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2019 (6) TMI 1425 - AT - Income TaxDisallowance on account of Business Promotion Members Gift, Scholarship expenses and payment to legal heirs of the members - allowable business expenditure - HELD THAT:- As decided in own case [2018 (5) TMI 1867 - ITAT AHMEDABAD] expenditure was incurred for the purpose of business to maintain goodwill and continuity of business being provided by important members. It was pointed out that these members had provided for nearly 98% of the bank's business and the expenditure was marginal as compared to the interest realised on advances made to such members by the bank and the amount of deposits made by the members with the bank. The Tribunal held that merely because there was no legal obligation to incur such expenditure would not mean that the same was not allowable business expenditure if it could be pointed out that the expenditure incurred in preserving the business connections and goodwill of business expenditure incurred in preserving the business connections and goodwill of business. Disallowance on account of Amortization of Premium - HELD THAT:- As decided in own case [2018 (5) TMI 1867 - ITAT AHMEDABAD] the allowability of amortized expenses on premium on Government Securities has been provided u/s. 36(1)(ii) of the provisions have been clarified and explained by CBDT, New Delhi vide Instruction No. 17 of 2008 dated 26.11.2008. As per this clarification, investments of banks classified under HTM (Held to Maturity) category need not be marked to market and are carried at acquisition cost unless these are more than the face value, in which case, the premium should be amortized over the period remaining to maturity. On the basis of this Instruction, different Tribunals, as mentioned above by assessee, have allowed the amortized expenditure. The AO has ignored the provisions of Instruction which is binding on him while discussing the issue and disallowing the expenditure. Since, the Instructions and Circulars are binding in nature on AOs and different Tribunals have given decisions against the revenue, respectfully following the same, ground of appeal of assessee is allowed and addition made by AO is deleted. Disallowance on account of interest accrued on non performing assets u/s. 36(1)(ii) - HELD THAT:- Interest accrued on NPA accounts to the tune of ₹ 41,18,29,397/- which was shown as overdue interest reserve in the balance sheet of the appellant before us cannot be taxed since the same was not possible to be recovered. The non-performing asset is an asset in respect of which interest has remained unpaid and has become past due. Once a particular asset is shown as NPA then the assumption would be it is not yielding any revenue and even the principle repayment is doubtful. Since it is not yielding any revenue the same cannot be brought to tax. We, therefore, find no infirmity in the order passed by the Learned CIT(A) so as to warrant interference. Thus revenue’s appeal is found to be devoid any merit and hence dismissed. - Decided against revenue.
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