TMI Blog2014 (9) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount was placed with LIC. In view of the aforesaid facts, we are of the view that the Assessee is entitled to deduction in the year under review and we therefore delete the addition made by the A.O. Disallowance on depreciation on investment - Held that:- The issue in the present case is with respect to the loss in value of investment in mutual funds arising on account of the difference between the cost of units and the NAV on the last day of the accounting year on account of valuation. Before us the ld. A.R. has submitted that the issue is covered in favour of the Assessee in view of the decisions cited by the ld. A.R. We find that the aforesaid decisions were not before CIT(A) when the issue was decided by him. We therefore feel th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee is now in appeal before us and has raised following grounds:- 1.1 The order passed u/s.250 on 4.10.2011 for A.Y.2008-09 by CIT(A)-XI, Abad upholding the disallowance of gratuity payment of ₹ 3,15,933 and loss on valuation of shares of ₹ 45,49,017/- made by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned disallowances. 2.1 The Ld.CIT(A) has grievously erred in law and on facts in confirming the disallowance the payment of gratuity of ₹ 3, 15,933. 2.2 That in the facts and circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rried the matter before CIT(A). CIT(A) upheld the order of A.O by holding as under:- 2.2 I have carefully considered the rival submission. I have also gone through assessment order and the submissions made by the A.R. It is seen that the appellant has not claimed this deduction in the original return. This deduction is claimed in the revised return. This shows that the appellant was not certain about allowance of the gratuity. It is further noticed that payment of ₹ 3,15,993/- was directly made to the employee of the appellant namely Shri V.K. Kanzaria by the Pension and Gratuity Scheme Department of Life Insurance Corporation of India. This payment was made againstPolicy No.GGCA 60292. This amount was credited in the SB A/c. of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployees was maintained through LIC. He submitted that the deduction on account of gratuity was claimed when actual payment of gratuity was made to the concerned employee and not when the amount was paid to LIC. He further submitted that the aforesaid policy of accounting was consistently followed by Assessee and further there was no double deduction claimed. He therefore submitted that the claim of Assessee be allowed in the year under consideration. The ld. D.R. on the other hand supported the order of A.O and CIT(A). 7. We have heard the rival submissions and perused the material on record. Before us, ld. A.R. has submitted that it was maintaining gratuity fund with LIC of India in accordance with guidelines of RBI and when the paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated and therefore the loss on account of investment depreciation was not allowable as deduction. He accordingly disallowed the claim deduction. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) upheld the order of A.O by holding as under:- 3.2 I have carefully considered the rival submissions. I have also gone through assessment order and the submission made by the appellant. It is seen that the appellant has made an investment of ₹ 1,80,00,000/- in the mutual funds. These investments are reflected in the balance sheet under the major head other investments . The appellant's contention is that in the balance sheet, these investments needs to be valued on NAV basis. The appellant is contending t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of the latest re-purchase price declared by the Mutual Funds in respect of each particular scheme. In case of funds with a lock-in-period, or where repurchase price/market quote is not available, Units could be valued at NAV. If N V is not available, then these could be valued at cost, till the end of the lock-in period. 3.4 Perusal of this guideline further reveals that as per RBI guidelines these units can be valued at NAV. Even these guidelines are not binding on the appellant. In view of the above mentioned fact, I hold that these investments were made for earning better profits and in loss or gain in respect of these securities/mutual funds are to be taxed as STCG or LTCG as the case may be. Since the appellant has n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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