M/s Visakhapatnam Co-op Bank Ltd., Visakhapatnam V. The Addl. CIT, Range-1, Visakhapatnam

ITA 133/VIZ/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56809 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 17-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: TH LUCAS PETER
• Keywords: Depreciation
• Section: 143(3); 263

Judgement Text

ITA NO 133 OF 2011 VIZAG COOP BANK LTD VISAKHAPATNA M PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.133/VIZAG/2011 ASSESSMENT YEAR: 2007 - 08 VISAKHAPATNAM COOPERATIVE BANK LTD., VISAKHAPATNAM VS. ADDL.CIT RANGE-1, VISAKHAPATNAM (APPELLANT) PAN NO: AAAAT 0844 L (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI TH. LUCAS PETER, CIT (DR) DATE OF HEARING: 07/07/2011 DATE OF PRONOUNCEMENT: 25/08/2011 ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: IN THIS APPEAL, THE ASSESSEE IS CHALLENGING THE ORDE R DATED 24.01.2011 PASSED BY LEARNED CIT-1, VISAKHAPATNAM I N THE HANDS OF THE ASSESSEE UNDER SECTION 263 OF THE ACT FOR THE ASSES SMENT YEAR 2007-08. 2. THE FACTS RELATING TO THE ISSUES ARE STATED IN B RIEF. THE ASSESSMENT IN THE HANDS OF THE ASSESSEE FOR THE IMPUGNED ASSES SMENT YEAR WAS COMPLETED BY THE ASSESSING OFFICER ON 31.12.2009 UN DER SECTION 143(3) OF THE ACT. THE LEARNED CIT, UPON VERIFICATION OF ASSE SSMENT RECORD, INITIATED REVISION PROCEEDINGS UNDER SECTION 263 OF THE ACT A ND FINALLY SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE ASSESSING OFFICER TO REDO THE ASSESSMENT BY EXAMINING THE FOLLOWING THREE ISSUES: (A) PROVISION MADE FOR STAFF GRATUITY FUND ` 18.00 LAKHS. (B) EXPENDITURE CLAIMED UNDER THE HEAD AMORTISATION OF GOVERNMENT SECURITY ` 36,61,225/- (C) DISALLOWANCE OF INTEREST PAID TO DEPOSITORS UND ER SECTION 40(A)(IA) OF THE ACT FOR THE NON DEDUCTION OF TAX AT SOURCE. AGGRIEVED BY THE ORDER OF THE LEARNED CIT, THE ASSE SSEE IS IN APPEAL BEFORE US. ITA NO 133 OF 2011 VIZAG COOP BANK LTD VISAKHAPATNA M PAGE 2 OF 3 3. THE FIRST ISSUE RELATES TO CLAIM MADE BY THE ASS ESSEE TOWARDS THE PROVISION MADE FOR PAYMENT OF GRATUITY. THE LEARNED CIT NOTICED THAT THE SAID CLAIM IS NOT ALLOWABLE UNDER SECTION 40A(7) OF THE ACT. ACCORDINGLY THE LEARNED CIT DIRECTED THE ASSESSING OFFICER TO DISAL LOW THE SAID CLAIM PERTAINING TO PROVISION MADE FOR PAYMENT OF GRATUIT Y. FROM THE ASSESSMENT ORDER, WE NOTICE THAT THE ASSESSING OFFICER DID NOT EXAMINE THE SAID CLAIM MADE BY THE ASSESSEE. 3.1 HOWEVER, DURING THE COURSE OF HEARING, THE LEAR NED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE IS ENTIT LED FOR DEDUCTION OF ACTUAL AMOUNT OF GRATUITY PAID DURING THE YEAR UNDE R CONSIDERATION. ACCORDINGLY HE REQUESTED THAT DIRECTION OF LEARNED CIT BE MODIFIED. THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT HAVE AN Y OBJECTION IN ALLOWING THE DEDUCTION WHICH THE ASSESSEE IS LEGALLY ENTITLE D TO. ACCORDINGLY WE MODIFY THE DIRECTION OF LEARNED CIT ON THIS ISSUE A ND DIRECT THE ASSESSING OFFICER TO DISALLOW THE PROVISION MADE FOR PAYMENT OF GRATUITY UNDER SECTION 40A(7) OF THE ACT AND ALLOW THE ACTUAL AMOUNT OF GR ATUITY PAID BY THE ASSESSEE, IF THE ASSESSEE IS ENTITLED FOR DEDUCTION IN ACCORDANCE WITH LAW. 4. THE NEXT ISSUE RELATES TO THE CLAIM OF AMORTIZA TION OF PREMIUM ON GOVT. SECURITIES. IT WAS SUBMITTED BEFORE THE LEARN ED CIT THAT THE SAID CLAIM ACTUALLY REPRESENTS THE DEPRECIATION IN VALUE OF INVESTMENT HELD AS STOCK IN TRADE. APPARENTLY THE ASSESSING OFFICER D ID NOT EXAMINE THIS CLAIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FURTH ER THE NOMENCLATURE OF THE CLAIM SUGGEST THAT THE ASSESSEE IS CLAIMING A P ART OF PREMIUM PAID ON PURCHASE OF GOVERNMENT SECURITIES, WHILE THE CLAIM IS SAID TO RELATE TO THE DEPRECIATION IN THE VALUE OF INVESTMENTS HELD AS ST OCK IN TRADE. HENCE, IN OUR VIEW, THE SAID CLAIM REQUIRES PROPER EXAMINATIO N. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE DIRECTION OF LEARNED CIT ON THIS ISSUE. ITA NO 133 OF 2011 VIZAG COOP BANK LTD VISAKHAPATNA M PAGE 3 OF 3 5. THE NEXT ISSUE RELATES TO DISALLOWANCE OF INTERE ST PAID TO DEPOSITORS TO BE MADE UNDER SECTION 40(A)(IA) OF THE ACT. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAD MADE THE DISALLOWANCE ON ESTIMATED BASIS, WHICH THE LEARNED CIT HAS FOUND FAULT WITH. HOWEVER, BE FORE US, BOTH THE PARTIES ADMITTED THAT THE ABOVE SAID ISSUE IS A SUB JECT MATTER OF APPEAL BEFORE THE LEARNED CIT (A), IN WHICH CASE THE REVIS ION PROCEEDING UNDER SECTION 263 OF THE ACT DOES NOT LIE UPON THIS ISSUE . ACCORDINGLY WE SET ASIDE THE ORDER OF THE LEARNED CIT ON THIS ISSUE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 25 TH AUGUST, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE:25-08-2011 COPY TO 1 THE VISAKHAPATNAM COOPERATIVE BANK LTD., NEAR KOT HA ROAD, VISAKHAPATNAM 530 001 2 THE ADDL. COMMISSIONER OF INCOME-TAX, RANGE-1, VI SAKHAPATNAM 3 4. THE CIT 1, VISAKHAPATNAM THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(1 ) VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM