DCIT, MUMBAI V. THE LAKSHMI VILAS BANK LIMITED, KARUR

ITA 6716/MUM/2024

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A), which had deleted certain additions made by the AO in the assessment of The Lakshmi Vilas Bank Ltd. for the Assessment Year 2009-10. The AO had initially made these additions in the original assessment order and later reiterated them in a rectification order. The CIT(A) found the AO's rectification order to be erroneous, as it misinterpreted the CIT(A)'s earlier decision which had deleted the additions. The Tribunal agreed with the CIT(A), dismissing the Revenue's appeal and upholding the deletion of the additions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398243 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Other Referred Cases: UCO Bank vs. CIT, Catholic Syrian Bank Ltd. vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: S. SUNDARARAMAN
• Keywords: Bad and doubtful debts; Rectification of order
• Section: 154

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ / ‘बी’ / ’सी’ / ’डी’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI \u0001ी एबी टी. वक , ाियक सद\u0011 एवं एवं एवं एवं \u0001ी मनोज क ुमार अ\u0019वाल, लेखा सद\u0007 क े सम BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.6716/Mum/2024 िनधा\u000eरण वष\u000e/Assessment Year: 2009-10 The DCIT, Circle - 2(3)(1), Mumbai-400 020. v. The Lakshmi Vilas Bank Ltd., Salem Road, Kathaparai, Karur – 639 006. [PAN: AAACT 4291 P] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) Department by : Mr. Shiva Srinivas, CIT Assessee by : Mr. S. Sundara Raman, CA सुनवाईक तारीख/Date of Hearing : 01.05.2025 घोषणाक तारीख /Date of Pronouncement : 04.06.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 01.07.2023 for the Assessment Year (hereinafter referred to as \"AY”) 2009-10. 2. At the outset, it is noted that there is a delay of ‘474’ days in filing of this appeal. After going through the application for condonation filed by the DCIT, Circle-2(3)-1, Mumbai, we find that there is sufficient reason ITA No.6716/Mum/2024 (AY 2009-10) The Lakshmi Vilas Bank Ltd. :: 2 :: for the cause of delay and therefore, we condone the delay and proceed to hear the appeal on merits. 3. The brief facts leading to this appeal being filed before this Tribunal are that the assessee-Bank had filed its return of income (RoI) on 29.09.2009 declaring an income of Rs.67,12,21,287/-. The AO noted that after setting off brought forward business loss of Rs.66,31,69,053/- [refer Page No.65 of the Paper Book], the assessee had worked out the tax liability of Rs.9,09,22,671/- and book profit of Rs.8,02,49,489/- u/s.115JB of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘). Thereafter, the return was picked up for scrutiny and the AO framed the assessment by making some additions/disallowance vide order dated 28.12.2011 passed u/s.143(3) of the Act. [refer Page Nos.65-94 of the Paper Book]. The assessee being aggrieved by the addition/disallowance, preferred an appeal before the Learned Commissioner of Income Tax (Appeals), Tiruchirapalli, who vide order dated 28.02.2014 has partly allowed the appeal of the assessee. Thereafter, the AO is noted to have passed order giving effect to the appellate order dated 28.02.2014 [refer Page Nos.29-54 of the Paper Book] by order dated 18.11.2016 wherein he allowed the claim of the assessee on seven (7) issues [refer Page No.25-28 of the Paper Book]. Thereafter, the AO rectified his order dated 18.11.2016 (wherein he gave ITA No.6716/Mum/2024 (AY 2009-10) The Lakshmi Vilas Bank Ltd. :: 3 :: effect to the Ld.CIT(A) order dated 28.02.2014), by passing the impugned order u/s.154 of the Act dated 08.12.2016 [refer Page Nos.2-24 of the Paper Book] and again reiterated his addition/disallowance as made by him in the original assessment order dated 28.12.2011 [refer Page No.65- 94 of the Paper Book] 4. Aggrieved by the aforesaid action of the AO u/s 154 dated 08.12.2016, the assessee preferred an appeal before the Ld.CIT(A)/NFAC who vide impugned appellate order dated 01.07.2023 found that the action of the AO passing the order u/s.154 of the Act dated 08.12.216 is erroneous, because, the Ld.CIT(A) while passing the earlier order on 28.02.2014, had allowed/deleted the additions made in the original assessment order dated 28.12.2011 and therefore the exercise of passing rectification order was due to mis understanding of the First Appellate order dated 28.02.2014. The Ld.CIT(A) is noted to have deleted the additions restored by the AO in his rectification order by holding as under: 4.1 The assessee sought and was granted a personal hearing through Video Conference held on 28/06/2023, wherein Mr. Shailesh Kothari Sr. VP and Head Taxation, Mr. Yash Lala, Sr. Associate appeared along with Shri Rinkesh Devnani CA from BSR & Co and the case was heard and discussed. 5. I have carefully considered the matter. The assessee has only one grievance against the action of the AO in adding back the relief granted by the CIT(A). I have perused the order of the CIT(A) for this year dated 28.02.2014 and find that the CIT(A) has clearly deleted the 7 additions made by the AO. It is only perhaps due to an unfortunate choice of words by the CIT(A) that the AO has interpreted the directions of the CIT(A) to mean that the AO has to \"reconsider the issues\". I find that in Para 3.1 of his order, the CIT(A) has clearly ITA No.6716/Mum/2024 (AY 2009-10) The Lakshmi Vilas Bank Ltd. :: 4 :: deleted the addition towards broken period interest of Rs. 4,92,80,964. The CIT(A) has noted that the ITAT in the assessee's own case for AY 1999-00 & 2000-01 in ITA No 1585 & 1596/MDS/2005 has held in favour of the assessee. The CIT(A) has directed the AO to follow that ITAT order and take appropriate action which can only mean that the disallowance of RS. 4,92,80,964 is deleted. 5.1 In respect of accrued interest on NPA of Rs. 2,22,083 in Para 4 of the CIT(A) order the discussion clearly indicates that the additions is deleted and the AO has been directed to follow the decision of the Supreme Court in United Commercial Bank and consider allowing the interest on NPA. This has been misinterpreted by the AO. It is clear that the CIT(A) has deleted the addition of RS. 2,22,083. I have perused the order of the CIT(A) in detail and find that using similar language which has been misinterpreted by the AO the CIT(A) has deleted the other 5 additions as detailed in the table below: Head of disallowance Amount Relevant Para of CIT(A) order Entertainment expenses Rs. 1,56,262 7.3 & 7.4 (Pages 9 & 10) Bad debts w/off u/s 36(1)(vii) Rs. 18,71,013 11.3 to 11.5 (Pages 16 & 17) Deduction u/s 36(1)(viia) Rs. 5,61,89,000 18 (Pages 22 & 23) Ex-gratia payment Rs. 89,47,273 15.1 & 15.2 (Pages 18 & 19) Pooja Expenses Rs. 3,72,150 17 (Pages 20 & 21) It is evident from the order of CIT(A) that the above additions have been deleted but the AO has misinterpreted the language in the CIT(A) order. I therefore direct the AO to allow the relief of Rs. 11,70,38,745 as originally allowed by him in the order giving effect to the CIT(A) order dated 18/11/2016. Based on the discussion above, I delete such addition made in the present order under appeal. 6. In the result, the appeal is allowed. 5. Aggrieved by the aforesaid action of the Ld.CIT(A), the Revenue is before us and has raised various issues which are not emanating from the impugned order of the Ld.CIT(A) dated 01.07.2023, because, it should be borne in mind that by passing the impugned order, the Ld.CIT(A)/NFAC was examining the action of the AO passed u/s.154 of the Act dated 08.12.2016. And it also has to be kept in mind that the order passed by ITA No.6716/Mum/2024 (AY 2009-10) The Lakshmi Vilas Bank Ltd. :: 5 :: the Ld.CIT(A), Tiruchirapalli, by order dated 28.02.2014 u/s.250 of the Act, against the assessment order passed by the AO on 28.12.2011 has now crystallized, since the Revenue didn’t prefer any appeal against the order of the Ld.CIT(A) dated 28.02.2014. 6. And as noted, the impugned order before us has been passed by the Ld.CIT(A)/NFAC by order dated 01.07.2023 as noted supra was against the AO’s order u/s.154 of the Act dated 08.12.2016 which was per-se erroneous; and it arose due to inadvertent mistake of choice of words as correctly noted by the Ld.CIT(A) while passing the order dated 28.02.2014 wherein, the Ld.CIT(A) after deleting seven (7) additions made by the AO [vide assessment order dated 28.12.2011] finally used the expression “reconsider the issues”. We note that all the seven (7) issues are noted at Page No.3 of the Paper Book, in which tabular form (infra) has been decided by the Ld.CIT(A) by deleting the addition as under: Sl. No. Issue Amount (in Rs.) 1 Broken period interest 4,92,80,969 2 Interest on Non-performing Accounts 2,22,083 3 Disallowance of Entertainment Expense 1,56,262 4 Ex- Gratia Payment 89,47,273 5 Disallowance of Pooja Expenses 3,72,150 6 Allowable Deduction u/s.36(1)(vila) 5,61,89,000 7 Bad Debts Written off u/s 36(1)(vii) and 36(1)(vila) 18,71,014 ITA No.6716/Mum/2024 (AY 2009-10) The Lakshmi Vilas Bank Ltd. :: 6 :: 7. Moreover, we find that the aforesaid issues have been rightly decided by the Ld.CIT(A) since we find that the issues are no longer res integra. Out of the seven (7) additions made by the AO, the Ld.CIT(A) has deleted the five (5) issues by relying on the decision of the Tribunal in the assessee’s own case and other two issues by following the decision of the Hon’ble Madras High Court in the case of UCO Bank v. CIT & Catholic Syrian Bank Ltd. v. CIT. The chart below shows that the aforesaid issues are covered by judicial precedents as under: List of case laws referred to in the order of the CIT(A) dated 28th February 2014 S.No. Issues Case Laws Internal Page Number Paper book Page Number 1 Interest on Non- Performing Account (NPA) Decision of the Hon'ble Supreme Court in the case of UCO Bank vs. CIT [237 ITR 889 (SC)] Pages 2,3,5,8,9 106-107, 109, 112-113 2 Deduction claimed u/s 36(i)(viia) Decision by ITAT Chennai in the assessee's own case (Lakshmi Vilas Bank Ltd vs. ACITITA Nos. 552 & 553/Mds/2009) Pages 8-10 122-124 Decision by ITAT Chennai in the assessee's own case (Lakshmi Vilas Bank Ltd vs. ACITITA Nos. 671 & 899/Chny/2019) Page 8 138 3 Ex-Gratia Payment Decision by ITAT Chennai in the assessee's own case (Lakshmi Vilas Bank Ltd. vs. DCIT/ACIT - ITA No.1402,1590/Mds/2012) Page 39 181-184 4 Pooja Expenses Decision by ITAT Chennai in the assessee's own case (Lakshmi Vilas Bank Ltd. vs. DCIT/ACIT - I.Τ.Α. Nos. 1402,1590/Mds/2012) Pages 26, 27 170-171 5 Entertainment Expenses Decision by ITAT Chennai in the assessee's own case (Lakshmi Vilas Bank Ltd. vs. DCIT/ACIT - I.T.Α. Nos. 1402,1590/Mds/2012) Pages 25, 26 169-170 6 Bad Debts Decision of the Hon'ble Page 17 201 ITA No.6716/Mum/2024 (AY 2009-10) The Lakshmi Vilas Bank Ltd. :: 7 :: Written Off Supreme Court in the case of Catholic Syrian Bank Ltd vs. Commissioner of Income Tax, (AIR 2012 SC 1538) 7 Broken Interest Period Decision by ITAT Chennai in the assessee's own case P(Lakshmi Vilas Bank Ltd. vs. DCIT - Ι.Τ.Α. Nos. 1596/Mds/2005) Page 3 207 8. In the light of the aforesaid discussion, looking from any angle, we find no merit in the appeal filed by the Revenue and hence, dismiss it. 9. In the result, appeal filed by the Revenue is dismissed. Order pronounced on the 04th day of June, 2025, in Chennai. Sd/- (मनोज क ुमार अ\u0019वाल) (MANOJ KUMAR AGGARWAL) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक ) (ABY T. VARKEY) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे ई/Chennai, !दनांक/Dated: 04th June, 2025. TLN आदेश क \u0017ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ /Appellant 2. \u000eथ /Respondent 3. आयकरआयु\u0014/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय ितिनिध/DR 5. गाड फाईल/GF "