Sanmitra Urban Co.op. Bank Ktdi, Akola V. ACIT Akola Circle, Akola

ITA 267/NAG/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2135 (ITAT-NAGPUR)
• Duration Of Justice: 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 08-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Section: 145

Judgement Text

1 ITA NO. 267/NAG/2015 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO. 267/NAG/2015. ASSESSMENT YEAR : 2009 - 10. SANMITRA URBAN COOP. BANK LTD., ASSTT. COMMISSIONER OF INCOME - TAX, AKOLA. VS. AKOLA CIRCLE, AKOLA. PAN AABTS4051J. APPELLANT. RESPONDENT. APPELLANT BY : NONE. RESPONDENT BY : SHRI A.R. NINAWE. DATE OF HEARING : 13 - 07 - 2016 DATE OF PRONOUNCEMENT : 14 TH JULY, 2016 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 18 - 08 - 2015 AND PERTAINS TO ASSESSMENT YEAR 2009 - 10. GROUNDS OF APPEAL READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - I ERRED IN REJECTING THE APPEAL OF THE ASSESSEE BANK WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE BANK IS ELIGIBLE TO AC COUNT FOR INTEREST ON NON PERFORMING ASSETS (NPA) ON RECEIPT BASIS IN VIEW OF VARIOUS DECISIONS OF HON. PUNE AND OTHER TRIBUNALS AND HON. HIGH COURT OF BOMBAY (AURANGABAD BENCH) IN CASE OF THE COMMISSIONER OF INCOME TAX VS. M/S DEOGIRI NAGARI SAHAKARI BANK LTD. & OTHERS (BOMBAY HIGH COURT AURANGABAD BENCH), INCOME TAX APPEAL NO. 53/2014 & OTHERS, DATE OF DECISION:22.01.2015, WHICH IS BINDING BEING JURISDICTIONAL COURT. 2. THE LEARNED CIT(APPEALS) - I ERRED IN NOT ALLOWING NPA INTEREST RS.14,31,261/ - , WHICH ARE O UTSTANDING BELOW 3 YEARS. THE LEARNED CIT(APPEALS)I, ALLOWED ONLY RS.56,972/ - WHICH IS SAID TO BE ACCORDING TO BOARDS CIRCULAR DATED 09.10.1984. 2 ITA NO. 267/NAG/2015 3. THE LEARNED CIT(APPEALS) - I ERRED IN NOT APPRECIATING THE FACT THAT INTEREST ON NPA CANNOT BE SAID TO HAVE ACCRUED AT FIRST PLACE ITSELF AND THUS THERE IS NO BREACH OF SECTION 145 AS ASSESSEE FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : THE APPELLANT IS A NON SCHEDULED CO - OPERATIVE BANK WORKING UNDER THE DIRECTIONS OF RESE RVE BANK OF INDIA. THE APPELLANT FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2009 - 10 ON 29 - 09 - 2009 DECLARING TOTAL INCOME OF RS.21,26,950/ - . THIS RETURN WAS PROCESSED U/S 143(1). THIS CASE WAS SELECTED FOR SCRUTINY UNDER CASS. IT WAS CONCLUDED BY THE AO THAT THERE WAS A NET ACCRUED UNREALIZED NPA INTEREST OF RS.14,88,233/ - OF T HE YEAR 2008 - 09 WHICH WAS DIRECTLY CREDITED TO THE BALANCE SHEET AND EQUAL AMOUNT WAS CREDITED TO THE OVERDUE INTEREST RESERVE A/C WITHOUT ROUTING THE CREDIT/DEBIT OF THESE ENTRIES IN THE PROFIT & LOSS A/C. THE ACCRUED OVERDUE INTEREST AMOUNT OF RS.14,88,233/ - ON NPA HAS NOT BEEN OFFERED TO TAX ON THE GROUND TH A T ASSESSEE WAS ACCOUNTING THE NPA INTEREST OF CASH/ACTUAL REALIZATION BASIS AND THIS METHOD WAS CONSISTENTLY FOLLOWED. AO P ROCEEDED TO MAKE ADDITION IN THIS REGARD. 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) HELD THAT INTEREST ON NPA OUTSTANDING FOR LESS THAN 3 YEARS HAS RIGHTLY BEEN TAXED BY THE AO AND HE AFFIRMED THAT PART OF THE AOS ORDER AND DELETED THE DISALLOWANCE OF INTEREST ON NPAS OF MORE THAN 3 YEARS. 4. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. I HAVE HEARD THE LEARNED D.R. NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER, IN MY CONSIDERED OPINION THE APPEAL CAN BE DISPOSED OF BY HE ARING THE LEARNED D.R. AND PERUSING THE RECORDS. 6. UPON CAREFUL CONSIDERATION I FIND THAT THE ISSUE IS SQUARELY COVERED IN F A VOUR OF THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S DEOGIRI NAGARI SAHAKARI BANK LTD. & OTHERS (BOMBAY 3 ITA NO. 267/NAG/2015 HIGH COURT AURANGABAD BENCH), INCOME TAX APPEAL NO. 53/2014 & OTHERS, VIDE ORDER DATED 22.01.2015. I ALSO FIND THAT THE ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE BY THE ITAT DECISION IN THE CASE OF THE MALKAPUR URBAN CO - OPE RATIVE BANK LTD. ITA NO. 432 & 433/NAG/2013 AND ITA NO. 452 & 453/NAG/2013 VIDE ORDER DATED 31 - 08 - 2015. THE TRIBUNAL IN THE ABOVE CASES HAS CONCLUDED AS UNDER : RESPECTFULLY FOLLOWING THE ABOVE PRECEDENTS, WE SET ASIDE THE ORDERS PASSED BY THE LEARNED CIT(APPEALS) IN ALL THESE CASES AND HOLD THAT THE ENTIRE ADDITION MADE IN THE PRESENT CASE ON ACCOUNT OF INTEREST ACCRUED ON NPAS IS NOT SUSTAINABLE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED AND THE GROUNDS RAISED BY THE REVENUE ARE DIS MISSED. 7. IN THE SAID ORDER THE ITAT HAS ALSO REFERRED DECISION OF HONBLE JURISDICTIONAL HIGH COURT AS UNDER : 5. HAVING HEARD BOTH THE PARTIES, WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE AURA NGABAD HIGH COURT, JUDICATURE AT BOMBAY, RENDERED IN A GROUP OF CASES DETAILS OF WHICH ARE AS UNDER : - I) CIT V/S M/S DEOGIRI NAGRI SAHAKARI BANK LTD., ITA NO. 53 OF 2014, JUDGMENT DATED 22 ND JANUARY 2015; II) CIT V/S M/S PEOPLES CO - OPERATIVE BANK LTD., ITS NO. 54 OF 2014, JUDGMENT DATED 22 ND JANUARY, 2015. III) CIT V/S THE NANDED DISTRICT CENTRAL CO - OPERATIVE BANK LTD., ITA NO. 57 OF 2014, JUDGMENT DATED 22 ND JANUARY, 2015; AND IV) CIT V/S VASANDADA NAGARI SAHAKARI BANK LTD., ITA NO. 68 OF 2014, JUDGMENT DATED 22 ND JA NUARY 2015. 4 ITA NO. 267/NAG/2015 IN THE ABOVE SAID DECISION HONBLE JURISDICTIONAL HIGH COURT HAS ELABORATELY DISCUSSED THE ISSUE AND CONSIDERED THE CASE LAWS ON THE SUBJECT AND HELD THAT THERE WAS NO NEED TO INTERFERE WITH THE ORDER OF THE TRIBUNAL. 8. RESPECTFULLY FOLLOWI NG THE ABOVE PRECEDENTS, I SET ASIDE THE ORDER OF LEARNED CIT(APPEALS) AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 9. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF JULY,2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 14 TH JULY, 2016. COPY FORWARDED TO : 1. SANMITRA URBAN COOP. BANK LTD., INFRONT OF TILAK PUTLA, RAMDAS PETH, AKOLA. 2. A.C.I.T., AKOLA CIRCLE, AKOLA. 3. C.I.T. - I, NAGPUR. 4. CIT(APPEALS), - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.