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TMI Blog2018 (4) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, we are unable to persuade ourselves to be in agreement with the said view of the A.O. CIT(A) rightly appreciating the facts of the case in the backdrop of the settled position of law had vacated the addition made by the A.O in the hands of the assessee under Sec. 41(1) of the Act. We thus finding no infirmity in the order of the CIT(A), therefore, uphold the same. Amortization of premium of investments - Held that:- As the amortization of premium paid on purchase of securities classified under the “HTM” category was an ascertained and determined loss to the bank which was not expressly disallowed by any provisions of the Income Tax Act, 1961, therefore, the same were to be allowed while computing the business income of the assessee bank. We are of the considered view that the CIT(A) had on the basis of a well reasoned order concluded that as the amortization premium of investment of government securities amounting to ₹ 1,74,90,500/- was an allowable revenue expenditure, therefore, the same had wrongly been disallowed by the A.O. Nothing has been submitted before us by DR which could persuade us to conclude that the aforesaid observations of the CIT(A) suffers from an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 26.12.2011. We shall first take up the appeal of the revenue. The revenue had assailed the order of the CIT(A) by raising the following grounds of appeal before us: 1. On the facts and in the circumstances of the case and in law, the L d . C IT ( A ) h as erred in deleting the disallowance of Rs . 25,29,602 / - of unrealized pay slips even though there was no liability to pay the same which constituted deemed income of the assessee with the application of section 41(1) of I.T. Act, 1961. 2. On the facts and in the circumstances of the case and in law, the. Ld. CIT(A) has erred in deleting the addition made by the A.O on account of unidentified deposits of ₹ 41,72,658/- without appreciating the facts that the assessee has claimed these liabilities as outstanding for a number of years, but could not substantiate the genuineness of the same. 3. On the f acts and in the circumstances of the case and in la w, the Ld. CIT(A) has erred in accepting adjudicating on the issue of amortization of premium on investments although the assessee had not filed, a claim in, this regard during assessment proceedings either by way of original return or revised return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,657/- in the hands of the assessee. 5. The assessee during the course of the assessment proceedings came forth with a revised computation of income on 15.11.2011, wherein claim in respect of expenses on account of amortization on investments was raised by it for the first time. The assessee submitted that the revised computation of income placed on record be treated as a revised return of income and its income be assessed after considering the claim in respect of expenses on account of amortization on investments so raised by it. However, the A.O being of the view that the assessee could have filed a revised return of income under Sec. 139(5) latest by 31.03.2011, therefore, observing that the aforesaid claim of the assessee was beyond the said stipulated time period, declined to admit the same. The A.O while concluding as hereinabove relied on the judgment of the Hon ble Supreme Court in the case of Goetze (India) Ltd. Vs. CIT (2006) 284 ITR 323 (SC). Alternatively, it was observed by the A.O that the assessee had in the immediately preceding year, viz. A.Y. 2008-09 debited a sum of ₹ 2,02,50,500/- as premium on investment amortized, which however was disallowed by his p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her observed that the same issue was decided by his predecessor in the assesses own case for A.Y. 2008-09, vide the latters order dated 11.07.2012. The CIT(A) on the basis of his aforesaid observations deleted the addition of ₹ 29,25,602/- made by the A.O under Sec. 41(1) of the Act. 8. The CIT(A) further adverted to the addition of ₹ 41,72,658/- pertaining to unidentified deposits which were shown by the assessee under the head sundry deposits , but however, were brought to tax by the A.O as ceased liability under Sec. 41(1) of the Act. The CIT(A) observed that the amount of ₹ 41,72,657/- represented the amounts which were deposited with a wrong mention of the account number or wrong mention of title, therefore, the proper credit of the said amounts could not be given to the accounts of the genuine account holders. The CIT(A) found favour with the contention of the assessee that it being a bank was simply a custodian of the money which it was liable to pay whenever demanded, even if the deposits were more than 30 years old. The CIT(A) persuaded to be in agreement with the aforesaid contention of the assessee, observed that as the aforesaid amount represented ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at though the A.O in the backdrop of the judgment of the Hon ble Supreme Court in the case of Goetze (India) Ltd. Vs. CIT (2006) 284 ITR 323 (SC) could not have entertained the aforesaid claim for deduction/relief made by the assessee, otherwise where such claim was raised by filing a revised return of income, however, the appellate authorities were vested with a jurisdiction to entertain such a claim, as long as the same was borne from the facts available on record. The CIT(A) on the basis of his aforesaid observations admitted the aforesaid additional ground of appeal raised by the assessee before him. The CIT(A) observed that the investments under consideration by the assessee were in government securities which the assessee being a bank had to purchase as per the guidelines of the RBI in order to maintain the Statutory Liquidity Ratio (SLR). The CIT(A) further observed that the SLR was maintained by the bank by parking the funds in government securities issued by both the central as well as different state governments. The CIT(A) took cognizance of the fact that the assessee in order to maintain the SLR had to purchase the government securities from the open market as the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, it was allowable as an expenditure and the disallowance of the same was unwarranted. The CIT(A) thus in terms of his aforesaid observations deleted the addition of ₹ 1,74,90,500/- made in the hands of the assessee by the A.O. The CIT(A) while concluding as hereinabove, also observed that a similar view was taken in the assesses own case by his predecessor while disposing of the appeal of the assessee for A.Y. 2008-09, vide his order dated 11.07.2012. 11. The CIT(A) thereafter adverted to the claim of the assessee that the A.O had erred in not allowing the deduction amounting to ₹ 50,00,000/- in respect of Investment depreciation reserve . The CIT(A) observed that the aforesaid claim of deduction of ₹ 50,00,000/- on account of investment depreciation reserve was raised by the assessee for the first time before him and was not taken up before the A.O at all. The CIT(A) observed that the contention of the assessee that it had raised such claim in its letter dated 15.11.2011 filed with the A.O, requesting that the same may be treated as a revised return of income, was proved to be incorrect on a perusal of the aforesaid letter, which revealed that no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the Hon ble High Court in the said case after deliberating on the issue under consideration had upheld the order of the Tribunal and concluded that the assessee was entitled to deduction on account of depreciation/reduction in the value of investments and had rightly claimed the same as a loss. The Ld. A.R. taking support of the aforesaid judicial pronouncement, submitted that the lower authorities had erred in not allowing its claim of investment depreciation reserve of ₹ 50,00,000/-. Per Contra, the Ld. D.R. submitted that the CIT(A) had wrongly set aside the additions/disallowances made by the A.O. However, the Ld. D.R did not controvert the contention of the Ld. A.R. that the issues involved in the appeal of the department were covered by the orders passed by the coordinate benches of the Tribunal in the assesses own case for A.Ys 2008-09 and 2011-12. 13. We have heard the authorized representatives for the both the parties, perused the orders of the lower authorities and the material available on record. We shall first advert to the disallowance of a sum of ₹ 25,29,602/- which though was shown by the assessee under the head other creditors in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hands of the assessee under Sec. 41(1) of the Act. We thus finding no infirmity in the order of the CIT(A), therefore, uphold the same. Before parting, we may herein observe that the coordinate bench of the Tribunal, i.e. ITAT Bench A , Mumbai in the assessee own case for A.Y. 2008-09, viz. ACIT Vs. M/s Kokan Mercantile Co-operative Bank Ltd. (ITA No. 6058/Mum/2012); dated 16.03.2016 had upheld the order of the CIT(A) and had deleted a similar disallowance of ₹ 12,09,832/- made by the A.O in respect of unrealized pay slips which were issued but not presented for payment. We further find that the order of the Tribunal was followed by another coordinate bench by the Tribunal, i.e. ITAT E Bench, Mumbai in the assesses own case for A.Y. 2011- 12, viz. DCIT Vs. M/s Kokan Mercantile Co-operative Bank Ltd. (ITA No. 281/Mum/2015); dated 28.07.2016. We thus in the backdrop of our aforesaid observations and finding no reason for taking a view different from that as arrived at by the aforesaid coordinate benches of the Tribunal, therefore, find no reason to dislodge the well reasoned order of the CIT(A) in respect of the issue under consideration. The Ground of Appeal No.1 raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of such unidentified deposits had ceased to exist in the hands of the assessee, the same merely on the basis of a presumption could not be characterized as a liability which had ceased to exist. We are of the considered view that now when the assessee bank was showing the aforesaid amount of unidentified deposits ₹ 41,72,657/- as an outstanding liability, therefore, as observed by us hereinabove, a very heavy onus was cast upon the revenue to disprove and dislodge the said claim of the assessee before concluding that the liability under consideration as claimed by the assessee had ceased to exist. We are afraid that here also as the A.O had failed to place on record any positive evidence to support his view that the aforesaid outstanding liability had ceased to exist, and had only on the basis of presumptions so inferred, therefore, we are unable to persuade ourselves to be in agreement with the said view of the A.O. We are of the considered view that the CIT(A) rightly appreciating the facts of the case in the backdrop of the settled position of law had vacated the addition of ₹ 41,72,657/- made by the A.O in the hands of the assessee under Sec. 41(1) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised either in his original return of income or through a revised return, therefore, the declining on the part of the A.O to entertain the aforesaid claim raised by the assessee vide a letter dated 15.11.2011 was well in order. However, we are of the considered view that as observed by the CIT(A) in the backdrop of the judgment of the Hon ble High Court of Bombay in the case of CIT Vs. Pruthvi Broker and Share Holders Ltd (2012) 349 ITR 0336 (Bom), no such restriction is placed on the appellate authorities for entertaining an additional claim of the assessee, as long as the same is found to be borne from the facts available on record. We are of the considered view that in the backdrop of the aforesaid judgment of the Hon ble High Court of Jurisdiction, no infirmity as regards admission by the CIT(A) of the aforesaid claim of amortization of premium of investments raised by the assessee on the basis of the facts available on record, followed by adjudication of the same, emerges from the records. We thus finding no infirmity on the part of the CIT(A) to admit and adjudicate the claim of amortization of premium of investment raised by the assessee on the basis of the facts available o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and concluding that amortization premium of investments in government securities amounting to ₹ 1,74,90,500/-, being a revenue expenditure was allowable as a deduction. The Ground of Appeal No. 3 raised by the revenue before us is dismissed. 18. The Ground of appeal No. 4 5 raised by the revenue before us being general in nature are dismissed as not pressed. 19. The appeal of the revenue is dismissed in terms of our aforesaid observations. ITA No. 979/Mum/2014 A.Y. 2009-10 20. We shall now advert to the appeal filed by the assessee. The assessee assailed the order of the CIT(A) before us on the following grounds of appeal : 1. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in approving the action of the learned A.O. in disallo wing an amount of ₹ 1,00,000/ - by invoking the provisions of section 14A read with rule 8D of the I.T. Rules 1962. 2. On the f acts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in not accepting and dismissing the ground of appeal pertaining to investment depreciation reserve claim amounting to ₹ 50,00,000/-. The Appellant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be in agreement with the same. We are of the considered view that though it remains as a matter of fact that certain expenses are related to collection of the exempt income, but however, we cannot remain oblivious of the fact that a major part of expenses viz. salary expenses, management expenses, miscellaneous expenses etc. would also be involved in management of the investment portfolio of the assessee, and taking of important decisions in respect of holding of the investments, who we find had made a substantial investment of ₹ 2,00,00,000/- in the UTI Master Value Fund. We find that the A.O had made a disallowance under Sec. 14A only under Rule 8D(2)(iii). We find no reason to dislodge the view of the CIT(A), who we find had upheld the disallowance of ₹ 1,00,000/- made by the A.O under Sec. 14A r.w. Rule 8D(2)(iii). We thus in terms of our aforesaid observations dismiss the Ground of Appeal No. 1 raised by the assessee before us. 22. We shall now take up the contention of the assessee that the CIT(A) had erred in not accepting and dismissing the ground of appeal pertaining to Investment Depreciation Reserve claim of the assessee amounting to ₹ 50,00,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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