The DCIT, Circle-2, Surat V. The Sutex Co.Op.Bank Ltd., Surat

ITA 2102/AHD/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9902 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 26-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SEWAK
• Assessee Lawyers: M K PATEL
• Keywords: Gift; Depreciation
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO. 2102/AHD/2011 (ASSESSMENT YEAR: 2008-09) DY. COMMISSIONER OF INCOME-TAX, CIRCLE 2, ROOM NO.110, 1 ST FLOOR, AAYKAR BHAVAN, MAJURAGATE, SURAT APPELLANT VS. THE SUTEX CO.OP. BANK LTD., 2 ND FLOOR, BANK BLOCK, S.T.M. RING ROAD, SURAT 395001 RESPONDENT PAN: AAAAT2953Q / BY REVENUE : SHRI SHIVA SEWAK, SR. D.R. /BY ASSESSEE : SHRI M. K. PATEL, A.R. /DATE OF HEARING : 18.10.2016 /DATE OF PRONOUNCEMENT : 24.11.2016 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2008-09 A RISES AGAINST THE CIT(A)- II, SURATS ORDER DATED 01.06.2011, IN APPE AL NO. CAS-II/415/10-11, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME T AX ACT, 1961; IN SHORT THE ACT. ITA NO.2102/AHD/2011 (DCIT VS. THE SUTEX CO. OP. B ANK LTD.) A.Y. 2008-09 - 2 - 2. THE REVENUE RAISES FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL: [1] ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A)-II, SURAT HAS ERRED IN DELETING THE ADDITION OF RS.36,5 3,800/- TOWARDS DISALLOWANCE OF GIFT TO SHARE HOLDERS AND CORRESPON DING DISALLOWANCE OF RS.88,194/- ON ACCOUNT OF INTEREST ON THE ABOVE AMO UNT WITHOUT NOTING THAT THE ASSESSEE FAILED TO PROVE THE ONUS CAST ON HIM T O EVIDENCE THE SAME. [2] ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW, THE LD. CIT(A)-II, SURAT HAS ERRED IN DELETING THE ADDITION OF RS.7,90 ,658/- ON ACCOUNT OF LIABILITY AND PROVISION TOWARDS INTEREST ON NPA U/S .37(1) OF THE I.T. ACT WITHOUT NOTING THAT THE ASSESSEE FAILED TO PROVE TH E ONUS OF PROVING THE GENUINENESS OF THE CLAIM IN SPITE OF BEING AFFORDED AN OPPORTUNITY TO DO SO. 3. WE COME TO THE FORMER SUBSTANTIVE GROUND. THIS ASSESSEE IS A CO- OPERATIVE SOCIETY ENGAGED IN BANKING BUSINESS. IT CLAIMED GIFT EXPENSES OF RS.36,53,800/- GIVEN TO ITS SHARE HOLDERS AS GIFTS ALLOWABLE U/S.37 OF THE ACT IN THE NATURE OF EXPENSES INCURRED WHOLLY AND EXCLU SIVELY FOR THE PURPOSE OF THE BUSINESS. THE ASSESSING OFFICER WAS OF THE VIE W THAT THE IMPUGNED GIFTS GIVEN ON THE OCCASION OF ASSESSEES 35 YEARS OF BAN KING BUSINESS IN THE NATURE OF VOUCHERS OF RS.200/- EACH TO ITS 18269 SHARE HOL DERS TO MATURE TO RS.300/- ON 01.04.2012 WERE NOT ALLOWABLE SINCE IT COULD NOT PROVE AS TO HOW THE SAME WOULD ADD TO THE BANKING BUSINESS IN QUESTION. HE WOULD ACCORDINGLY DISALLOWED THE SAME IN ASSESSMENT ORDER DATED 30.12 .2010. 4. THE CIT(A) REVERSES ASSESSING OFFICERS FINDINGS AS UNDER: 8. THE GROUNDS OF APPEAL NO.9 & 10 ARE AGAINST THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING APPELLANT'S CLAIM OF RS.36,5 3,800/- ON ACCOUNT OF GIFT TO SHARE HOLDERS AND INTEREST EXPENSES OF RS.88,194/- ON THE ABOVE AMOUNT OF GIFT TO SHAREHOLDERS. THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE APPELLANT ON THE GROUND THAT GIFT VOUCHERS HAVE BEEN GIVEN ONLY TO SHARE HOLDERS AND NOT TO AIL ACCOUNT HOLDERS AND THE FACTS OF T HE APPELLANT'S CLAIM ARE DIFFERENT FROM THE CASE RELIED UPON BY THE APPELLANT, VIZ. KARJAN CO-OPERATIVE COTTON SALES GINNING AND PRESSING SOCIETY, 199 ITR 17. THE APPEL LANT'S SUBMISSION IS THAT THE GIFT CERTIFICATES OF RS.200/- WERE ISSUED TO THE SH ARE HOLDERS OF THE BANK AND THE SAID CERTIFICATES WERE NOT ISSUED TO THE ACCOUNT HO LDERS OF THE BANK. THE TOTAL SHARE HOLDERS AS ON 31.3.2007 WERE 18269 AND SUCH C ERTIFICATES WORE GIFTED TO ALL OF THEM IRRESPECTIVE OF NUMBER OF SHARES OR LENGTH OF THEIR ASSOCIATION WITH THE ITA NO.2102/AHD/2011 (DCIT VS. THE SUTEX CO. OP. B ANK LTD.) A.Y. 2008-09 - 3 - APPELLANT BANK. THE APPELLANT HAS RELIED UPON THE S UPREME COURT'S DECISION IN THE CASE OF DELHI SAFE DEPOSIT LTD. THE INTEREST OF RS. 88,194/- HAS BEEN COMPUTED ON THE GIFT EXPENSES OF 36,53,800/- WHICH HAS BEEN DIS ALLOWED U/S 37(1) OF THE ACT. 9. I HAVE DULY CONSIDERED THE SUBMISSION OF THE AP PELLANT AND FIND THAT THE ISSUE REGARDING DEPRECIATION OF GIFTS TO MEMBERS OF THE CO-OPERATIVE BANK IS COVERED BY THE JUDGEMENT OF THE GUJARAT HIGH COURT IN THE CASE OF DASCROI TALUKA CO-OPERATIVE PURCHASE AND SALES UNION LTD. (1980) 1 26 ITR 413. IN VIEW OF THE SAME, I DELETE THE ADDITION OF 36,53,800/- AND CORR ESPONDING DISALLOWANCE OF RS.88,194/- ON ACCOUNT OF INTEREST ON THE ABOVE AMO UNT. 5. WE HAVE HEARD BOTH THE PARTIES REITERATING THEIR RESPECTIVE STANDS. THERE IS ADMITTEDLY NO DISPUTE BETWEEN THE PARTIES ABOUT THE FACT THAT THE ASSESSEE HAS MADE THE GIFTS IN QUESTION TO ITS SHAR E HOLDERS. THE ASSESSING AUTHORITY IS OF THE VIEW THAT THE ASSESSEE HAS GIVE N THE SAME ONLY TO ITS SHARE HOLDERS AND NOT THE MEMBERS IN QUESTION. LEANED CO UNSEL REPRESENTING ASSESSEE FILES BEFORE US A COPY OF THIS TRIBUNALS ORDER IN ITA NO.2793/AHD/2012 DCIT VS. SURAT NATIONAL CO-OPERATI VE BANK RELYING UPON HONBLE JURISDICTIONAL HIGH COURTS DECISION IN CAS E OF CIT V. DASCROI TALUKA CO-OPERATIVE PURCHASE AND SALES UNION LTD. [1980] 1 26 ITR 413 TO CONCLUDE THAT SUCH GIFTS INCURRED FOR PRESENTATION TO ITS ME MBER FOR KEEPING ALIVE GOOD IMAGE AND FOR GENERATION OF GOODWILL AMOUNTS TO AN EXPENDITURE IN THE NATURE OF WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF THE BUSINESS. WE FIND NO DISTINCTION ON FACTS INVOLVED THEREIN SO FAR AS THE INSTANT GROUND IS CONCERNED. THIS FORMER SUBSTANTIVE GROUND FAILS AC CORDINGLY. 6. THE REVENUES LATTER SUBSTANTIVE GROUND SEEKS TO REVIVE ADDITION OF RS.7,90,658/- ON ACCOUNT OF LIABILITY AND PROVISION TOWARDS INTEREST ON NPAS. THE ASSESSING OFFICER QUOTED RBIS DIRECTION ISSUED U/S.45JA OF THE RBI ACT PROVIDING THAT NOT ONLY ANTICIPATED LOSSES BUT ALSO EXPECTED INCOME IS TO BE TAKEN NOTE OF BUT THE SAME HAS NOTHING TO DO WITH C OMPUTATION OF TAXABILITY OF PROVISION OF NPA INCOME UNDER THE PROVISIONS OF THE INCOME TAX LAW. HE FURTHER QUOTED SECTION 36(1)(VII) TO DECLINE ASSESS EES EXPLANATION TO ADD THE IMPUGNED SUM IN ITS HANDS. THE CIT(A) REVERSES THE SAME. ITA NO.2102/AHD/2011 (DCIT VS. THE SUTEX CO. OP. B ANK LTD.) A.Y. 2008-09 - 4 - 7. LD. COUNSEL AT THIS STAGE FILES BEFORE US A COPY OF THIS TRIBUNALS DECISION IN CASE OF GANDHINAGAR NAGRIK CO-OP. BANK LTD. VS. ACIT ITA NO.2965/AHD/2013 RELYING UPON HONBLE JURISDICTIONA L HIGH COURTS DECISION IN CASE OF CIT VS. SHRI MAHILA SEWA SAHAKARI BANK L TD. IN TAX APPEAL NO. 531 OF 2015 THAT RBIS DIRECTIONS PREVAIL IN VIEW O F SECTION 45Q OF THE RBI ACT HAVING OVER-RIDING EFFECT OTHER LAWS INCLUDING INCOME TAX ACT, 1961. LD. DEPARTMENTAL REPRESENTATIVE FAILS TO POINT OUT ANY EXCEPTION THEREIN SO FAR AS FACTS OF THE INSTANT CASE ARE CONCERNED. WE ACCORDINGLY RELY ON SAID LD. CO-ORDINATE BENCH DECISION TO AFFIRM CIT(A)S FINDI NGS QUA THIS LATTER ISSUE AS WELL. 8. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF NOVEMBER, 2016.] SD/- SD/- (N. K. BILLAIYA) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD: DATED 24/11/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ()*+ ,--. ./0 / DR, ITAT, AHMEDABAD 1+2345 / GUARD FILE. BY ORDER / . // ./0