The Commercial Co.op. Bank Ltd., Kolhapur V. Deputy Commissioner of Income-tax,

ITA 265/PUN/2014

• Counselvise Citation: 26524514 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 10-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y K BHASKAR
• Assessee Lawyers: C V DESHPANDE
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.265/PN/2014 (ASSESSMENT YEAR : 2010-11) THE COMMERCIAL CO-OPERATIVE BANK LTD., 615, E WARD, SHAHUPURI, 1 ST LANE, KOLHAPUR. PAN : AAAAT0945J . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE- 2, KOLHAPUR. . RESPONDENT ASSESSEE BY : MR. C. V. DESHPANDE DEPARTMENT BY : MR. Y. K. BHASKAR DATE OF HEARING : 23-03-2015 DATE OF PRONOUNCEMENT : 31-03-2015 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), KOLHAPUR DATED 09.12.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 05.1 1.2012 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2010-11. 2. IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL :- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. C.I.T. (A) WAS NOT JUSTIFIED IN CONFIRMING THE DECI SION OF THE A.O. OF ADDING THE SUM OF RS.3,21,437/- BEING THE UNCLAIMED DIVIDEND T RANSFERRED TO RESERVE FUND BY THE APPELLANT BANK DURING THE YEAR. THE APPELLANT BANK SUBMITS AS UNDER: A. THE UNCLAIMED DIVIDEND TRANSFERRED TO RESERVE FU ND BEING OUT OF POST TAX PROFIT THERE CANNOT BE ANY ADDITION IN THI S RESPECT. B. THE TRANSFER TO RESERVE FUND HAVING BEEN MADE AS PER THE REQUIREMENTS OF MAHARASHTRA STATE CO-OPERATIVE SOCI ETIES ACT, 1960 THE AMOUNT OF UNCLAIMED DOES NOT RESULT IN ANY TAXABLE INCOME FOR THE APPELLANT. ITA NO.265/PN/2014 C. THE IMPUGNED SUM NOT BEING A TRADING LIABILITY T HE PROVISIONS OF SECTION 41(1) ARE NOT APPLICABLE IN THIS RESPECT. THE APPELLANT PRAYS THAT THE A.O. BE DIRECTED TO DE LETE THE ADDITION. 2) THE APPELLANT CRAVES TO LEAVE, ADD/AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 3. IN THIS APPEAL, ISSUE RELATES TO AN ADDITION OF RS.3,21,437/- MADE BY THE LOWER AUTHORITIES ON ACCOUNT OF UNCLAIMED DIVIDEND TRANSFERRED TO RESERVE FUND BY THE ASSESSEE. THE ASSESSING OFFICER AS WEL L AS THE CIT(A) WERE OF THE VIEW THAT THE TRANSFER OF UNCLAIMED DIVIDEND TO THE GENERAL RESERVE FUND SHOWED THAT SUCH LIABILITY CEASED TO EXIST AND THER EFORE, THE SAME WAS LIABLE TO BE TAXED. 4. AT THE TIME OF HEARING, IT WAS A COMMON POINT BE TWEEN THE PARTIES THAT AN IDENTICAL ISSUE HAS BEEN DECIDED IN THE FAVOUR O F THE ASSESSEE BY THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF BHINGAR URBAN CO- OP. BANK LTD. VS. ITO VIDE ITA NO.2027/PN/2013 & OT HERS DATED 20.10.2014. THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL D ATED 20.10.2014 (SUPRA), READS AS UNDER :- 5. IN OUR CONSIDERED OPINION, THE LOWER AUTHORITIE S HAVE MIS-DIRECTED THEMSELVES IN TAXING THE UNCLAIMED DIVIDEND AS AN I NCOME. OSTENSIBLY, DIVIDEND DISTRIBUTION BY THE ASSESSEE BANK IS AN AP PORTIONED FROM ITS TAX PAID PROFITS AND DOES NOT A CHARGE AGAINST THE PROFITS F OR THE PURPOSES OF COMPUTING TAXABLE INCOME. ONCE DIVIDEND DECLARED BY THE ASSE SSEE BANK IS NOT A CHARGE AGAINST THE PROFITS IN ORDER TO COMPUTE TAXA BLE INCOME, ANY UNCLAIMED DIVIDEND THEREOF, CANNOT BE CHARGED AS AN INCOME UN DER THE ACT. THEREFORE, WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION. THUS, ON GROUND OF APPEAL N O.2, THE ASSESSEE SUCCEEDS. 5. FOLLOWING THE AFORESAID PRECEDENT, WE HEREBY SE T-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELE TE THE IMPUGNED ADDITION OF RS. 3,21,437/- MADE ON ACCOUNT OF UNCLAIMED DIVIDEN D TRANSFERRED TO RESERVE FUND. THUS, ON THIS GROUND ASSESSEE SUCCEEDS. ITA NO.265/PN/2014 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED, AS ABOVE. ORDER PRONOUNCED ON 31 ST MARCH, 2015. SD/- SD/- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 31 ST MARCH, 2015. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), KOLHAPUR; 4) THE CIT, KOLHAPUR; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE