ACIT, New Delhi V. M/s. Jain Co-operative Bank Ltd., New Delhi

ITA 20/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86724 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 02-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Assessee Lawyers: SL GUPTA

Judgement Text

ITA NO.20/DEL/2013 ASSTT.YEAR: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH DNEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER ITA NO. 20/DEL/2013 ASSTT.YEAR: 2009-10 ACIT, VS M/S JAIN COOPERATIVE BANK LTD., CIRCLE-30(1), 510, NEW DELHI HOUSE 27, ROOM NO. 106, BARAKHAMBA ROAD, DRUM SHAPE BUILDING, NEW DELHI. I.P. ESTATE, (PAN: AAAAJ0060A) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI GAURAV DUDEJA, SR. DR RESPONDENT BY: SHRI S.L. GUPTA, CA O R D E R PER C.M. GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER OF THE CIT(A)- XXV, NEW DELHI DATED 11.10.2012 IN APPEAL N O.88/2011-12 FOR AY 2009-10. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN THIS APPEAL:- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE T HE LD. CIT (A) -XXV, NEW DELHI HAS ERRED BY DELETING T HE ADDITION OF RS. 29218109/- MADE BY THE AO. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE TH E LD. CIT(A)- XXV, NEW DELHI HAS ERRED IN DELETING THE AD DITION OF RS. 29218109/- FOLLOWING OF CIT VS SHOOJI VALLABHDAS & CO. 46 ITR ITA NO.20/DEL/2013 ASSTT.YEAR: 2009-10 2 144 (SC) (1962) WHICH STANDS DISTINGUISHED BY THE J UDGMENT IN THE CASE OF MORVI INDUSTRIES LTD. VS CIT (1971) 82 ITR 835 OF SUPREME COURT. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LD. CIT (A) - XXV, NEW DELHI HAS ERRED IN DELETING THE ADDITION OF RS. 29218109/- MADE BY THE AO ON ACCOUNT OF INTEREST ON NPAS IGNORING THE RATIO OF THE CASES OF THE STATE BANK O F TRAVANCORE VS. CIT REPORTED IN (1986) 158 ITR 102 (SC). 3. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFORE US. AT T HE OUTSET, LD. AR SUBMITTED A COPY OF THE DECISION OF ITAT B BENCH DELHI IN ASS ESSEES OWN CASE FOR AY 2008-09 IN ITA NO.207/D/2012 DATED 11.7.2014 AND SU BMITTED THAT THE MAIN ISSUE RAISED BY THE REVENUE STANDS COVERED BY THE O RDER OF THE TRIBUNAL (SUPRA) AND ANOTHER ORDER OF ITAT H BENCH DELHI IN ITA 5 549/D/2012 DCIT VS VAISH COOPERATIVE NEW BANK LTD. DATED 21.6.2013. L D. AR FURTHER CONTENDED THAT THIS WAS A CASE OF COOPERATIVE SOCIETY WHICH W AS ENGAGED IN THE BANKING BUSINESS AS PER RBI GUIDELINES AND AS PER ACCOUNTIN G STANDARD 9 AND THE ASSESSEE WAS NOT LIABLE TO OFFER INCOME OF INTEREST ON NON-PERFORMING ASSETS WHEREAS THE AO DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND MADE ADDITION IN THIS REGARD. LD. AR SUPPORTING THE IMP UGNED ORDER OF THE CIT(A) SUBMITTED THAT THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE AND CONSIDERING THE RATIO OF THE RELEVANT DECISIONS ON THE ISSUE, GRANTED RELIEF FOR THE ASSESSEE AND DELE TED THE ADDITION. LD. AR FINALLY SUBMITTED THAT THE MAIN GROUND OF THE REVENUE IN TH E PRESENT APPEAL IS SQUARELY ITA NO.20/DEL/2013 ASSTT.YEAR: 2009-10 3 COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF T HE TRIBUNAL DATED 11.7.2014 (SUPRA) IN ASSESSEES OWN CASE FOR AY 2008-09. 4. LD. DR SUBMITTED THAT THE ISSUE HAS NOT ATTAINED FINALITY AT THE LEVEL OF TRIBUNAL AND WE ARE MOVING TO THE HIGHER FORUM. HO WEVER, LD. DR COULD NOT SHOW US ANY CONTRARY ORDER WHICH CAN LEAD US TO TAK E A CONTRARY VIEW ON THIS ISSUE. 5. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, W E NOTE THAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2008-09 ORDER DATED 1 1.7.2014 (SUPRA) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE WITH FOLLOWING OBSERVATIONS AND CONCLUSION:- 4. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. THE APPEAL WAS EARLIER HEARD ON 10.07.2012 BUT IT WAS RELEASED ON 19.07.2012 FOR RE-HEARING IN VIEW OF THE RETIREMENT OF ONE OF THE MEMBERS. THE REVENUE HAS TAKEN A SPECIFIC GROUND VIDE GROUND NO.1 BY WHICH IT HAS CHALLENGED THAT LD. CIT(A) HAS WRONGLY FOLLOWED THE JUDGEMENT OF CIT VS SHOORJI VALLABHDAS & CO. 46 ITR 144 (S.C.), WHICH WAS DISTINGUISHED BY THE JUDGEMENT IN THE CASE OF MORVI INDUSTRIES LTD. VS CIT 82 ITR 835. HOWEVER, WE FIND THAT LD. CIT(A) HAD FOLLOWED THE FORMER CASE LAW BY APPLYING THE RATIO WHICH LAYS DOWN THAT REAL INCOME HAS TO B E CONSIDERED WITH REFERENCE TO COMMERCIAL & BUSINESS REALITIES OF THE SITUATION NOT WITH REFERENCE TO HIS SYSTEM O F ACCOUNTING. THE FACTS IN THE CASE LAW OF MORVI INDUSTRIES LTD. (SUPRA) ARE QUITE DIFFERENT. THEREFORE, GROUND NO.1 RAISED BY REVENUE DESERVES TO BE DISMISSED. 4.1 THE REVENUE HAS FURTHER TAKEN GROUND NO.2 BY WH ICH IT HAS CHALLENGED THAT LD. CIT(A) HAS NOT FOLLOWED THE RATIO OF CASE LAW OF STATE BANK OF TRAVENCORE VS CIT 158 ITR 102 (S.C.). ITA NO.20/DEL/2013 ASSTT.YEAR: 2009-10 4 4.2 WE HAVE GONE THROUGH THE CASE LAW AND WE FIND T HAT IN THAT CASE, ACCOUNTS OF BORROWERS WERE DEBITED AND I NTEREST INCOME WAS CREDITED TO INTEREST SUSPENSE ACCOUNT WH EREAS IN THE PRESENT CASE, THE INTEREST ON BAD LOANS HAS NOT BEEN PROVIDED AS PER RBI GUIDELINES AND AS PER ACCOUNTIN G STANDARD 9 ISSUED BY INSTITUTE OF CHARTERED ACCOUNT ANTS OF INDIA. 4.3 WE FIND THAT THE ISSUE RAISED BY REVENUE IS SQ UARELY COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF VAISH COOPERATIVE BANK LTD. IN I.T.A.NO. 5449 WHEREIN THE TRIBUNAL HAS DELETED THE ADDITION UNDER SIMILAR CIRCUMSTANCE S VIDE PARA 7 AND THE RELEVANT PORTION IS REPRODUCED BELOW: 7. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL B EFORE US. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE REC ORDS. WE FIND THAT THE INTEREST IN THIS CASE WAS DUE ON NON- PERFORMING ASSETS (NPA). AS PER THE RBI GUIDELINE IN THIS REG ARD, INTEREST ON NPAS IS NOT TO BE RECOGNIZED. ACCOUNTING STANDA RD 9 ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA ALSO PROVIDES THAT INCOME IS TO BE RECOGNIZED ONLY WHEN THERE IS SOME REASONABLE CERTAINTY ABOUT THE RECEIPT OF THE INCOME. WE, FURTHER, FIND THAT THIS VIEW IS ALSO SUPPORTED BY THE DECISIONS, AS MENTIONED ABOVE. WE FIND THAT IN THE CASE OF CIT VS ELGI FINANCE LTD., 293 ITR 357, HON'BLE MADRAS H IGH COURT HAS HELD THAT INTEREST ON NON-PERFORMING ASSE T IS NOT TO BE RECOGNIZED IN LIGHT OF THE RBI NOTIFICATION AND ACCOUNTING STANDARD 9 ISSUED BY THE INSTITUTE OF CHARTERED ACC OUNTANT OF INDIA. 5. WE FIND THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THE APPEAL OF THE REVENUE. 6. IN VIEW OF ABOVE, WE ARE OF THE CONSIDERED OPINI ON THAT THE INTEREST ON NON-PERFORMING ASSETS IS NOT TO BE RECOGNISED IN TH E LIGHT OF RBI NOTIFICATION AND ACCOUNTING STANDARD 9 ISSUED BY THE INSTITUTE OF CH ARTERED ACCOUNTANT OF INDIA. WE FURTHER RESPECTFULLY NOTE THAT THE BENEFIT OF TH E RATIO OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS SHOOJI VALLABHDAS & CO. (SUPRA) ITA NO.20/DEL/2013 ASSTT.YEAR: 2009-10 5 AND STATE BANK OF TRAVANCORE VS CIT (SUPRA) IS NOT AVAILABLE FOR THE REVENUE. UNDER THESE FACTS AND CIRCUMSTANCES, WE ARE INCLINE D TO HOLD THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE BY THE EARLIER ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2008-09 (SUPRA). THEREFORE, GROUND NO. 1, 2 AND 3 OF THE REVENUE BEING DEVOID O F MERITS ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.02.2015. SD/- SD/- (N.K. SAINI) (CHANDRAM OHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 11TH FEBRUARY, 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER AS STT. REGISTRAR