Deputy Commissioner of Income tax, Satara V. Prathamik Shikshak Sahakari Bank Ltd., Satara

ITA 1307/PUN/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5238 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 22-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 13 07 /P U N/201 7 / ASSESSMENT YEAR : 20 13 - 14 THE DY. COMMISSIONER OF INCOME TAX, SATARA CIRCLE, SATARA . / APPELLANT VS. PRATHAMIK SHIKSHAK SAHAKARI BANK LTD., 12 - B, RAVIWAR PETH, POWAI NAKA, SATARA - 415001 . / RESPONDENT PAN: AAAAP0381L / APPELLANT BY : SHRI PANKAJ GARG / RESPONDENT BY : SHRI M.K. KULKARNI / DATE OF HEARING : 1 9 . 0 7 .201 9 / DATE OF PRONOUNCEMENT: 19 . 0 8 .201 9 / ORDER PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY REVENUE IS AGAINST ORDER OF CIT (A) - 4 , PUNE , DATED 27 . 0 2 .201 7 RELATING TO ASSESSMENT YEAR 20 13 - 14 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: - 1. ON THE FACT AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2,69,663/ - ON ACCOUNT OF BROKEN PERIOD INTEREST. ITA NO. 13 07 /P U N/20 1 7 PRATHAMIK SHIKSHAK SAH. BANK LTD. 2 2. ON THE FACTS AND IN CIR CUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.64,47,429/ - ON ACCOUNT OF VOLUNTARY RETIREMENT PAYMENTS MADE TO THE STAFF AT THE TIME OF THEIR LEAVING THE EMPLOYMENT, WITHOUT APPRECIATING THE FACT THAT ANY PAYMENTS MA DE TO THEM OVER AND ABOVE THE DUE SALARY, CANNOT PARTAKE THE CHARACTER OF PROFITS IN LIEU OF SALARY. 3. FOR THIS AND SUCH OTHER REASONS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RES TORED. 3. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT BOTH THE ISSUES RAISED IN THE PRESENT APPEAL ARE SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011 - 12. 4. ON PERUSAL O F RECORD, WE FIND THAT THE FIRST ISSUE RAISED BY REVENUE IS AGAINST DELETION OF ADDITION MADE ON ACCOUNT OF BROKEN PERIOD INTEREST. SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010 - 11 IN ITA NO.1725/PN/2014, ORDER DA TED 18.05.2016 AND FOR ASSESSMENT YEAR 2011 - 12 IN ITA NO.491/PUN/2015 ORDER DATED 17.05.2017. THE TRIBUNAL IN TURN, RELYING ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. HDFC BANK LTD. REPORTED IN 366 ITR 505 (BOM) HAD HELD THAT BROKE N PERIOD INTEREST WAS ALLOWABLE AS DEDUCTION. THE RELEVANT FINDINGS OF TRIBUNAL IN PARA 8, WHICH ARE AS UNDER: - 8. SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2010 - 11. THE TRIBUNAL RELIED ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. HDFC BANK LTD. REPORTED IN 366 ITR 505 (BOM), WHICH IN TURN HAD RELIED ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN AMERICAN EXPRESS INTERNATIONAL BANKING CORPORATION VS. CIT REPORTED IN 258 I TR 601 (BOM), WHICH IN TURN, HAD DISTINGUISHED THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN VIJAYA BANK VS. CIT (SUPRA) AND THE HONBLE HIGH COURT OF RAJASTHAN IN CIT VS. BANK OF RAJASTHAN LTD. (SUPRA) AND HAD HELD THAT BROKEN PERIOD INTEREST IS ALL OWABLE AS DEDUCTION. FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF ITA NO. 13 07 /P U N/20 1 7 PRATHAMIK SHIKSHAK SAH. BANK LTD. 3 BROKEN PERIOD INTEREST OF RS.16,97,027/ - . THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS THUS, ALLOWED. 5. FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION ON ACCOUNT OF BROKEN PERIOD INTEREST AND DISMISS THE GROUND OF APPEAL NO.1 RAISED BY REVENUE. 6. COMING TO THE SECOND ISSUE RAISED I.E. ON ACCOUNT OF DISALLOWANCE OF PAYMENTS MADE TO RETIRING STAFF I.E. ON THEIR VOLUNTARY RETIREMENT. 7. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSING OFFICER WAS OF THE VIEW THAT IN THE ABSENCE OF ANY SCHEME FORMULATED BY THE ASSESSEE BANK, THE AMOUNT PAID AS EX - GRATIA TO PREMATURELY RETIR ING EMPLOYEES WAS NOT TO BE ALLOWED AS DEDUCTION. THE CASE OF ASSESSEE ON THE OTHER HAND, WAS THAT THE SAID PAYMENT WAS MADE IN RECOGNITION OF LONG TERM AND MERITORIOUS SERVICES OF THE EMPLOYEES. THE ASSESSEE HAD CLAIMED THE SAID EXPENDITURE AS EX - GRATIA PAYMENT AS IN THE NATURE OF PROFITS AND IN LIEU OF SALARY, AND ON THE SAME, TDS WAS ALSO DEDUCTED. HOWEVER, THE ASSESSING OFFICER DISALLOWED THE SAID EXPENSES IN VIEW OF SECTION 35DDA OF THE ACT AND ALSO HELD THAT THEY WERE NOT ALLOWED AS DEDUCTION UNDER SECTION 37(1) OF THE ACT. THE CIT(A) ALLOWED THE CLAIM OF ASSESSEE FOLLOWING THE ORDER OF TRIBUNAL IN THE CASE OF ANOTHER BANK. 8. WE FIND THAT THIS ISSUE ALSO AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2011 - 12 (SUPRA) AND THE T RIBUNAL VIDE PARAS 9 TO 14 HAD DECIDED THE ISSUE AND ALLOWED THE CLAIM OF ASSESSEE. WE ARE REFERRING TO THE SAID PARAS BUT NOT REPRODUCING THE SAME FOR THE SAKE OF BREVITY. ITA NO. 13 07 /P U N/20 1 7 PRATHAMIK SHIKSHAK SAH. BANK LTD. 4 ACCORDINGLY, WE FIND NO MERIT IN THE GROUND OF APPEAL NO.2 RAISED BY THE REVENUE AND THE SAME IS DISMISSED. 9 . IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 19 TH DAY OF AUGUST , 201 9 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 19 TH AUGUST , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 4 , PUNE ; 4. THE PR. CIT - 3 , PUNE ; 5. 6. , , / DR B , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE