Assistant Commissioner of Income-tax, V. Shri Anand Co-op. Bank Ltd., Pune

ITA 1299/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9042 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 13-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Assessee Lawyers: N O N E
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 1 299 /P U N/201 6 / ASSESSMENT YEAR : 20 12 - 13 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE ....... / APPELLANT / V/S. SHRI ANAND CO - OPERATIVE BANK LTD., 1944, SANDESH, GOKHALE PARK, CHAPEKAR CHOWK, CHINCHWAD, PUNE 411033 PAN : AAAAS6060P / RESPONDENT . / CO NO. 13 /PUN/201 8 / ASSESSMENT YEAR : 20 12 - 13 SHRI ANAND CO - OPERATIVE BANK LTD., 1944, SANDESH, GOKHALE PARK, CHAPEKAR CHOWK, CHINCHWAD, PUNE 411033 PAN : AAAAS6060P ....... / APPELLANT / V/S. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE / RESPONDENT ASSESSEE BY : N O N E REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 2 8 - 03 - 2018 / DATE OF PRONOUNCEMENT : 28 - 0 3 - 201 8 2 ITA NO . 1299/PUN/2016 & CO NO. 13/PUN/2018, A.Y. 2012 - 13 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - 9, PUNE DATED 17 - 03 - 2016 FOR ASSESSMENT YEAR 20 12 - 13. THE ASSESSEE HAS FILED CROSS OBJECTIONS (CO) SUPPORTING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). THE REVENUE IN APPEAL HAS RAISED SOLITARY ISSUE ASSAILING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION OF RS.1,24,32,910/ - ON ACCOUNT OF ACCRUED INTEREST ON NON PERFORMING ASSETS (NPA). 2. THE NOTICE OF APPEAL FOR TODAY WAS ISSUED TO THE ASSESSEE ON 06 - 02 - 2018 THROUGH RPAD. THE AC KNOWLEDGMENT AVAILABLE ON FILE CLEARLY INDICATES THAT THE NOTICE OF APPEAL HAS BEEN DULY SERVED ON THE ASSESSEE. DESPITE SERVICE OF NOTICE NONE HAS APPEARED TO REPRESENT THE ASSESSEE NOR ANY LETTER OF ADJOURNMENT HAS BEEN RECEIVED ON BEHALF OF ASSESSEE. IT APPEARS THAT THE ASSESSEE IS NOT KEEN TO DEFEND THIS CASE. UNDER SUCH CIRCUMSTANCES, WE ARE PROCEEDING TO DECIDE THE APPEAL AND THE CROSS OBJECTIONS WITH THE ASSISTANCE OF LD. DR AND THE MATERIAL AVAILABLE ON RECORD. 3 . SHRI MUKESH JHA REPRESENTING THE DEPARTMENT SUBMITTED THAT THE ASSESSEE IS A CO - OPERATIVE BANK. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT INCLUDED INTEREST ACCRUED ON NPA RS.1,24,32,910/ - IN THE PROFIT AND LOSS ACCOUNT. THE AS SESSING OFFICER MADE ADDITION OF THE AFORESAID AMOUNT. IN 3 ITA NO . 1299/PUN/2016 & CO NO. 13/PUN/2018, A.Y. 2012 - 13 FIRST APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE AFORESAID ADDITION BY PLACING RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. DEOGIRI NAGARI SAHAKARI BANK LTD. AND OTHERS REPORTED AS 379 ITR 24 AND THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010 - 11. THE LD. DR SUBMITTED THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. AS PER PROVISIONS OF SE CTION 145 OF THE ACT , THE ASSESSEE HAS TO FOLLOW EITHER MERCANTILE SYSTEM OR CASH SYSTEM OF ACCOUNTING. THE ASSESSEE CANNOT ADOPT MIX SYSTEM OF ACCOUNTING. THE LD. DR FURTHER CONTENDED THAT THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF SOUTHERN TECHN OLOGIES LTD. VS. JOINT COMMISSIONER OF INCOME TAX REPORTED AS 320 ITR 577 HAS HELD THAT THE RESERVE BANK OF INDIA DIRECTI VES UNDER THE RESERVE BANK OF INDIA ACT ARE PRUDENTIAL NORMS AND HAVE NOTHING TO DO WITH COMPUTATION OR TAXABILITY OF THE PROVISIONS OF NPA UNDER THE INCOME TAX ACT. THE LD. DR FURTHER POINTED THAT THE ASSESSEE IS A NON - SCHEDULE CO - OPERATIVE BANK , T HUS, THE PROVISIONS OF SECTION 43D OF RBI ACT ARE NOT APPLICABLE TO THE ASSESSEE. TO SUPPORT OF HIS CONTENTIONS THE LD. DR PLACED RELIANCE O N THE DECISION OF AHM E DABAD BENCH OF TRIBUNAL IN THE CASE OF THE SARANGPUR CO - OP. BANK LTD. VS. DCIT IN ITA NOS. 529 & 530/AHD/2013 DECIDED ON 21 - 06 - 2013. 4. W E HAVE HEARD THE SUBMISSIONS MADE BY LD. DR AND HAVE PERUSED THE DOCUMENTS AVAILABLE ON RECORD. THE REVENUE IN APPEAL HAS RAISED SOLITARY ISSUE OF DELETING ADDITION BY COMMISSIONER OF INCOME TAX (APPEALS) IN RESPECT OF ACCRUED INTEREST ON NPA. THE REVENUE HAS RAISED AS MANY AS 5 GROUNDS IN THE APPEAL , HOWEVER, ALL THE GROUNDS ARE DIRECTED TOWARDS THE SINGLE ISSUE AS MENTIONED ABOVE. THE ASSESSEE IS A CO - OPERATIVE SOCIETY ENGAGED IN BANKING BUSINESS. THE ASSESSING OFFICER MAD E ADDITION OF 4 ITA NO . 1299/PUN/2016 & CO NO. 13/PUN/2018, A.Y. 2012 - 13 RS.1,24,32,910/ - IN RESPECT OF ACCRUED INTEREST ON NPA NOT OFFERED TO TAX IN THE RETURN OF INCOME BY THE ASSES SEE. THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION BY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. DEOGIRI NAGARI SAHAKARI BANK LTD. AND OTHERS (SUPRA) , AS WELL AS , THE DECISION OF CO - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010 - 11. 5. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. DEOGIRI NAGARI SAHAKARI BANK LTD. AND OTHERS (SUPRA) HAS HELD THAT ACCRUED INTEREST S ON STICKY ADVANCES ARE NOT TAXABLE. THE HONBLE BOMBAY HIGH COURT WHILE DECIDING THIS ISSUE IN FAVOUR OF THE ASSESSEE HAS ALSO CONSIDERED THE DECISION OF HONBLE APEX COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD. VS. JOINT COMMISSIONER OF INCOME TAX (SU PRA) . THE HONBLE HIGH COURT HELD THAT THE CO - OPERATIVE BANKS ARE ALSO GOVERNED BY RESERVE BANK OF INDIA AND THUS, THE DIRECTIONS WITH REGARD TO PRUDENTIAL NORMS ISSUED BY RESERVE BANK OF INDIA EQUALLY APPL Y TO THE CO - OPERATIVE BANKS. THE PROVISIONS OF S ECTION 45Q OF THE RBI ACT HAVE AN OVERRIDING EFFECT OVER INCOME RECOGNITION PRINCIPLE FOLLOWED BY CO - OPERATIVE BANKS. THUS, IN VIEW OF THE DECISION RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. DEOGIRI NAGARI SAHAKARI BANK LTD. AND OTHERS (SUPRA) , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). ACCORDINGLY, THE SAME IS UPHELD AND THE APPEAL OF REVENUE IS DISMISSED. 6. THE ASSESSEE HAS FILED CROSS OBJECTIONS IN SUPPORT OF ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS). SINCE, WE HAVE ALREADY DISMISSED 5 ITA NO . 1299/PUN/2016 & CO NO. 13/PUN/2018, A.Y. 2012 - 13 THE APPEAL OF REVENUE , THE CROSS OBJECTIONS FILED BY THE ASSESSEE HAVE BECOME INFRUCTUOUS AND ACCORDINGLY, THE SAME ARE DISMISSED AS SUCH. 7. IN THE RESULT, APPEAL BY THE REVENUE AND CROSS OBJECTIONS FILED BY TH E ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 28 TH DAY OF MARCH, 2018 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 28 TH MARCH, 2018 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 9, PUNE 4. THE PR. CIT - 5, PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE