ITO, Ward 1(1), Kolhapur V. Kolhapur Mahila Sahakari Bank Ltd., Kolhapur

ITA 1/PUN/2013

• Counselvise Citation: 124514 RSA 2013
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 01-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Assessee Lawyers: SUSHANT S PHADNIS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.01/PN/2013 A.Y. 2009-10 ITO, WARD 1(1), KOLHAPUR APPELLANT VS. KOLHAPPUR MAHILA SAHAKARI BANK LTD., 1082 KH, B-WARD, TUTUCHI BAG, OPP. KHASBHAG, KOLHAPUR. PAN: AAAAK0367R RESPONDENT APPELLANT BY : SHRI P.L. P ATHADE RESPONDENT BY : SHRI SUS HANT S. PHADNIS DATE OF HEARING: 29.01.2014 DATE OF ORDER : 29.01.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL), [SHORT CIT( A)] KOLHAPUR, DATED 31.10.2012 FOR A.Y. 2009-10 ON THE FOLLOWING GROUNDS. 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN HOLDING THAT PROVISIONS OF SECTION 43D WERE APPLICA BLE TO THE ASSESSEE SOCIETY BEING A NON-SCHEDULED BANK ON THE BASIS OF THE ITAT'S DECISION IN THE CASE OF ACIT, C IRCLE-3, NANDED VS. USMANABAD JANATA SAHAKARI BANK LTD. IN I TA NO.795/PN/2011. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN HOLDING THAT THE INTEREST INCOME DIRECTLY CREDITED TO THE BALANCE-SHEET WAS NOT REAL INCOME IN SPITE OF THE F ACT THAT THE ASSESSEE SOCIETY WAS HAVING ACTIONABLE RIGHT FO R 2 RECEIVING THE INCOME AND THAT THE ASSESSEE SOCIETY WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, DUE TO WHICH THE INTEREST INCOME WAS REQUIRED TO BE ROUTED THROUGH THE PROFIT & LOSS ACCOUNT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR MODIFY ANY OTHER GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. THE ASSESSEE IS A CO-OPERATIVE BANK ENGAGED IN T HE BUSINESS OF ACCEPTING DEPOSITS FROM MEMBERS AND GIV ING LOANS TO MEMBERS. IT HAS FILED ITS RETURN OF INCOME ON 11.0 9.2009 FOR THE YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME AT 14,57,840/-. IN THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER N OTICED THAT THE ASSESSEE HAD NOT CREDITED INTEREST RECEIVABLE OR AC CRUED ON NON- PERFORMING ASSETS (HEREINAFTER REFERRED TO AS NPA) TO ITS PROFIT AND LOSS ACCOUNT FOR FINANCIAL YEAR 2008-09. THE ASSES SING OFFICER AFTER REJECTING THE VARIOUS CONTENTIONS OF THE ASSE SSEE HAS HELD THAT THE RBI GUIDELINES ARE NOT INTENDED TO REGULAT E THE INCOME TAX LAW AND THE ASSESSEE WAS LIABLE TO BE ASSESSED ON ACCRUAL BASIS U/S.5 OF I.T. ACT FOR THE REASONS (I) BENEFIT S EXTENDED TO SCHEDULE BANK, PUBLIC FINANCIAL INSTITUTIONS, PUBLI C COMPANIES FOR THE PURPOSE OF SECTION 43D WERE NOT EXTENDED TO A C O-OPERATIVE BANK AND (II) THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND NOT CASH SYSTEM. ULTIMATELY THE ASS ESSING OFFICER TAXED ON ACCRUED INTEREST OF 25,20,022/- ADVANCE CLAIMED TO BE NPA ACCOUNT. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY WHEREIN, FOLLOWING THE OS MANABAD JANTA SAHAKARI BANK LTD. IN ITA NO.795/PN/2011, THE CIT(A ) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE. 2.1 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD, WE FIND THAT IN OSMANABAD JANTA SAHAKARI BA NK LTD. (SUPRA) THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOU R OF ASSESSEE BY OBSERVING AS UNDER: 3 7. IN THE CASE BEFORE US, ADMITTEDLY, ASSESSEE HAS DIRECTLY TAKEN THE INTEREST TO THE BALANCE SHEET AND IT IS N OT ROUTED THROUGH THE PROFIT & LOSS ACCOUNT. MOREOVER, THE ISSUE OF THE TAXABILITY OF THE INTEREST ON THE STICKY LOSSES /ADVANCES, IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIO N OF THE COORDINATE BENCHES IN THE CASE OF THE DURGA COOPERA TIVE URBAN BANK LTD., VIJAYAWADA (SUPRA) AND KARNAVATI COOPERATIVE BANK LTD. (SUPRA). WE FIND NO REASON T O INTERFERE WITH THE REASONED ORDER OF THE LD. CIT(A) AND ACCORDINGLY THE SAME IS CONFIRMED. IN THE RESULT, THE REVENUES GROUND IS DISMISSED. THE ABOVE DECISION HAS BEEN FOLLOWED IN (I) ACIT, CIRCLE-3, NANDED V/S BHAGYALAXMI MAHILA SAHAKAR BANK LTD. ITA NO.793/PN/2011, (II) ACIT, CIRCLE-3 V/S SIDHESHWAR SAHAKARI BANK LTD. ITA NO.794/PN/2011, (III) ACIT (CENTRAL) V/S LATUR URBAN CO-OPERATIVE BANK LTD. ITA NO.792/PN/2011 AND (IV) ASST. CIT, CIRCLE-1 V/S DEOGIRI NAGARI SAHAKARI BAN K LTD. ITA NO.817 & 1114/PN/2011. 2.2 NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE O N BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWING THE SAM E REASONING, WE ARE NOT INCLINED TO INTERFERE IN THE FINDINGS OF CIT(A) WHO HAS HELD THAT THE PROVISIONS OF SECTION 43D WERE APPLIC ABLE TO ASSESSEES SOCIETY BEING NON SCHEDULED BANK BY FOLL OWING THE DECISION OF OSMANABAD JANTA SAHAKARI BANK LTD. FUR THER, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE INTEREST I NCOME DIRECTLY CREDITED TO THE BALANCE SHEET WAS NOT REAL INCOME. ACCORDINGLY, THE ORDER OF CIT(A) IS UPHELD. 3. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 29 TH OF JANUARY, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 29 TH JANUARY, 2014 GCVSR 4 COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A), KOLHAPUR 4) THE CIT, KOLHAPUR 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE