Asst. Commissioner of Income Tax, Circle-1, Belgaum, Belgaum V. The Basaveshwar Co-op. Bank Ltd., Belgaum

ITA 406/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93585 (ITAT-PANAJI)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 20-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND SHANKAR MARATHE LD
• Assessee Lawyers: ASHOK G MU DNUR
• Keywords: Depreciation
• Section: 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI, HON'BLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 406/PNJ/2014 : (A.Y 2010 - 11) ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 1, BELGAUM ( APPELLANT) VS. SHREE BASAVESHWAR CO - OP. BANK LTD., CTS NO. 704 & 705, 1 ST FLOOR, RAVIWAR PETH, BELGAUM PAN : AAAAB3041M (RESPONDENT) ITA NO. 420/PNJ/2014 : (A.Y 2010 - 11) SHREE BASAVESHWAR CO - OP. BANK LTD., CTS NO. 704 & 705, 1 ST FLOOR, RAVIWAR PETH, BELGAUM PAN : AAAAB3041M ( APPELLANT ) VS. DY . COMMISSIONER OF INCOME TAX, CIRCLE - 1, BELGAUM ( RESPONDENT ) ASSESSEE BY : ASHOK G. MUDNUR, CA REVENUE BY : ANAND SHANKAR MARATHE, LD. DR DATE OF HEARING : 13/07/2015 DATE OF PRONOUNCEMENT : 13 /07/2015 O R D E R PER GEORGE MATHAN : 1. ITA NO. 406 /PNJ/2014 IS AN APPEAL FILED BY THE REVENUE AND ITA NO. 420/PNJ/2014 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), BELGAUM IN ITA NO. 370/BGM/2012 - 13 DT. 23.9 .2014 FOR THE A.Y 2010 - 11. SHRI ANAND SHANKAR MARATHE, LD. DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI ASHOK G. MUDNUR, CA REPRESENTED ON BEHALF OF THE ASSESSEE. 2 ITA NOS. 406 & 420/PNJ/2014 (A.Y 2010 - 11) 2. IN ITA NO. 406/PNJ/2014 BEING REVENUES APPEAL, IT WAS SUBMITTED BY THE LD. DR THAT THE ONLY ISSUE IN THE APPEAL WAS AGAINST THE ACTION OF LD. CIT(A) IN ALLOWING THE CLAIM OF INTEREST ON NON - PERFORMING ASSETS RELYING ON THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT I N THE CASE OF CANFIN HOMES LTD. (2011) 5 TAXCORP (DT) 49593 AS ALSO TH E DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF UCO BANK REPORTED IN 237 ITR 889. 3. IN REPLY, THE LD. AR SUBMITTED THAT THE DECISION OF THE HON'BLE JURISDICTION HIGH COURT BEING THE HON'BLE KARNATAKA HIGH COURT HAD BEEN RIGHTLY FOLLOWED BY THE LD. CIT(A) AND THE SAME WAS LIABLE TO BE UPHELD. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE LD. CIT(A) HAS FOLLOWED THE DECISION OF THE HON'BLE JURISDICTION HIGH COURT OF KARNATAKA IN THE CASE OF CANFIN HOMES LTD. AS ALSO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF UCO BANK REFERRED TO SUPRA AND AS THE REVENUE HAS NOT BEEN ABLE TO DISTINGUISH THE ASSESSEES CASE FROM THE SAID DECISIONS, WE ARE OF THE VIEW THAT THE FINDING OF THE LD. CIT(A) ON THIS ISSUE IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 5. IN ITA NO. 420/PNJ/2014 BEING ASSESSEES APPEAL IT WAS SUBMITTED BY THE LD. AR THAT GR OUND NO. 2 WAS AGAINST THE ACTION OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF SUM OF RS. 14.96 LACS DEBITED TO THE PROFIT AND LOSS ACCOUNT ACCOUNT AS SPECIAL RESERVE U/S 36(1)(VIII). IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE REVERSED. 6. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND LD. CIT(A). 3 ITA NOS. 406 & 420/PNJ/2014 (A.Y 2010 - 11) 7. ON A SPECIFIC QUERY FROM THE BENCH AS TO WHAT WAS THE INTEREST EARNED IN RESPECT OF THE HOUSING LOAN, IT WAS SUBMITTED BY THE LD. AR THAT THE INTEREST EARNED WAS RS.13,69,023/ - . IT WAS THEN PUT TO THE LD. AR AS TO HOW THE AMOUNT OF RS. 14,96,000/ - WAS CLA IMED FOR WHICH THE LD. AR DID NOT HAVE ANY REPLY. IT WAS FURTHER QUERIED TO THE LD. AR AS TO WHAT WAS THE TOTAL PROFIT OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR AND WHAT WAS THE PROFIT IN RELATION TO THE LONG TERM FINANCE REPRESENTING THE HOUSING L OAN. TO THIS, THE LD. AR SUBMITTED THAT THE TOTAL PROFIT EARNED DURING THE YEAR WAS RS. 43,53,651/ - AND THE PROFIT RELATING TO THE HOUSING LOAN WAS NOT AVAILABLE. AS THE LD. AR IS UNABLE TO PRODUCE ALL THE DETAILS IN RESPECT OF THE CLAIM MADE U/S 36(1)(V III) AND AS THE ASSESSEE IS UNABLE TO SUBSTANTIATE ITS CLAIM U/S 36(1)(VIII), IN THE ABSENCE OF ANY DETAILS, THE ADDITION AS MADE BY THE AO AND AS CONFIRMED BY THE LD. CIT(A) STANDS CONFIRMED. 8. IN RESPECT OF GROUND NO. 3, IT WAS SUBMITTED BY THE LD. AR THAT THE ISSUE WAS AGAINST THE ACTION OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.25,000/ - DEBITED TO THE PROFIT AND LOSS ACCOUNT AS PAYMENT TO THE KARNATAKA FLOOD RELIEF FUND REPRESENTING THE CHIEF MINISTERS RELIEF FUND WHICH WAS ELIGIBLE FOR DEDU CTION U/S 80G. 9. IN REPLY, THE LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT PRODUCED THE RECEIPT FOR THE PAYMENT OF RS. 25,000/ - TOWARDS THE CHIEF MINISTERS RELIEF FUND. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WHEN THE LD. AR WAS SPECIFICALLY QU ERIED AS TO ANY EVIDENCE TO SHOW THAT THE PAYMENT WAS MADE TO THE CHIEF MINISTERS RELIEF FUND, THE LD. AR DREW OUR ATTENTION TO A LETTER ADDRESSED BY THE HON'BLE CHIEF MINISTER OF KARNATAKA DT. 12.10.2009, WHICH IS FOUND AT PG. 8 - 9 OF THE PAPER BOOK. A P ERUSAL OF THE SAID LETTER DOESNT TALK OF 4 ITA NOS. 406 & 420/PNJ/2014 (A.Y 2010 - 11) ANY DONATION BEING MADE TO THE CHIEF MINISTERS RELIEF FUND. IT ONLY TALKS ABOUT THE RESPONSE OF THE ASSESSEE TO THE APPEAL OF THE CHIEF MINISTER BY PADA YATRA TO HELP PEOPLE WHO HAVE BEEN AFFECTED BY NATURAL CA LAMITIES. AS THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE TO SHOW THAT THE PAYMENT HAS BEEN MADE TO THE CHIEF MINISTERS RELIEF FUND OR TO ANY ORGANIZATION OR ENTITY TO WHICH THE PROVISIONS OF SEC. 80G APPLY, THE ADDITION AS MADE BY THE AO AND A S CONFIRMED BY THE LD. CIT(A) STANDS CONFIRMED. 11. IN RESPECT OF GROUND NO. 4 IT WAS SUBMITTED BY THE LD. AR THAT THE ISSUE WAS AGAINST THE ACTION OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) BY DENYING EXEM PTION ON THE INTEREST PAID ON MEMBERS DEPOSIT ON ACCOUNT OF NON - DEDUCTION OF TDS U/S 194 OF THE ACT. IT WAS SUBMITTED BY THE LD. AR THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF THE GOA STATE CO - OP. BANK IN ITA NO. 123 TO 137/PNJ/2015 DT. 19.6.2015. IT WAS ALSO THE SUBMISSION THAT THE ISSUE WAS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE IN THE ASSESSEES OWN CASE FOR THE A.Y 2002 - 03 WHEREIN THE TRIBUNAL HAD HELD THE ISSUE IN FAVOUR OF THE ASSE SSEE IN ITA NO. 233/PNJ/2004 DT. 1.9.2006. 12. IN REPLY, THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND LD. CIT(A). 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE ISSUE OF ALLOWABILITY OF INTEREST PAID TO THE MEMBERS IS SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF THE GOA STATE CO - OP. BANK REFERRED TO SUPRA AS ALSO THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN C ASE FOR THE A.Y 2002 - 03, WE ARE OF THE VIEW THAT THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) IS UNSUSTAINABLE AND CONSEQUENTLY THE 5 ITA NOS. 406 & 420/PNJ/2014 (A.Y 2010 - 11) SAME IS DIRECTED TO BE DELETED. IN THE RESULT, GROUND NO. 4 OF THE ASSESSEES APPEAL STANDS ALLOWED. 14. IN RESPECT OF GROUND NO. 5, THE LD. AR HAS WITHDRAWN THE SAME. CONSEQUENTLY, THE SAME IS DISMISSED AS WITHDRAWN. 15. IN RESPECT OF GROUND NO. 6, IT WAS SUBMITTED BY THE LD. AR THAT THE ISSUE WAS AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE MADE BY THE AO IN RESPECT OF GRATUITY FUND PAID TO LIC. IT WAS THE SUBMISSION THAT THE PROVISION TOWARDS EMPLOYEES GRATUITY FUND WAS AN AMOUNT OF RS. 6,49,367/ - AND THE SUM OF RS. 9,75,000/ - WAS PAID TO LIC DURING THE YEAR TOWARDS THE GRATUITY FUND. IT WAS THE SUBMISSION THAT IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TEXTOOL CO. LTD. IN CIVIL APPEAL NO. 447 OF 2003 DT. 17.6.2013, THE PAYMENT MADE TO LIC WAS LIABLE TO BE ALLO WED. 16. IN REPLY, THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND LD. CIT(A). 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE ASSESSEE HAS PAID THE CONTRIBUTION TO THE LIC TOWARDS THE GRATUITY FUND, IN VIEW OF THE DECISI ON OF THE HON'BLE SUPREME COURT IN THE CASE OF TEXTOOL CO. LTD. REFERRED TO SUPRA , THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.9,75,000/ - IN RESPECT OF THE GRATUITY CONTRIBUTION MADE TO LIC. CONSEQUENTLY, GROUND NO. 6 OF THE ASSESSEES APPEAL STANDS A LLOWED. 18. IN RESPECT OF GROUND NO. 7, IT WAS SUBMITTED BY THE LD. AR THAT THE ISSUE WAS AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF AMORTISATION OF THE PREMIUM PAID ON GOVERNMENT SECURITIES. IT WAS THE SUBMISSION THAT THE GOV ERNMENT SECURITIES WERE HELD TILL MATURITY. IT WAS THE 6 ITA NOS. 406 & 420/PNJ/2014 (A.Y 2010 - 11) SUBMISSION THAT THE ADDITION AS MADE BY THE AO AND AS CONFIRMED BY THE LD. CIT(A) WAS LIABLE TO BE DELETED. 19. IN REPLY, THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND THE LD. CIT(A). 20 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE LD. AR WAS SPECIFICALLY QUERIED AS TO THE NATURE OF THE PREMIUM PAID AND WHY THE AMORTISATION WAS DONE. THE LD. AR WAS ALSO ASKED THE DETAILS OF THE GOVERNMENT SECURITIES IN RESPECT OF WHICH THE AMORTISATIO N OF THE PREMIUM HAD BEEN CLAIMED. THE LD. AR SUBMITTED THAT HE DID NOT HAVE DETAILS IN RESPECT OF THE SAME. AS THE ASSESSEE IS UNABLE TO EXPLAIN THE DETAILS OF THE AMORTISATION OF THE PREMIUM PAID ON THE GOVERNMENT SECURITIES WHICH ARE CLAIMED TO HAVE B EEN HELD TILL MATURITY, THE DISALLOWANCE AS MADE BY THE AO AND AS CONFIRMED BY THE LD. CIT(A) STANDS CONFIRMED. IN THE RESULT, GROUND NO. 7 OF THE ASSESSEES APPEAL STANDS DISMISSED. 22. CONSEQUENTLY, GROUND NOS. 2, 3, 5 & 7 OF THE ASSESSEES APPEAL STANDS DISMISSED AND GROUND NOS. 4 AND 6 STANDS ALLOWED. 23. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/07/2015. S D / - (N.S. SAIN I) ACCOUNTANT MEMBER S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 1 3 /07/ 201 5 *SSL* 7 ITA NOS. 406 & 420/PNJ/2014 (A.Y 2010 - 11) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 8 ITA NOS. 406 & 420/PNJ/2014 (A.Y 2010 - 11) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 13/07/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 14/07/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 14/07/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 14/07/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 14/07/2015 SR.PS 6. DATE OF PRONOUNCEMENT 13/07/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 14/07/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER