TMI Blog2015 (4) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... d that:- Section 43B permits a deduction in respect of any payment by way of' contribution to a provident fund or superannuation fund or any other fund for the welfare of employees in the year in which the liability is actually discharged. In the present case the appellant has not made any provision for gratuity U/s.40A(7) as on 31-03-2010 as the total amount has been paid on 31-03-2010 and accordingly the said payment of gratuity of ₹ 5,61,93,000/- is an allowable deduction U/s.43B of the I.T.Act, 1961 - Decided against revenue Disallowance of provision for staff fraud - addition on the ground that provision for frauds cannot be equated with provision for bad and doubtful debts, and frauds were not let off or written off normally and the embezzled money usually recovered - Held that:- As relying on assessee's own case [2014 (3) TMI 724 - ITAT HYDERABAD] staff frauds are similar to embezzlement by an employee and therefore qualifies as an allowable expenditure u/s 37 of the Act. The loss by embezzlement by employees should be treated as incidental to business and the same should be allowed as deduction in the year in which it is discovered - Decided against revenue Addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards interest paid in acquisition of securities on the ground that investment in Held to Maturity (HTM) securities amounted to capital expenses. It was observed by the Assessing Officer that, though this issue is covered by the decisions of CIT(A) for the A.Ys. 2007-08 2008- 09, further appeal, was made by the Department. The Assessing Officer also relied on the master circular by RBI, and circular No.665 issued by CBDT and the decision of Supreme Court in the case of Vijaya Bank Ltd. Vs. CIT (187 ITR 541) to substantiate his opinion that the broken period interest of ₹ 5,59,70,000/- paid by the assessee in purchase of HTM securities, is not an allowable revenue expenses. Hence, the disallowance. 5. Before the CIT (A), the assessee objected to such disallowance and has contended that by assessing the interest received on due date, without deducting the broken period interest paid, amounts to double taxation. It was also submitted that according to AS 13, read with the I.T. Act, 1961, the preacquisition element of interest cannot be included in the cost of investment, as such the broken period interest is to be treated as revenue expenses. The appellant also submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VI, Hyderabad for earlier years, which were upheld by ITAT, Hyderabad, vide its order dated 13.03.2014 in ITA No. 610/Hyd/2013. 9. The asseessee has preferred appeal before us. We find that the issue is covered by the Coordinate Bench decision in ITA No.610/Hyd/2013 dated 13.03.2014. Respectfully following the same, we dismiss the ground of the Revenue. PROVISION FOR GRATUITY 10. While computing the total income of the assessee, the AO disallowed the claim of the assessee for an amount of ₹ 5,61,93,000/- being the amount contributed to the gratuity fund during the year. While making the disallowance, the AO was of the opinion that the assessee bank did not have an approval for maintaining the gratuity contribution fund. It was further observed by the AO that assessee has not obtained permission for approved gratuity fund and if provision is not made towards approved gratuity fund, the gratuity payable is not allowed u/s 40A(7) of the IT Act. 11. Before the CIT (A), the assessee raised objection on such disallowance, vide the grounds of appeal raised in this regard. As per the assessee, the AO was under wrong belief that appellant bank should be recogni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computing the business income of that previous year in which such sum has been actually paid by him. 15. Section 43B permits a deduction in respect of any payment by way of' contribution to a provident fund or superannuation fund or any other fund for the welfare of employees in the year in which the liability is actually discharged. We may, however, add that clause (va) has been inserted in sub-section (1) of section 36 by the Finance Act, 1987. The effect of the amendment is that no deduction will be allowed in the assessment of the employer unless such contribution is paid to the fund on or before the due date. The due date in the context means the date by which an employer is required to credit the contribution to the employees' account under the provisions of any law or the terms of the contract of service or otherwise. 16. In the present case the appellant has not made any provision for gratuity U/s.40A(7) as on 31-03-2010 as the total amount has been paid on 31-03-2010 and accordingly the said payment of gratuity of ₹ 5,61,93,000/- is an allowable deduction U/s.43B of the I.T.Act, 1961. 17. Reliance is placed on the decision of the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance and it was contended that loss through embezzlement by employees is an expenditure, and is expressly allowable u/s 37 of the I.T.Act. It was also submitted that the said issue was subject matter of appeal and orders of CIT(A) and ITAT, supported the view of the assessee ,and relied on the order of ITAT 'A' Bench, Hyderabad in ITA No.610/Hyd/2013 dated 13.03.2014./ 21. Respectfully following the decisions of the ITAT on the issue in assessee s own case, CIT (A) was of the opinion that the provisions for staff frauds is an allowable expenditure and accordingly the addition of ₹ 28,68,000 was ordered to be deleted. 22. Respectfully following the decision of the Coordinate Bench in ITA No.610/Hyd/2013, dated 13.03.2014, the ground of the Revenue is dismissed. 23. In the result, appeal in ITA No.1771/Hyd/2013 for the assessment year is dismissed. 24. In the assessee s appeal, assessee is agitated on the addition on account of treating the unrealized interest on NPAs, as income amounting to ₹ 1,36,22,000. While computing the total income of the assessee, the AO included the unrealized interest on Non-Performing Assets (NPA) to the extent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, the CIT (A) had no hesitation in holding that unrealized interest on NPAs constitute income to the assessee on the principle that the RBI directives were only in the context of presentation of NPAs in Balance Sheet and presentation of Balance Sheets have nothing to do with taxable income, which has to be computed as per the provisions of the Income Tax Act. Accordingly, the CIT (A) held that the addition of ₹ 1,36,22,000 is held to be sustainable. 27. On appeal, the ld Counsel for the Assessee submitted a chart showing the issues involved and details of covered judgements/Circulars as follows: Judgment of the Hon'ble Supreme Court in the case of United Commercial Bank of India vs. CIT (240 ITR 355) Order of the Hon'ble High Court of judicature at Hyderabad for the State of Telangana and State of Andhra Pradesh in I.T.T.A No.566 of 2014 dated 4.9.2014 in the case of Andhra Pradesh Grameena Vikas Bank, Warangal for the A.Y 2007-08. Order passed by the ITAT Hyderabad in ITA No.1121 1459/Hyd/2011 for A.Y 2007-08 and 2008-09 respectively. TCI Finance Ltd vs. ACIT (2004) 9 ITD 573 (Hyd.) CIT vs. Annamalai Finance Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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