ACIT, Najibabad V. M/s District Cooperative Bank Ltd., Bijnor

ITA 3007/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7323 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 14-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S KASHYAP
• Assessee Lawyers: PARMINDER KAUR

Judgement Text

ITA NO. 3007 /D EL/ 2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B , NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. N O. 3007 /DEL/2013 A.Y. : 2008 - 09 ACIT,CIRCLE NAJIBABAD, NAJIBABAD VS. M/S DISTRICT COOPERATIVE BANK LTD., CIVIL LINE - 2, BIJNOR (PAN: AABFD2205R) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. P S KASHYAP, CA ASSESSEE BY : SMT. PARMINDER KAUR, SR. DR DATE OF HEARING : 10 - 09 - 2014 DATE OF ORDER : 26 - 09 - 2014 ORDER PER H.S. SIDHU : J M TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE OR DER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) , BAREILLY DATED 1 . 3 .2013 P ERTAINING TO ASSESSMENT YEAR 2008 - 09 . 2. THE GROUNDS RAISED READ AS UNDER: - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN FACT IN AND IN LAW IN DIRECTING THE ASSESSING OFFICER TO ALLOW ITA NO. 3007 /D EL/ 2013 2 DEDUCTION OF RS. 41,24,655/ - BEING REFUND OF INTEREST TO CUSTOMERS AND SOCIETIES AND CLAIMED AS EXPENDITURE ON THE BASIS OF DIRECTIONS OF THE REGULATOR I.E. RBI AS THE SAME ARE MERELY PRUDENTIAL NORMS NOT BINDING ON INCOME TAX AUTHORITIES. 2. IN THE FACT S AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN FACT IN AND IN LAW IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION OF RS. 41,24,655/ - BEING REFUND OF INTEREST TO CUSTOMERS AND SOCIETIES AND CLAIMED AS EXPENDITURE WITHOUT APPRECIATING TH E NATURE OF SUCH EXPENDITURE WHICH, IS NOT LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF ASSESSEE S BUSINESS OF BANKING. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN FACT IN AND IN LAW IN DIRECTING THE ASSES SING OFFICER TO ALLOW DEDUCTION OF RS. 41,24,655/ - BEING REFUND OF INTEREST TO CUSTOMERS AND SOCIETIES AND CLAIMED AS EXPENDITURE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD NOT CLAIMED SUCH EXPENDITURE AS ACTUALLY BEING WRITTEN OFF U/S. 36(1) (VII ) OF THE I.T. ACT, 1961. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN FACT IN AND IN LAW IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION OF RS. 41,24,655/ - BEING REFUND OF INTEREST TO CUSTOMERS AND SOCIETIES AND CLAIME D AS EXPENDITURE WITHOUT APPRECIATING THE FACT THAT THERE IS NO PROVISION UNDER THE I.T. ACT, 1961 TO ALLOW DEDUCTION OF SUCH EXPENDITURE. 5. ANY OTHER GROUNDS RAISED DURING THE PROCEEDINGS OF APPEAL. ITA NO. 3007 /D EL/ 2013 3 3. THE FACTS OF THE CASE ARE NOT IN DISPUTE BY BO TH THE PARTIES, THEREFORE, NEED NOT REPEATED HERE FOR THE SAKE OF CONVENIENCE. 4. AGAINST THE ORDER DATED 13.12.2010 OF THE ASSESSING OFFICER, ASESSSEE APPEALED BEFORE THE LD. FIRST APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 1.3.2013 DIRECTED T HE AO TO ALLOW THE REFUND OF INTEREST AS DEDUCTION TO THE ASSESSEE, IF REQUISITE CONDITIONS ARE SATISFIED. 5. AGAINST THE ABOVE ORDER DATED 1.3.2013 OF THE LD. CIT(A), REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE REC ORDS. DURING THE TIME OF HEARING LD. COUNSEL OF THE ASSESSEE RELIED UPON THE ORDERS OF THE LD. CIT(A) AND REQUESTED THAT THE SAME MAY BE UPHELD. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAD RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 7. WE FIND FROM THE FACTS OF THE CASE THAT IT IS CLEAR THAT THE BRANCHES OF THE ASSESSEE HAD PROVIDED INTEREST ON NPA ACCOUNTS DURING THE EARLIER YEARS AND BY FOLLOWING THE DIRECTIONS OF RBI AND REGISTER THE INTEREST WAS REVERSED AND DEBITED INTO A SEPARATE ACCOUN T. WE FIND THAT AO IS OF THE VIEW THAT SINCE THERE IS NO PROVISION IN THE INCOME TAX ACT TO ALLOW DEDUCTION OF SUCH INTEREST WHICH HAS BEEN REVERSED DURING THE YEAR, THEREFORE, THE CONTENTION OF THE ASSESSEE IS NOT JUSTIFIED. WE FIND THAT LD. CIT(A) WAS OF THE CONSIDERED VIEW THAT THERE IS SUBSTANCE IN THE ARGUMENT OF THE ASSESSEE. THE INTEREST CHARGED IN EARLIER YEARS AND SHOWN AS INCOME IN EARLIER YEARS, IF REVERSED AS PER THE DIRECTIONS OF REGULATOR VIZ. RESERVE BANK OF INDIA/REGISTER OUGHT TO BE ALL OWED AS DEDUCTION TO THE ASSESSEE. THEREFORE, LD. CIT(A) CORRECTLY DIRECTED THE AO TO SATISFY (I) WHETHER SUCH INTEREST INCOME WAS OFFERED FOR TAXATION DURING EARLIER YEARS (II) WHETHER THE RBI/ REGISTER HAS GIVEN DIRECTION D U RING THE RELEVANT PREVIOUS YEAR AND (III) W HETHER ITA NO. 3007 /D EL/ 2013 4 THE CORRESPONDING CREDIT IS GIVEN THE ACCOUNT OF SOCIETIES / CUSTOMERS FOR REFUND OF INTEREST. IF ALL THESE THREE CONDITIONS ARE SATISFIED, THE AO SHOULD ALLOW THE REFUND OF I NTEREST AS DEDUCTION TO THE ASSESSEE. WE FIND CONSIDERABLE COGENCY IN THE CONCLUSION DRAWN BY THE LD. CIT(A) AS STATED ABOVE, HENCE, W E FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THEREFORE, THE SAME DOES NOT NEED ANY INTERFE REN CE, HENCE, WE UPH OLD THE SAME. 8 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE O PEN C OURT ON 26 / 09 /20 1 4 . SD/ - SD/ - [ G.D. AGRAWAL ] [ H.S. SIDHU ] VICE PRESIDENT JUDICIAL MEMBER DATE 26 / 09 /201 4 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 3007 /D EL/ 2013 5