TaxTMI 
TaxTMI 
2013 (8) TMI 829
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....CIT(A) has erred in holding that the expenses on swap cost of Rs. 2,04,28,235/- were actually incurred by the assessee during the previous year. 3. For this and other grounds that may be urged at the time of bearing, the decision of the CIT(A) may be set aside and that of the Assessing Officer restored." By the assessee:- 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming an amount of Rs. 76,10,78,436 representing interest accrued on securities but not falling due for payment. Such interest, which is in the process of accrual, is at incipient and inchoate stage, maturing into taxable income only when it becomes due and payable in terms of the issue of such security. 2. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming disallowance of depreciation to the extent of Rs. 89,45,433 on assets leased to various lessees during the course of banking operations by the appellant. In respect of such assets the appellant continues to be a rightful owner and is, therefore entitled to depreciation on the basis of, among others, the user of the assets in the business of leasing. ....
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....Rs. 2,04,28,235/-, it is observed that the assessee being a banking company regularly receives foreign currency deposits as per the schemes approved by the Reserve Bank of India. These deposits are repayable in foreign currency along with interest thereon and since the foreign currency deposits are vulnerable to exchange fluctuation risk, banks are permitted to hedge the interest and foreign exchange fluctuation risk involved in these transactions by carrying out swap transactions. The assessee accordingly converts its foreign currency into rupee funds by way of exchange of foreign currency funds for a specified period. For this purpose, the assessee has to pay premium on the foreign currency funds to the counterparty bank, which is ready to provide the rupee funds to it in exchange of foreign currency funds for a specified period. Thus, this premium is a definite cost of the swap transaction to the assessee and the proportionate premium on the outstanding swap contracts as on 31-3- 2001 based on number of days for which the contract was held in the previous year was worked out by the assessee at Rs. 2,04,28,235/- and the same was debited to the P&L account. The A.O., however, took....
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....hat this issue relating to taxability of interest accrued on securities but not falling due for payment is squarely covered in favour of the assessee by the decision of the Tribunal in assessee's own case for A.Y. 2000-01 rendered vide its order dtd. 14-01-011 passed in ITA No. 931/Mum/2004 wherein a similar issue was decided in favour of the assessee vide para No. 2 to 5 of the order as under:- "2. Apropos Ground No.2, material facts are like this. In the course of assessment proceedings, the Assessing Officer noticed that the assessee had excluded Rs.91,99,67,252/- on the ground that this amount though accrued but not received during the year being not due, hence not eligible to tax. The AO rejected the contention of the assessee and after excluding Rs. 62,63,63,964 being the amount already taxed in the assessment year 1999- 2000, added the balance amount of Rs. 29,36,03,288 to the total income of the assessee. Aggrieved, the assessee carried the matter in appeal but without any success. 3. At the time of hearing, learned counsel for the assessee contended that this issue is covered by the decision of the ITAT Mumbai (SB) in the case of DCIT (International Taxation) vs. Ban....
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....ted above and it was held that these judgments are not applicable to the facts of Union Bank's case. In paragraphs 20 and 21, the Tribunal has also considered the objection of the department that the assessee cannot credit the interest on government securities in the profit & loss account on day to day basis but contended that for purposes of income tax only the interest that accrued on the coupon dates can be assessed. The Tribunal noticed the judgment of the Supreme Court in the case of another bank, namely United Commercial Bank, 240 ITR 355. In this case, the Supreme Court has reversed the judgment of the Calcutta High Court, which held that the assessee cannot prepare the computation of its income for income tax purposes in a manner different from the method under which it keeps accounts. Applying this judgment of the Supreme Court, the Tribunal held that Union Bank of India cannot be prevented from urging in the return that the interest on govt. securities accrued only on the specified coupon dates notwithstanding that credit has been taken in the profit & loss account for the interest on day to day basis. Thus, the issue has been decided in favour of the view that the intere....
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.... of provision for bad debts at Rs. 5,24,45,199/- being 5% of the total income as per the return. In the assessment, the A.O. allowed the deduction on account of provision for bad debts amounting to Rs. 5,29,01,270/- being 5% of the total assessed income. The ld. CIT(A),however, disallowed the said deduction on account of provision for bad debts on the ground that provision for bad debts of the current year should be reduced from bad debts claimed by the assessee as per the proviso to section 36(1)(vii) of the Act. 11. At the time of hearing before us, the ld. Representatives of both the sides have agreed that this issue is also covered in favour of the assessee by the decision of the Tribunal in assessee's own case for A.Y. 2000-01 (supra) wherein a similar issue was decided by the Tribunal in favour of the assessee by following the decision of the co-ordinate Bench of this Tribunal in the case of Oman International Bank SAOG vs. DCIT, 92 ITD 76 (Mum). As submitted by the ld. Counsel for the assessee the said decision of the Tribunal in the case of Oman International Bank SAOG has been upheld by the Hon'ble Bombay High Court in the case of UTI Bank Ltd. (212 Taxman 273) holding ....