9911796707
TMI Blog2021 (8) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... are that the assessee is a nationalised bank and is engaged in the business of banking including accepting deposit from public for the purpose of lending, investment etc. For the year under consideration, the assessee filed return of income on 27/09/2013 declaring total income of Rs. 963, 08,18,932/-which was finally revised to Rs. 769,94,12,146 on 23/02/2015. The return of income filed by the assessee was selected for scrutiny assessment. In the scrutiny assessment under section 143(3) of the Income-tax Act, 1961 (in short the Act) completed on 20/03/2015, the Assessing Officer assessed total income under normal provisions of the Act at Rs. 1996,43,16,100/- and at book profit of Rs. 3453,63,30,299/-. Further the Assessing Officer rectified the book profit to Rs. 3 471,63,30,299/- in his order under section 154 dated 26/04/2016. In the impugned rectification order, the Assessing Officer observed that interest on overdue deposits amounting to Rs. 18,00,00,000/- was added as an ascertained liability in normal provisions of the Act while passing order u/s. 143 (3) of the Act and therefore same was to be added while computing the book profit. Thus he rectified the order passed u/s. 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd deleted the addition made by the Assessing Officer relying upon the decision of A.Y. 2009-10, 2010-11 & 2011-12. The relevant para 6.4 of the order is reproduced as under:- "6.4 Interest on overdue deposits Rs. 18.00 crores:- This ground of appeal is directed against disallowance of claim of Rs. 18.00 crore in respect of interest on overdue deposits. The assessee submitted that earlier the bank was accounting for interest on overdue deposits at the time of renewal of such deposits. Since the A. Y. 2009-10 the bank has consistently accounted for such interest on overdue deposits by making a provision at the rate of saving bank deposits and the balance overdue interest in accounted for at the time of renewal. This is as per the RBI circular. It is submitted that there is no change in the method of accounting but it is only change in accounting policy as guided by the RBI which has been followed by the assessee consistently since the A. Y. 2009-10. It was submitted that due to this change, the assessee has claimed sum of Rs. 18 crore as an allowable deduction as per RBI circular in the computation of income. AO observed that the amount of provisions created pertains to unascert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirement are satisfied, the liability is not a contingent one. The liability is in praesenti though it will be discharged at a future date. It does not make any"difference if the future date on which the liability shall have to be discharged is not certain. The above principle was also followed by Hon'ble Supreme Court in Metal Box Co. of India Ltd. Vs Their workmen [73 ITR 53] and Calcutta Co. Ltd. Vs. CIT [37 ITR 1 ]. In view of the above factual and legal position as the liability determined as per RBI circular are definite and ascertained liability, therefore, allowable under the provisions of the Act. As such this ground is decided in favour of the appellant." The ground is exactly the same and the facts and circumstances are identical to the issue decided in A.Y. 2009-10, 2010-11 and 2011-12. I am therefore inclined to follow the order of Ld CIT (A) in these years and allow the interest on overdue deposits. The disallowance may be deleted." 4.4.4 During the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anged the method of account. The Id. AR submitted that it is not the change in the method of accounting, but it was the change in accounting policy which is necessary to follow the guidelines of RBI in preparing the financial statement. The Id'. C1T(A) has also accepted the view taken by the assessee and relied on a decision as is applicable to this case. However, the claim of assessee, in our opinion is not acceptable until it is ascertained that the actual payment of the provision has been made to the customers or not. We, therefore, restore this issue to the file of AO for the limited purpose to verify whether actual payment of the provision has been made to the customers or not and to decide the same accordingly as per law. Needless to say, the assessee shall be given reasonable opportunity of being heard. Accordingly, ground No. 3 of Revenue's appeal for A.Y. 2009-10 is allowed for statistical purposes." 4.4.5 Subsequent to this restoration, the Assessing Officer vide order u/s 254/250/143(3] of the Act dated 27.03.2017 has allowed the claim of the appellant by observing the following in para 2 of the order :- Allowance of provision for interest on overdue term dep ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
