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2014 (2) TMI 272 - AT - Income TaxAssessment of interest income on securities Held that:- As per terms of securities, the interest became payable to the holder of security and only on the due dates - the interest is not payable to the holder of security on a date other than the one stipulated in the instrument - The right to receive interest on the securities was vested in the assessee only on the due dates mentioned in the securities - income on account of interest of securities for the broken period till the end of the previous year had not accrued to the assessee - The decision in Director (International Taxation) vs. Credit Swisse First Boston (Cyprus) Ltd. [2012 (8) TMI 17 - BOMBAY HIGH COURT] followed - interest from securities for the broken period till the end of the previous year is not assessable in case of the assessee order of the CIT(A) set aside and the additions made for noth the years are deleted. Disallowance of depreciation on the assets leased Held that:- It was a case of mere advancing of loan by the assessee to Indo Gulf Fertilizers & Chemical Corporation and there was no genuine leasing of the boiler - no depreciation was allowable in case of the assessee lessor the order of the CIT(A) upheld. Disallowance u/s 37(1) of the Act - Entertainment expenditure 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 - There is no case made out by the revenue that expenses are not properly vouched - CIT(A) had agreed that expenses were allowable but has restricted the same to 75% when there is no limit provided under the Act order of the CIT(A) set aside and the claim of the assessee is allowed. Disallowance of loss on unmatured foreign exchange contracts Held that:- The claim as per the method of accounting is allowed and as per FEDAI guidelines which is allowable the order of CIT(A) set aside and the claim of the assessee allowed. Reduction of claim of bad debt u/s 36(1)(vii) of the Act Held that:- The decision in Oman International Bank, SAOG vs. DCIT [2012 (12) TMI 414 - ITAT MUMBAI] followed - The deduction s. 36(1)(vii) is only supplemental in nature inasmuch as it comes to the play only when, and is admissible to the extent, the provision for bad and doubtful debts allowed u/s 36(1)(viia)(b) falls short of the actual bad debts written off as irrecoverable thus, the AO is directed to allow deduction u/s 36(1)(vii), without taking into account the admissible deduction u/s 36(1) (viia)(b) for the relevant previous year which can only be taken into account for computing deduction u/s 36(1)(vii) for subsequent year(s) Decided partly in favour of Assessee.
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