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TMI Blog2015 (4) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... redited to the P&L a/c, since it pertains to NPA accounts. The reasoning of AO for making the addition reads as follow: (Para 11) "In view of the above, the interest receipts pertaining to the current year but not credited to the P&L account, amounting to Rs. 4,04'99,884/-, is being brought to tax in this year itself. It would also be fair, on the other hand, to give relief in respect of the interest income of earlier years credited to the P&L account of the current year on actual realization basis amounting to Rs. 3,59,98,629/-. This would also, as a natural corollary, require re-opening of the assessments of earlier years and taxing the accrued interest in the relevant year. However, such an exercise would be superfluous as in the years before the current year, the assessee enjoyed 100% deduction of its income under section 80P(2)(a)(i). Even if the cases were re-opened and the total income were re-assessed after including the interest income accrued in those years, the tax effect of such an exercise would be nil. It would serve the purpose of Revenue and would also be fair to the assessee if the difference of Rs. 4,04,99,884/- and Rs. 3,59,98,629/-is brought to tax in the cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be taken to be the income of the assessee. Thus the Ld.CIT(A) has thus rightly deleted the addition in question. The same is upheld. There is no substance in the contention of the Ld. DR that the assessee was having no objection to this addition, since we find that it was an alternative submission of the assessee before the AO that "even if any addition is to be made of Rs. 1,29,91,989/- then addition of Rs. 1,00,51,715/- is to be made on account of interest of earlier years credited during the year to P & L account". Even otherwise the AO is supposed to make just assessment based on the provisions of laws which can not be ignored since is agreeable to the proposed wrong addition. The ground No.3 is accordingly rejected." 3.5. In view of the coordinate Bench order of the Tribunal in the case of CIT Vs. The Jhajjar Central Coop. (supra), which is identical to the facts of the instant case, we reject the Ground No.1 raised by the Revenue. It is ordered accordingly. 4. Ground No.2, raised read as follows:- "2. The Ld. CIT(A) has erred in law as well as on facts in deleting the addition of Rs. 542759/- on account of disallowances of expenses. The department is in appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made before the Income Tax Authorities. 4.5 We have heard rival submissions and perused the material on record. The expenditure which are disallowed as prior period were expenses relatable to month of March, 2006 for which the payments were made in the month of April, 2006. These expenses become due only after the management examines the expenses and authorizes the payment of the same. Therefore, these expenditures become due in the current assessment year and same is to be allowed as deduction. Hence, the order of CIT(A) is correct and no interference is called for. 4.6 In the result, the ground no.2 raised by the Revenue is rejected. 5. The ground No.3 raised read as follow:- "3. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred deleting the addition of Rs. 777838/-on account of suspense individual and societies. The department is in appeal before the Hon'ble ITAT New Delhi this case for Asstt. Year 2008-09 also." 5.1 The relevant findings of the AO in making the addition reads as follow:- (Para 16) "The special audit has pointed out that bank had shown Rs. 48,25,788/- as suspense individuals and society in the liability side. This amount relates to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d back to the respective depositors. These contentions of the assessee have not been controverted either by the assessing officer or the ld. CIT (Appeals) and there is no material on record to show that such contentions of the assessee are incorrect. If the amount deposited in the said account belong to the various depositors, who intended to open the bank account with the assessee, then the said amount cannot attain the character of 'income' in the hands of the assessee unless it is shown that the said amount has become the income of the assessee. If the said amount does not belong to the assessee and the assessee has utilized the same until the said amount is refunded back, no notional interest can be added to that amount as either the assessee has to pay interest if the said amount is credited to the saving account or the amount itself has to be refunded back in case the account is not opened. There is no question of assessing any notional interest on the said amount. Therefore, we find no fault or infirmity in the findings recorded by the ld. CIT (Appeals) vide which the impugned addition and interest thereon is deleted, we decline to interfere. The appeal filed by the Revenue, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on these payments were deducted and deposited in the year 2009-10, hence the assessee is entitled to claim allowance of these expenditure in the year 2009- 10 i.e. the year in which tax deducted and deposited on these payments. In view of the above discussions addition of Rs. 12,78,047/-(Rs.3,45,852/- Rs. 58,820/- + Rs. 7,07,075/- + Rs. 1,66,300/-) is made to the total income of the assessee under provisions of section 40(a)(ia) (Addition: Rs. 12,78,047/-)" 6.1 The CIT(A), out of the total disallowance of Rs. 12,78,047/- deleted the addition of Rs. 2,12,600/- for the reason interest payments were to education institutions whose income is exempt u/s 10(23C) of the Act. 6.2 The Ld. DR relied on the order of the AO. On the other hand, Ld. AR reiterated the submissions made before the Income Tax Authorities. 6.3 We have heard rival submissions and perused the material on record. The interest payment of Rs. 2,12,600/- is to an education institution, whose income is exempt u/s 10(23C) of the Act. Therefore, as per Circular No.4/2002 no TDS is required to be made on such interest payment. Hence, we uphold the order of the CIT(A) and dismissed the Ground No.4 raised in Revenue's appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P&L A/c. Likewise processing charges of Rs. 18,250/- charged from the customers is also being added back. It is true that stationery issued to branches include items for self consumption as contended by the assessee. However, it is also true that the whole of the stationery issued by Head Office was not consumed by the branches. The closing stock of stationery with branches is over and above the closing stock reflected by the Head Office in its Balance Sheet. Keeping in view the facts narrated by assessee in his reply, an amount of Rs.l,75,368/- (i.e. 50% of Rs. 3,50,736 received from Head Office) is added to the income of the assessee bank as under valuation of closing stock. (Addition: Rs. 1,15,534+18250+ 1,75,368 = 3,09,152)" 7.1 The CIT(A) deleted the addition. The relevant finding of the CIT(A) reads as follow:- (Para 11.3) "I have considered the issue and the submissions made by the AR. The net amount charged to P&L a/c under this head is only Rs. 2,37,966/- and closing stock of Rs. 4,47,310/- has already been shown. The AO worked out the said disallowances without appreciating the facts properly. In view of the above, the addition made by the AO is deleted and the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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