Liluah Co.-Op. Bank Ltd., Kolkata V. Addl. CIT, Range - 46, Kolkata, Kolkata

ITA 2294/KOL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78340 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 05-03-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 30-12-2010
• Court: TRIBUNAL
• Department Lawyers: DAVID S CHAWNGTHU ACIT
• Assessee Lawyers: SOUMITRA CHOW DHURY; S P CHOUDHURY

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B , KOLKATA [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE S RI SHAMIM YAHYA, AM ] ITA NO.2294/KOL/2010 ASSESSMENT YEAR : 2007-08 ( APPELLANT ) (RESPONDENT) LILUAH CO-OP. BANK LTD. -VS- ADDL.CIT, RANGE-46, KOLKATA KOLKATA (PAN:AAABL 0055 E) ITA NO.204/KOL/2011 ASSESSMENT YEAR : 2007-08 ( APPELLANT ) (RESPONDENT) ACIT, CIRCLE-46, -VS- LIUAH CO-OP. BANK LTD. KOLKATA KOLKATA (PAN:AAABL 0055 E) FOR THE ASSESSEE SHRI S.P.CHOUDHURY AND SHRI SOUMITRA CHOWDHURY FOR THE DEPARTMENT SHRI DAVID S.CHAWNGTHU, ACIT, SR.(DR) DATE OF HEARING : 27.06.2014 DATE OF PRONOUNCEMENT : 02. 07.2014. ORDER PER SHRI SHAMIM YAHYA, AM THESE CROSS APPEALS FILED BY THE ASSESSEE AND THE R EVENUE EMANATE OUT OF ORDER OF LD. CIT(A)-XXX, KOLKATA DATED 29.09.2010 A ND PERTAIN TO ASSESSMENT YEAR 2007-08. ITA NO.2294/KOL/2010 (ASSESSEES APPEAL): 2. THE GROUND OF APPEAL IN THIS APPEAL READS AS UN DER :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD.CIT(A) XXX, KOLKATA HAS ERRED IN LAW AS WELL AS IN FACTS BY SUSTAINING THE DISALLOWANCE OF RS.7,12,243/- DEBITED IN PROFIT & LOSS A/C. AS OVERDUE INTEREST R ESERVE. 3. IN THIS CASE THE AO DISALLOWED THE OVERDUE INTE REST RESERVE BY OBSERVING THAT THE PROVISION MADE BY THE ASSESSEE WAS NOT BASED ON FACTS BUT MERELY ON SURMISE AND THE FIGURE HAS NOT BEEN ASCERTAINED ON ACTUAL BASIS . THE AO FURTHER OBSERVED THAT THE ASSESSEE FAILED TO JUSTIFY THAT THE LOANS HAD BECOM E BAD OR FOR THAT MATTER INTEREST ITA.NO.2294/KOL/2010 & 204/KOL/2011 LILUA H CO-OP. BANK LTD.. A.YR.2007-08 2 RECEIVABLE FROM THOSE LOANS, THE ASSESSEE WAS REQUI RED TO CREATE SUCH RESERVE AND NO DETAILS HAVE BEEN FILED. THE AO FURTHER MENTIONED T HAT THERE WAS NEVER SUCH TYPE OF CLAIM IN ANY OF THE PAST ASSTT.YEARS. HENCE AO MADE THE DISALLOWANCES. 3.1. UPON ASSESSEES APPEAL THE LD. CIT(A) CONFIRME D THE DISALLOWANCE BY HOLDING AS UNDER :- I HAVE CONSIDERED THE SUBMISSIONS OF THE A.R. OF T HE APPELLANT. I FIND THAT THE CLAIM OF OVERDUE INTEREST RESERVE HAS BEEN MADE IN THE PROFI T AND LOSS ACCOUNT UNDER THE HEAD PROVISIONS AND CONTINGENCIES UNDER SCHEDULE O. IT IS WELL-SETTLED THAT THE PROVISIONS AND CONTINGENCIES ARE NOT AN ALLOWABLE EXPENDITURE. IN VIEW OF THE SAME, THE CLAIM OF THE ASSESSEE FOR SUCH PROVISIONS IS NOT TENABLE UND ER THE SCHEME OF THE INCOME TAX ACT. IT MAY ALSO BE STATED THAT THE A.R. HAS TRIED TO SU BMIT THAT THIS OVERDUE INTEREST RESERVE IS INTEREST PROVIDED ON NPA. HOWEVER, NO SUCH MATER IAL WAS PRODUCED BEFORE ME. THEREFORE, SUCH CLAIM WAS A MERE BOLD STATEMENT WIT HOUT ANY MATERIAL TO SUPPORT THE SAME. THEREFORE, THE DISALLOWANCE MADE BY THE AO IS UPHELD. 4. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESEE HAD FOLLOWED TH E REGULAR SYSTEM OF ACCOUNTING. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS MADE THE PR OVISION FOLLOWING THE RBI GUIDELINES, HENCE THE CLAIM HAS TO BE ALLOWED. IN T HIS REGARD THE LD. COUNSEL OF THE ASSESSEE REFERRED TO THE MASTER CIRCULAR OF RBI FOR INCOME RECOGNITION, ASSET CLASSIFICATION, PROVISIONING AND OTHER RELATED MATT ER OF THE RBI PRODUCED IN PAGES 21 AND 22 OF THE PAPER BOOK. THE LD. COUNSEL OF THE AS SESSEE FURTHER SUBMITTED THAT SIMILAR PROVISION FOR OVERDUE INTEREST RESERVE HAS BEEN MADE BY THE ASSESSEE IN THE PRIOR PERIOD ON THE BASIS OF RBI GUIDELINES ISSUED IN THIS REGARD AND THE SAME WAS ALLOWED.. WE FIND THAT IT IS SETTLED LAW THAT PROVI SIONS MADE AS PER RBI GUIDELINES ARE ALLOWABLE. FURTHERMORE WE NOTE THAT SIMILAR PROVISI ON MADE IN THE PREVIOUS PERIOD HAS BEEN ALLOWED TO THE ASSESSEE. IN SUCH CIRCUMSTANCES WE FIND THAT THE ASSESSEE HAS A REASONABLE CASE AND THE ORDERS OF THE AUTHORITIES B ELOW DESERVE TO BE SET ASIDE ON THIS ISSUE. HENCE ACCORDINGLY WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ITA NO.204/KOL/2011 (REVENUES APPEAL) : 7. THE GROUNDS OF APPEAL READS AS UNDER :- ITA.NO.2294/KOL/2010 & 204/KOL/2011 LILUA H CO-OP. BANK LTD.. A.YR.2007-08 3 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD.CIT(A) XXX, KOLKATA WAS JUSTIFIED IN DELETING THE DISALLOWANCE THE PAYMENT OF INTERNAL TAX AUDITOR BY ACCEPTING THE ASSESSEES PLEA THAT THIS WAS PAYM ENT OF SALARY NOT LIABLE TO TDS. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LD.CIT(A)-XXX, KOLKATA WAS JUSTIFIED IN DELETING THE ADDITION FOR NON-DEDUCTIO N OF TDS BY ACCEPTING THE ASSESSEES SUBMISSION THAT FORM-15G OBTAINED FROM THE DEPOSITO RS WERE FORWARDED TO THE CITS OFFICE THROUGH UNDER CERTIFICATE OF POSTING WHICH I S TAKEN AS COMPLIANCE TO OBLIGATION OF THE ASSESSEE THOUGH THE FORM-15GS WERE FORWARDED TO AN ADDRESS WHICH DIDNT EXIST. 3. THE APPELLANT CRAVES, LEAVES, AMEND/ALTER/MODIFY ANY GROUNDS OF THE APPEAL AS MAY BE SUGGESTED. 8. APROPOS GROUND NO.1 : ON THIS ISSUE THE AO DISA LLOWED AND ADDED BACK U/S 40(A)(IA) OF THE IT ACT RS.3,84,000/- ON THE GROUND THAT THE ASSESSEE HAS FAILED TO DEDUCT TAX AS PER CHAPTER-XVII-B OF THE ACT. THE AS SESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSEE HAS PAID RS.8,000/- PER MO NTH TO FOUR OFFICERS EACH OF THE BANK ENGAGED IN INTERNAL AUDIT WORK AND ISSUED SALA RY CERTIFICATES IN FORM-16. HENCE IT WAS CLAIMED THAT THIS DOES NOT FALL WITHIN THE P URVIEW OF SECTION 194J OF THE ACT. THE RELEVANT FORM NO.16 IN RESPECT OF THE FOUR PERS ONS WERE ALSO PRODUCED BEFORE THE LD. CIT(A). CONSIDERING THE SAME THE LD. CIT(A) HEL D THAT THE PAYMENTS TO THOSE PERSONS DID NOT ATTRACT LIABILITY OF TDS U/S 194J O F THE ACT. THEREFORE SUCH PAYMENTS DID NOT WARRANT DISALLOWANCE U/S 40(A)(IA) OF THE A CT. 9. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT SINCE THE PAYMENT IS RELATED TO THE SALARY PAYMENT THERE IS N O QUESTION OF DEDUCTION OF TDS U/S 194J OF THE ACT. ACCORDINGLY WE DO NOT FIND ANY INF IRMITY IN THE ORDER OF THE LD. CIT(A) AND WE UPHOLD THE SAME. 11. APROPOS GROUND NO.2 : ON THIS ISSUE THE AO NOTE D THAT THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF INTEREST WHERE THE ASSESSEE I S REQUIRED TO MAKE TDS BUT NO TDS WAS MADE. HE FURTHER OBSERVED THAT FORM 15G WAS ALS O NOT OBTAINED. HENCE THE AO MADE DISALLOWANCE OF RS.1,53,749/- IN THIS REGARD. 12. UPON ASSESSEES APPEAL THE LD. CIT(A) NOTED THA T SEVERAL FORM-15G WERE RECEIVED BY THE ASSESSEE AND THEY WERE SENT TO THE CITS OFFICE UNDER CERTIFICATE OF POSTING. FURTHER THE LD. CIT(A) NOTED THAT AS PER T HE SUB-RULE(3) OF RULE 29C OF IT RULES THE FORM 15G IS FORWARDED TO THE CHIEF COMMIS SIONER OR THE COMMISSIONER OF INCOME TAX. HENCE THE LD. CIT(A) HELD THAT THE ASSE SSEE COMPLIED ITS OBLIGATION AND ITA.NO.2294/KOL/2010 & 204/KOL/2011 LILUA H CO-OP. BANK LTD.. A.YR.2007-08 4 THEREFORE THE AO WAS NOT CORRECT TO DISALLOW AND AD D BACK TO THE INCOME U/S 40(A)(IA) OF THE IT ACT. HENCE THE LD. CIT(A) DELETED THE ADD ITION. 13. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEA L BEFORE US. 14. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE LD. CIT(A) HAS DELETED THE ADDITION IN THIS REGARD BY F INDING THAT FORM15G WERE OBTAINED AND SENT TO THE CHIEF COMMISSIONER OF INCOME TAX IN THIS REGARD. IN THESE CIRCUMSTANCES WE DO NOT FIND ANY INFIRMITY IN THE O RDER OF THE LD. CIT(A) AND ACCORDINGLY WE UPHOLD THE SAME. 15. IN THE RESULT THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 02.07.2014. SD/- SD/- [ MAHAVIR SINGH ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 02.07.2014. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. LILUAH CO-OP. BANK LTD., BARK & ASSOCIATES, CHARTER ED ACCOUNTANT, 12, CHOWRINGEE SQUARE, KOLKATA-700069. 2 ADDL.CIT, RANGE-46, KOLKATA 3 . CIT(A)-XXX, KOLKATA 4. CIT - KOLKATA. 5. CIT-DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES