Appeal Details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 3111 (ITAT-NAGPUR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 8 month(s) 2 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-02-2016
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Assessment Year
2010-2011
Appeal Filed On
23-06-2014
Judgement Text
1 ITA NO. 345/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO.345/NAG/2014 ASSESSMENT YEAR : 2010 - 11. THE INCOME - TAX OFFICER, THE BHANDARA DISTRICT CENTRAL WARD - 2, BHANDARA. VS. COOPERATIVE BANK LTD., BHANDARA. PAN AAAAT0627K. APPELLANT RESPONDENT APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT : SHRI MUKESH AGRAWAL. DATE OF HEARING : 1 3 - 01 - 20 16 DATE OF PRONOUNCEMENT : 25 TH FEB., 2016. O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE REVENUE DEPARTMENT ARISING FROM THE ORDER OF LEARNED CIT(APPEALS) - II , NAGPUR DATED 11 - 03 - 2014. REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS RIGHT IN DIRECTING TO AO TO ALLOW THE DEDUCTION U/S 36(1)(VII)(A) OF THE IT ACT, 1961 TO THE EXTENT OF PROVISION MADE BY THE ASSE SSEE DURING THE RELEVANT PREVIOUS YEAR WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS NOT ENTITLED TO CLAIMING DEDUCTION ON ACCOUNT OF 10% OF AGGREGATE AVERAGE ADVANCE MADE BY RURAL BRANCHES AND HENCE PROVISION MADE BY THE ASSESSEE IN RELATION TO THE D EDUCTION TO WHICH THE ASSESSEE IS NOT ENTITLED CANNOT BE ALLOWED? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS CORRECT IN HOLDING THAT THE ASSESSEE CO - OPERATIVE BANK BE 2 ITA NO. 345/NAG/2014 TREATED AT PAR WITH SCHEDULED BANK FOR THE PURPOSE OF DEDUCTION U/S 36(1)(VII)(A) OF THE I.T. ACT, 1961? 2. THE ISSUE OF CLAIM OF DEDUCTION U/S 36(1)(VII)(A) AS NOTED BY THE AO WHILE PASSING THE ORDER U/S 143(3) DATED 29 - 01 - 2013 WAS THAT IT WAS APPLICABLE TO A BANK PRESCRIBED UNDER THE ACT. SINCE THE AO HAD D ISALLOWED THE CLAIM OF BAD AND DOUBTFUL DEBT, HENCE THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 3. LEARNED CIT(APPEALS) HAS CONSIDERED SEVERAL CASE LAWS AND THE PROVISIONS OF THE ACT IN THE LIGHT OF THE BANKING REGULATION ACT AND THERE AFT ER HELD THAT THE ACTUAL AMOUNT DEBITED ON ACCOUNT OF PROVISIONS FOR BAD AND DOUBTFUL DEBT IS AN ALLOWABLE DEDUCTION AS PER THE PROVISIONS OF SECTION 36(1)(VII)(A) OF I.T. ACT. AGAINST THE SAID VERDICT OF LEARNED CIT(APPEALS) NOW THE REVENUE IS IN APPEAL BE FORE US. 4. ON THIS SHORT ISSUE WE HAVE HEARD THE SUBMISSIONS OF BOTH THE SIDES. AT THE OUTSET WE HAVE BEEN INFORMED THAT THE R.B.I. HAS ISSUED A LIST OF THE BANKS TITLED AS LIST OF DCCBS IN MAHARASHTRA WHEREIN AT SR. NO. 6 THE NAME OF THE ASSESSEE IS M ENTIONED. IT HAS ALSO BEEN PLACED ON RECORD THAT IN EXERCISE OF THE POWERS CONFERRED ON THE RESERVE BANK OF INDIA ACCORDING TO BANKING REGULATION ACT THE ASSESSEE HAD BEEN GRANTED LICENCE TO COMMENCE AND CARRY ON BANKING BUSINESS SUBJECT TO CERTAIN CONDIT IONS. IN ADDITION TO THE ABOVE INFORMATION, OUR ATTENTION HAS ALSO BEEN DRAWN ON AN ORDER OF ITAT, NAGPUR BENCH, NAGPUR PRONOUNCED IN THE CASE OF ACIT VS. ARVIND SAHAKARI BANK LTD., KATOL (ITA NO. 376 & 377/NAG/2013 , A SSTT. YEARS 2009 - 10 AND 2010 - 11) ORDE R DATED 16 TH SEPT., 2015 WHEREIN AFTER CONSIDERING THE PROVISIONS OF SECTION 36(1)(VII)(A) AND THE BANKING REGULATION ACT, THE COORDINATE BENCH HAS HELD AS UNDER : 10. UPON CAREFUL CONSIDERATION WE NOTE THAT THE AO HAS MADE THE DISALLOWANCE U/S 36(1)(VIIA ) BY HOLDING THAT THE ASSESSEE BANK IS 3 ITA NO. 345/NAG/2014 NEITHER A SCHEDULED BANK NOR A NON SCHEDULE BANK NOR A COOPERATIVE BANK. NOW FROM THE FINDING OF THE LEARNED CIT(APPEALS) ABOVE AND THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE IT TRANSPIRES THAT A CONJOINED READING OF THE BANKING REGULATION ACT AND THE COMPANIES ACT MAKES IT CLEAR THAT ALL COOPERATIVE BANKS OPERATING UNDER THE DIRECT SUPERVISION AND REGISTRATION OF RBI ARE COMPANIES WITHIN THE MEANING OF SECTION 5(C) OF THE BANKING REGULATION ACT, 1949. T HE ASSESSEE BANK I.E. ARVIND SAHAKARI BANK LTD., KATOL HAS BEEN DULY REGISTERED AND APPROVED BY THE RESERVE BANK OF INDIA AND HAS BEEN SO NOTIFIED AS PER THE LIST SUBMITTED BY THE LEARNED COUNSEL OF THE ASSESSEE. THIS IS A LIST PUBLISHED BY RESERVE BANK OF INDIA ON ITS WEBSITE. THIS HAS NOT BEEN DOUBTED AS TO ITS VERACITY. THUS WE AGREE WITH THE LEARNED COUNSEL OF THE ASSESSEE THAT ONCE THE RESERVE BANK OF INDIA RECOGNIZES AND NOTIFIES A COOPERATIVE BANK AS A NON SCHEDULED BANK, THE REVENUE CANNOT CONTEND O THERWISE. ADMITTEDLY UPON FULFILLING ALL THE NECESSARY CONDITIONS OF THE RBI, THE ASSESSEE BANK HAS BEEN DULY NOTIFIED AS A NON SCHEDULE BANK AND HENCE BEING A NON SCHEDULE BANK IT IS ENTITLED TO DEDUCTION U/S 36(1)(VIIA) OF THE I.T. ACT. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS). HENCE WE UPHOLD THE SAME. 5 . RESPECTFULLY FOLLOWING THE ABOVE DECISION AND CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HEREBY AFFIRM THE FINDING OF LEARNED CIT(APPEALS). GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF FEB. 2016. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 25 TH FEB. , 2016. 4 ITA NO. 345/NAG/2014 COPY FORWARDED TO : 1. THE BHANDARA DISTRICT CENTRAL COOPERATIVE BANK LTD., CIVIL LINES, J.M. PATEL COLLEGE ROAD, BHANDARA - 441904 2. I.T.O., WARD - 2, BHANDARA. 3. COMMISSIONER OF INCOME - TAX - ,NAGPUR. 4. CIT(APPEALS) - I I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER WAKODE. ASSISTANT REGISTR AR, ITAT, NAGPUR
