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2016 (9) TMI 1465 - AT - Income TaxProvision for staff gratuity - Held that:- This amount is debited to profit & loss account but the same is accumulated under the head “reserve for gratuity fund” which shows that the actual payment was not made by the assessee. CIT(A) by following the case of District Cooperative Central Bank, Eluru, after considering the details filed by the assessee, he gave a categorical finding that payment made by the assessee towards unproved gratuity fund is not an allowable expenditure. As the assessee has submitted before us that even provision is made for the staff gratuity it is an allowable expenditure. There is no merit in the argument for the assessee for the reason that simply making a provision will not leads to allowable expenditure, unless payment is made. Thus, this ground of appeal raised by the assessee is dismissed. Provision for standard assets - Held that:- A.O. disallowed by observing that the nature of contingent liability do not constitute an expenditure. Assessee carried matter in appeal before the CIT(A). CIT(A) confirmed the order of the A.O. by observing that the assessee is provided only provision for standard assets, but it is not the case of the assessee that any of these assets have become bad or non-recoverable. It is also not the case that any of these loans/assets are written off and the provision claimed by the assessee is not allowable deduction as per the of the Income Tax Act, 1961. Before us, the assessee has submitted that the claim of the assessee has to be allowed. We find no merit in the argument of the Ld. Counsel for the assessee for the simple reason that the assessee has made a provision for standard assets not on the non-performing assets. It is a mere provision. We find no reason to interfere with the order passed by the Ld. CIT(A). This ground of appeal raised by the assessee is dismissed. Loss on account of Bobbili branch merger - Held that:- The same cannot be allowed in the hands of the assessee’s case. CIT(A) correctly by considering the provisions of the Act disallowed the claim made by the assessee. So far as RBI guidelines with regard to the amortization of losses is concerned, in view of the specific provision provided by section 72AB of the Act, in our opinion, RBI guidelines cannot prevail over the Income Tax Act. As observed that business losses and unabsorbed depreciation of amalgamating co-operative bank i.e. Bobbili Co-operative bank can be set off against the income of successor co-operative bank i.e. amalgamated co-operative bank (assessee) if the amalgamation is within the meaning of section 72AB. In the present case, the amalgamating company i.e. Bobbili Co-operative bank not filed return of income as required u/s 72AB of the Act. Therefore, the claim of the assessee cannot be allowed. We find that the Ld. CIT(A) has correctly decided the issue and disallowed the claim of the assessee. In this case, the assessee has not paid any amount to amalgamating company. The assessee has only taken losses of amalgamating company i.e. Bobbili Co-operative bank. Therefore, the assessee has not acquired any goodwill. CIT(A) by considering the entire facts of the case has passed a detailed order by considering the provisions of law. In so far as case laws relied upon by the Ld. Counsel for the assessee particularly in the case of Cosmos Co-operative Bank Limited (2014 (1) TMI 1696 - ITAT PUNE) is entirely different facts and circumstances, therefore, we find no application to the facts of the present case. In so far as other case laws relied for the assessee also decided in a different facts and circumstances and therefore, we find no application to the facts of the present case. We find no reason to interfere with the order passed by the CIT(A). This ground of appeal raised by the assessee is dismissed. Amortization of premium on Government securities - Held that:- It is only a provision i.e. contingent liability was made which may become payable at future date, therefore, the provisions are not allowable u/s 36 & 37 of the Act, the same is disallowed. On appeal, the Ld. CIT(A) confirmed the order of the A.O. On appeal, the assessee has submitted that this is an ascertained liability under the provision and the amount is already paid. We find this needs verification, therefore, we set aside the order passed by the CIT(A) and remit the matter back to the A.O. Provision for staff gratuity - Held that:- A.O. has observed that the assessee has claimed ₹ 60 lakhs as a provision for staff gratuity debited the same in the profit & loss account. The A.O. has asked the assessee to furnish the details. The A.O. after considering the details submitted by the assessee, he has observed that as per the information available on record, it is not clear whether the assessee is contributing to the recognised gratuity fund or not, accordingly, the claim of the assessee of ₹ 60 lakhs was disallowed. On appeal, the CIT(A) by following the assessee’s own case for 2008-09, the order of the A.O. is confirmed and directed the A.O. to allow the deduction of the actual amount of gratuity paid during the year. TDS u/s 194A - Disallowance u/s 40(a)(ia) - TDS on the interest payment exceeding ₹ 10,000/-, in view of the specific provision contained in section 194A(3)(i)(b) - Held that:- When the assessee filed a rectification petition u/s 154 of the Act dated 4.12.2013, CIT(A) has corrected the order by considering the assessment year 2007-08 and relief was granted. Therefore, we find that this ground of appeal raised by the assessee has no merit and the same is dismissed.
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