Sikar Kendriya Sahkari Bank Ltd.. , ... vs Assessee

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 121/JP/2012 fu/kZkj.k o"kZ@Assessment Year : 2008-09

Sikar Kendriya Sahkari Bank cuke Dy. Commissioner of Limited, H.O.- Basant Vihar, Sikar. Vs. Income Tax, Circle- Sikar. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAAAS 1601 G vihykFkhZ@Appellant izR;FkhZ@Respondent

vk;dj vihy la-@ITA No. 132/JP/2012 fu/kZkj.k o"kZ@Assessment Year : 2008-09

Asstt. Commissioner cuke Sikar Kendriya Sahkari Bank of Income Tax, Circle- Vs. Limited, H.O.- Basant Vihar, Sikar. Sikar. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAAAS 1601 G vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : Shri Anil Kaushik & Shri Sanjiv Agarwal (C.A.) jktLo dh vksj ls@ Revenue by : Mrs. Neena Jeph (JCIT)

lquokbZ dh rkjh[k@ Date of Hearing : 06/01/2015 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 27/03/2015 2 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

vkns'k@ ORDER

PER: T.R. MEENA, A.M.

These are cross appeals, one by the assessee and another by the

Revenue arise against the order dated 01/11/2011 passed by the

learned C.I.T.(A)-III, Jaipur for the A.Y. 2008-09. The grounds of

assessee's appeal as well as the Revenue are as under:-

Grounds of ITA No. 121/JP/2012

"1. The Ld. A.O's order is contrary to law and the facts of the case.

2. The order of the Ld. CIT Appeal-III, Jaipur dated 01.11.2011 is contrary to the law and the facts of the case to the extent it upholds the order of Ld. Assessing Officer DCIT, Circle Sikar.

3. The learned Assessing Officer's was grossly erred in law and acted arbitrarily while disallowing claim for contribution of managerial Salary Fund amounting to Rs. 10 lacs, made in compliance of the order of the State Government of Rajasthan under Rule 26(b) of the "PACS Managers Selection, Appointment and Service Rules, 2003. Though the ld. A.O. does not dispute that the fund is a statutory fund yet he disallows the contribution made thereto by the assessee bank under the plea that creation of fund may be legal/statutory requirement of the assessee but that does not mean that it an expenditure incurred that shows his bias. IN case of contribution 3 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

to be made to such funds (created under statutory provisions) the assessee is not free to make or not to make such contribution or have a liberty to judge its reasonability, as such the contribution is nothing but a charge on the income of the assessee, and is an allowable business expenditure being incurred to run the business. Hence the action of the Ld. A.O. needs to be quashed.

4. The learned Assessing Officer was grossly erred in law and acted arbitrarily while disallowing claim for contribution of PACS Development fund amounting to Rs. 820484/-, the amount is contributed by the assessee in compliance to the statutory provisions of "Revised Primary Agricultural Credit Cooperative Societies Development Fund Rules, 2003" made by the Co-operative Department, Government of Rajasthan, and the assessee is not independent for using the fund, being a statutory liability for it, thus this is charge on the income of the assessee bank and need to be allowed as a business expenditure.

5. The learned A.O. was grossly erred in law and acted arbitrarily while disallowing claim for contribution of K.K. Development fund amounting to Rs. 150000/-, the amount is contributed by the assessee for the welfare of its employees thus this is charge on the income of the assessee bank and need to be allowed as business expenditure. The contention of the Ld. A.O. that explanation filed by the assessee is not satisfactory is biased and unjust and not tenable at all.

4 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

6. The appellant craves leave to add to or amend the aforesaid grounds before disposal of the appeal."

Ground of ITA No. 683/JP/2012

"(i) The CIT(A) has passed a perverse order in deleting the disallowance to the extent of Rs. 12,80,355/- in respect of provision for doubtful debts without considering detailed facts mentioned in the assessment order.

(ii) The CIT(A) has passed a perverse order in accepting the claim of the assessee under sec. 36(1)(viia) by holding that the adverse decision in the earlier years given by CIT(A), on this issue, were inapplicable.

(iii) The CIT(A) has passed a perverse order in deleting the disallowance to the extent of Rs. 15,35,000/- in respect of provision for contingent liability on account of earned leave.

(iv) The appellant craves leave to add, alter, amend, withdraw or insert any ground or grounds of appeal before or at the time of hearing of the appeal."

2. The ground Nos. (i) and (ii) of the Revenue's appeal are against

allowing deduction at Rs. 12,80,315/- in respect of provision for

doubtful debts U/s 36(1)(viia) of the Income Tax Act, 1961 (hereinafter

referred as the Act). The Ld. Assessing Officer observed that the

assessee is a Central Cooperative Bank. It filed return on 29/09/2008

declaring total income of Rs. 2,51,46,865/-. The case was scrutinized

U/s 143(3) of the Act. The assessee has made provision U/s 36(1)(viia)

of the Act and Rule 6ABA of the Income Tax Rules, 1962 (in short the 5 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

Rules) for bad and doubtful debt of Rs. 12,80,355/-. The Assessing

Officer gave reasonable opportunity of being heard on this issue on the

ground that the assessee already had large reserve in the balance sheet

and no further provision for bad and doubtful debt is required. Further

the assessee has incurred heavy expenditure on insurance which covers

the risk of depositor's money. As per details filed assessee, it has

claimed expenditure of Rs. 21,10,698/- on account of insurance which

includes insurance expenditure of Rs. 19,70,870/- paid to DICGC for

insurance of deposits. Any bad debt is to be compensated by the

insurance agency as the deposits with the bank are insured for which

the assessee had been incurring heavy expenditure on insurance year

after year. As per the balance sheet of the assessee as on 31/3/2007,

the credit balance in bad and doubtful debts reserve for NPA is Rs. 4.85

cores and bad and doubtful debts reserve is Rs. 5.76 crores. Since

these reserves are for specific purpose any loss on account of bad and

doubtful debt is to be met out of these specific reserves.. The assessee

had reserve of 10.61 crores at the beginning of the year which is more

than assets considered bad and doubtful by the bank. It further relied

on the decision of the Hon'ble Supreme Court in the case of CIT Vs. City

Union Bank Ltd. , who had granted leave on revenue's special leave 6 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

petition (Civil) No(s). 24001/2007. The question of law referred by the

revenue being" Whether bad debts in respect of advances made by

Urban branches are allowable only on the basis of amounts written off

without taking into account the balance in the provision for bad and

doubtful account?" Section 36(1)(viia) of the Act provides for provision

for bad and doubtful debts and not simply for debts. He further held

that in the case of assessee, there are no debts which are doubtful over

and above the provision already made by assessee. The assessee has

not written off any amount on account of bad debt, the provision of

clause 36(1)(viia) of the Act are not applicable to assessee for the year.

Similar disallowance was also made in A.Y. 2007-08, therefore, he

disallowed the claim of bad and doubtful debt of Rs. 12,80,355/-.

3. Being aggrieved by the order of the Assessing Officer, the

assessee carried the matter before the learned CIT(A), who had allowed

the appeal by observing as under:-

"I have carefully considered the rival stands of the A.O. and the Ld. A.R., towards the issue under consideration. From the impugned order, it can be seen the A.O. has termed the Provision for Doubtful Debts, as claimed u/s 36(1)(viia) of the Act, as an inadmissible claim as such. While holding the same, the A.O. relied upon the fact that appellant has 7 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

already having reserves of Rs. 10.61 crores, which is more than the quantum of Provision for Doubtful Debts claimed, the appellant has also paid insurance premium of Rs. 21.10 Lacs towards insurance of deposit and also that the assessee has not written off any amount, on account of bad debts in its books of account. In his remand report dated 23/08/2011, the A.O. also pointed out that the similar issue has been decided in favour of the department by the then CIT(A), while deciding the appellant's appeal for A.Y. 2007-08 also. However, the Ld. AR opposed the above contentions of the A.O., while stating that the appellant is a Co-operative Bank and the benefit of Sec. 36(1)(viia) is extended to them in the current year only, as the relevant amendment was brought into effect from 01/04/2007 only. Moreover, it is also argued that the Sec. 36(1)(viia) does not stipulate any condition towards writing off the loans for making such claim in this regard. He also submitted that the insurance paid by the appellant was towards the repayment of deposits received from its clients and not towards the loans advance by them as such. As far as the issue of having substantial reserve of Rs. 10.61 crores, as pointed out by the A.O., it was stated that there is a fundamental difference in between the concept of "Provision" and "reserve", in accounting terminology and the same cannot be equated as such.

8 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

In the light of the above deliberation, I find force in the arguments of the Ld. AR as the benefit of impugned section has been extended from the current year only, therefore, the adverse decision given in the earlier year towards such claim of the appellant u/s 36(1)(viia) is not applicable in the current year. Even the then CIT(A)-111, vide his order dated 02/11/2010 for A.Y. 2007-08, has also recognized the above aspect while holding that since the cooperative banks have been included in the Sec. 36(1)(viia), w.e.f. 01/04/2007 only, therefore, the benefit of the above provision would be available to the assessee from A.Y. 2008-09 only i.e. the year consideration. Moreover, from the plain reading of the impugned section, it is quite clear that to claim the benefit of the bad debts, the eligible bank is required to create the provision for Doubtful Debts, to the extent as prescribed therein. It does not stipulate any condition of writing of such debts in the books of accounts or condition related to insured deposits or having reserves etc. The cardinal rule of interpretation of law suggests that when the meaning of the words/phrase used in a statute is clear and unambiguous, then such words to be given its plain and grammatical meaning and effect of the such law has to be given the in such context only. In the present case, it is found that the A.O. has raised several issues like insurance payment accumulated reserves and non writing off loans etc. i.r.o., the 9 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

applicability of Sec. 36(1)(viia), the aspects which have not been incorporative therein, as such. IN view of the same, I find that the A.O. has raised extraneous or unrelated grounds/justification, as stated above, to disallow the claim of the appellant made u/s 36(1)(viia) of the Act. IN the light of the above facts and circumstances, it is hold that the A.O's stand in this regard is against the sprite of the relevant law; therefore, the same is hereby reversed. Accordingly, the appellant's claim of Rs. 12,80,355/- made u/s 36(1)(viia) is allowed. Consequently, these grounds of appeal are upheld."

4. Now the revenue is in appeal before us. The Ld D.R. vehemently

supported the order of the Assessing Officer and argued that in A.Y.

2007-08, this addition was confirmed by the ld CIT(A). The issue is

identical, therefore, the same may be confirmed.

5. At the outset, the ld. A.R. for the assessee supported the order of

the ld CIT(A) and argued that in assessee's own case in A.Y. 2007-08,

the Hon'ble ITAT, Jaipur Bench, Jaipur has considered this issue. The

assessee has claimed bad and doubtful debt of Rs. 60,08,932/- U/s

36(1)(viia) of the Act, which was confirmed by the CIT(A). However,

deduction U/s 80P was not allowed by the Assessing Officer. Therefore,

the same is restored back to the Assessing Officer to consider the 10 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

amended provision of Section 36(1)(viia) of the Act. It is further argued

that these provisions were made as per the amendment made in

Section 36(1)(viia) of the Act w.e.f. 01/4/2007, which is squarely

applicable for the year under consideration. Therefore, the same may

be allowed. There is no necessity to write off the amount in the books

of account, therefore, the same may be allowed.

6. We have heard the rival contentions of both the parties and

perused the material available on record. The ld. CIT(A) has considered

this aspect in great detail and also examined the legal position for A.Y.

2007-08 as well as A.Y. 2008-09, which has not been controverted by

the ld DR. Section 36(1)(viia) of the Act provides that any provision in

bad and doubtful debt made by Central Cooperative Bank is allowed

deduction not exceeding seven and one half percent of the total income

(computed before making any deduction under this clause and Chapter

VIA) and an amount not exceeding ten percent of the aggregate

average advances made by the rural branches of such bank computed

in the prescribed manner. Therefore, we upheld the order of the ld.

CIT(A).

11 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

7. The revenue's third ground of appeal is against deleting the

disallowance of Rs. 15,35,000/- in respect of provision for contingent

liability on account of earned leave. The Assessing Officer observed that

the assessee had made provision of Rs. 15,35,000/- on account of

contingent expenditure and PL leave during the year and debited the

same amount in P&L account. The Assessing Officer gave reasonable

opportunity of being heard on this issue to explain how this provision is

admissible as deduction, which was replied by the assessee and

submitted that this provision is for earned leave of employees, which

had accrued during the year but payment was to be made afterwards.

He further observed that a similar claim of Rs. 15,35,628/- was made

by the assessee in A.Y. 2007-08, which has been added back by the

then A.O.. The issue is similar to A.Y. 2007-08. It is clarified by the

Assessing Officer that this provision had accumulated to 80.71 lacs,

therefore, he disallowed the provision made by the assessee.

8. Being aggrieved by the order of the Assessing Officer, the

assessee carried the matter before the ld. CIT(A), who had allowed the

appeal by observing as under:-

12 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

"I had gone through the reasoning of the A.O. for disallowance of the above expenditure and also the defense put forth by the Ld. AR in this regard. From the assessment order, it is evident that the A.O. has disallowed the above provision towards PL liability, earned by the employee during the year but not paid, while terming the same as contingent expenditure and also following the stand taken in the earlier year in this regard.

The A.O. has also mentioned that the similar issue has been decided in the favour of the department by the then CIT(A)-III in the assessment proceedings of A.Y. 2007-08. However, the Ld. AR stated that the provision for PL earned by the employees has to be made as same would be paid them on the eve of their retirement; thus, it amounts to a real statutory liability as such. He also disputed the A.O's claimed the similar issue decided against the appellant in the appeal relevant to A.Y. 2007-

08. He rather pointed out that out of such claims of Rs. 15,35,628/- in the previous year, then CIT(A) has allowed Rs. 1`4,23,195/- while excluding the double claim of such items separately also in the P&L account.

From the above facts and circumstances, I tend to agree with the contention of the Ld. AR that the claim towards provision of PL earned by the employees is a real and statutory liability, which has accorded in the current year only, based on the service rendered by the employee 13 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

in the relevant year itself. Accordingly, in the light of the Mercantile Accounting System, the same has been rightly claimed in the current year. Moreover, I also agree with the findings given by my Ld. Predecessors in the appeal of A.Y. 2007-08, on this account, as discussed above, wherein such liability was found admissible in appellant's case. Accordingly, the A.O's decision in this regard id reversed and the claim of the appellant of Rs. 15,35,000/- is allowed. Consequently, this ground of appeal is upheld."

9. Now the Revenue is in appeal before us. The ld DR supported the

order of the Assessing Officer and argued that the provision made by

the assessee is not on any scientific basis, therefore, the same may be

confirmed.

10. At the outset, the ld A.R. for the assessee reiterated the

arguments made before the ld CIT(A) and objected the findings given

by him for A.Y. 2007-08. It is clarified that he in the year under

consideration has verified the order of his predecessor for A.Y. 2007-08

and came to conclusion that he had allowed the appeal in favour of the

assessee. He further submitted that these provisions were created on

the basis of service left by the employee, which would be paid on their

retirement and date calculated on the basis of salary drawn last at the 14 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

time of retirement, irrespective of the salaries drawn in the year when

he earned the PL. Accordingly, the liability for payment of PL is made on

the basis of salary drawn last at the end of each financial year, which is

scientific method. Therefore, the same may be allowed.

11. We have heard the rival contentions of both the parties and

perused the material available on the record. It is statutory liability of

the assessee as per service rules at the time of retirement, the assessee

has to pay equivalent to 30 days leave earned by all the employees

during the year to discharge its statutory obligation. The ld. CIT(A) has

thoroughly examined the statutory liability provisions, which has not

been controverted by the DR, therefore, we do not find any reason to

intervene in the order of the ld. CIT(A). Accordingly, we dismiss this

ground of the revenue's appeal.

12. Now we are taking the assessee's appeal ground No. 1 and 2,

which are related to other remaining grounds, therefore, no separate

finding is given.

13. Ground No. 3 of the assessee's appeal is against disallowance

claimed for contribution to Managerial Salary Fund amounting to Rs. 10 15 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

lacs made in compliance of the order the State Government of

Rajasthan under Rule 26(b) of the PACS Managers Selection,

Appointment and Service Rules, 2003. The Assessing Officer observed

that the assessee had debited a sum of Rs. 10 lacs on account of

provision for managerial salary fund. A similar claim made by the

assessee was disallowed for A.Y. 2007-08 vide order dated 13/11/2009

passed under section 143(3) of the Act. The Assessing Officer gave

reasonable opportunity of being heard on this issue, which was replied

by the assessee vide letter dated 03/08/2010 and stated that provision

was made within limits and as per rule and hence were for the purposes

of business of the assessee. The ld. Assessing Officer held that creation

of fund may be legal/statutory requirement of the assessee but that

does not mean that it is an expenditure incurred or accrued, which can

be deducted from taxable income of assessee. As per the balance sheet

the accumulated credit balance in this provision account was more than

Rs. 1.19 crores. In Managerial Salary (security) Fund, there was

opening credit balance of Rs. 1.09 crores as on 01/4/2007 and further

amount of Rs. 10 lacs had been credited to this fund by charging this

amount to P&L account. No amount was debited in the account during

the year under consideration. The assessee has failed to explain that 16 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

this expenditure has been incurred wholly and exclusively for the

business purposes. Similar addition under the head contribution to PACS

Development Fund at Rs. 8,20,484/- and Rs. 1,50,000/- for K.K.

Development Fund was also disallowed by the Assessing Officer.

14. Being aggrieved by the order of the Assessing Officer, the

assessee carried the matter before the ld CIT(A), who had confirmed

the addition by observing as under:-

"I have carefully examined the findings of the A.O. and the counter submissions made by the Ld. AR viz. the issue under consideration. The A.O. has disallowed the above contributions of the appellant's in different welfare funds on the ground that they were made voluntarily, out of sweet will of the appellant and there was no legal/statutory requirement to incur such expenses. From the records, it is transpired that the similar issues have been dealt with and decided by me Ld. Predecessor, while disposal the appeal for A.Y. 2007-08 and vide his order dated 02/11/2010 (appeal No. 174/JPR/09-

10), he gave his findings, in these regards, as under:-

I have carefully considered the facts of the case and submissions of Ld. AR. However, on perusal of the relevant records, I find that the appellant has made a contribution of Rs. 10,00,000/- to the Managerial Salary (Security) Fund, which was only in the nature of a provisional fund to meet any 17 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

deficiency in the primary salary fund. Further, I find that the appellant failed to explain/justify before the A.O. the incurring/accrual or any expenditure on that account during the year. Therefore, I find that the Ld. A.O. was justified in disallowing the aforesaid expenditure claimed on account of contribution to a provisional fund. Further, I agree with the reasoning of the Ld. A.O. for making the disallowance of Rs.

6,99,653/- which was claimed as contribution to PACS Development Fund, as noted in para 5.2 above. IN addition, it is observed that as per the Karamchari Kalyan Yojna, there was no compulsion on the part of the appellant to make any contribution. Therefore, I find that the Ld. A.O. was also justified in disallowing the claim of Rs. 1,00,000/- made by the appellant on account of contribution to K.K. Fund. Accordingly, the impugned disallowances made by the Ld. A.O. are confirmed. Consequently, these grounds of appeal are rejected."

Since the facts and circumstances of the current year, i.r.o. the issues under considerations are identical to the A.Y. 2007- 08, therefore, while following the Rule of consistency, I also uphold that the contribution to managerial Fund of Rs. 10,00,000/-, contribution to P\ACS Fund of Rs. 8,20,484/- and contribution of K.K. Fund of Rs. 1,50,000/- are not incurred wholly and exclusively for the business purposes, therefore, they are not admissible expenditures u/s 37(1) of the Act. In view of the same, the A.O's stands in these regards are hereby affirmed. Consequently, these grounds of appeal are dismissed."

18 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

15. Now the assessee is in appeal before us. The ld. A.R. for the

assessee submitted that contribution by the assessee bank to

Managerial salary fund amounting to Rs. 10 lacs during the year was

made under statutory/legal obligation i.e. in compliance of the order of

the State Government of Rajasthan under Rule 26(b) of PACS Managers

Selection, Appointment and Service Rules, 2003. The Ld. Assessing

Officer had not disputed statutory fund but disallowed the contribution

made by the assessee bank under the plea that creation of fund may be

legal/statutory requirement of the assessee but that does not mean that

it is an expenditure incurred or accrued. The AR further submitted that

contribution is nothing but a charge on income of the assessee and

allowable decision. He further argued that the assessee had made

contribution to PACS Development fund amounting to Rs. 8,20,484/-

under Revised Primary Agricultural credit Cooperative Societies

Development Fund Rules, 2003 made by the Cooperative Department,

Govt. of Rajasthan. The ld Assessing Officer had disallowed this

contribution on the ground that in A.Y. 2007-08 similar additions were

made. He further submitted that this contribution was made in

compliance to Revised Primary Agricultural credit Cooperative Societies

Development Fund Rules, 2003 , which is allowable U/s 36(1)(viia) of 19 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

the Act. Further regarding disallowance of claim of Rs. 1.50 lacs

contribution to the KK fund as per the scheme framed by the bank in

terms of direction of NABARD for the welfare and benefit of employees

and also to cater to the interest to its employee by the assessee bank to

boost their moral and for having better employer employee relationship

in order to carry on the business smoothly and profitably. The ld CIT(A)

confirmed the addition on the ground that there was no statutory

compulsion on the part of the appellant to make such contribution.

Though there was no statutory compulsion to do so but it was for the

welfare of the employee and to carry on business smoothly. He relied

on the decision in the case of CIT Vs. New India Sugar Mills Ltd. (1994)

206 ITR 212 (Cal.), Krishna Sahakari Sahkar Karkhana Ltd. vs. CIT

(1998) 229 ITR 577 (Bom) and Amrit Banaspati Co. Ltd. Vs. CIT (2000)

111 Taxman 186 (Delhi) Mag.) and argued that the expenditures

claimed under these three heads are allowable U/s 37(1) of the Act as

incurred wholly and exclusively for the business purposes.

16. The Ld. DR supported the order of the ld CIT(A) and reiterated

the findings given by him on this issue and prayed to confirm his order.

20 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

17. We have heard the rival contentions of both the parties and

perused the material available on the record. The ld CIT(A) has not

appreciated the fact that contribution to the Managerial salary fund at

Rs. 10 lacs was made. This fund was for meeting the deficit in primary

salary fund as per the State Govt. of Rajasthan, under Rule 26(b) of the

PACS Managers Selection, Appointment and Service Rules, 2003,

likewise contribution of Rs. 8,20,484/- under PACS Development fund

was provided under Revised Primary Agricultural credit Cooperative

Societies Development Fund Rules, 2003 for training cost of Managers,

which will be paid from the PACS development fund. The contribution to

KK fund of Rs. 1,50,000/- was made by the assessee in view of the

claim framed by the bank in terms of direction of NABARD for the

welfare and benefit of its employees to cater the interest of its

employees by the assessee bank to boost their moral and having better

employer-employee relationship in order to carry on business smoothly

and profitably. All the expenses claimed under three heads were

incurred wholly and exclusively for business purposes and obligation

cast on the assessee under the various Acts framed by the State Govt.

or NABARD. Therefore, we are of the considered view that the ld CIT(A) 21 ITA 121 & 132/JP/2012_ Sikar Kendriye Sahkari Bank Vs. DCIT

was not justifying in confirming the order of the Assessing Officer.

Accordingly, we allow the assessee's appeal on this ground.

18. In the result, the assessee's appeal is allowed and appeal of the

revenue is dismissed.

Order pronounced in the open court on 27/03/2015.

Sd/- Sd/- ¼vkj-ih-rksykuh½ ¼Vh-vkj-ehuk½ (R.P.Tolani) (T.R. Meena) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur

fnukad@Dated:- 27th March, 2015

*Ranjan

vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- Sikar Kendriya Sahkari Bank Limited, Sikar.

2. izR;FkhZ@ The Respondent- The DCIT/ACIT, Circle- Sikar.

3. vk;dj vk;qDr@ CIT

4. vk;dj vk;qDr¼vihy½@The CIT(A)

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No. 121 & 132/JP/2012)

vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar