TaxTMI 
TaxTMI 
2015 (8) TMI 216
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..../s 14A stating that there is no cost incurred for earning such income. The AO held that the contention of the assessee is not correct, as the CBDT in the circular No.780 dated 4-10-1999 has clarified that it is the 'net income' after taking into account all expenses incurred to earn the dividend, interest and long term capital gains, that is exempt u/s 10(23C) of the Act. He observed that the assessee has made these investments out of borrowed funds i.e. public deposits only and that the assessee's own funds are only 14% of the total funds available for the year. He, therefore, estimated that all the investments have not been made out of own funds and since there will be administrative expenses for realizing the income on investment, he held that 15% has to be treated as expenses incurred for earning of the exempt income. He, accordingly, worked out the expenses at Rs. 28,73,88,373/- and made disallowance of Rs. 1,43,69,418/- u/s 14A of the Act. 3. Aggrieved, assessee preferred an appeal before the CIT(A) who allowed the same. The Revenue is in appeal before us against the relief given by the CIT(A). 4. The learned Departmental Representative relied upon the order of the AO while....
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....t the bank holds non-convertible debentures worth Rs. 245.01 crores as on 31-3-2001 out of which the non-convertible debentures worth Rs. 22.71 crores became the non-performing assets. The AO observed that non-performing assets in NCD worth Rs. 22.7 crores shown in the balance-sheet under investment for the assessment year 2000-01 are still a part of the investments at the end of year ending on March 2001 also. Thus, he came to the conclusion that there was no actual write off and hence the same cannot be allowed u/s 36(1)(vii) of the Act and the assessee had only made provision for non-performing assets in non-convertible debentures as per RBI guidelines. 6.2 Aggrieved, the assessee preferred an appeal before the CIT(A) who, after considering the decision of the Tribunal in the assessee's own case for the assessment year 2000-01, has held that the issue is still open for decision and hence the decision of the AO is found to be justified. Aggrieved, the assessee is in second appeal before us. 6.3 The learned counsel for the assessee, while reiterating the submissions made by the assessee before the authorities below, placed reliance upon the decision of the co-ordinate Bench of t....
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.... Rs. 33,14,298/-. The Tribunal on consideration of the material on record and the rival contentions held, when the expenditure is made not only once and for all but also with a view to bringing into existence an asset or an advantage for the enduring benefit, the same can be properly classified as capital expenditure. At the same time, even though the expenses are once and for all and may give an advantage for enduring benefit but is not with a view to bringing into existence any asset, the same cannot be always classified as capital expenditure. The test to be applied is, is it a part of company's working expenses or is it expenditure laid out as a part of process of profit earning. Is it on the capital layout or is it an expenditure necessary for acquisition of property or of rights of a permanent character, possession of which is condition on carrying on trade at all. The assessee in the course of its business acquired certain application software. The amount is paid for application of software and not system software. The application software enables the assessee to carry out his business operation efficiently and smoothly. However, such software itself does not work on s....
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.... condition that the provision should be in respect of rural advances is not necessary. At stage-II of the provisions of Sec.36(1)(viia) of the Act, this condition was done away with and it was only necessary to create PBDD in the books of accounts and debit to profit and loss account. The quantification of the maximum deduction permissible u/s.36(1)(viia) of the Act had to be done. Firstly it has to be ascertained as to what is 10% of the aggregate average advances made by rural branches, if the Bank has rural branches, otherwise that part of the deduction u/s.36(1)(viia) of the Act will not be available to the bank. The second part of the deduction u/s.36(1)(viia) has to be ascertained viz., 7.5% seven and one-half per cent of the total income (computed before making any deduction under this clause and Chapter VI-A). The above are the permissible upper limits of deductions u/s.36(1)(viia) of the Act. The actual provision made in the books by the Assessee on account of PBDD (irrespective of whether it is rural or non- rural) has to be seen. To the extent PBDD is so created, then subject to the permissible upper limits referred to above, the deduction has to be allowed to the Assess....