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TMI Blog2013 (8) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... or the welfare of the members. (iii) Disallowance of contribution to Urban Bank Credit Equalisation Fund:- On the facts and circumstances of the case and as per the law, the learned Commissioner of Income-tax (Appeals) erred in disallowing a sum of ₹ 5,20,609/-in respect of contribution to Urban Bank Credit Equalisation Fund as mandated by section 115J of the Gujarat Co-op. Societies Act, 1961. (iv). Payment of Education Fund - ₹ 3,00,000/-:- On the facts and circumstances of the case and as per the law, the learned Commissioner of Income-tax (Appeals) erred in confirming disallowance of a sum of ₹ 3,00,000/- as per mandatory provisions of section 69 of the Gujarat Co-op. Societies Act, 1961. (v) Levy of Surcharge:- The learned Commissioner of Income-tax (Appeals) erred in not considering Ground No. VI VII in respect of levy of surcharge and charge of interest u/s. 234B of the Act respectively. 3. The first ground of assessee s appeal is against not allowing depreciation in respect of diminution value of the securities held by the assessee at ₹ 55 lacs. The AO observed that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the CIT(A). 4. The learned Counsel for the assessee filed paper book which included the reply filed by the assessee to the CIT(A) and various replies to the AO during the course of assessment proceedings. He has also drawn our attention to page No.17 of the paper book and argued that there was depreciation in the securities at ₹ 55,07,150/-, however, the assessee made provisions to the extent of ₹ 55 lacs in the books of accounts as per the RBI guidelines. In support of his contentions the learned AR relied on the decision of the Hon ble Supreme Court in the case of United Commercial Bank Vs CIT, 240 ITR 355 (SC) and the decision of the Hon ble Madras High Court in the case of Karur Vysya Bank Ltd. 273 ITR 510 (Mad.) wherein similar issue was decided in favour of the assessee. Thus, he requested to allow the provisions made for depreciation in securities in the books of account. 5. At the outset, the learned DR opposed the arguments advanced by the learned AR and pleaded that the CIT(A) has specifically verified the details of the government securities and bonds and on that basis he directed the AO to verify the market price of various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot controverted the finding of the Assessing Officer that the above deduction claimed is not from the income of this year, but created out of profit of earlier years. The appellant has also not explained as to whether the above claim is as per the RBI guidelines and CBDT Instruction No.17 of 2008 dtd. 26.11.2008. I view of the above, I do not find any justification for allowing the above deduction. This ground of appeal is, therefore, dismissed. 8. Now, the assessee is in appeal before us. The learned Counsel for the assessee again drawn out attention to the paper book as well as submissions made before the authorities below and argued that to create interest in the members by the bank and keep the relation alive between the assessee and the members, the assessee had to incur certain expenditure. He further relied on the decision in the case of CIT, Guj. III Vs Dascroi Taluka Co-operative Purchase Sales Union Ltd. reported in 126 ITR 413 wherein assessee s expenditure incurred on account of silver jubilee and purchase of presentation of articles to the members were held to be incurred wholly and exclusively for the purpose of assessee s business u/s 37of the Act. In s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered the submission of the appellant. However, the appellant has not controverted the finding of the Assessing Officer that since the amount of the above fund is not debited in the P L a/c. for the year under consideration, the same is not allowable. The appellant has not controverted the finding given by the Assessing Officer in the order in this regard and has also not explained as to whether the above claim is as per RBI guidelines and CBDT Instruction No.17 of 20098 dt.26.11.2008. I, therefore, uphold the above finding of the Assessing Officer and dismiss this ground of appeal of the appellant. 12. Now, the assessee is in appeal before us. The learned Counsel for the assessee contended that these funds were created as per the provisions of section 115G of the Gujarat Co-operative Societies Act. He has drawn our attention to paper book page 23. As per this provision, the bank is to make provision @15% of its profits and pay the same to the State Co-operative bank for the purpose of crediting it into the Urban Bank Credit Equalization Fund. Thus, it was submitted that as per the Co-operative Societies Act the assessee had to make compliance. Thus, he requested to d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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