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TMI Blog2013 (1) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation 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 X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld CIT(A) in that year, by following the decision rendered by the Tribunal in ITA No.106/Coch/2009 referred supra. Since the tribunal is taking a consistent view in the impugned issue and since the decision rendered by the Ld CIT(A) is in accordance with the said view, we do not find any reason to interfere with his decision on this issue. 7. The next issue relates to the disallowance of unclaimed balance of bank deposits of Rs. 4,88,265/-. The nature of such deposits is explained in brief. If a depositor fails to close a matured deposit or renew it for a further period, within a particular time span, the assessee bank would categorise such kind of deposits as "Unclaimed or Over due deposits". According to the assessee, such kind of categorisation is done as per the instructions of RBI and such deposits would continue to remain as its liability until it is repaid to the concerned depositor. However, the Assessing Officer took the view that the assessee stands enriched by the unclaimed deposits. Accordingly, the AO treated the unclaimed deposits that were so categorised during the year under consideration, as the income of the assessee. The Ld. CIT(A) deleted the addition with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of Limitation Act. In fact as per latest instructions of the RBI regarding unclaimed deposits/inoperative accounts in banks issued circular vide RBI/20908-09, DBOD No. Leg.BC.34/09.07.005/2008-09, dated August 22, 2008, the banks are required to provide interest in such accounts while searching for the account holder. The appellant's case is distinguishable both on law and facts from the case of TV Sundaram Iyengar, relied upon by the Assessing Officer. The law does not permit the bank to appropriate it. The depositor or his legal claimants have the right to claim it at any point of time. It is not part of profit and loss account of the bank. The AO has not established that there is cessation of liability u/s. 41(1) of the IT Act. In the circumstances, I find that such deposits do not constitute the income of the bank. Income has neither accrued nor has been received by the Bank u/s. 6 of the IT Act. In view of the above factual and legal positions, this addition is deleted. This ground of appeal is allowed". 8. However, we notice that the Tribunal has considered an identical issue in the assessee's own case in the order passed for assessment year 2005-06, referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. In the circumstances, in view of the above factual and legal position, this addition is deleted. This ground of appeal is allowed". 10. However, we notice that the Tribunal has considered an identical issue in the assessee's own case relating to the assessment year 2005-06 in its order referred supra in paragraphs 16 and 17. The co-ordinate bench has taken the view that the surplus realised on sale of gold is assessable to tax on the ground that the principles enunciated in the case of Shree Digvijay Cement Mills Ltd Vs. Union of India (2002)(259 ITR 705)(SC) and CIT Vs. T.V.Sundaram Iyengar & Sons Ltd (1996)(222 ITR 344)(SC) are applicable to the instant issue. The Tribunal also held that the repayment of the surplus is made in any of the subsequent year, then such payment would qualify for deduction in that year. 11. Since the Co-ordinate bench of the Tribunal has already taken a particular view on the issue under consideration, it may not be proper for us to differ with it. Accordingly, consistent with the view taken by the Co-ordinate bench of the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .R did not furnish a copy of assessment order passed by the AO for assessment year 2005-06 pursuant to the order of the Tribunal. 15. In view of the facts stated above, the Ld A.R did not press the ground raised by the assessee on the issue of pension payments. The Ld A.R has also affixed his signature in the Grounds of appeal to acknowledge that he is not pressing the said ground. Accordingly we dismiss the grounds relating to Pension payments raised by the assessee. Since the Ld CIT(A) has only set aside the issue to the file of the AO, we are of the view that there is no reason for the revenue to agitate his decision on this issue. Accordingly we dismiss the grounds raised by the revenue on pension payment issue. 16. We shall now take up the appeal of the assessee. The ground raised by the assessee with regard to "Pension payments" has already been disposed of in the earlier paragraph. The remaining grounds raised by the assessee relate to the following issues:- (a) Disallowance of Bad debts - Rs.16,47,86,282/- (b) Disallowance of Revaluation loss in unquoted shares - Rs.1,38,253/- (c) Disallowance u/s 14A on dividend income - Rs.3,17,585/- (d) Addition of Excess cash foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the Hon'ble High Court of Kerala in the assessee's own case in I.T.A. No. 467/2009 dated 21.10.2010 has considered an identical issue wherein the High Court has restored the issue of disallowance of proportionate interest to the file of the Assessing Officer and deleted the disallowance of proportionate administrative expenses. In view of the decision of the Hon'ble High Court, referred supra, we are of the view that this issue needs re-examination at the end of the Assessing Officer. Accordingly, we set aside the order of the Ld. CIT(A) on this issue and restore the same to the file of the AO with the direction to examine the issue afresh in the light of the decision of the Hon'ble High Court, referred supra. 21. The next issue relates to the addition of excess cash of Rs. 67,980/-. The facts relating to the same are explained in brief. 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. This may so happen for various reasons. To name few, the cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l expands the capital base it is not repayable. However, the debentures have to be repaid under the prescribed date and in the instant case, it is borrowed as subordinated debt. In support of the claim that the expenses incurred on issue of debentures is a revenue expenditure, the Ld. AR relied on the decision of the Hon'ble High Court of Calcutta in the case of CIT vs. East India Hotels Ltd. (252 ITR 860). 26. We have gone carefully through the said decision and notice that the High Court of Calcutta has accepted the claim of the assessee that the expenses incurred on issuing debentures is revenue expenditure and in that regard, the High Court has followed the decision of the Hon'ble Supreme Court in the case of India Cements Ltd. vs. CIT (1966) (60 ITR 52). Another important point, which we notice is that the debentures have not been issued at the time of initiation of business activities of the assessee-company, but during the course of running of the bank, that too long after the commencement of the business. Hence, we are of the view that the expenditure incurred in connection with the issue of debentures, in the facts and circumstances of the instant case, has to be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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