Dhanbad Central Co-operative Bank Ltd., V. ACIT,

ITA 114/RAN/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2176 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 27-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEEPAK RAUSHAN
• Assessee Lawyers: S K PODDAR
• Keywords: Non-deduction of tax; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: RANCHI BENCH, RANCHI BEFORE SH. SHAMIM YAHYA, ACCOUNTANT MEMBER AND SH. PARTHA SARTHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 114/RAN/2013 ASSESSMENT YEAR: 2009-10 DHANBAD CENTRAL CO-OPERATIVE BANK LTD., BOX NO. 94, HIRAPUR, DHANBAD VS ASSISTANT COMMISSIONER OF INCOME TAX, RANGE-2, DHANBAD. PAN/GIR NO. : AAABT0261G (APPELLANT ) .. (RESPONDENT) APPELLANT BY : SH. S.K. PODDAR, ADVOCATE RESPONDENT BY : SH. DEEPAK RAUSHAN, DR DATE OF HEARING 08.03.2016 DATE OF PRONOUNCEMENT 10.03.2016 O R D E R PER SHAMIM YAHYA, AM : THIS APPEAL BY THE ASSESEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), DATED 03.09.2013 AND PERTAINS TO THE ASSESSMENT YEA R 2009-10. THE CONCISE GROUNDS RAISED ARE AS UNDER: 1. FOR THAT LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 3,67,26,600/- MADE BY THE LD. AO AS PROVISION OF BA D AND DOUBTFUL ASSETS WITHOUT CONSIDERING THE CREDIT AS APPEARING IN THE PROFIT AND LOSS ACCOUNT REGARDING BAD AND DOUBTFUL ASSETS. 2. FOR THAT AS PER RBI GUIDELINE BAD AND DOUBTFUL ASSE TS ARE TO BE CALCULATED EVERY YEAR IN TOTALITY BRANCH-WISE. AS S UCH, THE TOTAL PROVISION MAY INCREASE OR MAY DECREASE. THE INCREAS E IN PROVISION WAS DEBITED TO PROFIT AND LOSS ACCOUNT AND DECREASE IN PROVISION WAS CREDITED IN PROFIT AND LOSS ACCOUNT. IN THE BALANCE SHEET NET INCREASE IN THE PROVISION WAS REFLECTED. LD. AO OUGHT TO HAV E ADDED RS. 2 ITA NO. 114/RAN/2013 AY: 2009-10 2,02,93,725/- ONLY AS PROVISION FOR BAD AND DOUBTFU L ASSETS WHICH WAS TO BE ADDED IN THE COMPUTATION OF INCOME. 3. FOR THAT THE APPELLANT DID MAKE DEDUCTION OF TDS. H OWEVER, IN SOME CASES DEDUCTION WAS MADE @ 5.2% INSTEAD OF 10.3%. I N OTHER CASES DEDUCTION WAS MADE @ 10.02% (EDUCATION CESS @ 2%) W HEREAS EDUCATION CESS WAS RAISED TO 3% FROM THIS YEAR. PRO VISION OF SECTION 40(A)(IA) IS NOT APPLICABLE FOR SHORT DEDUCTION OF TDS AS SUCH ADDITION MADE U/S 40(A)(IA) IS UNJUSTIFIED AND ILLEGAL. 4. FOR THAT GROUND RELATING TO COMMENTS RELATING TO SE CTION 36(1)(VIIA) IS WITHDRAWN SINCE IS OF NO CONSEQUENCE. 2. APROPOS GROUND NOS. 1 & 2. AT THE OUTSET IN REL ATION TO THIS GROUND, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ONLY NET INC REASE IN THE PROVISION OF BAD AND DOUBTFUL DEBTS AMOUNTING TO RS. 2,02,93,725/- S HOULD HAVE BEEN ADDED IN THE COMPUTATION OF INCOME. HOWEVER, THE ASSESSING O FFICER HAS ERRONEOUSLY MADE ADDITION ON THE ENTIRE AMOUNT IN THE DEBIT SID E AMOUNTING TO RS. 3,67,26,600/-. LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THIS WAS ERRONEOUSLY DONE. THE ACTUAL INCREASE IN THE PROVISION OF BAD A ND DOUBTFUL DEBTS WHICH IS THE SUBJECT MATTER FOR THE CURRENT YEAR WAS ONLY RS . 2,02,93,725/-. TO SUPPORT THIS CONTENTION, LD. COUNSEL FOR THE ASSESSEE HAS P RODUCED BEFORE US THE WORK- SHEET OF BRANCH-WISE CALCULATION OF PROVISION MADE AS PER THE RBI GUIDELINES, WORK-SHEET FOR BRANCH-WISE ADDITIONAL PROVISION, CO PY OF BALANCE-SHEET FOR FINANCIAL YEAR 2008-09, COPY OF PROFIT AND LOSS ACC OUNT FOR FINANCIAL YEAR 2008- 09. LD. COUNSEL FURTHER SUBMITTED THAT A GROUND IN THIS REGARD WAS DULY RAISED BEFORE THE LD. CIT(A) VIDE GROUND NO.7, WHICH READ AS UNDER: 7. FOR THAT THE ADDITION FOR PROVISION FOR BAD AND DOUBTFUL DEBTS IS MADE ON THE ENTIRE DEBIT AMOUNT IGNORING THE CREDIT AMOUNT OF THE PROVISION RESULTING IN DOUBLE ADDITION OF THE CREDI T AMOUNT. SUCH ADDITION IN EARLIER YEARS, ALTHOUGH DISPUTED, WAS ALWAYS ON THE NET AMOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS DURING THAT YE AR. 3 ITA NO. 114/RAN/2013 AY: 2009-10 2.1 IN THIS REGARD, LD. COUNSEL FOR THE ASSESSEE PL EADED THAT THIS ISSUE HAS NOT AT ALL BEEN ADJUDICATED BY THE LD. CIT(A). HENCE, L D. COUNSEL PLEADED THAT, IN THE INTEREST OF JUSTICE, THIS ISSUE MAY BE REMITTED TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE FACTUAL VERACITY AND GIVE A FINDING. 2.2 PER CONTRA, LD. DR DID NOT RAISE ANY SERIOUS OB JECTION TO THIS PROPOSITION. 2.3 ACCORDINGLY, IN THE INTEREST OF JUSTICE, WE CO NSIDER IT APPROPRIATE TO REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. TH E ASSESSING OFFICER IS DIRECTED TO EXAMINE THIS ISSUE AFRESH AFTER MAKING FACTUAL V ERIFICATION OF THE SUBMISSION BEING MADE BY THE LD. COUNSEL FOR THE ASSESSEE. NEE DLESS TO ADD, THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEA RD. 3. APROPOS GROUND NO. 3, THIS ISSUE RELATED TO THE DISALLOWANCE OF RS. 88,055/- FOR THE SHORT FALL IN THE RATE OF TDS. THE LD. CIT(A) HAS DEALT WITH THIS ISSUE AS UNDER: 6. GROUND OF APPEAL NO. 9 IS REGARDING DISALLOWANC E OF RS. 88,055/- MADE BY THE TAX AUDITORS FOR FAULTY RATE O F TDS. IT HAS BEEN SUBMITTED THAT IN A LATER DECISION IN THE CASE OF C IT VS. S.K. TEKRIWAL [2011] 15 TAXMAN 289 (KOLKATA-TRIB.), IT HAS BEEN H ELD THAT IF TAX HAS BEEN SHORT DEDUCTED, NO DISALLOWANCE U/S 40(A)(IA) OF THE IT ACT, 1961 CAN BE MADE. ACCORDINGLY, IT WAS REQUESTED THAT THI S DISALLOWANCE WAS NOT REQUIRED TO BE MADE. 7. I HAVE CONSIDERED THE FACTS OF THE CASE. THE DI SALLOWANCE WAS MADE BY THE TAX AUDITORS AND RETURN HAS BEEN FILLED BY THE APPELLANT ACCORDINGLY. NO SUCH DISALLOWANCE HAS BEEN MADE BY THE A.O. ON THE BASIS OF ONE OR TWO SUCH DECISIONS, IT CANNOT BE SA ID THAT THE POSITION OF LAW HAS REACHED ANY CONCLUSIVE STAGE. ACCORDINGLY, I DECLINE TO INTERVENE IN THE MATTER. 3.1 AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN AP PEAL BEFORE ITAT. 3.2 LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE INVOLVED IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY SEVERAL DECISI ONS OF THE ITAT. HE 4 ITA NO. 114/RAN/2013 AY: 2009-10 SUBMITTED THAT IT WAS INCUMBENT UPON THE LD. CIT(A) TO FOLLOW THE DECISIONS OF THE ITAT. LD. COUNSEL PLEADED THAT IT IS SETTLED LA W THAT JUDICIAL PROPRIETY DEMANDS THAT LD. CIT(A) SHOULD FOLLOW THE DECISIONS OF ITAT. IN THIS REGARD, LD. COUNSEL FURTHER REFERRED TO ITAT, MUMBAI, DECISIONS IN THE CASE OF DCIT VS. CHANDABHOY & JASSOBHOY, IN ITA NO. 20/MUM/2010. IN THIS CASE, VIDE ORDER DATED 8 TH JULY, 2011, IT WAS HELD THAT THE PROVISIONS OF SEC TION 40(A)(IA) OF THE ACT DO NOT APPLY WHEN THERE IS ACTUAL DEDUCTION OF TAX UNDER SECTION 192 OF THE ACT. IT WAS EXPOUNDED THAT THE PROVISIONS OF SECTIO N 40(A)(IA) CAN BE INVOKED ONLY IN THE EVENT OF NON-DEDUCTION OF TAX BUT NOT L ESSER DEDUCTION OF TAX. 3.3 RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESS EE. 4. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSE E STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 10 TH MARCH, 2016. SD/- SD/- (PARTHA SARTHI CHAUDHURY) (SHA MIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 TH MARCH, 2016. RAJESH, SR.PS/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) - 5. THE DR, ITAT, RANCHI 6. GUARD FILE BY ORDER SR. P.S., ITAT, RANCHI