Prathamik Shiksha Sah. Bank Ltd., Satara V. ITO, Wd.-2, Satara

ITA 397/PUN/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56500 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-09-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 17-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K AMBARTHA
• Keywords: Assessment record
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI D.KARUNAKAR RAO, ACCOUNTANT MEMBER I.T.A. NO. 397 /PN/2010 : A.Y. 2005-06 PRATHAMIK SHIKSHAK SAHA BANK LTD., .. APPELLANT 12-B, RAVIWAR PETH, PAWAI NAKA, SATARA PA NO.AAAAP 0381 L VS. I.T.O. WARD 2 .. RESPONDENT SATARA APPELLANT BY: SHRI M.K.KULKARNI RESPONDENT BY: SHRI S.K.AMBARTHA DATE OF HEARING: 22- 9-2011 DATE OF PRONOUNCEMENT: 28-9-2011 ORDER PER SHAILENDRA KUMAR YADAV, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 8.2.2010 OF THE CIT-III, PUNE UNDER SECTION 263 OF THE I.T.ACT, 1961 FOR THE ASSESSMENT YEAR 2005-06. 2. FACT IN BRIEF ARE THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143( 3) ALLOWING THE DEDUCTION OF RS.15,30,81,390 U/A. 80P(2)(A)(I) OF THE I.T.ACT CLAIMED BY THE ASSESSEE. THE CIT WHILE EXAMINING T HE ASSESSMENT RECORDS FOUND THAT THE AO COMPLETED THE ASSESSMENT WITHOUT EXAMINING THE ADMISSIBILITY OR OTHERWISE TO THE ASS ESSEE, ON 2 DEDUCTION U/S.80P(2)(I) ON THE INTEREST INCOME RECE IVED BY IT FROM THE INVESTMENT OF VOLUNTARY RESERVES. AS PER THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MEHSANA DIST. COOPERATIVE BANK LTD, 251 ITR 577, DEDUCTION U/S.80P(2)(I) IS A DMISSIBLE IN RESPECT OF INCOME FROM INVESTMENT OF VOLUNTARY RESE RVE ONLY IF SUCH INCOME HAS BEEN UTILIZED IN THE REGULAR COURSE OF B ANKING BUSINESS. THE CIT WAS OF THE VIEW THAT AT THE TIME OF ASSESSM ENT, THE MANNER IN WHICH THE INTEREST INCOME EARNED FROM INVESTMENT OF VOLUNTARY RESERVED WAS UTILISED, AND WHETHER OR NOT SUCH INTE REST INCOME WAS UTILIZED IN THE REGULAR COURSE OF BANKING BUSINESS WAS NOT EXAMINED AT ALL. SIMILARLY, THE AO ALLOWED THE ASSESSEES C LAIM OF DEDUCTION U/S.80P(2)(I) ON ITS ENTIRETY EVEN THOUGH, PRIMA FACIE , CERTAIN ITEMS VIZ; MANAGERIAL CHARGES, MSEB REMUNERATION CHARGES, INSURANCE COMMISSION, DIVIDENDS, SURPLUS IN TRADING IN GOVERN MENT SECURITIES ETC WERE NOT ELIGIBLE FOR SUCH DEDUCTION IN AS MUCH AS SUCH RECEIPTS COULD NOT BE CONSIDERED AS INCOME OR PROFIT FROM TH E BUSINESS OF BANKING. CONSIDERING THE ABOVE LAPSES IN THE ASSES SMENT ORDER, THE CIT CONSIDERED THE ASSESSMENT ORDER AS ERRONEOU S IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACC ORDINGLY, NOTICE UNDER SECTION 263 WAS ISSUED TO THE ASSESSEE CALLIN G UPON TO SHOW CAUSE AS TO WHY THE ASSESSMENT ORDER SHOULD NOT BE REVISED. AFTER CONSIDERING THE OBJECTION RAISED BY THE ASSESSEE, T HE CIT DIRECTED THE AO TO MAKE A FRESH ASSESSMENT DE NOVO IN ACCORD ANCE WITH THE LAW AND AFTER GIVING THE ASSESSEE A REASONABLE OPPO RTUNITY OF BEING HEARD. 3. BEFORE US, THE STAND OF THE ASSESSEE IS THAT THE ISSUE OF INTEREST INCOME RECEIVED FROM THE INVESTMENT OF VOL UNTARY RESERVES WAS DEBATABLE ISSUE AT THE RELEVANT POINT OF TIME. THEREFORE, IT WAS NOT JUSTIFIED ON THE PART OF THE CIT IN INVOKING TH E PROVISIONS OF SECTION 263. IN SUM AND SUBSTANCE, IT WAS CONTENDE D THAT ON DEBATABLE ISSUE, THE CIT CANNOT MAKE THE ASSESSMENT ORDER AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, LEARNED COUNSEL URGES BEFORE US TO QUA SH THE 3 IMPUGNED ORDER. ON THE OTHER HAND, LEARNED D.R. SU PPORTED THE ORDER OF THE CIT. 4. AFTER HEARING BOTH THE SIDES AND PERUSING THE MA TERIAL ON RECORD, WE FIND THAT THE ISSUE OF INTEREST INCOME R ECEIVED FROM THE INVESTMENT OF VOLUNTARY RESERVES WAS A DEBATABLE AT THE TIME OF ASSESSMENT AND THE CIT IS NOT JUSTIFIED IN INVOKIN G THE PROVISIONS OF SECTION 263 BECAUSE A DEBATABLE ISSUE CANNOT MAK E THE ORDER OF THE AO ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE IN TEREST OF THE REVENUE TO ATTRACT THE REVISIONARY POWER UNDER SECT ION 263. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER 2011. SD/- SD/- (D.KARUNAKAR RAO) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED THE 2 8 TH SEPTEMBER 2011 PARIDA COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 4. THE CIT PUNE 5. THE D.R, ITAT PUNE BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL 4