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Vijaya Bank Versus Commissioner of Income-tax (LTU)

Revision u/s 263 - allowability of expenditure challenged by CIT (A) - Held that:- CIT had not given a concluding finding about allowability of the expenditure but has observed that the AO has not examined the issue from the point of allowability and the nature of expenditure. Even genuineness of the expenditure has not been examined by the AO while passing the impugned order. Thus it is clear that it is a case of lack of inquiry on the part of the AO while passing the impugned assessment order .....

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sment order and particularly on the issue which is the subject matter of the revision proceedings, then the CIT was justified in invoking the jurisdiction u/s 263 of the Act

The CIT has not given any concluding finding on the allowability of the said expenditure for want of complete details and record therefore, the issue was remitted to the AO with the direction to be decided in accordance with law. When the assessee has not furnished complete details of this expenditure, we do not f .....

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25/3/2014 passed by the CIT, u/s 263 of the IT Act, 1961 for the assessment year 2009-10. 2. The assessee has raised the following grounds: 1 The order of the learned Commissioner of Income tax (LTU) is bad in law and against the facts of the case. 2 The Learned Commissioner of Income Tax (LTU) erred in invoking the provisions of section 263 of the Income Tax Act, 1961. 2.1. The learned Commissioner of Income Tax (LTU) erred in initiating proceedings in respect of a debatable issue. 2.2. The le .....

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n disallowing the prior period expenditure while taxing the prior period income included by the appellant in the taxable income. 3.3. Learned Commissioner of Income Tax (LTU) erred in not following the ratio laid down by the Tribunals. For all these and other grounds which may be urged at the time of hearing, the appellant prays that its appeal be allowed. 3. The assessment in this case was completed u/s 143(3) on 30/8/2011 whereby the taxable income of the assessee was determined at ₹ 120 .....

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use notice dated 7/2/2014. The CIT noted that the AO has not considered the issue of allowability of prior period expenses and accordingly the order was to be held erroneous and prejudicial to the interest of the revenue. The assessee filed its reply to the show cause notice and submitted that the assessee s bank has more than 1000 branches spread all over the country. Various expenses are incurred at branch level which has been treated as prior period and reported in the tax audit report. These .....

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n. The CIT did not accept the contention of the assessee and observed that in order to decide the issue whether prior period or not one has to go into the nature of the expenditure and then decide the allowability of the expenditure. He further observed that in order to verify genuineness of the expenditure claimed, it is necessary that the assessee produce complete details, which in the present case, were not furnished. Rather, the assessee expressed its inability to produce the same even durin .....

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various branches of the assessee across the country. These expenses include travel bills, hotel bills, motor, repair, maintenance, telephone bill, electricity bills, water charges, property dues etc. The learned AR of the assessee submitted that various of these expenses were incurred by the site officials of the assessee bank situated in different parts of India. Therefore, final communication of incurring these expenditure was transmitted to the head office quite belatedly and after the asses .....

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ontinuous flow of expenditure. Therefore, there is no justification in disallowing such expenditure. In support of his contention he has relied upon the following decisions; i. Union Bank of India (16 Taxman.com 304(Mum), ii. iii. Bank of India (27 Taxmann.com 335(Mum), iv. UP Projects Corporation Ltd. 2015(1)TMI 105 - ITAT Lucknow, v. Winsome Yarns Ltd. 2014(12) TMI 433 - ITAT Chandigarh. The learned AR of the assessee submitted that in the case of UP Projects Corporation Ltd (Supra), Lucknow b .....

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epresentative has submitted that there is no examination and verification of the issue about the allowability of these expenses. Thus there is a lack of investigation as well as non-application of mind on the part of the AO on this issue while passing the assessment order u/s 143(3). He further submitted that the CIT remanded the issue to the record of the AO for proper inquiry and consideration of the issue as per law. Therefore, the impugned order of the CIT cannot be held as bad in law or wit .....

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proceedings, assessee contended that the expenditure was incurred by the branches of the assessee across the country and therefore, the expenditure is allowable as revenue expenditure. It was also contended that the liability is in fact crystallised in the year under consideration and the payment was also made during the previous year relevant to assessment year under consideration. Therefore, it was urged that in reality, this is not a prior period expenditure. Alternatively, the assessee has c .....

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f the record. It is admitted by the assessee that complete details of the expenditure were not furnished before the AO as well as before the CIT on the ground that it is a huge/large number of details which is not possible to be furnished. We find that the CIT had not given a concluding finding about allowability of the expenditure but has observed that the AO has not examined the issue from the point of allowability and the nature of expenditure. Even genuineness of the expenditure has not been .....

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