TaxTMI 
TaxTMI 
2015 (12) TMI 458
X X X X Extracts X X X X
X X X X Extracts X X X X
....roceedings u/s.147 of the Act, which was upheld by the CIT(Appeals) since the issues on which reopening had been initiated was examined by the Ld. CIT under Section.263 of the Act and the proceedings were dropped. For A.Y 2005-06 (ii) Ld. CIT(A) erred in confirming the disallowance of provision for wage arrears to staff of Rs. 3,50,35,000/- on the ground that the provision made was towards contingent liability. For A.Y 2006-07 (iii) Ld. CIT(A) erred in allowing the depreciation on UPS at 60%, instead of allowing the assessee's claim of 80% by considering the UPS as energy saving device. (iv) Ld. CIT(A) erred in confirming the disallowance made U/s.14A read with Rule 8D of Income Tax Rules disregarding the order of the Chennai Bench of the Tribunal in ITA No.1949/Mds./2012 for the assessment year 2009-10 wherein it was held that disallowance U/s.14A was not warranted if securities from which tax free income is earned are held as stock-in-trade. 2.B Revenue's Appeal : Common ground in both the revenue's appeals for the A.Ys 2005-06 & 2006-07) (v) The Ld.CIT(A) erred in holding that computation of book profit u/s.115JB of the Act is not applicable t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g U/s.147 of the Act. On the other hand the Ld. D.R relied on the order of Ld. CIT(A) who had upheld the validity of reopening discussing the issue in detail. After hearing both sides and perusing the materials on record, we find that the Ld. CIT (A) had judiciously considered the issue and held the matter against the assessee because reopening was within a period of four years and various omissions and discrepancies was revealed from the assessment order based on which the Ld. Assessing Officer had initiated proceedings U/s. 147 of the Act. Therefore we hereby uphold the order of the Ld. CIT (A). Accordingly, the first grounds raised by the assessee in both the appeals are held against it. 5. Ground No. (ii) - Disallowing provision for wage arrears to staff of Rs. 3,50,35,000/- It was observed by the Ld. Assessing Officer from annual report of the assessee that the assessee had made an adhoc provision of Rs. 3,50,35,000/- towards payment of arrears of salary and the same was debited in the P&L A/c. The Ld. Assessing Officer disallowed the same since the amount debited in the P&L A/c was an adhoc provision. On appeal, the Ld. CIT (A) following the decision of the Tribunal in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ders of the Revenue. 7.3 After hearing both the sides and perusing the material on record and the case cited by the Ld. A.R, we find that on the earlier occasion the Tribunal in the case of IOB (supra) has held the issue in favour of the assessee by following the decision of the case CIT Vs. Vegetable Products Ltd reported in 88 ITR 192 , because there were divergent views by various judicial authorities. However in the present case, it is not evident as to whether the securities are held in stock in trade or held as investments. The whole purpose of enactment of Section.14A of the Act is to disallow certain expenses which are attributable to exempt income. The assessee bank due to various statutory requirements and commercial reasons is bound to make investments in securities and equity shares etc., which earn dividend that, are exempt from income. For making such investments obviously the financial wizards employed by the assessee company has to make tremendous exercise to determine as to what securities /equity shares etc., has to be purchased by the assessee to optimize the economical functioning of the assessee. This incurs cost. A portion of this cost has to be apportioned....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e applied to the banks. In the case of Maharashtra State Electricity Board Vs. JCIT (82 ITD 422) it was held that provisions of book profit cannot be applied to Electricity Companies. Banking Companies and Companies engaged in generation and supply of electricity do not have to prepare their accounts in accordance with parts II and III of Sch. Vi of the Companies Act by the virtue of proviso to Section.211(2) of the Companies Act. We find that by the Finance Act 2012, w.e.f 01.04.2013, even companies to which proviso to Section.211(2) applies (the banking Companies and companies engaged in generating and distribution of electricity), should prepare their P&L and balance sheet in accordance with the provisions of the Act Governing such companies. This would mean that prior to A.Y. 2013-14, provisions 115JB will not apply to companies to which proviso to Section.211(2) of the companies Act, 1956 applies. The assessee being a company to which proviso to Section.211 (2) of the Companies Act, 1956 applies, will not be liable to be taxed U/s.115JB. 14. The Mumbai Tribunal in the case of Krung Thai Bank Vs. JCIT (133 TTJ 435) to which one of us is a party has held that provisions....