UCO Bank Vs ACIT (ITAT Kolkata)
Leave Encashment Allowed Only on Payment Basis as Tribunal Follows Supreme Court Ruling; MAT Additions Deleted Due to Inapplicability of Section 115JB to Statutory Banks; Disallowance for Short TDS Rejected as Covered by Jurisdictional High Court Decision; No Disallowance Under Section 14A Where Own Funds Exceed Investments.
The matter involved cross appeals against the order dated 12.12.2017 passed by the Commissioner of Income-tax (Appeals)-23, Kolkata for Assessment Year 2013–14.
On the issue of leave encashment, the Assessing Officer disallowed provision for leave encashment on the ground that deduction is allowable only on payment basis under Section 43B(f). The CIT(A) upheld the disallowance. The Tribunal noted that the Supreme Court had decided the issue in favour of the Revenue, holding that such deduction is allowable only on payment basis. Accordingly, while the disallowance on accrual basis was upheld, the Tribunal directed that deduction be allowed for actual payments made during the year.
With respect to applicability of Section 115JB (Minimum Alternate Tax), the assessee contended that it is not a company under the Companies Act, as it is established under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. The Assessing Officer and CIT(A) held that Section 115JB applied and computed book profits accordingly. The Tribunal relied on a Special Bench decision which held that such banks are not companies formed and registered under the Companies Act. It was further held that deeming provisions treating such banks as “Indian companies” under the Income-tax Act cannot extend to treating them as companies under the Companies Act. Therefore, the conditions required for applying Section 115JB were not satisfied. The Tribunal concluded that provisions of Section 115JB are not applicable to such banks and set aside the orders of lower authorities on this issue.
