M/S BARODA RAJASTHAN KSHETRIYA GRAMIN BANK, AJMER V. DEPUTY COMMISSIONER OF INCOME TAX, AJMER

ITA 1085/JPR/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 8936 (ITAT-JAIPUR)
• Duration Of Justice: 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 17-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: AJAY SOMANI
• Keywords: Opportunity of being heard; Bad and doubtful debts; Set aside

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 1085/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2015-16 M/S BARODA RAJASTHAN KSHETRIYA GRAMIN BANK PLOT NO. 2343, 2 ND FLOOR, VAISHALI NAGAR, AJMER. CUKE VS. THE DCIT, CIRCLE-1, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAAJB 1164 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI AJAY SOMANI (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 08/10/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 10/10/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A), AJMER DATED 25.07.2018 FOR ASSESSMENT YEAR 2015-16 WHEREIN THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF ADD ITION MADE BY THE ASSESSING AMOUNTING TO RS. 2.66 CRORES ON ACCOUNT O F DISALLOWANCE OF PROVISIONS TOWARDS STANDARD ASSETS AND DISALLOWANCE OF AMOUNT OF ITA NO. 1085/JP/2018 M/S BARODA RAJASTHAN KSHETRIYA GRAMIN BANK VS. DCI T 2 RS. 11.40 CRORES ON ACCOUNT OF PROVISION FOR LEAVE ENCASHMENT DEBITED IN THE PROFIT AND LOSS ACCOUNT. 2. AT THE OUTSET, THE AR HAS SUBMITTED THAT BOTH TH E ISSUES ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE EARLIER DE CISION OF THE COORDINATE BENCH IN ASSESSEES OWN CASE. IN THIS RE GARD, OUR REFERENCE WAS DRAWN TO THE DECISION OF THE COORDINATE BENCH I N ITA NO. 272/JP/2018 DATED 17.05.2018 FOR THE A.Y. 2014-15 W HEREIN THE COORDINATE BENCH HAS HELD IN PARA 3.4 AND 4.3 WHICH ARE REPRODUCED AS UNDER:- 3.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE WRITTEN SUBMISSIO N OF THE ASSESSEE. IT IS NOT IMPERATIVE TO REPEAT THE FACTS AND CIRCUMSTA NCES OF THE CASE AS THE LD. CIT(A) HAS ELABORATELY DISCUSSED THE ISSUE IN QUESTION. IN THIS GROUND, THE ASSESSEE HAS TAKEN THE SUPPORT OF ITAT JODHPUR BENCH (SUPRA) WHEREIN SIMILAR ISSUE HAS BEEN DECIDED IN F AVOUR OF NAGAUR URBAN COOPERATIVE BANK LTD. JODHPUR(SUPRA). THE ASS ESSEE FURTHER SUBMITTED THE PROVISION FOR BAD DOUBTFUL DEBTS MADE ARE AS PER RBI GUIDELINES AMOUNTING TO RS. 22.86 CRORES WHICH INCL UDES RS. 2.71 CRORES ON STANDARD ASSETS. THE DEDUCTION CLAIMED IS IN CON FORMITY WITH THE CBDT INSTRUCTION NO. 17/2008 DATED 26-11-2008 (SUPR A). IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ISSUE OF D ISALLOWANCE FOR STANDARD ASSET OF RS. 2.71 CRORES IS RESTORED TO TH E FILE OF THE AO TO VERIFY AS TO WHETHER THE PROVISION FOR STANDARD ASS ETS HAS BEEN MADE AS PER GUIDELINES OF THE RBI. IF THE ASSESSEE HAS COMP LIED WITH THE PROVISION AS PER RBI GUIDELINES, THE RELIEF MAY BE GIVEN TO THE ASSESSEE BY PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS GROUND NO. 2 (I) OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES. ITA NO. 1085/JP/2018 M/S BARODA RAJASTHAN KSHETRIYA GRAMIN BANK VS. DCI T 3 4.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSESSEE DREW OUR ATTENTION TO THE DECISION OF ITAT JAIPUR BENCH IN THE CASE JHALAWAR KENDRIYA SAHAKARI BANK LTD VS ACIT (I TA NO.1032/JP/2011 AND ITA NO. 1051/JP/2011 IN THE CA SE OF ACIT VS JHALAWAR KENDRIYA SAHAKARI BANK LTD WHEREIN THE BEN CH HAS ALLOWED THE BENEFIT OF GROUP LEAVE ENCASHMENT SCHEME TO THE BANK BY OBSERVING AS UNDER:- 19. APROPOS THE DEPARTMENTAL APPEAL, THE ASSESSEE TOOK A POLICY FROM LIC NAMED AS JHALWAR KENDRIYA SAHAKARI BANK EM PLOYEE GROUP LEAVE ENCASHMENT SCHEME. THE FACTS ARE MENTIONED IN DETAIL ABOVE. THE PAYMENT OF LEAVE ENCASHMENT IS A CONTRACTUAL LI ABILITY8, A CHARGE ON ASSESSEE'S PROFIT. TO ENSURE TIMELY BENEFIT OF L EAVE ENCASHMENT OF EMPLOYEES SCHEME IS DEVISED BY THE LIC, WHICH WORK S OUT THE LEAVE ENCASHMENT LIABILITY AND FIXATION OF PREMIUM. THE L IABILITY IS ASCERTAINED AND CRYSTALLIZED ON A SCIENTIFIC METHOD BY THE LIC. THUS, THE ASSESSEE'S PAYMENT OF RS. 40 LACS TOWARDS THE SAME IS WITHIN T HE FRAMEWORK OF THE SCHEME. IN OUR CONSIDERED VIEW, THE SAME IS ALLOWAB LE DEDUCTION. THIS VIEW FURTHER SUPPORTED BY THE HON'BLE SUPREME COURT IN THE CASE OF TEXTOOL CO. LTD (SUPRA) AND ITAT JUDGEMENT IN THE C ASE OF NAINITAL BANK LTD (SUPRA). RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE ASSESSEE IS ELIGIBLE FOR THIS DEDUCTION. THE LD.AR OF THE ASSESSEE FURTHER SUBMITTED THAT TH E ASSESSEE HAS DISCHARGED ITS LIABILITY TOWARDS LEAVE ENCASHMENT S CHEME, THE SAME IS THEREFORE, ALLOWABLE AS EXPENDITURE U/S 37(1)OF THE ACT. TAKING INTO CONSIDERATION THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DECISIONS RELIED UPON BY THE LD.AR OF THE ASSESSEE, IT WILL BE IN THE INTEREST OF EQUITY AND JUSTICE TO RESTORE THE ISSUE TO THE FILE OF THE AO FOR AFRESH ADJUDICATION. THE ASSESSEE IS DIRECTED T O SUBMIT THE WRITTEN SUBMISSION ALONGWITH RELEVANT DETAILS BEFORE THE AO . THUS GROUND NO. 2(II) OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PU RPOSES. ITA NO. 1085/JP/2018 M/S BARODA RAJASTHAN KSHETRIYA GRAMIN BANK VS. DCI T 4 3. FURTHER, OUR REFERENCE WAS DRAWN TO THE DECISION OF THE COORDINATE BENCH IN ITA NO. 273/JP/2018 & 274/JP/20 18 DATED 03.08.2018 FOR THE A.Y. 2009-10 & 2010-11 WHEREIN T HE COORDINATE BENCH FOLLOWING ITS EARLIER DECISION IN ITA NO. DAT ED 272/JP/2018 DATED 17.05.2018 HAS HELD AS UNDER:- THUS THE TRIBUNAL AFTER CONSIDERING THE FACTUAL MA TRIX OF THE ISSUE REMITTED THE SAME TO THE RECORD OF THE AO FOR AFRES H ADJUDICATION AFTER CONSIDERING THE RELEVANT DETAILS TO BE FILED BY THE ASSESSEE. HOWEVER, THE TRIBUNAL HAS ACCEPTED THE POSITION OF ALLOWABIL ITY OF THE CLAIM IF THE SAME IS REGARDING THE PREMIUM PAID FOR A POLICY TAK EN FROM THE LIC FOR EMPLOYEES GROUP LEAVE ENCASHMENT SCHEME. ACCORDING LY, AS FAR AS THE ALLOWABILITY OF THE CLAIM FOR PAYMENT OF PREMIU M OF POLICY TAKEN BY THE ASSESSEE FOR EMPLOYEES GROUP LEAVE ENCASHMENT S CHEME, THE SAME IS ALLOWABLE EXPENDITURE. HOWEVER, SINCE THE L D. CIT (A) HAS POINTED OUT THAT THE ASSESSEE ITSELF HAS SHOWN THE PAYMENT AS INVESTMENT IN THE LIC AND OTHER COMPANIES AND THE I NTEREST ACCRUED ON SUCH FUND WAS CREDITED TO THE PROFIT & LOSS ACCOUNT , THEREFORE, THE AO HAS TO JUST VERIFY THE FACT WHETHER ANY INCOME ACCR UING ON THE POLICY TAKEN BY THE ASSESSEE WAS ACTUALLY RECEIVED BY THE ASSESSEE OR IT IS JUST AN ACCOUNTING TREATMENT BY THE ASSESSEE WITHOUT ACT UAL INCOME. FURTHER, IF THE BENEFIT ACCRUED ON THE POLICY IS ON LY ACCUMULATED TO THE FUND ITSELF WHICH IS TO BE USED FOR DISCHARGE OF LI ABILITY ON ACCOUNT OF LEAVE ENCASHMENT, THEN SUCH INCOME THOUGH ASSESSEE HAS CREDITED IN THE PROFIT & LOSS ACCOUNT WOULD NOT PARTAKE THE CHA RACTER OF REAL INCOME BUT IT WOULD BE ONLY ACCUMULATION OF THE VAL UE OF THE POLICY TO BE USED FOR DISCHARGE OF THE LIABILITY ON ACCOUNT O F LEAVE ENCASHMENT. HENCE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT THE AO TO VERIFY THESE FACTS AND THEN ALLOW THE CLAIM OF THE ASSESSEE IN THE ABOVE TERMS. ITA NO. 1085/JP/2018 M/S BARODA RAJASTHAN KSHETRIYA GRAMIN BANK VS. DCI T 5 4. THE LD. DR REFERRING TO THE ORDER OF THE LD. CIT (A) FAIRLY SUBMITTED THAT FOR THE A.Y. 2014-15, SIMILAR ADDITIONS WERE M ADE BY THE ASSESSING OFFICER AND WHICH HAS BEEN CONFIRMED BY THE LD. CI T(A) AND WHICH HAS BEEN FOLLOWED IN THE INSTANT CASE. HE ACCORDINGLY S UBMITTED THAT THE MATTER IS FAIRLY COVERED BY THE DECISION OF THE COO RDINATE BENCH IN THE EARLIER YEARS, HOWEVER, THE DEPARTMENT HAS NOT ACCE PTED THE SAME. 5. HAVING HEARD THE RIVAL CONTENTIONS AS WELL AS HA VING PERUSED THE RELEVANT RECORDS, WE FIND THAT BOTH THE ISSUES ARE SQUARELY COVERED BY THE DECISIONS OF THE COORDINATE BENCHES REFERRED SU PRA AND FOLLOWING THE SAME, THE MATTER IS SET ASIDE TO THE FILE OF TH E ASSESSING OFFICER WHO SHALL VERIFY THE FACTS IN LIGHT OF DIRECTIONS GIVEN IN THE SAID DECISIONS AND ALLOW THE CLAIM SO MADE AFTER PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10/10/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 10/10/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S BARODA RAJASTHAN KSHETRIYA GRAMI N BANK, AJMER. ITA NO. 1085/JP/2018 M/S BARODA RAJASTHAN KSHETRIYA GRAMIN BANK VS. DCI T 6 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CIRCLE-1, AJMER. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 1085/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR