2021 (7) TMI 724 - AT - Income Tax

Disallowance on account of payment of education fund - allowable business expenditure - HELD THAT - The issue is covered against the Revenue by the decision of the Tribunal in the case of Surat National Co-operative Bank Ltd 2013 (8) TMI 1116 - ITAT AHMEDABAD as held expenditure incurred for purchase of articles for presentation only to its members for keeping alive good image among members and for generating goodwill and ensuring continuity of business with member societies was geld to be expenditure incurred wholly and exclusively for the purpose of business . - Decided in favour of assessee. Disallowance of investment depreciation - HELD THAT - As decided in own case as per the working filed, the assessee way back in AY 2012-13 had claimed investment depreciation loss (shown in schedule 17 of provisions contingencies). This market to make loss was reduced in AY 2013-14 and after reducing the outstanding loss from investment depreciation claimed in earlier year, the assessee was required to pay tax only being eligible profit for taxation and therefore, the assessee has rightly claimed the amount as investment depreciation loss instead of the entire amount CIT(A) has verified the working submitted by the assessee before him during appellate proceeding and after analyzing the same has allowed the claim. These facts are remained as uncontroverted before us by the Revenue. In view of this matter, we do not find any infirmity in the order of Ld. CIT(A), accordingly, same is upheld. Accordingly, this ground of Revenue is therefore, dismissed.

Summary

Issues Involved:
1. Deletion of disallowance of ?3,00,000 on account of payment of education fund.
2. Deletion of addition of ?48,00,000 on account of disallowance of provision of Special Long Term Finance Fund under Section 36(1)(viii).
3. Deletion of addition of ?3,06,81,350 on account of disallowance of investment depreciation.

Detailed Analysis:

1. Deletion of disallowance of ?3,00,000 on account of payment of education fund:
The assessee, a co-operative bank, had a disallowance of ?3,00,000 made by the Assessing Officer (AO) under the head payment to the education fund. The AO disallowed this amount on the grounds that it was an estimated provision towards a fund created as per Section 69 of the Gujarat Co-operative Societies Act and had not been spent during the year under consideration. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted this disallowance by following the decision of the Ahmedabad Tribunal in the case of Surat National Co-operative Bank Ltd. for AY 2007-08, which was based on the Gujarat High Court's decision in Mehsana District Co-operative Milk Producers Union Ltd., 258 ITR 780 (Guj). The Tribunal found that the issue is covered against the Revenue by the decision in Surat National Co-operative Bank Ltd. and affirmed the order of the CIT(A), thereby dismissing the Revenue's appeal on this ground.

2. Deletion of addition of ?48,00,000 on account of disallowance of provision of Special Long Term Finance Fund under Section 36(1)(viii):
The assessee claimed a deduction of ?48,00,000 under Section 36(1)(viii) for the provision of a Special Long Term Finance Fund. The AO disallowed this claim, arguing that it was not allowable as per the provisions of Section 36(1)(viii) since it was not spent. The CIT(A) deleted the addition, referencing similar deletions in the assessee's own case for previous assessment years, which were upheld by the Tribunal. The Tribunal, after considering the consistent decisions in the assessee's favor for previous years, found no merit in the Revenue's appeal and affirmed the order of the CIT(A), dismissing the Revenue's appeal on this ground.

3. Deletion of addition of ?3,06,81,350 on account of disallowance of investment depreciation:
The AO disallowed ?3,06,81,350 on account of investment depreciation, citing the assessee's failure to provide separate working for investment depreciation and supporting evidence. The CIT(A) deleted this addition, noting that similar claims had been allowed in previous years. The Tribunal observed that the issue was covered in favor of the assessee by the Tribunal's decision in the assessee's own case for AY 2012-13. In that case, the Tribunal had found that the assessee had correctly claimed investment depreciation loss, and the CIT(A) had verified and allowed the claim. The Tribunal, finding no infirmity in the CIT(A)'s order, upheld it and dismissed the Revenue's appeal on this ground.

Conclusion:
The Tribunal dismissed the Revenue's appeal on all grounds, affirming the CIT(A)'s orders. The consistent decisions in favor of the assessee in previous years and the lack of contrary evidence from the Revenue were key factors in the Tribunal's decision. The appeal was dismissed, and the order was announced on 14th July 2021 in the Virtual Court hearing.