Tribunal grants relief in tax appeals for 2008-09 & 2009-10, allowing key deductions.

The Tribunal partially allowed the appeals for the assessment years 2008-09 and 2009-10. The delay in filing the appeal was condoned, and deductions for provision for standard assets, leave encashment, amortization of government securities, and non-SLR securities were allowed based on legal arguments and precedents. The Tribunal's decision favored the assessee in most instances, leading to the deletion of disallowances and remittance of certain matters for fresh adjudication.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Confirmation of addition under the head "provision for standard assets."
3. Disallowance of deduction under the head leave encashment.
4. Disallowance of amounts written off/amortization of Government securities.
5. Disallowance under provision for non-SLR securities as per Mark to market valuation.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appeal filed by the assessee was barred by a limitation of 127 days. The assessee submitted a notarized affidavit for condonation of delay. The Tribunal found that the assessee had reasonable cause for the delay, and the Revenue did not object seriously. Consequently, the delay was condoned, and the appeal was admitted for hearing.

2. Confirmation of Addition Under the Head "Provision for Standard Assets":
The assessee contested the CIT(A)'s confirmation of the addition of Rs. 16,50,000 under the head "provision for standard assets" as per RBI norms. The Assessing Officer disallowed this provision, considering it a non-permissible and capital expenditure. The CIT(A) upheld this disallowance, citing the Supreme Court decision in Indian Molasses Co. Ltd vs CIT, which held that provisions for contingent liabilities are not deductible. However, the Tribunal found that the CIT(A) did not address the assessee's argument that the provision was within the limits prescribed under section 36(1)(viia) of the Act. The Tribunal noted that no evidence was provided to show that the assessee was not entitled to this deduction. Therefore, the disallowance of Rs. 16,50,000 was deleted.

3. Disallowance of Deduction Under the Head Leave Encashment:
The assessee argued against the CIT(A)'s confirmation of the disallowance of Rs. 32,13,587 under section 43B(f) of the Act for leave encashment. The Assessing Officer disallowed the provision of Rs. 37,00,000, accepting only the actual payment of Rs. 4,86,413. The CIT(A) allowed the actual payment but disallowed the remaining provision. The Tribunal referred to the Calcutta High Court's decision in Exide Industries Ltd vs UOI, which held that leave encashment is a trading liability and should be deductible even if not paid within the financial year. Although the Supreme Court stayed this decision, it had not been reversed. Therefore, the Tribunal remitted the matter back to the Assessing Officer for fresh adjudication in light of the Supreme Court's decision.

4. Disallowance of Amounts Written Off/Amortization of Government Securities:
For the assessment year 2009-10, the assessee contested the CIT(A)'s confirmation of the disallowance of Rs. 1,39,42,283 for amortization of government securities. The CIT(A) relied on the Supreme Court decision in Vijaya Bank vs CIT, which held that mere provisions for doubtful debts are not deductible. The Tribunal, however, found that the assessee consistently followed the method of amortization based on market value, which was allowed in previous years. The Tribunal referred to the Supreme Court decision in United Commercial Bank vs CIT, which supported this method. Consequently, the Tribunal deleted the disallowance.

5. Disallowance Under Provision for Non-SLR Securities as per Mark to Market Valuation:
The assessee also contested the disallowance of Rs. 2,50,125 for non-SLR securities as per Mark to market valuation. The Tribunal noted that the assessee consistently followed this method and referred to the Karnataka High Court decision in Karnataka Bank Ltd vs ACIT, which supported the assessee's practice. The Tribunal found no contrary evidence from the Revenue and deleted the disallowance.

Conclusion:
The Tribunal allowed the appeal for the assessment year 2008-09 partly for statistical purposes and similarly allowed the appeal for the assessment year 2009-10 partly. The orders were pronounced in the open court on 24/08/2017.

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