The Vallabh Vidyanagar Comm. Co.Op. Bank Ltd., Anand V. The ACIT, Anand Circle, Anand

ITA 2777/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8342 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-09-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 17-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Commercial expediency

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.2777/AHD/2014 ( / ASSESSMENT YEAR : 2011-12) THE VALLABH VIDYANAGAR COMM.CO-OP.BANK LTD. SHREE VALLABH CHAMBERS VALLABH VIDHYANAGAR 388 120 ANAND, GUJARAT / VS. THE ACIT ANAND CIRCLE ANAND # ./ ./ PAN/GIR NO. : AAAT 2898 Q ( #& / APPELLANT ) .. ( '#& / RESPONDENT ) #&( / APPELLANT BY : SHRI D.K. PARIKH, AR '#& )( / RESPONDENT BY : SHRI MUDIT NAGPAL, SR.DR *+ ), / DATE OF HEARING 10/10/2017 -./0 ), / DATE OF PRONOUNCEMENT 16/ 10 /2017 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED BY THE ASSESS EE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-IV , BARODA [CIT(A) IN SHORT] DATED 28/07/2014 IN THE MATTER OF ASSESS MENT ORDER PASSED UNDER S.143(3)OF THE INCOME TAX ACT, 1961 (HEREINAF TER REFERRED TO AS ITA NO.2777/AHD /2014 THE VALLABH VIDYANAGAR COMM.CO-OP.BANK LTD. VS. AC IT ASST.YEAR 2011-12 - 2 - 'THE ACT') DATED 29/11/2013 RELEVANT TO ASSESSMEN T YEAR (AY) 2011- 12. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE RE AD AS UNDER:- 1. THE LEARNED CIT(A)-IV, BARODA ERRED IN LAW AND / O R ON FACTS IN CONFIRMING THE DISALLOWANCE OF SAHAY EXPENSES OF RS.6,15,000/- PAID TO THE FAMILY MEMBERS OF DECEASE D MEMBERS OF THE BANK. 1.1 THE LEARNED CIT(A)-IV, BARODA, OUGHT TO HAVE DELETE D THE ADDITION OF SAHAY EXPENSES OF RS.6,15,000/- ON THE GROUNDS OF COMMERCIAL EXPEDIENCY. 1.2.THE LEARNED CIT(A)-IV, BARODA, ERRED IN LAW AND / OR ON FACTS IN CONFIRMING THE ADDITION OF SAHAY EXPENSES OF RS. 6,15,000/- THOUGH THE SAME WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE APPELLANT BANK. 2. THE LEARNED CIT(A)-IV, BARODA, ERRED IN LAW AND / OR ON FACTS IN CONFIRMING THE ACTION OF AO TO TREAT THE ARCHITECT FEES OF RS.12,990/- AS CAPITAL EXPENSES INSTEAD OF REVENUE EXPENSES. 3. GROUND NO.1 CONCERNS DISALLOWANCE OF SAHAY EXPE NSES OF RS.6,15,000/- PAID TO FAMILY OF DECEASED MEMBERS OF THE BANK. THE ASSESSING OFFICER (AO) DISALLOWED THE AFORESAID EXP ENSES AND CLAIMED BY THE ASSESSEE ON THE GROUND THAT SUCH EXPENSES HA VE NOT BEEN INCURRED FOR ITS BANKING ACTIVITIES. THE EXPENSES INCURRED ARE NOT WHOLLY AND EXCLUSIVELY FOR ITS BUSINESS PURPOSES. THE CIT(A) ALSO CONFIRMED THE ACTION OF THE AO IN FIRST APPEAL. ITA NO.2777/AHD /2014 THE VALLABH VIDYANAGAR COMM.CO-OP.BANK LTD. VS. AC IT ASST.YEAR 2011-12 - 3 - 4. THE LD.AR FOR THE ASSESSEE BEFORE US CONTENDED T HAT THE PAYMENT IS MADE TO THE DECEASED MEMBER OF THE BANK AS PER T HE STANDARD POLICY OF THE BANK. THE MAIN BUSINESS OF THE BANK IS TO COLL ECT THE FUNDS AND TO GIVE ADVANCES AGAINST THE FUNDS TO ITS MEMBERS EXCL USIVELY. THEREFORE, THE MEMBERS OF THE BANK ARE ITS CUSTOMERS. HENCE, TO ATTRACT THE PUBLIC TO BECOME MEMBERS, THE BANK DECLARED POLICY OF SAHAY TO THE DECEASED MEMBERS. AS PER THE SUBMISSIONS MADE BEFORE THE AO , THE BANK REGISTERED 336 INCOME CUSTOMERS DURING THE YEAR BY HIGHLIGHTING THE POLICY. THE EXPENDITURE INCURRED HAS HELPED BOOSTI NG ITS BANKING BUSINESS. THE LD.AR SUBMITTED THAT ON SIMILAR FACT S SITUATION, THE COORDINATE BENCH OF THE TRIBUNAL IN KALUPUR COMMERI CAL CO-OP.BANK LTD. VS. ACIT IN ITA NO.2614/AHD/2011 FOR AY 2008-0 9 ORDER DATED 17/08/2016 HAS ADJUDICATED THE ISSUE IN FAVOUR OF A SSESSEE AND ALLOWED THE AFORESAID PAYMENT AS BUSINESS EXPENDITURE. 5. THE LD.DR DID NOT CONTROVERT THE AFORESAID NARRA TIVE OF THE ASSESSEE. 6. IN THE LIGHT OF THE AFORESAID SUBMISSION, WE FIN D MERIT IN THE ARGUMENT OF THE ASSESSEE. THE EXPENDITURE INCURRED APPEARS TO HAVE PROMOTED THE BUSINESS OF THE COMPANY AND THUS IS IN THE NATURE OF BUSINESS EXPENDITURE. THEREFORE, GROUND NO.1 OF AS SESSEES APPEAL REQUIRES TO BE ALLOWED. ITA NO.2777/AHD /2014 THE VALLABH VIDYANAGAR COMM.CO-OP.BANK LTD. VS. AC IT ASST.YEAR 2011-12 - 4 - 7. GROUND NO.2 RAISED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON 16 / 1 0 /201 7 SD/- SD/- ( ) ( ) ( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 16/ 10 /2017 4..*,.*../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '#& / THE RESPONDENT. 3. 567, 8, / CONCERNED CIT 4. 8, ( ) / THE CIT(A)-IV, BARODA 5. 9:;,*67 , 67 0 , 5 / DR, ITAT, AHMEDABAD 6. ;<+ / GUARD FILE. / BY ORDER, '9,, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 10.10.17 (DICTATION-PAD 5- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10.10.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.16.10.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 16.10.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER