9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (12) TMI 888 - AT - Income TaxDepreciation on investments held to maturity - Held that - Following assessee s own case for AY 2006-07 - Value of the securities at cost or market value whichever is less should be accepted for income tax even if the banks in their books do not value on that basis - it is an accepted proportion that investment made by the bank to comply with the SLR requirement would constitute their stock in trade and depreciation in value of the same is an allowable deduction - Decided against Revenue. Broken period interest - Held that - Following assessee s own case for AY 2006-07 - The broken period interest included in the purchase price of Government securities held by the banking company to comply with SLR requirement is entitled to deduction - Decided against Revenue. Disallowance u/s 14A - Held that - Following assessee s own case for AY 2006-07 - The disallowance is to be made on reasonable basis - The disallowance is reduced to 2% expenditure as relating to earning of the exempted income u/s 14A - Decided against Revenue. Amortization of public issue expenses - Held that - Following assessee s own case for AYs 2000-01 to 2004-05 - The first and primary rule of construction is that the intention of the legislature must be found in the words used by the legislature itself - The expenses are disallowed u/s 35D - Decided against assessee. Provision for bad and doubtful debts - Held that - Following assessee s own case for earlier years - Irrespective of the debit to the profit and loss account on account of provision for bad and doubtful debts (PBDD), an Assessee is entitled to 10% of the AARA as deduction u/s.36(1)(viia) of the Act - Decided against assessee. Disallowance of unrealized interest - Held that - Following assessee s own case for AY 2006-07 - Income which was earlier recognised is not to be allowed in the subsequent year in case it is permissible for the assessee to write off such income in concerned assessment year when it was found that it was not recoverable - Decided in favour of assessee. Provision for leave encashment - Held that - In view of the amendment to Section 43B by the introduction of Sub Section (f) which provides for allowing deduction on leave encashment only on the actual payment - There is nothing on record to show that the assessee has parted with the amount for making payment for the leave encashment - This was merely a provisions made by the assessee - Decided against assessee. Debts written off by the non-rural branches - Held that - Following Catholic Syrian Bank Vs. CIT 2012 (2) TMI 262 - SUPREME COURT OF INDIA - The same is allowed as deduction - Decided in favour of assessee.
Issues Involved:
1. Depreciation on HTM Investments 2. Broken Period Interest 3. Disallowance under Section 14A 4. Deduction under Section 35D 5. Disallowance under Section 36(1)(viia) 6. Depreciation/Fall in Value of Investments Held to Maturity 7. Disallowance of Unrealized Interest 8. Disallowance of Provision for Leave Encashment 9. Deduction under Section 36(1)(vii) for Debts Written Off by Non-Rural Branches Detailed Analysis: 1. Depreciation on HTM Investments The AO disallowed the depreciation claim on HTM investments, arguing it was not routed through the P&L account. The CIT(A) directed the AO to ascertain the facts and allow depreciation accordingly. The ITAT upheld the CIT(A)'s direction, referencing a similar decision in the assessee's case for AY 2006-07, where it was held that such securities should be treated as stock in trade, allowing depreciation as a revenue deduction. 2. Broken Period Interest The AO disallowed the broken period interest on HTM securities, considering them capital assets. The CIT(A) directed the AO to delete this disallowance. The ITAT upheld this decision, citing the coordinate bench's ruling in AY 2006-07, which treated such securities as stock in trade, thus allowing the broken period interest as a revenue deduction. 3. Disallowance under Section 14A The AO applied Rule 8D to compute disallowance, which was not applicable for AY 2007-08. The CIT(A) directed the AO to recalculate using the formula applied in earlier years. The ITAT upheld the CIT(A)'s decision, directing the AO to restrict disallowance to 2% of the exempt income, following the coordinate bench's decision for AY 2006-07. 4. Deduction under Section 35D The AO disallowed the claim for deduction under Section 35D related to public issue expenses, following earlier decisions. The CIT(A) upheld this disallowance. The ITAT confirmed the CIT(A)'s order, referencing its own earlier decisions against the assessee. 5. Disallowance under Section 36(1)(viia) The AO disallowed the provision for standard assets, allowing only the provision made in the books. The CIT(A) upheld this, referencing the P&H High Court's decision in State Bank of Patiala. The ITAT confirmed the CIT(A)'s order, also referencing the Bangalore ITAT's decision in Syndicate Bank's case. 6. Depreciation/Fall in Value of Investments Held to Maturity The ITAT directed the AO to allow depreciation/fall in value of HTM securities, following the decision in the assessee's case for AY 2006-07, where such securities were treated as stock in trade. 7. Disallowance of Unrealized Interest The AO disallowed the unrealized interest on NPAs. The CIT(A) upheld this disallowance. The ITAT reversed the CIT(A)'s order, allowing the deduction for unrealized interest, citing the coordinate bench's decision for AY 2006-07. 8. Disallowance of Provision for Leave Encashment The AO disallowed the provision for leave encashment under Section 43B. The CIT(A) confirmed this disallowance. The ITAT upheld the CIT(A)'s order, referencing its decision in the assessee's case for AY 2006-07. 9. Deduction under Section 36(1)(vii) for Debts Written Off by Non-Rural Branches The assessee raised this issue for the first time before the ITAT. The ITAT admitted the additional ground and remitted the issue to the AO for decision, following the Supreme Court's judgment in Catholic Syrian Bank Ltd. Conclusion: - Revenue's Appeal (ITA No. 630/Hyd/2012): Dismissed. - Assessee's Appeal (ITA No. 715/Hyd/2012): Partly allowed. Pronounced in the open court on 04.10.2013.
|
