D.C.I.T., Circle-I, Jalpaiguri, Jalpaiguri V. Jalpaiguri Central Co-Operative Bank Ltd., Kolkata

ITA 2804/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4260 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 17-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MD GHAYAS UDDIN JCITSRDR
• Keywords: Bad and doubtful debts
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 2804 - 2806 / KOL / 2013 ASSESSMENT YEARS :2008-09 TO 2010-11 DCIT, CIRCLE-I, C.R. BUILDING, RACE COURSE PARA, P.O. & DIST. JALPAIGURI V/S . JALPAIGURI CENTRAL CO- OPERTIVE BANK LTD.,TEMPLE STREET, JALPAIGURI-735 101 [ PAN NO.AAABT 2597 B ] /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI RIP DAS, FCA /BY REVENUE MD. GHAYAS UDDIN, JCIT-SR-DR /DATE OF HEARING 07-11-2016 ! /DATE OF PRONOUNCEMENT 11-11-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THESE THREE APPEALS BY THE REVENUE ARE ARISING OUT OF ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) JALPAIGURI IN APPEAL NO.37,38 & 85/CIT(A)/JAL/12-13 ALL DATED 24.10.2013. ASSESSMEN TS WERE FRAMED BY JCIT RANGE-I/ITO WARD-1(3), JALPAIGURI U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE THEIR O RDERS DATED 04.12.2012, 05.12.2012 & 25.03.2013 FOR ASSESSMENT YEARS 2008-0 9 TO 2010-11 RESPECTIVELY. ITA NO.2804-2806/KOL/2013 A.Y. 2008- 09 TO 2010-11 DCIT CIR-1, JAL VS. JCCO-OP BANK LTD. PAGE 2 MD. GHAYAS UDDIN, LD. DEPARTMENTAL REPRESENTATIVE A PPEARED ON BEHALF OF REVENUE AND SHRI RIP DAS, LD. AUTHORIZED REPRESENTA TIVE APPEARED ON BEHALF OF ASSESSEE. 2. ALL THESE ARE HEARD TOGETHER AND ARE BEING DISPO SED OF BY WAY OF COMMON ORDER FOR THE SAKE OF CONVENIENCE. FIRST WE TAKE UP ITA NO.2804/KOL/2013 FOR A.Y. 08-0 9 . 3. FIRST ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN GIVING DIRECTION TO ASSESSING OFFICER TO DISALLOW T HE ADDITION MADE BY HIM ON ACCOUNT OF SERVICE TAX PAYMENT AFTER VERIFYING THE DATES OF PAYMENT OF SERVICES TAX AS PER PROVISION OF SEC. 43B OF THE AC T. 4. NECESSARY FACTS ARE THAT ASSESSEE IN THE PRESENT CASE IS A CO-OPERATIVE BANKING AND ENGAGED IN THE BUSINESS OF BANKING. DUR ING THE COURSE ASSESSMENT PROCEEDINGS, ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS SHOWN SERVICE TAX LIABILITY FOR 62,535/- ONLY. ON QUESTION BY THE AO TO FILE EVIDENCE OF PAYMENT OF SERVICE TAX ASSESSEE FAILED TO PRODUCE EVIDENCES REGARDING THE PAYMENT OF SERVICE TAX LIABILITY. ACC ORDINGLY THE AO HAS DISALLOWED THE AMOUNT OF SERVICE TAX LIABILITY IN P URSUANCE OF THE PROVISIONS OF SEC. 43B OF THE ACT AND ADDED TO THE TOTAL INCOME O F ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHERE THE ASSESSEE FILED COPIES OF CHALLANS FOR SUCH PAYMENT OF SERVICE TAX SHOWING THAT IT WAS PAID BEFORE THE DATE OF FILING OF INCOME TAX RETURN. CONSIDERING THE FACTS AND CIRCUMSTANCES OF FACTS, LD. CIT(A) DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- 5.6 THE ASSESSEE HAS NOT PRESSED ANY OTHER GROUND EXCEPT THE DISALLOWANCE OF SERVICE TAX LIABILITY U/S. 43B. THE AO IS DIRECTED TO VERIFY THE DATES OF PAYMENT OF SERVICE TAX AND IF THE SAME IS PAID WITHIN THE TIME PRESCRIBED, ALLOW THIS EXPENDITURE. ITA NO.2804-2806/KOL/2013 A.Y. 2008- 09 TO 2010-11 DCIT CIR-1, JAL VS. JCCO-OP BANK LTD. PAGE 3 BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 6. BEFORE US LD. DR FOR THE REVENUE SUBMITTED THAT LD. CIT(A) HAS NO POWER TO REMAND BACK THE PROCEEDINGS TO THE AO IN T ERMS OF THE PROVISIONS OF SECTION 251 OF THE ACT. IT WAS THE DUTY OF LD. CIT( A) TO ADJUDICATE THE MATTER ON MERIT AFTER TAKING REMAND REPORT FROM THE AO. ON THE OTHER HAND, LD. AR FOR THE ASSESSEE VEHEMENT LY SUPPORTED THE ORDER OF LD. CIT(A) AND REQUEST THE BENCH TO DECIDE THE I SSUE IN FAVOUR OF ASSESSEE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. FR OM THE ABOVE DISCUSSION, WE FIND THAT THE CRUX OF THE ISSUE FOR OUR ADJUDICA TION IS WHETHER THE ACTION OF LD. CIT(A) IS CORRECT IN DIRECTING THE AO TO ALLOW THE DISALLOWANCE MADE BY THE AO FOR THE SERVICE TAX SUBJECT TO THE COMPLIANCE OF THE PROVISIONS OF SECTION 43B OF THE ACT. AS PER THE PROVISIONS OF SECTION 25 1 OF THE ACT THE LD. CIT HAS THE POWERS AS MENTIONED BELOW : (1) IN DISPOSING OF AN APPEAL, THE [COMMISSIONER ( APPEALS)] SHALL HAVE THE FOLLOWING POWERS (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT [ 5085 ][* * * * *]; FROM THE BARE PROVISIONS OF THE ACT WE FIND THAT TH E LD. CIT(A) DOES NOT HAVE THE POWER TO REMAND THE MATTER TO THE AO FOR FRESH ADJUDICATION. HOWEVER WE FIND THAT THE LD. CIT(A) HAS NOT DECIDED THE ISSUE IN AS SESSEES FAVOUR. RATHER, THE MATTER HAS BEEN RESTORED TO THE ASSESSING OFFIC ER FOR DECIDING IT AFRESH WITH THE DIRECTION TO COMPLY THE PROVISIONS OF SECT ION 43B OF THE ACT. WE FIND NO INFIRMITY IN THE RESTORATION OF THE MATTER TO TH E AO. WE OBSERVE THAT THE LD. CIT(A) HAS GIVEN A SIMPLE DIRECTION THAT THE ASSESS ING OFFICER SHOULD DELETE THE ADDITION IF THE AMOUNT OF SERVICE TAX HAS BEEN PAID WITHIN THE TIME PRESCRIBED UNDER SECTION 43B OF THE ACT. IN OUR CON SIDERED OPINION, THERE IS NO CAUSE OF GRIEVANCE AT THE REVENUES END BECAUSE THE ISSUE IS OPEN AT LARGE ITA NO.2804-2806/KOL/2013 A.Y. 2008- 09 TO 2010-11 DCIT CIR-1, JAL VS. JCCO-OP BANK LTD. PAGE 4 BEFORE THE DEPARTMENTAL AUTHORITIES. TAKING INTO CO MPREHENSION THE FACTUAL SCENARIO AND PARTICULARLY THE BACKGROUND ASPECTS, I T IS, AT ONCE, CLEAR THAT THE CIT(A) IN HIS IMPUGNED ORDERS DATED 24.10.2013 HAS NOT PASSED AN ORDER AS IF HE WAS SETTING ASIDE THE ORDER OF ASSESSMENT AND RE FERRING THE MATTER BACK TO THE AO FOR MAKING FRESH ASSESSMENT IN ACCORDANCE WI TH HIS DIRECTIONS. EVEN IF THE AMENDMENT IN THE AFORESAID CLAUSE (A) OF SECTIO N 251(1) HAS BEEN MADE SO AS TO PROVIDE THAT THE COMMISSIONER (APPEALS) MA Y NOT SET ASIDE THE ASSESSMENT AND REFER THE CASE BACK TO THE AO FOR MA KING FRESH ASSESSMENT WITH A VIEW TO HELP BRINGING AN EARLY FINALIZATION OF THE ASSESSMENT, IT CANNOT BE ASSUMED THAT THE CIT(A) IS DIVESTED OF THE POWER TO ANNUL THE ASSESSMENT AND THEN TO PASS APPROPRIATE CONSEQUENTIAL ORDER. W E ARE, THEREFORE, NOT INCLINED TO DISTURB THE FINDING OF THE FIRST APPELL ATE AUTHORITY ON THIS COUNT. THE GROUND APPEAL OF REVENUE IS DISMISSED. 8. NEXT ISSUE RAISED BY REVENUE IN THIS APPEAL IS T HAT LD. CIT(A) ERRED IN GIVING RELIEF TO ASSESSEE ON ACCOUNT OF PROVISION U/S 36(VIIA)(A) FOR OVERDUE INTEREST FOR 4,78,47,934/-. 9. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO FOUND THAT ASSESSEE HAS CLAIMED DEDUCTION FOR 4,78,47,934/- ON ACCOUNT OF PROVISION FOR OVERDUE INTEREST. ON QUESTION ASSESSEE SUBMITTED THAT THE D EDUCTION HAS BEEN CLAIMED FOR OVERDUE INTEREST AS PER THE BANKING REGULATION. HOWEVER, AO HAS DISREGARDED THE CLAIM OF ASSESSEE BY HOLDING THAT U NDER THE PROVISION OF INCOME TAX ACT, SAID PROVISION ARE NOT LIABLE FOR D EDUCTION AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 10. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHEREAS ASSESSEE SUBMITTED THAT INTEREST OF NON-PERFORMING ASSET IS NOT THE INCOME IN THE HANDS OF ASSESSEE. THE ASSESSEE HAS RELIED IN T HE IN THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. VASISTH CHAY VYAPAR LTD. IN ITA NOS. 552/2005, 5652005, 1191/2007, 139/2008, 446/20 08, 537/2008, ITA NO.2804-2806/KOL/2013 A.Y. 2008- 09 TO 2010-11 DCIT CIR-1, JAL VS. JCCO-OP BANK LTD. PAGE 5 408/2003. CONSIDERING THE JUDGMENTS OF DELHI HIGH C OURT LD. CIT(A) DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- 5.4 IN VIEW OF THE ABOVE JUDGMENT OF HON HIGH COUR T ON THE BASIS OF THE JUDGMENT OF HON SUPREME COURT, THE AO IS DIRECT ED TO DELETE THE ADDITION OF THE PROVISION FOR OVERDUE INTEREST OF R S.4,78,47,934/. THE APPEAL ON THIS GROUND IS ALLOWED. 5.5 THE FINANCE ACT 2007 HAS ADDED CO-OPERATIVE BANK IN SECTION 36(1)(VIIA)(A) W.E.F. 1/4/2007. PRIOR TO THIS INSER TION THE CO-OPERATIVE BANKS WERE NOT ALLOWED THIS DEDUCTION AS THE COOPER ATIVE BANKS WERE NOT FALLING IN THE CATEGORY OF SCHEDULED BANK [MANSAROVAR URBAN CO- OPERATIVE BANK LTD. V. DCIT 2010 (126) ITD 0072 T-L UC]. THE ASSESSEE IS A CO-OPERATIVE BANK AND IS THUS ELIGIBL E FOR DEDUCTION U/S 36(1)(VIIA)(A). THE AO IS DIRECTED TO ALLOW THIS DE DUCTION. THE APPEAL ON THIS GROUND IS ALLOWED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 11. BEFORE US LD. DR SUBMITTED THAT LD. CIT(A) ALLO WED THE DEDUCTION TO ASSESSEE TWO TIMES ON ACCOUNT OF OVERDUE INTEREST. THEREFORE, LD. DR REQUESTED THE BENCH TO RESTORE THE ISSUE BACK TO TH E FILE OF AO FOR FRESH ADJUDICATION. ON THE OTHER HAND, LD. AR FOR THE ASSESSEE RELIED O N THE ORDER OF LD. CIT(A). 12. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND CAREFULLY CONSIDERED THE MATERIAL AVAILABLE ON RECORD. FROM T HE FOREGOING DISCUSSION, THE ISSUE BEFORE US TO ADJUDICATE ARISES SO AS TO W HETHER ASSESSEE IS ENTITLED FOR DEDUCTION OF RS. 4,78,47,934.00 IN TERMS OF THE PROVISIONS OF SECTION 36(1)(VIIA) OF THE ACT. AT THIS JUNCTURE WE FIND RE LEVANT TO PRODUCE THE PROVISIONS OF SECTION 36(1)(VIIA) OF THE ACT WHICH READS AS UNDER : 36.(1) THE DEDUCTIONS PROVIDED FOR IN THE FOLLOWIN G CLAUSES SHALL BE ALLOWED IN RESPECT OF THE MATTES DEALT WITH THEREIN , IN COMPUTING THE INCOME REFERRED TO IN SECTION 28- (I) . (II) (III) ITA NO.2804-2806/KOL/2013 A.Y. 2008- 09 TO 2010-11 DCIT CIR-1, JAL VS. JCCO-OP BANK LTD. PAGE 6 (IV) (V) .. (VI) (VII) SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), THE AMOUNT OF [ANY BAD DEBT OR PART THEREOF WHICH IS WRITTEN OFF AS IR RECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE FOR THE PREVIOUS YEAR]: [(VIIA) [IN RESPECT OF ANY PROVISION FOR BAD AND DO UBTFUL DEBTS MADE BY- (A) A SCHEDULED BANK [NOT BEING [***] A BANK INCORP ORATED BY OR UNDER THE LAWS OF A COUNTRY OUTSIDE INDIA] OR A NON -SCHEDULED BANK [OR A CO-OPERATIVE BANK OTHER THAN A PRIMARY A GRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTUR AL AND RURAL DEVELOPMENT BANK], AN AMOUNT [NOT EXCEEDING SEVEN A ND ONE-HALF PER CENT] OF THE TOTAL INCOME ((COMPUTED B EFORE MAKING ANY DEDUCTION UNDER THIS CLAUSE AND CHAPTER VIA) AND AN ADVANCES MADE BY THE RURAL BRANCHES OF SUCH BANK COMPUTED IN THE PRESCRIBED MANNER: FROM THE PLAIN READING OF THE PROVISIONS OF THE ACT WE FIND THAT THE ASSESSEE BEING A CO-OPERATIVE BANK IS ENTITLED FOR DEDUCTION IN RESPECT OF THE PROVISIONS FOR BAD & DOUBTFUL DEBTS TOWARDS THE OVERDUE INTERE ST IN PURSUANCE OF THE SECTION 36(1)(VIIA) OF THE ACT. THE ARGUMENT OF TH E LD. DR THAT THE LD. CIT(A) HAS ALLOWED THE DOUBLE DEDUCTION ON ACCOUNT OF PROV ISIONS FOR OVERDUE INTEREST ALSO DOES NOT HOLD GOOD. THE LD. CIT(A) HA S GIVEN RELIEF TO THE ASSESSEE CITING TWO REASONS, FIRSTLY THE CASE IS COVERED IN FAVOR OF ASSESSEE BY THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF CIT VS. VASISTH CHAY VYAPAR LTD. IN ITA 552/2005, 565/2005, 1191/2007, 1 39/2008, 466/2008, 537/2008 AND 408/2003 VIDE ORDER DATED 29 TH NOVEMBER 2010. SECONDLY THE FINANCE ACT 2007 HAS ALLOWED THE DEDUCTION PROVIDED UNDER SECTION 36(1)(VIIA) OF THE ACT TO THE COOPERATIVE BANKS. AS SUCH WE DISAGREE WITH THE ARGUMENT OF THE LD. DR THAT THE LD. CIT(A) HAS PROV IDED THE DOUBLE DEDUCTION TO THE ASSESSEE. IN VIEW OF ABOVE WE FIND NO INFIRM ITY IN THE ORDER OF LD. CIT(A). HENCE THE GROUND RAISED BY REVENUE IS DISMISSED. 13. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ITA NO.2804-2806/KOL/2013 A.Y. 2008- 09 TO 2010-11 DCIT CIR-1, JAL VS. JCCO-OP BANK LTD. PAGE 7 COMING TO ITA NO.2805-2806/KOL/2013 FOR A.YS. 09-10 & 10-11. 14. AT THE OUTSET WE FIND THAT THE INTER-CONNECTED ISSUE RAISED BY REVENUE IN BOTH APPEAL IS COMMON. WE HAVE ALREADY DISCUSSED THE SAME INTER- CONNECTED COMMON ISSUE IN PARA-12 OF THIS ORDER. HENCE, BOTH THE PARTIES AGREED WHATEVER VIEW TAKEN IN ITA NO.2804/KOL/2013 MAY BE TAKEN IN THESE APPEALS ALSO. WE HOLD ACCORDINGLY. 15. IN THE RESULT, APPEALS OF REVENUE ARE DISMISSED . 16. IN COMBINED RESULT, ALL THE THREE APPEALS OF REVENU E ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 11 /11/2016 SD/- SD/- (#$) () (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S &'(- 11 / 11 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-JALPAIGURI CENTRAL CO-OPERATIVE BANK LTD. , TEMPLE STREET, CIRCLE-I, JALPA IGURI 2. /REVENUE-DCIT, CIRCLE-I, C.R BUILDING, RACE COURSE PARA, P.O. & DIST. JALPA IGURI 3.'0'12 3 / CONCERNED CIT KOLKATA 4. 3- / CIT (A) KOLKATA 5.6 78$$12, 12!, / DR, ITAT, KOLKATA 6.8;<=> / GUARD FILE. BY ORDER/ , /TRUE COPY/ /' 12!,