TaxTMI 
TaxTMI 
2026 (9) TMI 1168
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.... ITA 3429/MUM/2018 (AY: 2013-14) Assessee's Appeal We first take up the assessee's appeal in ITA No. 2390/Mum/2015 - Appeal by the assessee 2. Ground No. 1 - Transfer pricing adjustment This ground concerns the transfer pricing adjustment of Rs. 55,49,256/-, comprising an adjustment of Rs. 14,82,656/- in respect of technical services and Rs. 40,66,600/- in respect of reimbursements. 2.1. The facts leading to the issue are that Nepal SBI Bank was formed as a joint venture between State Bank of India and the Government of Nepal. The assessee entered into a technical service agreement with Nepal SBI Bank, which was approved by the Central Bank of Nepal and His Majesty's Government of Nepal. During the year under consideration, the assessee rendered technical services to its associated enterprise, Nepal SBI Bank. In terms of the agreement, the assessee deputed certain personnel to the said associated enterprise and recovered the cost thereof on an agreed fixed-charge basis. 2.2. It was submitted that the deputation of the assessee's personnel to the said associated enterprise was in the interest of the assessee and not for the benefit of the associated enterpris....
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....cord. It is not in dispute that, pursuant to the technical service agreement entered into with Nepal SBI Bank, the assessee had deputed its personnel to the said associated enterprise and had rendered technical services. It is also not in dispute that the assessee recovered amounts of Rs. 74,13,281/- and Rs. 203.33 lakhs from its associated enterprises towards technical services and ITeS services, respectively. 2.8. The dispute before us is essentially with regard to the markup adopted by the Ld.TPO. The Ld.TPO has applied a mark-up of 20% by referring to the Safe Harbour Rules. The Ld.AR has rightly pointed out that the Safe Harbour Rules were not applicable to the assessment year under consideration, being A.Y. 2012-13. Therefore, the mark-up of 20% prescribed under the Safe Harbour regime could not have been mechanically applied for determining the arm's length price of the impugned transaction. 2.9. However, we are also unable to accept the proposition that, merely because the Safe Harbour Rules were not applicable, the consideration received by the assessee should be accepted as being at arm's length without any further examination. The assessee admittedly render....
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....etermination of 10% mark-up is based on the peculiar facts and circumstances of the present case and is intended to bring finality to the dispute having regard to the passage of time and the practical difficulty in undertaking a meaningful comparability analysis at this stage. Accordingly, Ground No. 1 raised by the assessee stands partly allowed. 3. Ground No. 2 - Provision for pension 3.1. The assessee challenges the disallowance of provision for pension amounting to Rs. 1,663.41 crores. The Ld.AR submitted that the liability, quantified on actuarial valuation, was an accrued and ascertained employee-benefit obligation. He placed reliance on the detailed submission advanced on identical issue for assessment year 2011-12 in assessee's own case, vide order dated 29/06/2026. 3.2. The Ld.DR relied upon the orders of the authorities below. He placed reliance on the detailed submission advanced on identical issue for assessment year 2011-12 in assessee's own case(supra). We have perused the submissions advanced by both sides in light of the record placed before us. 3.3. We note that identical issue came up for consideration before the Coordinate Bench of this Tribunal in....
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....ifferent from that adopted by the Tribunal in the earlier year. 4.7. Accordingly, respectfully following the order of the Co-ordinate Bench in assessee's own case for A.Y. 2010-11 on an identical set of facts and circumstances, we allow Ground No. 1 raised by the assessee." 3.4. Respectfully following the above view taken by the Coordinate Bench in assessee's own case, there being no material change in the facts or in law brought to our notice for the year under consideration, Ground No.2 raised by the assessee stands allowed. 4. Ground No. 3 - Disallowance u/s.14A read with Rule 8D The assessee earned exempt income of Rs. 896.83 crores and made suo moto disallowance of Rs. 1,31,49,287/- towards administrative expenditure. The Ld.AO computed disallowance under Rule 8D at Rs. 1,163.37 crores and, after reducing suo moto amount, made a net disallowance of Rs. 1,162.06 crores. 4.1. The Ld.AR disputed the interest component and sought restriction of the administrative component to investments which yielded exempt income, with credit for the amount already disallowed. He placed reliance on the detailed submission advanced on identical issue for assessment year 2....
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....he Ld.AO for the same limited exercise. The Ld.AO shall exclude the interest component in terms of the precedent, consider only investments which actually yielded exempt income, grant credit for the suo motu disallowance, and ensure that the aggregate disallowance does not exceed the exempt income. Accordingly Ground No.3 raised by the assessee stands allowed for statistical purposes. 5. Ground No.4- Depreciation on leased assets This ground concerns disallowance of depreciation of Rs. 3,22,88,358/- claimed on leased assets. 5.1. The Ld.AR relied on the detailed submission advanced on identical issue for assessment year 2011-12 in assessee's own case, vide order dated 29/06/2026. 5.2. The Ld.DR relied upon the orders of the authorities below. He also placed reliance on the detailed submission advanced on identical issue for assessment year 2011-12 in assessee's own case(supra). We have perused the submissions advanced by both sides in light of the record placed before us. 5.3. We note that an identical issue came up for consideration before the Coordinate Bench of this Tribunal in assessee's own case for A.Y. 2011-12. The relevant findings, appearing at paras 6....
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....tands dismissed. 6. Ground No. 5 - Valuation of securities classified as AFS/HFT The assessee seeks recognition of depreciation and appreciation arising on valuation of securities classified as Available for Sale and Held for Trading. The Ld.AR placed reliance on the detailed submission advanced on identical issue for assessment year 2011-12 in assessee's own case, vide order dated 29/06/2026. 6.1. The Ld.DR relied upon the orders of the authorities below. He also placed reliance on the detailed submission advanced on identical issue for assessment year 2011-12 in assessee's own case(supra). We have perused the submissions advanced by both sides in light of the record placed before us. 6.2. We note that identical issue came up for consideration before the Coordinate Bench of this Tribunal in assessee's own case for A.Y. 2011-12. The relevant findings, appearing at paras 9.1 to 9.4, including the operative findings reproduced therein of the order dated 29/06/2026, read as under:- "14.28. The Ld. DR could not show any reason to deviate from the aforesaid view taken in the assessee's own case. The Ld. DR could not bring out any legal or factual distinctions ....
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....essee u/s 36(1)(viia) of the Act. At the outset, both the parties submitted that the issue involved in the present ground is identical to the issue adjudicated by the Tribunal in assessee's own case for A.Y. 2010-11. We have perused the submissions advanced by both sides in light of the record placed before us. 10.2. We find that the issue arising in the present ground is identical to that considered by the Co-ordinate Bench in assessee's own case for A.Y. 2010-11 wherein the Tribunal held as under:- "15.12. We have considered the submissions of the Ld. DR and perused the material on record. The core objection of the Revenue is that the provision created by the assessee includes amounts relatable to "standard assets", which, as per the prudential norms prescribed by the Reserve Bank of India, are not Non-Performing Assets (NPAs), and therefore, according to the Revenue, cannot form part of "bad and doubtful debts" within the meaning of section 36(1)(viia). 15.13. At the outset, we are unable to accept the contention of the Ld.DR that the scope of deduction under section 36(1)(viia) is to be restricted only to NPAs as per RBI classificatio....
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....th such verification. 15.18. Accordingly, while upholding the principle of allowability, we set aside the impugned order only for the limited purpose of quantification of the deduction under section 36(1)(viia). The Ld.AO shall re-compute the allowable deduction in accordance with law, having regard to the provision actually created, the statutory ceilings, and the findings rendered in respect of related grounds, after affording adequate opportunity of being heard to the assessee. It is clarified that the issue on merits stands decided in favour of the assessee, and the remand is confined strictly to the arithmetical and factual determination of the quantum. Accordingly, Ground No. 9 raised by assessee stands allowed." 10.3. The Ld.DR could not point out any distinguishing feature in the facts of the year under consideration nor bring any contrary material on record warranting a departure from the view already taken by the Tribunal. Accordingly, respectfully following the order of the Co-ordinate Bench in assessee's own case for A.Y. 2010-11, Ground No. 7 stands allowed." 7.4. Respectfully following the above view taken by the Coordinate B....
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....er may be constrained by the ratio of Goetze (India) Ltd. v. CIT, the appellate authorities are not so fettered and are empowered to entertain a legitimate claim arising from facts already on record. In the present case, the issue pertains to the correct recognition of income from sticky advances based on the method consistently followed by the assessee and duly disclosed in the accounts. Therefore, the objection of the Ld. DR on this count is rejected. 16.7. On merits, the contention of the Revenue is that the assessee has followed the prudential norms prescribed by the Reserve Bank of India, which recognize income on NPAs only upon actual realization (with a 90-day delinquency norm), whereas the Assessing Officer has applied Rule 6EA read with section 43D, which contemplates a 180-day period, and that the provisions of the Income-tax Act must prevail in view of the decision of the Hon'ble Supreme Court in Southern Technologies Ltd. v. JCIT. 16.8. We are unable to accept the sweeping proposition canvassed by the Revenue. The decision in Southern Technologies Ltd. itself recognizes that while RBI norms do not override the provisions of the Income-tax Act, they are....
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....or A.Y. 2010-11. We have perused the submissions advanced by both sides in light of the record placed before us. 12.2. We find that the issue arising in the present ground is identical to that considered by the Co-ordinate Bench in assessee's own case for A.Y. 2010-11 wherein the Tribunal held as under:- "17.5. We have considered the rival submissions and perused the material on record. The issue relates to the taxability of interest on investments which have become non-performing in terms of the prudential norms prescribed by the Reserve Bank of India. The Assessing Officer has proceeded on the footing that since the assessee follows mercantile system of accounting, interest must be taxed on accrual basis notwithstanding its non-recognition in the books. 17.6. At the outset, we find that the reasoning adopted by the Ld.AO, as well as the submissions advanced by the Ld.DR, are substantially similar to those considered by us while adjudicating the issue relating to interest on sticky advances (NPAs). The underlying principle governing both situations is identical, namely, whether income can be said to have accrued in real terms when its recove....
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....;s own case for A.Y. 2010-11, Ground No. 9 stands allowed." 8.4. Respectfully following the above view taken by the Coordinate Bench in assessee's own case, there being no material change in the facts or in law brought to our notice for the year under consideration, Ground No. 7 raised by the assessee stands allowed. 9. Ground No. 8 - Contribution to Retired Employees Medical Benefit Scheme The assessee challenges disallowance of contribution of Rs. 92,00,00,000/- to the Retired Employees Medical Benefit Scheme. 9.1. The Ld.AR submitted that the payment was a bona fide employee welfare expenditure incurred for business purposes. He placed reliance on the detailed submission advanced on identical issue for assessment year 2011-12 in assessee's own case, vide order dated 29/06/2026. 9.2. The Ld.DR relied upon the orders of the authorities below. He also placed reliance on the detailed submission advanced on identical issue for assessment year 2011-12 in assessee's own case(supra). We have perused the submissions advanced by both sides in light of the record placed before us. 9.3. We note that an identical issue came up for consideration before the Coordinate Benc....
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....oning of the organisation, the same cannot be disallowed merely on technical grounds. 18.8. In the present case, the contribution is part of a structured employee welfare scheme covering both serving and retired employees. The benefit to retired employees is not in isolation but forms part of the overall employment framework, fostering confidence among existing employees and contributing to industrial peace and efficiency. Such expenditure, therefore, has a clear nexus with the business of the assessee. 18.9. The contention that the employer-employee relationship ceases upon retirement, and therefore no deduction can be allowed, is too narrow a view. Business expediency under section 37(1) is not confined to immediate contractual obligations but extends to measures taken by a prudent employer to maintain morale, goodwill, and continuity in workforce relations. Expenditure incurred in furtherance of such objectives cannot be said to be unrelated to business. We also find merit in the reliance placed by the assessee on the decision of the Tribunal in the case of State Bank of Travancore (supra), wherein on similar facts, such contribution was held to be allowable an....
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....wn case for A.Y. 2010-11. We have perused the submissions advanced by both sides in light of the record placed before us. 59. Further, Notification no. 91 of 2008 dated 20/08/2008 issued by the Central Government as per section 90(3) of the Act, reads as under:- "In exercise of the powers conferred by sub-section (3) of section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that where an agreement entered into by the Central Government with the Government of any country outside India for granting relief of tax or as the case may be, avoidance of double taxation, provides that any income of a resident of India 'may be taxed' in the other country, such income shall be included in his total income chargeable to tax in India in accordance with the provisions of the Income-tax Act, 1961 (43 of 1961), and relief shall be granted in accordance with the method for elimination or avoidance of double taxation provided in such agreement." 60. Therefore, as is evident from section 90(3) of the Act, the same refers to term used but not defined both in the Act as well as in the tax treaty. Thus, we find no basis in the subm....
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....2011-12. The relevant findings, appearing at paras 16.1 to 16.3, including paras 18.6 to 18.11 reproduced therein of the order dated 29/06/2026, read as under:- "16.1. This Ground relates to non-taxability of recovery of bad-debts written off in earlier years. At the outset, both the parties submitted that the issue involved in the present ground is identical to the issue adjudicated by the Tribunal in assessee's own case for A.Y. 2010-11. We have perused the submissions advanced by both sides in light of the record placed before us. 16.2. We find that the issue arising in the present ground is identical to that considered by the Co-ordinate Bench in assessee's own case for A.Y. 2010-11 wherein the Tribunal held as under:- "18.6. The issue for consideration is whether the recovery of bad debts written off in earlier years is liable to be taxed under section 41(4) of the Act. It is an undisputed legal position that the provisions of section 41(4) are attracted only where a deduction has been allowed in respect of bad debts under section 36(1)(vii) in an earlier year. The condition precedent for invoking section 41(4) is thus the prior allo....
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..... Respectfully following the above view taken by the Coordinate Bench in assessee's own case, there being no material change in the facts or in law brought to our notice for the year under consideration, we restore the issue to the Ld. AO for the limited verification directed above. Accordingly, Ground No. 10 raised by the assessee stands allowed for statistical purposes. 12. Ground No. 11 - Deduction u/s. 80-IA in respect of windmills The assessee seeks deduction u/s. 80-IA in respect of income from windmills. 12.1. The Ld.AR sought examination of the claim on merits. He placed reliance on the detailed submission advanced on identical issue for assessment year 2011-12 in assessee's own case, vide order dated 29/06/2026. 12.2. The Ld.DR relied upon the orders of the authorities below. He also placed reliance on the detailed submission advanced on identical issue for assessment year 2011-12 in assessee's own case(supra). We have perused the submissions advanced by both sides in light of the record placed before us. 12.3. We note that an identical issue came up for consideration before the Coordinate Bench of this Tribunal in assessee's own case for A.Y. 2011-12.....
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....he submissions advanced by both sides in light of the record placed before us. 13.3. We note that an identical issue came up for consideration before the Coordinate Bench of this Tribunal in assessee's own case for A.Y. 2011-12. The relevant findings, appearing at paras 22.1 to 22.3 of the order dated 29/06/2026, read as under:- "22.1. This Ground relates to disallowance u/s 40(a)(ia) of the Act in respect of short deduction of TDS. At the outset, both the parties submitted that the issue involved in the present ground is identical to the issue adjudicated by the Tribunal in assessee's own case for A.Y. 2010-11. We have perused the submissions advanced by both sides in light of the record placed before us. 22.2. We find that the issue arising in the present ground is identical to that considered by the Co-ordinate Bench in assessee's own case for A.Y. 2010-11 wherein the Tribunal held as under:- "23.2. At the outset, it is observed that the claims relating to (i) disallowance under section 40(a)(ia) on account of short deduction of TDS, (ii) deduction under section 80-IA in respect of income from windmills, and (iii) refund of excess D....
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....wn case, vide order dated 29/06/2026. 14.2. The Ld.DR relied upon the orders of the authorities below. He also placed reliance on the detailed submission advanced on identical issue for assessment year 2011-12 in assessee's own case(supra). We have perused the submissions advanced by both sides in light of the record placed before us. 14.3. We note that an identical issue came up for consideration before the Coordinate Bench of this Tribunal in assessee's own case for A.Y. 2011-12. The relevant findings, appearing at paras 23.1 to 23.3 of the order dated 29/06/2026, read as under:- "23.1. Assessee has raised the claim of deduction u/s 80LA by way of notice to the revised return as under:- "The learned DCIT erred in not considering the claim o the Bank in respect of additional deduction under section 80LA vide Note 29 to the revised return of income." 23.2. However, it is observed that the assessee has not furnished any details or supporting material in respect of the said claim till date. No factual information has been placed on record regarding the eligibility of the assessee for deduction under section 80LA, the nature of income claimed to be ....
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....ng documents in support of its claim. The Ld.AO shall decide the issue by way of a speaking order after granting reasonable opportunity of being heard to the assessee. Accordingly, Ground No.14 raised by the assessee stands allowed for statistical purposes. 16. Ground No. 15 - Delayed-payment compensation This ground relates to the disallowance of compensation for delayed payment amounting to Rs. 63,29,156/-. It was submitted that, although the amount was described as a penalty in the tax audit report, it represented compensation paid by the assessee for delayed remittance of Government funds and delayed filing of service-tax/TDS returns, among other matters. 16.1. The Ld.AR referred to Note No.40 forming part of the revised computation of income wherein the assessee had initially disallowed the impugned amount suo moto. However, the assessee subsequently claimed that the payment was compensatory in nature and allowable as a deduction. The assessee therefore sought withdrawal of the suo motu disallowance. 16.2. The Ld.DR submitted that the claim raised by the assessee requires verification. We have perused the submissions advanced by both sides in light of the rec....
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....such non-interest income is attributable to the eligible business, the quantum of income so attributable, and the consequent additional deduction claimed u/s. 36(1)(viii). 17.4. We also note that the assessee itself has stated that the income attributable to the eligible business of providing long-term finance had not been finally determined. The mere creation of a special reserve of approximately Rs. 1,400 crore, particularly when the deduction actually claimed is approximately Rs. 677 crore, does not by itself establish the quantum of deduction allowable under section 36(1)(viii). The allowance under the said provision has to be determined with reference to the income derived from the eligible business and the other statutory conditions prescribed therein. 17.5. In the absence of a complete and verifiable computation identifying the eligible business income, the non-interest income sought to be included therein, the basis of its attribution to the eligible business and the corresponding amount of deduction claimed, we are unable to ascertain the correctness of the additional claim made by the assessee. The burden of substantiating a claim for deduction rests upon the assess....
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....al purposes. 19. Ground No.18- Double Taxation Relief The assessee vide this ground seeks credit of Double Taxation Relief. As the exact eligible amount requires examination of the supporting certificates and the applicable provisions, the Ld. AO is directed to verify the claim and grant the admissible relief in accordance with law, after affording due opportunity to the assessee. Accordingly, Ground No. 18 is allowed for statistical purposes. 20. Ground No.19 - Consequential computation of deduction u/s. 36(1)(viii) Vide this ground the assessee seeks re-computation of deduction u/s.36(1)(viii) on the basis of the finally assessed income and is stated to be consequential to Ground No.16. Since Ground No.16 has been dismissed, no deduction is available to the assessee u/s.36(1)(viii). Accordingly, Ground No.19 raised by the assessee stands dismissed. 21. Ground No.20- Short grant of TDS credit 21.1. The assessee seeks credit for tax deducted at source as reflected in the supporting record. The Ld.AO is directed to verify the claim and grant due credit in accordance with law. Accordingly, Ground No.20 raised by the assessee is allowed for statistical pu....
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....d by the Co-ordinate Bench in assessee's own case for A.Y. 2010-11 wherein the Tribunal held as under:- "29.11. We have considered the rival submissions and perused the material available on record. The limited issue for our consideration is the allowability of Broken Period Interest (BPI) paid on purchase of securities classified under the HTM category. 29.12. It is an undisputed position that in the Government securities market, the purchaser of a security pays, in addition to the purchase price, the interest accrued from the last due date till the date of purchase, commonly referred to as Broken Period Interest. Such payment represents interest relatable to the period prior to acquisition of the security and, correspondingly, the seller accounts for the same as income. The purchaser, having acquired the security only from the date of purchase, becomes entitled to interest thereafter. Thus, BPI paid is intrinsically linked to the period prior to acquisition and partakes the character of revenue expenditure rather than forming part of the cost of acquisition of the security. 29.13. We find that the aforesaid treatment is in consonance with the recogn....
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....text of the erstwhile scheme of taxation under the head "Interest on securities", where the income was assessed under specific statutory provisions then in force. The facts and statutory framework in the present case are materially different, inasmuch as the income from securities, including Broken Period Interest, is assessed as business income under section 28. This distinction has been clearly recognized by Hon'ble Bombay High Court in American Express International Banking Corporation v. CIT,(supra), wherein it has been held that once Broken Period Interest received is taxed as business income, the corresponding payment cannot be disallowed. We therefore hold that, the decision in Vijaya Bank does not apply to the facts of the present case. 29.16. We are also of the considered view that no useful purpose would be served by remanding the matter to the file of the Ld.AO for examining the nature of HTM securities. The allowability of Broken Period Interest does not hinge upon such characterization. Hon'ble Supreme Court in case of Bank of Rajasthan Ltd. v. CIT reported in (2024) 167 taxmann.com 430 clarifies that classification is fact-dependent and RBI guidelines are not....
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....of the record placed before us. 25.3. We note that an identical issue came up for consideration before the Coordinate Bench of this Tribunal in assessee's own case for A.Y. 2011-12. The relevant findings, appearing at paras 31.1 to 31.3 of the order dated 29/06/2026, read as under:- "At the outset, both the parties submitted that the issue involved in the present ground is identical to the issue adjudicated by the Tribunal in assessee's own case for A.Y. 2010-11. The Ld.AR submitted that the issue stands covered by the order of the Co-ordinate Bench in favour of the assessee. 31.1. The Ld.DR relied upon the assessment order and reiterated the submissions advanced by the Revenue in the earlier year. We have perused the submissions advanced by both sides in light of the record placed before us. 31.2. We find that the issue arising in the present ground is identical to that considered by the Co-ordinate Bench in assessee's own case for A.Y. 2010-11, wherein the Tribunal held as under:- "31.9. We have considered the submissions of both sides and perused the material on record. We find that the issue under consideration is squarely....
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....Rs. 746,63,32,506/- relating to loss on revaluation of investments and amortisation of premium on securities classified as Held to Maturity. 26.1. The Ld.DR relied upon the classification under RBI norms and the assessment order. He placed reliance on the detailed submission advanced on identical issue for assessment year 2011- 12 in assessee's own case,(supra). 26.2. The Ld.AR relied upon the consistently followed method of valuation and the orders in assessee's own case. He also placed reliance on the detailed submission advanced on identical issue for assessment year 2011-12 in assessee's own case,(supra). We have perused the submissions advanced by both sides in light of the record placed before us. 26.3. We note that an identical issue came up for consideration before the Coordinate Bench of this Tribunal in assessee's own case for A.Y. 2011-12. The relevant findings, appearing at paras 33.7 to 33.16, read with paras 33.1 to 33.3 of the order dated 29/06/2026, read as under:- "At the outset, both the parties submitted that the issue involved in the present ground is identical to the issue adjudicated by the Tribunal in assessee's own case for A.Y. 2010....
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....ned to allowability of provision for NPAs by an NBFC, where Hon'ble Court held that RBI directions cannot override the specific provisions of the Income-tax Act. However, the Court also recognized that RBI norms may be relevant in understanding the nature of income and accounting treatment. 33.12. In present facts of the case, we are not confronted with a claim contrary to the Act, but with the question of correct computation of business income of a bank, where valuation of securities at lower of cost or market value has been judicially accepted as a permissible method. 33.13. Further, Hon'ble Supreme Court in CIT v. Bank of Rajasthan Ltd. reiterated that the treatment of securities in the hands of banks must be viewed in the context of their business model, and regulatory classification under RBI norms does not conclusively determine their tax character. 33.14. We also find that the CBDT itself has, in its circulars, accepted that banks may follow the method of valuing securities at cost or market value whichever is lower, and that such method, when consistently followed, reflects true and fair income. Thus, the position adopted by the assessee is in con....
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....6. We shall first adjudicate these grounds by following the said order and thereafter record the ground-wise disposal of the cross-appeals for A.Y. 2013-14 in a consolidated table. Assessment year 2013-14: ITA No. 3429/Mum/2018 - Appeal by the assessee It is noted that some of the grounds are not common in the appeal filed by the assessee and revenue for assessment year 2013-14, with the appeal considered herein above of the assessee and revenue for assessment year 2012-13. Accordingly, those grounds are being considered separately first as under. 28. Ground No. 3 - Provision for other employee benefits Ground No.3 relates to the provision made for other employee benefits. The Ld.AR submitted that the issue stands covered in favour of the assessee by the order of the Coordinate Bench in assessee's own case for A.Y. 2010-11 dated 21/04/2026. The arguments advanced by both sides are similar and identical to the arguments raised by them while arguing the issue for assessment year 2010-11. The relevant findings on the issue has been recorded in paras 12.6 to 12.14 for order passed for assessment year 2010- 11 that reads as under: "12.6. We have considered the su....
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....oyees, being in the nature of compensation for loss of services during the period of leave that the employees are entitled to avail. Such leave is not encashable and can only be availed in future. Therefore, these provisions do not partake the character of contingent liabilities, but represent present obligations arising from past services, reasonably estimated on scientific basis, and hence constitute allowable business expenditure. 12.11. We further note that the disallowance sought to be justified by reference to section 43B(f) is not sustainable inasmuch as the said provision specifically deals with leave encashment and its applicability would depend upon the nature of liability claimed. 12.12. As regards the argument that the claim has been made by way of a note and therefore deserves to be rejected, we find the same to be untenable in view of the settled legal position that appellate authorities are empowered to consider a legitimate claim arising from facts already on record, even if not specifically made in the return of income. The requirement of making a claim through a revised return is confined to the powers of the Assessing Officer and does not fetter....
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....warrant verification. The material on record indicates that the assessee has placed reliance on judicial precedents and has sought to raise a legal claim regarding allowability of bad debts in respect of non-rural advances. The absence of a claim in the return does not denude the appellate authorities of jurisdiction to examine the issue on merits. 11.12. On merits, the Revenue has contended that the decisions relied upon by the assessee stand overruled and that Explanation 2 to section 36(1)(vii) disentitles the claim. In this regard, we note that the allowability of deduction under section 36(1)(vii) is governed by the requirement of actual write-off in the books of account and is subject to the conditions laid down in section 36(2). Further, the interplay between sections 36(1)(vii) and 36(1)(viia), particularly in the case of banking companies, has been explained by the Hon'ble Supreme Court in Catholic Syrian Bank Ltd. v. CIT, wherein it has been held that both provisions operate in distinct fields and deduction under section 36(1)(vii) in respect of nonrural advances is not barred, subject to statutory conditions. 11.14. It is relevant to note that the later....
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.... allowed for statistical purposes. 30. Ground No.17 - Provision for privilege-leave encashment Ground No.17 relates to the provision for privilege-leave encashment. The issue stands covered by the order of the Coordinate Bench in assessee's own case for A.Y. 2010-11 dated 21/04/2026. The arguments advanced by both sides are similar and identical to the arguments raised by them while arguing the issue for assessment year 2010-11. The relevant findings on the issue has been recorded in paras 13.2 to 13.3 for order passed for assessment year 2010-11 that reads as under: "13.2. It is noted that the assessee raised this claim based on the decision of Hon'ble Calcutta High Court in the case of Exide Industries Ltd. v. UOI reported in (2007) 292 ITR 470. The Revenue challenged the said decision before the Hon'ble Supreme Court, wherein the constitutional validity of section 43B(f) was upheld in (2020) 425 ITR 1. 13.3. In any event, it is noted that the Hon'ble Supreme Court has held that the deduction in respect of such liability is allowable only on actual payment basis. Accordingly, the provision shall be allowed on payment basis in terms of section 43B, i.e., wh....
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....accounting and taxation purposes and such selective treatment leads to distortion of income. 28.5. However, it is an admitted position that the identical issue has been consistently decided in favour of the assessee in earlier years and the same has been affirmed by the Hon'ble jurisdictional High Court. In view of the binding nature of such precedents and following the principle of judicial discipline, we are constrained to follow the earlier decisions. We therefore do not find any infirmity in the view taken by the Ld. CIT(A) and the same is upheld." 31.2. There being no distinguishing feature in the facts or law brought to our notice, we respectfully follow the above view of the Coordinate Bench in assessee's own case. We there do not find any infirmity in the view taken by the Ld.CIT(A) and the same is upheld. Accordingly, Ground Nos. 1 and 2 raised by the Revenue stand dismissed. 32. Ground No. 5 - Provision for wage revision It is submitted that the claim relating to provision for wage revision has already been allowed by the Ld.AO after verification while giving effect to the order of the Ld.CIT(A) and no surviving grievance remains for adjudication. ....
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....able to tax as and when the deferred guarantee is issued and the commission is received.' 30.10. We are in complete agreement with the decision of the Coordinate Bench and accordingly hold that the guarantee commission is taxable in the year of receipt and cannot be spread over the period of guarantee. The order of the Ld. CIT(A) is therefore set aside and the action of the Ld. AO is restored." Respectfully following the above decision, we set aside the order of the Ld. CIT(A) on this issue and restore the action of the Ld. AO. Accordingly, Ground No. 6 raised by the Revenue stands allowed. 34. Ground No. 12 - Deduction for bad debts We note that the ground relating to deduction for bad debts does not arise from the findings or directions recorded by the Ld. CIT(A) in the impugned order. The ground has therefore been wrongly raised and does not give rise to any surviving grievance requiring adjudication. Accordingly, Ground No. 12 raised by the Revenue stands dismissed as misconceived. 35. Ground No. 13 - Provision for other long-term employee benefits Ground No.13 relates to the provision made for other long-term employee benefits. The arguments advan....
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....e requirement of actual payment in terms of section 43B(f). The Ld. AO shall grant deduction in accordance with law after due verification." Respectfully following the above decision, we restore the issue to the file of the Ld. AO for the limited verification directed therein. Accordingly, Ground No. 13 raised by the Revenue stands allowed for statistical purposes. 36. The other grounds raised by the assessee as well as revenue for the year under consideration are identical and similar to the facts and circumstances considered for assessment year 2012-13 in the preceding paras. Both sides submitted that the arguments advanced are also identical for these common issue. 36.1. Having adjudicated all the grounds raised in the cross-appeals for A.Y. 2013-14, our findings recorded hereinabove while disposing of the corresponding issues for A.Y. 2012-13 will thus be applicable mutatis mutandis. For the sake of convenience, the relevant paras considering the issues in AY 2012-13 are summarized and tabulated as under: ITA No. 3429/Mum/2018 - Appeal by the assessee Ground No. for A.Y. 2013- 14 Issue Corresponding ground for A.Y. 201213 Para(s) of the present ....