TMI Blog2014 (9) TMI 1179X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer at the time of assessment. Assessing Officer had not come to any conclusion at all having not considered the claim in the light of the conditions set out in Section 36(1)(viia) of the Act. We cannot say that he had taken a view which was in accordance with law. It is not a case where the Assessing Officer had adopted one of the courses possible in law. Of course, a cryptic order of the Assessing Officer by itself may not show that there was no thought given by him on a claim of the assessee. However, here there was no enquiry made during the course of assessment proceedings. Therefore, the order which was silent on the claim made by the assessee, and allowing such claim, without any discussion, will definitely render it erroneous and prejudicial to the interests of Revenue - decided against assessee. Addition made towards provision for bad and doubtful debts and depreciation on investments - CIT-A deleted this addition on verifying the details furnished by the assessee i.e. copy of computation of income, break-up of provisions of contingencies debited to profit and loss account etc. accepting the contention of the assessee that it has correctly added back the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 751 - ITAT CHENNAI]. Disallowance of provision for wage arrears - HELD THAT:- Provision made towards wage arrears is only a provision and liability has not been crystallized. The wage arrears shall be allowed as deduction in the year in which the assessee discharges the liability by paying wage arrears to the employees. Thus, the ground raised by the assessee on this issue is partly allowed. Relief u/s 90 to the extent of tax paid in the foreign country - HELD THAT:- As decided in assessee's own case [2014 (6) TMI 954 - ITAT CHENNAI] held that a case involving a DTAA, an income has to be included in the total receipts and the necessary relief is to be granted by ‘elimination’ method or as per the terms of agreement seeking to avoid double taxation. - Decided against assessee Provision for loss on ‘market to market’ basis in respect of trading derivatives could not have been disallowed. So, the impugned disallowance stands deleted. Depreciation on UPS to be allowed at 60% as decided in assessee's own case [2014 (6) TMI 954 - ITAT CHENNAI] Claim of the assessee for allowing provision for leave encashment invoking the provisions of section 43B to be allowed to be foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully considered the facts of the case and the submission of the Id. AR. The reopening in this case was made within a period of 4 years from the end of the assessment year. As seen from the records, the four issues on which the assessment is reopened do not seem to have come for discussion during the course of original assessment which was passed on 30.12.2008. The reopening has been done based on the subsequent information available with the AO. The argument of the appellant that it has submitted all the facts relating to these issues during the time of original assessment and no new tangible material was available with the AO for initiating the reopening proceedings will no more hold good in the light of following decisions: (i) Supreme Court in the case of Kalyanji Mavji Company v. CIT (102 ITR 287) (SC) (1976) wherein it is stated that there is no change of opinion if the assessment is reopened on new facts which came to notice subsequently, even though they are already on record. (ii) Gujarat High Court in the case of Praful Chunilal Patel and Vasanth Chunilal Patel v. ACIT (236 ITR 832) (1999) held that where the AO had overlooked something at the first assessment, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion made in books of accounts for debts having arrears, if any, upto 90 days classified under RBI norms as Standard Assets. 2.2 In computing the deduction u/s 36(1 )(viia), the CIT(A) has also erred in confirming the order of AO in not considering provision for debts based on country risk as per RBI guidelines. 8. Counsel for the assessee submits that both these issues have been decided against the assessee by the coordinate Bench of this Tribunal in ITA No.1815/Mds/2011 dated 2.4.2013 for the assessment year 2008-09. Copy of the order is placed on record. 9. We have perused the above order of the co-ordinate Bench of this Tribunal and find that the Tribunal has decided both these issues against the assessee by dismissing the grounds observing as under:- 4. The third ground of appeal of the assessee is regarding restriction of claim in respect of deduction under section 36(1)(viia) to the extent of provision made in the books. The A.R. for the assessee has conceded that this issue has already been decided against the assessee bank in the case of Bharat overseas Bank Ltd. in ITA No.1191/Mds/2012. This issue had also come up before the Tribunal in ITA No.818/Mds/2010 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the aggregate average advances made by the rural branches of such bank computed in the prescribed manner. It is clear from the above that it is not a standard allowance which is given, but, the allowance is subject to the actual provision made by the assessee, which in no case shall exceed 7.5% of the gross total income. Therefore, the argument of the assessee that whatever the provision it had actually made in its books, a provision of 7.5% of the gross total income had to be allowed, is not in accordance with law. Now considering the second aspect, whether provision for standard assets could be considered as provision for bad and doubtful debts, admittedly a provision on standard assets is not against any debts which had become doubtful. Standard assets are always considered recoverable, in the sense, bank has no doubt of recoverability. When the bank itself has treated such assets as good and recoverable, any provision made on such assets cannot be considered as a provision for bad and doubtful debts. The debt itself being good, a provision made on good debt cannot be considered as a provision for bad and doubtful debts. May be, the RBI has made a regulation for 10% pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Industrial Co. Ltd. v. CIT (243 ITR 83), prejudicial to the interests of the Revenue is a term of wide import and not confined to loss of tax. An order without application of mind is definitely prejudicial to the interests of the revenue. We are in agreement with ld. CIT that the order of Assessing Officer was erroneous insofar as it was prejudicial to the interests of Revenue. No interference is required. 8. In the result, appeal filed by the assessee is dismissed. In view of the aforesaid findings, this ground of appeal of the assessee is dismissed. 10. Respectfully following the said decision, we reject the grounds raised by the assessee. In the result, appeal of the assessee is dismissed. ITA No.1951/Mds/2013: (Revenue appeal) 11. This is a cross appeal filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) LTU, Chennai dated 20.9.2013 for the assessment year 2006-07. 12. The first issue in the grounds of appeal of the Revenue is that Commissioner of Income Tax (Appeals) erred in deleting the addition made towards provision for bad and doubtful debts and depreciation on investments. The Assessing Officer while completing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ongly contested the disallowance made by the AO. The appellant had filed a copy of the computation of income along with the full break up of the amount of provisions and contingencies debited to P L a/c. The copy of the relevant page of the P L a/c was also filed. The Id.AR submitted that the total amount debited to P L a/c on account of provisions and contingencies amounted to ₹ 735,47,46,6681- which was added back in full in the computation of income. It was submitted that in respect of provision for bad and doubtful debts a sum of ₹ 161,61,47,068/- was provided out of which a sum of ₹ 2,50,00,0001- was reversed as excess provision. Therefore the net provision debited in the P L a/c was only ₹ 159,11,47,068/- which was added back in the computation. Similarly, in respect of provision for depreciation on investments, the appellant had made a provision of ₹ 140,11,48,9011- out of which a sum of ₹ 14,73,03,543/- was reversed as excess provision. Therefore the net provision debited in the P L a/c was only ₹ 125,38,45,358/- which was added back in the computation. A detailed breakup showing the provision made and reversal of the provision and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Sons Ltd. (222 ITR 344) submits that these unclaimed balances were rightly taxed by the Assessing Officer. Departmental Representative also places reliance on the decision of the Hon ble Madras High Court in the case of CIT Vs. Aries Advertising P.Ltd. (255 ITR 510) in support of his contentions. 19. Counsel for the assessee submits that the said amount of ₹ 11.52 crores represents unreconciled credit balances in their inter-branch accounts. Counsel submits that whenever a particular branch requires an amount, one of the branches transfers funds to the particular branch and in the process in some branches, since the accounts were not squared up the unreconciled credit balances appear. The counsel submits that in the transaction between inter branch of assessee bank no one can make profit with himself. Counsel strongly places reliance on the order of the Commissioner of Income Tax (Appeals) in considering unreconciled amounts as not taxable. Counsel for the assessee places reliance on the decision of the Delhi Bench of this Tribunal in the case of Punjab National Bank Vs. Addl. CIT( 2012 -TIOL 80 ITAT- Del) dated 25.10.2011 in support of his contentions. Counsel submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts must have cancelled each other. It did not take place that way due to human errors or lack of advice forthcoming as regards the closure of the accounts. In any case, any imbalance in the inter branch accounts, in our considered view, cannot give rise to a taxable income under the Income-tax Act. The Assessing Officer as well as crr - DR has heavily relied upon the decision of the Hon'ble Supreme Court in the case of T. V.Sundaram Iyengar Sons Ltd. - 222 ITR 344 = (2002-TIOL-239-SC-IT). In that case, the assessee received the deposits from customers in the course of its business and transferred the amounts which were not claimed by the customers to its profit loss account. The Assessing Officer was of the view that the sums in question have become the income of the assessee because of the expiry of limitation period or other statutory or contractual rights. The amounts had the character of income and therefore, assessable to tax. The Hon'ble Supreme Court held that although the amounts received originally were not in the nature of an income, the amounts remained with the assessee for a long period unclaimed by the trade parties. By the lapse of time, the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajasthan Golden Transport Co.(P) Ltd. (supra) was concerned with the amounts received in the course of trade transactions. In the decision of the Hon'ble Delhi High Court, the amounts in question were held to be taxable under Section 41(1) of the Act. As regards the applicability of Section 41(1), we may again state that such provisions of Section 41(1) cannot be invoked to bring these amounts in question to be taxed as a part of the receipt in the aforesaid provision. The Revenue has to first establish that the sum in question which is now being brought to tax has once been allowed in the past as a deduction while computing the income of the bank. It is not the case of the Revenue or at least the Revenue has not brought any material to show that the sum in question forming part of the so-called inter branch transactions were once allowed by the Revenue as a deduction in the computation of profits and gains of business. When that primary requirement is absent, the question of bringing the sums in question to tax under Section 41(1) may not be legally permissible to the Revenue. In the light of the discussions above, we do not agree with the stand of the Department that the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 2.4.2013 for the assessment year 2006-07 remitted this issue back to the file of Assessing Officer to consider the issue in the light of the decision of Hon ble Supreme Court in the case of Sandvik Asia Ltd. Vs. CIT (2 SCC 508) and grant interest on interest. 29. Heard both sides. Perused orders of lower authorities and decisions relied on. On going through the decision of the Hon ble Supreme Court in the case of Gujarat Fluoro Chemicals (supra) we find that the issue on hand has been decided against the assessee by the Larger Bench holding that assessee is not entitled for interest on interest. Respectfully following the said decision, we hold that interest on interest is not allowable to the assessee. The grounds raised by the Revenue are allowed on this issue. ITA No.2125/Mds/2013 30. This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) LTU Chennai dated 20.9.2013 for the assessment year 2007-08 arising out of the assessment order passed under section 143(3) read with section 147 of the Act. 31. The assessee raised the following grounds:- 1. The learned CIT(A) had erred in holding that reopening the assessment al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore reopening is valid. While holding so, the Commissioner of Income Tax (Appeals) observed as under:- 4.1. I have carefully considered the facts of the case and the submission of the Id. AR. The reopening in this case was made within a period of 4 years from the end of the assessment year. As seen from the records, the four issues on which the assessment is reopened do not seem to have come for discussion during the course of original assessment which was passed on 30.12.2008. The reopening has been done based on the subsequent information available with the AO. The argument of the appellant that it has submitted all the facts relating to these issues during the time of original assessment and no new tangible material was available with the AO for initiating the reopening proceedings will no more hold good in the light of following decisions: (i) Supreme Court in the case of Kalyanji Mavji Company v. CIT (102 ITR 287) (SC) (1976) wherein it is stated that there is no change of opinion if the assessment is reopened on new facts which came to notice subsequently, even though they are already on record. (ii) Gujarat High Court in the case of Praful Chunilal Patel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to mean ward in a rural area. Counsel for the assessee submits that this issue has been decided against the assessee by the co-ordinate Bench while disposing off the appeal in the assessment year 2009-10 in ITA No.1949/Mds/2012 dated 18.6.2014. Copy of the order is placed on record. 37. We have perused the order of this Tribunal in ITA No.1949/Mds/2012 and find that the Tribunal decided this issue against the assessee by dismissing the grounds observing as under:- 8. The assessee s third ground raises the issue bad debts relating to rural branches u/s 36(1)(viia). It pleads that the CIT(A) has wrongly restricted its claim of aforesaid deduction by treating a branch as rural based on population of the panchayat instead of concerned ward . 9. It is to be seen that the assessee had claimed deduction of bad and doubtful advances of ₹ 654,41,43,300/-. The Assessing Officer restricted this claim to ₹ 25,58,86,646/-; inter alia, on the ground that the assessee s 48 branches were not rural as per section 36(1)(viia) explanation read with rule 6ABA in view of the census figures given in the Ministry of Home Affairs Website. The CIT(A) has also expressed agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction under Section 36(1)(viia) was also scaled down from ₹ 5,74,07,362/- to ₹ 2,65,39,916/-. This sum when aggregated with 10% of rural advances coming to ₹ 2,72,65,099/-, resulted in the sum of ₹ 5,38,05,015/- being eventually allowed as deduction under Section 36(1)(viia) of the Act. In the books of the assessee, actual provision for bad and doubtful debts was only ₹ 4,01,44,027/-. Assessee had also made a provision of ₹ 2.23 Crores on its standard assets. If the provision for bad and doubtful debts alone was considered, then the total allowance under Section 36(1)(viia) was in excess of such provision. However, if the provision for standard assets was also considered as provision for bad and doubtful debts, then the total provision could go up to ₹ 6,24,44,027/-. Then of course, assessee s claim as finally allowed was well within the limits specified under Section 36(1)(viia) of the Act. At this juncture, a look at Section 36(1)(viia) is necessary and this is reproduced hereunder, for brevity:- 36(1)(viia) a scheduled bank [not being a bank incorporated by or under the laws of a country outside India] or a non-scheduled bank [o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee in its books ₹ 4,01,44,027/- fall much below the sum of ₹ 5,38,05,015/- allowed by the Assessing Officer. In any case, a look into the original assessment order clearly show that but for the deduction allowed to the assessee as claimed by it in its return, there was no discussion as to how Section 36(1)(viia) was applied and whether the limits were corrected worked out. Admittedly, no question was asked to the assessee during the course of assessment proceedings also with regard to the claim made by it under Section 36(1)(viia), insofar as it concerns the quantum of such claim. This obviously show that there was no application of mind by the Assessing Officer at the time of assessment. Assessing Officer had not come to any conclusion at all having not considered the claim in the light of the conditions set out in Section 36(1)(viia) of the Act. We cannot say that he had taken a view which was in accordance with law. It is not a case where the Assessing Officer had adopted one of the courses possible in law. Of course, a cryptic order of the Assessing Officer by itself may not show that there was no thought given by him on a claim of the assessee. However, here th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Income Tax (Appeals) 46. Heard both sides. Perused orders of lower authorities. We find that this issue has been considered by the Commissioner of Income Tax (Appeals) and allowed claim of the assessee observing as under:- 5.6 On the issue of exclusion of income of the erstwhile Bharat Overseas Bank Ltd, the AO has excluded the said income on the contention that the proportionate income of erstwhile Bharat Overseas Bank Ltd included in the hands of the appellant was only after considering the deduction u/s 36(1 )(viia) and therefore on the said amount the deduction at 7.5% of total income as provided in section 36(1 )(viia) cannot be allowed. The AR on the other hand submits that since the income from the erstwhile Bharat Overseas Bank Ltd has been included in the total income of the appellant, the AO should have allowed deduction on the said income also irrespective of whether the income of the erstwhile Bharat Overseas Bank Ltd is before or after deduction u/s 36(1 )(viia). I find force in the contention of the AR. As per the provisions of section 36(1)(viia), the deduction is allowed at 7.5% of total income. Total income u/s 2(45) rws 5 of the Act defines total inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the month. The assessee in its claim for the current year, had considered the closing balances of advances made as on 31.3.2008. This amounts to double deduction of the same amount since closing balance as on 31.3.2008 was already considered for deduction u/s 36(1 )(viia) for the earlier previous year. The CIT(A) ought to have appreciated this fact and upheld the disallowance of excess deduction u/s 36(1 )(viia). The CIT(A) erred in following the decision in the case of City Union Bank, (ITA No.1485/Mds/2007 dt 30.10.2009) wherein the facts are distinguishable and hence inapplicable to the facts of the present case. 57. The factual backdrop of this ground is that while dealing with assessee s claim of bad debts of ₹ 654,41,43,300/- (supra), the Assessing Officer restricted this relief, inter alia, on the ground that only the incremental advances given in rural branches and not the ones outstanding be considered for this purpose. 58. In assessee s appeal, the CIT(A) has followed order of the 'tribunal' in City Union Bank s case in deleting the disallowance as follows: 7.4 I have carefully considered the facts of the case and submissions of the ld. A.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the Commissioner of Income Tax (Appeals), LTU, Chennai dated 20.9.2013 for the assessment year 2010-11 arising out of the assessment order passed under section 143(3) of the Act. 56. The first issue in the appeal of the assessee is that Commissioner of Income Tax (Appeals) erred in upholding the computation of deduction under section 36(1)(viia) made by the Assessing Officer by considering the word Place as appearing in Rule 6EA to mean the Panchayat whereas the same should only be taken to mean the ward in a rural area. At the time of hearing, counsel for the assessee submits that this issue has been decided against the assessee by the co-ordinate Bench of this Tribunal for the assessment year 2009-10 in ITA No.1949/Mds/2012 dated 18.6.2014. Copy of the order is placed on record. We find that the Tribunal while dismissing the assessee s ground in the above order held as under :- 8. The assessee s third ground raises the issue bad debts relating to rural branches u/s 36(1)(viia). It pleads that the CIT(A) has wrongly restricted its claim of aforesaid deduction by treating a branch as rural based on population of the panchayat instead of concerned ward . 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The findings of the Tribunal are reproduced herein below:- 7. We have perused the orders and heard the rival submissions. The original claim, which was allowed by the Assessing Officer under Section 36(1)(viia) of the Act, was as follows:- 7.5% of Gross Total Income: ₹ 5,74,07,362 10% of Rural Advances (Rs. 27,26,50,990/-): ₹ 2,72,65,099 ₹ 8,46,72,461 Thereafter, assessee had moved in appeal against some of the additions made by the Assessing Officer on other issues and pursuant to the relief granted in such appeal, the gross total income which earlier stood at ₹ 76,54,31,493/- came down to ₹ 35,38,65,546/-. As a result of the reduction in gross total income, deduction under Section 36(1)(viia) was also scaled down from ₹ 5,74,07,362/- to ₹ 2,65,39,916/-. This sum when aggregated with 10% of rural advances coming to ₹ 2,72,65,099/-, resulted in the sum of ₹ 5,38,05,015/- being eventually allowed as deduction under Section 36(1)(viia) of the Act. In the books of the assessee, actual provision for b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al norm. This can however be considered as a measure prescribed in abundant caution, to deal with a situation where banks are not to suffer shock of sudden delinquency that could happen in future. There is always a possibility that an asset, which is fully recoverable, may not be so at future date. Nevertheless, possibility of happening of such a contingency cannot be a sufficient reason to consider a provision made on standard assets also as a provision for bad and doubtful debts. Therefore, claim of the assessee that provision for standard assets also has to be considered for applying the condition set out under Section 36(1)(viia) is not in accordance with law. If the provision for standard assets is not considered as provision for bad and doubtful debts, the actual provision for bad and doubtful debts made by the assessee in its books ₹ 4,01,44,027/- fall much below the sum of ₹ 5,38,05,015/- allowed by the Assessing Officer. In any case, a look into the original assessment order clearly show that but for the deduction allowed to the assessee as claimed by it in its return, there was no discussion as to how Section 36(1)(viia) was applied and whether the limits were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2009-10 in ITA No.1949/Mds/2012 dated 18.6.2014. Referring to the said order, counsel submits that in principle, the Tribunal decided the issue in favour of the assessee holding that provisions of section 14A have no application when the securities are held as stock-in-trade. However, the Tribunal remitted the matter to the file of the Assessing Officer to ascertain whether securities are held as stock-intrade. 64. Departmental Representative places reliance on the orders of lower authorities in invoking provisions of section 14A read with Rule 8D for the purpose of disallowing expenditure attributable for earning dividend income. 65. We have perused the order of co-ordinate Bench of this Tribunal for the assessment year 2009-10, wherein the Tribunal held that authorities below have wrongly invoked section 14A in case of investments held as stock-in-trade. While holding so the Tribunal observed as under:- 15. We have considered the rival contentions, perused the relevant findings and the judicial precedents. Undisputedly, the assessee had earned exempt income of ₹ 21 crores from investments made in mutual funds and equities. Its stand adopted througho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 66. Since the facts and circumstances are identical, following the said decision of this Tribunal, we allow the ground raised by the assessee. 67. The next issue in the appeal of the assessee is that Commissioner of Income Tax (Appeals) erred in not allowing deduction in respect of contribution to staff welfare fund overlooking the mandatory requirement of payment as an employer. 68. At the time of hearing, counsel for the assessee submits that this issue has been decided against the assessee by the co-ordinate Bench for the assessment year 2008-09 in ITA No.1815/Mds/2011 dated 2.4.2013 in para 14 of the order. Respectfully following the said order of this Tribunal, we dismiss the ground of assessee on this issue. 69. The next issue in the grounds of appeal of the assessee is that Commissioner of Income Tax (Appeals) erred in confirming the order of the Assessing Officer disallowing the claim of depreciation on UPS at 80% overlooking the fact that UPS is an energy saving device entailing for higher depreciation. 70. Counsel for the assessee submits that this issue has been decided against the assessee by the co-ordinate Bench for the assessment year 2009-10 in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al payment? The learned AR has stated that the expenditure may be allowed in the year of actual payment. In view of the above discussion and the statement made by the learned AR, we hold that the amount claimed by the assessee towards wage revision be allowed in the year of actual discharge of the said liability. This ground of appeal of the Revenue is thus partly allowed. Since, the issue in hand is identical to the one already adjudicated by the Tribunal, the present ground of appeal is partly allowed for the aforesaid reasons. 74. Respectfully following the said decision, we hold that provision made towards wage arrears is only a provision and liability has not been crystallized. The wage arrears shall be allowed as deduction in the year in which the assessee discharges the liability by paying wage arrears to the employees. Thus, the ground raised by the assessee on this issue is partly allowed. 75. The last ground in the grounds of appeal of the assessee reads as under:- The CIT(A) erred in restricting the relief u/s.90 to the extent of tax paid in the foreign country. The CIT(A) should have noted that the relief claimed by the appellant is in accordance with sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total receipts and the necessary relief is to be granted by elimination method or as per the terms of agreement seeking to avoid double taxation. He relies upon Finance Act, 2012 inserting explanation 3 to section 90 making the notification retrospectively applicable. In this manner, the CIT(A) has directed the Assessing Officer to allow relief to the assessee as per the aforesaid notification. 25. We have heard both parties and gone through the relevant findings in the orders of Assessing Officer as well as the CIT(A). The parties are unanimous before us that this very issue stands decided in the Revenue s favour by the 'tribunal' (supra) in preceding assessment year. So, we also follow suit and reject the assessee s relevant grounds. 78. Respectfully following the said decision, we dismiss the ground raised by the assessee on this issue. ITA No.2031/Mds/2013: (Revenue appeal): 79. The first issue in the appeal of the Revenue is that Commissioner of Income Tax (Appeals) erred in directing the Assessing Officer to consider the aggregate average advances outstanding at the end of each month and not the incremental advances granted during each month while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 984/Mds/2003 dated 30.6.2011 Accordingly, the impugned disallowance stands deleted. 46. Coming to this issue as well, the parties express unanimity in referring to order of the 'tribunal' for assessment year 2008- 09(supra) to state that the very issue stands decided in the assessee s favour. Consequently, we agree with the CIT(A) s findings and reject the relevant Revenue s ground. 85. Respectfully following the said decision, we uphold the order of the Commissioner of Income Tax (Appeals) and reject the grounds of appeal of the Revenue. 86. The next issue in the appeal of the Revenue is that Commissioner of Income Tax (Appeals) erred in deleting disallowance of loss on revaluation of derivative contracts. The counsel for the assessee submits that this issue has also been decided by the co-ordinate Bench for the assessment year 2009-10 in ITA No.1949/Mds/2012 dated 18.6.2014 at pages 21 22 in paras 47 to 50 in favour of the assessee. Departmental Representative supports the order of the Assessing Officer. 87. We find that the co-ordinate Bench of this Tribunal while upholding the order of the Commissioner of Income Tax (Appeals) in allowing the claim of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed by this Tribunal at 60% observing as under:- 16. The assessee s fifth ground raises issue of depreciation on UPS claimed @ 80%. The Assessing Officer treated it as general plant and machinery and restricted it to 15% of the total value of ₹ 12,49,63,955/- resulting in consequential addition of ₹ 5,89,08,262/-. In doing so, he drew support from the ITAT Delhi and Jodhpur benches decisions to hold that a UPS is neither part of a computer nor an energy saving device but only an equipment to ensure uninterrupted power supply. 17. In lower appellate order, the CIT(A) has agreed with the Assessing Officer s findings treating the UPS in question as part of general plant and machinery only. 18. We have heard both parties and gone through the case file. It emanates from the tabulation that the very depreciation claim for preceding assessment year has been partly accepted @ 60% by the 'tribunal' (supra). Therefore, we adopt consistency herein as well and accept assessee s claim @ 60%. The balance 20% amount is, disallowed. The assessee gets part relief. 91. Respectfully following the said decision, we uphold the order of the Commissioner of Income Tax ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is furnished by the assessee along with such return. 21. The Hon ble Calcutta High Court in the case of Exide Industries (supra) has held that the original enactment of section 43B of the Income Tax Act was to curb unreasonable deduction on the basis of the mercantile system of accounting without discharging statutory liabilities on the one hand and claim appropriate benefit under the Act on the other introduced the provisions of section 43B(f). Under clause (f) of section 43B any sum payable by the employer to its employees as leave encashment shall be deductible only in computing the income referred to in section 28 of that previous year in which the sum is actually paid by the employer to its employees. The Hon ble High Court further held that while inserting the clause (f) no special reasons were disclosed. Without such reasons the enactment is inconsistent with the original provisions of that section. Although the disclosure of the reasons was not mandatory, but in the interest of justice, it was incumbent upon the legislature to disclose the reasons. The legislature must disclose reasons which would be consistent with the provisions of the Constitution and the laws ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility would be an accrued liability and would not convert into a conditional one merely because the liability was to be dis- charged at a future date. There may be some difficulty in the estimation thereof but that would not convert the accrued liability into a conditional one ; it was always open to the tax authorities concerned to arrive at a proper estimate of the liability having regard to all the circumstances of the case. Applying the above said settled principles to the facts of the case at hand we are satisfied that the provision made by the appellant-company for meeting the liability incurred by it under the leave encashment scheme proportionate with the entitlement earned by employees of the company, inclusive of the officers and the staff, subject to the ceiling on accumulation as applicable on the relevant date, is entitled to deduction out of the gross receipts for the accounting year during which the provision is made for the liability. The liability is not a contingent liability. The High Court was not right in taking the view to the contrary. The appeal is allowed. The judgment under appeal is set aside. The question referred by the Tribunal to the High Court is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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