THE MALKAPUR URBAN CO-OP. BANK LTD, Nagpur V. DY.C.I.T. AKOLA CIRCLE, Akola

ITA 438/NAG/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2174 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 30-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Assessee Lawyers: SURE N DURUGKAR

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH: NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 438 /NAG/20 1 4 ASSESSMENT YEAR: 20 1 0 - 1 1 THE MALKAPUR URBAN CO - OP BANK LTD., C/O. MSKBS & CO., 502 - 503, SATYAM APTS., DHANTOLI, NAGPUR - 12 PAN: - A AALT0274F VS DY. COMMISSIONER OF INCOME TAX AKOLA CIRCLE, AKOLA (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SURE N DURUGKAR , A.R. RESPONDENT BY SHRI A.R. NINAWE , D.R. DATE OF HEARING: 0 9 - 0 6 - 201 6 DATE OF P RONOUNCEMENT: - 16 / 0 6 /2016 O R D E R PER SHAMIM YAHYA , A .M. TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD.CIT(A) DATED 1 8 .0 6 .2014 AND PERTAIN S TO ASSESSMENT YEAR 20 10 - 11. THE GROUNDS OF APPEAL READ AS UNDER: - 1. THE ORDER PASSED BY HONBLE COMMISSIONER OF INCOME TAX (APPEALS - 1), NAGPUR IS ILLEGAL, INVALID AND BAD IN LAW. 2. THE INCOME DETERMINED BY HONBLE COMMISSIONER OF INCOME TAX (APPEALS - 1), NAGPUR AT RS.5,05,70,216/ - IS UNJUSTIFIED UNWARRANTED AND EXCESSIVE; 3. THE LEARNED HONBLE COMMISSIONER OF INCOME TAX (APPEALS - 1), NAGPUR OUGHT NOT TO HAVE ADDED SUM RS.2,69,98,530/ - BEING UNREALIZED ACCRUED INTEREST ON NPA TO INCOME OF THE ASSESSEE. 4. THE ADDITION TO THE INCOME RETURNED AT RS.2,69,98,530/ - IS UNJUSTIFIED, UNWARRANTED AND EXCESSI VE. 5. THE LEARNED HONBLE COMMISSIONER OF INCOME TAX(APPEALS - 1) NAGPUR OUGHT NOT TO HAVE ADDED SUM RS.32,63,076/ - BEING UNREALIZED ACCRUED INTEREST ON EXCESS NPA TO INCOME OF THE ASSESSEE. 6. THE ADDITION TO THE INCOME RETURNED AT RS.32,63,076/ - IS UNJUSTIFIED, UNWARRANTED AND EXCESSIVE. 7. THE ASSESSEE DENIES LIABILITY TO BE ASSESSED TO INTEREST U/S.234B, 234C AND 234D OF INCOME TAX, 1961. WITHOUT PREJUDICE THE LEVY OF INTEREST UNDER SECTION 234B, 234C AND 234D IS UNJUSTIFIED, UNWARRANTED AND EXCESSIVE. 2 I TA NO. 438 /NAG/20 1 4 2 . AT TH E OUTSET, IN THIS CASE THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT HE SHALL NOT BE PRESSING GROUND NO.5 AND 6 ABOVE. 3. IN THIS CASE, THE APPELLANT IS A NON SCHEDULED CO - OPERATIVE BANK WORKING UNDER THE DIRECTIONS OF RESERVE BANK OF INDIA. THE APPELLAN T FILED ITS RETURN OF INCOME FOR A.Y.2010 - 11 ON 30.09.2011 DECLARING TOTAL INCOME OF RS.2,03,08,610/ - . THIS RETURN WAS PROCESSED U/S.143(1). THIS CASE WAS SELECTED FOR SCRUTINY UNDER CASS. IT WAS CONCLUDED BY THE ASSESSING OFFICER THAT THERE WAS A NET ACCR UED UNREALIZED NPA INTEREST OF RS.4,48,35,364/ - OF THE YEAR 2010 - 11 WHICH WAS DIRECTLY CREDITED TO THE BALANCE SHEET AND EQUAL AMOUNT WAS CREDITED TO THE OVERDUE INTEREST RESERVE A/C. WITHOUT ROUTING THE CREDIT/DEBIT OF THESE ENTRIES IN THE PROFIT & LOSS A /C . THE AO DID NOT ACCEPT THE PLEA THAT T HE ACCRUED OVERDUE INTEREST AMOUNT OF RS.4,48,35,364/ - ON NPA HAS NOT BEEN OFFERED TO TAX ON THE GROUND THAT ASSESSEE WAS ACCOUNTING THE NPA INTEREST OF CASH/ACTUAL REALIZATION BASIS AND THIS METHOD WAS CONSISTENTLY FOLLOWED. 4 . UPON ASSESSEES APPEAL THE LD. CIT(A) HELD AS UNDER : - 9.3 CONSIDERING THE FACTS OF THE PRESENT CASE, IT WOULD BE NECESSARY TO COMPUTE THE INCOME THAT IS TO BE BROUGHT TO TAX BEING INTEREST ON CERTAIN AMOUNT CLASSIFIED AS NPAS IN VIEW OF TH E BOARDS ABOVE REFERRED CIRCULAR DATED 09.10.1984. THE AR OF THE APPELLANT ON 21.05.2014 HAS PROVIDED THE BIFURCATION OF THE INTEREST ACCRUED ON NPAS AND THE FIGURES OF INTEREST ATTRIBUTABLE TO SUCH NPAS, WHICH ARE OUTSTANDING FOR LESS THAN 3 YEARS AND AB OVE 3 YEARS AS UNDER: - SUMMARY OF NPA & OVERDUE INTEREST FOR FY 2009 - 10 PARTICULARS NO. OF A/CS. O/S. BALANCE INTEREST UPTO 1 YEAR 174 5,89,55,551/ - 98,71,610/ - 1 TO 2 YEARS 60 7,74,25,915/ - 1,44,11,350/ - 2 TO 3 YEARS 107 1,54,15,635/ - 27,15,370/ - 3 YEARS & ABOVE 445 8,64,26,734 1,78,36,834/ - TOTAL 23,82,23,835/ - 4,48,35,364/ - ACCORDINGLY, AS PER THE ABOVE DETAILS SUBMITTED BY THE A.R. OF THE APPELLANT, IT IS SEEN THAT OUT OF THE TOTAL ACCRUED INTEREST ON NPAS OF 3 I TA NO. 438 /NAG/20 1 4 RS.4,48,35,364/ - AN AMOUNT OF RS.2, 69,98,530/ - ONLY IS LIABLE TO BE TAXED AS INTEREST CHARGED BUT NOT RECEIVED ON SUCH NPAS WHICH FALLS WITHIN THE PERIOD OF LESS THAN 3 YEARS. THE FIGURES PROVIDED BY THE AR OF THE APPELLANT AS MENTIONED ABOVE, ARE CERTIFIED BY THE AR OF THE APPELLANT HIMSEL F. THE AO, HOWEVER, IS AT LIBERTY TO VERIFY THE VERACITY OF THE FIGURES PROVIDED BY THE APPELLANT WHILE GIVING EFFECT IN VIEW OF THE FINDING GIVEN ABOVE TAKING INTO CONSIDERATION THE BOARDS CIRCULAR DATED 09.10.1984. 5 . AGAINST ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE US. AT THE OUTSET THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE BY THE ITAT DECISION IN ASSESSEES OWN CASE IN ITA NO. 432 & 433 / NAG/2014 AND ITA NO.452 & 453 /NAG/2013 . 6 . PER CONTR A THE LD. DR D ID NOT DISPUTE THE ABOVE PROPOSITION , HOWEVER H E RELI ED UPON THE ORDER OF THE AUTHORITIES BELOW. 7 . UPON CA RE FUL CONSIDERATION WE FIND THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ABOVE MENTION DECISION S OF THE ITAT IN ASSESSEES O WN CASE VIDE ORDER DATED 31 .0 8 .201 5 , THE TRIBUNAL IN ABOVE CASE S HAS CONCLUDED AS UNDER: - RESPECTFULLY FOLLOWING THE ABOVE PRECEDENTS, WE SET ASIDE THE ORDERS PASSED BY THE LEARNED CIT(APPEALS) IN ALL THESE CASES AND HOLD THAT THE ENTIRE ADDITION MADE I N THE PRESENT CASE ON ACCOUNT OF INTEREST ACCRUED ON NPAS IS NOT SUSTAINABLE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8 . IN THE SAID ORDER THE ITAT HAS A LSO REFERRED DECISION OF HO NBLE HIGH COURT AS UNDER: - 5. HAVING HEARD BOTH THE PARTIES, WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE AURANGABAD HIGH COURT, JUDICATURE AT BOMBAY, RENDERED IN A GROUP OF CASES DETAILS OF WHICH A RE AS UNDER: - I) CIT V/S. M/S. DEOGIRI NAGARI SAHAKARI BANK LTD., ITA NO.53 OF 2014, JUDGMENT DATED 22 ND JANUARY 2015; II) CIT V/S. M/S. PEOPLES CO - OPERATIVE BANK LTD., ITA NO. 54 OF 2014, JUDGMENT DATED 22 ND JANUARY 2015; III) CIT V/S. THE N ANDED DISTRICT CENTRAL CO - OPERATIVE BANK LTD., ITA NO.57 OF 2014, JUDGMENT DATED 22 ND JANUARY 2015; AND IV) CIT V/S. VASANDADA NAGARI SAHAKARI BANK LTD., ITA NO.68 OF 2014, JUDGMENT DATED 22 ND JANUARY 2015. 4 I TA NO. 438 /NAG/20 1 4 6. THE FACTS OF THE CASE DEALT WITH BY THE HONBLE AURANGABAD HIGH COURT, JUD ICATURE AT BOMBAY, WERE IDENTICAL WITH THE FACTS IN THE PRESENT CASE, WHICH ARE MENTIONED IN PARA - 3 OF THE JUDGMENT RENDERED IN THE ABOVE INCOME TAX APPEALS. THE RELEVANT PORTION OF PARA - 3 IS REPRODUCE BELOW: - 3. THE COMMON ISSUE INVOLVED IN ALL THESE APPEALS RELATING TO THE ASSESSMENT YEAR AS MENTIONED IN THE AFORESAID TABLE ABOUT DELETION OF THE ADDITIONS ON ACCOUNT OF INTEREST ON STICKY ADVANCES. IN ALL THESE CASES, THE ASSESSING OFFICER, DURING THE ASSESSMENT PROCEEDINGS, HAS OBSERVED THAT THE PROV ISIONS OF SECTION 43(D) OF THE INCOME TAX ACT CANNOT BE APPLIED TO THE ASSESSEE AS IT IS NOT A SCHEDULED BANK BUT A CO - OPERATIVE BANK. IN THE OPINION OF THE ASSESSING OFFICER, CONSIDERING THE PROVISIONS OF SECTION 43 - D OF THE INCOME TAX ACT, NON SCHEDULED CO - OPERATIVE BANKS ARE SPECIFICALLY EXCLUDED FROM THE SPECIAL PROVISIONS OF THE 43 - D OF THE INCOME TAX ACT, REGARDING INTEREST ON STICKY ADVANCES. THE ASSESSING OFFICER HAS ALSO HELD THAT CBDT CIRCULAR NO.F - 201/4/84 ITA - II DATED 09.10.1984 IS APPLICABLE O NLY TO BANKING COMPANIES AND NOT TO NON - SCHEDULED BANKS AND CO - OPERATIVE BANKS 8. RESPECTFULLY FOLLOWING ABOVE PRECEDENTS, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 9 . IN THE RESULT, THIS APPEAL FILED BY THE AS SESSEE STANDS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF JUNE , 2016 SD/ - SD/ - (MUKUL K. SHRAWAT) (SHAMIM YAHYA) JUDICIAL M EMBER ACCOUNTANT MEMBER PLACE: - NAGPUR DATED: - 16 / 0 6 /2016 5 I TA NO. 438 /NAG/20 1 4 COPY FORWARDED TO : 1. THE MALKAPUR URBAN CO - OP BANK LTD., C/O. MSKBS & CO., 502 - 503, SATYAM APTS., DHANTOLI, NAGPUR - 12 2. DY. COMMISSIONER OF INCOME TAX AKOLA CIRCLE, AKOLA 3. C.I.T. - I, NAGPUR. 4. CIT (APPEALS) - I , NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR M.B.BODKHE /SR. P.S .