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TMI Blog2016 (8) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... 45-IC of the Reserve Bank of India Act and claimed the same as appropriation of funds by overriding title. However, the Assessing Officer disallowed the claim of the assessee by holding the same as application of income. The CIT(Appeals) also confirmed the order of the Assessing Officer by placing reliance on the orders of this Tribunal in the assessee's own case for assessment years 2003-04 to 2009-10. The Ld.counsel submitted that the assessee has already filed an appeal before the High Court and the same is pending. According to the Ld. counsel, it is only an appropriation of profit as per the statutory requirement under Section 45-IC of the Reserve Bank of India Act, therefore, it cannot be held as application of income at all. 4. On the contrary, Dr. U. Anjaneyalu, the Ld. Departmental Representative, submitted that a similar claim of transfer to Reserve Fund was made by the assessee for assessment years 2003-04 to 2009-10. The matter had come upto Tribunal and now the matter is before the High Court. According to the Ld. D.R., the Tribunal consistently found that the funds transferred to Reserve Fund, as required under Section 45-IC of the Reserve Bank of India Act, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot collected on the amount refunded to the assessee. What was collected from the assessee is the tax which was otherwise expected to be paid by the assessee. Since the assessee enjoyed the money due to the Department, interest was charged under Section 234D of the Act, therefore, it is not an allowable expenditure while computing the taxable income. 9. We have considered the rival submissions on either side and perused the relevant material available on record. As rightly submitted by the Ld. D.R., interest is charged under Section 234D of the Act on the excess amount refunded to the assessee while processing a return under Section 143(1) of the Act. Even though it is an interest levied on the amount refunded to the assessee, in fact, it is an interest for delayed payment of tax. In other words, the amount refunded to the assessee while processing return under Section 143(1) of the Act was considered as non-payment of tax and interest was charged for the period in which the assessee was holding the amount. Therefore, the interest paid by the assessee cannot be construed as expenditure for earning the income or for business purpose. Therefore, this Tribunal is of the considered opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unquoted investments with subordinated debts of Yes Bank Ltd. would not come within the purview of Section 14A of the Act and after the direction of the CIT(Appeals), what was disputed is in respect of the investment made by the assessee in shares and debentures of other companies. This Tribunal is of the considered opinion that the Assessing Officer has to mandatorily compute the expenditure incurred in earning income, which does not form part of total income, by applying Rule 8D(2) of the Income-tax Rules, 1962. Therefore, the borrowed funds, direct and indirect expenditure incurred by the assessee, which is not attributable to any particular income and 0.5% of the investment, which yielded income which does not form part of total income, also has to be taken into consideration. In view of the above, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. 14. The next issue is with regard to TDS credit of Rs. 67,16,883/-. 15. Shri R. Sivaraman, the Ld.counsel for the assessee, submitted that the assessee claimed credit of tax deducted at source to the extent of Rs. 24,97,95,185/-. The Assessing Officer, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the order of the CIT(Appeals) in which a direction was issued to give credit after verification, if permissible under the Act. This Tribunal is of the considered opinion that such direction would not prejudice the interest of the assessee in any way. Therefore, the order of the CIT(Appeals) is confirmed. 18. The next issue arises for consideration is disallowance of Rs. 252 Crores being the amount transferred to Statutory Reserve as per Reserve Bank of India guidelines, while computing income under Section 115JB of the Act. 19. Shri R. Sivaraman, the Ld.counsel for the assessee, submitted that as per the guidelines framed by the Reserve Bank of India, the assessee has transferred a sum of Rs. 252 Crores to Statutory Reserve. The Assessing Officer, however, added the same to the total income of the assessee while computing the taxable income. According to the Ld. counsel, the Assessing Officer found that the amount was transferred to Statutory Reserve on the ground that it was a provision for non-performing assets. According to the Ld. counsel, the claim of the assessee was towards ascertainable liability, therefore, it would not form part of taxable income of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deletion of bad debts to the extent of Rs. 141,94,63,000/-. 23. Dr. U. Anjaneyalu, the Ld. Departmental Representative, submitted that the Assessing Officer found that the debt was written off after the respective Branch Managers explored all possibilities of collection. After realizing that recovery of amount was very remote, it was written off. In fact, this amount was also classified as nonperforming asset. When identical issue came before this Tribunal, for the assessment years 2007-08, 2008-09, 2009-10 and 2011-12, this Tribunal allowed similar debt as bad debt. The Assessing Officer after referring to the order of this Tribunal found that the Department has already filed an appeal before the High Court. Therefore, according to the Ld. D.R., just to keep the matter alive, the bad debt written off was added back to the total income of the assessee. 24. On the contrary, Shri R. Sivaraman, the Ld.counsel for the assessee, submitted that as rightly submitted by the Ld. D.R., this Tribunal on identical set of facts, allowed the claim of the assessee. The Assessing Officer just to keep the matter alive, added back the bad debt to the total income since there is a pendency of appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,72,22,496/- paid to Shriram Ownership Trust. The Assessing Officer treated the same as capital expenditure and allowed depreciation at the rate of 12.5%. According to the Ld. D.R., the payment made to Shriram Ownership Trust towards royalty is nothing but a capital expenditure, therefore, the Assessing Officer has rightly allowed depreciation. Hence, according to the Ld. D.R., the CIT(Appeals) is not justified in deleting the addition made by the Assessing Officer. 28. On the contrary, Shri R. Sivaraman, the Ld.counsel for the assessee, submitted that the assessee-Trust was using Logo of Shriram Ownership Trust for its business and paid royalty. According to the Ld. counsel, Shriram Ownership Trust is a separate entity. For using its Logo in the business of the assessee, a payment needs to be made and the assessee is not purchasing the Logo. What was obtained by the assessee is only the right to use Logo. Therefore, according to the Ld. counsel, it cannot be treated as capital expenditure. 29. We have considered the rival submissions on either side and perused the relevant material available on record. What was paid by the assessee is for the right to use the Logo belonging to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts, the Madras High Court allowed the claim of the assessee. The Ld.counsel has also placed his reliance on the decision of this Tribunal in I.T.A. No.1891/Mds/2012 dated 11.04.2013. Referring to the Employees Stock Option Scheme, 2005, the Ld.counsel submitted that the option was given by the assessee-company directly to the employees, therefore, the difference in price has to be allowed. 33. We have considered the rival submissions on either side and perused the relevant material available on record. We have carefully gone through the orders of both the authorities below. The Assessing Officer found that in the assessee's own case for earlier assessment year, on the basis of very same Employees Stock Option Scheme, 2005, this Tribunal allowed the claim of the assessee for the assessment year 2009-10. The Assessing Officer found that the appeal is filed before the Madras High Court and the same is pending. The Assessing Officer also found that the Revenue has filed SLP against the judgment of Madras High Court in PVP Ventures Ltd. (supra) before the Supreme Court and the same was dismissed. Pending finality through review or curative petition, the Assessing Officer disall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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