M/s. The Ajara Urban Co.op. Bank Ltd., Kolhapur V. Assistant Commissioner of Income-tax,

ITA 2067/PUN/2013

• Counselvise Citation: 206724514 RSA 2013
• Duration Of Justice: 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 28-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Depreciation; Period of limitation; Cost of acquisition; Bad and doubtful debts; Time period of passing order; Revenue expenditure
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 2067/PN/2013 (ASSTT.YEAR : 2009-10) M/S. THE AJARA URBAN CO-OP BANK LTD., MAIN ROAD, AJARA, A/P AND TAL : AJARA, DIST : KOLHAPUR .. APPELLANT PAN NO.AAAAT0508R VS. ACIT, CIRCLE-1, KOLHAPUR. .. RESPONDENT ITA NO. 2068/PN/2013 (ASSTT.YEAR : 2010-11) M/S. THE AJARA URBAN CO-OP BANK LTD., MAIN ROAD, AJARA, A/P AND TAL : AJARA, DIST : KOLHAPUR .. APPELLANT PAN NO.AAAAT0508R VS. ITO, WARD-1(1), KOLHAPUR .. RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI REVENUE BY : SHRI P.L. PATHADE DATE OF HEARING : 24-12-2013 DATE OF PRONOUNCEMENT : 31-12-2013 ORDER PER SHAILENDRA KUMAR YADAV, JM : BOTH THESE APPEALS PERTAIN TO THE SAME ASSESSEE FOR A.YRS. 2009-10 AND 2010-11 AND ALMOST ON IDENTICAL ISSUES, SO THEY ARE BEING DISPOSED OF BY A COMMON O RDER FOR THE SAKE OF CONVENIENCE. 2 2. IN ITA NO.2067/PN/2013 FOR A.Y. 2009-10 THE ASSESSEE HAS FILED THE APPEAL ON FOLLOWING GROUNDS : 1) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A)-KOLHAPUR WAS JUSTIFI ED IN CONFIRMING THE ADDITION MADE OF RS.5,79,83,094/- BY THE A.O. BEING THE ESTIMATED ACCRUED INTEREST ON NPAS? EVEN IGNORING THE JURISDICTIONAL JUDGMENT OF THE TRIBUNAL? WHETHER THE CIT(A) OUGHT TO HAVE FOLLOWED THE JURISDICTIONAL TRIBUNAL JUDGMENT WHICH WAS BINDING ON HIM IN VIEW OF APEX COURTS JUDGMENT? 2) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW THE JUDGMENT OF THE OTHER CO-ORDINATED BENCHES OF THE TRIBUNAL AND ALSO OTHER HIGH COURT JUDGMENTS WERE NOT BINDING ON THE AUTHORITIES BELOW ? WHETHER THE LD. CIT(A) BREACHED THE PRINCIPLES OF JUDICIAL PROPRIETY IN NOT FOLLOWING THE VARIOUS JUD ICIAL VERDICTS RELIED UPON BEFORE HIM AND ALSO INCLUDED I N THE WRITTEN SUBMISSIONS PLACED BEFORE HIM? 3) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS CORRECT IN NOT DISCUSSING THE ISSUE IN HIS APPEAL ORDER AND SIMPLY RELYING ON AN APPEAL ORDER IN THE CASE OF THIS APPE LLANT PERTAINING TO A. Y. 2010-11? WHETHER HIS APPELLATE ORDER BREACHED THE PROVISIONS OF S. 250(6) OF THE A CT? 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW AND IN VIEW OF THE GROUND NOS. 1 TO 3 ABOVE THE ADDITION MADE BY A.O. OF RS.5,79,83,090/- AND CONFIRMED BY LD. CIT(A) IS UNSUSTAINABLE IN LAW AND THEREFORE BE DELETED. 5) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A)-KOLHAPUR WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS.5,67,456/- CLAIME D AS DEDUCTION OF AMORTIZATION EXPENSES OF PREMIUM PAID ON PURCHASE OF GOVT. SECURITIES IGNORING THE JURISDICTIONAL TRIBUNAL JUDGMENT AND OTHER JUDICIAL VERDICTS PLACED BEFORE HIM IN WRITTEN SUBMISSIONS SUBMITTED. THE ADDITION CONFIRMED BY HIM BE DELETED . 6) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMI NG THE DISALLOWANCE MADE BY THE A.0. OF BUILDING REVALUATION FUND. THE DISALLOWANCE BEING NOT SUSTAINABLE BE DELETED. 3 7) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE DISALLOWANCE OF RS.8650/- MADE BY THE A. 0. ON ACCOUNT DEPRECATION BE NOT SUSTAINABLE BE DELETE D. 8) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW AND SINCE NO ADVANCE-TAX WAS PAYABLE BY THE ASSESSEE THE LEVY OF INTEREST UNDER S. 234B OF RS.67,22,066/- IS NOT JUSTIFIED. IT BE QUASHED. 3. FIRST ISSUE IS WITH REGARD TO ADDITION OF RS.5,79,83,094/- BY THE ASSESSING OFFICER BEING EST IMATED ACCRUED INTEREST ON NPAS. AT THE OUTSET, THE LD. AR POINTED OUT THAT THIS ISSUE IS COVERED BY THE DECIS ION OF PUNE BENCH OF THE TRIBUNAL IN ITA NO.2197/PN/2012 F OR A.Y. 2009-10 IN THE CASE OF ACIT VS. PUPILS COOPERA TIVE BANK LTD. ORDER DATED 27-09-2013 WHEREIN THE TRIBUN AL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER: 4. WE HAVE HEARD THE PARTIES. IN THIS CASE, IT IS NOT DISPUTED THAT ON RECEIPT BASIS THE ASSESSEE IS CONSISTEN TLY DECLARING THE INCOME IN RESPECT OF INTEREST ON NPA ACCOU NT. WE FIND AN IDENTICAL ISSUE HAS COME UP FOR THE CONSIDERATIO N BEFORE THE TRIBUNAL IN THE CASE OF OSMANABAD JANATA S AHAKARI BANK LTD. VIDE ITA NO.795/PN/2011 WHICH DECISION HAS BEEN FOLLOWED BY THE LD.CIT(A). IN THE SAID CASE, IDENTICAL CONTROVERSY HAS BEEN DECIDED AND THE OPERATIVE PART O F THE DECISION IS AS UNDER : 5. WE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AN D PERUSED THE RECORD. WE FIND THAT THE IDENTICAL ISSUE HAS BEE N CONSIDERED BY THE ITAT, VISAKHAPATNAM BENCH, IN THE CASE OF DCI T, VIJAYAWADA VS. THE DURGA COOPERATIVE URBAN BANK LTD., VIJAYAWADA, IN ITA.NO.511/VIZAG/2010 DATED 10.03.2011. I N THE SAID CASE ALSO, IT WAS NOTICED BY THE ASSESSING OF FICER THAT ASSESSEE DID NOT INCLUDE THE INTEREST OF RS.18,26,306/- ON THE NPA ADVANCES. AGAIN THE ISSUE OF APPLICABILITY OF SEC TION 43D WAS CONSIDERED TO THE NON-SCHEDULED BANKS. THE TRIBUN AL PLACED ITS HEAVY RELIANCE ON THE DECISION OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF VASHIST CHAY VYAPAR LT D. [330 ITR 440 (DEL.)], IN WHICH THE HONBLE DELHI HIGH COURT HAS CO NSIDERED THE DECISION IN THE CASE OF SOUTHERN TECHNOLOGIES LT D. [320 ITR 577 (SC)]. THE TRIBUNAL FINALLY HELD THAT THE INTEREST I NCOME RELATABLE TO NPA ADVANCES DID NOT ACCRUE TO THE ASSESSE E. 6. AN IDENTICAL VIEW HAS BEEN TAKEN BY THE ITAT, AHMEDABA D BENCH IN THE CASE OF KARNAVATI COOPERATIVE BANK LTD . VS. DY.CIT [134 ITD 486 (AHMEDABAD)]. IN THE CASE OF KARNAVATI COOPERATIVE BANK LTD. (SUPRA), THE TRIBUNAL HAS CONSIDE RED THE PROVISIONS OF SECTION 43D AND ITS APPLICATION TO THE NON- SCHEDULED BANKS. THE REASONS GIVEN BY THE TRIBUNAL I N THE CASE 4 OF KARNAVATI COOPERATIVE BANK LTD. (SUPRA) FOR HOLDIN G THAT INTEREST ON THE STICKY ADVANCES/NPA ADVANCES CANNOT BE BROUGHT TO TAX BY FOLLOWING THE DECISION IN THE CASE OF UCO BANK (SUPRA), WHICH IS AS UNDER: 15.1. ON CAREFUL ANALYSIS OF THIS SECTION OUR FIRST OBSERVATION IS THAT SECTION 43D IS IN CONTRAST WITH THE FUNDAMENTAL PRINCIPLE OF ACCOUNTANCY. THE CARDINAL PRINCIPLE OF MERCANTILE SYSTEM OF ACCOUNTANCY IS THAT AN INCOME IS TO BE SHOWN IN THE BOOKS OF ACCOUNT ON AC CRUAL BASIS. THE PRINCIPLE IS THAT IT IS IMMATERIAL WHETHER IT WA S ACTUALLY RECEIVED OR NOT, BUT IF AN INCOME IS EXPECTE D TO BE RECEIVED, THEN IT SHOULD BE BROUGHT TO BOOKS OF ACCOU NT AS AN INCOME ACCRUED TO THE ASSESSEE. CONTRARY TO THIS RECOGNIZED PRINCIPLE, THIS SECTION HAS PRESCRIBED TH AT AN INCOME BY WAY OF INTEREST SHALL BE CHARGEABLE TO TAX I N THE PREVIOUS YEAR IN WHICH IT IS CREDITED. THE WORDS CRED ITED AND ACTUALLY RECEIVED HAS BEEN HIGHLIGHTED HEREINA BOVE WHILE REPRODUCING THE SECTION IN QUESTION. THE OTHER DEVIATION FROM THE SAID ACCEPTED PRINCIPLE OF ACCOU NTANCY IS THAT AN INCOME BY WAY OF INTEREST SHALL BE CHARGE ABLE TO TAX IN THE PREVIOUS YEAR IN WHICH IT IS ACTUALLY REC EIVED. THE ACT SAYS THAT THE INCIDENCE OF CREDIT OR ACTUA LLY RECEIVED, WHICHEVER IS EARLIER IS TO BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF CHARGEABILITY OF INCOME BY WAY OF INTEREST. SIMULTANEOUSLY, IT IS NOTEWORTHY THAT THIS SEC TION IS AN OVERRIDING SECTION BECAUSE THE OPENING WORD I S NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT. THEREFORE, IN SPIT E OF ANYTHING CONTAINED IN THE ACT, THE PROVISIONS OF THIS SECT ION SHALL OVERRIDE THOSE PROVISIONS. ONCE THE STATUTE HAS CATEGORICALLY MADE A LAW IN RESPECT OF PUBLIC FINANC IAL INSTITUTIONS THAT INTEREST IS CHARGEABLE TO TAX EITHER IN THE YEAR IN WHICH CREDITED OR ACTUALLY RECEIVED, WHICHEVER IS EARLIER, THEN IT IS COMPULSORY TO ABIDE BY THE SAID R ULE. ACCORDING TO US, NO SCOPE IS LEFT WITH THE REVENUE AUTHORITIES TO IGNORE THESE PROVISIONS DUE TO UNAMBI GUOUS USE OF LANGUAGE IN THE SECTION. (II) STATUS OF ASSESSEE FOR THE PURPOSE OF APPLICAT ION SECTION 43-D. AS FAR AS THE STATUS OF THE ASSESSEE IS CONCERNED, TH E ASSESSING OFFICER HAS STATED THAT THE ASSESSEE-BANK IS A CO-OPERATIVE BANK. UNDISPUTEDLY, THE ASSESSEE IS ALSO GOVERNED BY THE RBI GUIDELINES. VIDE AN EXPLANATION (D) R.W.S. 36(1)(VIIA) ANNEXED TO SECTION 43-D THE DEFINITION OF THE ENTITIES INCORPORATED BY THE SECTION HAVE BEEN D EFINED AND IN THE ABSENCE OF ANY CONTRARY MATERIAL, WE HEREB Y HOLD THAT THE ASSESSEE IS COVERED BY ONE OF THE ENTIT IES, HENCE THE PROVISIONS OF SECTION 43-D ARE TO BE APPLIED. (III) APPLICABILITY OF CBDT CIRCULAR. NEXT ISSUE IS THAT WHETHER A CIRCULAR HAVING EFFECT OF RELAXING RIGOUR OF LAW CAN BE TREATED AS INCONSISTEN T WITH THE PROVISIONS OF A STATUTE. IN ORDER TO AID PROPER DETERMINATION OF THE INCOME OF MONEY LENDERS AND BAN KS, THE CENTRAL BOARD OF DIRECT TAXES HAS ISSUED A CIRCUL AR DATED OCTOBER 6, 1952, PROVIDING THAT WHERE INTEREST ACCRUING ON DOUBTFUL DEBTS IS CREDITED TO A SUSPENSE 5 ACCOUNT, IT NEED NOT BE INCLUDED IN ASSESSEES TAXABLE INCOME, PROVIDED THE INCOME TAX OFFICER IS SATISFIED THAT RECOVERY IS PRACTICALLY IMPROBABLE. THE CBDT U/S.119 OF THE I.T.ACT HAS POWER TO ISSUE CIRCULARS IN EXERCISE O F ITS STATUTORY POWERS. IF THE BOARD CONSIDER IT NECESSARY TO LAY DOWN CERTAIN RULES AND THEN DIRECT THE SUB-ORDINATE AUTHORITIES, SUCH DIRECTIONS ARE REQUIRED TO BE FOLLOWED AN D SUCH CIRCULAR WOULD BE BINDING ON THE DEPARTMENT UNLE SS AND UNTIL HELD AS ULTRA VIRES BY A COURT OF LAW. TH E BOARD HAS POWERS TO RELAX THE SEVERITY OR THE STRICTNESS O F LAW AND THE AUTHORITIES ARE REQUIRED TO FOLLOW THOSE INSTRUCTIONS AS HELD IN THE CASE OF C.B. GAUTAM VS. UNI ON OF INDIA 108 CTR 304 (SC) & 110 CTR 179 (SC); NAVNITLAL C.ZAVERI 56 ITR 198(SC) AND K.P.VARGHESE 131 ITR 597 (SC). IN THE LAND-MARK DECISION, THE HON'BLE SUPREME COURT IN THE CASE OF UCO BANK VS. CIT (1999) 237 ITR 889 (SC) H AS THEREFORE HELD, FIRST, THAT A BENEFICIAL CIRCULAR IS NOT TO BE TREATED AS INCONSISTENT WITH THE PROVISIONS OF STATU TE AND BINDING ON THE AUTHORITIES. SECOND, THAT IN RESPECT O F INTEREST ON STICKY ADVANCES INTEREST INCOME IS TO BE TAXED ONLY WHEN ACTUALLY RECEIVED AS PRESCRIBED BY CBDT CIRCULAR. HOWEVER, IN THE PAST AN INTERESTING TURN HAD TAKEN P LACE BY AN ORDER OF THE HONBLE KERALA HIGH COURT IN THE C ASE OF STATE BANK OF TRAVANCORE REPORTED IN 110 ITR 336 (KE R.), WHEREIN IT WAS HELD THAT THE ASSESSEE, A BANKING COMPANY, DID NOT CREDIT IN ITS ACCOUNT THE INTEREST T HAT HAD ACCRUED ON STICKY ADVANCES BECAUSE THE ASSESSEE F ELT THAT THE INTEREST COULD NOT TO BE REALISED. IT CREDITE D THE INTEREST TO A SEPARATE ACCOUNT KNOWN AS INTEREST SUSPENSE ACCOUNT. ON REFERENCE, THE HON'BLE COURT HAS HELD THAT THERE WAS AN ACCRUAL OF INCOME LIABLE TO INC OME- TAX AND THE ASSESSEE WAS NOT JUSTIFIED IN NOT CREDITI NG THE INTEREST INCOME ON SUCH STICK ADVANCES IT ITS ACCO UNTS. HOWEVER, LATER ON AT THE HON'BLE APEX COURT WHILE PRONOUNCING THE JUDGMENT OF THE SAID STATE BANK OF TRAVANCORE VS. CIT REPORTED IN (1986)158 ITR 102(SC), THERE WERE HON'BLE THREE JUDGES PRESIDING THE COURT, OUT OF WHICH HONBLE TWO JUDGES WERE IN THE OPINION THAT THE INTEREST ON STICKY ADVANCES WAS RIGHTLY TREATED AS INCOME WHICH HAD ACCRUED TO THE APPELLANT. THERE WAS A DESCENDING NOTE BY ONE OF THE HON'BLE JUDGE AND COMMENTED THAT WHETHER AN INCOME ON RECEIPT BASIS O R ON ACCRUAL BASIS, IT IS THE REAL INCOME AND NOT ANY HYPOTHETICAL INCOME WHICH MAY HAVE THEORETICALLY ACCR UED, I.E. SUBJECT TO TAX UNDER THE ACT. NEVERTHELESS, THAT DECISION WAS NOT FOLLOWED WHILE DECIDING THE APPEAL OF UCO BANK (SUPRA) BY THE HON'BLE THREE JUDGES OF THE SUPREME COURT, ALREADY DISCUSSED BY US SUPRA. WE, THEREFORE SUMMARIZE THAT AS OF NOW THE LAW AS LAID DOWN IN UCO BANK IS THAT IN TERMS OF CBDT CIRCULAR THE I NTEREST IS TO BE ADDED AS INCOME ONLY WHEN ACTUALLY RECEIVED OR CREDITED IN RESPECT OF THE STICKY ADVANCES WHILE M AKING ASSESSMENT FOR A FINANCIAL INSTITUTION. 6 (IV) INTERPRETATION OF THE LANGUAGE OF THE STATUTE : WE HAVE REPRODUCED VERBATIM THE PROVISIONS OF SECTIO N 43- D OF THE I.T.ACT AND EXPRESSED AN OPINION THAT IF THE STATUTE HAS USED THE TERMINOLOGY FOR THE CHARGEABILIT Y OF INTEREST ON THE BASIS WHEN CREDITED OR ACTUALLY RECEIVED, THEN IN OUR OPINION NO AMBIGUITY HAS BEEN LEFT BY THE STATUTE. IF THE STATUTE IS SO CLEAR THAT AN INTERPRETATION CAN EASILY BE MADE, THEN THAT EXACT MEAN ING SHOULD BE GIVEN TO THE LANGUAGE OF THE SECTION. FOR T HIS LEGAL PROPOSITION WE PLACE RELIANCE ON KESHAVJI RAVJI A ND COMPANY VS. CIT 183 ITR 01 (SC), WHEREIN IT WAS HELD AS UNDER: AS LONG AS THERE IS NO AMBIGUITY IN THE STATUTORY LANGUAGE, RESORT TO ANY INTERPRETATIVE PROCESS TO UN FOLD THE LEGISLATIVE INTENT BECOMES IMPERMISSIBLE. THE SUPPOSED INTENTION OF THE LEGISLATURE CANNOT THEN BE APPEALED TO WHITTLE DOWN THE STATUTORY LANGUAGE WHICH IS OTHER-W ISE UNAMBIGUOUS. IF THE INTENDMENT IS NOT IN THE WORDS, I T IS NOWHERE ELSE. THE NEED FOR INTERPRETATION ARISES WHE N THE WORDS USED IN THE STATUTE ARE, ON THEIR OWN TERMS, AMBIVALENT AND DO NOT MANIFEST THE INTENTION OF THE LEGISLATURE. WHEN WORDS ACQUIRE A PARTICULAR MEANING OR SENSE BECAUSE OF THEIR AUTHORITATIVE CONSTRUCTION BY SUPER IOR COURTS, THEY ARE PRESUMED TO HAVE BEEN USED IN THE S AME SENSE WHEN USED IN SUBSEQUENT LEGISLATION IN THE SAM E OR SIMILAR CONTEXT. TO SAY THAT THE COURT COULD NOT RESORT TO THE SO-CALLED EQUITABLE CONSTRUCTION OF A TAXING STATUTE IS NOT T O SAY THAT, WHERE A STRICT LITERAL CONSTRUCTION LEADS TO A RE SULT NOT INTENDED TO SUBSERVE THE OBJECT OF THE LEGISLATION, A NOTHER CONSTRUCTION, PERMISSIBLE IN THE CONTEXT, SHOULD NOT BE ADOPTED. IN THIS RESPECT, TAXING STATUTES ARE NOT DIF FERENT FROM OTHER STATUTES. WE CAN THEREFORE SAFELY DRAW A CONCLUSION THAT BY TH E INSERTION OF A SPECIAL PROVISION TO TAX INTEREST INC OME IN THE CASE OF PUBLIC FINANCIAL INSTITUTION, ETC. SECTION 43-D HA S TO BE APPLIED IN ITS LETTER AND SPIRIT. IT IS PERTINENT TO MENTION THAT LATER ON, IN THE CASE OF CIT VS. BANK OF AMERICA S.A. 262 ITR 504 (BOM) THE QUESTION OF INTEREST ON STICK Y LOANS WAS DECIDED IN FAVOUR OF THE ASSESSEE AND HELD THAT THE QUESTION IS TO BE ANSWERED IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECISION OF UCO BANK REPORTED AT 237 ITR 889(SC) :: 240 ITR 355 (SC). LIKEWISE, IN AN ANOTHER CASE OF CIT VS. STATE BANK OF INDIA 262 ITR 662 (BOM.) AGAIN IT WAS HELD THAT THE AMOUNT CREDITED TO TH E INTEREST SUSPENSE ACCOUNT WAS NOT TAXABLE FOLLOWING TH E DECISION PRONOUNCED IN THE CASE OF UCO BANK (SUPRA). (V) JUDGEMENT IN FAVOUR OF REVENUE : FROM THE SIDE OF THE REVENUE AN ORDER OF THE TRIBUN AL HAS BEEN VEHEMENTLY RELIED UPON AND THIS IS THE BASIC RE ASON OF THE ELABORATE DISCUSSION MADE HEREINABOVE SO AS T O UNFOLD THE CONTROVERSY. IN THE SAID DECISION OF THE TRIBUNAL, VIZ. JT.CIT V/S. INDIA EQUIPMENT LEASING LTD. (2008)111 7 ITD 37 (CHENNAI), THE RESPECTED CO-ORDINATE BENCH HAS EXPRESSED THAT QUOTE PRIOR TO INSERTION OF SECTIO N 43D WITH EFFECT FROM 1-4-1991, RECOGNITION OF INCOME WAS O N THE BASIS OF CIRCULAR OF 9-101984. IT SAID THAT FOR F IRST THREE YEARS THE INCOME MAY BE TAKEN ON ACCRUAL BASIS AND F ROM 4TH YEAR ONWARDS, THE INCOME IN RESPECT OF DOUBTFUL D EBTS WAS TO BE RECOGNIZED ON RECEIPT BASIS. SINCE THE INC OME WAS TO BE ASSESSED FOR FIRST THREE YEARS ON ACCRUAL BASIS, PROVISIONS OF SECTION 43D WERE INSERTED IN THE ACT. CIRCULAR NO.621, DATED 19-12-1991 GIVES THE LEGISLATIVE INTENTION STATING THAT SECTION 43D WAS INSERTED WITH A VIEW TO IMPROVING THE VIABILITY OF BANKS, PUBLIC FINANCIAL INSTITUTIONS ETC., SO AS TO PROVIDE THAT INTEREST ON ST ICKY LOANS SHALL BE CHARGED TO TAX ONLY IN THE YEAR IN WHICH THE INTEREST IS ACTUALLY RECEIVED OR CREDITED TO THE PRO FIT AND LOSS ACCOUNT. THIS BENEFIT WAS EXTENDED WITH EFFECT FROM 1- 4-2000 IN THE CASE OF PUBLIC COMPANIES ENGAGED IN LONG - TERM FINANCING OF HOUSING PROJECTS APPROVED BY NATI ONAL HOUSING BANKS. THE LEGISLATURE IN THEIR WISDOM DID N OT EXTEND THE SAME BENEFIT TO NBFCS WHICH HAS BEEN GIV EN TO SCHEDULED BANKS, PUBLIC FINANCIAL INSTITUTIONS, ETC. THE PROVISIONS OF SECTION 43D AS STOOD AT RELEVANT TIME CONTAINED AN EXPRESSION 'THE INCOME BY WAY OF INTER EST IN RELATION TO SUCH CATEGORIES OF BAD OR DOUBTFUL DEBTS AS MAY BE PRESCRIBED HAVING REGARD TO THE GUIDELINES ISSUED BY THE RBI IN RELATION TO SUCH DEBTS'. THIS EXPRESSION CONTINUES TO EXIST IN THE NEWLY SUBSTITUTED SECTION 4 3D APPLICABLE WITH EFFECT FROM 1-4-2000. THIS SHOWS THAT TH E RBI GUIDELINES IN RESPECT OF SCHEDULED BANKS, PUBLIC FINANCIAL INSTITUTIONS ETC., WERE NOT SUFFICIENT FOR RECOGNITION OF INCOME ON CASH BASIS FOR THE PURPOSE S OF INCOME-TAX. THE INCOME OF SUCH ASSESSEES WAS DETERMI NED AS PER CIRCULAR DATED 9-10-1984. BECAUSE OF THIS REASO N, SECTION 43DWAS INSERTED IN THE STATUTE. RBI GUIDELIN ES IN CASE OF NBFC ARE FOR THE PURPOSE OF CONTROL AND SUPERVISION WITH RESPECT TO PUBLIC INTEREST AND VIABI LITY OF THE NBFC. THE GUIDELINES NEVER INTENDED FOR TAKING T HE INTEREST INCOME ACCRUED AS PER SECTION 5 OUT OF THE SCOPE OF THE ACT. IF THE CONTENTION OF ASSESSEE WAS ACCEPTED, IT WOULD AMOUNT TO INSERTION OF 'NBFC' IN SECTION 43D, T HAT TOO BY A GUIDELINE ISSUED FOR DIFFERENT PURPOSES BY AN AUTHORITY OTHER THAN THE PARLIAMENT IN OTHER WORDS, TH E DOCTRINE OF 'CASUS OMISSUS' WILL DEEM TO HAVE BEEN APPLIED WHICH IS CONTRARY TO LAW OF LAND.UNQUOTE. THE BASIC REASON FOR DIRECTING TO ASSESS THE ACCRUED IN TEREST ON NPA WAS THE RBI GUIDELINES ISSUED ONLY FOR SCHEDULED BANKS, PUBLIC FINANCIAL INSTITUTIONS AND NOT FOR NBFC. T HE OBSERVATION OF THE RESPECTED TRIBUNAL WAS THAT IF T HE CONTENTION OF THE ASSESSEE WAS TO BE ACCEPTED, THEN IT WOULD AMOUNT TO INSERTION OF NBFC IN SECTION 43-D O F THE I.T.ACT. AS AGAINST THAT, AS FAR AS THE ASSESSEE IS CONCERNED, IT IS AN ACCEPTED FACT THAT THE ASSESSEE IS A COOPERATIVE BANK AND NOT A NON-BANKING FINANCIAL COMPANY AND THIS NOTEWORTHY DISTINCTION HAS ALREADY BEEN APPRECIATED BY US IN ONE OF THE PARAGRAPHS ABOVE. THERE IS ONE MORE DECISION OF THE HONBLE APEX COURT WHICH IS YET TO BE MENTIONED WHILE DISCUSSING THE ARGUMENTS RAISED FROM THE SIDE OF THE REVENUE. A DEC ISION IN THE CASE OF SOUTHERN TECHNOLOGIES LTD. VS. JT. CIT 3 20 ITR 577 (SC) HAS BEEN CITED BUT THE FUNDAMENTAL DIFFERENCE IS THAT THE ISSUE BEFORE THE HONBLE COUR T WAS IN 8 RESPECT OF PROVISION FOR NPA AND DEBITED TO P&L ACCO UNT BY A NBFC. THE SAID PROVISION WAS UNDISPUTEDLY MADE BY THE SAID NBFC AS PER THE PRUDENTIAL NORMS MADE BY THE RESERVE BANK. THEREFORE WE WANT TO MAKE IT CLEAR THAT THE QUESTION FOR CONSIDERATION BEFORE THE HONBLE COURT W AS THAT IF A PROVISION FOR DOUBTFUL DEBT IS MADE THEN WHAT WILL BE THE LEGAL POSITION OF THE APPLICABILITY OF EXPLANATI ON TO SECTION 36(1)(VII) OF THE I.T. ACT. FOR THE SAKE OF REA DY REFERENCE, RELEVANT PARAGRAPH FROM THE HELD PORTION IS REPRODUCED BELOW: THE INCOME-TAX IS A TAX ON REAL INCOME, I.E., THE PR OFITS ARRIVED AT ON COMMERCIAL PRINCIPLES SUBJECT TO THE PROVISIONS OF THE ACT. THEREFORE, IF BY THE EXPLANATI ON TO SECTION 36(1)(VII) A PROVISION FOR DOUBTFUL DEBT IS KEP T OUT OF THE AMBIT OF BAD DEBT WHICH IS WRITTEN OFF, THEN ONE H AS TO TAKE INTO ACCOUNT THE EXPLANATION IN COMPUTING THE TOTAL INCOME UNDER THE INCOME-TAX ACT FAILING WHICH ONE C ANNOT ASCERTAIN THE REAL PROFITS. THE PROVISION FOR NON-PER FORMING ASSETS DEBITED IN THE PROFIT AND LOSS ACCOUNT UNDER T HE RESERVE BANK DIRECTIONS OF 1998 IS ONLY A NOTIONAL EXPENSE AND, THEREFORE, THERE WOULD BE ADD BACK TO THA T EXTENT IN THE COMPUTATION OF TOTAL INCOME UNDER THE INC OME- TAX ACT. THEREFORE THE DISTINCTION CAN EASILY BE DRAWN THAT IN THE APPEAL BEFORE US THE QUESTION IS ACCRUAL OF INTEREST INCOME ON STICKY LOAN BUT IN THIS CITED DECISION THE QUESTIO N BEFORE HE APEX COURT WAS ABOUT THE ADMISSIBILITY OF PROVISIO N MADE IN RESPECT OF DOUBTFUL DEBTS. (VI ) CONCEPT OF REAL INCOME APPROVED IN THE CASE OF BANKING BUSINESS: BEFORE US, THE THEORY OF REAL INCOME HAS ALSO BEEN ARGUED AND IN SUPPORT A DECISION OF HON'BLE COURT PRONOUNCED IN THE CASE OF CIT VS. GODHRA ELECTRICITY C O. 225 ITR 746 (SC). IN SHORT, THE VIEW EXPRESSED WAS THA T IF INCOME DOES NOT RESULT AT ALL, THERE CANNOT BE ANY TAX AND THAT IF AN INCOME HAS NOT MATERIALIZED, THEN MERELY AN ENTRY MADE ABOUT A HYPOTHETICAL INCOME BY FOLLOWING BO OK KEEPING METHODS, THE LIABILITY TO TAX CANNOT BE ATTRACTE D. NOW AT PRESENT THE SITUATION IS THAT THE HON'BLE MAD RAS HIGH COURT IN THE CASE OF CIT VS. ELGI FINANCE LTD. 29 3 ITR 357 (MAD.) HAS TAKEN A VIEW THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF LEASE, FINANCE AND HIRE PURCHASE AND THAT THE PRINCIPLE OF ACCRUAL COMES INTO PLAY WITHOUT INCOME WAS RECOGNIZED AND THAT THE ASSESSEE HAD CLASSIFIED ITS ASSETS ON THE BASIS OF NOTIFICATION ISSUED BY R.B.I. AND FOUND THAT CERTAIN ASSETS CAME UNDER THE CATEGORY OF NPA AND THAT FROM SUCH N PA THE ASSESSEE HAD NOT RECOGNIZED ANY INCOME IN CONSONANCE WITH THE NOTIFICATION ISSUED BY RBI AND A S-9 ISSUED BY ICAI AND THAT THE ASSESSEE WAS JUSTIFIED IN NOT RECOGNIZING SUCH INCOME. THE COURT HAD FURTHER EXPRE SSED THAT THERE WAS NO OCCASION TO CONSIDER WHETHER THE PRINCIPLE OF ACCRUAL WOULD ARISE OR NOT, NEVERTHELESS, T HE INTEREST FROM SUCH NPA WOULD BE TAXED IN THE APPROPR IATE ASSESSMENT YEAR ON THE BASIS OF ACTUAL RECEIPT. IT IS WORTH TO MENTION THAT FOR THIS DECISION, THE HON'BLE MADRAS HIGH 9 COURT HAS RELIED UPON AN ANOTHER DECISION OF THE SA ME HIGH COURT PRONOUNCED IN THE CASE OF JT.CIT VS. INDIA EQUIPMENT LEASING LTD. 293 ITR 350. 7. IN THE CASE BEFORE US, ADMITTEDLY, ASSESSEE HAS DIRECTLY TAKEN THE INTEREST TO THE BALANCE SHEET AN D IT IS NOT ROUTED THROUGH THE PROFIT & LOSS ACCOUNT. MORE OVER, THE ISSUE OF THE TAXABILITY OF THE INTEREST ON THE S TICKY LOSSES/ADVANCES, IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCHES IN THE CASE O F THE DURGA COOPERATIVE 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. 4.1 IN THIS CASE, NOWHERE IT IS DISPUTED THAT ON RECEIPT BASIS THE ASSESSEE IS RECOGNISING THE INCOME THAT HAS BEEN AC CEPTED BY THE AO IN THE PAST. MOREOVER, THE ISSUE STANDS COVE RED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS TRIBUNAL IN T HE CASE OF OSMANABAD JANATA SAHAKARI BANK LTD. (SUPRA). WE FIND NO REASON TO TAKE A DIFFERENT VIEW THAN TAKEN BY THE LD.CIT(A) ON THIS ISSUE. WE ACCORDINGLY CONFIRM THE ORDER O F THE LD.CIT(A). GROUND NO.1 BY THE REVENUE IS DISMISSED. 3.1 NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE ON B EHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWING SAME REASONING ADDITION OF RS.5,79,83,094/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ESTIMATED ACCRUED I NTEREST ON NPA IS DIRECTED TO BE DELETED. 4. NEXT ISSUE IS WITH REGARDS TO DISALLOWANCE OF RS.5,67,456/- CLAIMED AS DEDUCTION OF AMORTIZATION EXPENSES OF PREMIUM PAID ON PURCHASE OF GOVT. SECUR ITIES. AT THE OUTSET, THE LD. AR POINTED OUT THAT THIS ISS UE IS COVERED BY THE ORDER OF ITAT PUNE BENCH IN ITA NO.449/PN/2012 AND CO NO.130/PN/2013 ORDER DATED 05 - 08-2013 WHEREIN VIDE PARA 10 THE ISSUE HAS BEEN DEC IDED IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE U S. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN T HE CASE OF NAHSIK MERCHANT COOPERATIVE BANK LTD. (SUPRA). WE FIND THE TRIBUNAL HAS DISCUSSED THE ISSUE AND DISMISSED TH E GROUNDS RAISED BY THE REVENUE BY HOLDING AS UNDER : 10 4. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATE RIAL ON RECORD WE FIND THAT WITH THE ADVENT OF SECTION 8 0P(4) W.E.F. A.Y. 2007-08 HAS CLOSED THE DOORS FOR COOPER ATIVE BANKS FOR CLAIMING THE BENEFIT OF DEDUCTION U/S.80P (2)(A)(I) FROM THIS TOTAL INCOME. HOWEVER, THE COOPERATIVE SO CIETY SHOULD NOW BE ENTITLED TO BE ASSESSED AS NORMAL BAN KING COMPANY. THE CLAUSE (4) INSERTED IN SECTION 80P HAS TAKEN AWAY THE BENEFIT OF THE ERSTWHILE DEDUCTION AVAILABLE TO COOPERATIVE SOCIETY IN CARRYING ON BUSINES S OF BANKING OR PROVIDING CREDIT FACILITY TO ITS MEMBERS . THE NEW CLAUSE (4) INSERTED BY THE FINANCE ACT, 2006 W. E.F. 01- 04-2007 READS AS UNDER : ' THE PROVISION OF THE SECTION WAS NOT IN RELATION TO ANY COOPERATIVE BANK OTHER THAN AGRICULTURAL CREDIT SOC IETY OR PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPM ENT BANK'. 5. THE INTENTION OF THE PROVISION MAY BE DERIVED M ORE PRECISELY FROM RELEVANT PARA 166 OF THE BUDGET SPEE CH WHICH STATED THAT : 'CO-OPERATIVE BANKS, LIKE ANY OTHER BANK, ARE LENDING INSTITUTIONS AND SHOULD PAY TAX ON THEIR PROFITS, PRIMARY AGRICULTURAL CREDIT SOCIETIE S (PACS) AND PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK (PCARDB) STAND ON A SPECIAL FOOTING AND WILL CONTINUE TO BE EXEMPT UNDER SECTION 80P OF THE INCOME TAX ACT. HOWEVER, I PROPOSE TO EXCLUDE ALL OTHER CO-OPERATIVE BANKS FROM THE SCOPE OF THAT SECTION'. ACCORDINGLY, SECTION 80P IS TO BE AMENDED TO GIVE E FFECT TO THE ABOVE PROPOSAL. IT IS ALSO PROPOSED TO AMEND SE CTION 2(24) TO PROVIDE THAT PROFITS AND GAINS OF BUSINESS OF BANKING (INCLUDING PROVIDING CREDIT FACILITIES) CARRIED O N BY A CO-OPERATIVE SOCIETY WITH ITS MEMBERS SHALL BE INCLUDED IN THE DEFINITION OF 'INCOME' (WITH EFFECT FROM 1ST APRIL, 2007)'. 6. COOPERATIVE BANK UNLIKE OTHER COMMERCIAL BANKS ARE SUBJECTED TO DUAL CONTROL FROM BOTH RBI AS WELL AS FROM STATE COOPERATIVE DEPARTMENT. THE ACCOUNTING TREATMENT FOR A COOPERATIVE BANK IS THEREFORE A RESULT OF GUIDELINES FROM BOTH THE CONTROLLING AUTHORITIES. ORDINARILY A DEDUCTION IS NOT AVAILABLE TO AN ASSESSEE UNLESS SPECIFICALLY PROVIDED UNDER THE ACT. THIS IS IRRESPECTIVE OF ACCOUNTING TREATMENT PROVIDED BY TH E ASSESSEE IN ITS BOOKS OF ACCOUNTS. BUT AT THE SAME TIME IT WAS WELL SETTLED THAT DEDUCTION EXPRESSLY MENTIONED UNDER THE ACT ARE NOT EXHAUSTIVE AND PROFIT IS TO B E DERIVED ACCORDING TO ORDINARY COMMERCIAL PRINCIPLES . AS PER THE EXTANT RBI GUIDELINES DATED 01-07-2009 THE INVESTMENT PORTFOLIO OF THE BANKS IS REQUIRED TO BE CLASSIFIED UNDER 3 CATEGORIES VIZ., HELD THE MATURITY HTM), HELD FOR TRADING (HFT) AND AVAILABLE FOR SALE (AFS). THE VALUE OF EACH KIND OF INVESTMENT IS TO B E DONE IN THE FOLLOWING MANNER: SR.NO. CLASSIFICATION VALUATION NORMS OF INVESTMENT . 1. HTM THESE ARE CARRIED AT ACQUISITION COST UNLESS THE COST IS MORE THAN THE FACE VALUE, IN WHICH CASE THE PREMIUM SHOULD BE AMORTISED OVER THE PERIOD REMAINING 11 TO MATURITY. THE PREMIUM IS REQUIRED TO BE AMORTISE D OVER THE PERIOD REMAINING TO MATURITY. THIS APART, ANY PERMANENT DIMINUTION IN VALUE SHALL FV SHALL GO ON TO REDUCE COST OF THE INVESTMENT. 2. AFS THE INDIVIDUAL SCRIPS IN THE AVAILABLE FOR SALE CATEGORY WILL BE MARKED TO MARKET AT QUARTERLY OR AT MORE FREQUENT INTERVALS. THESE INVESTMENTS ARE CONSIDERED TO FORM STOCK-IN-TRADE OF A BANK AND THEREFORE ARE TO BE VALUED AT COST OR NRV, WHICHEVER IS LESS. FALL IN VALUE BELOW COST, THEREFORE, IS TO BE PROVI DED IMMEDIATELY, HOWEVER ANY NET APPRECIATION IN VALUE IS IGNORED AND NOT RECOGNIZED AS INCOME ON THE BASIS O F CONSERVATISM. 3. HFT THE INDIVIDUAL SCRIPS IN THE HELD FOR TRAD ING CATEGORY WILL BE MARKED TO MARKET AT MONTHLY OR AT MORE FREQUENT INTERVALS AND PROVIDED FOR AS IN THE CASE OF THOS E IN THE AVAILABLE FOR SALE CATEGORY. 7. IN PARA (VII) OF THE CBDT INSTRUCTION NO.17 OF 2008 DATED 26.11.2008, ON 'ASSESSMENT OF BANK - CHECK LIST FOR DEDUCTION, STATES AS UNDER: 'AS PER RBI GUIDELINES DATED I6TH OCTOBER, 2000, THE INVESTMENT PORTFOLIO OF THE BANKS IS REQUIRED TO BE CLASSIFIED UNDER THREE CATEGORIES VIZ. HELD TO MATURITY (HTM), HELD FOR TRADING (HFT) AND AVAILABLE FOR SALE (AFS). INVESTMENTS CLASSIFIED UNDER HTM CATEGORY NEED NOT BE MARKED TO MARKET AND ARE CARRIED AT ACQUISITION COST UNLESS THESE ARE MORE THAN THE FACE VALUE, IN WHIC H CASE THE PREMIUM SHOULD BE AMORTISED OVER THE PERIOD REMAINING TO MATURITY. IN THE CASE OF HFT AND AFS SECURITIES FORMING STOCK IN TRADE OF THE BANK, THE DEPRECIATION/ APPRECIATION IS TO BE AGGREGATED SCRIP WISE AND ONLY NET DEPRECIATION, IF ANY, IS REQUIRED TO BE PROVIDED FOR IN THE ACCOUNTS. THE LATEST GUIDELINES OF THE RBI MAY BE REFERRED TO FOR ALLOWING ANY SUCH CLAIMS.' 8. THE ITAT, MUMBAI BENCH, IN THE CASE OF ACIT VS. THE BANK OF RAJASTHAN LTD. (2011) TIOL-35-ITAT- MUMBAI, HAS HELD THAT IN CASE OF BANKS, THE PREMIUM PAID IN EXCESS OF FACE VALUE OF INVESTMENTS CLASSIFIED UNDER HTM CATEGORY WHICH HAS BEEN AMORTISED OVER THE PERIOD TILL MATURITY IS ALLOWABLE AS REVENUE EXPENDITURE SINCE THE CLAIM IS AS PER RBI GUIDELINES AND CBDT ALSO HAS DIRECTED TO ALLOW SUCH PREMIUM. IT HAS ALSO BEEN HELD IN THE CASE OF CATHOLIC SYRIAN BANK LTD. VS. ACIT THAT AMORTIZATION ON PURCHASE OF GOVERNMENT SECURITIES WAS MADE AS PER PRUDENTIAL NORMS OF THE RBI AND SAME WAS ALLOWABLE DEDUCTION. IN VIEW OF ABOVE, ASSESSEE WAS JUSTIFIED IN CONTENDING FOR AMORTIZATION OF PREMIUM PAID IN EXCESS OF FACE VALUE OF SECURITIES HELD TO MATURITY (HTM) CATEGORY OR PERIOD REMAINING TILL MATURITY WAS FOUND REASONABLE BY THE CIT(A). ACCORDINGLY ADDITION OF RS.17,91,659/- MADE BY THE ASSESSING OFFICER BY DISALLOWING AMOUNT TOWARDS AMORTIZATION OF GOVERNMENT SECURITIES (HMT) WAS DELETED. THIS REASONED FACTUAL AND LEGAL FINDING OF THE CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 12 9. AS A RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 10.1 RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL AND IN ABSENCE OF ANY CONTRARY MA TERIAL BROUGHT TO OUR NOTICE AGAINST THE ABOVE CITED DECISION W E FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) DELETING THE ADDITION . ACCORDINGLY, THE ORDER OF THE LD.CIT(A) IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 4.1 NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE ON B EHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWING SAME REASONING THE ASSESSING OFFICER IS DIRECTED TO ALOE CLAIM OF RS.5,67,456/- AS DEDUCTION OF AMORTIZATION EXPENSES OF PREMIUM PAID ON PURCHASE OF GOVT. SECURITIES. 5. NEXT ISSUE IS WITH REGARDS TO DISALLOWANCE OF RS.8,650/- MADE BY THE AO ON ACCOUNT OF DEPRECIATIO N. THE LD. AR DID NOT PRESS THE SAME, SO SAME IS DISM ISSED AS NOT PRESSED. THE LAST ISSUE IS WITH REGARD TO LEVY OF INTEREST U/S.234B OF RS.67,22,066/- WHICH IS CONSEQUENTIAL. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 6. IN ITA NO.2068/PN/2013 FOR A.Y. 2010-11 THE ASSESSEE HAS FILED THE APPEAL ON FOLLOWING GROUNDS : 1) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A)-KOLHAPUR WAS JUSTIFI ED IN CONFIRMING THE ADDITION MADE OF RS.5,38,53,061/- BY THE A.O. BEING THE ESTIMATED ACCRUED INTEREST ON NPAS? EVEN IGNORING THE JURISDICTIONAL JUDGMENT OF THE TRIBUNAL? WHETHER THE CIT(A) OUGHT TO HAVE FOLLOWED THE JURISDICTIONAL TRIBUNAL JUDGMENT WHICH WAS BINDING ON HIM IN VIEW OF APEX COURTS JUDGMENT? 2) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE JUDGMENT OF THE OTHER CO- ORDINATED BENCHES OF THE TRIBUNAL AND ALSO OTHER HI GH COURT JUDGMENTS WERE NOT BINDING ON THE AUTHORITIES BELOW? WHETHER THE LD. CIT(A) BREACHED THE PRINCIPL ES OF JUDICIAL PROPRIETY IN NOT FOLLOWING THE VARIOUS JUDICIAL VERDICTS RELIED UPON BEFORE HIM AND ALSO 13 INCLUDED IN THE WRITTEN SUBMISSIONS PLACED BEFORE HIM? 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW AND IN VIEW OF THE GROUND NOS. 1 TO 3 ABOVE THE ADDITION MADE BY A.I. OF RS.5,38,53,601/- AND CONFIRMED BY LD.CIT(A) IS UNSUSTAINABLE IN LAW AND THEREFORE BE DELETED. 4) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A)-KOLHAPUR WAS CORREC T IN HIS APPEAL ORDER SAYING THAT THE RESERVE BANK GUIDELINES CANNOT OVERRIDE THE PROVISIONS OF INCOME TAX ACT AND FOR THAT RELYING ON THE PROVISIONS OF CHAPTER IIIB OF RBI ACT, 1934 WHICH ARE ONLY IN RESPECT OF NBFCS AND NOT CO-OP BANKS: WHETHER THE LD.CIT(A) WAS DUTY BOUND TO CONSIDER THE VARIOUS JUDICIAL VERDICTS OF HIGH COURT AND SUPREME COURT POINTED OUT THAT RBI GUIDELINES WERE BINDING INCLUDING CBDT CIRCULAR NO.17/2008 ? WHETHER LD.CIT(A) IGNORED ALL THIS AND DECIDED THE ISSUE AGAINST THE ASSESSEE WHICH IS PERVERSE AND THEREFOR E UNSUSTAINABLE ? 5) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMIN G THE ADDITION MADE BY THE A.O. OF RS.25,700/- AND IT BE DELETED?. 6) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEVY UNDER S. 234A OF RS.10,07,640/- WAS NOT JUSTIFIED SINCE THE RETURN OF INCOME WAS FILED WITHIN THE LIMITATION OF S.139(1) OF THE ACT. THE SAME BE DELETED. 7) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW AND SINCE NO ADVANCE-TAX WAS PAYABLE BY THE ASSESSEE AND HENCE THE LEVY OF INTEREST U/S.234B OF RS.60,45,840/- IS NOT JUSTIFIED. IT BE QUASHED. 7. THE FIRST ISSUE IS WITH REGARDS TO ADDITION OF RS.5,38,53,801/- MADE BY THE ASSESSING OFFICER BEI NG ESTIMATED ACCRUED INTEREST ON NPA. WE HAVE ALREADY DECIDED THIS ISSUE VIDE PARA 3.3 OF THIS ORDER. FA CTS BEING SIMILAR, SO FOLLOWING SAME REASON THE ASSESSING OFF ICER IS DIRECTED TO DELETE THE ADDITION MADE BY THE ASSESSI NG 14 OFFICER OF RS.5,38,53,601/- BEING ESTIMATED ACCRUED INTEREST ON NPA. 8. NEXT ISSUE IS WITH REGARDS TO ADDITION MADE BY T HE ASSESSING OFFICER OF RS.25,700/- BY WAY OF GROUND N O.4. THE LD. AR DID NOT PRESS THE SAME, SO SAME IS BEING DISMISSED AS NOT PRESSED. 9. NEXT ISSUE IS WITH REGARDS TO LEVY OF INTEREST U /S.234A OF RS.10,07,640/-. LD. CIT HAS DECIDED THIS ISSUE BEING CONSEQUENTIAL IN NATURE. WHILE STAND OF THE ASSESS EE IS THAT LEVY OF INTEREST U/S.234A OF RS.10,067,640/- W AS NOT JUSTIFIED SINCE RETURN OF INCOME WAS FILED WITHIN L IMITATION OF SECTION 139(1) OF THE ACT. ACCORDING TO THE LD. AR THE RETURN WAS FILED WITHIN LIMITATION PERIOD, SO LEVY OF INTEREST U/S.234A IS NOT JUSTIFIED. AFTER HEARING BOTH THE SIDES, WE FIND THAT THIS ISSUE NEED FURTHER PROBE INTO THE MA TTER, SO WE RESTORE THE ISSUE TO THE FILE OF THE ASSESSING O FFICER WITH A DIRECTION TO DECIDE THE SAME AS PER FACT AND LAW AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO ASSESSEE. 10. NEXT ISSUE IS WITH REGARD TO LEVY OF INTEREST U /S.234B OF RS.60,45,840/- WHICH IS CONSEQUENTIAL. THE ASSE SSING OFFICER IS DIRECTED ACCORDINGLY. 11. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE PARTLY ALLOWED AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON 31-12-2013. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED : 31 ST DECEMBER, 2013 SATISH 15 COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A), KOLHAPUR 4. THE CIT, KOLHAPUR 5. D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SEC RETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE