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The Assistant Commissioner of Income Tax Versus M/s. Krishna Grameena Bank

2016 (6) TMI 250 - ITAT BANGALORE

Allowance of actuarial valuation of privilege leave encashment - Held that:- Disallowance was made by the AO by invoking the provisions of clause (f) of section 43B and the same was deleted by the ld. CIT (Appeals) by following the judgment of the Hon’ble Calcutta High Court rendered in the case of Exide Industries Ltd. v. UOI (2007 (6) TMI 175 - CALCUTTA High Court ) wherein it was held that insertion of clause (f) in section 43B is unconstitutional. Subsequently, the Hon’ble Apex Court [2008 ( .....

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ar, deduction on account of that provision cannot be allowed as per provisions of clause (f) of section 43B. It is not the case of assessee that payment was made for provision of leave encashment - Decided in favour of revenue.

Allowance of claim towards provision for bad and doubtful debts - Held that:- We find that as per assessment order, it is the objection of the AO that the details as per requirement of Rule 6ABA are not furnished before him. As some details are made available b .....

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ld. CIT (Appeals) on this issue and restore the matter back to his file for a fresh decision in light of our above observations, after affording reasonable opportunity of being heard to both the sides. - Decided in favour of revenue for statistical purposes..

Disallowance made with regard to excess claim of salary - Held that:- Letter dated 24.7.2010 issued by Govt. of India, Ministry of Finance, Department of Financial Services in respect of revision of pay & allowances of all Regio .....

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ese dates are prior to the date of filing of return of income by the assessee and therefore, the liability has crystallised prior to the date of filing of return of income. In our considered opinion, under these facts, provision should be made in the accounts for the year which were not finalised at that point of time i.e., crystallisation of liability - Decided in favour of assessee

Amortization of premium paid on Government securities - Held that:- The assessee is entitled to deduct .....

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CIT (Appeals), Hubli dated 26.2.2014 for the assessment year 2010-11. 2. The Revenue has filed the revised grounds of appeal and as per the same, ground Nos. 1 & 7 are general. Ground No.2 is as under:- 2. The CIT(A) erred in directing the AO to allow the actuarial valuation of privilege leave encashment without considering the fact that the Hon'ble Apex Court stayed the operation of the judgment of Calcutta High Court in the case of Exide Industries Ltd vs UOI, 292 ITR 470. 3. It was s .....

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alcutta High Court rendered in the case of Exide Industries Ltd. v. UOI (supra). He also placed reliance on the decision of the Tribunal rendered in the case of DLF Home Developers Ltd. v. ACIT in ITA No.2559/Del/2013 dated 31.10.2013 (copy furnished) and submitted that as per this Tribunal s order also, the judgment of Hon ble Calcutta High Court rendered in the case of Exide Industries Ltd. v. UOI (supra) cannot be followed, as per which it was held that amendment to section 43B by way of inse .....

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rameena Bank (assessee) in ITA No.1046/Bang/2013 dated 3.12.2014 for AY 2009-10. (ii) M/s. Krishna Grameena Bank (assessee) v. Addl. CIT in ITA No.146/Bang/2011 dated 15.6.2012 for AY 2007-08. (iii) Narayana Hrudayalaya P. Ltd. v. Addl. CIT in IA No.1281/Bang/2014 dated 7.8.15 for AY 2010-11. 5. We have considered the rival submissions. We find that the disallowance was made by the AO by invoking the provisions of clause (f) of section 43B and the same was deleted by the ld. CIT (Appeals) by fol .....

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proved. The legal position that now stands is that clause (f) of section 43B is very much on the statute book and therefore, if the assessee has not made payment of leave encashment provision in the present year, deduction on account of that provision cannot be allowed as per provisions of clause (f) of section 43B. It is not the case of assessee that payment was made for provision of leave encashment. Regarding various Tribunals orders cited by the ld. AR of assessee, these were rendered in ass .....

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ies Ltd. v. UOI (supra) was stayed. Therefore, considering the provisions of clause (f) of section 43B, on this issue, we reverse the order of ld. CIT (Appeals) and restore that of the AO. Ground No.2 of the Revenue s appeal is allowed. 6. Ground No.3 is as under:- 3. The learned CIT (A) erred in allowing the assessee's claim towards provision for bad and doubtful debts without appreciating the fact that the assessee had not furnished complete details towards its claim and the learned CIT (A .....

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also submitted that as per pages 5 & 6 of the assessment order, it was stated by the AO that the details required as per Rule 6ABA were not furnished before him. The ld. DR of Revenue submitted that even if details submitted before the CIT(Appeals) which are available on pages 1 to 7 of PB are to be considered as details in compliance of Rule 6ABA, the matter should go back to the ld. CIT(Appeals) for fresh decision after obtaining remand report of the AO. 8. The ld. AR of assessee supporte .....

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ppeals) from the AO. Under these facts, we find force in the contention of the ld. DR of Revenue that this matter should go back to the file of ld. CIT(Appeals) for fresh decision after obtaining remand report from the AO on this issue. Accordingly, we set aside the order of the ld. CIT (Appeals) on this issue and restore the matter back to his file for a fresh decision in light of our above observations, after affording reasonable opportunity of being heard to both the sides. This ground is all .....

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of Financial Services available at pages 8 & 9 of PB are dated 24.7.2010 and 31.8.2010 i.e. in the next year and therefore, it cannot be said that expenses had crystallised during the present year. He submitted that under these facts, these expenses of earlier year cannot be allowed in the present year and therefore, on this issue, the order of ld. CIT (A) should be reversed and that of the AO should be restored. 12. As against this, the ld. AR of assessee supported the order of ld. CIT (Ap .....

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of Finance, Department of Financial Services in respect of revision of pay & allowances of all Regional Rural Banks employees w.e.f. 1.11.2007. So, on the basis of communication received from Govt. of India, Ministry of Finance, the Board of assessee bank as per its Resolution dated 31.8.2010 has decided to make payment of arrears for the period from 1.11.2007 to 31.7.2010. No doubt, this date of Board Resolution and the letter from Govt. of India, Ministry of Finance is subsequent to the pr .....

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to interfere in the order of ld. CIT (Appeals). Accordingly, ground No.4 of Revenue is rejected. 14. Ground Nos. 5 & 6 are as under:- 5. The learned CIT(A) erred in allowing amortization of premium paid on Government securities over remaining life of the securities even though such expenditure was disallowed by the AO relying on the CBDT Instruction 17/2008. 6. The learned CIT (A) erred in not relying on the decision in the case of Vijaya Bank vs Addl.CIT, 187 ITR 541 on the issue of amortiz .....

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see by the Tribunal s order in assessee s own case for AY 2007-08 in ITA No.146 & 224/Bang/2011 dated 15.6.2012 and also by another Tribunal s order in assessee s own case for the AY 2009-10 in ITA No.1046/Bang/2013 dated 3.12.2014. He submitted copy of both the Tribunal s orders. 16. We have considered the rival submissions. We find that in AY 2007- 08 in the Revenue s appeal in ITA No.146/Bang/2011 (supra), this very issue was raised by the Revenue before the Tribunal and the same was deci .....

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er remaining life of the securities as an allowable expenditure ignoring the decision of the Hon'ble Supreme court in the case of Vijay Bank Vs. Addl. CIT 187 ITR 541 (SC) 7.2 The learned Departmental Representative submitted that the learned CIT(A) erred in holding that the amortization of premium paid on Govt. securities is an allowable expenditure ignoring the decision of the Hon'ble Apex Court in the case of Vijaya Bank reported in 187 ITR 541 in para 2(vii) of CBDT s Instruction NO. .....

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Ltd. Vs. JCIT in ITA No.1122/Bang/2010 dt.11.5.2012 ( a copy of which is placed on record.) The learned counsel for the assessee drew our attention to para 4 to para 8 of this order in which an identical issue on amortization of premium on investments was exhaustively considered by this Tribunal after which it held that the assessee was entitled to such deduction. In these circumstances, the learned counsel for the assessee prayed that since the decision of the Tribunal is squarely applicable to .....

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he Tribunal in the case of Sir M. Vishveswaraya Co-op. Bank Ltd. (supra) that the Tribunal had occasion to consider a similar issue of amortization of premium on investments exhaustively at paras 4 to 8 thereof after which it held that the assessee was entitled to such deduction. The operative part of the said order at para 8 thereof, is as under: 08. We have carefully considered the rival submissions and perused the relevant facts and materials on record. We have also considered the findings of .....

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nd considering that the assessee bank is following consistent and regular method of accounting system, there is no justification in interfering with the order of the Commissioner of Income-tax (Appeals) on this issue of amortization of premium on government securities. United Commercial Bank v. CIT (1999) 156 CTR (SC) 380; (1999) 240 ITR 355 (SC) and South Indian Bank Ltd., (ITA No.126/Coch/2004,dated.___ Sept, 2005 followed." (ii) The Khanapur Co-op Bank Ltd v. ITO - ITA No.141/PNJ/2011,da .....

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