TaxTMI 
TaxTMI 
2011 (2) TMI 1303
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....see had already established a pension fund for the purpose, and to which regular contributions were being claimed and allowed u/s. 36(1)(iv) of the Act. An amount could be claimed as a business expenditure only under a specific section; section 37(1) clearly providing for expenditure which is not specifically covered under section 30 to 36 of the Act. On facts, it was pointed out by him that the amount available with the pension fund was more than that being claimed by the assessee by way of direct payment. He relied on several decisions, both as regards the legal proposition as raised by him as well as in respect of the pension paid thus. The ld. CIT(A) found that the Tribunal had in the case of South Indian Bank Ltd. (in I.T.A. No. 359 & 360/Coch/2006 dated 27.9.2007) remitted the matter back to the file of the AO to consider as to how the liability (which stands claimed as arising by virtue of a tripartite agreement between the assessee, Indian Banks' Association and the Employees' Trade Union) had arisen inspite of the fact that there was a superannuation fund for the purpose, i.e., in short, to determine its commercial expediency. This was, in view of the assessee's claim as a....
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.... on a stand-alone basis, is unexceptional, and which we understand to be the import of the decision by the ld. CIT(A). The AO shall afford proper opportunity of hearing to the assessee in the matter. We decide accordingly. 4. The next disallowance contested by the assessee is for the amount claimed in respect of lease equalization charges. The assessee, following the method of accounting recommended by the Institute of Chartered Accountants of India, the regulatory authority for the accountancy profession in India, for lease financing, charged its profit and loss account for the year with lease equalization charge for Rs. 2858/-. The said method of accounting is being regularly followed and, further, stands recognised by RBI. The Revenue finds the assessee's case unacceptable as it is qua depreciation on leased assets, and which (depreciation) could be allowed only as per the provisions of the Act. The assessee, before us, relied on the order by the tribunal in its own case for A.Y. 2000-01 (in I.T.A. No. 131/Coch/2008 dated 6.8.2009) and A.Y. 1999-2000 (in I.T.A. No. 919/Coch/2007 dated 30.6.2009). The same, it was found, is not qua depreciation charge, but only purports to alloc....
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.... the matter back to the file of the AO for re-computing the disallowance u/s. 14A in accordance with Rule 8D (introduced by Income Tax (5th Amendment) Rules, 2008, noting that the same as retrospective, as held in the case of ITO vs. Daga Capital Management Pvt. Ltd. (supra). Likewise for A.Y. 2003-04 (in 854/Coch/2007 dated 6.8.2009), the disallowance u/s. 14A stood confirmed by it for the same reason. The difference in the stand by the tribunal in the matter for different years has been, we observe, primarily on the basis of whether section 14A(2) (and s. 14A(3)) read with Rule 8D is retrospective in its operation or not. The assessment order for the year has been passed on 28.12.2007, i.e., prior to the date (24.3.2008) of the prescription of the relevant rule (r. 8D), which is only to give effect to the provisions of section 14A(2) and 14A(3). The same, therefore, could not possibly be applied prior to that date. As such, the question of the retrospectivity of the said sections, which stand brought on the statute by Finance Act, 2006 (with effect from 1.4.2007), [while renumbering section 14A (as s. 14A(1))] does not arise and has no bearing in the present case. The AO has neit....
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....the AO, the same requires investment of funds in securities, being shares in companies and units of mutual funds. The assessee maintains that the same are only out of net-owned funds. However, it furnishes no details in support of its claim(s). It justifies its stand on the basis that the tax-free securities yield a lower return, which would not be viable on the basis of interest-bearing capital. We are unable to agree. Firstly, the question is one of fact. Further, the average cost of funds is what is relevant, i.e., while reckoning the viability of any investment. Secondly, tax-free securities are required to be purchased by a banking company to mitigate its business risk as well as to comply with the statutory guidelines. The assessee has not furnished any material to justify the investment in shares and units as self-financed, in the absence of which the consideration of the same as being from a common pool of funds available with the assessee cannot be faulted. The disallowance, as effected, is, thus, justifiable under the circumstances. We decide accordingly. 6.4 The reliance on the decision in the case of CIT vs. Hero Cycles Ltd., 31 DTR 301 (P&H) is mis-placed. The same is....
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....e have heard the parties, and perused the material on record. That the cash under reference represents cash in excess of that determined as per the books of account, and that there are no claimants there-for, are admitted facts. Further, the assessee's accounts (for the currrent as well as the earlier years) being audited, the book balance in respect of cash held (i.e., apart from the Suspense Account) can be said to represent correct balance thereof on the basis of the transactions entered into by the bank. That is, it can be reasonably presumed to be a true and accurate record, so that there are no unrecorded or mis-recorded transactions, which could also result in a difference between the physical and book balance of cash-inhand. As such, the excess cash with the assessee could only be explained on the basis of an actual mis-match of the physical cash with that recorded qua its transactions, i.e., an actual excess cash receipt. In fact, we find that the assessee does not deny the same. Its only claim is that the said excess has arisen over the 84 years of its operations, i.e., since inception; that booked for the current year being at Rs. 94,404/- only. As such, the entire of it....
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....e to claim the said cash (by a customer) reduces drastically with the lapse of time. That is, is highest within the short time of the transaction, and almost nil a few days later. This is as once the cash bundle bearing the bank's seal is broken, it is not possible to contend by a customer that the cash received by him from the bank is physically short. Similarly, clearly, the bank has no record or clue as to from whom, or with respect to which transaction/s, the excess cash stands received by it. If the bank could identify the cash bundle/s bearing the excess Rs. note/s' with a particular transaction/s, it would immediately notify the concerned depositor/payer or even credit his account. As such, it can be safely assumed that if no claim stands lodged qua cash found excess during the year up to its end or even up to the date of the close of the accounts for that year, none would. Consequently, the property in the same can be said to have passed per force the circumstances to the assessee-bank, which, in any case, treats it as part of its regular cash. Further, needless to add, any claim arising and honoured in future qua cash considered as income for a year would qualify for deduc....
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.... AO rejected the assessee's claim, relying on the express provisions of the Act, which did not provide for any distinction between the two claims, i.e., qua the nature of the advances and, further, provide for a co-relation inasmuch as the claim u/s. 36(1)(vii) is maintainable only to the extent it exceeds the provision u/s. 36(1)(viia), drawing further support from section 36(2)(v) (which provides for the debit of the write off to the provision account), the ld. CIT(A) allowed the same on the basis of the decisions by the jurisdictional high court, principally in the case of South Indian Bank Ltd. vs. CIT, 262 ITR 579 (Ker.) cited before him. 10. Before us, the case of both the parties remained the same. We may, firstly, clarify that even though the assessee may have written off debts as irrecoverable in its accounts for the year at Rs. 2962.88 lakhs, its claim u/s. 36(1)(vii) is only for Rs. 868.97 lakhs, so that the disallowance, if any, could not exceed the same. On merits, the assessee's claim is based on the decision in the case of South Indian Bank Ltd. vs. CIT (supra). The same stands overruled by the full bench judgement (in ITA No. 161 of 2009 dated 16/12/2009, copy on r....
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....e loss is in accordance with the RBI prudential norms (Circular No. DBOD No. BP.BC.11/21.4.141/2004-05 dated 17.7.2004) and in pursuance to the regularly followed method of accounting is also not in dispute. Accordingly, we see no reason to interfere with the impugned order in the matter. We decide accordingly, dismissing the Revenue's relevant ground/s. 13. The third issue pertains to the Rs. Unclaimed Deposits' at 279 lakhs. The same were admittedly received by the assessee-bank from the public in the regular course of its banking business. The Revenue's stand is that on account of being unclaimed for several years, the character of the same stands changed. Even though the assessee continues reflecting it as a liability in its accounts, and has not written it back as its income, it is for all practical purposes the assessee's own money. Applying the principles enumerated in the case of CIT vs. T.V. Sunderam Iyengar & Sons Pvt. Ltd (supra), the AO brought the same to tax. The matter was examined on its legal and factual aspects by the ld. CIT(A). The deposits by a banking company were covered by section 26 of the Banking Regulation Act, 1949. As per the same, the bank has to inti....
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....2/-. We find considerable merit in the assessee's claim. The only question to be seen is that if there has been a cessation of liability in respect of the impugned deposits or not. If they no longer continue to represent the assessee's liability, i.e., as at the year-end, having been received only in the course of its business, the same would definitely represent a trade surplus of the assessee-bank. However, we find no basis for the Revenue to hold so, i.e., that these do not constitute the assessee's liability. There is no write back in the accounts. The accounting entries, though not conclusive of the matter, are yet relevant, being purportedly passed only to exhibit the true and fair state of affairs of the reporting entity. The same, thus, could be ignored only where they are not in conformity with the substance of the transactions they purport to represent and, thus, do not represent, or do not do so correctly or accurately, what they purport to. In the instant case, there is no limitation. The Banking Regulation Act provides for the mechanism for reporting the information thereon to the RBI, with it having the power to direct the banks to transfer the same, where inoperative....
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....amount realised in excess of the borrower's liability, is marked as 'other liabilities' in its books. While the assessee claims it to be only a liability, the Revenue claims it to be its income inasmuch as the bank has retained the amount for which claims are not forthcoming, in view of the decision by the apex court in the case of Shree Digvijay Cement Mills Ltd. v. Union of India (supra). The ld. CIT(A) found that in a particular case the amount stood paid to the borrower on 20.4.2005 even though the auction had taken place as early as 15.11.1990, i.e., about 15 years earlier. There was no cessation of liability in terms of section 41, and the doctrine of unjust enrichment, as explained by the apex court in the case of Shree Digvijay Cement Mills Ltd. v. Union of India (supra), did not apply in the facts and circumstances of the case. 17. We have given our careful consideration of the matter. The borrowers have not come forward for years to honour their dues to the bank and/or claim their gold back, the value of which exceeds that of their dues to the bank, including interest to date (of realization). In other words, the borrower-owners of the gold are not traceable. In fact, th....
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....The bank has not stated of any dispute characterising any amount, in which case, if so, the decision shall have to await the resolution of the dispute. Under the circumstances, it is difficult to see as to how the amount/s have not inured to the bank. The non-write back of the same in accounts, given the admitted and undisputed facts and circumstances, and the legal position in the matter, is of no moment. The principles enunciated in the decision in the case of Shree Digvijay Cement Mills Ltd. v. Union of India (supra), as well as in the case of CIT vs. T.V. S Iyengar & Sons Pvt. Ltd. (supra), we find as squarely applicable to the instant case. The amounts in both the cases were realised in the course of the assessee's trade, and though not representing its monies, but only a liability, were found, in view of the changed circumstances and lapse of time, as liable to be considered as its own income, as it had acquired the character of a trade receipt/surplus. We find the facts of the present case as satisfying the operating parameters of the said decisions. The doctrine of unjust enrichment, or the question of cessation of liability u/s. 41, would not arise in the facts of the case....