Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (2) TMI 988 - AT - Income TaxExpenditure on purchase of software disallowed - Held that:- Respectfully following the decisions of the Hon'ble High Court of Karnataka in the case of IBM India Ltd. (2013 (10) TMI 1225 - KARNATAKA HIGH COURT) and the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2001-02 we hold that the expenditure incurred by the assessee for purchase of application software is revenue in nature. - Decided in favour of assessee. Provision for expenses related to HRD, Retail, Consumer product assets and Retail Deposit Operations - AO disallowed claim as these are provisions and had not crystallized or arisen during the course of the year - Held that:- It is settled principle that if expenditure is crystallized, then even if the payment is due at a later date, it is allowable expenditure. It is seen from the submissions of the assessee in this regard that, though the assessee has categorized these expenses as provisions, the same represents expenditure actually crystallized and the amounts are eligible for being claimed as deduction in view of the fact that the assessee is following the Mercantile System of Accounting.These expenses appear to be more in the nature of write off. Thus we are satisfied that these amounts are allowable expenditure while computing the assessee's total income - Decided in favour of assessee. Non-applicability of Section 115JB - whether provisions of MAT are not applicable to the assessee since it is a banking company - Held that:- As decided in assessee's own case [2015 (2) TMI 892 - ITAT BANGALORE] for Assessment Year 2002- 03, provisions of section 115JB of the Act are not applicable to the assessee which is a banking company. - Decided in favour of assessee. Disallowance of provision for expenses u/s. 115JB - Held that:- Once the provisions of section 115JB of the Act are not applicable to the assessee, which is a banking company, consequently, the disallowance of provisions for expenses made by the authorities below while computing the ‘book profits’ under Section 115JB of the Act also fails.- Decided in favour of assessee. Broken Period Interest - CIT(A) held that the broken period interest accrued but not received should not be brought to tax until the receipt thereof - Held that:- Respectfully following a decision of the Hon'ble Karnataka High Court in the case of Karnataka Bank Ltd. (2014 (11) TMI 221 - KARNATAKA HIGH COURT), we hold that the broken period interest does not constitute income in the year under consideration as it has not become due and payable / receivable as per the provisions of the Act.- Decided in favour of assessee. Write off of Non-Convertible Debentures - CIT (A) upheld the claim of the assessee that the amount represents write off and allowed the same as deduction - Held that:- Co-ordinate bench of this Tribunal, in the assessee's own case for Assessment Year 2002-03 has held that the loss in question is incidental to the business of the assessee and had to be allowed as a diminution in the value of stock-in-trade. We also find that the learned CIT (Appeals) in the impugned order has only mentioned the alternate submissions of the assessee, that since the said debentures were treated as investments in the ‘available for sale’ category, any diminution in the value of such investment is eligible for deduction. The learned CIT (Appeals) has not rendered any finding that the alternate submissions of the assessee is acceptable or otherwise. - Decided in favour of assessee. Disallowance of operational losses - CIT(A) held that these amounts are eligible for deduction, holding them to be business losses arising out of technical defaults incurred by the assessee in day-to-day revenue earning activity. - Held that:- these amounts represent operational losses on account of debit balance lying in the accounts where customers accounts were overdrawn and lying in such accounts for a period of more than one year. The discrepancies arose due to delayed posting of offline ATM transactions, reversals for suspect ATM transactions which were subsequently debited back from customers accounts, offline ATM transactions not debited to customers accounts done subsequently and credits given to wrong ATM claims which were debited back, etc. Evidently, these are operational mistakes as admitted by the Assessing Officer. After having held these amounts as having arisen out of operational mistakes, the Assessing Officer was wrong in holding these to be capital in nature. As these amounts have been written off as irrecoverable, we concur with the view of the learned CIT (Appeals) that these are eligible for deduction. - Decided in favour of assessee. Mark-to-Market Losses - Held that:- In the case on hand a contract has been concluded and a liability has crystallized. In this factual matrix, from the wordings of the Instruction, it follows that the loss arising out of the forward contract is not notional. In such a case, the CBDT Instruction requires the Assessing Officer to examine whether such a loss is on account of a speculative transaction as contemplated in section 43(5) of the Act. As discussed earlier, in the case on hand, there has been an existing contract with a binding obligation accrued against the assessee when it entered into derivative contracts. Hence, transaction in question cannot be called as a speculative transaction. Thus we hold that the assessee's claim in respect of MTM losses is allowable as revenue expenditure. - Decided in favour of assessee. Diminution in value of investment under AFS / HFT Categories - Held that:- We concur with the decision of the learned CIT (Appeals) in allowing the assessee's claim of diminution in the value of investments under the AFS/HFT categories as relying on assessee's own case for the A.Y. 2007-08 - Decided in favour of assessee. Insurance Premia for Housing Loan - Held that:- he expenditure incurred on insurance premium on housing loan are revenue in nature and is an allowable deduction. It is not the case of the Assessing Officer that these expenses are not for the purposes of the assessee's business or that they are capital in nature. These expenses are related to the housing products which are very much a part of the assessee's business activities and the payment of insurance premium on the housing products is also not capital in nature. Once the expenditure is accepted to be revenue in nature and incurred for the purposes of business, then it is allowable in the year in which it is incurred. There is no concept of deferred revenue expenditure in the scheme of the Act and unless otherwise expressly provided, the revenue expenditure is to be allowed in full, in the year in which it is incurred. - Decided in favour of assessee.
|