TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 1934
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....eduled Bank governed by RBI Guidelines and provisions made are allowable business expenditures under section 36(1)(viia) of Income Tax Act,1961 a held by ITAT Jodhpur (ITA No. 240/Jodh/2013 dated 29-11-2013) in Nagaur Urbanj Cooperative Bank Ltd vs ACIT, Nagaur. Total Income was Rs. 128.50 Crores whereas provision is only 2.71 crores. II. That the disallowance of Insurance Premium paid to LIC and others regarding leave encashment liability, Rs. 34,19,23,944/- (Rs. 35,19,00,000/- less Rs. 99,76,056/-) is unlawful as the expenditure is allowable under section 36/37. Hon'ble High Court, Uttrakhand in ITA No.39 of 2009 CIT vs M/s. The Nainital Bank Ltd and Hon'ble ITAT Delhi in Hero Motor Corporation Ltd vs ld. CIT (2013) 60 SDT d25 (Delhi) has allowed similar contribution to LIC as deductible expenditure. 3. That the ld. CIT(A), Ajmer has erred in law and the facts of the case in enhancement of income by an income of Rs. 3,80,89,353/- treating the same as an interest income of the appellant. The same has neither been received nor accrued to the appellant. 2.1 Apropos Ground No. 1 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:- '....
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....submitted that bank advanced totaled to Rs. 6169 crores. The provision for bad and doubtful debts made as per RBI guidelines Rs. 22.86 crores (including Rs. 2.71 crores on standard assets. The ld.AR of the assessee further submitted that the deduction claimed is in conformity with the Instruction No. 17/2008 dated 26-11-2008 of CBDT (PB Page 41) which in para (iii) lays down that:- ''(iii) Section 36(2)(viia) (a) of the Act provides that in respect of any provision for bad and doubtful debts to the type referred to in that sub-clause made by a bank, an amount not exceeding 5 percent upto 31st March 2003 and thereafter 7.5 percent of the total income (computed before making any deduction under this clause and Chapter VIA of the Act) and an amount not exceeding 10 percent of the aggregate average advances made by 'rural branches' of such banks computed in the manner prescribed under the Income Tax Rules, 1962 shall be allowed as deduction.'' The ld.AR of the assessee during the course of relied on the order ITAT Jodhpur Bench (ITA No.240/Jodh/2013 A.Y. 2009-10 dated 29-11-2013) in the case of Nagaur Urban Cooperative Bank Ltd vs ACIT, Circle - Nagaur wherein the appeal of the ap....
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....tten submission of the assessee. It is not imperative to repeat the facts and circumstances of the case as the ld. CIT(A) has elaborately discussed the issue in question. In this ground, the assessee has taken the support of ITAT Jodhpur Bench (supra) wherein similar issue has been decided in favour of Nagaur Urban Cooperative Bank Ltd. Jodhpur(supra). The assessee further submitted the provision for bad doubtful debts made are as per RBI guidelines amounting to Rs. 22.86 crores which includes Rs. 2.71 crores on standard assets. The deduction claimed is in conformity with the CBDT Instruction No. 17/2008 dated 26-11-2008 (supra). In view of the facts and circumstances of the case, the issue of disallowance for standard asset of Rs. 2.71 crores is restored to the file of the AO to verify as to whether the provision for standard assets has been made as per guidelines of the RBI. If the assessee has complied with the provision as per RBI Guidelines, the relief may be given to the assessee by providing adequate opportunity of being heard to the assessee. Thus Ground No. 2 (I) of the assessee is allowed for Statistical purposes. 4.1 The Ground No. 2 (II) of the assessee is regarding t....
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....ashment of Rs. 35,19,00,000/-is disallowed and added to the total income of the assessee by the AO. 4.2 In first appeal, the ld. CIT(A) has confirmed the addition of Rs. 34,19,23,944/- by observing as under:- ''4.12.....The appellant has also relied upon the decision of ITAT Jaipur in the case of Jhalawar Kendriya Sahakari Bank. In this case also, the relief was allowed to the appellant on the submission made by the appellant that ''after contribution of premium, the appellant has no control over the same''. (page No 9 of the order). The Tribunal also relied upon the decision of Hon'ble Supreme Court in the case of Textool Company Ltd and decision of ITAT Delhi in the case of The Nainital Bank Limited. As I have already discussed above the facts of Textool Compay Limited, on which the decision of The Nainital Bank Limited was based were totally different from the facts of the appellant's case. Therefore, the decision of ITAT Jaipur is also not applicable to the case of the appellant because the appellant has absolute control over the funds parked with these companies and the employees do not have any control over these funds. The other decision relied upon by the appellant....
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....rical India Pvt. Ltd is also not applicable in the case under consideration. The appellant has also relied upon the decision of ITAT Jaipur in the case of Jhalawar Kendriya Sahakari Bank. In this case also, the relief was allowed to the appellant on the submission made by the appellant that ''after contribution of premium, the appellant has no control over the same''' (Page No. 9 of the order). The Tribunal also relied upon the decision of Hon'ble Supreme Court in the case of Textool Company Ltd and decision of ITAT Delhi in the case of the Nainital Bank Limited. As I have already discussed above the facts of Textool Company Limited on which the decision of the Nainital Bank Ltd was based were totally different from the facts of the appellant's case. Therefore, the decision of ITAT Jaipur is also not applicable to the case of the appellant because the appellant has absolute control over the funds parked with these companies and employees do not have any control over these funds. The other decision relied upon by the appellant are not relevant for deciding the allowability of deduction u/s 43B(f) 4.13 It is pertinent to mention that in the A.Y. 2009- 10 and 2010-11,the ....
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.... the case of Nainital Bank Ltd (supra). Respectfully following the same, we hold that the assessee is eligible for this deduction.'' The ld.AR of the assessee further submitted that the assessee has discharged its liability towards leave encashment scheme, the same is therefore, allowable as expenditure u/s 37(1)of the Act. Taking into consideration the above facts and circumstances of the case and the decisions relied upon by the ld.AR of the assessee, it will be in the interest of equity and justice to restore the issue to the file of the AO for afresh adjudication. The assessee is directed to submit the written submission alongwith relevant details before the AO. Thus Ground No. 2(ii) of the assessee is allowed for Statistical purposes. 5.1 Apropos Ground No. 3, the facts as emerges from the order of the ld. CIT(A) are as under:- ''5.2 I have gone through the assessment order, statement of facts, grounds of appeal, written submission, remand report and rejoinder carefully. While deciding Ground No. 2(c) above, I have already held that the deduction admissible to the appellant u/s 43B(f) is only of Rs. 99,76,056/- because this was the sum payable and actually paid by the a....