TaxTMI 
TaxTMI 
2016 (1) TMI 930
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....1 declaring total income of Rs. 2,88,16,767/-. The case was selected for scrutiny assessment by issuing statutory notice u/s 143(2) along with notice u/s 142(1) calling for details. The Assessing Officer completed the assessment u/s 143(3) and determined the total income of Rs. 3,30,70,554/- after making additions being disallowances of amount spent out of members benevolent fund amounting to Rs. 12,60,537/- and members death relief fund amounting to Rs. 4,60,000/-. Besides, the AO, disallowed the amortisation of premium paid on Govt. securities of Rs. 9,93,550/-. 4. The Revenue has raised three grounds. From these grounds, it has agitated two issues, viz. (i) Whether the CIT(A) is right in deleting the additions of Rs. 12,60, 537/- and Rs. 460,000/- respectively, being amount spent out of members benevolent fund and members death relief fund. (ii) addition of Rs. 9,93,550/- being amortisation of premium paid on Govt. Securities. 5. Let us first take up issue relating to disallowance of amounts spent on member benevolent fund and member's death relief fund. 6. During the course of assessment proceedings, the AO noticed that the assessee claimed deduction in the statement o....
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....intended for the benefit of the members of the Society cannot be allowed as business expenditure deductible u/s 37 of the Act. 9. We have heard the Ld. DR, perused the material available on record and gone through the orders of the authorities below. Admittedly, the assessee claimed this expenditure out of the funds earmarked from the profits appropriated. It is an admitted fact that this amount is not claimed by debiting to its income and expenditure statement. The assessee claimed this deduction by making adjustment to its net profit in the statement of total income to arrive at income from business. The AO was of the view that this amount represents the appropriation of profits and spent from the earmarked funds therefore, should not be allowed as deduction from the business income. The assessee contention is that this amount was incurred exclusively for the purpose of business therefore, should be allowed as deduction while computing the business profits. We have gone through the assessment order, facts of the case, grounds of appeal before the CIT(A) and the order of the CIT(A). The assessee right from the beginning contended that this amounts represents the amount spent ou....
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....sively for the business purpose, it could have been claimed in the profit and loss account by debiting to the concerned expenditure account. Therefore, we are of the opinion that, the amount spent by the assessee for the welfare of its members out of the earmarked funds cannot be deductible as expenditure wholly and exclusively incurred for the purpose of business. From the findings of the facts, the CIT(A) did not appreciated the facts correctly while deleting the impugned additions. There is difference of findings of facts in the orders of the CIT(A). The assessee contends that the amounts spent out of members benevolent fund and members death relief fund but, the CIT(A) states that the amount contributed to these funds are for the welfare of the employees. Thus, there is clear difference between findings of facts by both the authorities, which needs to be relooked by the CIT(A). Therefore, we remit the issue back to the file of the CIT(A) in the light of the discussion above and direct the CIT(A) to consider the issue after affording an opportunity of hearing to the parties. 11. Now coming to the next issue, i.e. addition of Rs. 9,93,550/- being disallowance of amortisation o....
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....sue came for consideration before this Tribunal. The Coordinate bench of this Tribunal decided the issue in favour of the assessee in the case of Sir.M. Visweswaraya Co-op Bank Ltd., Vs. JCIT, in ITA No. 1122/B/2010. In the said case, the Tribunal has allowed the claim of the assessee by observing as under: "08. We have carefully considered the rival submissions and perused the relevant facts and materials on record. We have also considered the findings of the various benches of the Tribunal, as under: (i) Catholic Syrian Bank Ltd v. ACIT - (2010) 38 SOT 553 (Coch): An identical issue to that of the subject matter under consideration had arisen before the Cochin Bench. After analyzing the issue in depth, the bench has observed that with regard to amortization of premium on purchase of Government securities, it was clarified that this was made as per the prudential norms of the RBI. Following the Tribunal decision in the assessee's own case and considering that the assessee bank is following consistent and regular method of accounting system, there is no justification in interfering with the order of the Commissioner of Income-tax (Appeals) on this iss....