Assistant Commissioner of Income-tax, V. The Laxmi Co-op. Bank Ltd.,

ITA 1238/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4145 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-08-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 07-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK BABU
• Assessee Lawyers: S N DOSHI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1 238 /P U N/201 6 / ASSESSMENT YEAR : 20 1 2 - 1 3 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2 , SOLAPUR . / APPELLANT VS. THE LAXMI CO - OPERATIVE BANK LTD., 319, SOUTH KASBA, SOLAPUR . / RE SPONDENT PAN: A AA AT313 8G / APPELLANT BY : SHRI A SHOK BABU / RESPONDENT BY : SHRI S.N. DOSHI / DATE OF HEARING : 06 . 0 8 .201 8 / DATE OF PRONOUNCEMENT: 17 . 0 8 .201 8 / ORDER PER SUSHMA CHOWLA, J M : T HE APPEAL FILED BY REVENUE IS AGAINST ORDER OF CIT (A) - 7 , PUNE , DATED 23 . 0 3 .20 1 6 RELATING TO ASSESSMENT YEAR 20 1 2 - 1 3 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE LEARNED DEPART MENTAL REPRESENTATIVE FOR THE REVENUE AT THE OUTSET POINTED OUT THAT THOUGH SEVERAL GROUNDS OF APPEAL ARE RAISED BUT THE EFFECTIVE GROUNDS OF APPEAL ARE GROUNDS OF APPEAL NO.1 AND 8, WHICH READ AS UNDER: - ITA NO. 1 238 /P U N/20 1 6 THE LAXMI CO - OP BANK LTD. 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE HONBLE CIT(A) PUNE HAS ERRED IN DELETING THE ADDITION OF RS. 2 , 43 , 02 , 674 / - MADE BY THE A.O., ON ACCOUNT OF ACCRUED INTEREST ON NON PERFORMING ASSETS U/S. 43D OF THE I.T. ACT, 1961. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE HONBLE CIT(A) - 7, PUNE ERRED IN DELETING THE ADDITION OF RS. 34 , 25 , 361 / - MADE BY THE AO ON ACCOUNT OF AMORTIZATION OF PREMIUM ON INVESTMENTS. 3 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE RAISED IN GRO UND OF APPEAL NO.1 I.E. DELETION OF ADDITION MADE ON ACCOUNT OF ACCRUED INTEREST ON NPAS UNDER SECTION 43D OF THE ACT IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. DEOGIRI NAGARI SAHAKARI BANK LTD. (2015) 379 ITR 24 (BOM) . 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 5 . WE FIND THAT SIMILAR ISSUE AS BEFORE US AROSE IN BUNCH OF APPEALS WITH THE LEAD ORDER IN ITA NO.1641/PN/2014 IN TH E CASE OF JCIT VS. M/S. PEOPLES CO - OPERATIVE BANK LTD., RELATING TO ASSESSMENT YEAR 2011 - 12 VIDE ORDER DATED 05.02.2016 , WHEREIN THE TRIBUNAL IN TURN RELIED ON EARLIER DECISION IN KOLHAPUR MAHILA SAHAKARI BANK LTD. VS. ITO IN ITA NO.01/PN/2013, RELATING TO ASSESSMENT YEAR 2009 - 10, VIDE ORDER DATED 29.01.2014. THE TRIBUNAL IN TURN FOLLOWING THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN ACIT VS. OSMANABAD JANTA SAHAKARI BANK LTD. IN ITA NO.795/PN/2011, ORDER DATED 31.08.2012, HELD AS UNDER: - 2. THE A SSESSEE IS A CO - OPERATIVE BANK ENGAGED IN THE BUSINESS OF ACCEPTING DEPOSITS FROM MEMBERS AND GIVING LOANS TO MEMBERS. IT HAS FILED ITS RETURN OF INCOME ON 11.09.2009 FOR THE YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME AT 14,57,840/ - . IN THE SCRUTIN Y ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD NOT CREDITED INTEREST RECEIVABLE OR ACCRUED ON NON - PERFORMING ASSETS (HEREINAFTER REFERRED TO AS NPA) TO ITS PROFIT AND LOSS ACCOUNT FOR FINANCIAL YEAR 2008 - 09. THE ASSESSING OFFICER AFTER REJECTING THE VARIOUS CONTENTIONS OF THE ASSESSEE HAS HELD THAT THE RBI GUIDELINES ARE NOT INTENDED TO REGULATE THE INCOME TAX LAW AND THE ASSESSEE WAS LIABLE TO BE ASSESSED ON ACCRUAL BASIS U/S.5 OF I.T. ACT FOR THE REASONS (I) BENEFITS EXTENDED ITA NO. 1 238 /P U N/20 1 6 THE LAXMI CO - OP BANK LTD. 3 TO SCHEDU LE BANK, PUBLIC FINANCIAL INSTITUTIONS, PUBLIC COMPANIES FOR THE PURPOSE OF SECTION 43D WERE NOT EXTENDED TO A CO - OPERATIVE BANK AND (II) THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND NOT CASH SYSTEM. ULTIMATELY THE ASSESSING OFFICER TAXE D ON ACCRUED INTEREST OF 25,20,022/ - ADVANCE CLAIMED TO BE NPA ACCOUNT. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY WHEREIN, FOLLOWING THE OSMANABAD JANTA SAHAKARI BANK LTD. IN ITA NO.795/PN/2011, THE CIT(A) HAS DECIDED THE ISSUE IN FAVO UR OF THE ASSESSEE AND THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE. 2.1 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD, WE FIND THAT IN OSMANABAD JANTA SAHAKARI BANK LTD. (SUPRA) THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER: 7. IN THE CASE BEFORE US, ADMITTEDLY, ASSESSEE HAS DIRECTLY TAKEN THE INTEREST TO THE BALANCE SHEET AND IT IS NOT ROUTED THROUGH THE PROFIT & LOSS ACCOUNT. MOREOVER, THE ISSUE OF THE TAXABILITY OF THE INTEREST ON THE STICKY LOSSES/ADVANCES, IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCHES IN THE CASE OF THE DURGA COOPERATIVE URBAN BANK LTD., VIJAYAWADA (SUPRA) AND KARNAVATI COOPERATIVE BANK LTD. (SUPRA). WE FIND NO REASON TO INTERFERE WI TH THE REASONED ORDER OF THE LD. CIT(A) AND ACCORDINGLY THE SAME IS CONFIRMED. IN THE RESULT, THE REVENUES GROUND IS DISMISSED. THE ABOVE DECISION HAS BEEN FOLLOWED IN (I) ACIT, CIRCLE - 3, NANDED V/S BHAGYALAXMI MAHILA SAHAKAR BANK LTD. ITA NO.793/PN/20 11, (II) ACIT, CIRCLE - 3 V/S SIDHESHWAR SAHAKARI BANK LTD. ITA NO.794/PN/2011, (III) ACIT (CENTRAL) V/S LATUR URBAN CO - OPERATIVE BANK LTD. ITA NO.792/PN/2011 AND (IV) ASST. CIT, CIRCLE - 1 V/S DEOGIRI NAGARI SAHAKARI BANK LTD. ITA NO.817 & 1114/PN/2011. 6 . THE HONBLE BOMBAY HIGH COURT IN CIT VS. M/S. DEOGIRI NAGARI SAHAKARI BANK LTD. (SUPRA) HAS LAID DOWN THE PROPOSITION THAT THE INTEREST ACCRUED ON NPAS IS NOT TAXABLE IN THE HANDS OF ASSESSEE, IN VIEW OF THE GUIDELINES ISSUED BY THE RBI. 7 . FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT NO ADDITION IS WARRANTED ON ACCOUNT OF INTEREST ACCRUED ON NPAS. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) IN DELETING THE ADDITION MADE ON ACCOUNT OF INTEREST ACCRUED ON NPAS. THE GROUND OF APPEAL NO.1 RAISED BY T HE REVENUE IS DISMISSED. 8 . THE SECOND ISSUE RAISED VIDE GROUND OF APPEAL NO.8 IS AGAINST DELETION OF ADDITION MADE ON ACCOUNT OF AMORTIZATION OF PREMIUM ON INVESTMENTS. 9 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THIS ISSUE ALSO STANDS COVERED BY DIFFERENT DECISIONS OF PUNE BENCH OF TRIBUNAL. ITA NO. 1 238 /P U N/20 1 6 THE LAXMI CO - OP BANK LTD. 4 1 0 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 1 1 . WE FIND THAT THE PUNE BENCH OF TRIBUNAL IN SERIES OF DECISIONS HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE . HOWEVER, WE MAKE REFERENCE TO THE DECISION OF THE TRIBUNAL IN ACIT VS. JATH URBAN CO - OP. BANK LTD. IN ITA NOS.2713 & 2714/PUN/2016, RELATING TO ASSESSMENT YEARS 2007 - 08 & 2008 - 09, ORDER DATED 23.03.2018. THE GROUND OF APPEAL NO.8 RAISED BY THE REVENUE IS THUS, DISMISSED. 1 2 . IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 17 TH DAY OF AUGUST , 201 8 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 17 TH AUGUST , 201 8 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APP ELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 7 , PUNE ; 4. THE PR. CIT - 6 , PUNE ; 5. 6. , , / DR A , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE