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TMI Blog2013 (10) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. During the course of assessment proceedings, the Assessing Officer noticed that the assessee is having pension fund named 'The South Indian Bank Ltd. Employees' Pension Fund', which was also approved under the Income Tax Act. The assessee was also claiming deduction u/s. 36(1)(iv) of the Act in respect of provision created for contribution to the above said Pension Fund. In addition to the above contribution, the assessee has claimed deduction of pension payments made directly to the retired employees u/s. 37 of the Act. The Assessing Officer took the view that the deduction of an expense u/s 37 can be claimed only if it is not allowable under sections 30 to 43A of the Act. Since the assessee has claimed contribution made to the Pension fund and claimed deduction u/s 36(1)(vi) of the Act, the Assessing Officer took the view that the claim of pension paid directly to the retired employees cannot be again allowed u/s 37 of the Act. Accordingly, he disallowed the claim of pension payments made to the retired employees. The Ld. CIT(A) has also confirmed the said disallowance. 4. The Ld. Counsel appearing for the assessee submitted that the tax authorities have not properly u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is extracted below for the sake of convenience:- "6. We have considered the rival submissions on either side and also perused the material available on record. The only issue arises for consideration is disallowance of pension paid by the taxpayer to the retired employees. The contention of the Ld. DR is that the taxpayer contribute to the pension fund and also pays pension of its retired employees and claims both the payments as deduction; therefore, there is duplication of payment. The explanation of the taxpayer appears to be that the pension is not paid to the retired employee from the fund. The pension fund pays to the taxpayer and what was received from the pension fund is not sufficient enough to meet the entire liability of pension to its retired employees. Therefore, the amount of pension received from the pension fund is credited to the profit & loss account and thereafter the taxpayer makes payments to its retired employees. Therefore, the amount of pension received from the pension fund is credited in the profit & loss account and what was paid by the taxpayer is debited in the profit & loss account. Therefore, according to the ld. representative, there is no duplicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (referred supra). 8. The next issue relates to the disallowance of claim of writing off of non performing investments. It was brought to our notice that an identical issue was considered by this Bench of the Tribunal in assessee's own case in I.T.A. Nos. 09 & 10/Coch/2011 and 149 & 150 /Coch/2011 and the Tribunal, vide its order date dated 18-09-2012, has decided the issue in favour of the assessee by following the decision rendered by the Hon'ble jurisdictional High Court of Kerala in the case of Lord Krishna Bank and Nedungadi Bank. We have gone through the said order and for the sake of convenience, we extract below the observations made by the Tribunal on an identical issue:- "4. We have considered the rival submissions and also perused the material available on record. the only question arises for consideration is whether the notional loss said to be suffered by the taxpayer on revaluation of the securities is allowable as deduction or not. This issue was considered by the jurisdictional High Court in Commissioner of Income-tax vs. Nedungadi Bank Ltd. (supra)(264 ITR 545) and after considering the judicial pronouncements on the subject found that security held by the bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is based on RBI guidelines to the Banks for valuation of unquoted Government securities, we feel it is the rational basis which assessee was bound to adopt. The Assessing Officer also has not come out with any formula for computation of market value of unquoted securities and he has no case that the RBI guidelines for valuation is irrational. So much so, we feel the Tribunal rightly upheld assessee's claim for valuation of unquoted Government securities based on RBI guidelines". 6. The RBI issued guidelines to value to unsecured shares on the basis of YTM, i.e., yield to maturity method adopted for valuation of securities. The Kerala High Court has also found that YTM rates have been put out by the PDAI/FIMMDA at periodical intervals. Therefore, when the taxpayer revalued the asset on the basis of the guideline issued by the RBI at realizable value i.e. YTM method suggested by RBI, the taxing authority cannot find fault with taxpayer. As observed by Kerala High Court, the assessing authority has not come out with any suggestion/formula for computation of market value of unquoted shares. It is also not the case of the revenue that the guideline issued by the RBI for valuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contested. (a) Disallowance of pension payments claimed u/s 37 of the Act. (b) Disallowance of non-performing investments written off. (c) Charging of interest u/s 220(2) of the Act. 12. The first issue relates to the disallowance of pension payments claimed u/s 37 of the Act. In the immediately preceding year, we have considered an identical issue and set aside the matter to the file of the assessing officer for making fresh examination of the claim made by the assessee. Consistent with the view taken in that year, we set aside this issue to the file of the assessing officer in this year also with similar directions and accordingly the order of Ld CIT(A) on this issue stands set aside. 13. The next issue relates to the disallowance of writing off of non-performing investments. In the earlier years, the Tribunal has considered an identical claim made by the assessee and has decided the issue in favour of the assessee by following the decision rendered by the Hon'ble jurisdictional High Court. Consistent with the view taken in the earlier years, we direct the AO to delete the impugned disallowance made in this year also and accordingly, the order of Ld CIT(A) on this issue sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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