UNION BANK OF INDIA (ERSTWHILE- ANDHRA BANK),MUMBAI vs. DY. COMMISSIONER OF INCOME TAX , CIRCLE-1(1), HYDERABAD

ITA 364/HYD/2018Status: DisposedITAT Hyderabad24 January 2025AY 2013-14Bench: Shri Manjunatha, G. (Accountant Member), Shri K. Narasimha Chary (Judicial Member)1 pages
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What did the Tribunal hold?

The Tribunal held that the penalty paid to the RBI for deviation in KYC-AML guidelines was compensatory in nature, not penal for an offense, and thus deductible under Section 37(1). The issue regarding the deduction under Section 36(1)(viii) was set aside to the Assessing Officer for further verification.

What were the facts?

The assessee, a PSU bank, claimed deductions under Section 36(1)(viii) for a special reserve and also sought to deduct penalties paid to the RBI for KYC-AML guideline violations. The Assessing Officer disallowed both claims, and the CIT(A) partly allowed the appeal.

What were the issues?

Whether penalties paid to RBI for KYC-AML guideline violations are deductible business expenses, and the correct computation of eligible profits for deduction under Section 36(1)(viii).

Which sections of the Income-tax Act were involved?

Section 36(1)(viii),Section 37(1)

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Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad

Before: Shri Manjunatha, G. & Shri K. Narasimha Chary

Per Manjunatha G., A.M

These cross appeals filed by the assessee, as well as the Revenue, are directed against the orders dated 27/11/2017 of the Ld. CIT (A)-1, Hyderabad and pertain to A.Y.2013-14 and 2014-15. Since, facts are identical and issues are common, for the sake of convenience, the appeals filed by the assessee as well

The order continues below.

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