Asstt.Commissioner of Income Tax,Circle-4, Amaravati V. The Amravati Zilla Parishad Shishak Sah ,Bank Ltd, Amaravati

ITA 111/NAG/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3884 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 30-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR , BENCH , ( E - COURT), MUMBAI , BEFORE SHRI R.K.GUPTA , J M & SHRI D.KARUNAKAR RAO , A M ITA NO. 111 / N AG / 20 12 ( ASSESSMENT YEAR :200 8 - 200 9 ) ACIT, CIRCLE - 4, AMRAVATI CIRCLE, AMARAVATI - 444 601 VS. THE AMRAVATI ZILLA PARISHAD SHI K SHAK SAH. BANK LIMITED, HAMALPURA, CONGRESS NAGAR, AMARAVATI - 444 601 PAN/GIR NO. : A A AAT 0593 N ( APPELLANT ) .. ( RESPONDENT ) AND CROSS OBJECTION NO. 5 / NAG /20 12 ( ASSESSMENT YEAR :200 8 - 09 ) THE AMRAVATI ZILLA PARISHAD SHIKSHAK SAH. BANK LIMITED, HAMALP URA, CONGRESS NAGAR, AMARAVATI - 444 601 VS. ACIT, CIRCLE - 4, AMRAVATI CIRCLE, AMARAVATI - 444 601 PAN/GIR NO. : A AAAT 0593 N ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. PRAKASH MANE /REVENUE BY : MR. KAPIL HIRANI DATE OF HEARING : 8 TH MARCH ., 201 3 DATE OF PRONOUNCEMENT : 0 3 /04/ 201 3 O R D E R P ER SHRI R.K.G UPTA, JM : TH E DEPARTMENT HAS PREFERRED THIS APPEAL BEFORE THE ITAT NAGPUR BENCH, NAGPUR, AGAINST THE ORDER DATED 2 - 12 - 2011 OF LEANED CI T(A) - I I , NAGPUR (MAHARASHTRA) RELA TING TO THE ASSESSMENT YEAR 200 8 - 0 9 , WHEREAS THE ASSESSEE HAS PREFERRED A CROSS OBJECTION RELATING TO THE SAME ASSESSMENT YEAR, WHICH HAS BEEN HEARD THROUGH E - COURT, MUMBAI. ITA NO. 111 /20 12 & CO NO.5/2012 2 2 . THE DEPARTMENT IN ITS APPEAL IS OBJECTING IN ALLOWING THE CLAIM OF THE ASSESSEE IN RESPECT OF NON - PERFORMING ASSET ON THE BASIS OF INSPECTION REPORT OF RBI UNDER SECTION 36(1)(VIIA) OF THE ACT AT RS. 52,81,146/ - . 3 . BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDING THE AO NOTICED THA T THE ASSESSEE HAS SHOWN RETURNED INCOME OF RS. 7,75,000/ - BUT AS PER THE AUDIT REPORT THE NET PROFIT IS SHOWN AT RS. 71, 55,680/ - . THE ASSESSEE WAS REQUIRED TO EXPLAIN THE REASON. IT WAS SUBMITTED THAT THE PROFIT AS PER THE COOPERATIVE ACT IS RS. 71,55,680/ - , HOWEVER, RBI HAS REDUCED THE PROFIT TO RS. 7,75,000/ - DUE TO SHORT PROVISIONING OF STATUTORY RESERVES. FOR THE VERIFICATION OF THE SAME, THE RBI REPORT WAS ALSO FILED. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS CALCULATED THE PROFIT CONSIDERING THE PRO VISION OF SECTION 36(1)(XII)(C) . IT WAS ALSO SUBMITTED THAT THE PROFIT AS PER RBI IS CONSIDERED FOR INCOME TAX RETURN AND ACCORDINGLY, THE SAME WAS SET OFF AGAINST THE CARRIED FORWARD LOSSES FROM THE PREVIOUS YEAR. THE RBI IS AN APEX BODY FOR THE BANKING I NDUSTRY AND RBI HAS INSPECTED THE ESTABLISHMENT AND ACCORDINGLY REPORTED THAT THE PROFITS WERE REDUCED FROM RS. 71,55 LACS TO RS. 7.75 LACS DUE TO SHORT PROVISIONING OF NPA. THE AO ALSO NOTED THAT AS PER SECTION 36(1)(XII) (C), SUCH TYPE OF SHORT PROVISIONING OF NPA IS NOT ALLOWABLE. ACCORDINGLY, HE REJECTED THE EXPLANATION OF THE ASSESSEE AND A SUM OF RS. 20,13,355/ - WAS ADDED TO THE INCOME OF THE ASSESSEE. THE AO FURTHER CALCULATED THE ITA NO. 111 /20 12 & CO NO.5/2012 3 DISALLOWANCE AND FOUND THAT DEDUCTION UPTO THE EXTENT OF RS. 52,81,146/ - IS WRONGLY CLAIMED AND DISALLOWED THE SAME. 4 . DETAILED SUBMISSION WERE FILED BEFORE THE CIT(A) . IT WAS SUBMITTED THAT IN FACT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT AND NOT UNDER SECTION 36(1)(XII)(C), WHICH WAS DUE TO MI STAKENLY MENTIONED . THEREAFTER AS PER PROVISION OF LAW, CALCULATION SHEET WAS FILED BEFORE THE CIT(A), WHICH HAS BEEN TABULATED IN THE ORDER OF THE LEARNED CIT(A) AT PAGES 6 & 7. IT WAS EXPLAINED THAT AS PROVISION OF LAW, 7.5% OF THE TOTAL INCOME ON ACCOU NT OF BAD DEBT DOUBTFUL IS ALLOWABLE. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, CIT(A) FOUND THAT IT IS CLEAR THAT PROVISION MADE AS PER INCOME TAX ACT ARE ONLY ALLOWABLE AND PROVISION MADE IN MAHARASHTRA COOPERATIVE SOCIETY ACT , 1960 PASSED BY REGISTRAR AND IN VIEW OF THE SPECIFIC PROVISION IN INCOME TAX ACT, THE AO IS BOUND TO ALLOW ONLY THOSE DEDUCTION, WHICH EMANATE FROM IT ACT. HENCE, THE CLAIM OF THE ASSESSEE ONLY TO THE EXTENT OF RS. 52,81,146/ - AS SUBMITTED BY THE ASSESSEE IN THE CALCULATION SHEET ABOVE, IS ALLOWABLE UNDER SECTION 36(1)(VII)(A) . FURTHER PROVISO UNDER SECTION 36(1)(VII)(A) OF THE ACT IS NOT APPLICABLE TO THE ASSESSEE AS IT WAS APPLICABLE ONLY DURING THE ASSESSMENT YEAR 2001 - 2005 ,HENCE, NO FURTHER DISALLOWANCE MADE BY THE ASSESSEE IN PROFIT AND LOSS ACCOUNT IS TO BE ALLOWED UNDER THIS PROVISO. ACCORDINGLY, TO THAT EXTENT, CLAIM OF THE ASSESSEE WAS ALLOWED. THE DISALLOWANCE OF RS.20,13,355/ - ON ACCOUNT OF NPA WAS CONFIRMED ITA NO. 111 /20 12 & CO NO.5/2012 4 BY THE CIT(A). HOWEVER, AGAINST THE DIR ECTION OF LEARNED CIT(A) , IN ALLOWING THE AMOUNT OF RS. 52,81, 146/ - IN VIEW OF THE PROVISION OF SECTION 36 (1) (VII)(A) , THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5 . LEARNED DR CONCEDED THAT WHILE CONSIDERING THE PROVISION OF SECTION 36(1)(VII)(A ) , THE AO WAS NOT GRANTED ANY OPPORTUNITY BY THE LEARNED CIT(A). THEREFORE, THE MATTER SHOULD BE SENT BACK TO THE FILE OF THE AO. 6 . ON THE OTHER HAND, LEARNED COUNSEL OF THE ASSESSEE STATED THAT PROVISIONS OF LAW ARE VERY CLEAR. DUE TO MISTAKE, WRONG PRO VISION OF LAW WERE MENTIONED BEFORE THE AO . THE ACTUAL DEDUCTION IS ALLOWABLE UNDER SECTION 36(1)(VII)(A) , HOWEVER, IN RESPECT TO CALCULATION OF THE DEDUCTION, MATTER MAY BE SENT BACK TO THE FILE OF THE AO, OTHERWISE PROVISION S OF SECTION 36(1)(VII)(A) ARE VERY CLEAR THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION. 6.1 REGARDING CROSS OBJECTION FILED BY THE ASSESSEE, IT WAS STATED THAT THE SAME MAY BE TREATED AS NOT PRESSED. 7. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, WE FOUND TH AT LEARNED CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO ALLOW THE DEDUCTION UNDER SECTION 36(1)(VII)(A) AS PER PROVISIONS OF LAW, WHICH ARE ITSELF VERY CLEAR. THEREFORE, FOR THIS PURPOSE, THERE IS NO NEED TO SEND THE MATER BACK TO THE FILE OF THE AO . IF THERE IS SOME DIFFERENCE IN CALCULATION, THE AO WILL RE - EXAMINE THE CALCULATION AND ITA NO. 111 /20 12 & CO NO.5/2012 5 CAN RECTIFY THE DEDUCTION. WE ORDER ACCORDINGLY. 8 . SINCE THE CROSS OBJECTION HAS NOT BEEN PRESSED, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 9 . RESULTANTLY, APPEAL OF THE DEPARTMENT AS WELL AS CROSS OBJECTION FILED BY THE ASSESSEE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF APR. 201 3 . 201 3 SD/ - SD/ - ( ) ( D.KARUNAKAR RAO ) ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 0 3 / 04 / 201 3 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI / NAGPUR . 4. / CIT 5. / DR, ITAT, MUMBAI / NAGPUR . 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUM BAI