The Hoshiarpur Central Coop. Bank Ltd., Hoshiarpur V. The Assistant Commissioner of Income Tax, Hoshiarpur

ITA 121/ASR/2013

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0554 (ITAT-AMRITSAR)
• Duration Of Justice: 6 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-12-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 28-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Opportunity of being heard; Bad and doubtful debts; Commercial expediency; Set aside
• Section: 37(1); 80P; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N. K. CHOUDHRY, JUDICIAL MEMBER AND SH. O. P. MEENA ACCOUNTANT MEMBER I.T.A. NO. 121/ASR/2013 AS SESSMENT YEAR: 2009-10 THE HOSHIARPUR CENTRAL COOP. BANK LTD., RAILWAY ROAD, HOSHIARPUR [PAN: AAAAT 0384K] VS. ADDL. C. I. T., HOSHIARPUR RANGE, HOSHIARPUR (APPELLANT) (RESPONDENT) I.T.A. NO. 120/ASR/2013 AS SESSMENT YEAR: 2009-10 DEPUTY COMMISSIONER OF INCOME TAX, HOSHIARPUR CIRCLE, HOSHIARPUR VS. THE HOSHIARPUR CENTRAL COOP. BANK LTD., RAILWAY ROAD, HOSHIARPUR [PAN: AAAAT 0384K] (APPELLANT) (RESPONDENT) I.T.A. NO. 700/ASR/2014 AS SESSMENT YEAR: 2011-12 ASSTT. COMMISSIONER OF INCOME TAX, HOSHIARPUR CIRCLE, HOSHIARPUR VS. THE HOSHIARPUR CENTRAL COOP. BANK LTD., RAILWAY ROAD, HOSHIARPUR [PAN: AAAAT 0384K] (APPELLANT) (RESPONDENT) ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 2 I.T.A. NO. 156/ASR/2017 AS SESSMENT YEAR: 2013-14 THE HOSHIARPUR CENTRAL COOP. BANK LTD., RAILWAY ROAD, HOSHIARPUR [PAN: AAAAT 0384K] VS. DY. C. I. T., CIRCLE, HOSHIARPUR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. J. S. BHASIN (AD V.) RESPONDENT BY: SH. ALOK KUMAR CIT-DR DATE OF HEARING: 17.12.2019 DATE OF PRONOUNCEMENT: 20.12.2019 ORDER PER O. P. MEENA, AM: THE ABOVE CROSS APPEALS ARE FILED BY THE REVENUE AN D ASSESSEE ARE DIRECTED TO ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), J ALANDHAR DATED 19.12.2012, FOR AY 2009-10 AND ANOTHER TWO APPEALS FILED BY ASS ESSEE AGAINST OF LD. CIT(A) DATED 09.09.2014 AND 20.02.2017 FOR THE ASSESSMENT YEARS 2011-12 AND 2013-14 RESPECTIVELY. THE ABOVE FILES WERE HEARD TOGETHER H ENCE A CONSOLIDATED ORDER IS BEING PASSED ACCORDINGLY. ITA NO.120/ASR/2013 (AY 2009-10) BY THE REVENUE 2. GROUND NO. 1 RELATES IN DELETING THE ADDITION AM OUNTING TORS.41,00,640/- MADE ON ACCOUNT DISALLOWANCE OF DIVIDEND DISTRIBUTI ON BY THE AO. ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 3 3. AT THE OUTSET, THE LD. DR HAS POINTED OUT THAT T HIS ISSUE IS COVERED BY THE DECISION OF TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO. 93/ASR/2011 FOR THE ASSESSMENT YEAR 2007-08 VIDE PARA 6 TO 8 OF ITAT OR DER DATED 16.07.2018. 4. THE LD. COUNSEL ALSO STATED THAT FACTS ARE IDENT ICAL WHICH ARE ALSO FOLLOWED BY THE CIT(APPEAL) WHILE DELETING THE ADDITIONS ON THE ISSUE UNDER CONSIDERATION. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE ASSESSEES OWN CASE IN ITA NO. 93/ASR/2011 DATED 16.07.2018. WE FIND THAT THE TRIBUNAL VIDE PARA 6 TO 8 HAS GIVEN A FINDING WHICH ARE REPRODUCED AS UNDER: 6. THE FIRST GROUND OF THE REVENUES APPEAL IS IN RESPECT OF DELETION OF A SUM OF RS.34,00,732/- ADDED BY THE AO AS INCOME FROM OT HER SOURCES ON ACCOUNT OF NON PAYMENT OF DIVIDEND DISTRIBUTION TAX BY THE ASS ESSEE-COMPANY, WHICH IN FACT CLAIMS TO BE NOT LIABLE FOR THE SAID TAX. WE FIND N O BASIS FOR THE SAID ADDITION. EVEN ASSUMING, FOR THE SAKE OF ARGUMENT, THAT THE DIVIDE ND DISTRIBUTION TAX WAS INDEED PAYABLE BY THE ASSESSEE-COMPANY, THE REVENUE CAN ON LY PROCEED UNDER LAW TO EXACT THE SAME. IT DOES NOT IN ANY MANNER LEAD TO T HE INFERENCE OF ANY INCOME HAVING ACCRUED TO THE ASSESSEE AS A RESULT. RATHER, THE SAID TAX, WHERE PAID, WOULD STAND TO BE DEBITED TO ITS OPERATING STATEMENT (P&L A/C) FOR THE YEAR. WE DECIDE ACCORDINGLY. 7. VIDE THE SECOND GROUND, THE REVENUE CONTESTS THE DELETION OF THE DISALLOWANCE OF THE PROVISION ON STANDARD ASSETS, M ADE BY THE ASSESSEE-BANK AT THE RATE OF 0.25%, ON THE GROUND IT BEING ONLY A CO NTINGENT LIABILITY. THE ASSESSEE ALLUDES TO THE RBI/NABARD GUIDELINES, WHICH ARE TO BE MANDATORILY FOLLOWED. THE SAME, IN VIEW OF THE AO, WOULD NOT CONVERT THE PROV ISION AS TOWARD AN EXISTING LIABILITY, ONLY IN WHICH CASE WOULD THE PROVISION B E DEDUCTIBLE U/S. 37(1), QUOTING FROM THE BOARD INSTRUCTION NO. 17/2008 DATED 26.11. 2008, QUALIFYING THAT A ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 4 PROVISION IN RESPECT OF UNCERTAIN OR CONTINGENT LIA BILITY, WHICH HAD NOT ACCRUED, WOULD NOT QUALIFY FOR DEDUCTION. IN APPEAL, THE ASS ESSEE FOUND FAVOUR WITH THE LD. CIT(A) ON THE BASIS THAT THE PROVISION, THOUGH AGAI NST STANDARD ASSETS, IS YET A PROVISION FOR BAD AND DOUBTFUL DEBTS AND, THEREFORE , GOVERNED BY SECTION 36(1) (VIIA), WHICH ADMITS DEDUCTION AT SEVEN AND A HALF PER CENT. OF THE TOTAL INCOME (BEFORE MAKING ANY DEDUCTION UNDER THIS CLAUSE AND CHAPTER VIA), WITH THE SAID LIMIT BEING NOT BREACHED IN THE INSTANT CASE. 8. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE FIND NO INFIRMITY IN THE IMPUGNED ORDER. THE AO SHALL COMPUTE THE DEDUCTION U/S. 36(1)(VIIA) INCLUDING THE IMPUGNED D ISALLOWANCE, AND WHERE THE TOTAL DEDUCTION DOES NOT EXCEED THE STATUTORY LIMIT THERE-UNDER, NO DISALLOWANCE COULD BE MADE. HERE IT MAY ALSO BE RELEVANT TO STAT E THAT SECTION 36(1)(VIIA) IS APPLICABLE TO COOPERATIVE BANKS (OTHER THAN THOSE E XCLUDED) W.E.F. 01.04.2007, I.E., AY 2007-08 ONWARDS. THE ASSESSEE HAS NOT BEEN SHOWN TO US AS FALLING WITHIN THE EXCLUDED CATEGORIES, WHICH WE NOTE TO BE THE SAME A S THOSE SAVED U/S. 80P(4). AS SUCH, CLEARLY EITHER OF THE TWO SECTIONS, I.E., 36( 1)(VIIA) OR SECTION 80P, SHALL APPLY TO THE ASSESSEE, WHO CANNOT TAKE AN AMBIVALENT STAN D WITH REGARD TO ITS STATUS. THE PARAMETERS OF A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, I.E., TWO SPECIFIED EXCLUDED CATEGORIES, ARE WELL SETTLED. THE AO SHALL ACCORDINGLY EXAMINE THE MATTER, AND DECIDE THE SAME ISSUING DEFINITE FINDINGS OF FACT, OF COURSE, AFTER HEARING THE ASSESSEE IN THE MATTER. IN FACT, AS IT APPEARS, THE ASSESSEE HAS NO T CLAIMED DEDUCTION U/S. 80P, FOR OTHERWISE THIS ITSELF WOULD HAVE BEEN THE SUBJECT M ATTER OF DISPUTE BETWEEN THE PARTIES, WITH THE AO CLEARLY ADVERTING TO SECTION 8 0P(4), EXCLUDING THE ASSESSEE FROM THE PURVIEW OF SECTION 80P. WHY, IN THAT CASE, I.E., OF THE ASSESSEE BEING CONSIDERED AS ELIGIBLE FOR DEDUCTION U/S. 80P EVEN FOR AY 2007-08 ONWARDS, ALL THE OTHER ISSUES WOULD GET SUBSUMED THEREIN AS THE ASSE SSEES ENTIRE INCOME FROM BANKING BUSINESS WOULD GET DEDUCTED U/S. 80P(1) R.W .S. 80P(2)(A)(I). AS SUCH, IT IS ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 5 RATHER THE AO WHO APPEARS TO BE AMBIVALENT BY DENYI NG THE ASSESSEE DEDUCTION U/S. 36(1)(VIIA) AS WELL AS U/S. 80P. WE DECIDE ACC ORDINGLY. 6. IN VIEW OF ABOVE, RESPECTIVELY FOLLOWING THE DEC ISION IN ASSESSEES OWN CASE, THIS GROUND OF REVENUE IS ACCORDINGLY DISMISSED. 7. GROUND NO. 2 RELATE TO DELETING THE ADDITION OF RS.6,00,75,946/- MADE ON ACCOUNT OF STANDARD LOAN DISALLOWED BY THE AO. 8. THE LD. CIT-DR RELIED ON THE ORDER OF AO. 9. PER CONTRA THE LD COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THIS ISSUE IS COVERED BY PARA 14 AND 15 AT PAGE 16 TO21 BY THE OR DER ITAT IN ASSESSEES OWN CASE IN ITA NO. 47/ASR/2011 AND ITA NO. 93/ASR/2011 DATED 16.07.2018. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND FIND TH AT THE ISSUE IS COVERED AGAINST THE REVENUE BY THE ORDER OF ITAT VIDE PARA 14 TO 15 VIDE ORDER OF ITAT DATED 16.07.2018 (SUPRA) WHICH ARE REPRODUCED AS UN DER: 14. GROUND 4 IS IN RESPECT OF CLAIM OF RS.1.43 LAC S (REFER PARA 13 ABOVE). THE SAME WAS DENIED ON THE BASIS THAT THE SAID PROVISIO N COULD NOT BE REGARDED AS A PROVISION FOR BAD AND DOUBTFUL DEBTS. THE ASSESSEE S CLAIM IS THAT THE INTEREST, BOOKED AS INCOME FOR FY. 2006-07 (AY 2007-08), BEIN G NOT REALIZED EVEN DURING FY. 2007-08 (AY 2008-09), WAS REVERSED. THAT IS, CONSTI TUTES REVERSAL OF INTEREST, SO THAT IT WOULD NOT, AS STATED BY THE LD. CIT(A), STA ND TO BE DEBITED TO THE PROVISION ACCOUNT. 15. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD. THE ASSESSEE BANK, FOLLOWING ACCRUAL SYSTEM OF ACC OUNTING, HAD BOOKED INCOME FOR AY 2007-08 EVEN AS THE INTEREST WAS PEND ING REALIZATION. THE SAME HAVING NOT BEEN REALIZED EVEN DURING AY 2008-09, TH E CURRENT YEAR, THE SAME WAS ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 6 REVERSED. THE ASSESSEE HAS ITSELF CLAIMED THIS REVE RSAL AS A PROVISION FOR BAD AND DOUBTFUL DEBTS. IF THE INCOME HAD BEEN, AS CLAIMED, ALREADY BOOKED AS INCOME (FOR AY 2007-08), ALL THAT NEEDS TO BE DONE IS TO THE DE BIT THE PROVISION (FOR BAD AND DOUBTFUL DEBTS) ACCOUNT, WITH A CORRESPONDING CREDI T TO THE RESPECTIVE DEBTORS ACCOUNT/S, WHOSE ACCOUNT/S WOULD HAVE BEEN DEBITED ON CHARGE OF INTEREST FOR FY. 2006-07 (AY 2007-08). WE FIND NOTHING WRONG IN THE ADJUDICATION BY THE LD. CIT(A), NOR COULD THE LD. AR DURING HEARING POINT O UT TO ANY. THIS DECIDES ASSESSEES GROUND 4. THIS, HOWEVER, YET, LEAVES ANOTHER ASPECT OF THE M ATTER. THE ASSESSEE HAS, APART FROM THE PROVISION OF RS.2 LACS (AS AT PARA 1 3 ABOVE), MADE FURTHER PROVISION OF RS.850 LACS U/S. 36(1) (VIIA), AS UNDE R, I.E., AT A TOTAL OF RS.852 LACS: (A) PROVISION MADE AGAINST STANDARD ASSETS RS.100 LACS (B) PROVISION AGAINST RURAL ADVANCES RS.750 LACS RS.850 LACS THE PROVISION U/S. 36(1)(VIIA) AT THE RATE OF 7.5% OF INCOME WORKING TO RS.98.31 LACS, THE LD. CIT(A) RESTRICTED THE DEDUCTION FOR T HE PROVISION FOR BAD AND DOUBTFUL DEBTS THERETO, THUS, IN EFFECT, DIRECTING A DISALLO WANCE FOR RS.1.69 LACS (RS.100 LACS-RS.98.31 LACS). THE ASSESSEES CASE (ALSO REFE R GROUND 2) IS THAT THE PROVISION U/S. 36(1)(VIIA) SHOULD BE CONSIDERED AT RS.850 LAC S, I.E., BY INCLUDING RS.750 LACS, WHICH IS WITHIN THE PRESCRIBED LIMIT OF 10% OF THE AGGREGATE AVERAGE ADVANCES MADE BY RURAL BRANCHES OF THE BANK (COMPUTED IN THE PRESCRIBED MANNER). THAT IS, THERE IS NO SCOPE FOR CONSIDERING THE PROVISION (U/ S. 36(1)(VIIA)) DISJUNCTIVELY. AND THAT BOTH THE COMPONENTS OF 36(1)(VIIA) MUST BE CON SIDERED TOGETHER IN-AS-MUCH AS IT IS A SINGLE PROVISION, ALBEIT COMPRISING OF TWO PARTS, EACH OF WHICH IS TO BE COMPUTED SEPARATELY. AS LONG AS THEREFORE THE TOTAL PROVISION IS WITHIN THE TOTAL AMOUNT COMPUTED AS PRESCRIBED U/S. 36(1)(VIIA), NO DISALLOWANCE COULD BE MADE ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 7 WITH REFERENCE TO EITHER COMPONENT. IN OUR CONSIDER ED VIEW, FIRSTLY, THE CRYSTALLIZATION OF THE AMOUNT OF PROVISION U/S. 36( 1)(VIIA), IN-SO-FAR AS IT IS BASED ON ASSESSED INCOME, SHALL HAVE TO AWAIT THE FINALIZ ATION OF AND, THUS, COULD ONLY BE AFTER GIVING THE EFFECT TO THE ASSESSEES OTHER CLA IMS (OR COUNTER CLAIMS), I.E., IN APPEAL PROCEEDINGS. ON MERITS, THE ASSESSEE HAS AGG REGATED THE PROVISION INTO ITS TWO CONSTITUENTS, OPENING AND MAINTAINING SEPARATE (PROVISION) ACCOUNTS FOR EACH OF THEM, AS IS INCUMBENT UPON IT. THIS IS AS THOUGH EACH OF THE TWO LIMBS IS, IN EFFECT, A PROVISION FOR BAD AND DOUBTFUL DEBTS, THE DEDUCTION FOR THE SAME IS TO BE MADE WITH REFERENCE TO THE UPPER LIMIT FOR EACH OF THE TWO LIMBS, DEFINED SEPARATELY AS, NOT EXCEEDING I.E., THE SPECIFIED PERCENTAGE OF TOTAL INCOME IN ONE CASE, AND OF THE AGGREGATE RURAL BRANCH ADVANCES FO R THE OTHER. EACH OF THE TWO COMPONENTS WOULD THEREFORE HAVE TO BE RECKONED SEPA RATELY, AND NO DISALLOWANCE COULD BE MADE WHERE EACH OF THE TWO COMPONENTS DOES NOT EXCEED THE LIMITS SPECIFIED THERE-FOR. IT DOES NOT MEAN THAT THE PROV ISION ALREADY MADE IN ACCOUNTS IS TO BE DISTURBED TO ACCOMMODATE OTHER PROVISION, I.E., ADJUST THE PROVISION ACCOUNT, WHERE IN EXCESS (AS BY RS.1.69 LACS QUA TH E INCOME BASED PROVISION IN THE INSTANT CASE), WITH THAT WHERE IT IS SHORT. WE SAY SO AS THE SECTION DOES NOT SPECIFY THE AMOUNT OF DEDUCTION PER SE, BUT PERMITS THE DED UCTION IN RESPECT THEREOF UP TO A PARTICULAR SUM. AS SUCH, AS ALONG AS THE LIMIT, S PECIFIED SEPARATELY, WHICH IS THE REASON FOR OUR STATING OF THE ASSESSEE BEING REQUIR ED TO MAINTAIN TWO PROVISION ACCOUNTS, IS NOT BREACHED, NO DISALLOWANCE COULD BE MADE. PER CONTRA, TO THE EXTENT IT IS, DISALLOWANCE FOR THE EXCESS CLAIM WOU LD FOLLOW. IT MAY BE ARGUED THAT THE ASSESSEE COULD, IN THAT CASE, OPEN A SINGLE ACC OUNT WHICH WOULD MAKE THE ADJUSTMENT AFORESAID, I.E., TRANSFER FROM ONE PROVI SION ACCOUNT TO ANOTHER, UNNECESSARY. THE TOTAL PROVISION MADE EACH YEAR WOU LD STAND TO BE RECKONED WITH REFERENCE TO THE SUM OF THE TWO LIMBS, AND AS LONG AS THE AGGREGATE OF THE TWO, I.E., 7.5% OF THE CURRENT YEARS INCOME AND 10% OF THE AG GREGATE RURAL ADVANCES, IS NOT BREACHED, NO DISALLOWANCE COULD BE CALLED FOR. THE ARGUMENT NEEDS ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 8 EXAMINATION. AS AFORE-STATED, EACH OF THE TWO LIMBS , NEVERTHELESS, REPRESENT A PROVISION U/S. 36(1)(VIIA). THIS, HOWEVER, WOULD RE QUIRE US TO CONSIDER AS TO IF THE PROVISION COMPONENT RECKONED ON THE BASIS OF ALL RU RAL BRANCH ADVANCES IS TO BE RECKONED ON A YEAR-WISE BASIS OR THE PROVISION ALRE ADY CREDITED IN ACCOUNTS IS TO BE TAKEN INTO ACCOUNT, I.E., IF A PROVISION FOR RS. 10 LACS (SAY) STANDS ALREADY MADE AND ALLOWED FOR AN EARLIER YEAR (AY 2007-08, SAY), WOULD THE ASSESSEE BE ELIGIBLE FOR ANOTHER DEDUCTION OF RS.10 LACS QUA RURAL ADVAN CES ASSUMING, FOR THE SAKE OF SIMPLICITY, NO INCREASE IN THE RURAL ADVANCES DURIN G THE PREVIOUS YEAR RELEVANT TO AY 2008-09. THIS COULD BE EXTRAPOLATED FOR EACH SUC CEEDING YEAR. IT DOES NOT APPEAR TO BE SO, I.E., THAT THE PROVISION ALREADY M ADE WOULD HAVE TO BE TAKEN INTO ACCOUNT. THIS IS AS, WHERE NOT SO, THE AGGREGATE PR OVISION QUA RURAL ADVANCES WOULD, IN TIME, EXCEED HUNDRED PER CENT OF SUCH ADV ANCES, I.E., AS OUTSTANDING AT THE END OF THE RELEVANT YEAR, AND WHICH CANNOT BE. THE PROVISION, IT NEEDS TO BE APPRECIATED, IS AGAINST AN ASSET, I.E., RECOGNIZES THE RISK ASSOCIATED WITH ITS REALISABILITY AND, THEREFORE, IS VALID ONLY WITH RE FERENCE TO THE EXTANT ASSETS, I.E., AS OBTAINING AT THE RELEVANT TIME. THE PROVISION AS ON 31.03.2008 (ASSET) WOULD THEREFORE HAVE TO BE RECKONED WITH REFERENCE TO THE ADVANCES (BY RURAL BRANCHES OF THE BANK, SPEAKING IN THE CONTEXT OF SECTION 36(1)( VIIA)) AS ON 31.03.2008. THE SAID PROVISION MAY INCLUDE THAT MADE DURING THE EARLIER YEARS, I.E., WHERE NOT REVERSED, WHICH THUS WOULD HAVE TO BE TAKEN INTO ACCOUNT WHIL E COMPUTING THE UPPER LIMIT SPECIFIED QUA RURAL ADVANCES U/S. 36(1)(VIIA). AND IN WHICH CASE, THEREFORE, THE PROVISION BASED ON INCOME (FOR EACH YEAR U/S. 36(1) (VIIA) WOULD HAVE TO BE MADE, ACCOUNTED FOR AND RECKONED (FOR THE BREACH OF THE L IMIT SPECIFIED IN ITS RESPECT) SEPARATELY. THE ARGUMENT AFORESAID APPEALING AT FIR ST BLUSH, DOES NOT HOLD. AT THIS STAGE, WE MAY REFER TO THE REVENUES GROUN D NO. 2 (FOR AY 2008-09, IN ITA NO. 399/ASR/2011). THE AO REGARDING THE ENTI RE PROVISION OF RS.852 LACS BY THE ASSESSEE AS AGAINST STANDARD LOANS, EFFECTED AN ADDITION FOR THE SAME, I.E., RS.852 LACS. THE LD. CIT(A), WHILE CONFIRMING DISAL LOWANCE OF RS.2 LACS (AGITATED ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 9 BY THE ASSESSEE PER ITS APPEAL), REGARDING THE BALA NCE RS. 850 LACS AS IN EXCESS BY RS.1.69 LACS, ALLOWED THUS, IN EFFECT, A RELIEF OF RS.848.31 LACS, WHICH THE REVENUE CONTESTS PER ITS GROUND 2. EVEN IF AGAINST STANDARD ASSETS, WHY COULD NOT THE PROVISION BE REGARDED AS A PROVISION FOR BAD AND DO UBTFUL DEBTS. A PROVISION, THOUGH NORMALLY IN-ADMISSIBLE IN COMPUTING INCOME U /S. 28, IS ALLOWED AS SPECIAL MEASURE (IN COMPUTING TAXABLE INCOME) FOR BANKS, IN CLUDING COOPERATIVE BANKS, IN VIEW OF THE NATURE OF THE BUSINESS. WHILE ONE COMPO NENT OF THE PROVISION IS BASED ON INCOME, SO THAT IT WOULD NECESSARILY HAVE TO BE A REGULAR COMPONENT, I.E., FOR EACH YEAR, BASED ON ITS INCOME, THE OTHER PART IS B ASED ON THE AGGREGATE (AVERAGE) ADVANCES BY RURAL BRANCHES, LIMIT FOR WHICH STANDS SEPARATELY ALREADY SPECIFIED. THE PROVISION MADE DURING THE CURRENT YEAR SHALL BE ALLOWED SUBJECT TO THE TOTAL PROVISION (I.E., INCLUDING THAT ALREADY MADE) NOT E XCEEDING THE LIMITS SPECIFIED IN ITS RESPECT. TO CONCLUDE, THE ISSUE OF DISALLOWANCE OF RS.1.69 LACS SUSTAINED BY LD. CIT(A) AND RS.848.31 LACS DELETED BY HIM, AND QUA W HICH THE OPPOSING SIDES ARE IN APPEAL, ARE CORRELATED. THIS ALSO EXPLAINS OUR C ONSIDERING THE TWO TOGETHER, AS ALSO APPARENT FROM THE SAID CONSIDERATION. HOWEVER, WHILE ARGUMENTS WERE MADE IN RESPECT OF THE ASSESSEES APPEAL, THE REVENUES APPEAL WAS LARGELY CONSIDERED AS CONSEQUENTIAL. IN THE ABSENCE OF PROPER DELIBERA TION, WE DO NOT CONSIDER IT PROPER TO CONCLUDE THE TWO (CORRELATED) ISSUES. OUR FOREGOING OBSERVATIONS NOTWITHSTANDING, WHICH MAY WELL BE RELIED UPON BY E ITHER SIDE IN THE SET ASIDE PROCEEDINGS, WE ONLY CONSIDER IT PROPER THAT THE MA TTER IS RESTORED TO THE FILE OF THE AO FOR ADJUDICATION AFRESH AFTER ALLOWING THE ASSES SEE A REASONABLE OPPORTUNITY OF PRESENTING ITS CASE, IN ACCORDANCE WITH LAW. NO SID E, WE MAY THOUGH ADD, BE CONSTRAINED BY OUR OBSERVATIONS, SO THAT IS AN OPEN SET ASIDE. GROUND 2 OF THE ASSESSEES AND THE REVENUES APPEAL IS DISPOSED OF ACCORDINGLY. ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 10 IN THE LIGHT OF THE ABOVE GROUND IS RESPECTIVELY FO LLOWING THE DECISION OF ITAT, WE DISMISSED THE APPEAL OF THE REVENUE AND THIS GROUND . 11. IN THE RESULT, THE APPEAL FOR AY 2009-10 OF THE REVENUE IS DISMISSED. ITA NO.121/ASR/2013 (AY 2009-10) BY THE ASSESSEE 12. GROUND NO. 1 TO 5 ARE RELATES AND CONFIRMING TH E ADDITION OF RS.2,17,18,237/- ON ACCOUNT OF LOSSES OF FRAUD COMMITTED AT MAIN BRA NCH, HOSHIARPUR AND RS.2,58,57,709/- ON ACCOUNT OF CONTRA ENTRY OF INTE REST NOT DECIDED BY THE CIT(APPEAL). THE LD. COUNSEL SUBMITTED THAT THE CIT (APPEAL) HAS ALLOWED PARTLY APPEAL IN RESPECT OF DISALLOWANCE OF RS.6,0075,946/ - FOR PROVISION MADE AGAINST STANDARD LOANS OF RS.25 LACS AND ADVANCES OF RURAL BRANCHES AT RS. 1 CRORE BY FOLLOWING THE DECISION OF HIS PREDECESSOR AND CIT( APPEAL) FOR AY 2008-09. HOWEVER, THE CIT(APPEAL) DID NOT ADJUDICATE THE GRO UND RELATING TO PROVISION AGAINST FRAUD OF RS.2.17 CRORES AND INTEREST PAID T O HEAD OFFICE OF RS.2.58 CRORES U/S 36(1)(VIIA) ON THE GROUND THAT NO SEPARATE GROUNDS ARE TAKEN FOR THE SAME IN APPEAL NOR THE ISSUE OF DISALLOWANCES ARISE FROM THE ASSES SMENT ORDER ALSO, HENCE THE ADDITION OF RS.4,75,75,946/- BEING DISALLOWANCE NOT COVERED U/S 36(1)(VIIA) WAS NOT DECIDED. THE LD. COUNSEL DRAW OUR ATTENTION TO PARA 4 OF THE ASSESSMENT ORDER WHEREIN BY ADOPTING THE FIGURES OF RS.6,00,75,946/- AS PROVISION AGAINST STANDARD LOANS DEALT WITH THE ASSESSEES REPLY DATED 10.10.2 011, FURNISHING HEAD-WISE BREAK UP OF THE SAID AMOUNT OF RS.6,00,75,946/- ONLY QUA THE TWO AMOUNTS OF RS.25 LACS BEING PROVISION AGAINST STANDARD LOANS AND RS. ONE CRORE BEING PROVISION AGAINST RURAL ADVANCES, THEREFORE HIS ACTION TO MAKE ADDITI ON, BEYOND THE SAID TWO AMOUNTS, WITHOUT CONFIRMING THE ASSESSEE, WAS APPARENTLY ERR ONEOUS, NOT WARRANTING CONFIRMATION FROM THE LD. CIT(APPEAL) ALSO. THEREFO RE IT WAS REQUESTED BEFORE US THAT THE ISSUE MAY DECIDED TO THE FILE OF THE AO FO R REEXAMINATION ON THIS POINT. ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 11 13. PER CONTRA THE LD. CIT-DR RELIED ON THE CIT(APP EAL). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT WHILE CONSIDERING THE FIGURE O F RS.6,00,75,946/- AS PROVISION AGAINST THE STANDARD LOANS, THE ASSESSEE HAS SUBMIT TED A REPLY VIDE LETTER DATED 10.10.2011 GIVING THE BREAK UP OF THE DETAILS OF RS .6,00,75,946/- AS UNDER: PARA NO. 17. DETAILS OF PROVISIONS MADE AGAINST STANDARD LOANS/R URAL ADVANCES & OTHER CHARGES TO PROFIT & LOSS ACCOUNT. THE DETAILS OF RS.60075946.42 IS AS UNDER:- S. NO. PARTICULARS AMOUNT IN RS. --------------------------------------------------- ----------------------------------------------- A) PROVISION MADE AGAINST RURAL ADVANCES AS PER INCOME TAX ACT 10000000.00 UNDER SECTION 36(I) (VIIA). B) PROVISION MADE AGAINST STANDARD LOAN 250000 0.00 C) PROVISION MADE AGAINST MAIN B.O., FRAUD 21718 237.00 D) INTEREST PAID TO MAIN BRANCH HOSHIARPUR 25857 709.42 ---------------- TOTAL 60075946.42 WE FIND THAT WHILE DISALLOWING THE TOTAL AMOUNT OF RS.6,00,75,946/-. THE AO HAS ALSO INCLUDED THE AMOUNT OF RS.2.17 CRORES BEING PR OVISIONS MADE AGAINST MAIN BRANCH OFFICE OF FRAUD AND RS.2.58 CRORES BEING INT EREST PAID TO MAIN BRANCH HOSHIARPUR WITHOUT CONFRONTING THE ASSESSEE ON THIS ISSUE. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THIS ISSUE IS SET ASIDE TO THE FILE OF THE AO FOR EXAMINATION ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 12 AND RECONSIDERATION OF THE SAME AFTER AFFORDING A R EASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN VIEW OF THIS GROUND OF AP PEAL IS SET ASIDE TO THE FILE OF THE AO IN ENTIRETY FOR RECONSIDERATION OF THE DISALLOWA NCES MADE AT RS.6,00,75,946/- ACCORDINGLY. 15. GROUND NO. 6 RELATES TO CONFIRMING THE ADDITION OF RS.8,39,825/- MADE BY THE AO BEING DISALLOWANCE OF FUEL AND HIRE CHARGES DEBI TED TO THE P&L ACCOUNT. 16. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED AGAINST HIM BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE VIDE PARA 4 AND 5 PAGE 8 TO11 OF ITAT ORDER DATED 16.07.2018. T HE LD. CIT-DR HAS ALSO AGREED FOR THE SAME. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ITAT IN ITA NO. 47, 93/ASR /2011 DATED 16.07.2018 HAS GIVEN HIS FINDING ON THE ABOVE ISSUE AS PER PARA 4 AND 5 AT PAGE 8 TO 11 WHICH IS REPRODUCED AS UNDER: 4. THE NEXT ISSUE, PER GD. 3, IS IN RESPECT OF DIS ALLOWANCE OF FUEL AND HIRE CHARGES U/S. 37(1) OF THE ACT. THE ASSESSEE-BANK WA S DURING ASSESSMENT PROCEEDINGS ASKED TO EXPLAIN THE BUSINESS PURPOSE O F THE SAID EXPENDITURE, SUFFERED AND CLAIMED AT RS.5,89,875/- FOR THE CURRE NT YEAR, IN-AS-MUCH AS THE SAME STOOD INCURRED IN RESPECT OF THE ASSESSEES VEHICLE S USED BY THE DEPARTMENT OF COOPERATIVE SOCIETIES, PUNJAB. THE LETTER BY THE RE GISTRAR OF COOPERATIVE SOCIETIES, GOVERNMENT OF PUNJAB, ITSELF CLARIFIES T HAT THE EXPENDITURE WAS WITHOUT ANY LEGAL MANDATE FOR THE SAME, AND NEITHER COULD T HE SAME BE SAID TO BE INCURRED FOR ASSESSEES BUSINESS. THE DISALLOWANCE BEING AFF ECTED THUS, STOOD CONFIRMED IN FIRST APPEAL FOR PRINCIPALLY THE SAME REASONS. THER E IS NOTHING IN THE CHARTER OF EITHER THE REGISTRAR OF COOPERATIVE SOCIETIES OR OF THE ASSESSEE-BANK, FOR THE ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 13 FORMER TO REQUIRE THE ASSESSEE TO BEAR A PART OF TH E ADMINISTRATIVE BURDEN OF ITS OFFICE. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL . 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE FACTS ARE NOT IN DISPUTE. THE LAW PER SECTION 37(1), UNDE R WHICH SECTION THE DEDUCTION FOR EXPENDITURE IS BEING CLAIMED, OR IS OTHERWISE A LLOWABLE, MANDATES DEDUCTION OF ANY EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF ITS BUSINESS BY AN ASSESSEE. AS IS WELL-SETTLED, THE WORD WHOLLY IN THE SAID EXPRESSION REFERS TO ITS QUANTUM, WHILE EXCLUSIVELY THEREIN REFERS TO THE OBJECT OR PURPOSE FOR INCURRING THE EXPENDITURE. THE OTHER CONDITIONS, NO T APPLICABLE IN THE INSTANT CASE, ARE THAT THE EXPENDITURE SHOULD NOT BE IN THE NATUR E OF CAPITAL OR PERSONAL EXPENDITURE OR OF THE NATURE REFERRED TO IN SECTION S 30 TO 36. THE SCOPE AND AMBIT OF THE WORD WHOLLY AND EXCLUSIVELY STANDS EXPLAIN ED BY THE APEX COURT PER ITS DECISIONS, INTERALIA, IN SASSOON J. DAVID & CO. P. LTD. V. CIT [1979] 118 ITR 261, 275 (SC); SRI VENKATA SATYANARAYNA RICE MILL CONTRA CTORS CO. V. CIT [1997] 223 ITR 101 (SC); CIT (ADDL.) V. KUBER SINGH BHAGWANDAS [1979] 118 ITR 379, 386- 88 (MP)(FB); CIT V. SALES MAGNESITE (P.) LTD. [1995 ] 214 ITR 1 (BOM). AGAIN, THE EXPRESSION FOR THE PURPOSE OF THE BUSINESS, A S EXPLAINED IN CIT V. MALLAYALAM PLANTATIONS LTD. [1964] 53 ITR 140, 150 (SC), EXTENSIVELY FOLLOWED, IS THAT THE SCOPE OF THE SAID EXPRESSION IS WIDER THAN THAT OF THE EXPRESSION FOR THE PURPOSE OF EARNING PROFITS, OBTAINING IN THE ANALO GOUS PROVISION (S. 10(2) (XV)) OF THE 1922 ACT. THE SAME WOULD INCLUDE NOT ONLY DAY T O DAY RUNNING OF THE BUSINESS BUT ALSO RATIONALIZATION OF ITS ADMINISTRATION AND MODERNIZATION OF MACHINERY; IT MAY INCLUDE MEASURES FOR THE PRESERVATION OF THE BU SINESS OR FOR THE PROTECTION OF THE ASSETS AND PROPERTY THEREOF FROM EXPROPRIATION COERCIVE PROCESS OR ASSERTION OF HOSTILE TITLE; IT MAY COMPREHEND MANY OTHER ACTS INCIDENTAL TO THE CARRYING ON OF A BUSINESS. IN SHORT, THE WORDS CONNOTE COMMERCIAL EXPEDIENCY, CONSIDERED FROM A BUSINESSMAN POINT OF VIEW AND, THEREFORE, WOULD N OT INCLUDE THE CONDITION OF BEING INCURRED NECESSARILY. IN THE PRESENT CASE, HOWEVER, WE ARE UNABLE TO FIND ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 14 ANY COMMERCIAL EXPEDIENCY. THE ASSESSEES ONLY EXPL ANATION, AS WE SEE IT, AND EVEN AS PUT FORTH BY THE LD. COUNSELS BEFORE US, IS THAT THE REGISTRAR OF SOCIETIES BEING A REGULATORY BODY, THE ASSESSEE COULD NOT REF USE TO ACCEDE TO ITS PRESCRIPTIONS FOR ALL THE COOPERATIVE BANKS MEETING THE MAINTENANCE COST OF THE VEHICLES BEING USED BY ITS OFFICERS. ON BEING ASK B Y THE BENCH AS TO HOW COULD IT BE SAID THAT THE ASSESSEE COULD NOT REFUSE IN THE ABSE NCE OF ANY LEGAL OR CONTRACTUAL OBLIGATION, NO SATISFACTORY ANSWER WAS FORTHCOMING. IN FACT, THE REGISTRAR OF COOPERATIVE SOCIETIES (ROCS) IS A REGISTERING AUTHO RITY, AND NOT A REGULATORY AUTHORITY. IT IS THE NABARD (OR RBI) UNDER WHOSE SU PERINTENDENCE, DIRECTION AND CONTROL, I.E., THE BANKING POLICY AS WELL AS THE PO LICY FRAMEWORK IS CONCERNED, THAT IS THE REGULATORY BODY FOR THE ASSESSEE-BANK. FURTH ER, EVEN SO, THE USE OF THE VEHICLES BEING FOR THE PURPOSES OF ITS OFFICERS, IT IS THE PURPOSE OF THE ROCS FOR WHICH THE EXPENDITURE STANDS INCURRED, AND NOT FOR THE ASSESSEES BUSINESS. IN FACT, EVEN THE LETTER DATED 15.09.2008 BY THE ROCS, REFER RED TO DURING HEARING (PB PGS. 40-41), EVEN AS POINTED OUT BY THE LD. DR, STATES O F THE NEED TO CONTROL THE EXPENDITURE IN VIEW OF ITS MISUSE, BY FIXING A QUAN TITATIVE CAP IN TERMS OF LITRES OF FUEL PER MONTH. IT DOES NOT POINT OUT THE PROVISION /PRESCRIPTION UNDER WHICH THE CONTRIBUTION WAS BEING REQUISITIONED, WHICH IS ONLY IN THE NATURE OF AN EXACTION, APART FROM THE FACT THAT IT DOES NOT SERVE ANY BUSI NESS PURPOSE OF THE ASSESSEE. WE MAY HERE REFER TO THE DECISION IN LAKSHMIJI SUGAR M ILLS CO. PVT. LTD. V. CIT [1971] 82 ITR 376 (SC). THE ASSESSEE IN THAT CASE E MPHASIZED THE STATUTORY OBLIGATION UNDER WHICH THE CONTRIBUTION (FOR CONSTR UCTING ROADS) WAS MADE BY IT, POINTING OUT TO THE ELEMENT OF COMPULSION THEREIN. THE APEX COURT DID NOT, HOWEVER, STOP THEREAT. IT PROCEEDED TO EXAMINE THE PURPOSE FOR WHICH THE CONTRIBUTION, I.E., FOR THE DEVELOPMENT OF ROAD, WA S BEING DEFRAYED BY THE ASSESSEE. THE EXPENDITURE WAS ALLOWED, FINDING IT TO HAVE BEE N INCURRED TO FACILITATE THE TRANSPORTATION OF SUGARCANE. THE EXPENDITURE WAS TH US INCURRED ESSENTIALLY FOR THE BENEFIT OF THE BUSINESS, WHICH GOT AN ADVANTAGE OF AN ENDURING BENEFIT FOR ITSELF. IN ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 15 OTHER WORDS, THE (STATUTORY) OBLIGATION WAS BY ITSE LF NOT SUFFICIENT IF THE PURPOSE OF THE EXPENDITURE WAS NOT FOR THE BENEFIT OF OR THE R UNNING OF THE ASSESSEES BUSINESS. IN THE INSTANT CASE, WE FIND NEITHER OF THESE TWO C ONDITIONS BEING SATISFIED; THE FORMER BEING IN FACT INCIDENTAL IN-AS-MUCH AS A VOL UNTARY EXPENDITURE, SHOWN TO BE FOR THE PURPOSE OF THE ASSESSEES BUSINESS, WOULD Q UALIFY FOR DEDUCTION. IN OUR CONSIDERED VIEW, THEREFORE, THE IMPUGNED EXPENDITUR E DOES NOT MEET THE TEST OF SECTION 37(1), AND STANDS RIGHTLY DISALLOWED BY THE REVENUE. WE DECIDE ACCORDINGLY, AND THE REVENUE SUCCEEDS THEREFORE RESPECTIVELY FOLLOWING THE ABOVE ISSUE IS DECIDED AGAINST THE ASSESSEE. 18. IN THE RESULT, THE APPEAL FOR AY 2009-10 OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 700/ASR/2014 (AY 2011-12) BY THE REVENUE 19. GROUND NO. 1 AND 2 RELATES TO DELETING THE ADDI TION OF RS.35,67,180/- MADE ON ACCOUNT OF DIVIDEND TAX. 20. WE HAVE HEARD THE RIVAL SUBMISSIONS AND FIND TH AT THE ISSUE IS COVERED AGAINST THE REVENUE BY THE DECISION OF TRIBUNAL FOR AY 2007-08 IN ITA NO. 93/ASR/2011 AY 2007-08 VIDE PARA 6 OF THE ITAT ORDE R. WE FURTHER FIND THAT THIS ISSUE IS DECIDED AGAINST THE REVENUE BY US IN APPEA L FOR AY 2009-10 AS DISCUSSED IN EARLIER PART OF THIS ORDER IN ITA NO. 120/ASR/20 13, THEREFORE, OUR FINDINGS HIS GIVEN THEREIN WOULD APPLY FOR THIS GROUND ALSO FOR THIS YEAR ACCORDINGLY FOLLOWING THE SAME. THIS GROUND OF APPEAL OF THE REVENUE IS A CCORDINGLY DISMISSED. 21. GROUND NO. 3 TO 4 RELATES TO DELETING THE ADDIT ION OF RS.2,25,00,000/- WHICH WAS MADE BY THE AO REJECTING THE CLAIM OF THE ASSES SEE ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBT. ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 16 22. BRIEFLY STATED FACT ARE THAT THE AO MADE AN ADD ITION OF RS.2.25 CROES BY DISALLOWING PROVISION FOR BAD AND DOUBTFUL DEBT AGA INST ADVANCES MADE BY RURAL BRANCH ON THE PLEA OF CONTINGENT LIABILITY. THE AO CARRIED OUT THE MATTER BEFORE CIT(APPEAL) WHEREIN WRITTEN SUBMISSION FILED BY THE ASSESSEE WERE FORWARDED TO THE AO AND WHO VIDE HIS LETTER DATED 19.08.2014 SUB MITTED HIS REPORT AFTER CONSIDERING THE SAME. THE CIT(A) NOTED THAT THE AO HAS MADE IMPUGNED ADDITIONS LOOKING TO THE PAST HISTORY OF THE CASE AND ON THE OTHER HAND, THE ASSESSEE HAS SUBMITTED THAT SIMILAR ADDITION MADE IN AY 2007-08 AND 2008-09 BY THE AO HAS BEEN DELETED BY THE CIT(APPEAL) JALANDHAR. RESPECTI VELY FOLLOWING THE SAME, THE CIT(APPEAL) HAS DIRECTED TO DELETE THE ADDITIONS. 23. BEING AGGRIEVED THE REVENUE HAS FILED THIS APPE AL BEFORE THIS TRIBUNAL. THE LD. COUNSEL SUBMITTED THAT THE ISSUE IS COVERED BY THE ORDER OF TRIBUNAL IN ITA NO. 93/ASR/2011 FOR AY 2007-08 AND ITA NO. 399/ASR/2011 DATED 16.07.2018. 24. PER CONTRA THE LD. CIT-DR HAS AGREED WITH THE I SSUE IS COVERED BY THE DECISION OF TRIBUNAL VIDE PARA 7 & 8 OF ITA NO. 47/ ASR/2011 WHICH ARE REPRODUCED AS UNDER: 7. VIDE THE SECOND GROUND, THE REVENUE CONTESTS TH E DELETION OF THE DISALLOWANCE OF THE PROVISION ON STANDARD ASSETS, M ADE BY THE ASSESSEE-BANK AT THE RATE OF 0.25%, ON THE GROUND IT BEING ONLY A CO NTINGENT LIABILITY. THE ASSESSEE ALLUDES TO THE RBI/NABARD GUIDELINES, WHICH ARE TO BE MANDATORILY FOLLOWED. THE SAME, IN VIEW OF THE AO, WOULD NOT CONVERT THE PROV ISION AS TOWARD AN EXISTING LIABILITY, ONLY IN WHICH CASE WOULD THE PROVISION B E DEDUCTIBLE U/S. 37(1), QUOTING FROM THE BOARD INSTRUCTION NO. 17/2008 DATED 26.11. 2008, QUALIFYING THAT A PROVISION IN RESPECT OF UNCERTAIN OR CONTINGENT LIA BILITY, WHICH HAD NOT ACCRUED, WOULD NOT QUALIFY FOR DEDUCTION. IN APPEAL, THE ASS ESSEE FOUND FAVOUR WITH THE LD. CIT(A) ON THE BASIS THAT THE PROVISION, THOUGH AGAI NST STANDARD ASSETS, IS YET A ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 17 PROVISION FOR BAD AND DOUBTFUL DEBTS AND, THEREFORE , GOVERNED BY SECTION 36(1) (VIIA), WHICH ADMITS DEDUCTION AT SEVEN AND A HALF PER CENT. OF THE TOTAL INCOME (BEFORE MAKING ANY DEDUCTION UNDER THIS CLAUSE AND CHAPTER VIA), WITH THE SAID LIMIT BEING NOT BREACHED IN THE INSTANT CASE. 8. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE FIND NO INFIRMITY IN THE IMPUGNED ORDER. THE AO SHALL COMPUTE THE DEDUCTION U/S. 36(1)(VIIA) INCLUDING THE IMPUGNED D ISALLOWANCE, AND WHERE THE TOTAL DEDUCTION DOES NOT EXCEED THE STATUTORY LIMIT THERE-UNDER, NO DISALLOWANCE COULD BE MADE. HERE IT MAY ALSO BE RELEVANT TO STAT E THAT SECTION 36(1)(VIIA) IS APPLICABLE TO COOPERATIVE BANKS (OTHER THAN THOSE E XCLUDED) W.E.F. 01.04.2007, I.E., AY 2007-08 ONWARDS. THE ASSESSEE HAS NOT BEEN SHOWN TO US AS FALLING WITHIN THE EXCLUDED CATEGORIES, WHICH WE NOTE TO BE THE SAME A S THOSE SAVED U/S. 80P(4). AS SUCH, CLEARLY EITHER OF THE TWO SECTIONS, I.E., 36( 1)(VIIA) OR SECTION 80P, SHALL APPLY TO THE ASSESSEE, WHO CANNOT TAKE AN AMBIVALENT STAN D WITH REGARD TO ITS STATUS. THE PARAMETERS OF A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, I.E., TWO SPECIFIED EXCLUDED CATEGORIES, ARE WELL SETTLED. THE AO SHALL ACCORDINGLY EXAMINE THE MATTER, AND DECIDE THE SAME ISSUING DEFINITE FINDINGS OF FACT, OF COURSE, AFTER HEARING THE ASSESSEE IN THE MATTER. IN FACT, AS IT APPEARS, THE ASSESSEE HAS NO T CLAIMED DEDUCTION U/S. 80P, FOR OTHERWISE THIS ITSELF WOULD HAVE BEEN THE SUBJECT M ATTER OF DISPUTE BETWEEN THE PARTIES, WITH THE AO CLEARLY ADVERTING TO SECTION 8 0P(4), EXCLUDING THE ASSESSEE FROM THE PURVIEW OF SECTION 80P. WHY, IN THAT CASE, I.E., OF THE ASSESSEE BEING CONSIDERED AS ELIGIBLE FOR DEDUCTION U/S. 80P EVEN FOR AY 2007-08 ONWARDS, ALL THE OTHER ISSUES WOULD GET SUBSUMED THEREIN AS THE ASSE SSEES ENTIRE INCOME FROM BANKING BUSINESS WOULD GET DEDUCTED U/S. 80P(1) R.W .S. 80P(2)(A)(I). AS SUCH, IT IS RATHER THE AO WHO APPEARS TO BE AMBIVALENT BY DENYI NG THE ASSESSEE DEDUCTION U/S. 36(1)(VIIA) AS WELL AS U/S. 80P. WE DECIDE ACC ORDINGLY. ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 18 THEREFORE RESPECTIVELY FOLLOWING THE ABOVE ORDER, T HIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 25. IN THE RESULT, THE APPEAL OF THE REVENUE FOR AY 2011-12 IS DISMISSED. ITA NO. 156/ASR/2017 (AY 2013-14) BY THE ASSESSEE 26. GROUND NO. 1 RELATES TO SUSTAINING THE ADDITION OF RS.6,06,090/- FOR THE ALLEGED DEBIT OF SELF ASSESSMENT TAX TO P&L ACCOUNT , WHEN THE ASSESSEE HAD SUO MOTO ADDED BACK BY THE ASSESSEE WHILE FILING THE RE TURN. 27. THE AO NOTED THAT AN AMOUNT OF RS.6,06,090/- RE LATING TO SELF ASSESSMENT TAX PAID BY THE ASSESSEE FOR AY 2012-13 HAS BEEN POINTE D OUT BY THE AUDITOR, HENCE THE AO HAS DISALLOWED THE SAME. IN APPEAL THE CIT(APPEA L) HAS CONFIRMED THE SAME. 28. BEING AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THIS TRIBUNAL. THE LD. COUNSEL SUBMITTED THAT THE AMOUNT OF RS.6,06,090/- RELATES TO PAYMENT OF SELF ASSESSMENT TAX WHICH HAS ALREADY BEEN ADDED BACK BY THE ASSESSEE WHILE FILING THE RETURN OF INCOME AND SAME IS COVERED BY DISALLOWANC E OF RS.25,17,221/-. 29. PER CONTRA THE LD. CIT-DR RELIED ON THE LOWER A UTHORITIES. 30. WE HAVE HEARD THE RIVAL SUBMISSIONS AND FIND TH AT THE ASSESSEE HAS CONTENDED THAT THE AMOUNT OF RS.6,06,090/- HAS ALRE ADY BEEN ADDED BACK BY THE FILING RETURN OF INCOME, THEREFORE THIS ISSUE IS TO SET ASIDE TO THE FILE OF THE AO TO EXAMINE WHETHER THE SAID AMOUNT HAS ALREADY BEEN AD DED IN THE RETURN OF INCOME, IF SO NO ADDITION IS REQUIRED TO BE MADE ON THIS AM OUNT, IF NO THEN ADDITION MADE BY THE AO WOULD BE SUSTAINED. THIS GROUND OF APPEAL IS SET ASIDE TO THE FILE OF THE AO. 31. GROUND NO. 2 RELATES TO SUSTAINING THE ADDITION OF RS.25,17,221/- WHILE THE SAID AMOUNT HAS BEEN ADDED BACK BY THE ASSESSEE. ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 19 32. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT AS PER THE CLAIM OF THE ASSESS EE, THE AMOUNT OF RS. 25,17,221/- HAS ALREADY BEEN ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE, IF THAT IS SO, THEREFORE THIS ISSUE IS SET ASIDE TO THE FILE OF TH E AO FOR VERIFICATION, IF THE SAID AMOUNT HAS ALREADY BEEN DISALLOWED BY THE ASSESSEE IN THE RETURN OF INCOME THEN NO ADDITION IS REQUIRED TO BE MADE. THIS GROUND IS DISPOSE OFF, THEREFORE SET ASIDE TO THE FILE OF THE AO. 33. GROUND NO. 3 RELATES TO SUSTAINING THE ADDITION OF RS.6,99,344/- MADE BY THE AO BY WAY OF DISALLOWANCE OF VEHICLE EXPENSES. 34. AT THE OUTSET, THE LD. COUNSEL SUBMITTED THAT T HIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE ORDER OF THE TRIBUNAL VIDE PARA 4 P AGE 5 IN ITA NO. 93/ASR/2011 FOR AY 2007-08 DATED 16.07.2018. 35. WE HAVE HEARD THE RIVAL SUBMISSIONS AND FIND TH AT THIS ISSUE IS DECIDED AGAIN BY THE TRIBUNAL IN PARA 4, 5 OF ORDER DATED 16.07.2 018. FURTHER WE HAVE ALSO FOLLOWED THE SAME WHILE DECIDING THE APPEAL OF THE ASSESSEE FOR AY 209-10 IN GROUND NO. 6 HAS DISCUSSED ABOVE IN EARLIER PART OF THIS ORDER. THEREFORE RESPECTIVELY OUR FINDINGS AND FINDINGS OF THE TRIBU NAL IN ASSESSEES OWN CASE FOR AY 2007-08, THIS GROUND OF APPEAL OF THE ASSESSEE I S THEREFORE DISMISSED. 36. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR A Y 2013-14 IS PARTLY ALLOWED. 37. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 120/ASR/2013 FOR AY 2009-10 IS DISMISSED, IN ITA NO. 121/ASR/2013 FOR A Y 2009-10 OF ASSESSEE IS PARTLY ALLOWED AND SET ASIDE. THE APPEAL OF REVENUE IN ITA NO. 700/ASR/2014 FOR AY 2011-12 IS DISMISSED AND APPEAL OF THE ASSESSEE IN ITA NO. 156/ASR/2017 FOR AY 2013-14 IS PARTLY ALLOWED AND PARTLY SET ASIDE. ITA NOS. 121,120/ASR/2013&700&156/ASR/2014&2017 (AY S 2009-10, 2011-12&2013-14) THE HOSHIAR PUR CENTRAL COOP.BANK LTD. V. ADDL.CIT,DY.CIT&ASSTT .CIT 20 ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 20, 2019 SD/- SD/- (N. K. CHOUDHRY) (O. P. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 20.12.2019 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: (2) THE RESPONDENT: (3) THE CIT(APPEALS), (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER