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2016 (3) TMI 1364 - ITAT CHANDIGARHDisallowance u/s 14A - securities held as stock in trade - HELD THAT:- However in view of the clear finding given by the Karnataka High Court in the case of CCI Ltd [2012 (4) TMI 282 - KARNATAKA HIGH COURT] we found ourselves bound by the said judgement and hold that since the assessee bank is holding the securities as its stock in trade the disallowance under section 14A cannot be made. If the shares are held that as stock in trade and not as investment then even the disallowance under section under rule 8D will be Nil as rule 8D (2)(i) will be confined to only direct expenses for earning the tax exempt income. In the present case also since there are no direct expenses incurred in earning the dividend the disallowance will come to nil. - Decided in favour of assessee Addition of bad debts recovered - whether when bad debts were written off in any of the precious years, no claim of deduction was made or allowed u/s 36(1)(vii) - HELD THAT:- There is no denying the fact that the details of these amounts recovered were filed before the lower authorities. A copy of the same has also been filed before us. The assessee being a bank is eligible for deduction under section 36(1)(vii) of the Act. Further, the provisions of section 41(4) are also applicable on such debts that are recovered during the year which have been reduced from the income in any of the earlier years. In view of all these, we are inclined to send this issue back to the file of the Assessing Officer to verify with the details filed by the assessee whether any claim of any such nature, which reduces the income of the assessee with regard to these recoveries, if made in any of the earlier years the disallowance has to be sustained however in case no such benefit has been taken by the assessee out of these amounts recoverable in any of the earlier years the disallowance should be deleted. This ground of the assessee is allowed for statistical purposes. Disallowance as prior period expenses - appellant had not claimed any expenses relating to prior years in the computation of income - HELD THAT:- As it has been held in earlier year by the I.T.A.T. that looking into the regular system of accounting being followed by the assessee, an expenditure either has to be allowed or not to be allowed. In the present year also, both the Assessing Officer as well as the CIT (Appeals) has indulged in estimating the disallowance. Nowhere any of these authorities have been able to pinpoint which expenses are prior period in nature. A disallowance has not to be made just for the sake of making disallowance. We do not appreciate the way the issue has been handled by he lower authorities. The assessee has provided all details which were asked for by them. The order and dictate of I.T.A.T. were before them. Even then they did not bother to analyze the details filed by the assessee. In the earlier year, in the proceedings set aside by the I.T.A.T., the Assessing Officer restricted the disallowance only to stationery and miscellaneous expenses. This year also, same has been done on an estimated basis. This is not the right approach. Looking into the fact that the only dispute remaining is with regard to stationery and miscellaneous expenses, we are inclined to delete the disallowance made by the Assessing Officer and confirmed by the CIT (Appeals) in this regard. Income chargeable to tax being the increase in the credit balance outstanding in blocked accounts of customers (under NOSTRO balances) - Whether the said amount has not been written back in the profit and loss account as any remission of liability by the appellant bank? - HELD THAT:- The undisputed facts of the case are that there are certain unclaimed balances lying in the account of the assessee on account of NOSTRO Blocked accounts. This is also undisputed that the same nature of amount was taxed as income in the earlier year by the Assessing Officer which got confirmed till the level of ITAT. However we are in agreement with the argument of the assessee that there is a circular of the RBI No.RBI/2013-14/527, DBOD No. DEAF Cell.BC.101/30.01.002/2013-14, dated 21.3.2014, whereby these kind of unclaimed balances are to be transferred to a government account under the ‘Depositors Education and Awareness Fund’. This circular was not available to the I.T.A.T. while adjudicating the similar issue in assessment year 2007-08. In view of the same we are very clear that since no balance outstanding as on date is there in assessee’s account in respect of the said amount, the said amount cannot be considered as ‘income’ in nature. No addition on this account can be made. In view of this we direct the Assessing Officer to delete the addition made by him. The ground of assessee is allowed. Disallowance of depreciation on ATM - @ 60% - HELD THAT:- There are a number of judgments of various High Courts where the ATM is held to be computer and depreciation is allowed @ 60%. The grounds raised by the Department are dismissed.
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