Kolhapur Dist. Central Co-op Bank Ltd, Kolhapur V. Income tax Officer, Kolhapur

ITA 393/PUN/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1676 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-09-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 16-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P S SHINGTE
• Keywords: TDS; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NOS.392 & 393/PUN/2017 / ASSESSMENT YEARS : 2010-11 & 2012-13 KOLHAPUR DIST. CENTRAL CO.OP. BANK LTD., 1092/E, SHAHUPURI, DIST. KOLHAPUR PAN : AAAAK1037G VS. DCIT, CIRCLE-2, KOLHAPUR/ ITO, WARD-2(1), KOLHAPUR / ORDER PER R.S. SYAL, VP : THESE TWO APPEALS BY THE ASSESSEE ARISE OUT OF A COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-2, K OLHAPUR ON 20-12-2016 IN RELATION TO THE ASSESSMENT YEARS 2010-11 AN D 2012-13. FOR THE SAKE OF CONVENIENCE, THESE APPEALS WERE HEARD TO GETHER AND ARE BEING TAKEN UP FOR DISPOSAL IN A CONSOLIDATED ORDER. A.Y. 2010-11 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST CHARGING NO MINAL MEMBERS FEE OF RS.2,87,200/- TO TAX AS THE ASSESSEES INCOME. ASSESSEE BY SHRI P.S. SHINGTE REVENUE BY SHRI SUDHENDU DAS DATE OF HEARING 06-09-2019 DATE OF PRONOUNCEMENT 09-09-2019 ITA NOS. 392 & 393/PUN/2017 KOLHAPUR DIST. CENTRAL CO.OP. BANK LTD., 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E IS A DISTRICT CENTRAL COOPERATIVE BANK AT KOLHAPUR ENGAGED IN BANKIN G BUSINESS. ON PERUSAL OF THE RETURN, THE ASSESSING OFFICER (AO) OBSERVED THAT CERTAIN ITEMS OF INCOME TOTALLING TO RS.3,11,56,9 64/- WERE DIRECTLY CREDITED TO THE RESERVE FUND WITHOUT ROUTING T HEM THROUGH THE PROFIT AND LOSS ACCOUNT. ONE OF SUCH ITEMS, B EING, NOMINAL MEMBERS FEE OF RS.2,87,200/- WAS HELD, INTER ALIA, TO BE CHARGEABLE TO TAX BEING A REVENUE RECEIPT. THE LD. CIT(A) UPHELD THE AOS VIEW ON THIS POINT. 4. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEV ANT MATERIAL ON RECORD, IT IS OBSERVED THAT SIMILAR ISSUE OF TAXABILITY OF NOMINAL MEMBERS FEE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN THE CASE OF SHRI RUKMINI SAHAKARI BANK LTD. VS. ACIT (IT A NO.84/PUN/2017. VIDE ITS ORDER DATED 09-05-2019, THE TRIBUN AL REMITTED THE MATTER TO THE FILE OF AO FOR DECIDING IT AFRESH AF TER CONSIDERING PRUDENTIAL NORMS ON CAPITAL ADEQUACY, CIRCULAR DATE D 01-08-2009 ISSUED BY RESERVE BANK OF INDIA AND EXTRACT OF ASSESSEES BYE-LAWS. SINCE THE FACTS AND CIRCUMSTANCES OF THE INSTANT GR OUND ARE ADMITTEDLY SIMILAR TO THE ONE DECIDED BY THE TRIBUNAL IN THE AF ORESAID ORDER, FOLLOWING THE PRECEDENT, WE SET-ASIDE THE IMPUGNED ORDER ON THIS SCORE AND REMIT THE MATTER TO THE FILE OF AO FOR DECIDING IT AFRESH ITA NOS. 392 & 393/PUN/2017 KOLHAPUR DIST. CENTRAL CO.OP. BANK LTD., 3 IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY THE TRIBUNAL IN THE ABOVE REFERRED ORDER. 5. THE NEXT GROUND IS AGAINST UPHOLDING ADDITION OF RS.1,01, 141/- TOWARDS EXCESS CASH. 6. THE FACTS CONCERNING THIS ISSUE ARE THAT THE ASSESSEE DIR ECTLY CREDITED EXCESS CASH OF RS.1,01,141/- TO THE RESERVE FUN D WITHOUT ROUTING IT THROUGH THE PROFIT AND LOSS ACCOUNT. THE AO HELD SUCH AMOUNT TO BE CHARGEABLE TO TAX, WHICH VIEW GOT COUNTENANCED IN THE FIRST APPEAL. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. AR CONTENDED THAT THE EXCESS CA SH IS A LIABILITY OF THE ASSESSEE WHICH COULD NOT BE PROPERLY CREDITED TO THE RESPECTIVE DEPOSITORS ACCOUNT BECAUSE OF SOME DEFICIENCY IN FILLING UP PAY-IN-SLIP ETC. FROM THE ASSESSMENT ORDER, IT IS OBSERVE D THAT THE ENTRIES OF EXCESS CASH RELATE TO A PERIOD EXTENDING TO CERTAIN YEARS. THE CONTENTION OF THE ASSESSEE THAT THIS AMOUNT REPRESENTS LIA BILITY, DOES NOT ACCORD WITH THE ASSESSEES ACTION IN CREDITING SUCH AMOUNT TO RESERVE FUND. IF IT WAS REALLY A LIABILITY, THEN THERE WAS NO NEED TO CREDIT SUCH AMOUNT TO RESERVE FUND. INSTEAD, THE AMOUNT OU GHT TO HAVE KEPT AS A LIABILITY IN THE BALANCE SHEET. BE THAT AS IT MAY , WE SET- ITA NOS. 392 & 393/PUN/2017 KOLHAPUR DIST. CENTRAL CO.OP. BANK LTD., 4 ASIDE THE IMPUGNED ORDER ON THIS SCORE AND DIRECT THE AO TO CARRY OUT PROPER INVESTIGATION OF THE AMOUNT FOR ASCERTAINING IF IT IS REA LLY PAYABLE OR NOT. IN CASE, THE AO COMES TO A CONCLUSION TH AT THE ASSESSEE BANK IS NOT LIABLE TO PAY SUCH EXCESS CASH, THEN THIS AMOUNT SHOULD BE TREATED AS INCOME AND VICE-VERSA. 8. THE NEXT GROUND IS ABOUT CONFIRMATION OF ADDITION OF RS.2 2,844/- TOWARDS RISK FUND. THE ASSESSEE CREDITED THIS AMOUNT TO RE SERVE FUND DIRECTLY WITHOUT TAKING IT TO THE PROFIT AND LOSS ACCOUNT. TH E AO HELD SUCH AMOUNT OF INTEREST TO BE CHARGEABLE TO TAX, WHIC H GOT AFFIRMED IN THE FIRST APPEAL. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE R ELEVANT MATERIAL ON RECORD, IT IS CLEAR THAT THE ASSESSEE CREDITED SUCH AMOUNT TO THE RESERVE FUND INSTEAD OF ITS PROFIT AND LOSS ACCOUNT. IT IS FOUND THAT THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER OR THE IM PUGNED ORDER ABOUT THE NATURE OF THE AMOUNT. IF, IN FACT, SUCH AN AMOUNT REPRESENTS INTEREST, THEN IT HAS, OBVIOUSLY, TO BE CHARGED TO TAX. IN THE ABSENCE OF AVAILABILITY OF NATURE OF SUCH AMOUNT, WE ARE HE LPLESS TO DECIDE THIS ISSUE AT OUR HAND. WE, THEREFORE, SET ASIDE TH E IMPUGNED ORDER ON THIS SCORE AND DIRECT THE AO TO ASCERTAIN THE FACTS AND THEN DECIDE ABOUT THE TAXABILITY OR OTHERWISE OF THIS AMOUNT. ITA NOS. 392 & 393/PUN/2017 KOLHAPUR DIST. CENTRAL CO.OP. BANK LTD., 5 A.Y. 2012-13 10. THE FIRST ISSUE IS ABOUT HOLDING NOMINAL MEMBERS FEE OF RS.6,55,000/- AS INCOME OF THE ASSESSEE. 11. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCU MSTANCES OF THIS GROUND ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF FIRST GROUND OF THE ASSESSEES APPEAL FOR THE A.Y. 2010-11 DISCUSSED AB OVE. FOLLOWING THE VIEW TAKEN HEREINABOVE, WE SET-ASIDE THE IMPUG NED ORDER AND REMIT THE MATTER TO THE FILE OF AO FOR DECIDING THIS IS SUE IN ACCORDANCE WITH OUR DIRECTIONS GIVEN ABOVE. 12. THE ONLY REMAINING ISSUE WHICH SURVIVES IN THIS APPEAL IS AGAINST ADDITION OF RS.16,10,793/- ON ACCOUNT OF INTEREST RECEIVED FROM BANK OF BARODA. 13. THE AO NOTED THAT THE ASSESSEE EARNED INTEREST OF RS. 16,10,793/- ON FDRS MAINTAINED WITH BANK OF BARODA, KOLHAPUR BRANCH O N WHICH TAX AT SOURCE WAS ALSO DEDUCTED TO THE TUNE OF RS.1,61,080 /-. ON BEING CALLED UPON TO EXPLAIN AS TO WHY SUCH INTEREST INCOME WAS NOT OFFERED TO TAX, THE ASSESSEE SUBMITTED THAT THE DEDUCTOR-BANK GAVE CE RTIFICATE OF TDS TO THE ASSESSEE VERY LATE. THE AO INCLUDED THIS AMO UNT IN THE TOTAL INCOME OF THE ASSESSEE, WHICH ACTION CAME TO BE APPROV ED IN THE FIRST APPEAL. ITA NOS. 392 & 393/PUN/2017 KOLHAPUR DIST. CENTRAL CO.OP. BANK LTD., 6 14. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD, IT IS FOUND AS AN ADMITTED POSITION THAT A SU M OF RS.16,10,793/- REPRESENTS INTEREST INCOME OF THE ASSESSEE ON FDRS MAINTAINED WITH BANK OF BARODA. ON A SPECIFIC QUERY, IT WAS FAIRLY ADMITTED BY THE LD. AR THAT THIS INTEREST INCOME PERTAINS TO THE YE AR UNDER CONSIDERATION. SIMPLY BECAUSE THE TDS CERTIFICATE WAS FURNISHED TO THE ASSESSEE AFTER THE CLOSE OF THE YEAR CAN NOT MAR THE TAXABILITY OF THE AMOUNT OF INCOME, WHICH IS OTHERWISE CHARGEAB LE TO TAX FOR THE YEAR UNDER CONSIDERATION. WE, THEREFORE, UP HOLD THE INCLUSION OF RS.16,10,793/- IN THE TOTAL INCOME OF THE ASSESS EE. 15. IN THE RESULT, THE APPEAL FOR THE A.Y. 2010-11 IS ALL OWED FOR STATISTICAL PURPOSES AND THE APPEAL FOR THE A.Y. 2012-13 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH SEPTEMBER, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 09 TH SEPTEMBER, 2019 ITA NOS. 392 & 393/PUN/2017 KOLHAPUR DIST. CENTRAL CO.OP. BANK LTD., 7 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-2, KOLHAPUR 4. 5. 6. THE CIT-2, KOLHAPUR , , / DR B, ITAT, PUNE; / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 06-09-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 06-09-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *