TaxTMI 
TaxTMI 
2022 (12) TMI 335
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....iate the fact that the Appellant bank charged off 50% of the CENVAT credit as per the provisions of the Finance Act. 1994. 3. The assessee is a nationalized bank in which majority of the shares are held by Central Government. The assessee had availed CENVAT credit of excise duty paid on capital goods. The CENVAT credit was availed based on the provisions of Finance Act, 1994. The total CENVAT credit availed by the assessee was a sum of Rs.1,08,87,453.50/-. As per the provisions of Finance Act, 1994 read with CENVAT Credit Rules, 2004, the assessee utilized 50% of the CENVAT credit against its output tax liability and the remaining 50% of the CENVAT credit was charged off to the Profit and Loss Account. It was the case of the assessee that as per the provision of Finance Act, 1994 and the CENVAT Credit Rules, 2004, no depreciation should be claimed on the amount of CENVAT credit availed. It was the plea of the assessee that it is because of this legal requirement that the assessee did not capitalize the aforesaid amount to the capital asset but charged the same in the Profit and Loss Account. This claim for deduction on the basis of write off of CENVAT credit to the profit and loss....
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....set is purchased for 100 which includes 30 towards duty leviable (Original Cost 70 and Duty amount 30). The eligible CENVAT credit of excise duty of this purchase is 10. What the explanation to 9 envisages is if the asset is capitalized for an amount of Rs.100, the credit allowed subsequently i.e. Rs.10 need to be reduced from the cost of the asset. The actual cost in this case is Rs.90 (Rs.70 of original cost plus Rs.20 of duty not eligible for credit). The law thus, does not restrict the duty paid, for which no credit is allowed, as per the Central Excise Rules from being added to the cost of the asset but mandates that any credit availed should be reduced from the capitalized cost of the asset. In the given case assessee has paid an amount of Rs.1,28,01,784 being 50% of the CENVAT credit which not eligible to claim credit as per the Rule 63B of CENVAT credit Rules 2004 (Rs.20 in our example above). Hence the amount so paid and not eligible for credit should be added to the cost of the asset. Hence, we uphold the order of the CIT(A) in restricting the disallowance to the amount debited to the P&L account as said amount needs to be capitalized and not claimed as an expenditure as ....
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....er section 80G of the Act. Accordingly, 50% of the sum given as donation was disallowed by the AO. 8. On appeal by the assessee, the CIT(A) upheld the order of the AO on the ground that the assessee's income would be negative and hence deduction under Chapter VIA of the Act i.e., Sec.80G cannot be allowed. The CIT(A) did not adjudicate the claim of the assessee with regard to eligibility of claim for deduction u/s.37(1) of the Act. Aggrieved by the order of the CIT(A), the assessee is in appeal before the Tribunal. The learned Counsel for the assessee drew our attention to guidelines for 'Rural Self Employment Training Institutes' (RSETIs) issued by Government of India, Ministry of Rural Development, New Delhi. In the aforesaid circular, the Government after explaining the intention of the government in providing sustainable income to rural BPL families and the setting up of rural development and self employment training institute in Dharmasthala in Karnataka, has also observed that these institutions will be bank led institutions and will be managed and run by public sector / private sector banks with active co-operation from the State Government. Learned Counsel for the assessee....
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....se of business of the assessee and for promoting its business interest. Learned Counsel also placed reliance on the decision of the Calcutta High Court in the case of PCIT Vs. Eastern Coalfields Ltd., GA2/2022 dated 16.11.2022 wherein it was held that where Government of India framed guidelines on corporate social responsibility for central public sector enterprises, such public sector is bound to formulate a policy in terms of the said guidelines and if an obligation springs from complying with the said guidelines, it has to be regarded as expenditure incurred on grounds of commercial expediency and allowed as a deduction. Our attention was also drawn to decision of the ITAT, Hyderabad Bench in the case of Andhra Bank Vs. DCIT ITA No.42/Hyd/2015 and ITA No.31/Hyd/2015 order dated 24.04.2015. In the aforesaid decision, the Tribunal on identical facts where Andhra Bank made contribution to Andhra Bank Rural Development Trust for training of unemployed rural youth and claimed the said sum as deduction under section 37(1) of the Act. The Tribunal examined the issue and held following the decision of the Hon'ble Karnataka High Court in the case of Infosys Technologies Ltd., (supra) tha....
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....a, Ministry of Rural Development has instructed public sector banks to be lead institutions in managing and running such institutes. It is in this context that the assessee has contributed a sum of Rs.3,82,69,960/-. The Revenue authorities took the view that this was in the nature of donation which can be claimed as a deduction only under section 80G of the Act. The decision of the Hon'ble Karnataka High Court on this point is very clear and is to the effect that provisions of section 37(1) and 80G of the Act are not mutually exclusive if the contribution by the assessee in the form of donation of the category specified in section 80G of the Act but if it could be termed as an expenditure of the category falling under section 37(1) of the Act, then the right of the assessee to claim the whole of it as allowance under section 37(1) of the Act cannot be denied but such money must be laid out wholly or exclusively for the purpose of business. The decision of the Hon'ble Calcutta High Court in the case of CIT Vs. Eastern Coalfields Ltd., (supra) where Government of India framed guidelines on corporate social responsibility for central public sector enterprises, such public sector is bo....
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....e Appellant bank resorted to write off of bad debts much later to the conduct of Annual General Meeting and approval and finalization of accounts. 4.9 The learned Deputy Commissioner failed to appreciate the fact that the bad debts were written off before the accounts were finalized for the relevant previous year. 4.10 The learned Deputy Commission erred in holding that the bad debts should be adjusted against the provision allowed under section 36(1)(viia). 4.11 The learned Deputy Commissioner erred in wrongly interpreting the Explanation 2 to section 36(1)(vii). 4 12 Without prejudice to the above, the learned Deputy Commissioner failed to appreciate the fact that the closing balance in the 36(1) (viia) account upto 31.03.2013 was only for Rural Advances and no non rural write off can be adjusted against that provision. 4.13Without prejudice to the above, the learned Deputy Commissioner erred in taxing an amount of Rs. 106,45,47, 126 being recovery in written off accounts in respect of which deduction under section 36(1) (vii) was not allowed in earlier years. 14. The assessee also raised ground No.5 before the CIT(A). 5. Without prejudice to the above two grounds, t....