TaxTMI 
TaxTMI 
2022 (3) TMI 1135
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....ed with some of the additions confirmed by the learned CIT(A) and therefore has preferred this appeal by raising following grounds of appeal:- "1. The learned C.I.T.(A) has failed in sustaining disallowances of Rs. 44563/-in respect of Indore Branch, Rs. 37124/- for Gwalior Branch, Rs. 100000/- for Andheri Branch and Rs. 1112/- for Mhasurne Branch towards Earlier Year Expenses out of total disallowance of Rs. 204359/- made by the A.O. He failed to consider the facts and merits each of the disallowances sustained as above. 1A. The reasons stated for not allowing the set off against these expenses for provision of Rs. 10 lac made by the Appellant for Contingent Expenses and duly added back in Return of Income are also wrong and contrary to the facts and law. 2. The learned CIT(A) has failed in sustaining disallowance of Rs. 700000/- which represents 1/5th of the expenditure on stamp duty for increasing the authorised share capital of the Assessee in A.Y. 2001- 02. He ought to have held that Banking is recognised as an Industry and the context of Sec. 35D does not require manufacture of an article to quality for deduction and failed to appreciate th....
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....RBI. He failed to appreciate that the penalty was compensatory in nature. 6. The Appellant craves leave to add, alter, amend or modify any of the Ground of Appeal" 04. ITA No. 1339/PN/2007 is filed by the assessee against the order passed by Commissioner of income-tax (Appeals)-2, Pune [the learned CIT(A)]dated 17.07.2007, wherein the appeal filed by the assessee against the order passed by the Dy. Commissioner of Income-tax Satara, Circle Satara [the learned Assessing Officer) under section 143(3) read with section 147 of the Act for Assessment Year 2002-03 was dismissed, upholding the reopening of the assessment as well as confirmation of the disallowance of Rs. 2,35,00,000/- as losses written off. 05. The assessee is aggrieved on following grounds of appeal:- "Aggrieved by the Appellate Order dated 17.07.2007, passed by the Commissioner of Income Tax (Appeals) II, Pune [CIT (A)] for the Assessment Year 2002-03 u/s 250 of the Income Tax Act, the Appellant begs to file this appeal, and raise the following grounds of appeal, which are independent of and without prejudice to each other. 1. Reopening of Assessment The Hon'ble CIT (A) erre....
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....income on 20th September, 2002 of Rs. 10,28,40,690/- which was subsequently revised on 31st March, 2004 at Rs. 35,02,62,985/-. The case of the assessee was picked up for scrutiny and assessment order under section 143(3) of the Act was passed on 30th November, 2004 determining the total income of the assessee at Rs. 44,84,43,920/-. 09. The learned Assessing Officer made seven disallowances amounting to Rs. 10,33,48,354/- which are as under:- "ANNUEXURE-A TO COMPTUATION OF TOTAL INCOME 1. Earlier years' expenses ( Para No 08 Page Nos 3 to 8) Rs. 2,04,359 2. Unpaid Bonus (Para No 09 Page Nos 8 to 9) Rs. 4537 3. 1/5th of expenditure on stamp duty etc for increasing authorised capital (Para No.10 Page Nos. 9 to 14) Rs. 7,00,000 4. Proportionate expenditure on income not includible in total income (Para No. 11 Page Nos.14 to 21) Rs. 7,23,00,000 5. Depreciation on leased commercial vehicles & other vehicles (Para No.12 Page Nos 21 to 26) Rs. 27,85,077 6. Excess claim Bad debts u/s 36(1)(vii) (Para No. 13 Page Nos. 26 to 28) Rs. 2,68,54,381 7. Penalty (Para No.14 Page Nos. 28 to 35) Rs. 5,00,000 Total Ad....
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....hen the expenditure are approved then the same are said to be incurred and for that year those claim are allowable. Naturally, though the expenses may relate to period of earlier year but when the liability to pay such sum is acknowledged during the year, the same is allowable. In the present case, Rs. 44,563/- is with respect to rent, Rs. 37,124/- is also of water charges and electricity and expenditure of Rs. 1,112/- of different branches are also disallowed for the same reason. With respect to the sum of Rs. 1 lac that was given, as advance in earlier years but accounted for expenditure during the current year on completion of the work. Therefore, it cannot be said to be an expenditure pertaining to earlier year because the event of completion of work falls in this year. Therefore, respectfully following the decision of coordinate Bench in assessee's own case for earlier years we direct the learned Assessing Officer to delete the disallowance of Rs. 2,04,359/- which is expenses pertaining to earlier year but incurred during the year. Ground No.1 of the appeal is allowed. In view of our decision of ground No.1, alternative plea for ground no. 1A do not survive. 015. The 2nd gr....
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....Punjab & Haryana), has held that assessee bank extending financial services would be entitled to amortization of preliminary expenses for public subscription. The Hon'ble Punjab and Haryana High Court has also held that fees of ROC, for enhancement of authorized capital is deductible over a period of ten years under section 35D(2) of the Act. Further, this is the second year of amortization period expenses challenged before us. In the first year, co-ordinate bench has decided the above issue in favour of the assessee, respectfully following the decision of co-ordinate Bench in assessee's own case; we also allow the ground No.2 of the appeal. 018. Ground No.3 and 3A of the appeal is with respect to disallowance under section 14A of the Act. During the year assessee has claimed tax-free income of Rs. 33,12,67,172/-. In the return of income as note no. 3 assessee has stated that no expenditure is incurred attributable to tax-free income, as the amount of investment made in those equity is less than the amount of share capital and free reserve of the assessee and therefore there cannot be any interest expenditure disallowable under section 14A of the Act. During the assessment p....
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....he provision u/s 36 (1) (viia) is of Rs. 22,69,44,299/- and made a net claim of Rs. 60,31,65,150/-. The learned Assessing Officer on the basis of the work found that assessee has gross bad debt of Rs. 83,01,10,149/- and the balance of the provision as on 31.03.2001 was Rs. 9,49,87,381/-. The assessee has made the provision for current year of Rs. 15,88,11,299/- resulting into balancing figure of gross bad debt of Rs. 57,63,11,469/-, which at maximum could have been claimed . The assessee has claimed bad debts of Rs. 60,31,65,850/- and therefore, the learned Assessing Officer held that Rs. 2,68,54,381/- is an excess claim of bad debts under section 36(1) (vii) of the Act. Against this disallowance of assessee preferred the appeal before the learned CIT (A) who confirmed the above disallowance. While confirming the same, he noted that decision of the co-ordinate Bench in assessee's own case for AY 1993-94 has decided this issue against assessee and therefore following the same he is confirming the disallowance. Therefore, the assessee is in appeal before us. 022. The learned Authorised Representative submitted that there is no excess claim made by the assessee. He relied on the de....
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....d Authorised Representative contested that RBI is a regulatory authority and the penalty is not levied for infraction of any law or any criminal offence and therefore it is not disallowable. He also referred to several judicial precedents including in assessee's own case where disallowance made of penalty levied by RBI is deleted. Before us, the assessee has relied upon the decision of co-ordinate Bench in the case of Bapunagar Mahalla Co-operative Bank Ltd. in ITA No. 2423/Ahd/2010 dated 02.07.2015 and Hon'ble Bombay high Court in the case of Stock and Bond Trading Co. in ITA No.4117 of 2010 dated 14th October 2011 stating that the above payment is not prohibited by law and therefore it should be allowed. 027. The learned Departmental Representative vehemently supported the orders of the lower authorities. 028. We have carefully considered the rival contentions and perused the orders of lower authorities. Firstly, we have asked the assessee to produce the order of the Reserve bank of India for levy of penalty. The penalty was levied for the reason that assessee has allotted shares in excess of 5 % of capital of the bank. Because of such violation, assessee was directed b....
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....decision relied up on by the learned Authorised Representative does not apply as none of those decisions have considered the decision of Honourable Supreme court in case of ICICI bank [ supra]. More so, we do not find that violation of the above provisions of the banking Regulation Act is merely technical or venial in nature. In view of this, we confirm the action of the learned lower authorities in disallowing the above sum of Rs. 5 lacs under section 37(1) of the Act. Ground no 5 of the appeal is dismissed. 029. In view of this, the ITA No.1738/PN/2005 is partly allowed. 030. Now, we come to the ITA No.1339/PN/2007 filed against the order passed by the learned Commissioner of Incometax Appeals-3, Pune dated 17.07.2007, wherein the appeal filed by the assessee against the order passed by the Dy. Commissioner of Income-tax, satara Circle, Satara passed under section 143(3) of the Act read with section 147 of the Income-tax Act, 1961 (hereinafter referred to as 'Act') was dismissed. 031. The learned CIT (A) upheld the reopening of the assessment as well as disallowance of Rs. 2,35,00,000/- claimed as expenditure by the assessee on account of ESOP. 032. The assessee filed....
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....bution but not as a loan U/s. 40A(a). the A.O has further examined the Bank's claim that deduction be allowed as a Bad Debit since the loss has arisen in the normal banking business of advancing loans' and held that claim on the ground also cannot be allowed as such. It is seen from assessment records of A.Y. 2002-03 that the assessee bank has written off loss of Rs. 2,35,00,000/- being the balance amount in above credited loan account of Employees Equity Trust'. This loss has been allowed to be written off by the A.O. The claim of Bad Debits of Bank on this account cannot be admitted in view of the provisions of Sec. 36(2)(i) and with the fact that interest fee loan is the Employee's Trust is not a ordinary course of business of banking. Therefore, the loss claimed should have been disallowed on merit as well as, as per consistent by basis on it was disallowed in A.Y. 2001-02. Omission to do so has resulted in underassessment of income of Rs. 2,35,00,000/- and consequent short levy of tax of Rs. 1,69,67,000/- including interest U/s. 234-B. In view of the aforesaid, discussion, I have reason to believe that Income to this extent chargeable to tax h....
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.... report in notes to financial statements in schedule 18 that there would be a further write off of Rs. 2,35,00,000/- relating to employees stock option plan. This was so because of the reason that assessee was granted a further period of 6 months i.e. up to 30th September, 2001 for sale of shares by RBI which resulted in the above loss and therefore it was booked in Assessment Year 2002-03. The Authorised Representative submitted that the learned CIT(A) has confirmed this disallowance following his own order for Assessment Year 2001-02, he submitted that identical ground for Assessment Year 2001-02 has been decided by the co-ordinate Bench wherein the issue was set aside to the file of the learned Assessing Officer. He referred to the paragraph no. 3 to 8 of the above order. 038. The learned Departmental Representative supported the orders of the lower authorities. 039. We have carefully considered the rival contentions and perused the orders of the lower authorities. The first ground of appeal is with respect to the reopening of the assessment which is challenged by the assessee stating that there is absence of any tangible material and even otherwise, it is a mere change of....