Appeal details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 8835 (ITAT-VISAKHAPATNAM)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
8 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-07-2017
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Assessment Year
2013-2014
Appeal Filed On
23-11-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 465 / VIZ /201 6 (ASST. YEAR : 20 13 - 14 ) DCIT , CIRCLE - 2(1), VIJAYAWADA. V S . M/S. COASTAL LOCAL AREA BANK LTD., D.NO. 59 - 14 - 2A, 3 RD FLOOR , SANTHI PLAZA, RING ROAD , NEAR BENZ CIRCLE, VIJAYAWADA . PAN NO. AACCC 1693 G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C. SUBRAHMANYAM FCA DEPARTMENT BY : SHRI K.C. DAS SR. DR DATE OF HEARING : 26 / 0 7 /201 7 . DATE OF PRONOUNCEMENT : 31 / 0 7 /201 7 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , VIJAYAWADA , DATED 23 /0 8 /201 6 FOR THE ASSESSMENT YEAR 20 13 - 14 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS CARRYING ON BANKING BUSINESS , HAD FILED ITS RETURN OF INCOME BY DECLARING TOTAL INCOME OF 10,15,52,040/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER HAS NOTED THAT ACCRUED INTEREST ON NPAS OF 37,50,806/ - HA S NOT BEEN CREDITED TO PROFIT & LOSS ACCOUNT BY THE ASSESSEE EVEN THOUGH HE IS FOLLOWING MERCANTILE SYSTEM OF 2 ITA NO. 465/VIZ/2016 ( M/S. COASTAL LOCAL AREA BANK LTD. ) ACCOUNTING . T HE ASSESSING OFFICER A S KED THE ASSESSEE AS TO WHY INTEREST ON NPAS SHOULD NOT BE BROUGHT TO TAX. IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT NO INTEREST ON NPAS WAS CHARGED AND WHENEVER THIS AMOUNT IS RECOVERED , IT WOULD BE ACCOUNTED FOR AND INTEREST WILL BE PAID. HOWEVER, THE ASSESSING OFFICER HAS NOT AGREED WITH THE EXPLANATION OF THE ASSESSEE AND INTEREST ON NPAS OF 37,50,806/ - WAS BROUGHT TO TAX AND ADDED THE S AME TO THE INCOME OF THE ASSESSEE. 3 . ON APPEAL, LD. CIT(A) BY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF GANDHI COOPERATIVE URBAN BANK LTD . IN ITA NO. 469/V IZAG /2012 , DATED 30/11/2015, DELETED THE ADDITIO N MADE BY THE ASSESSING OFFICER . THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: - 5.1. ASSESSING OFFICER HELD THAT THE APPELLANT WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING BUT OFFERED INTEREST INCOME ON NPA ON CASH SYSTEM. HENCE, HE MADE ADDITION OF RS.37,50,806 / - HOLDING THAT APPELLANT NEED OFFER INTEREST INCOME ON THE NPA (NON PERFORMING ASSETS) ON ACCRUAL BASIS. 5 . 2. ACCORDING TO APPELLANT, INTEREST ON NPA IS RS.49892117. IT IS SUBMITTED THAT NECESSARY DETAI L S IN THIS REGARD HAD BEEN SUBMITTED DURI NG ASSESSMENT PROCEEDINGS BEFORE ASSESSING OFFICER. HOWEVER , I NADVERTENTLY, ADDITION OF RS.37,50,8061 - , I.E. CLOSING BALANCE OF NET NPA INSTEAD OF INTEREST PORTION ON NPA, HAS BEEN MADE BY ASSESSING OFFICER. ASSESSING OFFICER IS DIRECTED TO VERIFY THIS CLA IM OF APPELLANT. 5.3. IN THE CASE OF A PUBLIC FINANCIAL INSTITUTION OR A SCHEDULED BANK OR A STATE FINANCIAL CORPORATION OR A STATE INDUSTRIAL INVESTMENT CORPORATION, INCOME BY WAY OF INTEREST ON SUCH CATEGORIES OF BAD AND DOUBTFUL DEBTS AS MAY BE PRESCRIB ED [SEE RULE 6EA OF THE INCOME - TAX RULES ] HAVING REGARD TO THE GUIDELINES ISSUED BY THE RESERVE BANK OF INDIA IN RELATION TO SUCH DEBTS, SHALL BE CHARGEABLE TO TAX IN THE PREVIOUS YEAR IN WHICH IT IS CREDITED TO THE PROFIT AND LOSS ACCOUNT BY THE SAID INST ITUTIONS FOR THAT YEAR OR IN THE PREVIOUS YEAR IN WHICH IT IS ACTUA LLY RECEIVED BY THEM, WHICHEVER IS EARLIER. 5.3 IN APPELLANTS CASE, THIS AMOUNT ( 37,50,806/ - ) WAS NOT BROUGHT TO THE PROFIT AND LOSS ACCOUNT . IT IS SHOWN AS AN ASSET AND DULY DISCLOSED IN THE BALANCE SHEET (PAGE NO. 38, SCH. NO. 18 , 3 ITA NO. 465/VIZ/2016 ( M/S. COASTAL LOCAL AREA BANK LTD. ) SL. NO. 3.4.1. CLOSING BALANCE OF NON - PERFORMING ASSETS WAS STATED AT 37.51.L). 5.4 I FIND THAT THE ISSUE INVOLVED IS IDENTICAL TO THE ISSUE I N THE CASE OF T HE GA NDHI CO - OPERATIVE URBAN BANK LTD. FOR THE ASST. YEAR 2009 - 10, WHEREIN THE HON' BLE I TAT, VISAKHAPATNAM VIDE ORDER IN ITA NO.469 /V IZAG/2012 DATED 30.11.2015 UPHELD THE DECISION OF THE CIT(A). THE RELEVANT PORTION OF THE ORDER IS REPRODUCED AS UNDER: '10. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO APPLYING THE RATIOS OF THE JUDG MENTS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT INTEREST ON A LOAN WHOSE RECOVERY IS DOUBTFUL AND WHICH HAS NOT BEEN RECOVERED BY THE ASSESSEE - BANK, BUT HAS BEE N KEPT IN A SUSPENSE ACCOUNT AND HAS NOT BEEN BROUGHT TO THE P&L A/C OF THE ASSESSEE, COULD NOT BE INCLUDED IN THE INCOME OF THE ASSESSEE. THE CIT(A) RIGHTLY DELETED THE ADDITIONS TOWARDS INTEREST ON NPAS. THERE IS NO ERROR OR INFIRMITY IN THE ORDER OF CIT (A). ACCORDINGLY, WE DIRECT THE AO TO DELETE THE ADDITIONS MADE TOWARDS INTEREST ON NPAS.' 5.5. RESPECTFULLY FOLLOWING THE ORDER OF THE HON'BLE ITAT VIDE ORDER MENTIONED ABOVE , I DIRECT THE ASSESSING OFFICER TO DELETE THE ADD ITION OF RS.37,50 , 806/ - MADE ON ACCOUNT OF ACCRUAL OF INTEREST ON NPAS. 4 . ON BEING AGGRIEVED, R E V E NUE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 5. LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER WHEREAS , L EARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A). 6 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW . 7 . THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WHETHER INCOME NOT CHARGED ON NPAS HAS TO BE BROUGHT TO THE PROFIT & LOSS ACCOUNT OR NOT . THE ISSUE HAS ALREADY BEEN CONSIDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF GANDHI COOPERATIVE URBAN BANK LTD . (SUPRA) AND HELD THAT INTEREST NOT CHARGED O N THE NPAS , C OULD NOT BE INCLUDED IN THE 4 ITA NO. 465/VIZ/2016 ( M/S. COASTAL LOCAL AREA BANK LTD. ) INCOME OF THE ASSESSEE AND THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. IN THE PRESENT CASE, THE FACTS ARE MUTATIS MUTANDIS TO THE FACTS OF GANDHI COOPERATIVE URBAN BANK LTD. (SUPRA) RELIED ON BY THE LD.CIT(A) . T HEREFORE , RESPECTFULLY FO L L O W I NG THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF GANDHI COOPERATIVE URBAN BANK LTD., (SUPRA) , WE FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(A). THUS, THIS G ROUND OF APPEAL RAISED BY THE RE V E NUE IS DISMISSED. 8 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 3 1 S T DAY OF JU LY , 201 7 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3 1 S T JU LY , 201 7 . VR/ - COPY TO: 1. THE ASSESSEE - M/S. COASTAL LOCAL AREA BANK LTD., D.NO. 59 - 14 - 2A, 3RD FLOOR, SANTHI PLAZA, RING ROAD, NEAR BENZ CIRCLE, VIJAYAWADA. 2. THE REVENUE - DCIT, CIRCLE - 2(1), VIJAYAWADA. 3. THE P CIT , VIJAYAWADA. 4. THE CIT(A) , VIJAYAWADA. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.
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