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TMI Blog2021 (9) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... its fresh verification. The assessee is liberty to file all evidences, if any, in support of its claim. AO shall afford reasonable opportunity of hearing to the assessee and pass order, in accordance with law. Demand drafts not paid more than three years - We note that from the record that pay orders and demand drafts were not claimed by the parties within relevant time as explained by the AO and in our opinion, it becomes the income of the assessee. There is no evidence to show that the amounts were paid or adjusted by the assessee which clearly shows the assessee recognized the said amounts as income of the assessee. Therefore, since, the said amount has been accepted by the assessee as income in its accounts again remanding the issue to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uires creation of provision as a mandatory pre-condition for claiming deduction under statute. Therefore, when the assessee has not claimed separate deduction on standard assets, in our opinion, the assessee is entitled to claim deduction u/s. 36(1)(vii a) of the Act to the extent as the provision made under standard assets. Thus, the AO is directed to give deduction to the extent of 10 lakhs as against the deduction claimed 42,26,631/-. Ground raised by the assessee is allowed for statistical purpose. X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of ₹ 30,27,789/- which consists of ₹ 15,00,000/- in respect of amount transferred from taxable profit to reserve fund and an amount of ₹ 15,27,789/- in respect of the demand drafts which remained unpaid for more than three years. 5. In respect of ₹ 15,00,000/- the ld. AR submitted that the AO did not clearly make out a case in assessment order and the CIT(A) held that the assessee has not furnished cogent evidence to show that the amount was not transferred from appropriation account nor explained how the appropriation account has been created. The contention of ld. AR is that since it was not properly adjudicated by both the authorities below an opportunity may be given to the assessee to support the claim by pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious branches issued upto 31-03-2005 are transferred to emergency fund. The AO held that it is a liability, if the liability is not paid even after 3 years it has to be considered as income of the assessee. As it appears from the record there is no material or evidence or even explanation were not adduced before the CIT(A). The ld. AR submits that since there is no clear cut finding from the AO and the CIT(A), it may also be remanded to the file of AO for its fresh verification and subject to verification the AO may be directed to pass order. We note that from the record that pay orders and demand drafts were not claimed by the parties within relevant time as explained by the AO and in our opinion, it becomes the income of the assessee. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 42/- from investments in mutual funds. According to AO, the assessee has incurred interest expenditure and claimed no expenditure attributable to exempt income. The AO proceeded to compute the disallowance under Rule 8D(2) and accordingly made disallowance to an extent of ₹ 20,15,540/- particularly under Rule 8D(2)(ii) and Rule 8D(2)(iii) of the Rules. The CIT(A) restricted the disallowance to the extent of exempt income. The contention of ld. AR is that the assessee has reserve exceeding the investment and drew our attention to the Balance sheet at Page No. 6 of the paper book. On perusal of Balance sheet prepare as on 31-03-2011 we note that the assessee has capital funds i.e. share capital, reserve fund, and building fund to an ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/-, in our opinion, is justified. Accordingly, we confirm the addition to that effect made under Rule 8D(2)(iii) of Rules and the order of CIT(A) is set aside. Thus, ground No. 2 raised by the assessee is partly allowed. 10. Ground No. 3 raised by the assessee challenging the action of CIT(A) in confirming the order of AO on account of section 36(1)(vii a) of the Act. 11. Heard both the parties and perused the material available on record. Both the authorities below i.e. the AO and CIT(A) held when there was no provision made for bad and doubtful debts in the account of assessee the claim made therein is not allowable. We note that the assessee claimed deduction of ₹ 42,26,331/- on account of 7.5% of total income before allowing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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