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TMI Blog2023 (3) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... /set off of brought forward losses - whether the assessee is eligible to claim brought forward/set off of the accumulated losses of the five rural banks? - HELD THAT:- Case of the assessee falls u/s 72AA of the Act since it is a banking company doing the business of banking and the amalgamation of the five rural banks has been brought into force under the directions of Central Government vide the notification and since the quantum of loss is not in dispute and also the assessee company having filed the return before the due date prescribed u/s 139(1) AO erred in not allowing the claim of accumulated brought forward loss of the five rural banks which were merged with the assessee bank during the Financial Year 2006-07 and, therefore, the assessee has rightly claimed the set off of brought forward losses to in the income tax return furnished for Assessment Year 2007-08. Accordingly, Ground No. 5, raised by the assessee is allowed. Disallowance of provision for fraud - HELD THAT:- AO without mentioning any reason and doubting the type of expenditure has observed that out of total expenditure for the year 1/5th is to be disallowed - This finding of the AO has been affirmed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the learned Commissioner of Income Tax (Appeals) - 12, Kolkata (hereinafter the ld. CIT(A) ) even dated 26/09/2019, passed u/s 250 of the Income Tax Act, 1961 ( the Act ), for Assessment Years 2007-08 2008-09. 2. The assessee has raised the following grounds of appeal for the Assessment Year 2007-08:- 1. For that on the facts of the case, the order passed by the Ld. CIT(A)-12, Kolkata is completely arbitrary, unjustified and illegal and without any jurisdiction. 2. For that on the facts of the case, the Ld. C.I.T. (A) was wrong in not considering the merit of the case, therefore, the order passed by the Ld. C.I.T. (A) is completely arbitrary, unjustified and illegal. 3. For that on the facts of the case, the Ld. C.I.T. (A) was wrong in not considering the facts that in reopening the assessment u/s. 148 (r.w.s. 147) which is mere change of opinion and against requirement of law, as such his finding is completely arbitrary, unjustified and illegal. 4. For that on the facts of the case, the A.O. was wrong in treating the status as A.O.P. which is confirmed by the Ld. CIT(A), therefore, the order should be quashed. 5. For that on the facts of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. and confirming the addition of Rs.8,00,000/- under head provision for fraud which is completely arbitrary, unjustified and illegal. 6. For that on the facts of the case, Ld. CIT(A) was wrong in dittoing the order of the A.O. and confirming the addition of Rs.2,00,000/- under head provision for dacoity which is completely arbitrary, unjustified and illegal. 7. For that on the facts of the case, Ld. CIT(A) was wrong in dittoing the order of the A.O. and confirming the addition of Rs.49,000/- as expenses for penalty which is allowable expenditure u/s. 37, therefore, the order of the Ld. CIT(A) is completely arbitrary, unjustified and illegal. 8. For that on the facts of the case, Ld. CIT(A) was wrong in dittoing the order of the A.O. and confirming the addition Rs.4,000/- from the head Provision for Contingencies' which is completely arbitrary, unjustified and illegal. 9. For that on the facts of the case, Ld. CIT(A) was wrong in dittoing the order of the A.O. and confirming the addition of Rs.384,000/- from the head Provision for FBT' which is completely arbitrary, unjustified and illegal. 10. For that the appellant reserves the right to addu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with it. As far as the other disallowances are concerned it is submitted that they are merely ad hoc in nature and are not in accordance with law. Reliance placed on the following decisions: Catholic Syrian Bank Ltd. vs. CIT reported in 343 ITR P-270 (SC) Allahabad Bak vs. DCIT reported in 137 ITD P-290 United Bank of India vs. ACIT in ITA No. 75/Kol/2018; order dt. 28/02/2020 5.1. On the other hand, the ld. D/R vehemently argued supporting the orders of both the lower authorities. 6. We have heard the rival contentions and perused the material on record placed before us. 7. Ground Nos. 1, 2 3, raised by the assessee, challenge the reopening of assessment proceedings by issuance of notice u/s 148 of the Act. We notice that the return of the assessee was processed u/s 143(1) of the Act. There was specific information of amalgamation of erstwhile five Rural Banks with the assessee bank. Proper reasons were recorded before selecting the case for scrutiny. Based on this specific information, reopening was initiated which, in our view is valid. Thus, ld. CIT(A) has rightly held the re-assessment proceedings as valid. Hence, no interference is called for. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne or more corresponding new bank or banks with any other corresponding new bank under a scheme brought into force by the Central Government under section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) or under section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980) or both, as the case may be; or (iii) one or more Government company or companies with any other Government company under a scheme sanctioned and brought into force by the Central Government under section 16 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972), the accumulated loss and the unabsorbed depreciation of such banking company or companies or amalgamating corresponding new bank or banks or amalgamating Government company or companies shall be deemed to be the loss or, as the case may be, allowance for depreciation of such banking institution or amalgamated corresponding new bank or amalgamated Government company for the previous year in which the scheme of amalgamation was brought into force and other provisions of this Act relating to set off and carry forward of loss and allowance for dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e there has been an amalgamation of one or more banking company with any other banking institution under a scheme sanctioned and brought into force by the Central Government under sub-section (7) of section 45 of the Banking Regulation Act, 1949 the accumulated loss and the unabsorbed depreciation of such banking company or companies or amalgamating corresponding new bank or banks or amalgamating Government company or companies shall be deemed to be the loss or, as the case may be, allowance for depreciation of such banking institution or amalgamated corresponding new bank or amalgamated Government company for the previous year in which the scheme of amalgamation was brought into force and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly. 9.2. Further we observe that Section 45(7) of the Banking Regulation Act, 1949, provides that, the scheme shall thereafter be placed before the Central Government for its sanction and the Central Government may sanction the scheme without any modifications or with such modifications as it may consider necessary, and the scheme as sanctioned by the Central Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely an ad hoc disallowance without giving any reason for the said disallowance and ignoring the fact that this is a regular feature of the assessee bank to make provision for fraud and the actual expenditure incurred are cleared from the balance appearing in the account of provision for fraud. Thus, this finding of the ld. CIT(A) is set aside and the ground raised by the assessee is allowed. Accordingly, Ground No. 6 is allowed. 11. Ground No. 7 relates to disallowance on payment of gratuity at Rs.99,00,000/-. Both the lower authorities have denied the claim stating that the assessee has not made any payment. We, however, fail to find any merit in this finding since the payment of gratuity is an ascertained liability and it has been held time and again and also clarified that the Central Board of Direct Taxes (CBDT) that provisions for payment of gratuity that has become payable during the previous year is allowable. Our view is further fortified by the decision of this Tribunal in the case of DCIT, CIR-I, KOLKATA, Kolkata v. M/s Reliance Jute Mills International Ltd., Kolkata. ITA 897/KOL/2014; Assessment Year 2008-2009. Accordingly, Ground No. 7 raised by the assessee is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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