THE AGRASEN NAGRI SAHAKARI BANK LTD., Akola V. ACIT, AKOLA CIRCLE, Akola

ITA 27/NAG/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2159 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 02-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE

Judgement Text

1 ITA NO. 27/NAG/2015. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO. 27/NAG/2015. ASSESSMENT YEAR : 2009 - 10. THE AGRASEN NAGRI SAHAKARI BANK LTD., ASSTT. COMMISSIONER OF AKOLA. VS. INCOME - TAX, PAN AAAAT0864A. AKOLA CIRCLE, AKOLA. APPELLANT. RESPONDENT. APPELLANT BY : NONE. RESPONDENT BY : SHRI A.R. NINAWE. DATE OF HEARING : 04 - 07 - 2016 DATE OF PRONOUNCEMENT : 5 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 29 - 10 - 2014 AND PERTAINS TO ASSESSMENT YEAR 2009 - 10. THE GROUNDS OF APPEAL READ AS UNDER : 1. THAT THE LEARNED CIT(A) - I, NAGPUR HAS ERRED IN SUSTAINING THE ACCRUED INTEREST ON NON PERFORMING ASSETS (NPA) AT RS.2,15,174/ - BY HOLDING THAT INTEREST ATTRIBUTABLE TO THE NPA ACCOUNTS OUTSTANDING FOR LESS THAN 3 YEARS IS TAXABLE INTEREST ON NPA. 2. THAT THE LEARNED CIT(APPEALS) - I, NAGPUR OUGHT TO HAVE APPRECIATED THE FACT THAT, WHEN LO ANS / ADVANCES GIVEN BY THE APPELLANT ARE DOUBTFUL FOR RECOVERY (NPA ACCOUNTS) , INTEREST THEREON HAS NEITHER BEEN ACCRUED NOR BEEN RECEIVED AS PER NORMS OF RBI. 3. THAT THE LEARNED CIT(APPEALS) - I, NAGPUR HAS ERRED IN NOT FOLLOWING THE PROVISIONS OF SEC. 45 Q OF RBI ACT, WHICH IS AN OVERRIDING PROVISION ON ALL THE OTHER ACTS (INCLUDING INCOME TAX ACT), SINCE SAME IS A NON - OBSTANTE CLAUSE. 4. THAT THE LEARNED CIT(APPEALS) - I, NAGPUR OUGHT TO HAVE APPRECIATED THAT, INTEREST ON NPA ACCOUNTS HAS BEEN RIGHTLY OFFERED FO R TAXATION BY 2 ITA NO. 27/NAG/2015. THE APPELLANT IN THE YEAR OF ACTUAL RECEIPT THEREOF AND THE SAID SYSTEM OF TAXATION HAS BEEN CONSISTENTLY FOLLOWED BY THE APPELLANT RIGHT FROM INCEPTION. 5. THAT THE LEARNED CIT(APPEALS) - I, NAGPUR HAS ERRED IN NOT CONSIDERING THE FACT THAT APPEL LANT HAS OFFERED RECOVERY OF INTEREST ON NPA ACCOUNTS FOR TAXATION ON RECEIPT BASIS IN ASSESSMENT YEAR 2011 - 12 AT RS.22,12,257/ - AND SINCE AO HAS TAXED INTEREST ON NPA ON ACCRUAL BASIS IN BACK YEARS, IT AMOUNTS TO DOUBLE TAXATION. 6. THAT THE ORDER IS BAD - IN - LAW AND AGAINST THE FACTS OF THE CASE. 2. IN THIS CASE IT WAS CONCLUDED BY THE AO THAT THERE WAS A NET ACCRUED UNREALIZED NPA INTEREST OF RS.13,81,998/ - OF THE 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.47,11,264/ - ON NPA HAS NOT BEEN OFFERED TO TAX ON THE GROUND THAT ASSESSEE W AS ACCOUNTING THE NPA INTEREST OF CASH/ACTUAL REALIZATION BASIS AND THIS METHOD WAS CONSISTENTLY FOLLOWED. ACCORDINGLY THE AO MADE THE ADDITIONS. 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) DISALLOWED NPAS OF LESS THAN THREE YEARS. L EARNED CIT(APPEALS) CONCLUDED AS UNDER : CONSIDERING THE FACTS OF THE PRESENT CASE, IT WOULD BE NECESSARY TO COMPUTE THE INCOME THAT IS TO BE BROUGHT TO TAX BEING INTEREST ON CERTAIN AMOUNT CLASSIFIED AS NPAS IN VIEW OF THE BOARDS ABOVE REFERRED CIRCU LAR DATED 09.10.1984. THE AR OF THE APPELLANT ON 29.10.2014 HAS PROVIDED THE BIFURCATION OF THE INTEREST ACCRUED ON NPAS AND THE FIGURES OF INTEREST ATTRIBUTED TO SUCH NPAS, WHICH ARE OUTSTANDING FOR LESS THAN 3 YEARS AND ABOVE 3 YEARS AS UNDER : PARTICULARS NO. OF A/CS INTEREST NPA LESS THAN 3 YEARS 23 2,15,174/ - NPA MORE THAN 3 YEARS & ABOVE 21 11,66,819/ - TOTAL 13,81,993/ - 3 ITA NO. 27/NAG/2015. ACCORDINGLY, AS PER THE ABOVE DETAILS SUBMITTED BY THE A.R. OF THE APPELLANT, IT IS SEEN THAT OUT OF THE TOTAL ACCRUED INTEREST ON NPAS OF RS.13,81,993/ - AN AMOUNT OF RS.2,15,174/ - ONLY IS LIABLE TO BE TAXED AS INTEREST CHARGED BUT NOT RECEIVED ON SUCH NPAS WHICH FALLS WITHIN THE PERIOD OF LESS THAN 3 YEARS. THE FIGURES PROVIDED BY THE AR OF THE APPELLANT AS MENTIONED ABOVE, ARE CERTIFIED BY TH AR OF THE APPELLANT. THE AO, HOWEVER, IS AT LIBERTY TO VERIFY THE VERACITY OF THE FIGURES PROVIDED BY THE APPELLANT WHILE GIVING EFFECT IN VIEW OF THE FINDING GIVEN ABOVE TAKING INTO CONSIDERATION THE BOARDS CIRCULAR DATED 09.10.1984. 4. AGAINST THE ABOVE ORDER , THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. I HAVE HEARD THE LEARNED D.R. NONE APPEARED ON BEHALF OF THE ASSESSEE. 6. UPON CAREFUL CONSIDERATION I FIND THAT THE ISSUE CAN BE DISPO SED OF BY HEARING THE LEARNED D.R. AFTER CONSIDERING THE FACTS OF THE CASE AND HEARING THE LEARNED D.R. I FIND THAT THE ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE BY THE ITAT DECISION IN THE CASE OF THE MALKAPUR URBAN CO - OPERATIVE BANK LTD. ITA NO . 432 & 433/NAG/201 3 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(APPE A LS) 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 DISMISSED. 7. IN THE S AID 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 AURANGABAD HIGH COURT, JU DICATURE 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; 4 ITA NO. 27/NAG/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 JANUARY 2015. IN THE AB OVE 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 FOLLOWING 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 5 TH DAY OF JULY,2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 5 TH JULY, 2016. 5 ITA NO. 27/NAG/2015. COPY FORWARDED TO : 1. THE AGRASEN NAGRI SAHAKARI BANK LTD., GANDHI ROAD, AKOLA - 444203. 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. WAKOD E.