TMI Blog2022 (9) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... :-CIT(A) thus allowed relief to the assessee on this issue by relying on the order of his learned predecessor passed in assessee s own case for AY 2013-14 [ 2019 (10) TMI 1068 - ITAT AHMEDABAD] - As agreed by the learned representatives of both the sides, this issue is thus squarely covered in favour of the assessee by the order of the Co-ordinate Bench of this Tribunal passed in assessee s own case for AY 2013-14 and respectfully following the same, we uphold the impugned order of the learned CIT(A) deleting the addition made by the Assessing Officer on account of deposits written off with Madhavpura Mercantile Co-op. Bank . Ground No.2 of the Revenue s appeal is accordingly dismissed. Disallowance of Impact Fee - CIT-A deleted the addition - HELD THAT:- CIT(A) thus allowed relief to the assessee on this issue by relying on the decision of Yadunandan Corporation Surat [ 2011 (11) TMI 868 - ITAT AHMEDABAD] , Keerthi Estates P. (Ltd) [ 2017 (8) TMI 1672 - ITAT HYDERABAD] and Sanjay Bharatkumar Shah [ 2021 (12) TMI 814 - ITAT AHMEDABAD] wherein held that compounding fees paid to municipal corporation for regularizing a building plan is not in nature of offence nor prohibited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch filed its return of income for the year under consideration on 22.09.2015 declaring a total income of Rs.98,12,84,810/-. In the assessment completed under Section 143(3) of the Income-tax Act, 1961 ( the Act in short) vide an order dated 30.11.2017, the total income of the assessee was determined by the Assessing Officer at Rs.1,08,68,86,394/- after making following additions/disallowances:- i. Disallowance of amortization of premium expenses Rs. 3,15,80,885/- ii. Disallowance of Members gift expenses - Rs. 1,10,80,735/- iii. Addition on account of deposits written off by merged banks - Rs. 2,99,07,611/- iv. Disallowance of Impact Fee - Rs. 10,43,353/- v. Disallowance of investment written off - Rs. 3,19,89,000/- 4. Against the order passed by the Assessing Officer under Section 143(3) of the Act, an appeal was preferred by the assessee before the learned CIT(A) and after considering the submissions made by the assessee as well as the material available on record, the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee further relied upon the order passed by the Co-ordinate Bench in Assessee s own case for A.Y. 2012-13 in ITA No.2124/Ahd/2016; cops whereof has been submitted before us. On the contrary the Learned DR relied upon the order passed by the authorities below. 17. Heard the respective parties, perused the relevant materials available on record including the order passed by the co-ordinate Bench in ITA No.2124/Ahd/20l6 the relevant portion whereof is as follows: 8.During the year under consideration, the assessee has written off govt. security premium to the extent of Rs. 2,10,11,715/-. The assessing officer has disallowed the premium amount amortized by the assessee hank in respect of purchase of securities under the category held to be maturity stating that definitely the same is of capital only which cannot be allowed as expenditure. 9. Aggrieved assessee filed appeal before the ld. CIT(A). The ld. CIT(A) has deleted the addition stating that his predecessor has deleted the same in the case of the assessee in the earlier years. 10. We have heard the rival contentions and perused the material on record carefully. The assessee hits made investment in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al is allowed. 6.1 The learned CIT(A) thus allowed relief to the assessee on this issue by following the orders of his learned predecessors in assessee s own case for AYs 2013-14 and 2014-15 as well as the decision of the Tribunal rendered in assessee s own case for AY 2013-14 vide its order dated 14.10.2019 passed in ITA No.1088/Ahd/2017. At the time of hearing before us, the learned Counsel for the assessee has pointed out that even the order of the learned CIT(A), passed in assessee s own case for AY 2014-15 on which reliance inter alia is placed by the learned CIT(A) to decide this issue in favour of the assessee vide its impugned order, has been upheld by the Tribunal vide its order dated 18.06.2019 passed in ITA No. 1864/Ahd/2017. A copy of the said order is placed on record and a perusal of the same shows that a similar issue relating to disallowance of amortization of premium has been decided by the Tribunal vide paragraph No.8 as under:- 8. Heard the respective parties, perused the relevant materials available on record. It appears from the records that while deleting the addition made by the Learned AO, the Learned CIT(A) observed inter alia as follows followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nate Bench in ITA No.2124/Ahd/2016 for A.Y. 2012-13. While deciding the identical issue in favour of the assessee the Hon'ble Co-ordinate Bench observed as follows: 10. We have heard the rival contentions and perused the material on record carefully. The assessee has made investment in the HTM category as per the guidelines laid down by the RBI and claimed amortization of premium till the period maturity. The assessing officer has disallowed the claim following the similar addition made by his predecessors on the ground that the premium amount paid for acquiring the capital investment cannot be allowed as deduction expenditure. The ld. CIT(A) has deleted the addition by following the decision of his predecessors. We have noticed that as per RBI guidelines dated 16th Oct, 2000, the investment portfolio of the bank is required to be classified under three categories viz. Held to Maturity (HTM), Held for Trading (HFT) and Available for Sale (ATS). Investment classified under HTM category needs to be marked to market and are carried at acquisition cost unless these are more than the face value in which case the premium should be amortized over the remaining period. Allowabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 is regarding an amount written off towards deposit of Madhavpura Mercantile Co. Op. Bank Ltd. to the tune of Rs. 23,88,83,704/-. The A.O. dealt with this issue vide para-7 and 8 of the assessment order which is reproduced as under :- 7. I have carefully perused the submission of the assessee. However the contention of- the assesses is not acceptable on the following facts. i) The assessee has not filed any Corroboratory evidence or justification regarding the write off amounting to Rs.23,88,83,704/-. The assessee has furnished a letter dated 05/08/2010 issued by the Director, Ministry of agriculture, Department of Agriculture Cooperation, Krishi Bhavan. New Delhi regarding the Gist of discussions taken in the meeting held on 26/05/2010 to discuss the possibilities of the revival of The Madhupura Mercantile Co-operative Bank Ltd. Ahmedabad. The letter clearly indicates that the Reserve Bank of India is in favour of Revival of Madhupura Mercantile Cooperative Bank. Further letter of Reserve Bank of India dated 02/12/2010 produced by the assessee is a letter to all Urban Cooperative banks to make full provision against their exposure to Madhupura Mercantile Bank as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had accumulated loss of 1357.41 crores and deposit erosion was 100%. Therefore the observation of the A. O in the assessment order that on verification of the return of income filed by MMCB for A.Y.2013-14, the bank is having cash and bank balance amounting to Rs. 654.89 crore cannot be the reason for disallowing the claim of the appellant especially in view of findings of the RBI as given in the order cancelling the license of MMCB. All these findings have been given by the RBI after statutory instruction of the Co. Op. Bank u/s.35 of the Act with reference to its financial position as on March, 31st, 2011. It has also been confirmed by the appellant that nothing has been recovered till date since 2001 and nothing is likely to be recovered in the near future also. In view of the above the argument of the appellant are accepted and the addition made by the A.O. is deleted. 6.1 Further, the Revenue filed appeal before the Hon'ble ITAT, Ahmedabad, against the order of the CIT(A)-10, Ahmedabad, inter-alia challenging the deletion of the addition of Rs. 23,88,83,704/- made by the A.O., on account of FDR written off. The said ground of appeal was dismissed by the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der which reads a under:- 7. The Ground No. 5 of the appeal is regarding disallowance of Impact Fees of Rs.10,43,353/-. During the year under consideration, the appellant has paid impact fees of Rs.10,43,353/- to Ahmedabad Municipal Corporation for regularizing the illegal construction. According to AO there is no difference between unauthorized construction and illegal construction. Therefore the Impact Fees paid to regularize the same is in form of penalty and hence not allowed. The appellant submitted the facts of this case are similar to the facts of case decided by hon'ble ITAT Ahmedabad in case of Yadunandan Corporation Surat V. Department of Income Tax on 24.11.2011 vide ITA No. 92/Ahd/2009. 1. On the facts and circumstances of the case and in law, the Ld. CIT (A), Surat has erred in deleting the addition of Rs.13,02,923/- on account of impact fee paid to Surat Municipal Corporation in violation and infraction of provisions of taw? There was only a violation of the sanction, and not any infraction of any law . Further, it must be also appreciated that the contravention was not something which the SMC had detected and had levied penalty for such contrav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecisions cited by the appellant and following decision of the Ahmedabad ITAT in case of Yadunandan Corporation Surat V. Department of Income Tax on 24.11.2011 vide ITA No. 92/Ahd/2009, addition of Rs. 10,43,353/- made is hereby deleted, This ground of appeal is allowed. 8.1 The learned CIT(A) thus allowed relief to the assessee on this issue by relying on the decision of Co-ordinate Benches of this Tribunal in the case of Yadunandan Corporation Surat (supra) and Keerthi Estates P. (Ltd) (supra). As further pointed out by the learned Counsel for the assessee at the time of hearing before the Tribunal, the Tribunal it its recent decision rendered in the case of Sanjay Bharatkumar Shah Vs. ITO, vide its order dated 08.12.2021 passed in ITA No.1138/Ahd/2019, has also decided a similar issue in favour of the assessee vide paragraph No. 7 as under:- 7. With the assistance of the Id. DR, we have gone through the record carefully. Municipal authorities have levied an impact fee and such expenses were to be borne by owner of the assessee's premises. The Revenue was of the view that this expenditure is penal in nature, and therefore, hit by Explanation-1 appended to section 37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aragraph Nos. 8 to 8.1 of his impugned order:- 8. The Ground No. 6 of appeal is regarding disallowance of claim of Investment written off of Rs. 3,19,89,000/-. The Udhna Citizen Co-op. Bank Ltd., Surat got merged with your assessee bank during financial year 2013- 14. The said bank has deposited Rs.3,19,96,075/- with Home Trade Ltd. Mumbai for purchasing government securities. The broker Home Trade Ltd. involved in some scandalous activities. The appellant has filed a suit before the civil judge at Surat and written off the amount. The AO has disallowed the amount on the basis that decision of Hon'ble civil court in this matter is awaited. 8.1 I have gone through the facts of the case and it is noticed that the appellant is not able to recover the amount from Home Trade Ltd. even after the decree passed by Cession Court in 2003. It is stated by the appellant that the company's name has been struck off from record of Registrar of company and the concerned individuals are not traceable. The appellant is allowed to write off the amount of Rs.31,98,9,000/- as business loss and the corresponding addition made by the AO is deleted . 9.1 At the time of hearing befo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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