C.G/Rajya Sah.Krishi & Gramin Vikas Bank Maryadit, RAIPUR (CG) V. Deputy Commissioner of Income-Tax,Circle-2(1), RAIPUR

ITA 157/BIL/2011

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0524 (ITAT-RAIPUR)
• Duration Of Justice: 4 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 06-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Assessee Lawyers: R B DOSHI
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ./ ITA NO. 157 /BLPR/2011 / ASSESSMENT YEAR: 200 7 - 0 8 CHHATTISGARH RAJYA SAHKARI KRISHI & GRAMIN VIKAS BANK MARYADIT, B - BLOCK, FIRST FLOOR, RDA BUILDING, SHARDA CHOWK, RAIPUR (CG) PAN : AAAAC 4219 L VS. DY. COMMISSIONER OF INCOME TAX 2 ( 1 ), RAIPUR / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI R.B. DOSHI, AR REVENUE BY : SHRI S.K. MEENA, DR / DATE OF HEARING : 12 / 10 /2015 / DATE OF PRONOUNCEMENT: 15 / 10 /201 5 / O R D E R PER MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) , RAIPUR (CG), DATED 31 .12.2010 FOR ASSESSMENT YEAR 200 7 - 0 8 . 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS FOLLOWS: - 1. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED C.I.T. (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE LD. A.O. OF THE PROVISION FOR RESERVE FOR SUBSTANDARD ASSET OF RS.2,58,03,900/ - . 2. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED C.I.T. (APPEALS) ALSO ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE LD. ITA NO. 157/BLPR/ 2011 CHHATTISGARH RAJYA SAHKARI KRISHI & GRAMIN VIKAS BANK MARYADIT V/S DCIT AY: 200 7 - 0 8 2 A.O. FOR THE PROVISION FOR RESERVE OF OVERDUE INTEREST OF RS.36,41,564/ - . 3. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED C.I.T. (APPEALS) ERRED IN RESTRICTING THE DEDUCTION BY RS.50000/ - ONLY U/S 80P(2)(C)(II) OF THE INCOME TAX ACT, 1961 AND BY NOT CONSIDERING THE DEDUCTION OF SECTION 80P(2)(A)(I) UNDER INCOME TAX ACT, 1961 AS CLAIMED BUT DISALLOWED BY LD. A.O. 3. THE OBSERVATIONS OF THE ASSESSING OFFICER, AS PER ASSESSMENT ORDER PASSED U/S 143(3) DATED 15.12.2009, WERE THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY AND INVOLVED IN BANKING ACTIVITIES. IT WAS FOUND BY THE ASSESSING OFFICER THAT THE ASSESSEE H AD MADE A PROVISION FOR SUB - STANDARD ASSETS. A RESERVE WAS C R E A T E D BY THE ASSESSEE AND EXPLAINED THAT THE PROVISIONS HAVE BEEN MADE AS PER RBI (NABARD) GUIDELINES IN RESPECT OF NON - PERFORMING ASSETS. ACCORDING TO THE ASSESSING OFFICER, THE PROVISION WA S MADE BY THE ASSESSEE WITHOUT ANY BASIS WHICH WAS NOT IN RESPECT OF ANY EXPENDITURE TO BE INCURRED IN FUTURE. HENCE, ADDED BACK THE AMOUNT IN QUESTION A S THE T A X A B L E INCOME OF THE ASSESSEE. 3.1 THE ASSESSEE HAS ALSO MADE A PROVISION IN RESPECT OF THE INTEREST DUE OVER THE SAID RESERVE AMOUNTING TO RS.36,41,564/ - . THE EXPLANATION OF THE ASSESSEE WAS THAT WHEN THE PRINCIPLE ITSELF WAS NOT RECOVERABLE, THE RECOVERY OF INTEREST WAS ALSO DOUBTFUL. TH E ASSESSING OFFICER WAS NOT CONVINCED AND HELD THAT THE ASSESSEE HAS NOT ESTABLISHED THAT THE INTEREST WAS IN RESPECT OF DOUBTFUL DEBTS; THEREFORE, ITA NO. 157/BLPR/ 2011 CHHATTISGARH RAJYA SAHKARI KRISHI & GRAMIN VIKAS BANK MARYADIT V/S DCIT AY: 200 7 - 0 8 3 THE PROVISION WAS WRONGLY MADE. RESULTANTLY, THE AMOUNT IN QUESTION WAS ADDED BACK TO THE INCOME OF THE ASS ESSEE. 3.2 . BOTH THESE ADDITIONS WERE CHALLENGED BEFORE THE LEARNED CIT(A); HOWEVER, THE SAME WERE REJECTED. 3.3 . APART FROM THE ABOVE TWO ADDITIONS, WHICH WERE CHALLENGED BEFORE US IN GROUND NOS. 1 & 2, THE ASSESSEE HAS ALSO RAISED THE ISSUE OF THE A PPLICABILITY OF THE PROVISIONS OF SECTION 80P OF INCOME - TAX ACT IN GROUND NO.3 (SUPRA). BEFORE THE LEARNED CIT(A), THE ASSESSEE HAD CLAIMED THE DEDUCTION U/S 80P OF THE INCOME - TAX ACT. THE LEARNED CIT(A) HAS MENTIONED THAT THE SAID CLAIM WAS NOT DISCUSS ED IN THE ASSESSMENT ORDER BY THE ASSESSING OFFICER. HOWEVER, THE ASSESSEE HAS MENTIONED THAT IN THE COMPUTATION OF INCOME THE SAID CLAIM WAS MADE BY THE ASSESSEE. THE VEHEMENT CONTENTION OF THE ASSESSEE WAS THAT THE ASSESSING OFFICER HAS ONLY MENTIONED T HAT THE ASSESSEE HAPPENED TO BE A CO - OPERATIVE SOCIETY AND INVOLVED IN BANKING ACTIVITIES, BUT THE ASSESSING OFFICER HAS FAILED TO MENTION THAT FACTUALLY THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITY TO ITS MEMBERS, HENCE ENTITLED F OR EXEMPTION U/S 80P OF THE INCOME - TAX ACT. IT WAS FURTHER ELABORATED THAT THE ASSESSEE WAS PROVIDING THE FINANCE TO THE DISTRICT BANKS WHO WERE ITS MEMBERS. THE FUNDS WERE STATED TO BE BORROWED EITHER IN THE FORM OF LOANS OR BY ISSUE OF DEBENTURES TO NABARD AND THEREAFTER LOANS ARE PROVIDED TO THE DISTRICT AGRICULTURAL BANK, BASED UPON THE SCHEMES FORMED BY NABARD. THOSE DIST. AGRICULTURAL BANKS ARE THE MEMBER S OF THE ASSESSEE. ITA NO. 157/BLPR/ 2011 CHHATTISGARH RAJYA SAHKARI KRISHI & GRAMIN VIKAS BANK MARYADIT V/S DCIT AY: 200 7 - 0 8 4 ACCORDING TO ASSESSEE, THE DEDUCTION IS ALLOWABLE AS PER PROVISIONS OF SECTION 80P(2)(A)(I) OF THE INCOME - TAX ACT. HOWEVER, LEARNED CIT(A) HAS HELD THAT THE PROVISION OF SECTION 80P(4) SHOULD APPLY ON THE ASSESSEE; THEREFORE, THE DISAL LOWANCE WAS RIGHTLY MADE BY THE ASSESSING OFFICER. 4. ON THE LEGAL ISSUE, LEARNED AUTHORIZED REPRESENTATIVE, SHRI R.B. DOSHI, HAS PLACED VEHEMENT RELIANCE ON THE BYE - LAWS OF THE ASSESSEE COPY PLACED IN THE COMPILATION FILED BEFORE US. LEARNED AUTHORIZ ED REPRESENTATIVE HAS ALSO PLACED RELIANCE ON THE EXTRACT OF CHHATTISGARH CO - OPERATIVE SOCIETYS ACT, 1960. HE HAS PLEADED THAT THE FACTS OF THE CASE HAVE NOT BEEN CORRECTLY APPRECIATED BY THE REVENUE AUTHORITIES IN THE LIGHT OF THE BYE - LAWS OF THE ASSE SSEE. ALTERNATIVELY, HE HAS ALSO MENTIONED THAT A PROPORTIONATE DISALLOWANCE COULD HAVE BEEN MADE AS HELD IN THE CASE OF CIT VS. NAGPUR ZILLA KRISHI AUDYOGIK SAHAKARI SANGH LTD., (1994) 209 ITR 481 (BOM). 5. FROM THE SIDE OF THE REVENUE, LEARNED DEPAR TMENTAL REPRESENTATIVE, SHRI S.K. MEENA, APPEARED AND PLEADED THAT THE ASSESSEE HAS NOT FURNISHED THE BYE - LAWS BEFORE THE REVENUE AUTHORITIES; HENCE, FAILED TO ESTABLISH THAT THE FACILITIES WERE PROVIDED TO THE MEMBERS OF THE SOCIETY. HE HAS URGED T O AFFIRM THE ORDERS OF THE AUTHORITIES BELOW. 6. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT , BEFORE DECIDING THE DISALLOWANCES AS ITA NO. 157/BLPR/ 2011 CHHATTISGARH RAJYA SAHKARI KRISHI & GRAMIN VIKAS BANK MARYADIT V/S DCIT AY: 200 7 - 0 8 5 CHALLENGED BEFORE US VIDE GROUND NOS. 1 & 2, IT IS NECESSARY TO FIRST DECIDE THE LEGAL ISSUE AS RAISED IN GROUND NO.3 OF THE GROUNDS OF APPEAL. THE CONTENTION OF THE ASSESSEE IS THAT THE CLAIM OF DEDUCTION FALLS UNDER THE PROVISIONS OF SECTION 80P(2)(A)(I) OF INCOME - TAX ACT. ON THE OTHER HAND, THE REVENUE HAS INVOKED THE PROVISIONS OF SECTION 80P(4) OF THE INCOME - TAX ACT. HOWEVER, BECAUSE OF THE REASON THAT THE APPELLANT IS VEHEMENTLY CONTESTING THAT THE REVENUE AUTHORITIES HAVE NOT EXAMINED THE BYE - LAWS PRESCRIBING THAT THE FACILITY IS TO BE E XTENDED TO ITS MEMBERS; THEREFORE, A FAULTY VIEW WAS TAKEN BY THE REVENUE AUTHORITIES. THE ARGUMENT BEFORE US, THEREFORE, THAT HAD THE REVENUE AUTHORITIES HAVE APPLIED THEIR MIND ON THE CO - OPERATIVE SOCIETYS ACT, 1960, AND THE BYE - LAWS OF THE ASSESSEE IN THE LIGHT OF THE ACCOUNTS MAINTAINED, THEN THE CLAIM OF DEDUCTION WOULD NOT HAVE BEEN DISALLOWED. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, AS WELL AS FEW PRECEDENT CITED BEFORE US, WE ARE OF THE CONSIDERED OPINION THAT THE CORR ECT FACTS ABOUT THE NATURE OF THE ACTIVITY OF THE CO - OPERATIVE SOCIETY SHOULD FIRST BE STREAMLINED AND EXAMINED BY THE REVENUE AUTHORITIES, THEN ONLY ON THOSE UNCONTROVERTED FACTS THE LAW AS PRESCRIBED U/S 80P OF THE INCOME - TAX ACT IS TO BE APPLIED. DUE TO THIS REASON, WE DEEM IT PROPER AS WELL AS JUSTIFIABLE TO RESTORE THIS ISSUE BACK TO THE STAGE OF THE ASSESSING OFFICER TO BE DECIDED DE NOVO AS PER LAW, NEEDLESS TO MENTION, AFTER PROVIDING ADEQUATE OPPORTUNITY OF HEARING TO THE A S S E S S E E . MOREOVER, DUR ING THE COURSE OF HEARING, BOTH THE SIDES HAVE ALSO EXPRESSED THAT I N THE FITNESS OF CIRCUMSTANCES THE RIGHT RECOURSE IS TO REFER THE MATTER FOR DE NOVO ADJUDICATION BY THE ASSESSING OFFICER. ITA NO. 157/BLPR/ 2011 CHHATTISGARH RAJYA SAHKARI KRISHI & GRAMIN VIKAS BANK MARYADIT V/S DCIT AY: 200 7 - 0 8 6 RESULTANTLY, ALL THE GROUNDS RAISED BY THE ASSESSEE MAY BE TREATED AS ALLOWED BUT FOR STATISTICAL PURPOSES SINCE THE MATTER HAS BEEN RESTORED BACK FOR AFRESH ADJUDICATION. 7. IN THE RESULT, THE ASSESSEES APPEAL MAY BE TREATED AS ALLOWED, BUT FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE COURT ON 1 5 T H OCTOBER, 2015 AT RAIPUR . SD/ - SD/ - (SHAMIM YAHYA) ACCOUNTANT MEMBER (MUKUL KR. SHRAWAT) JUDICIAL MEMBER RAIPUR ; DATED 1 5 / 1 0 /201 5 BIJU T., PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, RAIPUR 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, RAIPUR