Sree Kalidasa Sahakar Bank Nimyamit, Bangalore V. Income Tax Officer, Bangalore

ITA 260/BANG/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5396 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 06-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: C R NULVI
• Keywords: Depreciation; Business expenditure
• Section: 43B; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH - SMC C BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER I.T.A. NO. 260 /BANG/201 7 (ASSESSMENT YEAR : 2012 - 13 ) SREE KALIDASA SAHAKAR BANK NIYAMIT, 2 ND CROSS, 2 ND MAIN, GANDHINAGAR, BANGALORE. PAN AACA S 5452P VS. INCOME TAX OFFICER, WARD 5(2)(4), BANGALORE. APPELLANT RESPONDENT. APPELLANT BY : SHRI C.R. NULVI, C.A. RESPONDENT BY : SHRI AR.V.SREENIVASAN, JCIT (D.R) DATE OF H EARING : 20.03.2017. DATE OF P RONOUNCEMENT : 03.05 . 201 7 . O R D E R PER SHRI VIJAY P AL RAO, J. M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DT.19.09.2016 OF CO MMISSIONER OF INCOME TAX (APPEALS) FOR THE ASSESSMENT YEAR 2007 - 08. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 2 ITA NO. 260 /BANG/ 2017 3. GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 4. GROUND NO.2 IS REGARDING DISAL LOWANCE OF LOSS ON SALE OF SECURITIES AND AMORTIZATION OF PREMIUM PAID ON SALE OF SECURIT IES HELD FOR MATURITY . 3 ITA NO. 260 /BANG/ 2017 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSING OFFICER HAS DISALLOWED EXCESS DEPRECIATION OF RS.11,59,991 WHICH WAS OBJECTED BY THE ASSESSEE BEFORE THE CIT (APPEALS). HOWEVER THE CIT (APPEALS) HAS CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS POINTED OUT THAT THE ONLY GRIE VANCE OF THE ASSESSEE ON THIS ISSUE IS REGARDING THE LOSS ON SALE OF GOVT. SECURITIES HELD FOR MATURITY AMOUNTING TO RS.3,29,533 WHICH WAS ALSO PART OF THE CLAIM OF DEPRECIATION DISALLOWED BY THE ASSESSING OFFICER . T HEREFORE TO THE EXTENT OF THIS AMOU NT OF RS.3,29,533, THE CLAIM OF THE ASSESSEE IS ALLOWABLE. HE HAS RELIED UPON CBDT CIRCULAR NO.17/2008 DT.26.11.2008. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS ALSO REFERRED TO THE DETAILS OF THE DEPRECIATION AS PER THE BOOKS OF ACCOUNTS OF THE ASSESSEE PLACED AT PAGE NO.4 OF THE PAPER BOOK AND SUBMITTED THAT THE CLAIM OF DEPRECIATION INCLUDES THIS AMOUNT OF RS.3,29,533 BEING LOSS ON THE GOVT. SECURITIES HELD FOR MATURITY . THUS THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT WHILE MAKING THE DISALLOWANCE ON ACCOUNT OF EXCESS DEPRECIATION THE ASSESSING OFFICER HAS NOT CONSIDERED THIS FACT. 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS NOT RAISED THIS PLEA EITHER BEFORE THE ASSESSING OFFICER OR 4 ITA NO. 260 /BANG/ 2017 BEFORE THE CIT (AP PEALS) THEREFORE , THIS FACT HAS NOT BEEN EXAMINED BY THE AUTHORITIES BELOW. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE LIMITED GRIEVANCE OF THE ASSESSEE IS IN RESPECT OF DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESS DEPRECIATION INCLUDING LOSS ON GOVT. SECURITIES HELD FOR MATURITY WHICH HAS BEEN CLAIMED AS PART OF THE DEPRECIATION. THUS THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT WHILE MAKING THE DISALLOWANCE OF EXCESS DEPRECIATION THE ASSESSING OFFICER HAS NOT TAKEN INTO CONSIDERATION THIS AMOUNT OF RS.3,29,533 BEING LOSS ON GOVT. SECURITIES HELD FOR MATURITY . THERE IS NO DI SPUTE THAT NEITHER THE ASSESSING OFFICER NOR THE CIT (APPEALS) HAS CONSIDERED THIS ASPECT OF THE MATTER WHILE DISALLOWING THE EXCESS DEPRECIATION CLAIM OF THE ASSESSEE. THEREFORE IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, T HIS ISSUE IS REMITTED TO THE RECORD OF THE ASSESSING OFFICER FOR PROPER VERIFICATION AND ADJUDICATION OF THE ISSUE OF CLAIM OF LOSS ON SALE OF SECURITIES AND AMORTIZATION OF PREMIUM ON THE GOVT. SECURITIES HELD FOR MATURITY . 8. GROUND NO.3 IS REGA RDING DISALLOWANCE OF THE CONTRIBUTION MADE TO THE LIC FUND. 5 ITA NO. 260 /BANG/ 2017 9. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED THE PROVISION MADE BY THE ASSESSEE TO THE LIC GRATUITY FUND. HE HAS REFERRED TO T HE DETAILS OF GRATUITY PAYABLE AS SHOWN IN THE BALANCE SHEET OF THE ASSESSEE AT RS.22,65,242 AS ON 31.3.2011 AND SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS PAID THE SAID AMOUNT AS PER THE ACKNOWLEDGEMENT OF THE LIC PLACED AT PAGE N O.34 OF THE PAPER BOOK. THUS THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT AS P ER THE PROVISIONS OF SECTION 43B (B) OF THE ACT, ONCE THE ASSESSEE HAS PAID THIS CONTRIBUTION TO THE APPROVED LIC GRATUITY FUND THEN THE SAID AMOUNT IS ALLOWABLE . AS REGADS THE NEW ENTRANT PAYMENT OF RS.531 PER PERSON THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT THIS IS ONLY A GENERAL INFORMATION PROVIDED BY THE LIC IN THE SAID CERTIFICATE AND THIS ENTIRE AMOUNT HAS BEEN PAID BY THE ASSESSEE. 10. ON TH E OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE ASSESSING OFFICER AS WELL AS CIT (APPEALS) HAS TAKEN NOTE OF THE FACT THAT THE LIC HAS SPECIFICALLY MENTIONED THAT NEW ENTRANT CAN JOIN THE SCHEME ON PAYMENT OF RS.531 PER PERSO N AND THEREFORE IT IS NOT CLEAR WHETHER THIS AMOUNT WAS PAID BY THE EMPLOYE ES OF THE ASSESSEE OR IT WAS PAID BY THE ASSESSEE. THUS HE HAS SUBMITTED THAT IN THE ABSENCE OF ANY EVIDENCE TO SHOW 6 ITA NO. 260 /BANG/ 2017 THAT THIS AMOUNT WAS PAID BY THE ASSESSEE THIS CONTRIBUTION OF CLAIM BY THE ASSESSEE SHOULD NOT BE ALLOWED. 11. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD, IT IS NOTED THAT THE ASSESSEE HAS PAID A SUM OF RS.22,65,242 ON 29.2.2012 AS A CONTRIBUTION TO GRATUITY SCHEME OF LIC. THIS AMOUNT WAS PAID TOWARDS ANNUAL CONTRIBUTION AND THIS PERTAINS TO THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE AS P ER THE PROVISIONS OF SECTION 43B (B) OF THE ACT THE PAYMENT MADE TOWARDS THE GRATUITY SCHEME OF LIC IS ALLOWABLE. AS REGARDS THIS AMOUNT OF RS.531 PER PERSON FOR NEW ENTRANT IN THE SCHEME, THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT THIS AMOUNT WAS PAID BY THE ASSESSEE AND NOT BY THE EMPLOYEE AS OBSERVED BY THE AUTHORITIES BELOW. THEREF ORE FOR LIMITED PURPOSE OF VERIFYING THIS FACT, THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE RELEVANT RECORD AND THEN DECIDE THIS ISSUE IN THE LIGHT OF THE ABOVE OBSERVATION. 12. GROUND NO.4 IS REGARDING DISALLOWANCE OF RS.35,637 ON ACCOUNT OF PF ADMINISTRATIVE CHARGES. 13. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THIS AMOUNT OF RS.35,637 WAS SHOWN UNDER SALARY THOUGH IT WAS THE PAYMENT MADE FOR PF ADMN. CHARGES. THE ASSESSING OFFICER HAS DISALLOWED THIS 7 ITA NO. 260 /BANG/ 2017 AMOUN T ON THE GROUND THAT IT IS NOT A SALARY PAYMENT. THUS THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT WHEN THE PF ADMN. CHARGES IS ALLOWABLE AS BUSINESS EXPENDITURE THEN EVEN IF THE SAID AMOUNT CANNOT BE ALLOWED AS SALARY, THE SAME IS ALLOWABLE AS BUSINESS EXPENDITURE UNDER SECTION 37(1) OF THE ACT. HE HAS REFERRED TO THE CHALLAN WHEREBY THE ADMN. CHARGES HAVE BEEN PAID TO THE EPF ORGANISATION. THUS THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE SAID AMOUNT IS ONLY ON ACCOUNT OF PF ADMN. CHARGES WHICH IS AN ALLOWABLE EXPENDITURE. 14. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THIS AMOUNT WAS CLAIMED BY THE ASSESSEE UNDER THE HEAD SALARY AND THE ASSESSING OFFICER HAS DISALLOWED ON ACCOUNT OF EXCE SS SALARY. THUS THE ASSESSEE IS RAISING A NEW PLEA THAT THIS IS AN AMOUNT PAID TOWARDS PF ADMN. CHARGES WHICH HAS NOT BEEN EXAMINED BY THE AUTHORITIES BELOW. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 15. I HAVE CONSIDERED THE RIVAL SU BMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER DISALLOWED THIS AMOUNT OF RS.35,637 ON ACCOUNT OF EXCESS SALARY. HOWEVER THE ASSESSEE HAS NOW PRODUCED THE CHALLAN OF PAYMENT TOWARDS PF ADMN. CHARGES TO THE EPF ORGANISATION AT PAGE NOS.36 TO 43 OF PAPER BOOK AND SUBMITTED THAT THIS AMOUNT REPRESENTS THE PF ADMN. 8 ITA NO. 260 /BANG/ 2017 CHARGES WHICH IS AN ALLOWABLE BUSINESS EXPENDITURE UNDER SECTION 37(1) OF THE ACT. SINCE THIS ASPECT OF THE MATTER HAS NOT BEEN EXAMINED BY THE AUTHORITIES BELOW THEREF ORE THIS ISSUE IS SET ASIDE TO THE RECORD OF THE ASSESSING OFFICER TO VERIFY THIS PLEA AND THEN DECIDE THE SAME AS PER LAW. NEEDLESS TO SAY THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BEFORE DECIDING THE ISSUE. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD MAY , 201 7 . SD/ - (VIJAY PAL RAO) JUDICIAL MEMBER BANGALORE, DT. 03.05 .2017. *REDDY GP COPY TO : 1 . APPELLANT 2 . RESPONDENT 3 . C.I.T. 4 . CI T(A) 5 . DR, ITAT, BANGALORE. 6 . GUARD FILE. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL BANGALORE.