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2013 (1) TMI 129 - AT - Income TaxDisallowance loss on amortization of premium - Purchase of government securities A.O. argued that the premium given at the time of purchasing permanent category of investment is capital in nature Held that - Following the decision of Tribunal in assessee s own has considered an identical issue and delete the disallowance. In favour of assessee Addition of unclaimed balance of bank deposits - Unclaimed or Overdue deposits A.O argue that assessee stands enriched by the unclaimed deposits Held that - Unclaimed deposits are form part of the bank deposits as reflected in the Balance sheet and have not been appropriated towards profits or income of the bank in the P&L A/c. It cannot be treated as income of the bank unless it has accrued to the bank or has it been received by the bank as its income. Same view has been taken by Tribunal in an identical issue in the assessee s own case in the order passed for assessment year 2005-06. In favour of assessee Addition of surplus realised on sale of jewellery - Unjust Enrichment - The assessee bank is advancing money on the security of gold - When the borrower fails to liquidate the loan, the assessee-bank auctions the pledged gold and uses the proceeds to recover the amount lent by it - The excess amount so realised by the bank over and above the outstanding loan amount was shown as its liability under the head surplus realisation on sale of jewellery AO argue that assessee has enriched itself by the surplus amount and accordingly, treated the same as income of the assessee Held that - The excess amount on sale of jewellery has neither accrued nor has been received by the bank as its income u/s. 5 of the I.T. Act. It continues to be an ascertained liability of the bank to be returned to the owner. Tribunal has considered an identical issue in the assessee s own case relating to the assessment year 2005-06. In favour of assessee Disallowance made u/s. 40(a)(ia) Late deposit of TDS Held that - All the deducted amounts except two small amounts of Rs. 550/- and 400/- had been remitted to the Central Government on or before the last day of the previous year. The above said two amounts which were deducted on 02.06.2005 and 04.08.2005 respectively were remitted into the Government account only on 04.04.2006, i.e., after the expiry of the financial year. Accordingly, the Ld. CIT(A) granted relief in respect of the amounts represented by the TDS which were remitted on or before the end of the relevant year. In favour of assessee Disallowance of revaluation of loss in unquoted shares - loss on revaluation of shares Held that - We set aside the order of the Ld. CIT(A) on this issue and restore the same to the file of the A.O. with the direction to examine this issue in the light of the decision of the Hon ble High Court of Kerala in assessee s own case. Remand back to AO Disallowance made u/s. 14A - Disallowance of proportionate interest - proportionate administrative expenses Held that - This issue needs re-examination as per Hon ble High Court of Kerala in the assessee s own case at the end of the A.O. Remand back to AO Addition of excess cash - The cashier of all branches has to tally the receipts and payments of cash of each day with the record maintained by the Accountant. Sometimes, it so happens that the cash balance physically available with the cashier may exceed the cash balance that should be available with him - customer might have remitted more than what was actually mentioned in the challan or the cashier might have disbursed lesser amount than that mentioned in the cheque leaf banks usually treat the Excess cash as its liability, as the bank may receive claim from the concerned party at any point of time - Held that - As the Tribunal in its order dated 11-02- 2011 passed in the assessee s own case in I.T.A. No. 10/coch/2009 relevant to the assessment year 2005-06 has upheld the addition of excess cash found with the assessee. In favour of revenue Disallowance of bond issue expenses - expenses incurred in expanding the capital base is capital expenditure Held that - Following the decision in case of East India Hotels Ltd. (2001 (8) TMI 102 - CALCUTTA HIGH COURT) that claim of the assessee that the expenses incurred on issuing debentures is revenue expenditure. Therefore, the expenditure incurred in connection with the issue of debentures, in the facts and circumstances of the instant case, has to be treated as revenue expenditure only. In favour of assessee Disallowance of claim of depreciation on Held to maturity investment Held that - This issue is covered by the decision of the Hon ble High court of Kerala in the assessee s own case in I.T.A. No. 38/2010 dated 24-02-2011. Restore the same to the file of the AO
Issues Involved:
1. Amortization of premium on purchase of government securities. 2. Unclaimed overdue deposits. 3. Surplus on sale of jewelry. 4. Disallowance under section 40(a)(ia) for delayed remittance of TDS. 5. Pension payments. 6. Disallowance of bad debts. 7. Disallowance of revaluation loss in unquoted shares. 8. Disallowance under section 14A on dividend income. 9. Addition of excess cash found. 10. Disallowance of bond issue expenses. 11. Disallowance of depreciation on "Held to Maturity" investments. Detailed Analysis: 1. Amortization of Premium on Purchase of Government Securities The Assessing Officer (AO) disallowed the claim of Rs. 8,42,90,000/- stating it was capital in nature. The Ld. CIT(A) granted relief by following a previous Tribunal decision in the assessee's own case. The Tribunal upheld the Ld. CIT(A)'s decision, finding no reason to interfere. 2. Unclaimed Overdue Deposits The AO treated unclaimed deposits of Rs. 4,88,265/- as income, asserting the bank was enriched by these deposits. The Ld. CIT(A) deleted the addition, emphasizing that these deposits remain liabilities as per RBI guidelines and cannot be appropriated by the bank. The Tribunal upheld the Ld. CIT(A)'s decision, consistent with a previous ruling in the assessee's own case. 3. Surplus on Sale of Jewelry The AO treated the surplus of Rs. 2,53,161/- from auctioned jewelry as income, arguing the bank was enriched by it. The Ld. CIT(A) deleted the addition, stating the surplus was a liability to be returned to the rightful owner. However, the Tribunal restored the AO's addition, aligning with a previous Tribunal decision in the assessee's own case. 4. Disallowance under Section 40(a)(ia) The Ld. CIT(A) granted relief for TDS amounts remitted on or before the last day of the previous year, except for two small amounts remitted after the financial year. The Tribunal found no infirmity in the Ld. CIT(A)'s decision. 5. Pension Payments The AO disallowed Rs. 3.48 crores in pension payments, arguing it was over and above the Pension Fund contribution. The Ld. CIT(A) set aside the issue for re-examination. The Tribunal noted the issue was resolved in favor of the assessee in subsequent proceedings and dismissed the grounds raised by both parties. 6. Disallowance of Bad Debts The issue of disallowance of Rs. 16.47 crores in bad debts was remanded back to the AO for re-examination in light of a Supreme Court decision in the assessee's own case. 7. Disallowance of Revaluation Loss in Unquoted Shares The AO disallowed Rs. 1,38,253/- claimed as revaluation loss. The Tribunal remanded the issue back to the AO for reconsideration in light of a Kerala High Court decision in the assessee's own case. 8. Disallowance under Section 14A on Dividend Income The Tribunal remanded the issue of disallowance of Rs. 3,17,585/- under section 14A back to the AO for re-examination in light of a Kerala High Court decision in the assessee's own case. 9. Addition of Excess Cash Found The AO treated excess cash of Rs. 67,980/- as income. The Tribunal upheld the addition, consistent with a previous Tribunal decision in the assessee's own case. 10. Disallowance of Bond Issue Expenses The AO disallowed Rs. 30,57,979/- in bond issue expenses, treating it as capital expenditure. The Tribunal disagreed, ruling the expenses were revenue in nature and directed the AO to delete the addition. 11. Disallowance of Depreciation on "Held to Maturity" Investments The Tribunal remanded the issue back to the AO for re-examination in light of a Kerala High Court decision in the assessee's own case. Conclusion: The appeal filed by the Revenue is partly allowed, and the appeal of the assessee is treated as partly allowed for statistical purposes.
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