SREE KALIDASA SAHAKAR BANK NIMYAMIT,BANGALORE vs. INCOME TAX OFFICER, BANGALORE

The assessee has raised the following grounds :

4. Ground No.2 is regarding disallowance of loss on sale of securities and amortization of premium paid on sale of securities “ Held for Maturity”.

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 grievance of the assessee on this issue is regarding the loss on sale of Govt.

On the other hand, the learned Departmental Representative submitted that the assessee has not raised this plea either before the Assessing Officer or CIT (Appeals) therefore, this fact has not been examined by the authorities below. He has relied upon the orders of the authorities below.

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.

Ground No.3 is regarding disallowance of the contribution made to the LIC Fund.

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 the 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 No.34 of the paper book. Thus the learned Authorised Representative has submitted that as per 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.

On the 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 person and therefore it is not clear whether this amount was paid by the employees of the assessee or it was paid by the assessee. Thus he has submitted that in the absence of any evidence to show

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 per 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. Therefore 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.

Ground No.4 is regarding disallowance of Rs.35,637 on account of PF Administrative charges.

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 amount 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.

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 excess 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.

I have considered the rival submissions 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.

In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 3rd May, 2017.