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TMI Blog2012 (9) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that:- We find no error on the part of the CIT(A) in giving a direction to the Assessing Officer to verify the facts and then allow the deduction subject to payment having been made. We uphold the order of the CIT(A) on this issue. Addition on leave encashment - Held that:- The account statement shows that the expenditure claimed and actually paid during the year which reflects the liability arising during the year itself and it has been actually paid. In this view of above factual matrix, we find that the CIT(A) made no error in deleting the addition - C.O. No. 57/PN//2011 Arising out of ITA No. 793/PN/2011 - - - Dated:- 27-9-2012 - SHRI G.S. PANNU, ACCOUNTANT MEMBER AND R.S. PADVEKAR, JUDICIAL MEMBER For the Appellant : Shri S.P. Joshi and Ms. Kirti Joshi For the Respondent : Ms. Ann Kapthuama ORDER PER G.S. PANNU, A.M.: The appeal by the Revenue and the cross objection by the assessee are directed against the order of the Commissioner of Income-tax (Appeals)- Aurangabad dated 7-2-2011 which, in turn, have arisen from order dated 30-12-2009 passed by the Assessing Officer, under section 143(3) of the Income-tax Act, 1961 (in short the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is common ground that Grounds no. 1 and 2 of the appeal raised by the Revenue are covered in favour of the assessee by the decision of co-ordinate Bench of the Tribunal in the case of ACIT Cir. 3, Nanded Vs. Osmanabad Janta Sahakari Bank Ltd. Latur in ITA No. 795/PN/2011 for A.Y. 2007-08 dated 31-8-2012 wherein the issue has been decided by observing as under: In the case before us, admittedly, assessee has directly taken the interest to the Balance sheet and it is not routed through the P L a/c. Moreover, the issue of the taxability of the interest on the sticky losses/advances, is covered in favour of the assessee by the decision of the co-ordinate Benches in the case of Dy. CIT Vs. The Durga Co-operative Urban Bank Ltd., Vijayawada in ITA No. 511/Vizag/2010 dated 10-3-2011 and Karnavati Coop. Bank Ltd., Vs. Dy. CIT (134 ITD 486 (Ahmedabad). We find no reason to interfere with the reasoned order of the ld. CIT(A) and accordingly the same is confirmed. In the result, the Revenue s ground is dismissed. Since the facts of the present case are on an identical footing, following the aforesaid decision of the Tribunal in the case of Osmanabad Janta Sah. Bank Ltd. (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accrual basis whenever the NDCC Bank is allowed by the RBI to repay the deposits or the interest to the appellant bank. Hence the addition is deleted subject to above observations. 6. Before us, the learned DR appearing for the Revenue reiterated the Grounds of Appeal raised by the Revenue which is to the effect that the CIT(A) was wrong in deleting the addition with regard to interest on deposits with NDCC Bank by wrongly observing that such interest has not been credited to the P L a/c. The learned DR further submitted that the CIT(A) was wrong in holding that such income was to be taxed on receipt basis. On the other hand, the learned representative for the respondent-assessee submitted that the CIT(A) was justified in deleting the addition, inasmuch as even as per the Prudential Norms and Income Recognition policy laid down by the Reserve Bank of India, no income can accrue to the bank on such debts which are doubtful of recovery, inasmuch as there was a moratoriam on the NDCC Bank to accept/refund the deposits. 7. We have carefully considered the rival submissions. In this case, the dispute is with respect to an amount of ₹ 95,86,440/- which is stated to be inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid payment is voluntary and not a statutory obligation of the assessee. According to the Assessing Officer since the impugned amount is not covered under Payment of Bonus Act or Factories Act, he disallowed the same and added it to the total income of the assessee. In appeal, the CIT(A) directed the Assessing Officer to verify the facts and allow the deduction if payment has been made, by observing as under: I have considered facts of the case, AO s order, appellant s submission and position of law. As per law the ex-gratia payment, in excess of the limits prescribed under the Payment of Bonus Act either u/s 36(1)(ii) or section 37(1) of the Act, is allowable as business expenditure although the payment does not cover contractual or customary payment. In this regard reliance is also placed on the decision of Hon ble Bombay High Court in the case of CIT Vs. Maina Ore Transport (P) Ltd. 218 CTR 653 (Bom). In this case the Hon ble Court has upheld the decision of the Hon ble Tribunal and held as under that Ex gratia payment in excess of the limits prescribed under the Payment of Bonus Act, 1965, is allowable as business expenditure, although the payment did not cover contractual ..... X X X X Extracts X X X X X X X X Extracts X X X X
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