HARYANA FINANCIAL CORPORATION,CHANDIGARH V. DCIT CIRCLE PANCHKULA, PANCHKULA

ITA 900/CHANDI/2024

AI Insights

The case involves multiple appeals by the Haryana Financial Corporation against the orders of the Commissioner of Income Tax (Appeals) concerning the assessment years 2013-14 to 2015-16. The primary issues in the appeals included the disallowance under section 14A, addition on account of provision for NPAs written back, and addition on account of interest on seed money. The Tribunal consolidated the appeals for convenience and brevity, taking the appeal for A.Y. 2013-14 as a lead case. The Tribunal dismissed the ground related to disallowance under section 14A as not pressed by the assessee. However, it found merit in re-examining the additions related to NPAs and interest on seed money, leading to the remand of these issues to the Assessing Officer.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711302 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2013-2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEENAKSHI VOHRA; VIVEK VARDHAN
• Assessee Lawyers: NALIN NOHRIA; C.A
• Keywords: Opportunity of being heard
• Section: 14A

Judgement Text

"आयकरअपीलीयअिधकरण,चǷीगढ़ Ɋायपीठ “ए”, चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी क ृणवȶ सहाय, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM &SHRI. KRINWANT SAHAY, AM आयकरअपील सं./ ITA No. 1351/Chd/ 2019 िनधाŊरण वषŊ / Assessment Year : 2013-14 Haryana Financial Corporation 30 Bays Building, Ground Floor, Sector 17-C, Chandigarh-160017 बनाम The ACIT Circle, Panchkula ˕ायी लेखा सं./PAN NO: AAACH4685B अपीलाथŎ/Appellant ŮȑथŎ/Respondent आयकर अपील सं./ ITA No. 1352/Chd/ 2019 िनधाŊरण वषŊ / Assessment Year : 2014-15 Haryana Financial Corporation 30 Bays Building, Ground Floor, Sector 17-C, Chandigarh-160017 बनाम The DCIT Circle, Panchkula ˕ायी लेखा सं./PAN NO: AAACH4685B अपीलाथŎ/Appellant ŮȑथŎ/Respondent आयकरअपील सं./ ITA No. 1353/Chd/ 2019 िनधाŊरण वषŊ / Assessment Year : 2015-16 Haryana Financial Corporation 30 Bays Building, Ground Floor, Sector 17-C, Chandigarh-160017 बनाम The ACIT Circle, Panchkula ˕ायी लेखा सं./PAN NO: AAACH4685B अपीलाथŎ/Appellant ŮȑथŎ/Respondent आयकरअपील सं./ ITA No. 900/Chd/ 2024 िनधाŊरण वषŊ / Assessment Year : 2013-14 Haryana Financial Corporation 30 Bays Building, Ground Floor, Sector 17-C, Chandigarh-160017 बनाम The DCIT Circle, Panchkula ˕ायी लेखा सं./PAN NO: AAACH4685B अपीलाथŎ/Appellant ŮȑथŎ/Respondent आयकरअपीलसं./ ITA No. 914/Chd/ 2024 िनधाŊरणवषŊ / Assessment Year : 2014-15 Haryana Financial Corporation 30 Bays Building, Ground Floor, Sector 17-C, Chandigarh-160017 बनाम The DCIT Circle, Panchkula ˕ायी लेखा सं./PAN NO: AAACH4685B अपीलाथŎ/Appellant ŮȑथŎ/Respondent Printed from counselvise.com 2 िनधाŊįरती की ओर से/Assessee by : Shri Nalin Nohria, C.A and Shri B.K. Nohria, C.A राजˢ कीओर से/ Revenue by : Smt. Meenakshi Vohra, CIT, DR & Shri Vivek Vardhan, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 23/07/2025 उदघोषणा की तारीख/Date of Pronouncement : 24/07/2025 आदेश/Order PER BENCH: The appeals in ITA Nos. 1351 to 1353/Chd/2019 for the A.Y’s 2013-14 to 2015-16 have been filed against the separate orders of the Ld. CIT(A)-3, Ludhiana each dt. 01/06/2019 and appeals in ITA Nos. 900 & 914/Chd2024 pertaining to A.Y’s 2013-14 & 2014-15 have been filed against the order of the Ld. CIT(A)/NFAC, Delhi each dt. 26/06/2024. 2. Since all the appeals were heard together therefore they are being disposed off by this consolidated order for the sake of convenience and brevity. 3. We shall take appeal of the Assessee in ITA No. 1351/Chd/2019 for the A.Y. 2013- 14 as a lead case for discussion. 4. This appeal by the assessee is directed against the order dated 01.06.2019 passed by the Ld. Commissioner of Income Tax (Appeals)-3, Ludhiana, under section 250(6) of the Income Tax Act, 1961, for the assessment year 2013-14. The assessee has raised various grounds in the present appeal relating to the disallowance made under section 14A, addition on account of provision for NPAs written back, and addition on account of interest on seed money. 5. During the course of hearing, the Ld. Counsel for the assessee submitted that the ground relating to disallowance made under section 14A may not be pressed. In view of the above, the ground taken by the assessee on this issue is dismissed as not pressed. 6. As regards the addition of Rs.4,29,72,691/- on account of provision for NPAs written back, the assessee submitted that it had furnished sufficient documentary evidence to establish that the said provision had been claimed and allowed as deduction in the computation of income in earlier years. In this regard, the assessee Printed from counselvise.com 3 placed reliance on the computation of income, audited financial statements, assessment orders, orders passed by the CIT(A) and ITAT in preceding assessment years, and the appeal effect order passed pursuant to the directions of the Tribunal. It is the case of the assessee that once the provision for NPA has been allowed in the earlier assessment years, the write-back of the same in the year under appeal cannot be treated as taxable income again. The assessee thus contended that the impugned addition made by the AO was not sustainable. 7. On the issue of addition of Rs.35,60,752/- on account of interest on seed money, it was contended by the assessee that it follows the mercantile system of accounting and during the year under consideration, it had neither received any interest from the borrowers nor had paid the same to the Haryana State Government. It was further submitted that the assessee was acting as a nodal agency for the State Government in relation to the seed money disbursed to industrial units and the corresponding accounting entries were merely for reconciliation/statistical purposes. In the absence of any real accrual or receipt of income, the assessee contended that the addition on this account was unjustified. 8. The Ld. DR, relied upon the order passed by the lower authorities and submitted that the assessee did not file the documents before the lower authorities. 9. Ground Nos. 2 and 3 – Addition on account of NPA provision written back and interest on seed money 9.1 We have considered the submissions of the assessee and perused the material available on record. In our considered view, the issues relating to the addition on account of NPA provision written back require a fresh examination and verification at the end of the Assessing Officer. The assessee has contended that the provision for NPAs was allowed as a deduction in the preceding assessment years, and therefore, the write-back of such provision ought not to be taxed again. However, the correctness of these assertions can only be determined upon due verification of the supporting documents and the relevant facts surrounding the claim. 9.2 It is indeed regrettable that the assessee, being a Government Organisation, is constrained to pursue repeated litigation even though most of the information now being sought or alleged to be unavailable had already formed part of the record in Printed from counselvise.com 4 earlier assessment proceedings. In view of the above, we deem it appropriate to restore the issue of addition on account of NPA provision written back to the file of the Assessing Officer with a direction to verify the factual contentions of the assessee and adjudicate the matter afresh, in accordance with law, after affording a reasonable opportunity of being heard to the assessee. Accordingly, Ground No. 2 is restored to the file of the Assessing Officer and is allowed for statistical purposes. 9.3 As regards Ground No. 3, which pertains to the addition on account of interest on seed money, the assessee has submitted that it follows the mercantile system of accounting, and the deduction on account of interest debited to the State Government is thus eligible. However, this aspect has not been duly examined either by the Assessing Officer or by the CIT(A). Since Ground No. 2 is being remanded, we also consider it just and proper to remand Ground No. 3 to the file of the Assessing Officer. The Assessing Officer shall verify the method of accounting consistently followed by the assessee in the relevant and prior years and decide the issue afresh in light of the applicable legal position and binding precedents of the Hon’ble High Courts and the Hon’ble Supreme Court. Accordingly, Ground No. 3 is also allowed for statistical purposes. 10. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. 11. Both the parties fairly submitted that the facts and circumstances of other appeals i.e ITA Nos. 1352 and 1353/ Chd/2019 are exactly identical to the Appeal in ITA No. 1351/Chd/2019 and similar contentions raised therein may be considered, therefore, our findings and directions given in ITA No. 1351/Chd/2019 shall apply mutatis mutandis to these two appeals which are accordingly allowed for statistical purpose. 12. ITA Nos. 900 & 914/Chd/2014 – A.Ys. 2013-14 and 2014-15 12.1 These appeals pertain to the Assessment Years 2013-14 and 2014-15 respectively. Since the quantum appeals of the assessee for the relevant assessment years have been remanded to the file of the Assessing Officer in the earlier part of this order, the present appeals being consequential to the quantum additions are also remanded back to the file of the Assessing Officer. The Assessing Officer shall decide these appeals afresh in accordance with law, after taking into consideration the outcome of the Printed from counselvise.com 5 quantum proceedings in terms of the directions given above. Accordingly, these appeals are treated as allowed for statistical purposes. Order pronounced in the open Court on 24/07/2025 Sd/- Sd/- क ृणवȶ सहाय लिलत क ुमार (KRINWANT SAHAY) (LALIET KUMAR) लेखासद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟/JUDICIAL MEMBER AG आदेशकी Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "