Provision for CA Audit Fee can’t be Disallowed If It was as per Norms of NABARD considering the Number of Branches of Assessee-Bank: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) last day held that the Assessing Officer cannot disallow the provision made by the Assessee in respect of CA Audit fee If the same was as prescribed by the NABARD considering the number of branches of the assessee-Bank.

In the instant case, the assessee, The Jhajjar Central Coop Bank Ltd made provision for CA audit fees. They claimed that the provision pertained to audit fee payable to the statutory auditor for the ensuing year. It was further submitted that the statutory audit has to be carried out by a CA Firm recommended by NABARD and the audit fee is also prescribed by NABARD as per which, the audit fee is approximately Rs. 6,000/- per branch and since the assessee bank had 25 branches, a provision of Rs. 1.50 lakhs was made.

On first appeal, the first appellate authority allowed the claim by holding that this expenditure has actually been incurred by the assessee. Aggrieved by the order, the department approached the appellate Tribunal.

Allowing the contentions of the assessee, the bench comprising Judcial Member Sudhanshu Srivastava and Accountant Member Pramod Kumar upheld the categorical finding of the first appellate authority that this expenditure has actually been incurred by the assessee. “It is further seen that even the provision was created keeping in mind the audit fee prescribed by the NABARD and after taking into account the number of branches which the assessee was operating.” Accordingly, the department appeal was dismissed.