Assistant Commissioner of Income-tax, V. Lokmangal Co-op. Bank Ltd., Solapur

ITA 1422/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5310 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 01-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• 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 42 0 /P U N/201 6 / ASSESSMENT YEAR : 20 1 2 - 1 3 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 1 , SOLAPUR . / APPELLANT VS. RATANCHAND SHAH SAHAKARI BANK LTD., BAZAR PETH, MANGALWEDHA, DIST. SOLAPUR . / RESPONDENT PAN: A AA AT3135A . / ITA NO. 1422 /P U N/201 6 / ASSESSMENT YEAR : 2012 - 13 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2, SOLAPUR . / APPELLANT VS. LOKMANGAL CO - OPERATIVE BANK LTD., 193, GOLD FINCH PETH, RUKMINI COMPLEX, SAVARKAR MAIDAN, SOLAPUR 413007 . / RESPONDENT PAN: AAAAL0119J / APPELLANT BY : SHRI A JAY MODI / RESPONDENT BY : SHRI S.N. PURANIK / DATE OF HEARING : 2 4 . 0 7 .201 8 / DATE OF PRONOUNCEMENT: 27 . 0 7 .201 8 ITA NO. 1 42 0 /P U N/20 1 6 ITA NO.1422/P UN/2016 2 / ORDER PER SUSHMA CHOWLA, J M : BOTH T HE APPEAL S FILED BY REVENUE ARE AGAINST RESPECTIVE ORDER S OF CIT (A) - 7 , PUNE , BOTH DATED 01 . 0 4 .20 1 6 RELATING TO SAME ASSESSMENT YEAR 20 1 2 - 1 3 AGAINST RESPECTIVE ORDER S PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. BOTH THE APPEALS FILED BY REVENUE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SA KE OF CONVENIENCE. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE AT THE OUTSET POINTED OUT THAT THOUGH SEVERAL GROUNDS OF APPEAL ARE RAISED BUT THE EFFECTIVE GROUNDS OF APPEAL IN BOTH THE APPEALS ARE GROUNDS OF APPEAL NO.1 AND 8, WHICH READ A S UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT(A) PUNE HAS ERRED IN DELETING THE ADDITION OF RS.3, 3 5, 60 , 345 / - MADE BY THE A.O., ON ACCOUNT OF ACCRUED INTEREST ON NON PERFORMING ASSETS U/S. 43D OF THE I.T. ACT, 1 961. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT(A) - 7, PUNE ERRED IN DELETING THE ADDITION OF RS. 7 , 49 ,2 4 4/ - MADE BY THE AO ON ACCOUNT OF AMORTIZATION OF PREMIUM ON INVESTMENTS. 4. FIRST, WE SHALL TAKE UP THE APPEAL IN ITA NO.1420/PUN/2016. 5. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE RAISED IN GROUND 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 CO VERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF, WHEREIN THIS ITA NO. 1 42 0 /P U N/20 1 6 ITA NO.1422/P UN/2016 3 ISSUE WAS DECIDED IN BUNCH OF APPEALS WITH THE LEAD ORDER IN ITA NO.1641/PN/2014 IN THE CASE OF JCIT VS. M/S. PEOPLES CO - OPERATIVE BANK LTD., RELATING TO ASSESSMENT YEAR 2011 - 1 2 AND REVENUE APPEAL IN THE CASE OF ASSESSEE IN ITA NO.617/PN/2015 , RELATING TO ASSESSMENT YEAR 2011 - 12 VIDE ORDER DATED 05.02.2016. HE FURTHER POINTED OUT THAT THE ISSUE NOW STANDS COVERED BY THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS . (1) DEOGIRI NAGARI SAHAKARI BANK LTD. (INCOME TAX APPEAL NO.53 OF 2014), (2) PEOPLES CO - OPERATIVE BANK LTD. (INCOME TAX APPEAL NO.54 OF 2014), (3) NANDED DISTRICT CENTRAL CO - OP. BANK LTD. (INCOME TAX APPEAL NO.57 AND 58 OF 2014) AND (4) VASANTADADA NAGAR I SAHAKARI BANK LTD. (INCOME TAX APPEAL NO.68 OF 2014) REPORTED IN (2015) 379 ITR 24 (BOM) . 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 7. WE FIND THAT SIMILAR ISSUE AS BEFORE US AROSE IN BUNCH OF APPEALS INCLUDING THE APPEAL OF REVENUE AGAINST THE ASSESSEE RELATING TO ASSESSMENT YEAR 2011 - 12, WHEREIN THE TRIBUNAL IN TURN RELIED ON EARLIER DECISION IN KOLHAPUR MAHILA SAHAKARI BANK LTD. VS. ITO IN ITA NO.01/PN/2013, RELATI NG 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 ASSESSEE IS A CO - OPERATIVE BANK ENGAGED IN THE BUSINESS OF ACCEPTING DEPOSITS FROM MEMBERS AND GIVING LOANS TO MEMBERS. IT HAS FILED I TS RETURN OF INCOME ON 11.09.2009 FOR THE YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME AT 14,57,840/ - . IN THE SCRUTINY 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 ITA NO. 1 42 0 /P U N/20 1 6 ITA NO.1422/P UN/2016 4 ASSESSED ON ACCRUAL BASIS U/S.5 OF I.T. ACT FOR THE REASONS (I) BENEFITS EXTENDED TO SCHEDULE 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 TAXED 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 FAVOUR OF THE ASSESSEE AND THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE. 2.1 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL 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 SH EET 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 COOPE RATIVE URBAN BANK LTD., VIJAYAWADA (SUPRA) AND KARNAVATI COOPERATIVE BANK LTD. (SUPRA). WE FIND NO REASON TO INTERFERE WITH THE REASONED ORDER OF THE LD. CIT(A) AND ACCORDINGLY THE SAME IS CONFIRMED. IN THE RESULT, THE REVENUES GROUND IS DISMISSED. TH E ABOVE DECISION HAS BEEN FOLLOWED IN (I) ACIT, CIRCLE - 3, NANDED V/S BHAGYALAXMI MAHILA SAHAKAR BANK LTD. ITA NO.793/PN/2011, (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 L TD. ITA NO.792/PN/2011 AND (IV) ASST. CIT, CIRCLE - 1 V/S DEOGIRI NAGARI SAHAKARI BANK LTD. ITA NO.817 & 1114/PN/2011. 8 . THE HONBLE BOMBAY HIGH COURT IN CIT VS. M/S. DEOGIRI NAGARI SAHAKARI BANK LTD. IN INCOME TAX APPEAL NO.53 OF 2014 & ORS. HAS LAID DOW N 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. 9 . 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 THE REVENUE IS DISMISSED. 10. THE SECOND ISSUE RAISED VIDE GROUND OF APPEAL NO.8 IS AGAINST DELETI ON OF ADDITION MADE ON ACCOUNT OF AMORTIZATION OF PREMIUM ON INVESTMENTS. ITA NO. 1 42 0 /P U N/20 1 6 ITA NO.1422/P UN/2016 5 11. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THIS ISSUE ALSO STANDS COVERED BY DIFFERENT DECISIONS OF PUNE BENCH OF TRIBUNAL. 12. THE LEARNED DEPARTM ENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 13. 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 TRIB UNAL 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. 14. NOW, COMING TO THE APPEAL IN ITA NO.1422/PUN/2016. 15. THE ISSUE RAISED VIDE GROUND OF APPEAL NO.1 IS SIMILAR TO THE ISSUE RAISED VIDE GROUND OF APPEAL NO.1 IN ITA NO.1420/PUN/2016 AND OUR DECISION IN ITA NO.1420/PUN/2016 SHALL APPLY MUTATIS MUTANDIS TO ITA NO.1422/PUN/2016. 16. THE GR OUND OF APPEAL NO.8 RAISED BY REVENUE IS ALSO SIMILAR TO THE GROUND OF APPEAL NO.8 RAISED IN ITA NO.1420/PUN/2016. HOWEVER, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT NO SUCH ADDITION WAS MADE BY THE ASSESSING OFFICER AND NO S UCH DELETION WAS ALSO DONE BY THE CIT(A). HE POINTED OUT THAT THE ADDITION OF 2,27,224/ - RELATES TO BROKEN PERIOD INTEREST AND WHETHER THE SAME IS TO BE ALLOWED AS DEDUCTION. HE FURTHER POINTED OUT THAT THE ISSUE STANDS COVERED BY THE ORDER OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. HDFC BANK LTD. REPORTED IN 107 DTR 140 (BOM) . ITA NO. 1 42 0 /P U N/20 1 6 ITA NO.1422/P UN/2016 6 17. WE FIND NO MERIT IN THE GROUND OF APPEAL NO.8 RAISED BY THE REVENUE AS NO SUCH DECISION ON AMORTIZATION OF PREMIUM ON INVESTMENTS HAS BEEN DECIDED EITHER BY THE ASSESSING OFFICER OR CIT(A) IN THE AFORESAID APPEAL. HENCE, THE GROUND OF APPEAL NO.8 D OES NOT STAND. IN ANY CASE, THE ISSUE WHICH HAS BEEN DECIDED BY THE ASSESSING OFFICER AGAINST THE ASSESSEE AND CIT(A) IN FAVOUR OF ASSESSEE RELATES TO BROKEN PERIOD INTEREST WHICH IS NOW DECIDED IN FAVOUR OF ASSESSEE BY THE HONBLE BOMBAY HIGH COURT IN CI T VS. HDFC BANK LTD. (SUPRA). THE GROUND OF APPEAL NO.8 RAISED BY THE REVENUE IS DISMISSED. 18 . IN THE RESULT, BOTH THE APPEAL S OF REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 27 TH DAY OF JULY , 201 8 . SD/ - SD/ - ( ANIL CHATURVEDI) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 27 TH JULY , 201 8 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 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