The Dy. CIT, Circle- 5(3), Ahmedabad V. The Saurashtra Co. Op. Bank Ltd., Ahmedabad

ITA 3291/AHD/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5485 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 07-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts; Set aside

Judgement Text

, CH CHCH CH IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD L LL LK KK KOZJH OZJH OZJH OZJH OLHE OLHE OLHE OLHE VGEN VGEN VGEN VGEN] YS[KK ] YS[KK ] YS[KK ] YS[KK LNL; ,O LNL; ,O LNL; ,O LNL; ,O EK/ EK/EK/ EK/KQFERK KQFERK KQFERK KQFERK JKW; JKW;JKW; JKW;] U; ] U;] U; ] U;KF KFKF KF;D ;D;D ;D LNL; LNL; LNL; LNL; DS LE{KA DS LE{KA DS LE{KA DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER INCOME TAX APPEAL NO. 3291/AHD/2016 ( / ASSESSMENT YEAR : 2013-14) ACIT, CIRCLE 5(3), AHMEDABAD. / VS. THE SAURASHTRA CO-OP BANK LTD., OPP. BHIDBHANJAN HANUMAN, NIKOL ROAD, BAPUNAGAR, AHMEDABAD 380 024 ./ ./ PAN/GIR NO. : AAATT 5544 J ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MUDIT NAGPAL, SR. D.R. / RESPONDENT BY : SHRI BANDISH SOPARKAR, A.R. / DATE OF HEARING 28/09/2018 !'# / DATE OF PRONOUNCEMENT 01/11/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-5, AHMEDABAD, VIDE APPEAL NO.CIT(A)-5/DCIT CIR.5(3)/381/2015-16 DATED 02-09-2 016 FOR THE ASSESSMENT YEAR (AY) 2013-14. 2. REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPE AL: (1) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.72,53,040/- MADE ON ACCOUNT OF ACCRU ED INTEREST ON BAD & DOUBTFUL DEBTS/ NPAS. ITA NO.3291/AHD/2016 ACIT VS. THE SAURASHTRA CO-OP BANK LTD A.Y. 2013-14 - 2 - (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD.CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. (3) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT (A) MAY BE SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED TO THE ABOVE EXTENT. (4) THE APPELLANT CRAVES LEAVE TO ADD, ALTER AN D/OR TO AMEND ALL OR ANY OF THE GROUND BEFORE THE FINAL HEARING OF THE A PPEAL. 3. THE SOLITARY ISSUE RAISED BY THE REVENUE IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.72,53,040/- ON ACCOU NT OF INTEREST ACCRUED ON NON PERFORMING ASSETS. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN TH E PRESENT CASE IS A CO- OPERATIVE BANK AND ENGAGED IN THE BUSINESS OF BANKI NG. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS SHOWN NON-PERFORMI NG ASSETS FOR RS. 604.42 LACS IN ITS BALANCE SHEET AS ON 31.03.2013. THE ASSESSEE HAS NOT CHARGED ANY INTEREST ON SUCH ADVANCE SHOWN AS NPA I N THE YEAR UNDER CONSIDERATION. HOWEVER, THE AO WAS OF THE VIEW THAT THE ASSESSEE I S MAINTAINING ITS BOOKS OF ACCOUNTS AS PER MERCANTILE SYSTEM OF ACCOU NTING AND ACCORDINGLY, THE ASSESSEE WAS UNDER THE OBLIGATION TO OFFER THE INTEREST INCOME ACCRUED ON SUCH NON PERFORMING ASSETS. THE A O IN SUPPORT OF HIS CLAIM HAS ALSO RELIED ON VARIOUS JUDGMENTS. ACCORDI NGLY, THE AO WORKED OUT THE AMOUNT OF ACCRUED INTEREST ON NPA FOR RS.72 ,53,040/- BEING 12% OF 604.42 LACS ON ESTIMATED BASIS WHICH WAS ADDED T O THE TOTAL INCOME OF THE ASSESSEE. ITA NO.3291/AHD/2016 ACIT VS. THE SAURASHTRA CO-OP BANK LTD A.Y. 2013-14 - 3 - 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD. C IT(A) WHO HAS DELETED THE ADDITION MADE BY THE AO BY OBSERVING TH AT THE IDENTICAL ADDITION WAS DELETED IN THE A.Y. 2012-13 BY HIS PRE DECESSOR IN THE OWN CASE OF THE ASSESSEE. THUS, THE LD. CIT(A) RESPECTF ULLY FOLLOWING THE SAME DELETED THE ADDITION MADE BY THE AO. BEING AGGRIEVED BY THE ORDER OF LD. CIT(A) REVENUE IS IN SECOND APPEAL BEFORE US. 6. BOTH THE PARTIES BEFORE US RELIED ON THE ORDER O F AUTHORITIES BELOW AS FAVORABLE TO THEM. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE FIND THAT TH E HONBLE GUJARAT HIGH COURT IN THE IDENTICAL FACTS AND CIRCUMSTANCES HAS DELETED THE ADDITION IN THE CASE OF PCIT VS. KUTCH DISTRICT CENTRAL COOPERATIVE BANK LT D. REPORTED IN 94 TAXMANN.COM 298 WHEREIN IT WAS HELD AS UNDER: IN OUR OPINION, ENTIRE ISSUE IS COVERED BY THE JUD GMENT OF THIS COURT IN CASE OF SHRI MAHILA SEWA SAHAKARI BANK LTD. (SUPRA) . IN THE SAID CASE, THE COURT HAS CONSIDERED FOLLOWING SUBSTANTIAL QUES TION OF LAW: 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE INCOME TAX APPELLATE TRIBUNAL IS RIGHT IN LAW AND ON FACTS IN HOLDING THAT INTEREST ON NON PERFORMING ASSETS IS NOT TAXABLE ON ACCRUAL BASIS LOOKING TO THE GUIDELINES OF THE RESERVE BANK OF IN DIA ?' THE COURT ANSWERED THE QUESTION IN FAVOUR OF THE AS SESSEE AND CONCURRED WITH THE VIEW OF THE DELHI HIGH COURT IN CASE OF VASISTH CHAY VYAPAR LTD. (SUPRA). IN THE SAID DECISION, CON TRARY TO WHAT WAS ARGUED BEFORE US BY THE COUNSEL FOR THE REVENUE, TH E COURT HAD NOT ONLY NOTICED BUT ALSO REFERRED TO AT SOME LENGTH THE JUD GMENT OF THE SUPREME COURT IN CASE OF SOUTHERN TECHNOLOGIES LIMITED (SUP RA). ITA NO.3291/AHD/2016 ACIT VS. THE SAURASHTRA CO-OP BANK LTD A.Y. 2013-14 - 4 - IN THE RESULT, THE QUESTION IS ANSWERED IN FAVOUR O F THE ASSESSEE AND AGAINST THE REVENUE AND ALL TAX APPEALS ARE DISMISS ED. 7.1 THE ISSUE BEFORE US IS EXACTLY IDENTICAL TO THE FACTS OF THE CASE I.E. KUTCH DISTRICT CENTRAL COOPERATIVE BANK LTD.(SUPRA) . THEREFORE RESPECTFULLY FOLLOWING THE SAME WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). HENCE, THE GROUND OF APPEA L OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 01/11/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; YK S[KK LNL; U;KF;D LNL; YK S[KK LNL; U;KF;D LNL; YK S[KK LNL; U;KF;D LNL; YK S[KK LNL; (MADHUMITA ROY) (WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 01/11/2018 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-5, AHMEDABAD. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD