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2017 (5) TMI 1695 - AT - Income TaxAddition as broken period interest - HELD THAT:- The Tribunal relied on the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT], which in turn had relied on the ratio laid down by the Hon’ble Bombay High Court in American Express International Banking Corporation Vs. CIT [2002 (9) TMI 96 - BOMBAY HIGH COURT], which in turn, had distinguished the ratio laid down by the Hon'ble Supreme Court in Vijaya Bank Vs. CIT [1990 (9) TMI 5 - SUPREME COURT] and the Hon’ble High Court of Rajasthan in CIT Vs. Bank of Rajasthan Ltd. [2008 (3) TMI 325 - RAJASTHAN HIGH COURT] and had held that broken period interest is allowable as deduction. Following the same parity of reasoning, we hold that the assessee is entitled to the claim of broken period interest of ₹ 16,97,027/-. The ground of appeal No.1 raised by the assessee is thus, allowed. Disallowance of payment made on account of voluntary retirement of the employees - HELD THAT:- The issue arising before us is identical to the issue before the Tribunal in The Satara District Central Co.Op Bank Ltd. Vs. DCIT [2014 (12) TMI 1217 - ITAT PUNE] and following the same parity of reasoning, we hold that the ex-gratia payment made to the retiring employees in recognition of their services was profits in lieu of salary and is duly allowable as expenditure under section 37(1). The ground of appeal No.2 raised by the assessee is thus, allowed. Nature of receipts - refund of municipal tax receipts - revenue or capital receipt - HELD THAT:- Assessee had claimed the deduction on account of municipal taxes on actual payment basis, in the earlier years, since the assessee was following mercantile system of accounting. Once the refund of such municipal taxes has been received by the assessee in the year under consideration, the same is to be added as income in the hands of assessee. Accordingly, the ground of appeal No.3 raised by the assessee is dismissed. Addition on account of prior period expenses - HELD THAT:- The said expenses were on account of advertisement expenditure relating to assessment year 2010-11. The assessee claimed that the expenditure was treated as accrued as and when the bills were submitted to the bank and were sanctioned for payment. AO did not allow the said expenditure and the CIT(A) upheld the same. We find merit in the plea of the assessee that where the bill for prior expenditure was received by the assessee during the year under consideration and hence, the same merits to be allowed as deduction. We direct so. The ground of appeal No.4 raised by the assessee is thus, allowed. The grounds of appeal raised by the assessee are thus, partly allowed.
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