Assistant Commissioner of Income tax, V. Laxmi-Vishnu Sah. Bank Ltd, Kolhapur

ITA 110/PUN/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1512 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 13-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARISES OUT OF PASSED

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / ITA NO.110/PUN/17 / ASSESSMENT YEARS : 2013-14 ACIT, ICHALKARANJI CIRCLE, ICHALKARANJI VS. LAXMI -VISHNU SAH. BANK LTD., 20/194, SHRI JIVESHWAR BHAVAN, ICHALKARANJI, DIST. KOLHAPUR 416115 PAN : AAAAL0117G (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE CIT(A)-2, KOLHAPUR ON 08-11-2016 IN RELATION TO THE ASSESSMENT YEAR 2013-14. 2. THE ONLY EFFECTIVE GROUND RAISED IN THIS APPEAL READS AS UNDER :- APPELLANT BY SHRI SUDHENDU DAS RESPONDENT BY NONE (WRITTEN SUBMISSIONS) DATE OF HEARING 26-11-2018 DATE OF PRONOUNCEMENT 27-11-2018 ITA NO.110/PUN/2017 LAXMI VISHNU SAH. BANK LTD., 2 ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEALS) WAS NOT JUSTIFIED IN RESTRICTING THE CLAIM TO RS. 48,94,000/- OUT OF DISALLOWANCE OF CLAIM FOR INTEREST ON DEPOSITS OF RS. 2,10,85,000/- WHERE THE MATTER SHOULD HAVE BEEN REFERRED TO THE AO AS PER PROVISION OF RULE 46A OF THE RULE 1962. 3. BRIEFLY STATED, THE FACTS OF THE CASE, ARE THAT THE ASSESS EE CLAIMED DEDUCTION, INTER ALIA, OF RS. 2,10,85,000/- TOWARDS SHORT INTEREST PROVISION, AS PER THE DIRECTION GIVEN BY THE RESERVE BANK OF INDIA (RBI) IN ITS REPORT ON INSPECTION OF THE ASSESSEE-BANK. ON BEING CALLED UPON TO SUBSTANTIATE THE CLAI M, THE ASSESSEE SUBMITTED THAT DEDUCTION OF RS.210.85 LAKHS WAS MADE IN THE COMPUTATION OF INCOME FOR THE INSTANT YEAR AS SUC H INTEREST ACCOUNTED FOR IN THE YEAR 2014-15 WAS CONSIDERED AS PRIOR PERIOD AMOUNT AND DISALLOWED SUO MOTU IN THE COMPUTATION OF INCOME OF SUCH LATER YEAR. THE ASSESSEE FURTHER EXPLAINED THAT IT WAS ON THE INSISTENCE OF RBI THAT PROVISION OF INTEREST WAS MADE. THE ASSESSEE FURNISHED A COPY OF INSPECTION REPORT OF RBI DATED 25-12-2013 IN SUPPORT OF ITS CLAIM. THE ASSESSING OFFICER (AO) DISALLOWED THE CLAIM BY OBSERVING THAT THIS PROVISION WAS CLAIMED IN ITS RETURN OF INCOME AND NOT IN THE PROFIT AND LOSS ACCOUNT AND FURTHER THE ASSESSEE FAILED TO PRODUCE THE YEAR-WISE BIFURCATION OF THE SAID ITA NO.110/PUN/2017 LAXMI VISHNU SAH. BANK LTD., 3 AMOUNT. SINCE THE LIABILITY FOR SUCH INTEREST PAYMENT DID NOT CRYSTALLISE DURING THE YEAR UNDER CONSIDERATION, THE AO OPINE D THAT THE AMOUNT WAS NOT DEDUCTIBLE. IN THE FIRST APPEAL, THE LD. CIT(A) OBSERVED THAT OUT OF TOTAL SUM OF RS. 210.85 LAKHS CLAIMED AS DEDUCTION BY THE ASSESSEE, A SUM OF RS. 48. 94 LAKHS PERTAINED TO THE PRECEDING YEAR ENDING 31.3.2012 AND ONLY A SUM OF RS. 161.91 LAKHS RELATED TO THE YEAR UNDER CONSIDERATION. HE, THEREFORE, ALLOWED DEDUCTION FOR A SUM OF RS. 161.91 LAKHS AGAINST WHICH THE REVENUE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL BY ALLEGING VIOLATION OF RULE 46A OF THE INCOME-TAX RULES, 1962 BY THE LD. CIT(A). 4. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE WRITTEN SUBMISSIONS FILED ON BEHALF OF THE ASSESSEE HAVE ALSO BEEN TAKEN INTO CONSIDERATION. IT IS EVIDENT FROM THE FACTUAL POSITION ENUMERATED ABOVE THAT THE RBI INSPECTION TRANSPIRED UNDER PROVISION OF INTEREST FOR A S UM OF RS. 210.85 LAKHS OUT OF WHICH A SUM OF RS. 161.91 LA KHS PERTAINS TO THE YEAR UNDER CONSIDERATION. EVEN THOUGH THE REPORT OF THE RBI IS DATED 25-12-2013 AND WAS RECEIVED IN THE PREVIOUS YEAR RELEVANT TO THE A.Y. 2014-15, THE ASSESSEE STATED ITA NO.110/PUN/2017 LAXMI VISHNU SAH. BANK LTD., 4 TO HAVE SUO MOTU MADE DISALLOWANCE OF SUCH CLAIM IN THE COMPUTATION OF INCOME FOR SUCH LATER YEAR, WHICH FACT HAS N OT BEEN DENIED ON BEHALF OF THE REVENUE. THE LD. CIT(A) CONSIDERED THE REPORTS OF THE RBI WHICH INDICATED THE POSITION REGARDING THE AMOUNT OF INTEREST AND THE PERIOD TO WHICH IT PERTAINS. IT CAN BE SEEN FROM PAGE 7 OF THE ASSESSMENT ORDER THAT THERE IS CLEAR REFERENCE BY THE AO TO THE INSPECTION REPO RTS BY THE RBI. THE ASSESSEE IN ITS SUBMISSIONS MADE BEFORE THE AO, AS CAPTURED ON PAGES 5 AND 6 OF THIS ASSESSMENT OR DER, CATEGORICALLY STATED THAT OUT OF TOTAL INTEREST OF RS. 210.85 LAKHS, A SUM OF RS.48.94 LAKHS RELATES TO THE YEAR ENDING 31-03-2012 AND THE REMAINING AMOUNT IS FOR THE YEAR UNDER CONSIDERATION. THUS, IT IS PALPABLE THAT THE RBI REPORTS TAK EN INTO CONSIDERATION BY THE LD. CIT(A) ARE NOT FRESH EVIDENCE AS THE SAME WERE BEFORE THE AO AS WELL. SINCE THERE IS NO VIOLATION OF RULE 46A AND THE SUBJECT MATTER OF THE GROUND IS RESTRICTED TO SUCH VIOLATION, IN OUR CONSIDERED OPINION, NO FA ULT CAN BE FOUND WITH THE LD. CIT(A) IN CONSIDERING THE RBI REPORTS WHICH WERE ALREADY BEFORE THE AO. WE, THEREFOR E, HOLD THAT THE LD. CIT(A) DID NOT VIOLATE THE PROVISIONS OF RULE ITA NO.110/PUN/2017 LAXMI VISHNU SAH. BANK LTD., 5 46A BY THE LD. CIT(A) AS ALLEGED IN THE GROUND OF APPEAL. THE IMPUGNED ORDER IS THEREFORE UPHELD. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2018. SD/- SD/- (VIKAS AWASTHY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESID ENT PUNE; DATED : 27 TH NOVEMBER, 2018 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-2, KOLHAPUR 4. / THE PR.CIT-2, KOLHAPUR 5. , , / DR B, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.110/PUN/2017 LAXMI VISHNU SAH. BANK LTD., 6 DATE 1. DRAFT DICTATED ON 26-11-18 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 26-11-18 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. *