Pandyan Grama Bank, Virudhunagar V. DCIT, Virudhunagar

ITA 2089/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7946 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 27-10-2016
• Assessment Year: 2013-2014
• Appeal Filed On: 11-07-2016
• Court: TRIBUNAL
• Department Lawyers: M M BHUSARI
• Assessee Lawyers: R VIJAYARAGHAVAN; P GURUSAMY ITP
• Keywords: Bad and doubtful debts
• Section: 143(3); 263

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I T.A. NO. 2089 /MDS/2016 / ASSESSMENT YEAR :20 1 3 - 1 4 M/S. PANDYAN GRAMA BANK, ADMN. OFFICE, NO. 2 - 70 - 1, COLLECTORATE COMPLEX, VIRUDHUNAGAR 626 002. [PAN: AAAAP0895P] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1, KATCHERI ROAD, VIRUDHUNAGAR 626 001. ( APPELLANT ) ( R ESPONDENT ) I .T.A. NOS. 2319 AND 2320/MDS/2016 ASSESSMENT YEAR S :2012 - 13 & 2013 - 14 & C.O. NO S . 134 AND 135 /MDS/2016 [IN I.T.A. NO S . 2319 & 2320 /MDS/2016 ] THE DEPUTY COMMISSIONER OF INC OME TAX, CIRCLE 1, VIRUDHUNAGAR 626 001. VS. M/S. PANDYAN GRAMA BANK, ADMN. OFFICE, NO. 2 - 70 - 1, COLLECTORATE COMPLEX, VIRUDHUNAGAR 626 002. ( APPELLANT ) ( R ESPONDENT /CROSS OBJECTOR ) DEPARTMENT BY : SHRI M.M. BHUSARI , CIT ASSESSEE BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE & SHRI P. GURUSAMY, ITP / DATE OF HEARING : 2 7 . 1 0 .201 6 / DATE OF P RONOUNCEMENT : 30 .11 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : BOTH THE APPEAL S PREFERRED BY THE REVENUE AND THE CROSS OBJECTION S FILED BY THE ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDER S OF THE LD. I.T.A. NO S . 2319 & 2320 /M/1 6 , C .O. NO S . 134 & 135 /M/16 & I.T.A. NO. 2089/M/2016 2 COMMISSIONER OF INCOME TAX (APPEALS) 3 , MADURAI BOTH DATED 3 1 . 05 .201 6 FOR THE ASSESSMENT YEAR S 20 12 - 13 AND 2013 - 14 . THE REVENUE HAS RAISED THE COMMON I SSUE FOR BOTH THE ASSESSMENT YEARS THAT THE LD. CIT(A) ERRED IN HOLDING THAT THE STATUS OF THE ASSESSEE IS COOPERATIVE SOCIETY AND DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. ON THE OTHER HAND, THE ASSESSEE, BY MEANS OF CROSS OBJECTIONS SUPPORTED THE ORDERS OF THE LD. CIT(A) ON THIS ISSUE. 2. THE ASSESSEE ALSO FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A) 3, MADURAI FOR THE ASSESSMENT YEAR 2013 - 14, WHEREIN, THE LD. CIT(A) HAS ERRED IN DECLINING TO ADJUD ICATE THE ISSUES WITH REGARD TO FLOATING PROVISION FOR NPA, LOSS ON REDEMPTION OF SECURITIES AND BAD DEBTS WRITTEN OFF, SINCE THERE WAS NO TAX IMPLICATION AS DEDUCTION UNDER SECTION 80P2(A)(I) OF THE ACT HAS BEEN ALLOWED BY THE LD. CIT(A). 3. BRIEF FAC TS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 27.09.2012 ADMITTING NIL INCOME WHICH WAS PROCESSED U NDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] . SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY A ND NOTICE UNDER SECTION 143(2) OF THE ACT DATED 19.08.2013 WAS ISSUED AND THE SAME WAS DULY SERVED ON THE ASSESSEE ON 31.08.2013. IN RESPONSE THERETO, THE ASSESSEE HAS FURNISHED THE DETAILS IN WRITING AND OFFERED ITS EXPLANATION. IN THE ASSESSMENT ORDER, T HE ASSESSING OFFICER HAS OBSERVED THAT AS PER THE I.T.A. NO S . 2319 & 2320 /M/1 6 , C .O. NO S . 134 & 135 /M/16 & I.T.A. NO. 2089/M/2016 3 WEBSITE OF THE ASSESSEE, THE ASSESSEE IS A SCHEDULED BANK IN THE PUBLIC SECTOR IN INDIA UNDER REGIONAL RURAL BANKS ACT, 1976, ESTABLISHED ON 9 TH MARCH, 1977. INDEED, THE ASSESSEE HAS OBTAINED PAN AS AN ASSO CIATION OF PERSONS AND FILING ITS RETURN OF INCOME FROM ITS INCEPTION AS A CO - OPERATIVE SOCIETY. IN ITS RETURN OF INCOME, THE ASSESSEE HAS CLAIMED THE DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT TO THE TUNE OF .41,77,10,510/ - . BEFORE THE ASSESSING OFFICER, IT WAS CONTENDED THAT AS PER THE PROVISIONS OF SECTION 22 OF RRB ACT, THE ASSESSEE IS A CO - OPERATIVE SOCIETY FOR THE PURPOSE OF INCOME TAX ACT, 1961 AND AS PROVISIONS SECTION 80P(4) OF THE ACT ARE APPLICABLE ONLY TO A CO - OPERATIVE BANK AND THE SAME IS NOT APPLICABLE TO THE ASSESSEE, THE ASSESSEE HAS CLAIMED TO BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. AFTER MAKING DETAILED DISCUSSION IN THE ASSESSMENT ORDER AND DISTINGUISHING THE RRB ACT AND INCOME TAX ACT, THE ASSESSING OFFICER HAS CONCLUDED THE STATUS OF THE ASSESSEE AS A COMPANY AND THE DEDUCTION CLAIMED BY THE ASSESSEE OF .41,77,10,510/ - UNDER SECTION 80P OF THE ACT WAS DISALLOWED AND COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). BY FOLLOWING THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR S 2008 - 09 AND 2010 - 11 IN I.T.A. NOS. 572 & 595/MDS/2014 VIDE ORDER DATED 25.08.2014, THE LD. CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO ALLOW THE DEDUCTION UNDER I.T.A. NO S . 2319 & 2320 /M/1 6 , C .O. NO S . 134 & 135 /M/16 & I.T.A. NO. 2089/M/2016 4 SECTION 80P(2)(A)(I) OF THE ACT. ON SIMILAR FACTS AND CIRCUMSTANCES IN AN IDENTICAL ISSUE, THE LD. CIT(A) HAS GIVEN SIMILAR FINDINGS FOR THE ASSESSMENT YEAR 2013 - 14 ALSO. 5. ON BEING AGGRIEVED, THE REVENUE IS IN APPEALS BEFORE THE TRIBUNAL FOR BOTH THE ASSESSMENT YEARS. BY SUPPORTING THE ORDERS OF THE ASSESSING OFFICER, THE LD. DR HAS SUBMITT ED THE PROVISIONS OF SECTION 80P OF THE ACT WAS AMENDED BY THE FINANCE ACT, 2006 W.E.F. 1 ST APRIL, 2007 INTRODUCING SUB - SECTION (4), WHICH LAID DOWN SPECIFICALLY THAT THE PROVISIONS OF SECTION 80P WILL NOT APPLY TO ANY CO - OPERATIVE BANK OTHER THAN A PRIMAR Y AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK AND THEREFORE, THE STATUS OF THE ASSESSEE IS A CORPORATE ENTITY AND NOT ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. ON THE OTHER HAND, BY FILING CROSS OBJECTIONS IN SUPPORT OF THE ORDERS OF THE LD. CIT(A) FOR BOTH THE ASSESSMENT YEARS, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL FROM THE ASSESSMENT YEARS 2007 - 08 ONWARDS, WHICH MAY BE FOLLOWED FOR ASSESSMENT YEARS UNDER CONSIDERATION. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH ORDERS OF AUTHORITIES BELOW AND ALSO PERUSED THE COPIES OF EARLIER ORDER S OF THE TRIBUNAL . IT IS AN ADMITTED FACT THAT FOR THE ASSESSMENT YEAR I.T.A. NO S . 2319 & 2320 /M/1 6 , C .O. NO S . 134 & 135 /M/16 & I.T.A. NO. 2089/M/2016 5 2007 - 08, THE ASSESSING OFFICER HAS ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT VIDE HIS ORDER DATED 19.03.2009. BY ORDER DATED 28.10.2009, THE LD. CIT PASSED OR DER UNDER SECTION 263 OF THE ACT QUASHING THE ASSESSMENT ORDER ON THE GROUND THAT IN VIEW OF INTRODUCING SUB - SECTION (4) TO SECTION 80P OF THE ACT AS PER FINANCE ACT, 2006 THAT THE PROVISIONS OF SECTION 80P OF THE ACT WILL NOT APPLY TO ANY CO - OPERATIVE BAN K OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, THE DEDUCTION ALLOWED TO THE ASSESSEE UNDER SECTION 80P(2)(A)(I) OF THE ACT SHOULD BE WITHDRAWN. AGAINST THE ORDER OF THE LD. CIT, BY CONS IDERING THE RRB ACT AND INCOME TAX ACT, THE TRIBUNAL VIDE ITS ORDER DATED 13.08.2010 IN I.T.A. NO.1941/MDS/2010, ON MERITS, GAVE A CONCURRENT FINDINGS THAT THE ASSESSEE HAS TO BE TREATED AS A CO - OPERATIVE SOCIETY AND WOULD BE ELIGIBLE TO CLAIM DEDUCTION UN DER SECTION 80P(2)(A)(I) OF THE ACT AND THE RELEVANT PORTION OF THE ORDER IS REPRODUCED AS UNDER: 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. IT IS NOT DISPUTED THAT IF THE ASSESSEE IS TO BE TREATED AS A CO - OPERATIVE SOCIETY, THEN THE DEDUCTION UNDER SECTION 80P(2) (A) (I) OF THE ACT IS AVAILABLE TO IT. THE ONLY DISPUTE HERE IS THAT ASSESSEE BEING A REGIONAL RURAL BANK ESTABLISHED UNDER RRB ACT, 1976, WAS TO BE TREATED AS A CO - OPERATIVE BANK OR COULD BE CONSIDERED AS A CO - OPERATIVE SOC IETY NO DOUBT, SUBSECTION (4) OF SECTION 80P INTRODUCED BY FINANCE ACT 2006 CLEARLY TAKES A COOPERATIVE BANK OUT OF THE PURVIEW OF DEDUCTION AVAILABLE UNDER 80P(2)(A)(I) OF THE ACT THUS, IF THE ASSESSEE IS A COOPERATIVE BANK, IT WOULD NOT BE ELIGIBLE FOR S UCH DEDUCTION CONTENTION OF THE ASSESSEE IS THAT IN VIEW OF SECTIONS 22 ARID 23 OF THE RRB ACT, 1976, IT WAS TO BE TREATED AS A COOPERATIVE SOCIETY AND THE SAID SECTIONS HAVING NOT BEEN OVERRIDDEN, IT COULD ONLY BE TREATED AS A CO - OPERATIVE I.T.A. NO S . 2319 & 2320 /M/1 6 , C .O. NO S . 134 & 135 /M/16 & I.T.A. NO. 2089/M/2016 6 SOCIETY FURTHER , RELYING ON DEFINITION OF CO - OPERATIVE BANK AS GIVEN IN THE BANKING REGULATION ACT, 1949, ASSESSEE SUBMITS THAT IT IS NEITHER A STATE CO - OPERATIVE BANK NOR A CENTRAL COOPERATIVE BANK NOR A PRIMARY COOPERATIVE BANK, AND THEREFORE, NOT A CO - OPERATIVE BANK AT ALL. WHATEVER THAT MAY BE, THERE IS MUCH STRENGTH IN THE ARGUMENT OF THE ASSESSEE THAT IT IS TO BE TREATED AS COOPERATIVE SOCIETY IN VIEW OF THE PROVISIONS CONTAINED IN RRB ACT, 1976. IF SO, IT WOULD BE ELIGIBLE UNDER SECTION 80P(2)(A)(I) OF THE ACT.... ....... 7. BY FOLLOWING THE ABOVE DECISION OF THE TRIBUN AL DATED 13.08.2010 , IN SUBSEQUENT ASSESSMENT YEARS, THE TRIBUNAL HAS ALLOWED THE ASSESSEE TO CLAIM DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. [I.T.A. NOS. 1088, 1091 & 1092/MDS/2012 FOR THE ASSESSMENT YEARS 2007 - 08, 2008 - 09 & 2009 - 10 VIDE ORDER DATED 23.08.2012; I.T.A. NOS. 572 & 595/MDS/2014 FOR THE ASSESSMENT YEARS 2008 - 09 AND 2010 - 11 VIDE ORDER DATED 25.08.2014; I.T.A. NO. 1831/MDS/2015 FOR THE ASSESSMENT YEAR 2011 - 12 VIDE ORDER DATED 18.0 3.2016] 8. FOR THE ASSESSMENT YEARS UNDER CONSIDERATION, BY FOLLOWING THE DECISION OF THE TRIBUNAL IN I.T.A. NOS. 572 & 595/MDS/2014 FOR THE ASSESSMENT YEARS 2008 - 09 AND 2010 - 11 VIDE ORDER DATED 25.08.2014, THE LD. CIT(A) HAS DIRECTED THE ASSESSING OFFIC ER TO ALLOW THE DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. THE LD. DR COULD NOT CONTROVERT THE ABOVE FINDINGS OF THE TRIBUNAL OR FILED ANY HIGHER COURT DECISION HAVING MODIFIED OR REVERSED THE FINDINGS OF THE TRIBUNAL. RESPECTFULLY FOLLOWING THE ABOV E DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL, WE FIND NO REASON TO I.T.A. NO S . 2319 & 2320 /M/1 6 , C .O. NO S . 134 & 135 /M/16 & I.T.A. NO. 2089/M/2016 7 INTERFERE WITH THE ORDERS OF THE LD. CIT(A) ON THIS ISSUE AND THUS, THE GROUND RAISED BY THE REVENUE IS DISMISSED FOR BOTH THE ASSESSMENT YEARS. 9. THE CROSS OBJECTIONS FILED BY TH E ASSESSEE FOR BOTH THE ASSESSMENT YEARS ARE ONLY IN SUPPORT OF THE ORDERS OF THE LD. CIT(A). SINCE WE HAVE CONFIRMED THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DISMISSED THE APPEALS OF THE REVENUE, THE CROSS OBJECTIONS FILED BY THE ASSESSEE BECOME INFR ACTUOUS AND ACCORDINGLY, WE DISMISS BOTH THE CO S FILED BY THE ASSESSEE. I.T.A. NO. 2089/NDS/2016 10. NOW, COMING THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2013 - 14, THE ASSESSEE HAS RAISED A GROUND THAT THE LD. CIT(A) HAS DECLINED TO ADJU DICATE THE SPECIFIC GROUND RAISED BEFORE HIM WITH REGARD TO (I) FLOATING PROVISION FOR NPA, (II) LOSS ON REDEMPTION OF SECURITIES AND (III) BAD DEBTS WRITTEN OFF SINCE THERE WAS NO TAX IMPLICATION. ON PERUSAL OF THE ASSESSMENT ORDER, W E FIND THAT EVEN THOU GH THE ASSESSEE HAS NOT MADE CLAIM OF DEDUCTION IN THE RETURN OF INCOME, THE DEPARTMENT HAS TAKEN THE BENEFIT OF ASSESSEE S IGNORANCE AND REJECTED THE CLAIM MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IF THE ASSESSEE IS LEGALLY ENTITLED TO CLAIM A DE DUCTION, IN VIEW OF THE DIRECTIONS GIVEN BY THE CBDT VIDE ITS CIRCULAR NO. 14 [XL - 35] OF 1955 DATE 11.04.1955, THE ASSESSING OFFICER SHOULD HAVE CONSIDERED THE GENUINENESS OF THE CLAIM AND GRANTED RELIEF TO THE ASSESSEE WHICH HE IS LEGALLY ENTITLED TO. I.T.A. NO S . 2319 & 2320 /M/1 6 , C .O. NO S . 134 & 135 /M/16 & I.T.A. NO. 2089/M/2016 8 HOW EVER, IN THIS CASE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS MADE THE CLAIMS, WHICH WAS NOT ORIGINALLY CLAIMED IN THE RETURN OF INCOME, BUT, THE ASSESSING OFFICER HAS REJECTED THE CLAIM OF THE ASSESSEE SINCE THE ASSESSEE HAS NOT MADE S UCH CLAIM IN THE RETURN OF INCOME . UNDER THESE CIRCUMSTANCES, WE DIRECT THE ASSESSING OFFICER TO CONSIDER THE CLAIMS OF THE ASSESSEE AFTER VERIFYING TH E RECORD WITH REGARD TO ITS ADMISSIBILITY , GENUINENESS AND DECIDE THE ISSUES IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITIES OF HEARING TO THE ASSESSEE. A CCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEALS FILED BY THE REVENUE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DIS MISSED AND THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 30 TH NOVEMBER , 201 6 AT CHENNAI. SD/ - SD/ - (A.MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 30 . 11 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.