9911796707
TMI Blog2022 (3) TMI 1135X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT(A) and therefore has preferred this appeal by raising following grounds of appeal:- "1. The learned C.I.T.(A) has failed in sustaining disallowances of Rs. 44563/-in respect of Indore Branch, Rs. 37124/- for Gwalior Branch, Rs. 100000/- for Andheri Branch and Rs. 1112/- for Mhasurne Branch towards Earlier Year Expenses out of total disallowance of Rs. 204359/- made by the A.O. He failed to consider the facts and merits each of the disallowances sustained as above. 1A. The reasons stated for not allowing the set off against these expenses for provision of Rs. 10 lac made by the Appellant for Contingent Expenses and duly added back in Return of Income are also wrong and contrary to the facts and law. 2. The learned CIT(A) has failed in sustaining disallowance of Rs. 700000/- which represents 1/5th of the expenditure on stamp duty for increasing the authorised share capital of the Assessee in A.Y. 2001- 02. He ought to have held that Banking is recognised as an Industry and the context of Sec. 35D does not require manufacture of an article to quality for deduction and failed to appreciate that the claim was under Sec. 35D (2) (c)(iv) and not U/s 37 as was the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modify any of the Ground of Appeal" 04. ITA No. 1339/PN/2007 is filed by the assessee against the order passed by Commissioner of income-tax (Appeals)-2, Pune [the learned CIT(A)]dated 17.07.2007, wherein the appeal filed by the assessee against the order passed by the Dy. Commissioner of Income-tax Satara, Circle Satara [the learned Assessing Officer) under section 143(3) read with section 147 of the Act for Assessment Year 2002-03 was dismissed, upholding the reopening of the assessment as well as confirmation of the disallowance of Rs. 2,35,00,000/- as losses written off. 05. The assessee is aggrieved on following grounds of appeal:- "Aggrieved by the Appellate Order dated 17.07.2007, passed by the Commissioner of Income Tax (Appeals) II, Pune [CIT (A)] for the Assessment Year 2002-03 u/s 250 of the Income Tax Act, the Appellant begs to file this appeal, and raise the following grounds of appeal, which are independent of and without prejudice to each other. 1. Reopening of Assessment The Hon'ble CIT (A) erred in upholding the action of the learned assessing officer in reopening of assessment. In the facts and the circumstances of the case the reopening of the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) of the Act was passed on 30th November, 2004 determining the total income of the assessee at Rs. 44,84,43,920/-. 09. The learned Assessing Officer made seven disallowances amounting to Rs. 10,33,48,354/- which are as under:- "ANNUEXURE-A TO COMPTUATION OF TOTAL INCOME 1. Earlier years' expenses ( Para No 08 Page Nos 3 to 8) Rs. 2,04,359 2. Unpaid Bonus (Para No 09 Page Nos 8 to 9) Rs. 4537 3. 1/5th of expenditure on stamp duty etc for increasing authorised capital (Para No.10 Page Nos. 9 to 14) Rs. 7,00,000 4. Proportionate expenditure on income not includible in total income (Para No. 11 Page Nos.14 to 21) Rs. 7,23,00,000 5. Depreciation on leased commercial vehicles & other vehicles (Para No.12 Page Nos 21 to 26) Rs. 27,85,077 6. Excess claim Bad debts u/s 36(1)(vii) (Para No. 13 Page Nos. 26 to 28) Rs. 2,68,54,381 7. Penalty (Para No.14 Page Nos. 28 to 35) Rs. 5,00,000 Total Addition Rs. 10,33,48,354 010. The assessee aggrieved with the same preferred the appeal before the learned CIT (A), who partly allowed the appeal of the assessee and the issue on which the addition is confirmed the assessee is in appeal before us. 01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is allowable. In the present case, Rs. 44,563/- is with respect to rent, Rs. 37,124/- is also of water charges and electricity and expenditure of Rs. 1,112/- of different branches are also disallowed for the same reason. With respect to the sum of Rs. 1 lac that was given, as advance in earlier years but accounted for expenditure during the current year on completion of the work. Therefore, it cannot be said to be an expenditure pertaining to earlier year because the event of completion of work falls in this year. Therefore, respectfully following the decision of coordinate Bench in assessee's own case for earlier years we direct the learned Assessing Officer to delete the disallowance of Rs. 2,04,359/- which is expenses pertaining to earlier year but incurred during the year. Ground No.1 of the appeal is allowed. In view of our decision of ground No.1, alternative plea for ground no. 1A do not survive. 015. The 2nd ground of appeal, with respect to the sustaining of disallowance of Rs. 7 lacs being 1/5th expenditure on stamp duty for increasing the authorized share capital of the assessee in Assessment Year 2011-12. In the computation of the total income assessee has claimed 1/5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital is deductible over a period of ten years under section 35D(2) of the Act. Further, this is the second year of amortization period expenses challenged before us. In the first year, co-ordinate bench has decided the above issue in favour of the assessee, respectfully following the decision of co-ordinate Bench in assessee's own case; we also allow the ground No.2 of the appeal. 018. Ground No.3 and 3A of the appeal is with respect to disallowance under section 14A of the Act. During the year assessee has claimed tax-free income of Rs. 33,12,67,172/-. In the return of income as note no. 3 assessee has stated that no expenditure is incurred attributable to tax-free income, as the amount of investment made in those equity is less than the amount of share capital and free reserve of the assessee and therefore there cannot be any interest expenditure disallowable under section 14A of the Act. During the assessment proceedings also the assessee submitted that it has interest free funds of Rs. 682 crores and investment in securities generating tax free income is 206 crores and therefore no disallowance is warranted on account of interest expenditure. The learned Assessing Officer reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,87,381/-. The assessee has made the provision for current year of Rs. 15,88,11,299/- resulting into balancing figure of gross bad debt of Rs. 57,63,11,469/-, which at maximum could have been claimed . The assessee has claimed bad debts of Rs. 60,31,65,850/- and therefore, the learned Assessing Officer held that Rs. 2,68,54,381/- is an excess claim of bad debts under section 36(1) (vii) of the Act. Against this disallowance of assessee preferred the appeal before the learned CIT (A) who confirmed the above disallowance. While confirming the same, he noted that decision of the co-ordinate Bench in assessee's own case for AY 1993-94 has decided this issue against assessee and therefore following the same he is confirming the disallowance. Therefore, the assessee is in appeal before us. 022. The learned Authorised Representative submitted that there is no excess claim made by the assessee. He relied on the decision of the Hon'ble Supreme Court in the case of Catholic Syrian Bank Ltd. vs. CIT [2012] 18 taxmann.com 282 (SC) 342 ITR 270 and decision of the Hon'ble Gujarat High Court in the case of CIT vs. UTI Bank Ltd. [2013] 29 taxmann.com 79 (Gujarat). The learned Authorised R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce made of penalty levied by RBI is deleted. Before us, the assessee has relied upon the decision of co-ordinate Bench in the case of Bapunagar Mahalla Co-operative Bank Ltd. in ITA No. 2423/Ahd/2010 dated 02.07.2015 and Hon'ble Bombay high Court in the case of Stock and Bond Trading Co. in ITA No.4117 of 2010 dated 14th October 2011 stating that the above payment is not prohibited by law and therefore it should be allowed. 027. The learned Departmental Representative vehemently supported the orders of the lower authorities. 028. We have carefully considered the rival contentions and perused the orders of lower authorities. Firstly, we have asked the assessee to produce the order of the Reserve bank of India for levy of penalty. The penalty was levied for the reason that assessee has allotted shares in excess of 5 % of capital of the bank. Because of such violation, assessee was directed by RBI to liquidate such shares and assessee has incurred huge losses. Such a Violation of the Guidelines of RBI cannot be considered as mere technical or venial breach of law. For this, RBI has levied penalty on the assessee. This penalty was disallowed by the LD AO and confirmed by the LD C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely technical or venial in nature. In view of this, we confirm the action of the learned lower authorities in disallowing the above sum of Rs. 5 lacs under section 37(1) of the Act. Ground no 5 of the appeal is dismissed. 029. In view of this, the ITA No.1738/PN/2005 is partly allowed. 030. Now, we come to the ITA No.1339/PN/2007 filed against the order passed by the learned Commissioner of Incometax Appeals-3, Pune dated 17.07.2007, wherein the appeal filed by the assessee against the order passed by the Dy. Commissioner of Income-tax, satara Circle, Satara passed under section 143(3) of the Act read with section 147 of the Income-tax Act, 1961 (hereinafter referred to as 'Act') was dismissed. 031. The learned CIT (A) upheld the reopening of the assessment as well as disallowance of Rs. 2,35,00,000/- claimed as expenditure by the assessee on account of ESOP. 032. The assessee filed its return of income that was assessed under section 143(3) of the Act on 30th November, 2004. After that, the notice under section 148 of the Act was issued on 20 February 2006 served on assessee on 1 March 2006. 033. The reason for reopening recorded by the learned Assessing Officer are as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02-03 that the assessee bank has written off loss of Rs. 2,35,00,000/- being the balance amount in above credited loan account of Employees Equity Trust'. This loss has been allowed to be written off by the A.O. The claim of Bad Debits of Bank on this account cannot be admitted in view of the provisions of Sec. 36(2)(i) and with the fact that interest fee loan is the Employee's Trust is not a ordinary course of business of banking. Therefore, the loss claimed should have been disallowed on merit as well as, as per consistent by basis on it was disallowed in A.Y. 2001-02. Omission to do so has resulted in underassessment of income of Rs. 2,35,00,000/- and consequent short levy of tax of Rs. 1,69,67,000/- including interest U/s. 234-B. In view of the aforesaid, discussion, I have reason to believe that Income to this extent chargeable to tax has escaped assessment within the meaning of provision of action U/s. 147 of the I.T. Act, 1961. Issue of notice under section 148 as per directions of the Addl. CIT, SR, Satara's No.Str/Addl.CIT/SRS/proposal/263/532/2005-06 dated 06.02.2006." 034. Assessee was questioned on the above reasons, assessee replied the same which was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore it was booked in Assessment Year 2002-03. The Authorised Representative submitted that the learned CIT(A) has confirmed this disallowance following his own order for Assessment Year 2001-02, he submitted that identical ground for Assessment Year 2001-02 has been decided by the co-ordinate Bench wherein the issue was set aside to the file of the learned Assessing Officer. He referred to the paragraph no. 3 to 8 of the above order. 038. The learned Departmental Representative supported the orders of the lower authorities. 039. We have carefully considered the rival contentions and perused the orders of the lower authorities. The first ground of appeal is with respect to the reopening of the assessment which is challenged by the assessee stating that there is absence of any tangible material and even otherwise, it is a mere change of opinion. On careful analysis of the reasons recorded by the learned Assessing Officer, it is apparent that original assessment under section 143(3) of the Act was completed on 30 November 2004 for Assessment Year 2002-03. The notice under section 148 of the Act was issued on 28 February 2006. The reasons for reopening is assessment records for As ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
