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2015 (12) TMI 1283

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..... date of approval granted by the DRE, what is important is the effective date of commencement. The Tribunal, while relying upon the decision of the Hon'ble Supreme Court in the case of "Bharat Earth vs. CIT [2000 (8) TMI 4 - SUPREME COURT], held that in such a case the incurring of liability was certain and the same could also be estimated with reasonable certainty, although, the actual quantification may not be possible. In the case in hand also as per the agreement and the policy, the wage revision was certain and it could have been reasonably estimated also. Hence, the provision made by the assessee towards wage revision was allowable - Decided in favour of assessee Inclusion of income of foreign branches into the total income of the assessee - Held that:- The assessee will be entitled to credit of such taxes which have been paid by the branches in other contracting states. Since the issue is squarely covered by the decision of the co-ordinate bench of the Tribunal in the own case of the assessee, hence, respectfully following the same, the appeal of the Revenue is treated as allowed in the same lines. - ITA No. 4619/M/2012, ITA No. 4873/M/2012 - - - Dated:- 4-11-2015 - D. .....

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..... the bipartite settlement talks that were being held between the Indian Bank's Association (IBA) and various Employee Unions. 3.2 The Ld CIT(A) failed to appreciate that once liability for an expenditure which is contractual in nature is foisted on appellant the same is allowable as deduction though the same could be quantified based on reasonable estimate only. Reliance is placed on the decision of ITAT in Neyveli Lignite Corporation v ACIT 93 TTJ 685 (Chen) 4.1 The Ld CIT (A) erred in confirming the disallowance u/s 14A computed as per Rule 8D at ₹ 65.37 crore on a tax free income of ₹ 60.81 crore over looking fact that the appellant had himself quantified the disallowance at ₹ 6.05 crore being 0.5% of average investments earning tax free income. The CIT (A) having agreed with the claim of the appellant that its interest free funds far exceed the amount of investments in assets earning tax free income ought to have followed the ratio laid down by Jurisdictional High Court in the case of Reliance Utilities and Power Ltd 313 ITR 340 and held that no disallowance of interest as contemplated in Rule 8D was warranted. 5. The Ld CIT (A) erred in conf .....

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..... claim deduction during the year under consideration. He, therefore, rejected the claim of the assessee and upheld the disallowance made by the AO. 5. Before us, the Ld. A.R. of the assessee, at the outset, has invited our attention to the decision of the co-ordinate Delhi Bench of the Tribunal in the case of M/s. Power Finance Corporation Ltd. vs. JCIT ITA No.1164/Del/04 dated 31.07.2008 ,wherein the Tribunal on the identical issue while analyzing the provisions of section 36(1)(viii) has held that a reserve created in subsequent years, however, before finalization of grant of deduction is required to be considered while allowing assessee's claim of deduction made under section 36(1)(viii) of the Act. The Tribunal, while holding so, observed that the inference from the words Before making any deduction under this clause carried to such reserve account can be drawn that the requirement of special reserve is to be complied with at the time of considering the claim of deduction and it does not mean that the amount should be transferred to the special reserve before making any claim of deduction. The Tribunal further in para 26 of the order has observed in the said case that .....

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..... it was a contingent liability. He held that no agreement was signed by the assessee during the year under consideration, hence the assessee was not entitled to create provision for the wage revision. Being aggrieved, the assessee has come in appeal before us. 7. The Ld. A.R. of the assessee, at the outset, has submitted that the issue is squarely covered by the decision of the co-ordinate bench of the Tribunal in the case of Tata Communications Ltd. vs. DCIT ITA Nos.3062 3438/M/2003 vide order dated 05.12.12 wherein the Tribunal has taken a view that in case of salary/wage revision, what is important is not the date of signing the agreement nor the date of approval granted by the DRE, what is important is the effective date of commencement. The Tribunal, while relying upon the decision of the Hon'ble Supreme Court in the case of Bharat Earth vs. CIT 245 ITR 428 , held that in such a case the incurring of liability was certain and the same could also be estimated with reasonable certainty, although, the actual quantification may not be possible. In the case in hand also as per the agreement and the policy, the wage revision was certain and it could have been reasonably .....

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..... urt has held that Rule 8D r.w.s. 14A(2) is not arbitrary or unreasonable and also not retrospective and applies from A.Y. 2008-09. It has been further held that under section 14A of the Income Tax Act, resort can be made to Rule 8D of the Income Tax Rules for determining the amount of expenditure in relation to exempt income, if, the AO is not satisfied with the correctness of the claim made by the assessee in respect of such expenditure. The satisfaction of the Assessing Officer has to be arrived at, having regard to the accounts of the assessee. Sub section (2) does not ipso facto enable the Assessing Officer to apply the method prescribed by the rules straightaway without considering whether the claim made by the assessee in respect such expenditure is correct. The satisfaction of the Assessing Officer must be arrived at on an objective basis. In a situation where the accounts of the assessee furnish an objective basis for the Assessing Officer to arrive at a satisfaction in regard to the correctness of the claim of the assessee, there would be no warrant for taking recourse to the method prescribed by the rules. An objective satisfaction contemplates a notice to the assessee, a .....

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..... pronouncements in the case of Godrej Boyce Manufacturing Co. Ltd. Vs. DCIT (supra), CIT vs. Reliance Utilities and Power Ltd. (supra), CIT vs. HDFC Bank Ltd. (supra) and in the case of India Advantage Securities Ltd. (supra). Needless to say, the AO will give proper opportunity to the assessee to present its case and furnish working/computation etc. and then to decide the case in accordance with law. 13. The Ld. A.R. of the assessee has not advanced any argument in relation to ground No.5 of the appeal and the said ground is accordingly dismissed. Now coming to the appeal of the department i.e. ITA No.4873/M/2012 ITA No.4873/M/2012 14. The sole issue raised by the Revenue through its grounds of appeal is relating to inclusion of income of foreign branches into the total income of the assessee. The contention of the assessee bank has been that the foreign branches of the assessee are subject to tax in the source country i.e. foreign country, therefore, their income cannot be included in the return of income filed in India. The Ld. A.R. of the assessee has been fair enough to admit that this issue is squarely covered against the assessee in the own case of th .....

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