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TMI Blog2015 (10) TMI 1611X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A). Therefore, no interference is called for. The provision for standard asset is the diminution in the value of stock-in-trade and the same is allowable u/s. 28(1) of the Act. - Decided against revenue. Addition on account of loss incurred by bank due to fraud - CIT(A) deleted the addition - Held that:- The undisputed fact is that there was an embezzlement/fraud by the employees of the bank to the tune of ₹ 35 crores. It is also an undisputed fact that RBI asked the assessee to write off the loss in phased manner. It is also an undisputed fact that losses written off in F.Y. 2007-08 & 2008-09 have been accepted by the Assessing Officer. This is the last year of the write off wherein the dispute has arisen breaching the rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from A.Y. 2008-09 to 2010-11, when the assessee was following the mercantile system of accounting constantly over the years, where expenditure to be allowed in the year when liability gets crystallized i.e. A.Y. 2007-08 as held by the Supreme Court in the case of CIT Vs. British Paints Pvt. Ltd. 188 ITR 44. 3. The first grievance relates to the deletion of addition on account of provision for standard asset. While scrutinizing the return of income, the Assessing Officer noticed that a sum of ₹ 17,41,464/- was debited under provision for standard assets. Clarification was sought on the provision created under the Standard Assets. It was explained that standard asset provision has been created as per statutory requirement of RBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for. First grievance is dismissed. 7. The second grievance relates to the deletion of addition on account of loss incurred by bank due to fraud. 8. This issue has been considered by the Assessing Officer at para 4 on page 3 of his order, wherein the Assessing Officer observed that ₹ 35 crores is being written off in a phased manner over a period of three years as per RBI directions from the A.Y. 2008-09 to 2010-11. The assessee was asked to explain why the provision on investment depreciation should not be disallowed reserve since it is a notional loss and it has been spread over three years. It was explained that the provision under this head is on account of fraud incurred by the bank on investment with IIBI bonds and NTBCL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther observed that the Assessing Officer himself has accepted the loss for A.Y. 2008-09 2009-10. Therefore, there was no reason for taking different view for the year under consideration. Regarding the year, in which the loss should have been claimed, if it was claimed in A.Y. 2007-08, the assessee would show a huge loss,would not pay any tax and investor and depositor sentiments would be shattered which would, in turn, be detrimental to carrying on the business of the assessee bank. The Ld. CIT(A) directed the Assessing Officer to allow loss of ₹ 15.82 crores. 9. Aggrieved by this, the Revenue is before us.] 10. Learned DR could not add anything to what Assessing Officer has already mentioned in his assessment order. Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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