Deputy Commissioner of Income-tax, V. Indira Mahila Sahakari Bank Ltd., Nandurbar

ITA 110/PUN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0319 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 22-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 43D; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 110 /PN/20 1 5 / ASSESSMENT YEAR: 20 0 7 - 0 8 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 3 (1), DHULE . / APPELLANT VS. INDIRA MAHILA SAHAKARI BANK LTD., SHRIRAM TOWER, STATION ROAD, NAGAR PARISHAD AREA, NAN DURBAR . / RESPONDENT PAN: AAAAI0415Q . / CO NO. 47 /PN/201 6 / ASSESSMENT YEAR : 20 0 7 - 08 / ASSESSMENT YEAR : 20 0 7 - 08 (OUT OF ITA NO.1 10 /PN/201 5 ) INDIRA MAHILA SAHAKARI BANK LTD., SHRIRAM TOWER, STATION ROAD, NAGAR PARISHAD AREA, NANDUR BAR / CROSS OBJECT OR PAN: AAAAI0415Q VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 3 (1), DHULE . / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI ANIL CHAWARE / DATE OF HEARING : 1 4 . 1 2 .201 6 / DATE OF PRONOUNCEMENT: 21 . 1 2 .201 6 ITA NO . 110 / PN /201 5 CO NO.47/PN/2016 INDIRA MAHILA SAH. BANK LTD. 2 / ORDER / ORDER PER SUSHMA CHOWLA, JM: T H E APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT( A ) - I, NASHIK , DATED 1 8 . 11 .201 4 RELATING TO ASSESSMENT YEAR 20 0 7 - 0 8 AGAINST THE ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . THE ASSESSEE HAS ALSO FILED CROSS OBJECTIONS AGAINST THE APPEAL OF REVENUE. THE ASSESSEE HAS ALSO FILED CROSS OBJECTIONS AGAINST THE APPEAL OF REVENUE. 2. THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE REVENUE IN ITA NO.110/PN/2015 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION OF OVERDUE INTEREST RS.52,00,000/ - MADE BY THE ASSESSEE. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONSIDERING RS.52,00,000/ - AS AN ALLOWABLE DEDUCTION. 3. THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF AO IN RESPECT OF DISALLOWANCE OF RS.52,00,000/ - 4. THE ASSESSEE IN CO NO.47/PN/2016 HAS RAISED THE FOLLOWING GROUNDS OF 4. THE ASSESSEE IN CO NO.47/PN/2016 HAS RAISED THE FOLLOWING GROUNDS OF OBJECTIONS: - 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN REOPENING THE ASSESSMENT WHEN ALL MATERIAL FADS AND DOCUMENTS NECESSARY FOR THE ASSESSMENT WERE PRODUCED. THE ORDER MAY PLEASE BE CANCELLED. 2 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN REOPENING THE ASSESSMENT U/S 147 WHEN NO NEW MATERIAL HAS COME INTO POSSESSION SINCE THE ORIGINAL ASSESSMENT AND ISSUE OF NOTICE U/S 148. THE ASSESSMENT MAY PLEASE BE CANCELLED. ITA NO . 110 / PN /201 5 CO NO.47/PN/2016 INDIRA MAHILA SAH. BANK LTD. 3 3 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN NOT FURNISHING THE REASONS RECORDED FOR REOPENING THE ASSESSMENT. THE ASSESSMENT MAY PLEASE BE CANCELLED. 4 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN REOPENING THE ASSESSMENT CANNOT BE REOPENED ON THE SAME GROUND ON WHICH PROCEEDINGS U/S 154 WERE DROPPED. THE ASSESSMENT MAY BE CANCELLED. 5 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ASSESSMENT CANNOT BE REOPENED ON THE BASIS OF CHANGE IN OPINION. THE MAY BE CANCELLED. 6 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN REOPENING THE ASSESSMENT IN VIEW OF S. C. ASSESSING OFFICER IS NOT JUSTIFIED IN REOPENING THE ASSESSMENT IN VIEW OF S. C. DECISION IN THE CASE OF CIT VS. KELVINATOR OF INDIA PVT. (2010) 320 ITR 561 (SC). THE ORDER MAY BE CANCELLED. 5. THE ISSUE RAISED IN THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) IN ALLOWING DEDUCTION ON ACCOUNT OF INTEREST DUE ON NP AS AT RS.52 LAKHS. 6. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE STANDS COVERED BY THE ORDER OF PUNE BENCH OF TRIBUNAL IN ACIT VS. OSMANABAD JANTA SAH. BANK LTD. (2013) 32 TAXMANN.COM 229 (PUNE TRIB) A ND ALSO BY THE ORDER OF HONBLE BOMBAY HIGH COURT IN CIT VS. (1) DEOGIRI NAGARI SAHAKARI BANK LTD. (INCOME TAX APPEAL NO.53 OF 2014), (2) PEOPLES CO - OPERATIVE BANK LTD. (INCOME TAX APPEAL NO.54 OF 2014), (3) NANDED DISTRICT CENTRAL CO - OP. BANK LTD. (INCOME TAX APPEAL NO.57 AND 58 OF 2014) AND (4) VASANTADADA NAGARI SAHAKARI BANK LTD. (INCOME TAX APPEAL NO.68 OF 2014) REPORTED IN (2015) 379 ITR 24 (BOM) . 7. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE IS CO - OPERATIVE SOCIETY DOING BANKING BUSINESS. THE ORIGINAL ASSESSMENT WAS COMPLETED IN THE CASE OF ASSESSEE. THEREAFTER, THE ASSESSING OFFICER RECORDED REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT AND ISSUED NOTICE UNDER SECTION 148 OF ASSESSMENT UNDER SECTION 147 OF THE ACT AND ISSUED NOTICE UNDER SECTION 148 OF ITA NO . 110 / PN /201 5 CO NO.47/PN/2016 INDIRA MAHILA SAH. BANK LTD. 4 THE ACT . THE REASON FOR REOPENING WAS THAT WHER E THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THE INCOME OR EXPENDITURE COULD BE ALLOWED ON ACCRUAL BASIS. THE ASSESSEE HAD CREDITED AND DEBITED INTEREST RECEIVABLE ON THE NPAS ACCOUNTS SAYING IT WAS NOT THE INCOME OF BANK. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID INTEREST IS TO BE INCLUDED AS INCOME OF THE ASSESSEE. THE ASSESSING OFFICER THUS, DID NOT ALLOW DEDUCTION ON ACCOUNT OF PROVISION FOR OVERDUE INTEREST SINCE THE PROVISION WAS UNASCERTAINED LIABILITY. 8. IN APPEAL, THE CIT(A) ALLOWED THE CLAIM OF ASSESSEE THAT SINCE THE INTEREST OF RS.52 LAKHS CHARGED ON NPAS WAS HELD TO BE NOT THE INCOME OF ASSESSEE SINCE NO INTEREST WAS RECEIVED DURING THE YEAR. 9. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 10. WE FIND THAT SIMILAR ISSUE AS BEFORE US AROSE IN KOLHAPUR MAHILA SAHAKARI BANK LTD. VS. ITO IN ITA NO.01/PN/2013, RELATING TO ASSESSMENT YEAR 2009 - 10, VIDE ORDER DATED 29.01.2014. THE TRIBUNAL IN TURN FOLLOWING THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL I N ACIT VS. OSMANABAD JANTA SAHAKARI BANK LTD. (SUPRA) , HELD AS UNDER: - 2. THE ASSESSEE IS A CO - OPERATIVE BANK ENGAGED IN THE BUSINESS OF ACCEPTING DEPOSITS FROM MEMBERS AND GIVING LOANS TO MEMBERS. IT HAS FILED ITS RETURN OF INCOME ON 11.09.2009 FOR THE YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME AT 14,57,840/ - . IN THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD NOT CREDITED INTEREST RECEIVABLE OR ACCRUED ON NON - PERFORMING ASSETS (HEREINAFTER REFERRED TO AS NPA) TO ITS PROFIT AND LOSS ACCOUNT FOR FINANCIAL YEAR 2008 - 09. THE ASSESSING OFFICER AFTER REJECTING THE VARIOUS CONTENTIONS OF THE ASSESSEE HAS HELD THAT THE RBI GUIDELINES ARE NOT INTENDED TO REGULATE THE INCOME TAX LAW AND THE ASSESSEE WAS LIABLE TO BE ASSESSED ON ACCRUAL B ASIS U/S.5 OF I.T. ACT FOR THE REASONS (I) BENEFITS EXTENDED TO SCHEDULE BANK, PUBLIC FINANCIAL INSTITUTIONS, PUBLIC COMPANIES FOR THE PURPOSE OF SECTION 43D WERE NOT EXTENDED TO A CO - OPERATIVE BANK AND (II) THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND NOT CASH SYSTEM. ULTIMATELY THE ASSESSING OFFICER TAXED ON ACCRUED INTEREST OF 25,20,022/ - ADVANCE CLAIMED TO BE NPA ITA NO . 110 / PN /201 5 CO NO.47/PN/2016 INDIRA MAHILA SAH. BANK LTD. 5 ACCOUNT. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY WHEREIN, FOLLOWING THE OSMANABAD JANTA SAHAKARI BAN K 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 MATERIAL ON RECORD, WE FIND THAT IN OSMANABAD JANTA S AHAKARI BANK LTD. (SUPRA) THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER: 7. IN THE CASE BEFORE US, ADMITTEDLY, ASSESSEE HAS DIRECTLY TAKEN THE INTEREST TO THE BALANCE SHEET AND IT IS NOT ROUTED THROUGH THE PROFIT & LOSS A CCOUNT. MOREOVER, THE ISSUE OF THE TAXABILITY OF THE INTEREST ON THE STICKY LOSSES/ADVANCES, IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCHES IN THE CASE OF THE DURGA COOPERATIVE URBAN BANK LTD., VIJAYAWADA (SUPRA) AND KARNA VATI COOPERATIVE BANK LTD. (SUPRA). WE FIND NO REASON TO 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, CIRC LE - 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 BANK LTD. ITA NO.817 & 1114/PN/2011. 1 1 . THE HONBLE BOMBAY HIGH COURT IN CIT VS. M/S. DEOGIRI NAGARI SAHAKARI BANK LTD. IN INCOME TAX APPEAL NO.53 OF 2014 & ORS. HAS LAID DOWN THE PROPOSITION THAT THE INTEREST ACCRUED ON NPAS IS NOT TAXABLE IN THE HANDS OF ASSESSEE, IN VIEW OF THE GUIDELINES ISSUED BY THE RBI. 1 2 . THE ISSUE ARISING IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE PUNE BENCH OF TRI BUNAL IN ACIT VS. OSMANABAD JANTA SAHAKARI BANK LTD. (SUPRA) AND HONBLE BOMBAY HIGH COURT AND FOL LOWING THE SA ID RATIO, WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 13. THE LEARNED AUTHORIZED REPRESENTATIVE FOR T HE ASSESSEE POINTED OUT THAT IN CASE THE ISSUE ON MERITS IS DECIDED IN FAVOUR OF THE ASSESSEE, THEN HE IS NOT ITA NO . 110 / PN /201 5 CO NO.47/PN/2016 INDIRA MAHILA SAH. BANK LTD. 6 PRESSING THE CROSS OBJECTIONS. ACCORDINGLY, THE CROSS OBJECTIONS RAISED BY THE ASSESSEE ARE THUS, DISMISSED AS NOT PRESSED. 14. IN THE RESULT, B OTH THE APPEAL OF REVENUE AND THE CROSS OBJECTIONS OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THIS 21 ST DAY OF DECEM BER , 201 6 . SD/ - SD/ - ( ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 21 ST DECEM BER , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE C I T (A) - I , NASHIK ; 4. / THE C I T - I, NASHIK ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE