMI 578 - ITAT, MUMBAI) and M/s INDUSIND BANK LTD. Versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2(3), MUMBAI [2011 (1) TMI 1244] - Decided in favour of assessee.
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