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TMI Blog2024 (12) TMI 1477X X X X Extracts X X X X X X X X Extracts X X X X ..... trepreneurs in small-scale industries. We respectfully follow the order of [ 2023 (11) TMI 1107 - ITAT MUMBAI] . We set aside the impugned appeal order in this issue. In our considered view, the ground taken by the assessee is allowed. Rejection of provision of guarantee claims - AO had treated this provision as Provision of Expenses which not allowable as per the statue - We note that the nature of settlement of claim and the payment made by assessee is only to support the small and medium businesses. The entire activities for the purpose of providing effective credit guarantee for SSI loans extended by eligible scheduled commercial bank and rural bank to the eligible borrowers without collateral security. As per the scheme, a lending inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of deduction of Rs. 12,52,48,555/- u/s 11(1)(a) of the Act being 15% of income derived from property held under trust by relying upon assessing officer's findings in preceding assessment years of appellant trust. (4) Ld. CIT(A) has erred in confirming the disallowance of deduction of provision for guarantee claims of Rs. 791,02,44,944/-. (5) Ld. CIT(A) has erred in not allowing the set off of brought forward deficit of previous years against the income determined in the order. 6) Ld. CIT(A) has erred in confirming interest of Rs. 2,44,76,642/- u/s 234A of the Act. 7) Ld. CIT(A) has erred in confirming interest of Rs. 73,42,99,260/- u/s 234B of the Act. The appellant trust craves leave to add, alter, amend, modify and/or delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44/-. The assessee has claimed provision for guarantee claim amount to Rs. 1607,58,00,000/-. After considering the payment of guarantee claims amount to Rs. 816,55,55,066/- the balance amount which works out to Rs. 791,02,44,944/- was added back with the total income of the assessee. The aggrieved assessee filed an appeal before the ld. CIT(A). The Ld.CIT(A) upheld the impugned assessment order. Being aggrieved on the appeal order, the assessee filed the appeal before us. 4. The Ld.AR vehemently argued and proceeded his argument related to groundno.2, the disallowance the claim of deduction under section 11 of the Act. The Ld.AR further argued that the assessee is arranging the guarantee to the credit for loans and advances in first generat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutions without having collateral security and/or third party guarantee which is being provided by the assessee trust with cost to cost or with a small mark up is pursuing the activity of advancement of general public utility without having an iota of activity of trade, commerce or business. So in other words mere charging of guarantee fees for services by the assessee trust ipso facto is not sufficient to invoke the proviso to section 2(15) of the Act, that too without establishing that the object and purpose of the assessee is profit motive. Had it been so the assessee trust would not have been running into deficit of about Rs. 400 crores every year. So in these circumstances the impugned findings returned by the Ld. CIT(A) that since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision of Expenses which not allowable as per the statue. It is further stated by the ld. AR that the issue was agitated in earlier years in assessee s own case and the issue is also squarely covered by the order of the ITAT, Mumbai Bench C in assessee s own case in ITA No.2684/Mum/2022, date of pronouncement 24/11/2023. The relevant paragraph Nos.28 29 are reproduced as below: - 28. Hon ble Supreme Court of India in case of Rotrock Control India Pvt. Ltd. vs. CIT 314 ITR 62 held provision on account of warranty in respect of product sold by the assessee as legitimate deduction. Hon ble Supreme Court of India in case of Parth Movers 245 ITR 428 (SC) has also decided the issue at hand by returning following findings: Held, reversing the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 49 2,936.52 3,847.38 5,217.12 6,311.63 Total guarantees issued and outstanding as on year end (B) 62,318 67m762 70,310 74,330 99,492 1,09,955 1,24,618 % of Closing Provision to outstanding guarantee as on year end (C= A/B) 2.78 2.65 2.65 3.95 3.87 4.74 5.06 9. The ld. DR argued and fully relied on the impugned orders of the revenue authorities and was unable to provide any evidence or bring forth any material to contradict the submissions of the Ld. AR. 10. We heard the rival submission and considered the documents available in the record. We find that the ld. AO had treated the provision of guarantee claims as provision for expenses . We note that the nature of settlement of claim and the payment made by assessee is only to support the sma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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