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2014 (9) TMI 1179 - AT - Income TaxValidity of reopening of assessment - failure on the part of assessee to disclose material facts - HELD THAT - Reopening in this case was made within a period of four years from the end of the assessment year and the reopening was made subsequent information available with the Assessing Officer and therefore reopening is valid Deduction u/s 36(1)(viia) to be restricted to the provision made in books as against the entire eligible amount - HELD THAT - As decided in assessee s own case 2013 (4) TMI 751 - ITAT CHENNAI 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 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 while computing its income - HELD THAT - No infirmity in the conclusion arrived at by the Commissioner of Income Tax (Appeals) in deleting the disallowance. The Revenue has also not placed any document on record to rebut the findings of the Commissioner of Income Tax (Appeals). In the circumstances, we uphold the order of the Commissioner of Income Tax (Appeals) and reject the grounds raised by the Revenue on this issue. Taxability of unreconciled entries in inter branch transactions credited to profit and loss account - HELD THAT - Commissioner of Income Tax (Appeals) following the decision of Delhi Bench of this Tribunal in the case of Punjab National Bank Vs. Addl. CIT 2012 (5) TMI 437 - ITAT, NEW DELHI deleted the addition made by the Assessing Officer. On a perusal of the decision of the Delhi Bench of this Tribunal, we find that the said decision squarely applies to the issue on hand. The Delhi Bench of this Tribunal considered a similar situation where the assessee reduced unreconciled balances while computing the income which was brought to tax by the Assessing Officer and the Tribunal held that question of bringing such sums to tax under section 41(1) are not permissible. Thus we uphold the order of the Commissioner of Income Tax (Appeals) and reject the grounds raised by the Revenue on this issue. Non applicability of provisions of section 115JB to assessee bank as decided in assessee s own case 2013 (4) TMI 919 - ITAT CHENNAI Interest under section 244A on the interest component of the refund also - HELD THAT - On going through the decision of the Hon ble Supreme Court in the case of Gujarat Fluoro Chemicals 2013 (10) TMI 117 - SUPREME COURT 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. Disallowance u/s 14A - HELD THAT - As 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. Disallowing deduction in respect of contribution to staff welfare fund confirmed relying on its own case 2013 (4) TMI 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 followed in assessee s own case 2013 (4) TMI 751 - ITAT CHENNAI .
Issues Involved:
1. Validity of reopening the assessment under section 143(3) read with section 147. 2. Deduction under section 36(1)(viia) and its computation. 3. Deletion of addition towards provision for bad and doubtful debts and depreciation on investments. 4. Taxability of unreconciled entries in inter-branch transactions. 5. Applicability of section 115JB to the assessee. 6. Entitlement to interest under section 244A on the interest component of the refund. 7. Deduction for contribution to staff welfare fund. 8. Depreciation rate on UPS. 9. Deduction of provision for wage arrears. 10. Relief under section 90 for tax paid in foreign countries. 11. Disallowance of loss on revaluation of investments. 12. Disallowance of loss on revaluation of derivative contracts. 13. Provision for leave salary. Detailed Analysis: 1. Validity of Reopening the Assessment: The assessee contested the reopening of the assessment under section 143(3) read with section 147, arguing that no new tangible material was available. The Tribunal upheld the reopening, citing that it was within four years and based on subsequent information available to the Assessing Officer. The Tribunal referenced several judicial decisions, including the Supreme Court in Kalyanji Mavji & Company v. CIT and the Gujarat High Court in Praful Chunilal Patel and Vasanth Chunilal Patel v. ACIT, supporting the validity of reopening based on new facts or overlooked issues. 2. Deduction under Section 36(1)(viia): The Tribunal upheld the CIT(A)'s decision to restrict the deduction to the provision made in the books, dismissing the assessee's claim for a higher deduction. The Tribunal referenced its previous decisions and clarified that the allowance under section 36(1)(viia) is subject to the actual provision made by the assessee and cannot exceed 7.5% of the gross total income. The Tribunal also dismissed the assessee's claims regarding provisions for standard assets and country risk, reiterating that such provisions do not qualify as bad and doubtful debts. 3. Deletion of Addition towards Provision for Bad and Doubtful Debts and Depreciation on Investments: The Tribunal upheld the CIT(A)'s decision to delete the addition made by the Assessing Officer, agreeing that the net provision debited in the profit and loss account was correctly added back in the computation of income. The CIT(A) had verified the details and found that the total provisions were fully added back, thus rejecting the Revenue's grounds. 4. Taxability of Unreconciled Entries in Inter-Branch Transactions: The Tribunal upheld the CIT(A)'s decision that unreconciled entries in inter-branch transactions are not taxable. The Tribunal referenced the Delhi Bench decision in Punjab National Bank Vs. Addl. CIT, which held that such sums do not constitute income under section 41(1) of the Act. 5. Applicability of Section 115JB: The Tribunal upheld the CIT(A)'s decision that section 115JB does not apply to the assessee, referencing its own decision in the assessee's case for a previous assessment year. 6. Entitlement to Interest under Section 244A: The Tribunal ruled against the assessee, following the Supreme Court decision in CIT Vs. Gujarat Fluoro Chemicals, which held that interest on interest is not allowable. 7. Deduction for Contribution to Staff Welfare Fund: The Tribunal dismissed the assessee's claim for deduction for contribution to the staff welfare fund, following its own decision in the assessee's case for a previous assessment year. 8. Depreciation Rate on UPS: The Tribunal allowed depreciation on UPS at 60%, following its own decision in the assessee's case for a previous assessment year, where it had partially accepted the claim. 9. Deduction of Provision for Wage Arrears: The Tribunal held that the provision for wage arrears is not deductible as it is not a crystallized liability. The deduction is allowable in the year the liability is discharged. 10. Relief under Section 90 for Tax Paid in Foreign Countries: The Tribunal ruled against the assessee, following its own decision in the assessee's case for a previous assessment year, which restricted relief to the extent of tax paid in the foreign country. 11. Disallowance of Loss on Revaluation of Investments: The Tribunal upheld the CIT(A)'s decision to delete the disallowance, following its own decision in the assessee's case for a previous assessment year, which allowed the claim based on judicial precedents. 12. Disallowance of Loss on Revaluation of Derivative Contracts: The Tribunal upheld the CIT(A)'s decision to delete the disallowance, following its own decision in the assessee's case for a previous assessment year, which allowed the claim based on judicial precedents. 13. Provision for Leave Salary: The Tribunal upheld the CIT(A)'s decision to allow the provision for leave salary, following its own decision in the assessee's case for a previous assessment year, which referenced judicial precedents that struck down section 43B(f).
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