ACIT, New Delhi V. M/s. Vaish Co-operative Adarsh Bank Ltd, New Delhi

ITA 3428/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4020 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 04-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K BHATT
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDEN T & SHRI K.N. CHARY, JUDICIAL MEMBER ITA NO.-3428/DEL/2014 ( ASSESSMENT YEAR: 2010-11) ACIT CIRCLE 30(1) NEW DELHI. VS VAISH CO - OPERATIVE ADARSH BANK LTD. 3, NETAJI SUBHASH, DARYA GANJ, NEW DELHI. AABAT7703R ASSESSEE BY SH. M.K. BHATT, FCA REVENUE BY SH. ARUN KUMAR YADAV, SR. DR ORDER PER SHRI K.N. CHARY, JUDICIAL MEMBER REVENUE FILED THIS APPEAL CHALLENGING THE ORDER DAT ED 28.03.2014 IN APPEAL NO. 14/2013-14 PASSED BY THE L D. COMMISSIONER OF INCOME TAX (APPEALS)-XXV, NEW DELHI (HEREINAFTER FOR SHORT CALLED AS THE LD. CIT (A)) ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD.CIT (A) HAS ERRED IN DELETING ADDITION OF RS. 4,56,64,365/- MAD E ON ACCOUNT OF INCOME FROM NPA. 2. THE LD. CIT (A)S ORDER IS AFFLICTED WITH CONTRADIC TIONS AS FAR AS THE ACCOUNTING PRINCIPAL ADOPTED BY THE ASSESSEE IN RESPECT OF ACCOUNTING FOR THE INTEREST ON NPAS IS CONCERNED. DATE OF HEARING 18.09.2017 DATE OF PRONOUNCEMENT 09.10.2017 2 ITA NO. 3428/DEL/2014 3. THE LD. CIT (A) HAS GIVEN RELIEF TO THE ASSESSEE WI THOUT APPRECIATING THAT THE ASSESSEE FAILED TO WRITE OFF THE BAD DEBTS ON ACCOUNT OF NPAS IN THE BOOKS OF ACCOUNTS WHICH I S IN CONTRAVENTION OF THE PROVISION OF SECTION 36(1)(VII ) OF THE INCOME TAX ACT, 1961. 4. THE LD. CIT (A) HAS ERRED IN OBSERVING THAT THE ASS ESSEE HAS FOLLOWED THE RBI GUIDELINES WITHOUT POINTING OUT AS TO WHAT SUCH GUIDELINES ARE AND HOW THE ASSESSEE FOLLOWED THE SA ME. 5. THE LD. CIT (A) HAS ERRED IN ALLOWING THE ASSESSEE S APPEAL WITHOUT IDENTIFYING THE ASSETS THAT HAVE BECOME NPA . 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE BANK FILED ITS RETURN OF INCOME ON 21.09.2010 DECLARING THE TOTAL INCOME OF RS. 1,31,96,539/- AND AFTER SCRUTINY U/S 143(3) OF THE ACT AO MADE AN ADDITION OF RS. 4,56,64,365/- ON ACCOUNT OF THE INTEREST ACCRUED ON NPA ACCOUNT FOR THE FY 2009-10 WHICH IS NOT RECOGNIZED AS INCOME ON ACCOUNT OF NPA AND A SU M OF RS. 6,250/- ON ACCOUNT OF DIVIDEND WRONGLY CLAIMED. IN THE APPEAL, BY WAY OF IMPUGNED ORDER, THE LD. CIT (A) D ELETED THE ADDITION OF RS. 4,56,64,365/-. HENCE, THIS APPEAL BY THE REVENUE. 3. IT IS THE ARGUMENT OF THE LD. DR THAT THE LD. CI T (A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE FAI LED TO WRITE OFF THE BAD DEBTS ON ACCOUNT OF NPA IN THE BOOKS OF ACC OUNT IN CONTRAVENTION OF THE PROVISIONS U/S 36(1)(VII) OF T HE ACT. IT IS 3 ITA NO. 3428/DEL/2014 THE SUBMISSION OF THE AR THAT THE ASSESSEE MAINTAIN S THE BOOKS OF ACCOUNT ON THE BASIS OF THE RBI GUIDELINES AND NO INTEREST WOULD BE ACCRUED TO THE ASSESSEE IN RESPEC T OF THE NON PERFORMING ASSETS AND THERE IS A SERIES OF CASE LAW ON THIS ASPECT INCLUDING THE DECISIONS REPORTED IN CIT VS. SHOORJI VALLABHDAS & CO., 46 ITR 144 (SC) (1962), UCO BANK VS. CIT 237 ITR 889 (SC) (1999), CIT VS. VASISTH CHAY VYAPA R LIMITED 330 ITR 440 (DEL) (2011), CIT VS. ELGI FINANCE LIM ITED 293 ITR 357 (MADRAS), CIT VS. MOTOR CREDIT CO. PVT. LT D. 127 ITR 572 (MADRAS) (1981) AND CIT VS. NAINITAL BANK LIMI TED 309 ITR 335 (UTTARAKHAN). HE FURTHER SUBMITTED THAT IN RESPECT OF THE AY 2009-10 IN ASSESSEES OWN CASE A COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 3310/DEL/2012 HELD THE ISS UE IN FAVOUR OF THE ASSESSEE AND DISMISSED THE APPEAL PRE FERRED BY THE REVENUE HOLDING THAT THE INTEREST ON NPA IS NOT TO BE RECOGNIZED AS PER THE RBI GUIDELINES AND INCOME HAS TO BE RECOGNIZED ONLY WHEN THERE IS SOME REASONABLE CERTA INTY ABOUT THE RECEIPT OF THE INCOME. FOR THIS PRINCIPL E THE TRIBUNAL FOLLOWED THE DECISION REPORTED IN CIT VS. ELGI FINANCE LTD. 293 ITR 357 (MADRAS) (HC). HE FURTHER BROUGHT TO OUR 4 ITA NO. 3428/DEL/2014 NOTICE THAT FOR THE AY 2012-13 ALSO THE FIRST APPEL LATE AUTHORITY ALLOWED THE APPEAL OF THE ASSESSEE AND RE VENUE ACCEPTED THE SAME WITHOUT PREFERRING AN APPEAL. BY WAY OF PAPER BOOK, HE PRODUCED THE ORDER OF THE FIRST APPE LLATE AUTHORITY. 4. WE HAVE CAREFULLY GONE THROUGH THE RECORD. IN T HE CASE OF THE ASSESSEE FOR THE AY 2009-10 IN APPEAL NO. 3310/DEL/2012 AND IN THE CASE OF THE SISTER CONCERN IN THE APPEAL IN ITA NO. 5545/DEL/2012 A COORDINATE BENCH OF THIS TRIBUNAL HELD THAT UNLESS THERE IS SOME REASONABLE CERTAINTY ABOUT THE RECEIPT OF THE INCOME, INCOME CANNOT BE R ECOGNIZED AND THE INTEREST ON NPA IS NOT TO BE RECOGNIZED AS PER THE RBI GUIDELINES AND ON THIS PRINCIPLE DISMISSED THE APPE ALS OF THE REVENUE. WE HAVE ALSO GONE THROUGH THE ORDER OF TH E FIRST APPELLATE AUTHORITY IN ASSESSEES OWN CASE FOR THE AY 2012-13, WHERE A SIMILAR FINDING WAS RETURNED AND RELIEF WAS GRANTED TO THE ASSESSEE. THERE IS NO DENIAL OF THE ASSERTION OF THE ASSESSEE THAT NO APPEAL WAS PREFERRED BY THE REVENU E AGAINST THE ORDER OF THE FIRST APPELLATE AUTHORITY IN RESPE CT OF THE AY 2012-13. IN THE CIRCUMSTANCES, WHILE RESPECTFULLY FOLLOWING 5 ITA NO. 3428/DEL/2014 THE VIEW OF A COORDINATE BENCH OF THIS TRIBUNAL IN RESPECT OF THE AY 2009-10, WE HOLD THAT THE APPEAL OF THE REVE NUE CANNOT BE SUSTAINED. WITH THIS VIEW OF THE MATTER, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.10.2017 SD/- SD/- (G.D. AGRAWAL) (K.N. CHARY) PRESIDENT JUDICIAL MEMBER DATED: 09.10.2017 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO. 3428/DEL/2014