DCIT 1(3)(2), MUMBAI V. SVC CO. OP. BANK LTD., MUMBAI

ITA 3614/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8943 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 25-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINAY SINHA LD
• Assessee Lawyers: RAJIV WAGHLE LD
• Keywords: Bad and doubtful debts; Revised return; Reassessment proceedings
• Section: 143(3)

Judgement Text

ITA NOS.3614-15/MUM/2018 M/S. SVC CO-OP BANK LTD. ASSESSMENT YEARS :2009-10 & 2014-15 1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE SHRI MANOJ KUMAR AGGARWAL, AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO.3614/MUM/2018 ( / ASSESSMENT YEAR: 2009-10) & ./ I.T.A. NO.3615/MUM/2018 ( / ASSESSMENT YEAR: 2014-15) D CIT - 1 ( 3 )( 2 ) AAYKAR BHAVAN, ROOM NO.540, 5 TH FLOOR, M.K. ROAD MUMBAI -400 020. / VS. M/S. SVC CO - OP BANK LTD. J.N. ROAD VAKOLA SANTACRUZ (E) MUMBAI- 400 055. ./ ./PAN/GIR NO. AAAAT-0177-C ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) ASSESSEE BY : SHRI RAJIV WAGHLE- LD. AR REVENUE BY : SHRI VINAY SINHA-LD. CIT-DR / DATE OF HEARING : 08/01/2020 / DATE OF PRONOUNCEMENT : 14/01/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE GRIEVANCE OF THE REVENUE IN AFORESAID APPEAL S FOR ASSESSMENT YEARS (AY) 2009-10 & 2014-15 IS COMMON. THEREFORE, THE APPEALS WERE HEARD TOGETHER AND ARE NOW BEING DISPOSED-OFF BY WA Y OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE & BR EVITY. FIRST, WE TAKE UP APPEAL FOR AY 2014-15. ITA NOS.3614-15/MUM/2018 M/S. SVC CO-OP BANK LTD. ASSESSMENT YEARS :2009-10 & 2014-15 2 ITA NO. 3615/MUM/2018, AY 2014-15 2. THE REVENUE CONTEST THE ORDER OF LD. COMMISSIONE R OF INCOME-TAX (APPEALS)-3, MUMBAI, [IN SHORT REFERRED TO AS CIT( A)], APPEAL NO. CIT(A)-3/DCIT 1(3)(2)/IT-220/2016-17 DATED 08/01/20 18 ON FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE HON'BLE CIT(A) ERRED IN ALLOWING THE ASSESSEE'S CLAIM OF DEDUCTION U/S 36(1)(VII) WHICH IT HAD NOT CLAIMED IN ITS RETURN OF INCOME RELYING UPON TH E DECISION OF BOMBAY HIGH COURT IN THE CASE OF PRITHVI BROKERS AND SHARES PVT . LTD. 349 ITR 356(BOM) WHEN THE SAME WAS NOT ACCEPTED BY DEPARTMENT ON MER ITS AND AGAINST WHICH NO FURTHER APPEAL WAS FILED ONLY DUE TO LOW TAX EFF ECT. AS EVIDENT FROM GROUNDS OF APPEAL, THE REVENUE IS A GGRIEVED BY THE FACT THAT DEDUCTION U/S 36(1)(VII) HAS BEEN ALLOWED TO T HE ASSESSEE WHICH WAS NOT CLAIMED AS PER RETURN OF INCOME AND WAS REV ISED DURING THE COURSE OF REASSESSMENT PROCEEDINGS. 3.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING A CO- OPERATIVE BANK WAS ASSESSED FOR YEAR UNDER CONSIDER ATION U/S 143(3) ON 30/12/2016 WHEREIN THE INCOME OF THE ASSESSEE WAS D ETERMINED AT RS.109.16 CRORES AFTER CERTAIN ADJUSTMENTS AS AGAIN ST RETURNED INCOME OF RS.106.73 CRORES E-FILED BY THE ASSESSEE ON 13/1 0/2014. 3.2 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 36(1)(VII) FOR RS.22.36 C RORES. IT WAS NOTED THAT PROVISO TO SEC. 36(1)(VII) MANDATES THAT IN CA SE OF AN ASSESSEE TO WHICH CLAUSE (VIIA) APPLIES, THE AMOUNT OF DEDUCTIO N RELATING TO ANY SUCH DEBT OR PART THEREOF SHALL BE LIMITED TO THE AMOUNT BY WHICH SUCH DEBT OR PART THEREOF EXCEEDS THE CREDIT BALANCE IN THE PROV ISION FOR BAD AND DOUBTFUL DEBTS ACCOUNT MADE UNDER THAT CLAUSE. FURT HER, CBDT ITA NOS.3614-15/MUM/2018 M/S. SVC CO-OP BANK LTD. ASSESSMENT YEARS :2009-10 & 2014-15 3 INSTRUCTION NO. 17/2008 DATED 26/11/2008 MANDATE TH AT FOR THE PURPOSE OF THIS PROVISO, THE OPENING BALANCE OF THE PROVISI ON U/S 36(1)(VIIA) SHOULD BE CONSIDERED. EXAMINED IN THE LIGHT OF THIS POSITION, THE ASSESSEES CLAIM WAS FOUND TO BE INCORRECT. THE ASS ESSEE SUBMITTED REVISED COMPUTATION OF INCOME WHEREIN HIGHER AMOUNT OF RS.24.47 CRORES WAS CLAIMED AS DEDUCTION U/S 36(1)(VII). HOW EVER, LD.AO REFUSED TO CONSIDER THE SAME SINCE THE SAME WAS NOT CLAIMED BY WAY OF REVISED RETURN. 3.3 UPON FURTHER APPEAL, LD. CIT(A) ADMITTED THE CL AIM OF THE ASSESSEE AND ALLOWED THE SAME BY FOLLOWING THE RATIO OF DECI SION OF HONBLE BOMBAY HIGH COURT RENDERED IN CIT V/S PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. (349 ITR 336) WHICH WAS RENDERED AFTER CONSIDERING THE RATIO LAID DOWN IN GOETZ (INDIA) LTD. (284 ITR 323). AGGRIEVED, THE REVENUE IS UNDER FURTHER APPEAL BEFO RE US. 4. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSION AND CONSIDERED THE MATERIAL ON RECORD. IT IS DISCERNIBLE FROM THE FACT UAL MATRIX AS ENUMERATED IN PRECEDING PARAGRAPHS THAT THE ASSESSE E HAD ALREADY MADE A CLAIM U/S 36(1)(VII) WHILE FILING THE ORIGIN AL RETURN OF INCOME. HOWEVER, THE SAID CLAIM WAS REVISED DURING THE COUR SE OF ASSESSMENT PROCEEDINGS IN THE LIGHT OF STATUTORY PROVISIONS RE AD WITH CBDT INSTRUCTION NO.17/2008 DATED 26/11/2008. INCIDENTAL LY, THE CLAIM WORKED OUT TO BE AT HIGHER FIGURES, WHICH WAS DENIED BY LD . AO SINCE THE SAME WAS NOT CLAIMED BY WAY OF REVISED RETURN OF INCOME. THE LEARNED CIT(A) ADMITTED AND ALLOWED THE SAME BY RELYING UPON THE R ATIO LAID DOWN BY HONBLE BOMBAY HIGH COURT RENDERED IN PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. (349 ITR 336) WHEREIN IT WAS HELD THAT THERE ITA NOS.3614-15/MUM/2018 M/S. SVC CO-OP BANK LTD. ASSESSMENT YEARS :2009-10 & 2014-15 4 WOULD BE NO BAR FOR APPELLATE AUTHORITIES TO CONSID ER A NEW CLAIM RAISED BEFORE THEM. THE LD. AR HAS RELIED UPON THE DECISIO N OF BANGALORE TRIBUNAL IN SCHNEIDER ELECTRIC IT BUSINESS INDIA PVT. LTD. V/S JCIT (200 TTJ 20 30/04/2019) WHICH ALSO SUPPORTS THE SAME VIEW. ANOTHER NOTEWORTHY FACTOR IS THAT THE REVENUE HAS NOT DISPU TED THE QUANTUM OF DEDUCTION U/S 36(1)(VII) WHICH WOULD BE ALLOWABLE T O THE ASSESSEE AND THEREFORE, IT COULD SAFELY BE PRESUMED THAT THE CLA IM, ON MERITS, WAS IN ACCORDANCE WITH LAW. THEREFORE, NO FAULT COULD BE F OUND IN THE ACTION OF LD. CIT(A) IN ALLOWING THE REVISED CLAIM, BY FOLLOW ING THE RATIO LAID DOWN BY HONBLE BOMBAY HIGH COURT. 5. RESULTANTLY, THE APPEAL STANDS DISMISSED. ITA NO. 3614/MUM/2018, AY 2009-10 6.1 IN THIS YEAR, THE REVENUE CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-3, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-3/DCIT 1(3)(2)/IT-222/2016-17 DAT ED 15/01/2018 ON FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE HON'BLE CIT(A) ERRED IN ALLOWING THE ASSESSEE'S CLAIM OF DEDUCTION U/S 36(1)(VII) WHICH IT HAD NOT CLAIMED IN ITS RETURN OF INCOME RELYING UPON TH E DECISION OF BOMBAY HIGH COURT IN THE CASE OF PRITHVI BROKERS AND SHARES PVT . LTD. 349 ITR 356(BOM) WHEN THE SAME WAS NOT ACCEPTED BY DEPARTMENT ON MER ITS AND AGAINST WHICH NO FURTHER APPEAL WAS FILED ONLY DUE TO LOW TAX EFF ECT. II. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED WHILE RE-COMPUTING THE DEDUCTION U/S 36(1)(VII) ALL OWABLE TO THE ASSESSEE CONSIDERING THE RELIEF GIVEN TO ASSESSEE U/S 36(1)( VII) WHEN THE SAME IS BASED ON PRITHVI SHARES AND BROKERS AND THE SAME HA S NOT BEEN ACCEPTED BY THE DEPARTMENT. AS EVIDENT FROM GROUNDS OF APPEAL, THE REVENUE IS S IMILARLY AGGRIEVED BY THE FACT THAT REVISED DEDUCTION U/S 36(1)(VII) HAS BEEN ALLOWED TO THE ITA NOS.3614-15/MUM/2018 M/S. SVC CO-OP BANK LTD. ASSESSMENT YEARS :2009-10 & 2014-15 5 ASSESSEE WHICH WAS NOT CLAIMED BY WAY OF REVISED RE TURN BUT CLAIMED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 6.2 FACTS ARE MORE OR LESS THE SAME IN THIS YEAR. T HE ASSESSEE WAS ASSESSED U/S. 143(3) R.W.S. 147 ON 30/12/2016 WHERE IN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.64.09 CRORES AFTER CE RTAIN ADDITIONS / ADJUSTMENTS, AS AGAINST ASSESSED INCOME U/S 143(3) FOR RS.63.63 CRORES. 6.3 THE REASSESSMENT PROCEEDINGS WERE TRIGGERED IN VIEW OF THE FACT THAT DEDUCTION OF PROVISION FOR BAD AND DOUBTFUL DE BTS U/S 36(1)(VIIA) WAS ALLOWED TO THE ASSESSEE BEFORE DEDUCTION U/S 36(1)( VII) AND 36(1)(VIII) WHICH RESULTED INTO EXCESS DEDUCTION FOR RS.171.71 LACS. ANOTHER TRIGGERING FACTOR WAS THE REASON THAT DEDUCTION U/S 36(1)(VIII) WAS ALLOWED IN EXCESS TO THE EXTENT OF RS.153.44 LACS. BOTH THESE ADJUSTMENTS WERE MADE BY LD. AO WHILE FRAMING THE A SSESSMENT ORDER. CONSEQUENTLY, THE ASSESSEE REVISED ITS CLAIM U/S 36 (1)(VII) WHICH WAS DENIED BY LD. AO ON SIMILAR REASONING. 6.4 UPON FURTHER APPEAL, LD. CIT(A) ADMITTED AND AL LOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE RATIO OF DECISION OF HONBLE BOMBAY HIGH COURT RENDERED IN CIT V/S PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. (349 ITR 336) WHICH WAS RENDERED AFTER CONSIDERING THE RATIO LAID DOWN IN GOETZ (INDIA) LTD. (284 ITR 323). AGGRIEVED, THE REVENUE IS UNDER FURTHER APPEAL BEFORE US. 6.5 FACTS BEING PARI-MATERIA THE SAME AS IN AY 2014 -15, TAKING THE SAME VIEW, WE CONFIRM THE ORDER OF LD. CIT(A), IN T HIS REGARD. ITA NOS.3614-15/MUM/2018 M/S. SVC CO-OP BANK LTD. ASSESSMENT YEARS :2009-10 & 2014-15 6 7. RESULTANTLY, THE APPEAL STANDS DISMISSED. CONCLUSION 8. BOTH THE APPEALS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JANUARY, 2020. SD/- SD/- (RAVISH SOOD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 14/01/2020 SR.PS, JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. '/ THE APPELLANT 2. #$ '/ THE RESPONDENT 3. O ( ) / THE CIT(A) 4. O / CIT CONCERNED 5. WX#&Y, Y , / DR, ITAT, M UMBAI 6. X[\] / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.