2013 (2) TMI 751 - AT - Income Tax

Disallowance of expenditure on Wills World Cup - Held that - The entire advertisement expenses has already been allowed in the assessment year 1996-97, the same cannot be allowed in the subsequent year. Therefore, this ground of appeal of the assessee has become infructuous and the same is dismissed as such. Applicability of provisions of section 115JA to bank - Held that - In view of the situation that the second ground of appeal which has been vehemently argued by both the parties does not emanate from the impugned order of the CIT(A), it would not be possible for the Tribunal to adjudicate the same. The issue was not raised by the assessee by following proper procedure by raising the same as additional ground of appeal before the Tribunal. This ground of appeal of the assessee is dismissed There is no question of allowing depreciation on land to the assessee Bad debts written off in respect of rural advances

Issues Involved:
1. Disallowance of expenditure on Wills World Cup.
2. Applicability of provisions of section 115JA to banks.
3. Depreciation on building including land.
4. Disallowance under section 14A.
5. Bad debts written off.
6. Contribution towards staff welfare fund.
7. Provision for wage arrears.

Issue-wise Detailed Analysis:

1. Disallowance of Expenditure on Wills World Cup:
The assessee had amortized the advertisement expenditure over three years starting from the assessment year 1996-97. The Tribunal had previously allowed the entire expenditure in the year it was incurred. Hence, the claim for the subsequent year was dismissed as infructuous.

2. Applicability of Provisions of Section 115JA to Banks:
The assessee argued that section 115JA does not apply to nationalized banks as they are not companies under the Companies Act, 1956. The Tribunal dismissed this ground since it was not raised before the CIT(A) and was not properly presented as an additional ground before the Tribunal.

3. Depreciation on Building Including Land:
The Tribunal upheld its earlier decision that depreciation on land is not allowable, dismissing the assessee's claim.

4. Disallowance Under Section 14A:
For the assessment year 1998-99, the CIT(A) upheld a 2% disallowance of tax-free income as estimated expenditure. The assessee did not press this ground, and it was dismissed. For the assessment year 2002-03, the Tribunal reduced the disallowance to 2% to align with earlier years.

5. Bad Debts Written Off:
The Tribunal remanded the issue back to the Assessing Officer for fresh adjudication in light of the Supreme Court's ruling in Catholic Syrian Bank Ltd., which clarified that sections 36(1)(vii) and 36(1)(viia) are distinct and independent.

6. Contribution Towards Staff Welfare Fund:
The Tribunal dismissed the assessee's claim for deduction as the liability had not crystallized, and the contribution was not made towards an approved fund as required by section 40A(9).

7. Provision for Wage Arrears:
The Tribunal held that the provision for wage arrears should be allowed in the year of actual payment, partially allowing the Revenue's appeal. The Tribunal noted that the liability was contractual and crystallized after the close of the accounting year.

Separate Judgments Delivered:
No separate judgments were delivered by different judges in this case. The order was pronounced collectively by the Tribunal members.

Conclusion:
The Tribunal dismissed several grounds of appeal by the assessee, including those related to the Wills World Cup expenditure, depreciation on land, and the applicability of section 115JA. It remanded the issue of bad debts back to the Assessing Officer for fresh adjudication and allowed the provision for wage arrears in the year of actual payment. The Tribunal also adjusted the disallowance under section 14A to 2% for consistency across assessment years.

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