Palus Sahakari Bank Ltd., Sangli V. Income-tax Officer,

ITA 234/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7435 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-10-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 09-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts
• Section: 234B; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 315 /P U N/201 4 / ASSESSMENT YEAR : 20 10 - 11 PALUS SAHAKARI BANK LTD., A/P. PALUS, DISTT. - SANGLI PAN : AAAAP0340F ....... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, SANGLI / RESPONDENT . / ITA NO . 234/PUN/2015 / ASSESSMENT YEAR : 2011 - 12 PALUS SAHAKARI BANK LTD., A/P. PALUS, DISTT. - SANGLI PAN : AAAAP0340F ....... / APPELLANT / V/S. INCOME TAX OFFICER, WARD 1(3), SANGLI / RESPONDENT ASSESSEE BY : S HRI M.K. KULKARNI REVENUE BY : SHRI AJAY MODI / DATE OF HEARING : 31 - 08 - 2017 / DATE OF PRONOUNCEMENT : 22 - 0 9 - 2017 2 ITA NO S. 315/PUN/2014 & 234/PUN/2015, A.YS. 2010 - 11 & 2011 - 12 / ORDER PER VIKAS AWASTHY, JM : TH ESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEE ASSAILING THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS), KOLHAPUR FOR THE ASSESSMENT YEARS 2010 - 11 AND 2011 - 12, RESPECTIVELY. THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) FOR ASSESSMENT YEAR 2010 - 11 IS DATED 11 - 12 - 2013 AND THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) FOR ASSESSMENT YEAR 2011 - 12 IS DATED 11 - 12 - 2014. SINCE, THE ISSUES RAISED BY THE ASSESSEE IN BOTH THE APPEALS ARE COMMON , THE APPEALS OF THE ASSESSEE ARE TAKEN UP TOGETHER FOR ADJUDICATION. 2. SHRI M.K. KULKARNI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A CO - OPERATIVE BANK. DURING THE FINANCIA L YEAR 2005 - 06 THE ASSESSEE HAD MADE RESERVE S IN RESPECT OF BAD AND DOUBTFUL DEBTS. DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR 2010 - 11 THE ASSESSEE REVERSED RS.25 LAKS TO PROFIT AND LOSS ACCOUNT FROM BAD AND DOUBTFUL DEBTS RESERVE. IN THE PERIOD WHEN EXCESS RESERVE WAS CREATED THE INCOME OF ASSESSEE WAS EXEMPT BY VIRTUE OF SECTION 80P(2). AFTER THE AMENDMENT BY FINANCE ACT, 2006, THE CO - OPERATIVE BANKS HAVE BEEN TAKEN OUTSIDE THE PURVIEW OF SECTION 80P W.E.F. 01 - 04 - 2007. NOW, THE REVENUE WANTS TO TA X THE AMO U NT TRANSFERRED TO THE RESERVES PRIOR TO AMENDMENT, WHEN THE SAME WAS EXEMPT FROM TAX. THE LD. AR SUBMITTED THAT THE IMPUGNED ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) FOR ASSESSMENT YEAR 2010 - 11 IS NOT A SPEAKING ORDER. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THE FACTS IN RIGHT PERSPECTIVE , THEREFORE, THE ISSUE CAN BE RESTORED BACK TO COMMISSIONER OF INCOME TAX (APPEALS). THE LD. AR SUBMITTED THAT SIMILAR ADDITION HAS BEEN MADE IN ASSESSMENT 3 ITA NO S. 315/PUN/2014 & 234/PUN/2015, A.YS. 2010 - 11 & 2011 - 12 YEAR 2011 - 12 AND THE SA ME HAS BEEN ASSAILED BY RAISING GROUND NOS. 3 AND 4 IN THE APPEAL. 2.1 THE LD. AR SUBMITTED THAT THE GROUND NO. 2 IN APPEAL FOR ASSESSMENT YEAR 2011 - 12 IS WITH RESPECT TO AMORTIZATION OF PREMIUM RS.4,80,000/ - PAID ON ACQUISITION OF SECURITIES UNDER HTM CATEGORY. BOTH THE AUTHORITIES BELOW HAVE REJECTED THE CLAIM OF ASSESSEE. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. HDFC BANK LTD. REPORTED AS 366 ITR 505 HAS HELD THAT AMORTIZATION OF PREMIUM ON SECURITIES HELD UNDER HT M CATEGORY IS AN ALLOWABLE EXPENDITURE. 2.2 THE LD. AR HAS STATED AT THE BAR THAT HE IS NOT PRESSING GROUND NO. 5 IN APPEAL FOR ASSESSMENT YEAR 2011 - 12. 3. SHRI AJAY MODI REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN REJECTING THE GROUNDS RAISED BY THE ASSESSEE. THE LD. DR PRAYED FOR DISMISSING BOTH THE APPEALS OF THE ASSESSEE. 4. W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. THE GROUND NO. 1 RAISED IN THE APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 2010 - 11 AND GROUND NOS. 3 AND 4 IN THE APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 2011 - 12 ARE ON SAME ISSUE . THE LD. AR HAS POINTED THAT THE COMMISSIONER OF INCOME T AX (APPEALS) HAS CONFIRMED THE ADDITION OF RS.25 LAKHS IN RESPECT OF WRITE BACK OF RESERVE FOR BAD AND DOUBTFUL DEBTS IN ASSESSMENT YEAR 2010 - 11 BY PASSING A NON - SPEAKING ORDER, THEREFORE, THE SAME SHOULD BE RESTORED TO THE FIRST APPELLATE AUTHORITY. AFTE R PERUSAL OF THE IMPUGNED 4 ITA NO S. 315/PUN/2014 & 234/PUN/2015, A.YS. 2010 - 11 & 2011 - 12 ORDER, WE ARE OF VIEW THAT THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IS NOT A SPEAKING ORDER. THEREFORE, WE DEEM IT APPROPRIATE TO RESTORE THE ISSUE TO COMMISSIONER OF INCOME TAX (APPEALS) FOR PASSING A DETAILED AND SPEAK ING ORDER , AFTER AFFORDING OPPORTUNITY OF HEARING TO THE ASSESSEE. SINCE, IDENTICAL ISSUE HAS BEEN RAISED IN ASSESSMENT YEAR 2011 - 12, THE GROUND NOS. 3 AND 4 OF THE APPEAL FOR ASSESSMENT YEAR 2011 - 12 ARE ALSO RESTORED TO COMMISSIONER OF INCOME TAX (APPE ALS) TO MAINTAIN PARITY AND CONSISTENCY. ACCORDINGLY, GROUND NO. 1 RAISED IN THE APPEAL FOR ASSESSMENT YEAR 2010 - 11 AND GROUND NOS. 3 AND 4 RAISED IN THE APPEAL FOR ASSESSMENT YEAR 2011 - 12 ARE ALLOWED FOR STATISTICAL PURPOSE. 5. THE GROUND NO. 2 RAISED IN THE APPEAL BY THE ASSESSEE IS WITH RESPECT TO AMORTIZATION OF PREMIUM ON ACQUISITION OF HTM SECURITIES. THE VARIOUS BENCHES OF TRIBUNAL HAS BEEN CONSISTENTLY TAKING A VIEW THAT AMORTIZATION OF PREMIUM ON ACQUISITION OF HTM SECURITIES IS AN ALLOW ABLE EXPENDITURE. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. HDFC BANK LTD. (SUPRA) HAS APPROVED THE VIEW OF TRIBUNAL IN TREATING AMORTIZATION OF PREMIUM AS ALLOWABLE EXPENDITURE. THUS, IN VIEW OF THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT WE FIND MERIT IN THE GROUND NO. 2 RAISED BY THE ASSESSEE IN APPEAL. ACCORDINGLY, THE SAME IS ALLOWED. 6. THE LD. AR OF THE ASSESSEE HAS S TATED AT THE BAR THAT HE IS NOT PRESSING GROUND NO. 5 IN APPEAL FOR ASSESSMENT YEAR 2011 - 1 2. ACCORDINGLY, THE SAME IS DISMISSED AS NOT PRESSED. 5 ITA NO S. 315/PUN/2014 & 234/PUN/2015, A.YS. 2010 - 11 & 2011 - 12 7. THE ASSESSEE IN BOTH THE APPEAL S HAS ASSAILED LEVY OF INTEREST U/S. 234A, 234B AND 234C OF THE ACT. L EVY OF INTEREST U/S. 234A, 234B AND 234C IS CONSEQUENTIAL AND MANDATORY, HENCE, GROUND RAISED IN BOTH THE APPEAL S BY ASSESSEE IS DISMISSED BEING DEVOID OF ANY MERIT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2010 - 11 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND THE APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 2011 - 12 IS PARTLY ALLOWED IN THE AFORESAID TERMS. ORDER PRONOUNCED ON FRIDAY, THE 22 ND DAY OF SEPTEMBER, 2017 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 22 ND SEPTEMBER, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) , KOLHAPUR 4. / THE CIT - I /II, KOLHAPUR/CIT(CENTRAL), PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE