ITO, Wd.-1(3), Jalna V. M/s. The Jalna Peoples Co Op. Bank Ltd., Jalna

ITA 1119/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9943 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 06-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINITA MENON
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI R.K. PANDA, AM ITA NO. 1119/PN/2011 (ASSESSMENT YEAR: 2008-09) INCOME-TAX OFFICER, WARD 1(3) JALNA .. APPELLANT VS. THE JALNA PEOPLES CO-OP. BANK LTD., SADAR BAZAR, JALNA 431 203 PAN AAAAJ 0638 E RESPONDENT APPELLANT BY: SMT. VINITA MENON RESPONDENT BY: SMT. M.N. KULKARNI DATE OF HEARING: 20-9-2012 DATE OF PRONOUNCEMENT: 28-9-2012 ORDER PER SHAILENDRA KUMAR YADAV, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)- AURANGABAD DATED 30-6-2011 FOR A.Y. 2008 - 09 ON THE FOLLOWING GROUNDS: 1. WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS RIGHTLY DELETED THE ACCRUED INTEREST ON BAD AND DOUBTFUL ASSETS FOLLOWING THE VARIOUS IRRELEVANT DECISION OF COURT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AFTER SUBSTITUTION OF SECTION 43D OF THE INCOME-TAX ACT, 1961 W.E.F. 1-4-2000 IN THE CASE OF ASSESSEE BANK INTEREST ON BAD AND DOUBTFUL ASSETS IS ASSESSABLE TO TAX ON RECEIPT BASIS. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) WAS CORRECT IN UPHOLDING THAT ASSESSEE BANKS INTEREST ON BAD AND DOUBTFUL ASSETS IS ASSESSABLE TO TAX ON RECEIPT BASIS; WHEREAS ASSESSEE BANK IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. 2 ITA NO 1119/PN/11 JALNA PEOPLES CO-OP.BANK A.Y. 2008-09 2. THE ASSESSEE IS A CO-OPERATIVE BANK CARRYING ON THE BUSINESS OF BANKING PURSUANT TO THE BANKING REGULATION ACT, 1949. THE ASSESSEE FILED ITS RETUR N OF INCOME DECLARING NIL INCOME WHICH WAS COMPLETED BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 144 OF THE ACT DETERMINING THE TOTAL INCOME AT RS. 1,24,07,181/- AFTER MAKING VARIOUS ADDITIONS, IT WAS NOTICED BY T HE ASSESSING OFFICER THAT THE ASSESSEE BANK HAS NOT CONSIDERED THE INTEREST RECEIVABLE ON STICKY ADVANCES/NON-PERFORMING ASSETS (NPA) AS INCOME AND SAME HAS BEEN DIRECTLY TAKEN TO THE BALANCE SHEET WITHOUT ROUTING THROUGH THE P & L A/C. THE ASSESSI NG OFFICER OBSERVED THAT THE PROVISIONS OF SEC. 43D OF THE ACT CANNOT BE APPLIED TO THE ASSESSEE BANK AS IT IS NOT A SCHEDULED BANK BUT A CO-OPERATIVE BANK. HE THEREFORE, ESTIMATED THE INTEREST @ 16% OF TOTAL NP A OF RS. 1044.88 LAKHS AMOUNTING TO RS. 167.18 LAKHS. ON APPEAL, THE CIT(A) DELETED THE ACCRUED INTEREST ON BAD AND DOUBTFUL ASSETS FOLLOWING VARIOUS DECISIONS OF THE COURTS. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL, WE FIND THAT THE GROUNDS THE REVENUE ARE COVERED IN FAVOUR OF THE ASSESSEE BY TH E DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN TH E CASE OF ACIT CIR. 3, NANDED VS. OSMANABAD JANTA SAHAKARI BANK LTD. LATUR IN ITA NO. 795/PN/2011 FOR A.Y. 2007-08 DATED 31-8-2012 WHEREIN THE ISSUE HAS BEEN DECIDED BY OBSERVING AS UNDER: IN THE CASE BEFORE US, ADMITTEDLY, ASSESSEE HAS DIRECTLY TAKEN THE INTEREST TO THE BALANCE SHEET AND IT IS NOT ROUTED THROUGH THE P & L A/C. MOREOVER, THE ISSUE OF THE TAXABILITY OF THE INTEREST ON THE STICKY LOSSES/ADVANCES, IS 3 ITA NO 1119/PN/11 JALNA PEOPLES CO-OP.BANK A.Y. 2008-09 COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-ORDINATE BENCHES IN THE CASE OF DY. CIT VS. THE DURGA CO-OPERATIVE URBAN BANK LTD., VIJAYAWADA IN ITA NO. 511/VIZAG/2010 DATED 10-3-2011 AND KARNAVATI CO-OP. BANK LTD., VS. DY. CIT (134 ITD 486 (AHMEDABAD). 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. 4. SINCE THE FACTS OF THE PRESENT CASE ARE ON AN IDENTICAL FOOTING, FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL IN THE CASE OF OSMANABAD JANTA SAH. BANK LTD. (SUPRA), THE GROUNDS RAISED BY THE REVENU E ARE DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST T HE REVENUE. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. DECISION PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER 2012. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED:28 TH SEPTEMBER 2012 ANKAM COPY TO:- ASSESSEE DEPARTMENT THE CIT (A) AURANGABAD THE CIT AURANGABAD THE D.R. A BENCH, I.T.A.T., PUNE. BY ORDER //TRUE COPY// SR. P.S. I.T.A.T., PUNE 4 ITA NO 1119/PN/11 JALNA PEOPLES CO-OP.BANK A.Y. 2008-09