Kerala State Co-op Bank Ltd, Trivandrum V. ACIT, Trivandrum

ITA 272/COCH/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2585 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 25-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 07-05-2013
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA; M ANIL KUMAR
• Assessee Lawyers: V DEVARAJAN
• Keywords: Revenue expenditure
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO.272/COCH/2013 ASSESSMENT YEAR : 2008-09 KERALA STATE CO-OP BANK LTD.,, CO-BANK TOWERS, PALAYAM, TRIVANDRUM. [PAN:AAAK 4255G] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(2), TRIVANDRUM. (ASSESSEE-APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI V. DEVARAJAN, CA REVENUE BY SMT. S. VIJAYAPRABHA, JR. DR AND SHRI M. ANIL KUMAR, CIT(DR) DATE OF HEARING 25/07/2013 DATE OF PRONOUNCEMENT 31/07/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER DATED 27-03-2013 PASSED BY THE LD. CIT, TRIVANDRUM U/S. 263 OF THE A CT FOR THE ASSESSMENT YEAR 2008- 09. 2. THE ASSESSEE IS CHALLENGING THE VALIDITY OF THE REVISION ORDER PASSED BY LD CIT. 3. THE LD CIT, ON EXAMINATION OF RECORD, NOTICED TH AT THE ASSESSEE HAS CLAIMED AN EXPENDITURE OF RS.7,37,35,467/- UNDER THE HEAD SEC URITIES AMORTIZATION WRITTEN OFF. THE ASSESSEE HAD WRITTEN OFF THE DIFFERENCE BETWEEN THE BOOK VALUE AND FACE VALUE OF SECURITIES IN INSTALMENTS ACCORDING TO THE PERIOD O F MATURITY OF THE SECURITIES. THE SAME CONSISTED OF TWO ITEMS VIZ., RS.4,34,38,172/- WHICH WAS AMORTISED IN FIVE YEARS AND RS.3,02,97,295/-, WHICH WAS WRITTEN OFF IN 13 YEARS . THE LD CIT TOOK THE VIEW THAT THE I.T.A. NO.272/COCH/2013 2 SAID EXPENDITURE WAS NOT ALLOWABLE. HE FURTHER HE NOTICED THAT THE ASSESSING OFFICER HAD ALLOWED THEM AS REVENUE EXPENDITURE. HENCE, TH E LD CIT INITIATED REVISION PROCEEDINGS. 4. BEFORE LD CIT, THE ASSESSEE SUBMITTED THAT T HE ASSESSEE HAS CLAIMED THE ABOVE AMOUNTS AS EXPENDITURE AS PER THE RBI CIRCULAR NO. RBI/2005-06/55 DATED 13-07-2005. THE LD CIT EXAMINED THE RBI CIRCULAR, REFERRED SUPR A, AND CONCLUDED THAT THE SAID CIRCULAR IS APPLICABLE ONLY TO THE CLAIM OF RS.4,34 ,38,172/-. FOR COMING TO THIS CONCLUSION, THE LD CIT ALSO PLACED RELIANCE ON THE DECISION DATED 07-11-2002 OF HONBLE JURISDICTIONAL KERALA HIGH COURT IN THE CASE OF CIT VS. NEDUNGADI BANK LTD. ACCRODINGLY THE LD CIT HELD THAT THE CLAIM OF RS.4.34 CRORES, R EFERRED ABOVE, IS ADMISSIBLE. THE LD CIT NOTICED THAT THE REMAINING AMOUNT OF RS.3,02,97 ,295/- REPRESENTED ONLY A PROVISION MADE IN THE ACCOUNTS FOR POSSIBLE DIMINUTION IN THE BOOK VALUE OF PERMANENT SECURITIES. HENCE THE LD CIT TOOK THE VIEW THAT THE CIRCULAR IS SUED BY RBI, BEING IN THE NATURE OF ONE TIME EXCEPTION, IS NOT APPLICABLE TO THE SAID C LAIM AND ACCORDINGLY HELD THAT THE SAID CLAIM IS NOT ADMISSIBLE AS DEDUCTION. THE LD CIT A LSO RELIED ON THE CIRCULAR NO.4/2007 DATED 15.6.2007 ISSUED BY CBDT. ACCORDINGLY, THE L D CIT ORDERED FOR REVISION OF THE ASSESSMENT ORDER. 5. THE LD COUNSEL SUBMITTED THAT THE ASSESSEE H AS CLAIMED THE AMOUNT OF RS.3,02,97,295/- AS PER THE CIRCULAR ISSUED BY RBI AND HENCE THE SAME IS ALLOWABLE AS DEDUCTION. HE FURTHER SUBMITTED THAT THE DECISION RENDERED BY THE HONBLE KERALA HIGH COURT IN THE CASE OF NEDUNGADI BANK (264 ITR 545) S QUARELY APPLIES IN THIS ISSUE ALSO. 6. ON THE CONTRARY, THE LD D.R SUBMITTED THAT T HE CLAIMOF RS.3,02,97,295/- WAS ONLY A PROVISION MADE IN THE ACCOUNTS FOR POSSIBLE DIMIN UTION IN THE VALUE OF PERMANENT SECURITIES AND HENCE THE SAME IS NOT ALLOWABLE AS D EDUCTION. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. WHEN A SPECIFIC QUERY WAS ASKED TO THE LD A.R AS TO WHETHER THE AO HAS DISCUSSED ABOUT THE ISSUE RELATING TO THE CLAIM OF RS.3,02,97,295/- IN THE AS SESSMENT ORDER, THE LD A.R FAIRLY I.T.A. NO.272/COCH/2013 3 SUBMITTED THAT THE AO DID NOT DISCUSS ABOUT THE SAM E. THERE SHOULD NOT BE ANY DISPUTE THAT THE ASSESSING OFFICER PASSES THE ORDER IN A QUASI JUDICIAL PROCEEDING AND HENCE THE ASSESSMENT ORDER SHOULD SPEAK FOR ITSELF. 8. THE HONBLE DELHI HIGH COURT, IN THE CASE OF TOYOTO MOTOR CORPORATION (306 ITR 49), HAS HELD THAT THE PROCEEDINGS BEFORE THE AO AR E QUASI JUDICIAL PROCEEDINGS AND A DECISION TAKEN BY THE AO IN THIS REGARD MUST BE SUP PORTED BY REASONS. IN THE CASE BEFORE THE DELHI HIGH COURT, THE ASSESSING OFFICER PASSED A CRYPTIC ORDER DROPPING THE PENALTY PROCEEDINGS WITHOUT GIVING ANY REASON AND H ENCE THE SAID ORDER WAS REVISED BY THE LD CIT U/S 263 OF THE ACT. THE ASSESSEE CHALLE NGED THE REVISION ORDER BEFORE THE TRIBUNAL AND COULD SUCCEED. THE DEPARTMENT CARRIED THE MATTER IN APPEAL BEFORE THE HONBLE DELHI HIGH COURT, WHICH UPHELD THE REVISION ORDER PASSED BY LD CIT U/S 263 OF THE ACT FOR THE REASONS STATED ABOVE. THE SAID ORD ER OF THE DELHI HIGH COURT HAS BEEN APPROVED BY THE HONBLE SUPREME COURT IN THE CASE O F TOYOTO MOTOR CORPORATION (306 ITR 52) WITH THE OBSERVATION THAT THE ASSESSING OFF ICER SHOULD PASS A REASONED ORDER. THESE DECISIONS CLEARLY BRING OUT THAT THE ASSESSME NT ORDER SHOULD BE PASSED WITH OR CONTAIN PROPER REASONS ON VARIOUS ISSUES. 9. THE IMPUGNED ISSUE POINTED OUT BY LD CIT WOULD HAVE IMPLICATION ON THE TAX COMPUTATION IF IT IS DECIDED AGAINST THE ASSESSEE, IN WHICH CASE THE IMPUGNED ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WO ULD BECOME PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 10. THE LD A.R SUBMITTED THAT THE LD CIT HAS EX PRESSED HIS OPINION ABOUT THE ALLOWABILITY OF THE CLAIM MADE BY THE ASSESSEE AND HENCE THE ASSESSING OFFICER MAY HAVE NO OTHER CHOICE, BUT TO DISALLOW THE CLAIM OF RS.3,02,97,295/- CLAIMED BY THE ASSESSEE. ACCORDINGLY, THE LD A.R SUBMITTED THAT T HE ASSESSING OFFICER MAY BE DIRECTED TO EXAMINE THE ISSUE AFRESH IN ACCORDANCE WITH THE LAW. WE FIND FORCE IN THE SAID SUBMISSIONS. ACCORDING TO THE ASSESSEE, THE ISSUE RELATING TO THE ABOVE SAID CLAIM IS SQUARELY COVERED BY THE DECISION RENDERED BY THE JU RISDICTIONAL HIGH COURT IN THE CASE OF NEDUNGADI BANK LTD (SUPRA). HENCE, THE CONTENTIONS OF THE ASSESSEE REQUIRE I.T.A. NO.272/COCH/2013 4 EXAMINATION. ACCORDINGLY, WE MODIFY THE IMPUGNED O RDER OF THE LD CIT AND DIRECT THE ASSESSING OFFICER TO EXAMINE THE ISSUE AFRESH IN AC CORDANCE WITH LAW BY DULY CONSIDERING THE CONTENTIONS OF THE ASSESSEE AND WITHOUT BEING I NFLUENCED BY THE DISCUSSIONS MADE BY LD CIT IN THE IMPUGNED REVISION ORDER. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 31-07-20 13. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 31ST JULY, 2013 GJ COPY TO: 1. KERALA STATE CO-OP BANK LTD., CO-BANK TOWERS, PA LAYAM, TRIVANDRUM. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1(2), TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM 4. I.T.A.T., COCHIN BENCH, COCHIN. 5. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN