TaxTMI 
TaxTMI 
2016 (1) TMI 930
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.... however, no response from the assessee. Finally, the case is posted for hearing on 8/10/2015 but, none appeared for the assessee. Therefore, we proceed to dispose off the appeal on merits after hearing the Departmental representative. 3. The brief facts of the case, are that the assessee is Co-operative Bank which is engaged in the business of banking, filed its return of income for the A.Y. 2010-11 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 s....
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....embers death relief fund amounting to Rs. 4,60,000/- by stating that, these amounts represents the appropriation of profit which cannot be allowed as deduction while computing the taxable income. 7. Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals)-II, Bangalore. Before CIT(A), the assessee contended that the assessee being a co-operative society, created various funds out of its profits and these amounts are paid out of these funds for the welfare of the members. The assessee further, contended that ultimately these amounts are expenditure spent out of coffers of the assessee Society for the benefit of members, therefore, incurred wholly and exclusively for the business pur....
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....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 out of the earmarked funds and for the benefit of the members....
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.... funds are created to achieve the objects of the society through the bylaws for the welfare of the members out of the profits of the society. The Society is having liberty to create any funds for the welfare of its members within the frame work of by-laws but, the Income-tax Act does not provide for any deduction towards these expenditures under specific provisions. Further, it cannot be claimed under general category by virtue of section 37, because it is not incurred exclusively for the purpose of business and also there is an element of personal in nature, because the benefit was given to members being owners of the society. It is also admitted fact that these deductions are claimed in the statement of total income without routed through....
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....head amortisation of premium paid on Govt. securities. In response to a specific query, it was submitted that as per the laws applicable to Co-Op banks, it needs to invest certain portion of its funds in SLR securities. To comply with the statutory requirements, it has purchased Govt. securities from open market by paying premium on face value of the securities which was amortised over the period of security as per the Circular issued by RBI vide circular No. CO.BSD.1.PCB.44/12.02.2005 and this is as per the prescribed method of accounting suggested by the ICAI as well as CBDT Circular No. 17/2008 dated 26-08-2008. However, the AO did not convinced with the explanation, disallowed the amortisation of premium paid on Govt. securities amounti....
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....f 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 securiti....