Assistant Commissioner of Income-tax, Circle - 12, Pune V. The Cosmos Co-Operative Bank Ltd, Pune

ITA 3047/PUN/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9530 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 21-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Charitable institution; Earning of tax free income
• Section: 143(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO . 3047 /PUN/201 7 / ASSESSMENT YEAR : 20 14 - 15 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 12, PUNE ...... / APPELLANT / V/S. THE COSMOS CO - OPERATIVE BANK LIMITED, 269/270, SADASHIV PETH, PUNE 411030 PAN : AAAAT0742K / RESPONDENT ASSESSEE BY : SHRI SU NIL GANOO REVENUE BY : SHRI S.P. WALIMBE / DATE OF HEARING : 1 6 - 03 - 2021 / DATE OF PRONOUNCEMENT : 18 - 03 - 2021 / ORDER PER S.S. VISWANETHRA RAVI, JM : THIS APPEAL BY THE REVENUE AGAINST THE ORDER DATED 25 - 09 - 2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 5 , PUNE [CIT(A)] FOR ASSESSMENT YEAR 20 14 - 15 . 2 ITA NO .3047/PUN/2017, A.Y. 2014 - 15 2. THE ONLY ISSUE IS TO BE DECIDED IS AS TO WHETHER THE CIT(A) JUSTIFIED IN DELETING THE ADDITION MADE U/S. 40A(2)(B) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS RELA TING TO THE ISSUE ON HAND ARE THAT THE ASSESSEE IS AN AOP AND ENGAGED IN THE BANKING BUSINESS. THE ASSESSEE FILED RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.1,08,37,60,260/ - . ON SCRUTINY THE AO DETERMINED THE SAME AT RS.1,20,81,88,100/ - VIDE THIS OR DER DATED 30 - 12 - 2016 PASSED U/S. 143(3) OF THE ACT INTER ALIA MAKING DISALLOWANCE ON ACCRUED INTEREST ON NPA, CONTINGENT PROVISION FOR STANDARD ASSETS AND DISALLOWANCE @ 50% O N PAYMENT TO COSMOS FOUNDATION. 4. WE NOTE THE AO FOUND THAT THE ASSESSEE MADE PAYMENT OF RS.9,77,72,665/ - TO COSMOS FOUNDATION WHICH IS REGISTERED AS A CHARITABLE TRUST. ACCORDING TO AO THE SAID COSMOS FOUNDATION IS A PARTY COVERED U/S. 40A(2)(B) OF THE ACT A S THE CHAIRMAN OF THE ASSESSEE BANK IS ALSO THE CHAIRMAN OF THE COSMOS FO UNDATION. THE AO HELD THE PAYMENT OF RS.9,77,72,665/ - TO COSMOS FOUNDATION IS A COLORABLE DEVICE TO DIVERT THE TAXABLE INCOME OF THE BANK INTO AN ENTITY WHOSE INCOME IS NON - TAXABLE. FURTHER, HE HELD THAT THE ASSESSEE BANK IS GETTING THE BENEFIT OF SECTIO N 37 OF THE ACT BY CLAIMING THE SAID PAYMENT AS EXPENSES FOR BUSINESS PURPOSE AND THE RECIPIENT TRUST IS GETTING THE BENEFIT BY WAY OF CLAIMING ITS EXEMPT INCOME. THE CONTENTION OF ASSESSEE BEFORE THE AO WAS , THAT IT IS EVIDENT FROM PAGE NO. 6 OF THE ASSE SSMENT ORDER THAT SIMILAR DISALLOWANCE WAS MADE BY THE AO IN EARLIER YEARS WHICH WAS CONFIRMED BY THE CIT(A) IN THE FIRST APPELLATE PROCEEDINGS. THE ITAT, PUNE BENCH HELD THE ORDER OF CIT(A) 3 ITA NO .3047/PUN/2017, A.Y. 2014 - 15 IS NOT JUSTIFIED AND DELETED THE DISALLOWANCE VIDE ITS ORDER DAT ED 20 - 05 - 2016. THE AO DID NOT FIND MERIT IN THE SUBMISSIONS OF ASSESSEE AND OPINED THAT THE APPELLANT REVENUE PREFERRED AN APPEAL BEFORE THE HONBLE COURT OF BOMBAY AGAINST THE DECISION OF ITAT, PUNE AND PROCEEDED TO DISALLOW 50% OF THE ABOVE SAID PAYMEN T AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE . BEFORE THE CIT(A), THE ASSESSEE REITERATED TH E SAME SUBMISSIONS AS MADE BEFORE THE AO AND CONTENDED THAT THE DISALLOWANCE TO BE DELETED IN TERMS OF DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE. CONSIDERING THE SAME THE CIT(A) DELETED THE DISALLOWANCE MADE ON ACCOUNT OF PAYMENT TO COSMOS FOUNDATION. 5. THE LD. DR, SHRI S.P. WALIMBE BEFORE US HEAVILY PLACED RELIANCE ON THE ORDER OF AO AND SUPPORTED THE REASONS RECORDED B Y THE AO FOR SUCH DISALLOWANCE. 6. THE LD. AR, SHRI SUNIL GANOO SUPPORTED THE ORDER OF CIT(A) AND SUBMITTED THAT THE APPEAL PREFERRED BY THE REVENUE IS STILL PENDING FOR ADMISSION BEFORE THE HONBLE HIGH COURT OF BOMBAY AND THERE WAS NO CONTRARY ORDER AS ON TODAY AGAINST THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE. WE NOTE THAT AS RIGHTLY POINTED OUT BY THE LD. AR THAT THERE IS NO ORDER PLACED ON RECORD TO SHOW THAT THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE INVOLVING THE ISSUE ON HA ND IS REVERSE D OR MODIF IED BY THE HONBLE HIGH COURT OF BOMBAY AND THE AO MADE 50% DISALLOWANCE ON PAYMENT MADE TO COSMOS FOUNDATION ONLY ON THE GROUND THAT THE APPEAL IS PENDING FOR ADMISSION BEFORE THE HONBLE HIGH COURT OF BOMBAY . THE CIT(A) CLEARLY HE LD SINCE THERE WAS NO ORDER FROM THE HONBLE HIGH COURT, 4 ITA NO .3047/PUN/2017, A.Y. 2014 - 15 THE ORDER OF THIS TRIBUNAL IS BINDING ON THE REVENUE AUTHORITIES INVOLVING THE SAME ISSUE. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) AND IT IS JUSTIFIED. ACCORDINGLY, THE GROUN D RAISED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 202 1 . SD/ - SD/ - ( R.S. SYAL ) ( S.S. VISWANETHRA RAVI ) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 18 TH MARCH, 202 1 . RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A) - 5 , PUNE 4. THE PR. CIT - 4 , PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE