TaxTMI 
TaxTMI 
2015 (5) TMI 478
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....e has filed charts depicting the grounds raised by the Revenue in Revenue's appeal and also the grounds raised by the assessee in its appeal and as to how these grounds are covered in favour of or against the assessee. Taking the said charts into consideration and after hearing both the parties, we decide the issues as under: ITA No.31/Hyd/2015 3. In the Revenue appeal, the first ground of appeal raised by the Revenue is against the deletion of the disallowance of broken period interest paid by the assessee on purchase of long term securities and claimed as expenditure by the assessee. The AO made the disallowance holding that the securities are purchased by the assessee as capital outlay and therefore interest element in the purchase is also capital in nature. On appeal, the CIT (A) had given relief by following the decision of the ITAT in assessee's own case for A.Ys 2005-06 to 2010-11, wherein the decision of Bombay High Court in the case of American Express International Ltd vs. CIT (285 ITR 601 (Bom.), was followed, wherein it was held that the securities which are held for complying with SLR (Statutory Liquidity Ratio) are to be held as stock-in-trade and the broken period....
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..... 7. Ground No.3 is against the order of the CIT (A) deleting the disallowance of claim of payment to LIC for Group Leave Encashment Scheme for the employees of the assessee. According to the Revenue, the CIT (A) has not appreciated the fact that the expenditure is hit by the provisions of section 40A(9) and 43B(f) of the Act. It is seen that this issue is also covered by the decision of the Tribunal in the assessee's own case for A.Y 2008-09 and the Tribunal at Para Nos.29 to 34 has held as under: "29. The next effective grievance of the assessee in this appeal relates to disallowance of premium of Rs. 148,36,49,516 paid to Life Insurance Corporation of India towards leave encashment policy taken by the assessee for its employees. 30. Facts of the case in brief relating to this issue are that the assessee claimed deduction in the computation of income of Rs. 124.82 crores towards payment made to LIC group leave encashment scheme. During the course of assessment, the claim was revised to Rs. 148.36 crores, as the claim for deduction of Rs. 10.576 crores for Assessment year 2006-07 and Rs. 12.97 crores for assessment year 2007-08 were not allowed by the Assessing Officer in those....
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.... as an expenditure not for personal expenses of the assessee and that the same is wholly and exclusively for the purpose of business or profession of the assessee. A cover obtained to discharge such recognized obligation will not come under Section 37 of the Act is not accepted. 33. In the case of Hindustan Latex Ltd. (supra), which in fact was in the context of order of the Commissioner passed under S.263 of the Act, dealing with eligibility of deduction in respect of premia paid towards insurance cover, the Kerala High Court has held that what is intended by clause (f) of S.43B was to deny deduction for liabilities not actually incurred and to exclude provisions made against future liabilities from being granted as deduction. In the case of insurance premia paid, it was observed, the same was not a provision for future liability which was claimed as a deduction. The assessee had insured itself against the liabilities that may arise on account of the claims ITA No.167/Hyd/2014 & five others M/s. Andhra Bank, Hyderabad made by the employees towards leave encashment. The assessee being covered by a valid insurance policy and premium being regularly paid, incurs no liability towards....
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....sion' and the claim of expenses are to be considered under the head 'business' and provisions of S.14A and Rule 8D are not applicable. The Cochin Bench of the tribunal in the case of State Bank of Travancore (318 ITR 17) held that any expenditure incurred by the assessee bank for investing in the bonds even tax- free was expenditure incurred for carrying on its business so as to maintain the required statutory liquidity ratio and tax free interest is just an incidence to it. Therefore, since the assessee has not incurred any expenditure to earn the said dividend income, the expenditure cannot be disallowed and the assessee is entitled to the benefit of deduction of the entire expenditure. We are of the opinion that there are no direct expenses attributable to the dividend income earned by the assessee, and the decision of the Karnataka High Court in the case of CCI Ltd. V/s. JCIT (212.TIOL.251) also supports this view. However, assessee itself has disallowed an amount of Rs. 33,41,474, being two month's salary of officers and staff working in Investment Department under S.14A, and the said disallowance made by the assessee itself works out to almost 2% of the tax-fr....
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....ntary Loans 2009 published by the Ministry of Corporate Affairs, though not binding, companies should allocate specific amount from the budget for CSR activities. This amount may be related to profits after tax. For the above reasons and observing further that the amount spent towards Corporate Social Responsibility are to be met out of profits and as such, cannot be deducted before arriving at taxable profits, the Assessing Officer disallowed the claim of the assessee and made an addition of Rs. 2,04,34,107. 13. On appeal, the CIT(A) considering the objectives of the trust and details of the programmes conducted by the Trust observed that the Trust was formed with the noble objective of providing employment to the rural youth by way of providing training and also the required credit to help them to be self- employed. For these reasons and also for the reasons discussed in Para 13.4 of the impugned order, extracted hereunder, the CIT(A) deleted the addition made by the Assessing Officer in this behalf. "13.4 The appellant also submitted the statistics as the number of candidates trained in each district and the number of candidates to whom credit was provided by the bank. During....
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....of the assessee, can it be allowed by treating the same as having been incurred by the assessee in the discharge of its social responsibility. In the case of Infosys Technologies Ltd. (supra), Hon'ble Karnataka High Court considered the expenditure claimed by the assessee on installation of traffic signals at Bannerghata Circle, Bangalore, as expenditure having been incurred by the assessee in discharge of its corporate social responsibilities, which also facilitated the business of the assessee, and hence allowable as deduction under S.37(1) of the Act. Similarly, coordinate bench of the Tribunal in cross appeals of NMDC Ltd., Hyderabad for the assessment year 2008-09, vide order dated 28.2.2014 in ITA No.714 & 885/Hyd/2012, to which both of us are signatories, following the still earlier order of the Tribunal in that very case, held donation of Rs. 5 crores made by the assessee therein to a Medical College, though not related to the business of the assessee, as having been incurred in furtherance of a corporate social responsibility and hence allowable as deduction under S.37 of the Act. In the facts of the present case, the amount spent by the assessee-bank, was not only in ....
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....he assessee has submitted that this issue is covered against the assessee by the decision of the Tribunal in ITA No.245/Hyd/2014 for A.Y 2008-09 dated 18.7.2014. However, he submitted that the alternate ground 3.2 is covered in favour of the assessee by the decision of the Coordinate Bench dated 18.7.2014 in ITA No.244/Hyd/2014. On perusal of the material on record, we find that the assessee had not raised this alternate ground before the authorities below, but has raised it for the first time before this Tribunal. Since it is an alternate and legal ground, we deem it fit and proper to remand this issue to the file of the AO with a direction to adjudicate the same de novo in accordance with the law. 16. In the result, ground No.3.1 raised by the assessee is rejected and Ground No.3.2 is treated as allowed for statistical purposes. 17. As regards Ground No.2, brief facts are that during the scrutiny proceedings, the AO directed the assessee to furnish the details of provisions on account of rural debts and the bad debts written off for the preceding year. Assessee submitted the required details and the AO observed that the opening balance of the provision u/s 36(1)(viia) was Rs. 1....