Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (4) TMI 99 - ITAT DELHIDisallowance of deduction of premium written off on Govt. Securities - CIT(A) deleted the addition - Held that:- Assessee invests in Govt. Securities and other financial documents as other co-operative banks as per the guidelines of the RBI and so as per the RBI Master Circular No.DBOD.BP.BC.13/21.04.141/2012-13 dated July 2,2012, containing consolidated instructions/guidelines issued to banks till June 30, 2012, on matters relating to prudential norms for classification, valuation and operation of investment portfolio by banks, Investments classified under HTM (Held To Maturity) need not be marked to market and will be carried at acquisition cost, unless it is more than the face value, in which case the premium should be amortized over the period remaining to maturity. The book value of the security should continue to be reduced to the extent of the amount amortized during the relevant accounting period. And as held in the case of CIT Vs. Himachal Finance Corporation [2008 (5) TMI 633 - HIMACHAL PRADESH] and Indian Rayon and Industries Ltd. [2010 (3) TMI 299 - BOMBAY HIGH COURT] it was held that discount on bonds and premiums on redemptions of debentures are allowable as expense proportionately spread over the period of security. So therefore we are of the considered view that this issue needs to be remanded back to the file of the AO to verify whether the assessee has claimed the expenses proportionately i.e. the premium amount which is in addition to the face value proportionately spread over the life of security and if it is so computed and claimed it be allowed. - Decided in favour of revenue statistical purposes. Provision for bad & doubtful debts - Addition under the head deduction u/s 36(1)(viia) - CIT(A) deleted the addition - Held that:- assessee has made the provisions of ₹ 3,66,33,543/- for bad and doubtful debts in its Profit & Loss A/c but by mistake while submitting the return the same was taken as ₹ 1,35,28,498/- instead of ₹ 3,66,33,543/-. We find that section 36(1)(viia) was amended by Finance Act, 2007, with effect from 01.04.2007, by which the words “or a cooperative bank other than a primary agricultural credit society or a primary cooperative agricultural and rural development bank” were inserted. This amendment is applicable to assessment year 2007-08 onwards and for the year under consideration. Accordingly, it applies to the case of the assessee for this year. We find that this issue has not been adjudicated on merits by the AO. Therefore, we think it fit to restore the matter back to the file of the AO to adjudicate the admissibility of the amount u/s 36(1)(viia) on merits - Decided in favour of revenue statistical purposes. Accrued interest on NPA - CIT(A) deleted the addition - Held that:- We find considerable cogency in the finding of the Ld. CIT(A) regarding the notional interest income that the same has not been received by the assessee and as such the AO was not justified to make the addition on the basis of notional interest because of the mercantile system of accounting only and accordingly, the addition was rightly deleted by the CIT(A). In the background of the aforesaid discussions and precedent relied upon, we are of the considered view that no interference is called for in the well reasoned order passed by the Ld. CIT(A), hence, we uphold the same by rejecting this ground of appeal raised by the Revenue in the aforesaid manner. - Decided against revenue.
|