The Dy. Commr. Of Income Tax, Cir.-2, JAMNAGAR V. The Jamnagar District Co. Op. Bank Ltd., JAMNAGAR

ITA 248/RJT/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1441 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 14-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C P BHATIA
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: SHRI RAJPAL YADAV, JUDICIAL MEMBER AND S H RI AMARJIT SINGH , ACCOUNTANT MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] D CIT, CIRCLE - 2 , JAMNAGAR (APPELLANT) VS THE JAMNAGAR DISTRICT CO - OP. BANK LTD. SAHKAR BHAVAN, RA N JIT ROAD, JAMNA GAR PAN: AAAJT0272 B (RESPONDENT) REVENUE BY : S H RI C.P. BHATIA , D . R. ASSESSEE BY: S H RI SARVESH GOHIL , A.R. DATE OF HEARING : 21 - 06 - 2 018 DATE OF PRONOUNC EMENT : 27 - 08 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THI S REVENUE S APPEAL FOR A.Y. 2012 - 13 , AR ISES FROM ORDER OF THE CIT(A), JAMNAGAR DATED 18 - 04 - 2016 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE REVE NUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. T HE LD. CIT(A) ERRED OR FACTS AND IN LAW IN DELETING THE DISALLOWANCE OUT OF PROVISION OF BAD AND DOUBTFUL DEBTS MADE BY THE AO OF RS.2,32,17,061/ - I T A NO . 248 / RJT /20 16 A SSESSMENT YEAR 2012 - 13 I.T.A NO. 248 /RJT /20 16 A.Y. 2012 - 13 PAGE NO D CI T VS. THE JAMNAGAR DISTRICT CO - OP. BANK LTD. 2 [RS.2,70,69,600/ - AS DISALLOWED BY THE AO LESS RS.38,52,53 9/ - ALLOWABLE AS DEDUCTION U/S. 36(1 )(VII)(A), BEING 7.5% ELIGIBLE INCOME OF RS.5,13,67,182/ - ]. 2. ON THE BASIS OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. THAT THE REVENUE CR AVES LEAVES TO ADD, AMEND, ALTER OR WITHDRAW ANY GROUND OF APPEAL. 4. IT IS THEREFORE PRAYED THAT THE ORDER OF THE CIT (A), JAMNAGAR MAY KINDLY BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. 3. THE BRIEF FACT OF THE CASE IS THAT RETURN OF INCOME DECLARING INCOME OF RS. NIL WAS FILED ON 24 TH SEP, 2012. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 14 TH AUGUST, 2013. THE ASSESSEE IS A CO - OPERATIVE SOCIETY AND IS ENGAGED IN THE BUSINESS OF BANKIN G. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASSESSSEE HAS CLAIMED DEDUCTION U/S. 36(1)(VIII) OF T HE ACT. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS IN SUPPORT OF DEDUCTION CLAIMED. IN THIS RESPECT, THE ASSESSEE HAS FURNISHED THE REQUIRED DETAIL COMPRISING OF WORKING OF DEDUCTION AS PRODU C ED ON PA G E NO. 2 AND 3 OF T HE ASSESSING OFFICER S ORDER . THE ASSESSEE HAS ALSO SUBMITTED CHART REFLECTING ADVANCE OUTSTANDING OF THE BRANCH ES HAVING POPULATION BELOW 10,000 FOR THE YEAR UNDER CONSIDERATION. T HE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS COM P UTED AFORESAID DEDUCTION ON THE BASIS OF OUTSTANDING ADVANCE FOR THE MONTH WHICH RESULTED IN MULTIPLE DEDUCTION ON SA ME ADVANCES YEAR BY YEAR. HE WAS OF THE VIEW THAT O NLY RURAL ADVANCES MADE IN THE MONTH UNDER CONSIDERATION AND WHICH ARE OUTSTANDING AS ON LAST ASSESSMENT YEAR OF THAT MONTH HAVE TO BE TAKEN INTO CONSIDERATION. HE WAS OF THE VIEW THAT THE RULE 6ABA PERTAINED TO THE ADVANCES MADE BY EACH RURAL BRANCH WH ICH ARE OUTSTANDING AT THE END OF EACH MONTH IN THE PREVIOUS YEAR. THEREFORE, HE OBSERVED THAT THE DEDUCTION IS ALLOWABLE ONLY FOR THE ADVANCES MADE IN THE CURRENT YEAR AND THAT TOO FOR THOSE WHICH ARE OUTSTANDING AT THE END OF EACH MONTH. HE HAS FURTHER STATED THAT OPENING ADVANCES FIGURE ON 1 ST APRIL OF EACH FINANCIAL YEAR HAS TO BE IGNOR ED. HE FURTHER STATED THAT FRESH MONTH LY BALANCE IS TO BE ASCERTAINED AND AVERAGE ADVANCES TO BE RESTRICTED TO THE NUMBER OF MONTHS IN WHICH FRESH ADVANCES WERE MADE. CONSEQUENTLY, HE HAS DETERMINED THE TOTAL AMOUNT OF RS. 20 , 18 , 34 , 00/ - AS 10% OF TOTAL AGGREGATE ADVANC ES OF RS. I.T.A NO. 248 /RJT /20 16 A.Y. 2012 - 13 PAGE NO D CI T VS. THE JAMNAGAR DISTRICT CO - OP. BANK LTD. 3 20,18,34,000/ - MADE RURAL B RANCHES. ACCORDINGLY, HE HAS RESTRICTED THE DEDUCTION OF BAD DOUBTFUL DEBT TO RS. 20 , 18 , 34 , 00/ - . 4. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER STATING THAT THE ASSESSING OFFICER HAS COMPLETELY MISUNDERSTOOD THE PROVISION. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BE FORE US, LD. DEPARTMENTAL REPRESENTATIVE SUPPOR T ED THE ORDER OF ASSESSING OFFICER. ON THE OTHER HAND, LD. COUNSEL HAS CONTENDED THAT LD. CIT(A) HAS CORRECTLY ALLOWED THE CLAIM OF THE ASSESSEE AS PER THE PROVISION OF SECTION 36(1)( VIII ) (A) OF THE ACT. HE HAS ALSO PLACED RELIANCE ON THE DECISION OF THE ITAT BANGALORE VIDE ITA NO. 865/BANGL/2017 IN THE CASE OF CANARA BANK VS. JCIT AND THE DECISION OF ITAT HYDRABAD VIDE ITA NO. 1 1 61/HYD/2011 IN THE CASE OF ITO VS. NIZAMABAD DIST. CO - OPERATIVE BANK LTD. 6 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL CAREFULLY. THE RULE 6ABA PROVIDES THE PROCEDURE FOR COMPUTATION OF PROVISION FOR BAD AND DOUBTFUL DEBT. AFTER PERUSAL OF THE ABOVE RULE, WE OBSERVED THAT NOWHERE IT HAS BEEN PROVIDED THAT ONLY FRESH ADVANCES MADE BY EACH RURAL BRANCH DURING THE EACH MONTH IS TO BE CONSIDERED FOR COMPUTATION OF OUTSTANDING AMOUNT OF ADVANCES FOR RURAL BRANCHES. WE HAVE FURTHER NOTICED THAT THE IDENTICAL ISSUE HAS BEEN ADJUDICATED BY THE ITAT BANGALORE IN THE A BOVE CITED CASE WHEREIN IT IS HELD THAT AS PER THE PROVISION U/S. 36(1)( VIII ) (A) AND RULE 6ABA THE 10% OF AGGREGATE AVERAGE ADVANCES HAS TO BE WORKED OUT ON THE ENTIRE OUTSTANDING ADVANCES AND NOT THE ADVANCES O F THAT MONTH ALONE. AFTER PERUSAL OF THE AB OVE FACTS AND THE FINDINGS , WE ARE OF THE VIEW THAT METHOD ADOPTED BY THE ASSESSING OFFICER FOR COMPUTING THE AGGREGATE OVERALL ADVANCE IN RESPECT OF RURAL BRANCHES IS NOT CORRECT AND LD. CIT(A) HAS CORRECTLY DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. IN VIEW OF THE ABOVE, THE APPEAL OF THE REVENUE IS DISMISSED. I.T.A NO. 248 /RJT /20 16 A.Y. 2012 - 13 PAGE NO D CI T VS. THE JAMNAGAR DISTRICT CO - OP. BANK LTD. 4 7 . IN THE RE SULT , THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OUR T ON 27 - 08 - 201 8 SD/ - SD/ - (RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 27 /08 /201 8 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FIL E. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT