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2018 (9) TMI 1620 - AT - Income TaxAddition on account of interest on reverse fund - Held that:- The assessee has made a provision in the profit & loss account as ‘interest on reserve fund’. This provision is made by the assessee on notional basis and not accrued liability, therefore, Assessing Officer has made addition on this count and the ld. CIT(A) confirmed the same on the ground that it is a provision on notional basis and does not ascertain to be accrued liability. We find no infirmity in the order passed by the ld. CIT(A). Thus, this ground of appeal raised by the assessee is dismissed. Addition on account of interest on deficit cover fund - Held that:- As find that it is a provision made by the assessee on notional basis and it cannot be considered as an accrued liability. Mere provision made in the accounts would not be eligible for deduction. We find that ld. CIT(A) correctly confirmed the order of the Assessing Officer. Thus, this ground of appeal raised by the assessee is dismissed. Addition of claim towards staff gratuity - Held that:- In the instant case the assessee has made the payments to the LIC towards group gratuity scheme directly in approved schemes. The assessee has also obtained the policy in favour of the bank. The assessee has no control over the funds contributed to LIC towards the gratuity. The assessee is receiving the gratuity payment directly from the LIC of India as per the scheme which is paid to the employee on happening of the event i. e. retirement or death or resignation. We hold that the assessee is entitled for the deduction for payment of gratuity to LIC and accordingly, we set aside the order of the lower authorities and allow the appeal of the assessee. Amortization loss on account of merger of Palakol Cooperative Urban Bank - Held that:- It is very clear that assessee company being an Indian company can only make a claim under section 35DD of the Act. The Income Tax Act, 1961 has defined what is an Indian company, as per section 2(26), Indian company means a company formed and registered under the companies Act 1956. In the present case, the assessee is not an Indian company and not registered under the Companies Act, 1956. It is only a Co-operative bank, therefore, assessee is not eligible to make claim under section 35DD of the Act. The main condition which needs to be fulfilled is that the said loss should have been allowable in the hands of Palakol Bank (Amalgamated bank) as per the provisions of the Act. The entitlement as to allowance of such loss in the hands of Palakollu Bank or its eligibility otherwise to be carried forward under the provisions of section 72 was not proved. Therefore, once this condition is not fulfilled the acquirer bank (assessee) is not eligible to carry forward the said losses/unabsorbed depreciation as per the provisions of section 72AB of the Act. We find that the Assessing Officer has rightly denied the claim of the assessee and the same is confirmed by the ld. CIT(A). We find that the assessee neither acquired goodwill nor any commercial right. Therefore, assessee is not eligible for claim under section 32 of the Act. We find no reason to interfere with the order passed by the ld. CIT(A). Thus, this ground of appeal raised by the assessee is dismissed. Amortization of premium on Government Securities i. e. HTM - Held that:- From the details filed, it is seen that the securities were held under HTM category and the premium paid over the cost of acquisition have been amortized over a period of maturity and claimed as allowance. He found that assessee’s claim is in accordance with the CBDT Instruction and directed the Assessing Officer to allow this claim and delete the addition. The ld. Departmental Representative has not pointed out any error in the order passed by the ld. CIT(A), which is neither contrary to any provision of law nor CBDT Circular. We have also considered CBDT circular and find that ld. CIT(A) by following the Circular No. 17/2008, dated 26/11/2008 directed the Assessing Officer to delete the addition. We find no infirmity in the order of the ld. CIT(A). Thus, this ground of appeal raised by the Revenue is dismissed.
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