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of <h1>Tribunal allows deductions for salary provision and government securities premium under Income Tax Act</h1> <h3>ACIT-1(2), Bhopal Versus M/s. Madhya Pradesh Rajya Sahakari Bank Maryadit, Bhopal</h3> ACIT-1(2), Bhopal Versus M/s. Madhya Pradesh Rajya Sahakari Bank Maryadit, Bhopal - TMI Issues:1. Deletion of addition made on account of provision paid as salary to employees before filing the return.2. Deletion of addition made on account of premium paid on government securities.Analysis:1. The first issue pertains to the deletion of an addition made by the Assessing Officer on account of provision paid as salary to employees before filing the return. The Tribunal referred to a previous decision dated 19.10.2011, where it was established that any actual payment made before filing the return is an allowable expenditure under Section 43B of the Income Tax Act. The Tribunal found that the provision for cadre staff salary was indeed paid before filing the return, and since the amount was debited to the profit and loss account, it was considered an allowable deduction. The Tribunal relied on various precedents to support this decision, including CIT v. Amco Batteries and other relevant cases. Therefore, the Tribunal affirmed the decision to delete the addition of Rs.1,20,00,000 made by the Assessing Officer.2. The second issue concerns the deletion of an addition made on account of premium paid on government securities. The Tribunal again referenced a previous decision dated 19.10.2011, where a similar issue was discussed. In this case, the premium paid on government securities was considered a revenue expenditure as it was related to the regular business activity of the assessee bank. The Tribunal held that since the trading of securities is part of banking business activities, the premium paid on government securities should be treated as a revenue expenditure. The Tribunal cited relevant case law, including the decision in American Express International Banking Corporation vs. CIT, to support this conclusion. As there was no contrary decision brought to their notice, the Tribunal affirmed the decision of the CIT(A) to delete the addition of Rs.7,50,000 made by the Assessing Officer.In conclusion, the Tribunal found no merit in the appeal of the Revenue and dismissed it, upholding the decisions to delete the additions made on both the salary provision and premium paid on government securities.
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