9911796707
Advanced Search 
TMI Blog2014 (12) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the matter. The authorities below were not justified in disregarding the CBDT Instructions and RBI Guidelines. The disallowance be deleted. 2) On the facts and circumstances of the case and in law the Ld. CIT(A) was not justified in confirming the disallowance made by the A.O. of Rs. 5,00,000/- being donations and subscriptions. The assessee bank had rightly claimed the deduction and it be allowed to the assessee. 3) On the facts and circumstances of the case and in law the Ld. CIT(A)-Pune was not justified in confirming the disallowance made by A.O. of Rs. 32,46,181/- so claimed on account of staff voluntary payments, the reliance of Ld. CIT(A) on circular No. 200 dt. 23-01-2001 is is placed. The Board Circular no.14 of 2001 clarifies that the payments made in accordance with any Scheme or schemes of VRS are only covered within the purview of the said section. The ex-gratia payments made over andabove the regular terminal benefits the normal provisions of the Act would apply. The ld. CIT(A) failed to properly appreciate the arguments of the assessee. The disallowance confirmed being without jurisdiction be quashed. 4) On the facts and circumstances of the case and in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereto and allowed the whole of the outstanding amount of Bonus/Ex-gratia including the unpaid Bonus/Ex-gratia of the earlier years even though the liability to pay such amount was not incurred in the previous year under consideration. 4. The Commissioner of Income-tax (Appeals) erred on facts and in law in deleting the addition of Rs. 38,63,446/- made in the assessment on account of unpaid amount out of provisions, instead of confirming such addition and not appreciating the fact that mere provision is not an allowable deduction. 5. For this and such other reasons as may be urged at the time of the hearing, the order of the Commissioner of Income-tax (Appeals) may be vacated and that of the Assessing Officer be restored. 6. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal during the course of the appellate proceedings before the ITAT." 4. The cross appeals filed by the assessee and the Revenue were heard together and are being disposed off by this consolidated order for the sake of convenience. ITA No.2537/PN/2012 - Assessee's appeal 5. The issue in ground no.1 raised by the assessee is against the disallowance of Rs. 31,73,359/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r exclusion under the Act. Hence, the expenditure on account of amortization of premium paid on acquisition of HTM securities was held to be not allowable expenditure. 8. The assessee is in appeal against the order of the learned CIT(A). The A.R. pointed out that the issue in the present appeal is squarely covered by the ratio laid down by the Tribunal, Pune Bench, in the case of Pune District Central Co. Operative Bank Ltd., ITA No.1796/PN/2013, vide order dated 28th November 2014, relating to assessment year 2009-10 and Hon'ble Bombay High Court in CIT v/s HDFC Bank Ltd., 366 ITR 505 (Bom.). 9. The A.R. for the Revenue placed reliance on the order of the CIT(A). 10. We have heard the rival contention and perused the record. The issue arising in the present appeal is with regard to amortization of premium on HTM securities. The case of the assessee was the Banks were given permission to shift securities from AFS to HTM on or before 31st March 2005. For the purpose, year and valuation of AFS was done and price paid for the HTMs over the face value was amortized for a period of five years and booked as expenditure, as per RBI norms. The case of the Revenue was that the HTM securi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding as under : "4. After going through rival submissions and material on record we find that with the advent of section 80P(4) w.e.f. A.Y, 2007-08 has closed the doors for cooperative banks for claiming the benefit of deduction u/s.80P(2)(a)(i) from this total income. However, the cooperative society should now be entitled to be assessed as normal banking company. The clause (4) inserted in section 80P has taken away the benefit of the erstwhile deduction available to cooperative society in carrying on business of banking or providing credit facility to its members. The new clause (4) inserted by the Finance Act, 2006 w.e.f. 01-04-2007 reads as under: " The provision of the section was not in relation to any cooperative bank other than agricultural credit society or primary cooperative agricultural and rural development bank". 5. The intention of the provision may be derived more precisely from relevant Para 166 of the budget speech which stated that : "Co-operative banks, like any other bank, are lending institutions and should pay tax on their profits, Primary Agricultural Credit Societies (PACS) and Primary Cooperative Agricultural and Rural Development Bank (PCARDB) st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve, assessee was justified in contending for amortization of premium paid in excess of face value of securities held to maturity (HTM) category or period remaining till maturity was found reasonable by the CIT(A). Accordingly addition of Rs. 17,91,659/- made by the Assessing Officer by disallowing amount towards amortization of Government Securities (HMT) was deleted. This reasoned factual and legal finding of the CIT(A) needs no interference from our side. We uphold the same. 9. As a result, the appeal filed by the Revenue is dismissed". 10.1 Respectfully following the decision of the Coordinate Bench of the Tribunal and in absence of any contrary material brought to our notice against the above cited decision we find no infirmity in the order of the Ld.CIT(A) deleting the addition. Accordingly, the order of the Ld.CIT(A) is upheld and the grounds raised by the Revenue are dismissed." 2.2 Nothing contrary has been brought to our knowledge on behalf of the Revenue. Facts being similar, so following the same reasoning we hold that in case of banks, the premium paid in excess of face value of investments classified under HTM category which has been amortised over the period til ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where only a provision for donation and subscription to the extent of Rs. 5,00,000/- had been made in the books of account and no actual expenditure has been incurred by the assessee. Merely because the Board of the a- Bank had passed a resolution for incurring the said expenditure, does not entitle the assessee to the said claim in the absence of having incurred any expenditure on donation and subscription. Thus, ground no.2, raised by the assessee is dismissed. 16. The ground no.3, raised by the assessee is against the disallowance of Rs. 32,46,181/-, on account of staff voluntary payment. 17. The brief facts of the issue are that for the year under consideration, the assessee had claimed expenditure of Rs. 32,46,180/-, under the head staff voluntary payment. Before the Assessing Officer, the assessee explained that the said expenditure pertained to the ex-gratia payment made to employees of the bank who had resigned from their service. The said payment was made in recognition of their meritorious service. It was also clarified before the Assessing Officer that the said payments were not made in terms of any scheme formulated under section 35DDA of the Act, but were in the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was paid to 9 employees of the bank who retired from the service due to illness and consequently, the same was disallowed by the Assessing Officer. The CIT(A) on the other hand treated the said expenditure to be capital in nature as the services of the said employees resulted in long term benefit to the assessee and hence was not allowable as revenue expenditure under section 37(1). 22. In the facts and circumstances of the case, where the assessee in recognition of the services provided to its retiring employees make certain ex-gratia payments in recognition of their services, which are not based on any scheme or instruction formulated by the employer assessee, then the same partakes the nature of profit in lieu of salary. The relationship between the assessee and retiring employees was admittedly as of employer and employee and the remuneration paid to such employees is part of the salary due to the said employee. Even the ex-gratia payment made by the assessee over and above the remuneration due to the employees partakes the character of profits in lieu of salary to such employee and is duly allowable as an expenditure in the hands of the assessee under section 37(1) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T v/s Vector Shipping Services Pvt. Ltd. 357 ITR 642 (All.), the ratio laid down by the Hon'ble Allahabad High Court stands and the question of paid and payable of expenditure is to be decided in favour of the assessee. 29. The ld. D.R. placed reliance on the order of the CIT(A) and on the ratio laid down by the Pune Bench of the Tribunal in Serum International Ltd. (supra). 30. We have heard the rival contention and perused the record. The issue arising in the present ground of appeal is against the disallowance of expenditure incurred on directors and employees on study tour. The ld. A.R. for the assessee during the course of hearing had furnished on record the details of the said expenditure and it was pointed out by the ld. A.R. that looking into the nature of expenditure, there was no necessity to deduct tax at course out of such amount. However, by an error, TDS was deducted and deposited with the Department in the succeeding year and because of this act of the assessee, the expenditure was disallowed by the Assessing Officer in view of the provisions of section 40(a)(ia) of the Act. On the perusal of the order of the CIT(A), we find that even before the CIT(A), the ambit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statistical purposes. 35. In the result, appeal of the assessee is partly allowed. ITA No.2522/PN/2012 - Revenue's appeal 36. The ground of appeal no.1 raised by the Revenue being general, is dismissed. 37. The issue in ground of appeal no.2 and 3 is with regard to the unpaid amount of bonus and exgratia payments. 38. The CIT(A) had restored the issue back to the file of the Assessing Officer for verification and the issue raised is linked to the ground no.4, raised by the assessee. 39. In view of the Assessing Officer giving effect to the order of the CIT(A) by passing the order dated 26th March 2014, we find no merit in ground no.2 and 3 raised by the Revenue. Thus, these grounds of appeal are dismissed. 40. The issue in ground no.4, raised by the Revenue is against the deletion of addition of Rs. 38,63,446/-, made on account of unpaid amount out of provisions. 41. The Assessing Officer noted that the assessee had made a provision of Rs. 11,18,44,652/-, under various heads of recoveries against which the assessee had incurred only a sum of Rs. 10,79,81,206/-, as actual expenditure on various accounts. The balance sum of Rs. 38,63,446/-, being a mere provision was disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the facts of the case and the nature of the provisions made by the appellant. On perusal of the income & expenditure a/c for the relevant year and the details on record, it is found that the appellant has made the following provisions:- i) Opening balance of provision 1,02,44,652.14 ii) Society borrower members' interest rebate (Agrl. Loan provision) 3,05,00,000.00 iii) Society borrower members recovery incentive for MT & IT Loans (Provision) 3,71,00,000.00 iv) Incentive to non-beneficiaries of Central &State Govt. Debt waiver scheme (provision) 3,40,00,000.00 Total 11,18,44,652.14 As against the above opening balance and the provisions made during the year, the appellant claimed to have made the following payments: i) Society borrower members interest rebate (Agrl. Loan provision) and Society borrower members recovery incentive for MT & IT Loans (Provision) paid on 15/09/2009 5,54,46,913.00 ii) Incentive granted to non-beneficiaries of Central & State Govt. Debt waiver scheme (provision) by way of fertilizers etc. for agricultural production 2,75,34,293.00 iii) Amount paid by way of DD to the Oriental Insurance Co. Ltd. towards premium for ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
