Shri Mahalaxmi Co.op. Bank Ltd., Kolhapur V. Deputy Commissioner of Income-tax,

ITA 333/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7278 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-10-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 30-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL
• Keywords: Rectification of order; Principle of natural justice; Question of law; Bad and doubtful debts
• Section: 260A; 147; 6; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO , AM AND SHRI VIKAS AWASTHY, JM . / I TA NO. 333 /PUN/20 15 / ASSESSMENT YEAR :2007 - 08 SHRI MAHALAXMI CO - OP. BANK LTD. SHRI BHAVAN, 167, B - WARD, MANGALWAR PETH, KOLHAPUR - 416 012. PAN : AAATS3679R ....... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME CIRCLE - 1, KOLHAPUR. / RESPONDENT A SSESSEE BY : WRITTEN SUBMISSION REVENUE BY : DR. VIVEK AGGARWAL / DATE OF HEARING : 10.10.2017 / DATE OF PRONOUNCEMENT : 27 .10.2017 / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TA X (APPEALS), KOLHAPUR DATED 04.0 2.2014 FOR ASSESSMENT YEAR 2007 - 08. 2 ITA NO.333 /PUN/2015 A.Y. 2007 - 08 2. THE ASSESSEE IN APPEAL HAS RAISED FOUR GROUNDS OUT OF WHICH GROUND NO. 2, 3 AND 4 HAVE BEEN NOT PRESSED BY THE ASSESSEE. THE GROUND NO.1 RAISED BY THE ASSESSEE READS AS UNDER : 1.HON'BLE CIT(A) ERRED ON FACTS AND LAW IN RESTRICTING THE DEDUCTION TO THE EXTENT OF AMOUNT OF PROVISION MADE IN THE BOOKS FOR BAD AND DOUBTFUL DEBT I.E. RS. 61,00,000/ - INSTEAD OF CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME OF RS.1,15,70,338/ - AND THERE BY DISALLOW ING DEDUC TION OF RS.54,70,338/ - WHICH IS IN FACT CORRECTLY CLAIMED. THE DISALLOWANCE OF DEDUCTION U/S. 36(I)(VIIA) ON THIS ACCOUNT PLEASE BE DELETED. 3 . NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER, WRITTEN SUBMISSIONS HAVE BEEN FILED WITH A REQUEST TO DECI DE THE MATTER ON THE BASIS OF WRITTEN SUBMISSIONS ALONE. THE CONTENTS OF THE WRITTEN SUBMISSIONS FILED BY ASSESSEE ARE: DISALLOWANCE OF PROVISION UNDER SECTION 36(1) (VIIA) DURING THE RELEVANT YEAR, THE ASSESSEE HAS DEBITED RS.61,00,000 IN THE DURING THE RELEVANT YEAR, THE ASSESSEE HAS DEBITED RS.61,00,000 IN THE PROFIT AND LOSS ACCOUNT FOR PROVISION FOR BAD AND DOUBTFUL DEBTS FOR RURAL BRANCHES. WHEREAS AS PER COMPUTATION OF INCOME THE ASSESSEE CLAIMED DEDUCTION OF RS.1,15,70,338/ - UNDER SECTION 36(1)(VIIA) FOR PROVISION FOR BAD AND DOUBTFUL DEBTS FOR RURA L BRANCHES. THIS DEDUCTION WAS CLAIMED ON THE BASIS OF DECISION OF BANGALORE TRIBUNAL IN THE CASE OF SYNDICATE BANK. AT PAGE NO.2 PARA 4 OF ASSESSMENT ORDER DURING THE ASSESSMENT, LEARNED AO HAS RESTRICTED THE DEDUCTION TO THE AMOUNT OF PROVISION IN PRO FIT AND LOSS ACCOUNT I.E. RS.61,00,000. THUS CORRECT DISALLOWANCE WOULD BE OF RS.54,70,338 (I.E. RS. 1,15,70,338 AS CLAIMED IN COMPUTATION OF INCOME MINUS RS. 61,00,000 AS DEBITED TO PROFIT AND LOSS ACCOUNT). HOWEVER, LEARNED AO, BY MISTAKE HAS CONSIDERED RS. 2,15,70,338 INSTEAD OF RS. 1,15,70,338 AS AMOUNT CLAIMED IN COMPUTATION OF INCOME AS DEDUCTION UNDER SECTION 36(1)(VIIA) FOR PROVISION FOR FOR BAD AND DOUBTFUL DEBTS FOR RURAL BRANCHES. RESULTING INTO DISALLOWANCE OF RS. 1,54,70,338 INSTEAD OF RS. 54,70,338. ACCORDINGLY, ASSESSEE APPLIED FOR RECTIFICATION UNDER SECTION 154 AND LEARNED AO HAS PASSED RECTIFICATION ORDER UNDER SECTION 154 AND REDUCED THE ADDITION MADE FROM RS.1,54,70,338 TO RS. 54,70,338. THIS FACT WAS BROUGHT TO THE NOTICE OF HON. CIT(A) DURING THE APPELLATE PROCEEDINGS, HOWEVER, HON. CIT(A) IGNORED THE RECTIFICATION ORDER UNDER SECTION 154 MADE BY THE AO AND CONFIRMED THE WRONG ADDITION MADE BY 3 ITA NO.333 /PUN/2015 A.Y. 2007 - 08 LEARNED AO OF RS. 1,54,70,338 INSTEAD OF RS . 54,70,338. AGGRIEVED BY THE ABOVE ADDITION ASSESSEE HAS PREFERRED APPEAL BEFORE YOU AND FOLLOWING GROUNDS RAISED AND RELIEF IS CLAIMED - GROUND NO. 1. HON. CIT(A) ERRED ON FACTS AND LAW IN RESTRICTING THE DEDUCTION TO THE EXTENT OF AMOUNT OF PROVISIO N MADE IN THE BOOKS FOR BAD AND DOUBTFUL DEBTS I.E. RS. 61,00,000/ - INSTEAD OF CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME OF RS. 1,15,70,338 AND THEREBY DISALLOWING DEDUCTION OF RS.54,70,338 WHICH IS IN FACT CORRECTLY CLAIMED. THE DISALLOWANCE OF D EDUCTION UNDER SECTION 36(1)(VIIA) ON THIS ACCOUNT PLEASE BE DELETED. OUR CONTENTIONS A. THE ISSUE OF ALLOWABILITY OF DEDUCTION, RELATING TO PROVISION FOR BAD AND DOUBTFUL DEBTS, UNDER SECTION 36(1)(VIIA ), IN EXCESS OF PROVISION AND DOUBTFUL DEBTS, UNDER SECTION 36(1)(VIIA ), IN EXCESS OF PROVISION MADE IN THE BOOKS OF ACCOUNTS IS ALREADY DECIDED AGAINST THE ASSESSEE IN ITS OWN CASES BY ITAT, PUNE BENCH FOLLOWING DECISIONS ITA NO.1658/PN/2011 ORDER DATED 29 - 10 - 2013 FOR AY 2008 - 09 ITA NO. 162/PN/2013 ORDER DATED 16 - 4 - 2014 F OR AY 2009 - 10 ITA NO. 63/PN/2014 ORDER DATED 09 - 12 - 2014 FOR AY 2010 - 11 ITA NO . 1170/PN/2014 ORDER DATED 19 - 2 - 2016 FOR AY 2011 - 12 B. THE ASSESSEE HAS FILED APPEAL UNDER SECTION 260A BEFORE HON'BLE B. THE ASSESSEE HAS FILED APPEAL UNDER SECTION 260A BEFORE HON'BLE BOMBAY HIGH COURT. HON'BLE BOMBAY HIGH COURT HAS VIDE ITS ORDER DATED 17 - 11 - 2016 IN INCOME TAX APPEAL NO. 1089 OF 2014 HAS ADMITTED THE FOLLOWING 'QUESTION OF LAW' FOR AY 2008 - 09 (COPY ENCLOSED). ' WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN ' LAW, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE INCOME TAX ACT, 1961 IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS COULD BE ALLOWED ONLY TO THE EXTENT THE PROVISION ACTUALLY CREATED IN THE BOOKS OF ACCOUNTS BY THE APPELLANT?' C. CONSIDERING THE ABOVE FACT, TO AVOID REPETITIVE APPEALS WE HAVE FILED THE DECLARATION IN FORM NO.8 UNDER SECTION 1S8A OF INCOME TAX ACT, 1961 BEFORE HON'BLE TRIBUNAL BENCH, PUNE ON 09 - 03 - 2017, WHICH IS PENDING FOR HEARING BEFORE YOUR HONOURS. (COPY OF ACKNOWLEDGEMENT ENCLOSED) . D. CON SIDERING THE ABOVE, YOUR HONOUR IS REQUESTED TO KEEP THE ABOVE GROUND IN ABEYANCE. GROUND NO . 2. HON.CIT (A) HAS CONFIRMED THE ADDITION MADE BY LEARNED AO RS. 1,54,70,338 IN THE RETURNED INCOME INSTEAD OF RS.54,70,338 BY IGNORING 1,54,70,338 IN THE RETURNED INCOME INSTEAD OF RS.54,70,338 BY IGNORING THE RECTIFICATION ORDER UNDER SECTION 154 PASSED BY LEARNED AO ON THIS ISSUE AND DEMAND IS REDUCED ACCORDINGLY BY THE AO. THE ADDITION OF ADDITIONAL AMOUNT OF RS.1,00,00,000 WHICH IS IGNORED BY HON. CIT(A) PLEASE BE 4 ITA NO.333 /PUN/2015 A.Y. 2007 - 08 DELETED. OUR CONTENTIONS: AO HAS ALREADY PASSED RECTIFICATION ORDER HENCE THIS GROUND IS NOT PRESSED : 3. HON. CIT(A) HAS FAILED ON FACTS AND LAW TO ALLOW DEDUCTION OF 'PREMIUM AMORTISED ON HTM SECURITIES' WHICH WAS NOT CLAIMED AS DEDUCTION IN THE RETURN OF INCOME, BUT WAS CLAIME D DURING THE ASSESSMENT BY GIVING SEPARATE LETTER. THIS CLAIM PUT UP BY THE ASSESSEE PLEASE BE ALLOWED CONSIDERING VARIOUS DECISIONS AND ON THE PRINCIPLE OF NATURAL JUSTICE. 4. HON. CIT(A) HAS ERRED ON FACTS AND LAW IN NOT ENTERTAINING THE CLAIM OF PREMI UM ON AMORTIZATION OF HTM SECURITIES. THIS DEDUCTION IS CORRECTLY CLAIMED ON THE BASIS OF CEDT'S INSTRUCTION NO. 17/2008 DATED 26 - 11 - 2008 AND DECISION OF HON. PUNE TRIBUNAL IN ASSESSEE'S OWN CASE AS WELL AS OTHER DECISIONS THIS CLAIM OF 'PREMIUM AMORTISED ON HTM SECURITIES' OF RS. 47,85,720 PLEASE BE ALLOWED. OUR CONTENTIONS: THIS CLAIM WAS DEDUCTION CLAIMED DURING RE - ASSESSMENT PROCEEDINGS UNDER SECTION 147 AND HENCE IT IS NOT ELIGIBLE. WE THEREFORE DON'T PRESS UPON THESE GROUNDS. THE ASSES SEE HAS FILED DECLARATION U/S. 158A(1) OF THE ACT IN THE PRESCRIBED FROM - 8 WITH RESPECT TO THE ISSUE RAISED IN GROUND NO. 1 IN THE APPEAL. THE ASSESSEE HAS ALSO FILED COPY OF THE ORDER OF HON'BLE BOMBAY HIGH COURT IN INCOME TAX APPEAL NO. 1769 OF 2014 DATE D 16.03.2017 IN APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF TRIBUNAL FOR ASSESSMENT YEAR 2009 - 10, TO SHOW THAT THE HON'BLE COURT HAS ADMITTED APPEAL OF THE ASSESSEE ON SUBSTANTIAL QUESTION OF LAW WITH RESPECT TO ASSESSEES CLAIM OF DEDUCTION U/S. 36(1) ( VIIA) OF THE INCOME TAX ACT, 1961. 4 . DR. VIVEK AGGARWAL REPRESENTING THE DEPARTMENT SUBMITTED THAT THE ISSUE RAISED BY ASSESSEE IN ASSESSMENT YEAR UNDER APPEAL A S GROUND NO. 1 IS IDENTICAL TO THE ONE RAISED BEFORE THE TRIBUNAL IN ITA NO. 162/PN/2013 FOR ASSESSMENT YEAR 2009 - 10. T HE TRIBUNAL VIDE ORDER 5 ITA NO.333 /PUN/2015 A.Y. 2007 - 08 DATED 16.04.2014 REJECTED THE CLAIM OF ASSESSEE BY FOLLOWING ITS OWN ORDER IN IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2008 - 09 IN ITA NO. 1658/PN/2011 DECIDED ON 29.10.2013. 5 . WE HAVE HE ARD THE SUBMISSION MADE BY THE LD. DR AND HAVE PERUSED THE WRITTEN SUBMISSION FILED BY ASSESSEE. AS PER THE WRITTEN SUBMISSION FILED BY THE ASSESSEE, GROUND NO. 2, 3 AND 4 ARE NOT PRESSED . HENCE, THE SAME ARE DISMISSED AS SUCH. 6 . IN SO FAR AS GROUND NO. 1 IS CONCERNED, I T IS UNDISPUTED FACT THAT CO - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN APPEAL FOR ASSESSMENT YEAR 2009 - 10 HAS REJECTED ASSESSEES CLAIM U/S. 36(1) (VIIA). IT IS ALSO AN ADMITTED FACT THAT THERE HAS BEEN NO CHANGE IN FACTS AND CIRCUMSTANCES IN THE ASSESSMENT YEAR UNDER APPEAL. WE FIND NO REASON TO TAKE A CONTRARY VIEW; HENCE, THE GROUND NO. 1 RAISED IN APPEAL BY TO TAKE A CONTRARY VIEW; HENCE, THE GROUND NO. 1 RAISED IN APPEAL BY ASSESSEE IS DISMISSED. 7 . T HE ASSESSEE HA S FILED DECLARATION U/S.158A ( 1) OF THE ACT . THE ASSESSEE HAS ALSO FILED COP Y OF ORDER PASSED BY THE HON'BLE BOMBAY HIGH COURT IN INCOME TAX APPEAL NO. 1769 OF 2014 DATED (SUPRA.) WHEREIN THE ASSESSEE HAS IMPUGNED THE ORDER OF TRIBUNAL FOR ASSESSMENT YEAR 2009 - 10. THE HON'BLE JURISDICTIONAL HIGH COURT HAS ADMITTED THE APPEAL OF AS SESSEE, ON FOLLOWING SUBSTANTIAL QUESTION OF LAW IN ASSESSMENT YEAR 2009 - 10 : 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE DEDUCTION UNDER SECTION 36(1) (VIIA) OF THE INCOME TAX ACT , 1961 IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS COULD BE ALLOWED ONLY TO THE EXTENT THE PROVISION ACTUALLY CREATED IN THE BOOKS OF ACCOUNTS BY THE APPELLANT. 6 ITA NO.333 /PUN/2015 A.Y. 2007 - 08 THUS, IN VIEW OF DECLARATION BY ASSESSEE, THE FINDINGS OF THE HONBLE HIGH COURT IN ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009 - 10 WOULD BE BINDING ON THE ASSESSEE IN ASSESSMENT YEAR UNDER APPEAL AS WELL. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED IN THE AFORESAID TERMS. ORDER PRO NOUNCED ON FRIDAY, THE 27 TH DAY OF OCTOBER , 201 7 . SD/ - SD/ - ( . / D. KARUNAKARA RAO ) ( /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 27 TH OCTOBER , 2017 . SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS), KOLHAPUR. 4. THE CIT, KOLHAPUR. 5 . , , , / DR, ITAT, B BENCH, PUNE. 6 . / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE .