TMI Blog2011 (4) TMI 1358X X X X Extracts X X X X X X X X Extracts X X X X ..... nk. The assessee Bank (henceforth the assessee ) in its petition accompanied by an affidavit - through its Manager - represented that its Manager was under treatment for a week from 21st to 27th July, 2010 due to indisposition which caused the delay of three days in preferring this appeal which may be condoned as the delay was unintentional and beyond its control etc. 3.1. After due examination of the submission of the assessee which was supported by a Medical Certificate, the delay is condoned and the Registry was directed to place the assessee s appeal papers on record. 4. Reverting back to the main issue, it was noted that during the assessment year under dispute, the assessee had claimed in its return of income a sum of ₹ 32.5 lakhs - non-recoverable deposits and interest with KCC BANK as business expenditure u/s 37 of the Act. The issue, in brief, was that the assessee, in accordance with the directions of RBI, had kept deposits [the amounts received from its customers] with the Karnataka Central Co-operative Bank Ltd., Dharward (Gadag Branch) - [KCC Bank]. It was the case of the assessee that since the said Bank had become sick, the assessee was in no position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritten off in the books. In the absence of any entry in the books in this regard, the AO in his order has rightly pointed out that to claim business expenditure u/s 37, provision has to be routed through the books of account of the appellant bank. However, the appellant has not explained the same. It is also not explained as to on what basis a sum of ₹ 32.5 lakhs only, out of total deposits of ₹ 280 lakhs has been claimed as business expenditure u/s 37 of the Act. If, according to the appellant bank, the entire deposit amount has become irrecoverable due to the reason that KCC Bank Ltd. has become sick, in that case entire deposit amount becomes irrecoverable, therefore, claiming part of the amount of ₹ 32,50,000/- only as deduction as business expenditure u/s 37 of the Act, leaving thereby a substantial amount of deposits still lying with the KCC Bank ltd. is an indicator that the liability of KCC Bank Ltd. has not ceased and the KCC Bank Ltd. is still a creditor to the appellant bank and the appellant bank has the legal right to recover the deposits from the KCC Bank. S. 37 of the Act clearly stipulates that the expenditure incurred wholly and exclusively for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Co. Ltd. 46 ITR 649 (SC) (ii) CIT v. Inden Biselers 91 ITR 427 (Mad) (iii) CIT v. Inden Biselers 181 ITR 69 (Mad) (iv) Chenab forest Co. v. CIT 96 ITR 568 (J K) (v) ACIT v. Foseco India Ltd. (2009) 41A-BCAJ 161 (vi) ITO v. Karnataka Central Co-op Bank Ltd. 266 ITR 635 (Kar) (vii) Kedarnath Jute Mfg. co. Ltd. v. CIT 82 ITR 363 (SC) (viii) CBDT Circular No.14 dt: 11.4.1955 6.1. On her part, Smt. Jacinta Zimik Vasahai, the Ld. D R picked up a leaf out of the Ld. CIT (A) s finding to defend the Revenue s stand that a substantial amount of deposits was still lying with the KCC Bank which was an indication that the liability of KCC Bank had not ceased and the said Bank was still a creditor to the assessee Bank and the assessee Bank had the legal right to recover the deposits from the deposited Bank. It was, further, argued that the assessee had not brought out any credible case as to how the deposited amount had become a loss to the assessee and, therefore, the Ld. CIT (A) was within his dominion to sustain the stand of the AO which requires no intervention by this Bench at this stage. 7. We have duly examined the rival submissions, meticulously perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that In our case also the said bank did not refund our money and we were forced to renew our deposits as otherwise we will not be eligible for any interest also. 7.2. Reverting back to the assessee s claim of ₹ 32.5 lakhs as business expenditure u/s 37 of the Act which clearly specify that the expenditure incurred wholly and exclusively for the purpose of business only can be claimed as business expenditure. As a matter of fact, the assessee had not brought on record any clinching evidence to justify that the deposit amounts with KCC Bank have become a loss or rather irrecoverable without making an attempt to contemplate legal recourse to recover the said deposits. Moreover, no provisions whatsoever have been made in its books of account for such an eventuality. 7.3. Let us now turn our attention to the judicial pronouncements to some of which, the assessee had placed profound reliance. (i) The ruling of the Hon ble Apex Court in the case of CIT v. Mysore Sugar Co. Ltd. cited supra can not come to the rescue of the assessee as the said ruling with due respects, we would like to point out that the issue before the Hon ble Court was on a different footing which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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