The ACIT, 1(1), Bhopal V. M/s. Bhopal Co-operative Central Bank Ltd., Bhopal

ITA 45/IND/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2288 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-08-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 03-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MOURYA
• Keywords: Depreciation
• Section: 143(3); 142(1); 32; 263

Judgement Text

ACIT VS. BHOPAL COOP. ITA 45/2017 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, HONBLE JUDICIAL MEMBER AND SHRI MANISH BORAD, HONBLE ACCOUNTANT MEM BER ITA NO. 45/IND/2017 A.Y. 2010-11 ACIT 1(1) BHOPAL ::: APPELLANT VS M/S BHOPAL COOPERATIVE CENTRAL BANK LTD., BHOPAL ::: RESPONDENT APPELLANT BY SHRI R.P. MOURYA RESPONDENT BY S / SHRI HITESH CHIMNANI & YASH KUKREJA DATE OF HEARING 9.3.2018 DATE OF PRONOUNCEMENT 20 .3.2018 O R D E R PER SHRI MANISH BORAD, AM THIS APPEAL OF THE REVENUE RELATING TO THE ASSESSMENT YEAR 2010-11 IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-I, BHOPAL, D ATED ACIT VS. BHOPAL COOP. ITA 45/2017 2 23.11.2016 WHICH IS ARISING OUT OF THE ORDER U/S 143 (3) OF THE ACT DATED 19.2.2016 FRAMED BY THE ACIT, 1 (1), BH OPAL. 2. THE SOLE GROUND OF THE REVENUE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIE D IN DELETING THE ADDITION OF RS.61,71,821/- BY ACCEPTING THE ASSESSEES PLEA THAT THE PROVISION OF RS. 61,71,821/- HAS BEEN ADDED BACK TO THE INCOME IN THE COMPUTATION OF INCOME FOR PRECEDING YEARS. 3. BRIEFLY STATED, THE FACTS, AS CULLED OUT FROM RECOR D, ARE THAT THE ASSESSEE IS AN AOP ENGAGED IN THE BANKING BUSINESS. THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 22.2.2013 DETERMINING THE INCOME AT RS.6,59,52,579/-. THEREAFTER, THE LEARNED PR.CIT VID E ORDER U/S 263 OF THE ACT SET ASIDE THE ASSESSMENT ORDER U/S 143(3) OF THE ACT FOR EXAMINING THE ISSUE OF DEDUCTI ON OF RS.61,71,821/- CLAIMED ON DEPRECIATION DIMINUTION WRITTEN BACK. THE ASSESSING OFFICER ISSUED NOTICE U /S ACIT VS. BHOPAL COOP. ITA 45/2017 3 143(2) AND 142(1) OF THE ACT AND AFTER GOING THROUGH T HE SUBMISSIONS OF THE ASSESSEE FRAMED OPINION THAT THE PROVISION FOR DEPRECIATION DIMINUTION WRITTEN BACK IS NOT ACCEPTABLE AND ADDED THE SAME TO THE ASSESSED INCOME OF THE ASSESSEE U/S 143(3) OF THE ACT THEREBY ASSESSING THE INCOME U/S 143(3) R.W.S. 263 OF THE ACT AT RS.7,21,24,400/-. AGAINST THE IMPUGNED DISALLOWANCE B Y THE ASSESSING OFFICER, THE ASSESSEE WENT IN APPEAL BEF ORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND SUCCEEDE D AS THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THE IMPUGNED AMOUNT OF RS.61,71,821/- HAS BEEN OFFERE D TO TAX DURING ASSESSMENT YEARS 2007-08 TO 2010-11 AND ALSO THE AMOUNT OF RS.1,00,000/- FOR ASSESSMENT YEAR 2010-11 HAS BEEN OFFERED TO TAX IN THE COMPUTATION O F INCOME. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRI BUNAL AGAINST THE ALLEGED DELETION OF ADDITION OF RS.61,71,82 1/-. ACIT VS. BHOPAL COOP. ITA 45/2017 4 5. THE LEARNED DR SUPPORTED THE ORDER OF THE ASSESS ING OFFICER AND ADDED THAT NECESSARY DOCUMENTS WERE NOT PRODUCED BY THE ASSESSEE TO PROVE THAT THE IMPUGNED ADDITION HAS BEEN OFFERED TO TAX IN EARLIER YEARS. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE REITE RATING THE SUBMISSIONS MADE BEFORE THE COMMISSIONER OF INC OME TAX (APPEALS) AS WELL AS THE FINDINGS GIVEN BY HIM, TO OK US THROUGH THE RELEVANT PAGES OF THE PAPER BOOK BY DEMONSTRATING THAT THE PROVISION OF RS. 61,71,821/- H AS BEEN ADDED TO THE INCOME IN THE COMPUTATION OF INCOME FILED ALONG WITH THE RETURN OF INCOME. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SI DES. THE SOLE GRIEVANCE OF THE REVENUE RELATES TO DELETION OF ADDITION OF RS.61,71,821/- BY THE COMMISSIONER OF IN COME TAX (APPEALS). THE ALLEGED AMOUNT RELATES TO DEPRECIATI ON DIMINUTION WRITTEN BACK CLAIM WHICH WAS DENIED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER OBSERVED T HAT THE ACIT VS. BHOPAL COOP. ITA 45/2017 5 ALLEGED DEPRECIATION CLAIM IS NOT OPTIONAL BUT MANDATORY AND, THEREFORE, NOT PERMISSIBLE BECAUSE THE AMOUNT IS NOWHERE CO-RELATED WITH DEPRECIATION AS ENVISAGED U/S 3 2 OF THE ACT AND IT IS ONLY AN ACCOUNTING MEASURE TO MARK THE INVESTMENT TO MARKET PRICE AND, THEREFORE, NOT DEDUC TIBLE. 7. WE FURTHER OBSERVE THAT THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE IMPUGNED ADDITION BY OBSERV ING AS UNDER :- 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, ASSESSMENT ORDER AND THE SUBMISSIONS FILED BY THE APPELLANT. THE APPELLANT HAS SUBMITTED THAT THE AMO UNT ADDED BY THE A.O. THOUGH CAPTIONED AS DEPRECIATION IS NOT ACTUALLY RELATED TO DEPRECIATION AS ENVISAGED U /S 32 OF THE IT ACT. IT IS ONLY AN ACCOUNTING MEASURE TO MARK THE INVESTMENTS TO MARKET PRICE AND IS NOT A DEDUCT IBLE EXPENSE AS PER THE PROVISIONS OF INCOME TAX LAW. IT WAS SUBMITTED THAT THIS HAS NEVER BEEN CLAIMED BY T HE ACIT VS. BHOPAL COOP. ITA 45/2017 6 APPELLANT IN THE INCOME TAX COMPUTATION OR IN THE AUDITED BALANCE SHEET. IT WAS ALSO SUBMITTED THAT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING S THE APPELLANT BY MISTAKE ENCLOSED A PROVISIONAL INC OME TAX COMPUTATION FORM IN WHICH IT HAD CREDITED THE DEPRECIATION DIMINUTION OF INVESTMENT WRITTEN BACK AS A PLANNING EXERCISE. IT WAS FURTHER SUBMITTED THAT DU RING THE ASSESSMENT PROCEEDINGS WHEN THE MISTAKE CAME TO THE NOTICE OF THE APPELLANT THE APPELLANT SUBMITTED THE COMPUTATION OF TOTAL INCOME BASED ON THE AUDITED FINANCIAL STATEMENTS. THE ACTUAL INCOME TAX COMPUTA TION FORM DID NOT CONTAIN ANY AMOUNT CREDITED OR DEBITED IN THE NAME OF DEPRECIATION DIMINUTION OF INVESTMENT WRITTEN BACK. 6. IT WAS SUBMITTED THAT THE APPELLANT HAD MADE PROVISIONS ON ACCOUNT OF DEPRECIATION DIMINUTION OF INVESTMENT WRITTEN BACK AS PER THE TABLE IN POINT N O. 22 ACIT VS. BHOPAL COOP. ITA 45/2017 7 REPRODUCED ABOVE OF THE SUBMISSIONS. AS PER THE TAB LE, A PROVISION OF RS. 3,15,748/- WAS MADE IN THE F.Y. 2006-07 WHICH WAS TREATED AS AN INADMISSIBLE EXPENS E AND ADDED TO THE INCOME OF THE APPELLANT AS PER THE COMPUTATION OF INCOME FILED WITH THE RETURN FOR THE A.Y., 2007-08. SIMILARLY PROVISION OF RS. 12,20,981/- WAS MADE IN THE A.Y. 2008-09, PROVISION OF RS. 46,35,09 2/- WAS MADE IN THE A.Y. 2009-10 AND PROVISION OF RS.1,00,000/- WAS MADE IN THE A.Y., 2010-11. HOWEVER, ALL THESE PROVISIONS WERE ADDED BACK IN TH E COMPUTATION OF INCOME BY THE APPELLANT HIMSELF AT T HE TIME OF FILING OF RETURN. THE COPIES OF ITR AND THE COMPUTATION OF INCOME FOR ALL THESE ASSESSMENT YEAR S WERE FILED ALONG WITH THE SUBMISSIONS. 7. FROM THE PROFIT AND LOSS ACCOUNT FOR THE YEAR EN DED 31 ST MARCH, 2010 UNDER THE EXPENDITURE CLAIMED BY THE APPELLANT IS THE HEAD OF PROVISIONS AND CONTINGENC IES OF ACIT VS. BHOPAL COOP. ITA 45/2017 8 RS.3,21,32,330/-. THIS INCLUDES PROVISION FOR DEPRECIATION ON INVESTMENT OF RS. 1,00,000/-. FROM THE COMPUTATION OF TOTAL INCOME FOR THE F.Y. 2009-10 TH E APPELLANT HAS ADDED BACK THIS PROVISION FOR INVESTM ENT DEPRECIATION OF RS. 1,00,000/- TO THE PROFIT AS PER P&L ACCOUNT AT THE TIME OF FILING RETURN FOR A.Y. 2010- 11. 7.1 SIMILARLY, FOR THE F.Y. 2008-09 PROVISION FO R DEPRECIATION ON INVESTMENT HAD BEEN MADE OF RS.46,35,092/- WHICH HAD BEEN ADDED BACK BY THE APPELLANT IN ITS COMPUTATION OF INCOME TO THE PROFI T AS PER P&L ACCOUNT AT THE TIME OF FILING THE RETURN FOR A.Y. 2009-10. 7.2 FOR THE F.Y. 2007-08 PROVISION FOR DEPRECIAT ION ON INVESTMENT HAD BEEN MADE OF RS. 11,20,981/- WHICH HAD BEEN ADDED BACK BY THE APPELLANT IN ITS ACIT VS. BHOPAL COOP. ITA 45/2017 9 COMPUTATION OF INCOME TO THE PROFIT AS PER P&L ACCOU NT AT THE TIME OF FILING THE RETURN FOR A.Y. 2008-09. FOR F.Y. 2006-07 THIS PROVISION FOR DEPRECIATION ON INVESTME NT HAD BEEN MADE OF RS.3,15,748/- WHICH HAD BEEN ADDED BACK BY THE APPELLANT IN ITS COMPUTATION OF INCOME TO THE PROFIT AS PER P&L ACCOUNT AT THE TIME OF FILING THE RETURN FOR A.Y. 2007-08. THE PROVISION M ADE BY THE APPELLANT UNDER THIS HEAD OF PROVISION FOR DEPRECIATION ON INVESTMENT FOR THE F.Y. 2006-07, 2 007- 08, 2008-09 AND 2009-10 ADDS UP TO RS.62,71,821/- WHICH HAS BEEN ADDED BACK BY THE APPELLANT IN HIS COMPUTATION OF INCOME WHILE FILING THE RETURNS FOR THE RESPECTIVE ASSESSMENT YEARS. 8. THUS, LOOKING TO THE TOTAL FACTS OF THE CASE, IT IS SEEN THAT THE APPELLANT HAS MADE A TOTAL PROVISION UNDER THE HEAD DEPRECIATION DIMINUTION OF INVESTME NT ACIT VS. BHOPAL COOP. ITA 45/2017 10 WRITTEN BACK OF RS.62,71,821/- FROM THE A.Y. 2007- 08 TO 2010-11. IN ALL THESE YEARS, IT HAS ADDED BACK T HIS PROVISION AT THE TIME OF FILING OF RETURN AS CAN BE SEEN FROM THE COMPUTATION OF INCOME FOR THESE YEARS. DUR ING THIS ASSESSMENT YEAR ALSO I.E. A.Y. 2010-11, THE APPELLANT HAS A MADE A PROVISION OF RS.1,000,000/- WHICH HAS BEEN SUO MOTO ADDED BACK BY THE APPELLANT IN ITS COMPUTATION OF INCOME. LOOKING TO THE TOTALIT Y OF THE FACTS AND CIRCUMSTANCES, THE CONTENTION OF THE APPELLANT IS ACCEPTED AND THE ADDITION MADE BY THE A.O. OF RS. 62,71,821/- DURING THIS ASSESSMENT YEAR 2010-11 IS HEREBY DELETED. THIS GROUND OF APPEAL IS ALLOWED. 9. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED ACIT VS. BHOPAL COOP. ITA 45/2017 11 8. EVEN DURING THE COURSE OF HEARING, WHILE EXAMINING THE PAPER BOOK WE FIND THAT THE AMOUNT OF RS.3.15.748/ -, RS.12,20,981/- AND RS.46,35,092/- TOTALING TO RS.61,71,821/- HAS BEEN OFFERED TO INCOME IN THE INC OME TAX RETURNS FOR THE ASSESSMENT YEARS 2006-07 TO 2008- 09 RESPECTIVELY BY TREATING THEM AS INADMISSIBLE EXPENSE S. THE RELEVANT PAGES OF COMPUTATION OF INCOME AS WELL AS THE INCOME TAX RETURN FORM SUPPORT THE CONTENTION OF TH E ASSESSEE. THE LEARNED DR FAILED TO CONTROVERT ANY OF T HESE FACTS CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESS EE. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF OUR VERIFICATION OF THE RELEVANT DOCUMENTS ANNEXED WITH THE PAPER BOOK, ARE OF THE VIE W THAT RS.61,71,821/- CLAIMED BY THE ASSESSEE AS DEPRECIATION DIMINUTION WRITTEN BACK STANDS ALREADY OFFERED TO TAX IN THE PRECEDING YEARS AS AND WHEN PROV IDED. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE FINDINGS ACIT VS. BHOPAL COOP. ITA 45/2017 12 OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND ACCORDINGLY UPHOLD THE SAME. 8. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. PRONOUNCED IN OPEN COURT ON 20 TH MARCH, 2018. SD/- SD/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER 20 MARCH, 2018 DN/- COPY TO APPELLANT/RESPODENT/PR.CIT/CIT(A)/DR/GUAR D FILE BY ORDER PRIVATE SECRETARY