TaxTMI 
TaxTMI 
2016 (7) TMI 252
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....ing the fact that the assessee ceases to exercise right over amount set aside for distribution of dividend and hence, cessation of liability, by not following the decision of Supreme Court in the case of CIT Vs. TVS Sundaram Iyangar and Sons Ltd. 222 ITR 344. 2. For these and such other grounds as may be urged at the time of hearing, the order of the Ld.CIT(A) may be vacated and that of the Assessing Office be restored. 3. The appellant craves to add, amend, alter or delete any of the above ground of appeal during the course of appellate proceedings before the Hon'ble Tribunal." 3. Facts of the case, in brief, are that the assessee is a Cooperative society carrying on the banking business and also providing depository services like....
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....bank is only the custodian of the money on behalf of the members/shareholders and when the same remains unclaimed and the bank is crediting to its Reserve Fund account, it is acknowledging the extinguishment of its liability to distribute the unclaimed dividends and such amount immediately assumes the character of income. The Assessing Officer accordingly made an addition of Rs. 70,54,269/- towards said credits in the Reserve Fund account. The assessee contested only addition on account of unclaimed dividend of 2006-07 amounting to Rs. 53,13,800/- before CIT(A). 5. It was submitted that the assessee bank was doing business of banking as per guidelines and prudential norms issued by RBI as well as the Maharashtra State Co-op. Society's Ac....
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....rvation of the AO that once the dividend is declared the Bank loses its right over such money and when the same remains unclaimed and the bank is crediting it to it Reserve Fund account, it is acknowledging the extinguishment of its liability to distribute the unclaimed dividend and such amount assumed the character of income is concerned, it was submitted that the AO has failed to understand the exact nature of transaction. It was argued that the AO had treated it as a cessation of liability, or extinguishment of liability but it was not so and it was just a transfer from one head to another, as per provisions of Co-operative Society's Act. It is not in the nature of trade liability nor any liability which had been created by debiting the ....
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....t an expenditure claim above the line. In my opinion, as the appellant has not claimed expenditure when dividend was paid, the writ back of the unclaimed dividend cannot be taxed as income under the provisions of the Income Tax Act, just because the same was taken to the General Reserve account as per RBI norms and provisions of Co-op. Society's Act. This issue came up before ITAT, Mumbai in the case of Apex Urban Co-op. Bank of Maharashtra and Goa Ltd. (134 ITD) 118), wherein it is clearly held that when the assessee has not claimed expenditure when dividend was paid, the write back of the unclaimed dividend cannot be treated as income under the provisions of the Act, just because the same was credited to the P&L Account. In such a situati....
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....the order of the Tribunal in assessee's own case for A.Y. 2010-11 bearing ITA No.1861/PN/2013 and ITA No.1982/PN/2013 order dated 20-05- 2015 and submitted that identical issue has been decided by the Tribunal in favour of the assessee. Therefore, in view of the decision of the Tribunal in assessee's own case the grounds raised by the Revenue should be dismissed. 11. The Ld. Departmental Representative on the other hand fairly conceded that the Tribunal has decided the issue in favour of the assessee. 12. After hearing both the sides, we find the issue regarding unclaimed dividend has been decided by the Tribunal in assessee's own case in the immediately preceding assessment year. We find the Tribunal at para 14 and 15 of the order ha....
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....n so far as, the reliance placed by the CIT(A) on the judgement of the Hon'ble Supreme Court in the case of TVS Sundaram Iyengar and Sons Ltd. (supra) is concerned, the same is quite misplaced. In the case before the Hon'ble Supreme Court, assessee had received deposits in the course of his business which were originally treated as capital receipt. Some of the deposits were neither claimed nor returned to the depositors. Such unreturned and unclaimed deposits were taxed by the Revenue, which was upheld by the Hon'ble Supreme Court. As per the Hon'ble Supreme Court, by lapse of time, the claim of deposits became time-barred and the amounts attained a totally different quality. According to the Hon'ble Supreme Court, such surplus became a tra....