Deputy Commissioner of Income tax, V. M/s. Vidya Sahakari Bank Ltd, Pune

ITA 182/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6074 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 25-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI R.S. SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO.182/PUN/2017 / ASSESSMENT YEAR : 2013-14 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, PUNE. ....... / APPELLANT / V/S. M/S. VIDYA SAHAKARI BANK LTD. SY. NO.1355, PLOT NO.72, SHUKRAWAR PETH, BAJIRAO ROAD, PUNE-411 002 PAN : AAAAV0260E / RESPONDENT REVENUE BY : SHRI PANKAJ GARG ASSESSEE BY : NONE / DATE OF HEARING : 22.01.2019 / DATE OF PRONOUNCEMENT : 23.01.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE REVENUE EMANATES FROM THE ORDER OF LD. CIT(APPEALS)-4, PUNE DATED 20.10.2016 FOR THE ASSESSMENT YEAR 2013-14 AS PER FOLLOWING GROUNDS OF APPEAL ON RECORD: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) HAS ERRED IN DELETING ADDITION OF INTEREST OF RS.2,17,0 8,000/- ON NPA WHEN THE SAID INTEREST HAS ACCRUED TO THE BANK AS PER TH E MERCANTILE SYSTEM OF ACCOUNTING FOLLOWED BY IT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN FAILING TO APPRECIATE THE FACT THAT TH E ASSESSEE IS A CO- OPERATIVE BANK AND NOT A SCHEDULED BANK AND THAT TH E PROVISIONS OF 2 ITA NO. 182/PUN/2017 A.Y.2013-14 SECTION 43D ARE APPLICABLE TO THE FINANCIAL INSTITU TIONS AND NOT TO CO- OPERATIVE SOCIETIES? 3. FOR THIS AND SUCH OTHER REASONS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE CIT(A) BE VACATED AND THA T OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES, LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF APPELL ATE PROCEEDINGS BEFORE THE HON'BLE TRIBUNAL. 2. AT THE TIME OF HEARING THE ASSESSEE WAS NEITHER PRES ENT IN PERSON NOR THROUGH HIS AUTHORIZED REPRESENTATIVE. THE PRESENCE OF LD.D.R IS RE CORDED. 3. THE BRIEF FACTS IN THIS CASE ARE THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO FURNISH DETAILS O F ACCRUED INTEREST ON NPA'S AS PER SECTION 43D R.W.R 6EA AND EXPLANATION AS T O WHY THE SAME SHOULD NOT BE INCLUDED IN THE TOTAL INCOME. IN RESPONSE, T HE ASSESSEE SUBMITTED THAT IT GENERALLY FOLLOWS RBI GUIDELINES WITH REFER ENCE TO INCOME RECOGNITION OF INTEREST ON NON-PERFORMING ASSETS UNLESS A ND UNTIL IT IS ACTUALLY REALIZED AND RELIED ON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT-8 VS. M/S. KEC HOLDINGS LIMITED AND SUBMITTED THE WO RKING OF INTEREST ACCRUED ON NPA AS FOLLOWS: THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY TH E AO DUE TO THE FOLLOWING REASONS: PARTICULARS F.Y. 2012-13 (AMOUNTS IN LAKHS) OPENING BALANCE 1425.39 ADD. ADDITION DURING THE YEAR 416.22 LESS. RECOVERY DURING THE YEAR 199.14 CLOSING BALANCE 1642.47 NET ADDITION DURING THE YEAR 217.08 3 ITA NO. 182/PUN/2017 A.Y.2013-14 1. IN FORM NO. 3CD REPORT THE ASSESSEE HAD MENTION ED THAT THE Y ARE FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND IN TH AT CASE INCOME AS WELL AS EXPENDITURE HAD TO BE ACCOUNTED ON ACCRUAL BASIS. 2. AS FAR AS LIABILITY OF INCOME TAX IS CONCERNED, THE SAME IS TO BE GOVERNED BY INCOME TAX ACT AND MERELY BECAUSE FOR A CCOUNTING PURPOSE, THE ASSESSEE IS FOLLOWING RBI GUIDELINES DOES NOT M EAN THAT THE ASSESSEE IS NOT LIABLE TO SHOW THE ACCRUED INTEREST INCOME WHEN IT HAD ACCRUED TO THE ASSESSEE UNDER THE MERCANTILE SYSTEM AND EXIGIBLE TO TAX UNDER THE ACT. 3. THE JUDGEMENT OF APEX COURT IN THE CASE OF SOUTH ERN TECHNOLOGIES VS. CIT WHEREIN IT WAS HELD THAT THE RBI GUIDELINES OR PRUDENTIAL NORMS ISSUED BY RBI ARE NOT INTENDED TO REGULATE THE INCO ME TAX LAWS. HENCE FOR CALCULATING THE INTEREST U/S.43D CALCULATION OF RULE 6EA HAD TO BE MADE. 4. RELIANCE IS ALSO PLACED IN THE CASE OF GIC HOUSI NG FINANCE LTD. VS. ADDL. CIT, RANGE 2(1) (2011) 45 SOT 318 ( MUM) WHER EIN THE CONTENTION OF THE AO WAS REJECTED. 5. THE CASE LAWS RELIED UPON BY THE ASSESSEE IS DIS TINGUISHABLE ON THE FACTS AS IT IS IN THE CASE OF NBFC AND NOT BANKS AN D THE DEPARTMENT HAD NOT ACCEPTED BY THE ISSUE AND HAD LEARNED TO CONTES TED TO SUPREME COURT. FURTHER, IN ASSESSEES OWN CASE THE DEPARTME NT IS IN APPEAL IN HIGH COURT ON THE SAME ISSUE IN PREVIOUS YEARS. THE REFORE, IN ORDER TO KEEP THE MATTER ALIVE AN AMOUNT OF RS.2,17,08,000/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE U/S.43D OF THE ACT. 4. THE MATTER TRAVELLED UP TO THE LD. CIT(APPEALS) WHEREIN THE LD. AR OF THE ASSESSEE FILED WRITTEN SUBMISSIONS. IT WAS SUBMITTED T HAT THE CASE OF THE ASSESSEE IS FULLY COVERED BY THE DECISION OF THE CO-ORDINA TE BENCH OF TRIBUNAL, PUNE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009- 10 AND 2010-11. THE CO-ORDINATE BENCH OF THE TRIBUNAL RELYING UPON THE DECISIO N OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF M/S. DEOGIRI NAGARI SAHA KARI BANK LTD. IN ITA NO. 53/PUN/2014 HAS DECIDED THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. THAT ON CONSIDERATION OF ASSESSMENT ORDER, FACTS ON RECO RD AND SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(APPEALS) HAS HELD AS FOLLOWS: DECISION : I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAI SED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. ON PERUSAL OF THE JURISDICTIONAL ITAT, PUNE'S ORDER ITA NO.671/PN/2014 DATED 24/08/2015 IN THE APPELLANT ' S OWN CASE, WHEREIN, THE HON'BLE ITAT HELD THAT 'RE SPECTFULLY FOLLOWING THE DECISION OF HON'BLE JURISDICTIONAL HI GH COURT (SUPRA) AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOT ICE BY THE LD DEPARTMENTAL REPRESENTATIVE AGAINST THE CONSISTENT VIEW OF THE TRIBUNAL ON THE ISSUE DO NOT FIND INFIRMITY IN THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE BY THE AD. ACCORDINGLY, THE SAME IS U PHELD AND THE 4 ITA NO. 182/PUN/2017 A.Y.2013-14 GROUND RAISED BY THE REVENUE IS DISMISSED . HENCE, THE AO IS DIRECTED TO CANCEL THE ADDITION OF RS.2,17,08,000/-. 5. WE HAVE PERUSED THE CASE RECORD AND HEARD THE SU BMISSIONS OF THE LD. DR . WE FIND THAT THE DECISION OF THE LD. CIT(APPEALS) IN THIS CASE IS FOUNDED ON THE BASIS OF ASSESSEES OWN CASE FOR ASSESSMENT YE ARS 2009-10 AND 2010- 11 WHICH HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY C O-ORDINATE BENCH OF THE TRIBUNAL, PUNE. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD.CIT(APPEALS) WHICH IS, THEREFORE, UPHELD. HENCE, GROU NDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 23RD DAY OF JANUARY, 2019. SD/- SD/- R.S. SYAL PARTHA SARAT HI CHAUDHURY VICE-PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 23RD JANUARY, 2019. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-4, PUNE. 4. THE PR. CIT-3, PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 5 ITA NO. 182/PUN/2017 A.Y.2013-14 DATE 1 DRAFT DICTATED ON 22 .01.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 22 .01 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER