The Gozaria Nagrik Sahakari Bank Ltd., Mehsana V. The Income Tax Officer, Ward-4, Patan

ITA 112/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6357 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 09-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 112/AHD/2015 (ASSESSMENT YEAR: 2011-12) THE GOZARIA NAGRIK SAHAKARI BANK LTD.MAIN BAZAR, AT & POST GOZARIA- 382825 DIST: MEHSANA V/S INCOME TAX OFFICER, WARD- 4, PATAN (APPELLANT) (RESPONDENT) PAN: AAAAT1074G APPELLANT BY : SHRI SANJAY R. SHAH, AR RESPONDENT BY : SHRI V.K. SINGH, SR. D.R. ( )/ ORDER DATE OF HEARING : 02 -01-201 8 DATE OF PRONOUNCEMENT : 05 -01-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A), GANDHINAGAR, AHMEDABAD DATED 15.09.2014 PERTAINING TO A.Y. 2011-12. ITA NO. 112/ AHD/2015 . A.Y. 2011-1 2 2 2. THE FIRST SUBSTANTIVE GRIEVANCE OF THE ASSESSEE REL ATES TO THE ADDITION OF DEPRECIATION ON ACCOUNT OF GOVERNMENT SECURITIES TO THE AMOUNT OF RS. 13,37,050/-. 3. FACTS RELATING TO THIS GRIEVANCE SHOW THAT THE ASSE SSEE IS ENGAGED IN BANKING ACTIVITIES. DURING THE COURSE OF THE SCRUTINY ASSES SMENT PROCEEDINGS, THE A.O. NOTICED THAT IN ITS BALANCE SHEET, THE ASSESSEE HAS TREATED SECURITIES FOR RS. 26.86 CRORES AS INVESTMENT AND NOT AS STOCK IN TRADE. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE CANNOT CLAIM ANY PROVISION FOR DE PRECIATION FOR THE VALUE OF INVESTMENT OF SECURITIES. THE A.O. FURTHER WAS OF T HE OPINION THAT THE ASSESSEE WAS HOLDING INVESTMENT IN GOVERNMENT SECURITIES AND FOLLOWING THE GUIDANCE ISSUED BY RBI. THE INVESTMENT HELD TO BE MATURITY A RE INVESTMENT OF THE BANK AND OTHER TWO CATEGORIES SUCH AS HELD FOR TRADING A ND AVAILABLE FOR SALE ARE STOCK IN TRADE OF THE BANK. CONSIDERING THE GUIDELI NES QUA THE FACTS, THE A.O. DISALLOWED THE PROVISION ON DEPRECIATION OF GOVERNM ENT SECURITIES FOR RS. 13,37,050/- AND ADDED BACK TO THE INCOME OF THE ASS ESSEE. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CLAIM OF THE PROVISION. 5. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) AGREED WITH THE CLAIM OF THE ASSESSEE AND DIRECTED THE A.O. TO DELE TE THE DISALLOWANCE SO MADE. HOWEVER, WHILE DELETING THE DISALLOWANCE THE FIRST APPELLATE AUTHORITY INADVERTENTLY HAS MENTIONED THE AMOUNT OF RS. 4,84, 830/- BEING GOVERNMENT SECURITIES PREMIUM WRITTEN OFF WHERE AS RS. 13,37,0 50/- SHOULD HAVE BEEN MENTIONED. SINCE THE ASSESSEE HAS ALREADY GOT RELIE F FROM THE FIRST APPELLATE AUTHORITY, THERE REMAINS ONLY A TYPOGRAPHICAL ERROR OF THE AMOUNT AND ITA NO. 112/ AHD/2015 . A.Y. 2011-1 2 3 ACCORDINGLY WE DIRECT THE A.O. TO CONSIDER THE AMOU NT OF RS. 13,37,050/- INSTEAD OF RS. 4,84,830/-. WE ORDER ACCORDINGLY. 6. THE SECOND SUBSTANTIVE GRIEVANCE RELATES TO THE DIS ALLOWANCE OF AN AMOUNT OF RS. 6,22,600/- CLAIMED AS PROVISION ON STANDARD ASS ETS. 7. WHILE SCRUTINIZING THE RETURN, THE A.O. NOTICED THA T THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 6,22,600/- ON ACCOUNT OF PROVISION ON STANDARD ASSETS. THE A.O. FOUND THAT THE ASSESSEE HAS HEAVILY RELIED UPON ON THE RBI GUIDELINES. THE A.O. WAS OF THE OPINION THAT RBI DIRECTIVE HAVE NOTHING TO DO WITH THE TAXABILITY OF THE ENTITIES GOVERNED BY THOSE DIRECTIONS AND TAXAB LE INCOME OF THE ASSESSEE IS REQUIRED TO BE DETERMINED IN ACCORDANCE WITH THE PR OVISIONS OF THE INCOME-TAX ACT. 8. WE FIND THAT AN IDENTICAL ISSUE WAS CONSIDERED BY T HE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 2010-11 IN ITA NO. 3077/AHD/2013 WHERE IN THE CO-ORDINATE BENCH HAS RESTORED THE MATTER TO THE FILES OF THE A .O. THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READ AS UNDER:- 9. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THA T THE HON'BLE APEX COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD.(SUPRA) HAS C LEARLY OBSERVED THAT BY WAY OF SPECIAL PROVISION UNDER S.36(L)(VIIA), THE BANKS AR E ALLOWED TO CLAIM DEDUCTION SUBJECT TO A CEILING OR A LIMIT. AS PER SECTION 36( L)(VIIA), THE BANKS ARE ENTITLED TO CLAIM DEDUCTION CERTAIN PRESCRIBED PERCENTAGES OF T HE AVERAGE ADVANCE MADE BY THE RURAL BRANCHES OF SUCH BANKS. HOWEVER, RELEVANT FACTS ABOUT THE ADVANCE BY THE RURAL BRANCH REQUIRES TO BE VERIFIED IN THE LIG HT OF SECTION 36(L)(VIIA) READ WITH RULE 6ABA OF THE INCOME TAX RULES, 1963. ACCORDINGL Y, WE CONSIDER IT EXPEDIENT THAT THE ISSUE IS REVISITED BY THE AO DE NOVO IN AC CORDANCE WITH LAW IN THE LIGHT OF ITA NO. 112/ AHD/2015 . A.Y. 2011-1 2 4 PROVISIONS OF SECTION 36(L)(VIIA) OF THE ACT AFTER GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDIN ATE BENCH (SUPRA), WE RESTORE THIS ISSUE TO THE FILES OF THE A.O. WITH SI MILAR DIRECTIONS. THIS GRIEVANCE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 10. THE LAST SUBSTANTIVE GRIEVANCE RELATES TO NOT GRANT ING DEPRECIATION OF 60% ON CERTAIN FURNITURE FIXED WITH COMPUTERS AND AIR-COND ITIONERS AND RESTRICTING THE CLAIM OF DEPRECIATION UP TO 15% ONLY. 11. THE A.O. FOUND THAT THE ASSESSEE HAS CLAIMED DEPREC IATION @ 60% ON FURNITURE FIXED WITH COMPUTERS ON WHICH DEPRECIATION AS ALLOW ABLE @ 15%. THE A.O. THEREFORE DISALLOWED EXCESS CLAIM OF DEPRECIATION O F RS. 24,007/-. 12. THE ASSESSEE AGITATED THE MATTER BEFORE THE LD. CIT (A) BUT WITHOUT ANY SUCCESS. 13. A PERUSAL OF THE ORDER OF THE AUTHORITIES BELOW SHO WS THAT THE ASSESSEE HAS CLAIMED DEPRECIATION @ 60% ON FURNITURE, FIXTURES A ND AIR-CONDITIONERS TREATING THE SAME AS PART OF OR ATTACHMENT TO COMPUTER ACCES SORIES. IN OUR CONSIDERED OPINION, THE ACTION OF THE ASSESSEE DOES NOT ENTITL E IT TO CLAIM DEPRECIATION @ 60%. THE ALLOWABLE RATE ON SUCH ASSET IS 15% AND TH EREFORE THE A.O. HAS RIGHTLY DISALLOWED THE EXCESS CLAIM OF DEPRECIATION OF RS. 24,007/-. NO INTERFERENCE IS CALLED FOR. THIS GRIEVANCE IS ACCOR DINGLY DISMISSED. ITA NO. 112/ AHD/2015 . A.Y. 2011-1 2 5 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 05- 01- 20 18 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 05 /01/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD