The Visnagar Nagrik Sahakari Bank Ltd., Mehsana V. The Dy.CIT, Patan Circle, Patan

ITA 2251/AHD/2015

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4275 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 30-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: A P NANAVATY
• Keywords: Business income; Depreciation; Diversion of income; Set aside; Liquidation
• Section: 72(1); 195; 64

Judgement Text

ITA NO.2251/AHD/2015 A.Y. 2011-12 PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER (CONDUCTED THROUGH VIRTUAL COURT) ITA NO.2251/AHD/2015 ASSESSMENT YEAR: 2011-12 THE VISNAGAR NAGRIK SHAKARI BANK LTD., VS. THE D.C. I.T., MARKET YARD, PATAN CIRCLE, PATAN. VISNAGAR 384 215 DISTT. MEHSANA [PAN AAAFT 8764 C] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.P. NANAVATY, A.R. RESPONDENT BY : SHRI RITESH PARMAR, CIT D.R. DATE OF HEARING : 10.09.2021 DATE OF PRONOUNCEMENT : 30.09.2021 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER : THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-7, AHMEDABAD D ATED 19.03.2015 PASSED FOR ASSESSMENT YEAR 2011-12. 2. THE ASSESSEE VIDE LETTER DATED 27-01-2020 HAS FI LED THE REVISED GROUNDS OF APPEAL: (1) ASSESSEE HAS REALIZED INTEREST ON ADVANCES OF RS.41,13,228/-. IN THE COURSE OF REALIZING ADVANCES FROM BORROWERS SUCH AD VANCES DO NOT CEASE TO BE STOCK IN TRADE NOR SUCH INTEREST CEASE TO HAVE CHARACTERIZATION OF BUSINESS INCOME HENCE LD. CIT(A ) OUGHT TO HAVE HELD THAT INTEREST ON ADVANCES OF RS.41,13,228/- IS BUSINESS INCOME. (2) ASSESSEE HAS REALIZED ADVANCES AND HAS KEPT SUR PLUS FUNDS AS FIXED DEPOSITS AND AS REGARDS BANK IS CONCERNED; LIQUID F UNDS INCLUDING STOCK IN TRADE CONVERTED AS LIQUID MONEY AND KEPT AS FIXE D DEPOSITS ARE STOCK IN TRADE HOWEVER INTEREST THEREON HAS ITS CHARACTER IZATION AS INCOME FROM OTHER SOURCES DUE TO LIQUIDATION PROCESS BUT IN VIE W JUDGMENT OF ITA NO.2251/AHD/2015 A.Y. 2011-12 PAGE 2 OF 8 SUPREME COURT IN CASE OF WESTERN STATES TRADING CO (P.) LTD. V/S. C.I.T. 80 ITR 21 (SC) SUCH INTEREST INCOME ON FIXED DEPOSI TS BEING STOCK IN TRADE AND ASSESSED UNDER HEAD INCOME FROM OTHER SOU RCES OUGHT TO HAVE BEEN SET-OFF AGAINST BROUGHT FORWARD BUSINESS LOSSES. (3) IN VIEW OF DEPOSIT CREDIT GUARANTEE CORPORATION OF INDIA ACT, 1961 (DICGCI ACT, 1961) READ WITH DICGCI REGULATION 1961 ; ANY BANK UNDER LIQUIDATION AVAILED INSURANCE CLAIM FOR PAYMENT OF OUTSTANDING DEPOSIT LIABILITY FROM DICGCI (SUBSIDIARY OF RBI) STATUTORI LY REQUIRED TO SET A PART FUNDS REALIZED FROM ADVANCES FOR PAYMENT OF LIABILI TY OF DICGCI HENCE BANK IS STATUTORILY OBLIGED TO DIVERT BY OVERRIDING TITLE FOR PAYMENT OF LIABILITIES OF DICGCI AND NOT OTHERWISE AS HELD BY SUPREME COURT IN CASE OF DICGIC VS. RAGHUPATHI RAGHAVAN CIVIL APPEAL NO.1 035/2008 DATED 01/07/2015 AND BY GUJARAT HIGH COURT IN CASE OF ASS ESSEE IN LPA NO.2456/2009 IN SCA NO.7617/2009 DATED 06.07.2015 H ENCE ANY INCOME OF THE ASSESSEE BANK UNDER LIQUIDATION OUGHT TO HAVE BEEN DIVERTED AT SOURCE BY OVERRIDING TITLE FOR PAYMENT OF LIABILITIES OF DICGCI AND THEREFORE ALL PROCEEDS OF ADVANCES REALIZED AND ENTIRE INCOME OF ASSESSEE BANK UNDER LIQUIDATION IS DIVERTED AT SOUR CE AND HENCE TAXABLE INCOME IS NIL. 3. THE ASSESSEE IN GROUND NO.3 CONTENDED THAT THERE WAS AN OVERRIDING TITLE ON ITS INCOME IN FAVOUR OF DICGCI AND THEREFORE THE SAME I S NOT TAXABLE. 4. THE FACTS AS CULLED OUT FROM THE ORDER OF THE AU THORITIES BELOW ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A COOPERATIVE BANK AND UNDER LIQUIDATION WITH EFFECT FROM 13-08-2002. THE ASSESSEE FOR THE YEAR UNDER CO NSIDERATION FILED ITS RETURN OF INCOME DECLARING AN INCOME OF 6,53,15,515/- WHICH WAS SET OFF AGAINST THE BROUGH T FORWARD LOSSES. HOWEVER, THE AO DID NOT ALLOW THE SET OFF THE LOSSES FROM THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION ON THE REASONING THAT THE ASSESSEE IS NOT CARRYING OUT ANY BUSINESS ACTIVITY AND, THEREFO RE, SUCH BROUGHT FORWARD BUSINESS LOSS CANNOT BE SET OFF AGAINST THE INCOME UNDER THE HEAD OTHER SOURCES. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARN ED CIT (A) AND HAS TAKEN A DIFFERENT STAND BY REFERRING THE GROUND OF APPEAL A S REPRODUCED UNDER: (2) THE LEARNED INCOME TAX OFFICER OUGHT TO HAVE A LLOWED THE LIABILITY OF THE APPELLANT ASSESSEE FOR REPAYMENT TO THE DEPOSITORS AND DICGC FROM THE RECOVERY MADE BY IT FROM THE BORROWERS AGAINST THE INTEREST RECEIVED FROM THE FIXED DEPOSIT, WHICH HAS ACCRUED ON THE AM OUNT RECOVERED PENDING THE PAYMENT TO THE DEPOSITORS. ITA NO.2251/AHD/2015 A.Y. 2011-12 PAGE 3 OF 8 6. THE ASSESSEE IN THE STATEMENT OF FACTS FILED BEF ORE THE LEARNED CIT (A) CONTENDED THAT IT IS NOT CARRYING ON ANY BUSINESS A CTIVITY POST LIQUIDATION. THE DUTY OF THE LIQUIDATOR WAS TO REALIZE DEBTS/ASSETS WHICH WA S TO BE DISTRIBUTED TO THE CREDITORS IN THE RANK OF THE PRIORITY. AS SUCH THERE WAS SOME DI SPUTE WITH REGARD TO THE RANK OF PRIORITY OF THE CREDITORS AND THEREFORE THE AMOUNT REALIZED BY THE ASSESSEE WAS PARKED WITH OTHER INSTITUTIONS BY IT AS TRUSTEE OF THE CRE DITORS. THUS, INTEREST EARNED BY IT ON SUCH AMOUNT IS NOT TAXABLE UNDER THE ACT. 7. HOWEVER, LEARNED CIT (A) REJECTED THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE ITSELF HAS SHOWN THE NET INCOME O F 6,53,15,515/- IN ITS PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31-03-2011 WHICH WA S ALSO TAKEN IN THE COMPUTATION OF INCOME. ACCORDINGLY, THE GROUND OF APPEAL OF THE ASSESSEE BASED ON THE REAL INCOME WAS REJECTED BY THE LEARNED CIT (A). 8. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US. 9. THE LEARNED AUTHORIZED REPRESENTATIVE BEFORE US FILED A 3 DIFFERENT PAPER BOOKS RUNNING FROM PAGES 1 TO 58, 1 TO 64 AND 1 TO 41 AND CONTENDED THAT THE ASSESSEE HAS BORROWED MONEY FROM DICGCI FOR MAKING THE PAYMENT TO THE DEPOSITORS. AS PER THE UNDERSTANDING WITH DICGCI T HE ASSESSEE WAS LIABLE TO MAKE THE PAYMENT TO DICGCI AGAINST THE AMOUNT RECOVERED BY IT. AS SUCH, THE LEARNED AUTHORIZED REPRESENTATIVE CONTENDED THAT DICGCI HAS OVERRIDING TITLE ON THE AMOUNT RECOVERED BY THE ASSESSEE WHETHER SUCH RECOVERY REP RESENTS THE PRINCIPAL AMOUNT OR THE INTEREST. IN SUPPORT OF HIS CONTENTION, THE LEA RNED AUTHORIZED REPRESENTATIVE DREW OUR ATTENTION ON THE DIRECTION GIVEN BY THE HONBLE GUJARAT HIGH COURT IN THE OWN CASE OF THE ASSESSEE WHICH IS PLACED ON PAGES 14 TO 36 O F THE PAPER BOOK-III FILED AS ON 03.01.2019. ACCORDINGLY, THE LEARNED AUTHORIZED RE PRESENTATIVE CONTENDED THAT THE INCOME RECEIVED BY THE ASSESSEE IN THE FORM OF INTE REST HAS BEEN DIVERTED AT SOURCE TOWARDS THE AMOUNT PAYABLE TO DICGCI AT THE THRESHO LD ON ACCOUNT OF OVERRIDING TITLE. 10. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. ADMITTEDLY, THE ASS ESSEE HAS RECEIVED THE AMOUNT OF ITA NO.2251/AHD/2015 A.Y. 2011-12 PAGE 4 OF 8 INTEREST INCOME NET OF EXPENSES IN THE YEAR UNDER C ONSIDERATION FOR 6,53,15,515/- POST LIQUIDATION. IT IS ALSO A FACT ON RECORDS THAT THE ASSESSEE WAS NOT CARRYING OUT ANY BUSINESS ACTIVITY POST LIQUIDATION. AS SUCH, THE JO B OF THE ASSESSEE THROUGH THE LIQUIDATOR WAS TO REALIZE THE DEBT/ASSETS FOR MAKIN G FURTHER PAYMENT TO THE CREDITORS. UNDOUBTEDLY THE DICGCI HAS MADE PAYMENT TO DEPOSITO RS UP-TO THE LIMIT PROVIDED UNDER DICGCI ACT ON BEHALF OF THE ASSESSEE. THE DET AILS OF THE AMOUNT PAID BY DICGCI ON BEHALF OF ASSESSEE AND REPAYMENT MADE BY THE ASSESSEE TO DICGCI STAND ON PAGES 2 OF ENCLOSURE SUBMITTED WITH LETTER DATED 17-03-2020. 12. NOW THE QUESTION ARISES WHETHER THE AMOUNT RECE IVED BY THE ASSESSEE IN THE FORM OF INTEREST BELONGS TO IT OR IT BELONGS TO DIC GCI. IN THIS CONNECTION WE FIND PERTINENT TO REFER THE JUDGMENT OF THE HONBLE GUJA RAT HIGH COURT IN THE OWN CASE OF THE ASSESSEE I.E. THE VISNAGAR NAGRIK SHAHAKARI BAN K LTD. & ORS. VS. DICGCI IN LPA NO. 1300 OF 2010 AND LPA NO. 906 OF 2010 VIDE ORDE R DATED 06-07-2015. THE RELEVANT EXTRACT OF THE JUDGMENT IS REPRODUCED AS U NDER: IN VIEW OF THE ABOVE AND FOR THE REASONS STATED AB OVE, THE IMPUGNED COMMON JUDGEMENT AND ORDER PASSED BY THE LEARNED SI NGLE JUDGE PASSED IN SPECIAL CIVIL APPLICATION NO.4260 OF 2009, SPECIAL CIVIL APPLICATION NO.7617 OF 2009 AND SPECIAL CIVIL APPLICATION NO.6978 OF 2009 ARE HEREBY QUASHED AND SET ASIDE AND THE LETTERS PATENT APPEALS ARE ALLOWE D TO THE AFORESAID EXTENT BY DIRECTING THE CONCERNED OFFICIAL LIQUIDATOR OF THE CONCERNED BANK IN LIQUIDATION TO MAKE THE PAYMENT FIRST TO DICGC I.E. THE AMOUNT WHI CH IS PAID BY DICGC TO THE CONCERNED DEPOSITOR/S TO THE EXTENT OF RS.1 LAC EAC H, HOWEVER AFTER MAKING NECESSARY PROVISIONS FOR THE EXPENSES IN RELATION T O THE LIQUIDATION PROCEEDINGS AND FOR DECLARATION OF DIVIDEND. REST OF THE LETTE RS PATENT APPEAL NOS.1305 OF 2010, LETTERS PATENT APPEAL NO.1755 OF 2010, LETTER S PATENT APPEAL NO.1304 OF 2010, LETTERS PATENT APPEAL NO.1306 OF 2010, LET TERS PATENT APPEAL NO.1307 0F 2010, LETTERS OF PATENT APPEAL NO.2458 O F 2009, LETTERS PATENT APPEAL NO.238 OF 2013 AND LETTERS PATENT APPEAL NO. 239 OF 2013 STAND DISPOSED OF WITH THE AFORESAID OBSERVATIONS AND DIR ECTIONS. HOWEVER, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THERE SHALL BE NO ORDER AS TO COSTS, IN EACH OF THE APPEALS. 13. FROM THE ABOVE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT, IT IS REVEALED THAT WHATEVER AMOUNT WILL BE RECEIVED BY THE ASSESSEE HA S TO BE PAID FIRSTLY TO DICGCI AFTER MAKING NECESSARY PROVISION FOR EXPENSES IN RE LATION TO LIQUIDATION AND DECLARATION OF DIVIDEND. THUS, THERE REMAINS NO AMBIGUITY TO TH E FACT THAT THE ASSESSEE HAS NO RIGHT IN THE IMPUGNED AMOUNT OF INTEREST INCOME AS THE SAME HAS BEEN DIVERTED TO ITA NO.2251/AHD/2015 A.Y. 2011-12 PAGE 5 OF 8 DICGCI AS DISCUSSED ABOVE. ACCORDINGLY, THE AMOUNT OF INTEREST THOUGH RECEIVED BY THE ASSESSEE BUT DOES NOT BELONG TO IT. 14 WE ALSO FIND THAT HONBLE SUPREME COURT IN THE C ASE OF ASSOCIATED POWER CO. LTD VS. CIT REPORTED IN [1996] 218 ITR 195 (SC) WIT H RESPECT TO DIVERSION OF INCOME DUE OVERRIDING TITLE OBSERVED AS UNDER: THE APPLICATION OF THE DOCTRINE OF DIVERSION OF IN COME BY REASON OF AN OVERRIDING TITLE IS QUITE INAPPOSITE. THE DOCTRINE APPLIES WHEN, BY REASON OF AN OVERRIDING TITLE OR OBLIGATION, INCOME IS DIVERTED AND NEVER REACHES THE PERSON IN WHOSE HANDS IT IS SOUGHT TO BE ASSESSED. 15. WE ALSO FIND THAT IN THE IDENTICAL FACTS AND CI RCUMSTANCES IN THE CASE OF JANTA COMMERCIAL COOPERATIVE BANK IN ITA NO.538/AHD/2018 CORRESPONDING TO A.Y. 2013- 14, THE COORDINATE BENCH OF THE TRIBUNAL DECIDED TH E ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER: 6. ON PERUSAL, IT IS NOTICED THAT THE ASSESSEE, A COOPERATIVE BANK, WAS DIRECTED TO BE WOUND UP AS ON 02.06.2003 VIDE O RDER OF GOVERNMENT OF GUJARAT UNDER COOPERATIVE SOCIETY ACT , 1961. CONSEQUENTLY, THE BOARD OF DIRECTOR OF BANK WAS SUP ERSEDED AND OFFICIAL LIQUIDATOR BEING AN OFFICIAL OF COOPERATIV E DEPARTMENT OF GOVERNMENT OF GUJARAT WAS APPOINTED TO ADMINISTER R EALIZATION OF ASSETS AND REPAYMENT OF LIABILITIES. BANK UNDER LI QUIDATION WAS ALSO AUTHORIZED TO APPROACH DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION LTD. (DICGCI) BEING SUBSIDIARY OF RESER VE BANK OF INDIA FOR THE PURPOSES OF REIMBURSEMENT OF INSURANCE CLAIM OF DEPOSIT WITH BANK UNDER LIQUIDATION WITHIN THE LIMIT OF RS.1 LAKH OR LESS AND ACCORDINGLY DICGCI HAS PAID BANK UNDER LIQUIDATION RS.3,65,71,8 75/- WHICH WAS UTILIZED FOR THE PURPOSE OF REPAYMENT OF DEPOSITORS TO THE EXTENT OF RS.1 LAKH. HOWEVER, ACCORDING TO DICGCI ACT, BANK WAS A UTHORIZED TO REALIZE ITS ASSETS AND ADVANCES COERCIVELY AND WHAT EVER PROCEEDS ARE REALIZED, BANK COULD UTILIZE SUCH PROCEEDS FOR REPA YMENT OF LIABILITIES OF DEPOSITORS AND OTHER LIABILITIES. IN VIEW OF THE A FORESAID MANDATE AVAILABLE BY VIRTUE OF DICGCI ACT, A DEFICIT OF RS. 1,05,461/- AROSE IN THE HANDS OF THE ASSESSEE IN THE PROCESS OF RECOVERY AN D REPAYMENT. UNDER THE CIRCUMSTANCES, IT WAS THE CASE OF THE ASS ESSEE BEFORE THE CIT(A) THAT BANK UNDER LIQUIDATION SHALL NOT HAVE A NY TAXABLE INCOME TILL THE LIABILITY OF DICGCI IS FULLY PAID OFF DUE TO DI VERSION OF INCOME AT SOURCE. 7. THE CIT(A) HAS EXAMINED THE ISSUE THREADBARE AND HAS RECORDED A FINDING IN FAVOUR OF THE ASSESSEE FOR NON-APPLICA BILITY OF SECTION 139(3) OF THE ACT IN THE CIRCUMSTANCES WHICH READS AS UNDER: 4. DECISIONS: I HAVE CONSIDERED THE FACTS OF THE CASE AND THE ARGUMENT OF THE APPELLANT CAREFULLY. ALL THREE GROUNDS ARE ITA NO.2251/AHD/2015 A.Y. 2011-12 PAGE 6 OF 8 TAKEN TOGETHER FOR ADJUDICATION. THE FACTUAL MATRIX AS PER PARA-3 ABOVE HAVE BEEN KEPT IN MIND WHILE DECIDING THE ISS UE. IT IS UNDISPUTED FACT THAT BANK IS UNDER LIQUIDATIO N WITH EFFECT FROM 28/03/2003 AND ADMINISTRATION OF BANK I S IN HANDS OF OFFICIAL OF COOPERATIVE DEPARTMENT OF GOVT. OF GUJA RAT FOR THE PURPOSE OF REALISING ADVANCES UNDER VARIOUS LEGAL M ETHODS PROVIDED IN GUJARAT COOPERATIVE SOCIETIES ACT. 1962 . BANK RETAINS PART OF THE STAFF WHEN BANK WAS IN OPERATION AS IDE NTITY AND HISTORY OF ADVANCES CAN BE KNOWN FROM SUCH STAFF ON LY. BANK HAS ALSO AVAILED INSURANCE FROM DICGCI AND AN AMOUNT OF RS. 3,65,71,875/- IS PAYABLE TO DICGCI AS OF DEPOSIT IN SURANCE CLAIM AS AT 31/03/2014. AFTER THE ABOVE JUDGEMENT OF RAGU PATHI RAGAVAN(SUPRA) BANK HAS REPAID RS.3,65,71,875/- TO DICGCI AND PRESENT LIABILITY TO DICGCI IS RS. NILL. DURING THE YEAR APPELLANT BANK HAS EARNED INTEREST OF RS. 40,75,681 /- AND SH ARE DIVIDEND OF RS. 69,245/- AFTER MEETING ALL EXPENSES INCLUDIN G DEPRECIATION OF RS. 2,39,180/- THERE IS SURPLUS OF RS. 29,31,478 /-HOWEVER APPELLANT HAS DISALLOWED AFORESAID DEPRECIATION OF RS. 2,39,18G/- AND HAS CLAIMED DEPRECIATION RS. 32,882/- AND ITS C OMPUTATION IS PROVIDED IN STATEMENT OF TOTAL INCOME WHICH HAS BEE N ALLOWED BY DOT. NOW THE DISPUTE REMAINS AS TO ALLOWANCE OF LOS S OF UNREALISED AMOUNT OF RS. 18,14,14,727/- AGAINST INC OME OF CURRENT YEAR AND AS CLAIMED SAID INTEREST AND DIVID END ARE TAXABLE UNDER INCOME FROM OTHER SOURCES AND NOT PAR T OF BUSINESS INCOME AND SUCH SETOFF HAS TO BE ALLOWED U/S. 71 OF THE IT. ACT, 1961 BEING INTRA HEAD SETOFF OF LOSSES. DCIT HAS JU STIFIED SUCH DISALLOWANCE U/S. 139(3) BEING PRECONDITION OF FILI NG OF RETURN OF INCOME WITHIN DUE DATE. HOWEVER PLAIN READING OF SE C. 139(3) OF THE IT.ACT, 1961, SUCH PRECONDITION IS ONLY FOR CAR RY FORWARD OF BUSINESS LOSSES U/S. 72(1) OF THE IT.ACT,1961 AND S UCH LEGAL SITUATION HAS BEEN UPHELD IN THE CASE OF PEERLESS G ENERAL FINANCE AND INVESTMENT CO. LTD. V/S. CIT (2015 378 ITR 718 (CAL) AS WELL AS CIT V/S. BRITISH INSULATED CALENDER'S LIMITED 202 ITR 354 (BOMBAY) AND ACIT V/ S. SANJAY BASRATHI GEMS LTD 84 TAXMANN.COM 138 (JAIPUR). UNDER THE CIRCUMSTANCES, WE AGREE WITH TH E SUBMISSION OF ASSESSEE FOR SETOFF OF LOSS AGAINST C URRENT YEAR INCOME AND ASSESSEE SHALL NOT HAVE RIGHT OF CARRY F ORWARD OF BUSINESS LOSS U/S. 72(1) OF THE I.T. ACT, 1961. WHILE CONSIDERING ALTERNATIVE PLEA OF DIVERSION OF INCOME AT SOURCE, I HAVE GONE THROUGH JUDGEMENT OF SUPREME CO URT AS WELL AS JUDGEMENT OF GUJARAT HIGH COURT IN THE CASE OF V ISNAGAR NAGARIK SAHAKARI BANK LTD. (SUPRA) AS JURISDICTIONA L HIGH COURT HAS UPHELD STATUTORY OBLIGATION UPON BANKS UNDER LI QUIDATION AVAILING INSURANCE CLAIM FOR DEPOSITS AND IN FACT S UCH LIABILITY HAS BEEN FULLY PAID OFF TO DICGCI AND THEREFORE TILL SU CH OBLIGATION ALL FUNDS REALISED BY BANK UNDER LIQUIDATION ARE DIVERT ED AT SOURCE ENTIRE INCOME OF ASSESSEE BASED ON OBSERVATION IN T HE CASE OF MOTI LAL CHHADAMI JAIN V/S CIT 190 ITR 1 (SC) R.W J UDGEMENT IN THE CASE OF SMT SARLA DEVI K. V/S. CIT 222 ITR 211 (KERALA) AND ASSOCIATED. POWER COMPANY LTD. 218 I T R 195 (SC.) THEREFORE ENTIRE INTEREST INCOME AND SHARE DIVIDEND INCOME IS DIVERTED AT ITA NO.2251/AHD/2015 A.Y. 2011-12 PAGE 7 OF 8 SOURCE AND BANK UNDER LIQUIDATION HAS NO DISCRETION OR AUTHORITY TO APPLY SUCH FUNDS AS IT WISHES AND HENCE SUCH FUN DS ARE NOT AVAILABLE TO APPELLANT AS INCOME AND THEREFORE SUCH INCOME IS NOT TAXABLE IN THE HANDS OF APPELLANT. IN VIEW OF FACT S AND RATIO LAID DOWN IN THE CASE LAWS (SUPRA), GROUND NO.1 & 2 ARE ALLOWED . AS APPELLANT HAS NOT MADE ANY SUBMISSIONS ON CAPITAL N ATURE OF RECEIPTS SUBSEQUENT TO LIQUIDATION AS PER CONTENTIO N RAISED IN GROUND NO.3. IN VIEW OF LACK OF FACTUAL SUBMISSIONS AS REGARDS CAPITAL NATURE OF RECEIPTS IN THE EVENT OF LIQUIDAT ION, I AM UNABLE TO DEAL WITH SUCH GROUND, THEREFORE, GROUND NO.3 IS HEREBY DISMISSED. THE ORDER OF CIT(A) IS SELF EXPLANATORY. 8. WE ARE IN COMPLETE AGREEMENT WITH THE FINDINGS O F THE CIT(A) NOTED ABOVE IN THE LIGHT OF VARIOUS DECISIONS NOTED ABOVE. WE THUS DECLINE TO INTERFERE. 16. IN VIEW OF THE ABOVE, WE CONCLUDE THAT THE AMOU NT OF INTEREST IN DISPUTE IS NOT AN INCOME OF THE ASSESSEE AND THEREFORE THE SAME CA NNOT BE MADE SUBJECT MATTER OF TAX IN THE HANDS OF THE ASSESSEE. 17. IT IS ALSO PERTINENT TO NOTE THAT THE SPECIFIC ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 3 IS NOT ARISING FROM THE ORDER OF THE A UTHORITIES BELOW. ON PERUSAL OF THE LEARNED CIT (A) ORDER, WE FIND THAT THIS GROUND WAS RAISED BY THE ASSESSEE IN A GENERAL/CASUAL MANNER WHICH WAS ALSO ADJUDICATED BY THE LEARNED CIT (A) BUT NOT IN A SPECIFIC MANNER. 18. BUT THE GROUND RAISED BEFORE US IS VERY SPECIFI C AFTER MAKING A REFERENCE TO THE ORDER OF HONBLE GUJARAT HIGH COURT IN THE OWN CASE OF THE ASSESSEE I.E. THE VISNAGAR NAGRIK SHAHAKARI BANK LTD & ORS VS. DICGCI (SUPRA). THUS THE QUESTION ARISES WHETHER THE MATTER SHOULD BE SET ASIDE TO THE FILE OF THE AUTHORITIES BELOW. TO OUR UNDERSTANDING, ALL THE FACTS OF THE CASE RELATED TO THE ISSUE ARE ARISING FROM THE ORDER OF THE AUTHORITIES BELOW AND THERE IS NO NEED TO MA KE REFERENCE TO ANY FRESH DOCUMENTS. LIKEWISE, THE ISSUE WAS RAISED BY THE AS SESSEE BEFORE THE LD. CIT-A BUT THE SAME WAS NOT ADJUDICATED IN PROPER MANNER. THUS , WE ARE NOT INCLINED TO REMIT THE MATTER BACK TO THE AUTHORITIES BELOW AS AN OPPORTUN ITY WAS AFFORDED TO THE LEARNED CIT (A) FOR ADJUDICATION UNDER THE PROVISIONS OF LAW. B UT THE SAME WAS NOT AVAILED BY THE LEARNED CIT (A) IN THE EFFECTIVE MANNER. ACCORDINGL Y WE HOLD THAT, NO FRESH OPPORTUNITY IS TO BE GRANTED TO THE AUTHORITIES BELOW IN THE GI VEN FACTS AND CIRCUMSTANCES. ITA NO.2251/AHD/2015 A.Y. 2011-12 PAGE 8 OF 8 19. AS THE ASSESSEE SUCCEEDS ON THE TECHNICAL ISSUE RAISED BY IT, WE DO NOT FIND ANY REASON TO ADJUDICATE THE ISSUE RAISED BY THE AS SESSEE ON MERIT. AS SUCH, THOSE ISSUES RAISED BY THE ASSESSEE ON MERIT BECOME INFRU CTUOUS. ACCORDINGLY WE DISMISS THE SAME. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF SEPTEMBER, 2021. SD/- SD/- (RAJPAL YADAV) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD, THE 30 TH DAY OF SEPTEMBER, 2021 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER UE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD