ACIT, UDAIPUR V. Dungarpur Central Cooperative Bank Ltd., DUNGARPUR

ITA 472/JODH/2013

• Counselvise Citation: 47223314 RSA 2013
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-02-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 03-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 472/JODH/2013 (A.Y. 2010-11) ACIT, CIRCLE-1, VS. DUNGARPUR CENTRAL, UDAIPUR. COOPERATIVE BANK LTD., NEW COLONY, DUNGARPUR. PAN NO. AAAAT 3056 G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHRAWAN KUMAR GUPTA. DEPARTMENT BY : SHRI N.A. JOSHI- D.R. DATE OF HEARING : 18/02/2014. DATE OF PRONOUNCEMENT : 20/02/2014. O R D E R PER N.K. SAINI, A.M THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 31/07/2013 OF LD. CIT (A), UDAIPUR. 2 THE ONLY GROUND RAISED IN THIS APPEAL READS AS UND ER:- ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 8 6,05,115/- MADE ON ACCOUNT OF EXCESS DEDUCTION CLAIMED U/S 36(1)(VIIA) OF THE IT ACT DESPITE THE FACT THAT EXCESS DEDUCTION OF 10% OF AVERAGE ADVANC ES OF RURAL BRANCH IS 2 AVAILABLE TO RURAL BRANCHES AND AS PER EXPLANATION (IA) BELOW SECTION 36(1)(VIIA) OF THE IT ACT RURAL BRANCH MEANS A BRA NCH OF SCHEDULE BANK OR A NON SCHEDULE BANK (AND THUS RURAL BRANCH OF A COOPE RATIVE BANK IS NOT COVERED). 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE I S A COOPERATIVE BANK AND FILED ITS RETURN OF INCOME ON 25/09/2010 DECLAR ING AN INCOME OF RS. 85,98,450/-. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLA IMED EXPENDITURE UNDER SECTION 36(1)(VIIA) OF THE I.T. ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT IN SHORT). THE ASSESSEE SUBMITTED DETAIL ED EXPLANATIONS IN SUPPORT OF ITS CLAIM. THE ASSESSEE-BANK HAD CLAIME D DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT BY CALCULATING THE A MOUNT @ 7.5% OF TOTAL INCOME PLUS 10% OF AGGREGATE AVERAGE ADVANCES OF RU RAL BRANCH EQUAL TO PROVISIONS FOR BAD AND DOUBT FULL DEBTS MADE IN THE BOOKS OF ACCOUNTS WHICHEVER IS LESS. HOWEVER, THE ASSESSING OFFICER O PINED THAT THE CLAIM WAS EXCESSIVE. HE, THEREFORE, DID NOT ACCEPT THE CL AIM OF THE ASSESSEE UNDER SECTION 36(1)(VIIA) OF THE ACT AND MADE THE A DDITION OF RS. 86,05,115/-. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O THE LD. CIT(A) AND SUBMITTED AS UNDER:- 'IN THIS RESPECT, AT THE VERY OUTSET, WE HAVE TO SU BMIT THAT THE SIMILAR AND IDENTICAL ISSUE HAS ALREADY BEEN DISCUSSED AND DECI DED RECENTLY BY THE 3 HON'BLE ITAT, JAIPUR BENCH, JAIPUR IN THE CASE OF A CIT CIRCLE-3 JAIPUR V/S M/S. JAIPUR CENTRAL CO-OPERATIVE BANK LIMITED, JAIPUR IN ITA NO. 817/JP/2O11 DATED 7/3/2O12, BY THE HON'BLE ITAT COCHIN IN THE C ASE KODUNGALLUR TOWN CO-OP BANK AND BY THE HONB'LE ITAT COCHIN IN THE CA SE OF THE KANNUR DIST CO-OPERATIVE BANK LIMITED REPORTED AT (2012) 147 TT J (COCH) 744 ALSO.LN ALL THE ABOVE CASES THE ISSUE IS COMMON AND IDENTICAL T O THE ISSUE IN THE PRESENT APPEAL. LN ALL THE ABOVE DECIDED CASES THE ISSUE HAS BEEN DISCUSSED IN DETAIL AND BOTH THE HON'BLE TRIBUNALS HAS HELD T HAT THE COOPERATIVE BANKS ARE NON SCHEDULE BANK FOR THE PURPOSE OF SECTION 36 (1) (VIIA) AND HAVE HELD THAT THE COOPERATIVE BANK ARE ENTITLED FOR DEDUCTIO N UNDER SECTION 36(1) (VIIA) UPTO DEDUCTION OF 7 5% ON TOTAL INCOME AND ( PLUS) 10% ON AGGREGATE AVERAGE ADVANCES OF RURAL BRANCHES. THE CALCULATION OF CLAIMED DEDUCTION HAS ALREADY PR OVIDED ON RECORD AT THE TIME OF ASSESSMENT AND THE SUBMISSION IN SUPPORT OF CLAIM WERE PLACED ALSO ON RECORD WHICH WAS NOT PROPERLY APPRECIATED BY THE LEARNED ASSESSING OFFICER IN THEIR TRUE PERSPECTIVE AND THERE BY ERRE D IN ARRIVING AT WRONG CONCLUSION. THE ADDITION MADE BY DISALLOWANCE OF PA RT OF DEDUCTION CLAIMED BY THE ASSESSEE BY THE LEARNED ASSESSING OFFICER AC COUNT OF MISINTERPRETATION OF THE OVERALL PROVISION OF SECTI ON 36(1)(VIIA) IS ILLEGAL AND NOT IN CONFORMITY WITH THE LAW. LN THIS REGARDS WE HAVE TO SUBMIT THAT, ANY CO-OPERATIVE BANK IS A BANKING COMPANY AS PER CLAUS E @ OF SECTION 5 OF THE BANK REGULATION ACT, 1949. THEREFORE ANY CO-OPERATI VE BANK WHICH IS NOT A SCHEDULE BANK, IS A NON-SCHEDULE BANK AS PER CLAUSE (I) OF EXPLANATION TO SECTION 36(1)(VIIA). HENCE ANY RURAL BRANCH OF SUCH COOPERATIVE BANK IS COVERED BY THE CLAUSE (II) OF THE SAID EXPLANATION. ACCORDINGLY THE AMOUNT ALLOWABLE UNDER SECTION 36(1)(VIIA) HAS TO BE CALC ULATED @7.5% ON TOTAL INCOME AND (PLUS) 10% ON AGGREGATE AVERAGE ADVANCES OF RURAL BRANCHES. THE BANK HAS RIGHTLY CLAIMED THE EXPENDITURE AS PER LAW AND THE DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER ON THIS ACCOUNT IS NOT JUSTIFIED AND AGAINST THE PROVISION OF SECTION 36(1 )(VIIA). THE RATIO OF ABOVE REFERRED JUDGMENTS FULLY SUPPORTS THE ABOVE POSITIO N OF LAW. HOWEVER FOR BETTER APPRECIATION OF THE FACTS OF THI S CASE AND POSITION OF LAW WITH REGARDS TO THE PROVISION RELATED TO ALLOWABILI TY OF BAD DEBTS TO COOPERATIVE BANK UNDER SECTION 36(1)(VIIA), WE ARE ENCLOSING HEREWITH THE COPY OF RELEVANT SUBMISSION ON THE ISSUE FURNISHED BY THE AR IN THE CASE OF JAIPUR CENTRAL COOPERATIVE BANK AS ANNEXURE -1, WHI CH IS ALSO REPRODUCED IN THE SAID JUDGMENT AND WE ALSO RELY ON THE SAME SUBM ISSION IN THE PRESENT 4 CASE. COPY OF JUDGMENT IN THE CASE OF JAIPUR CENTRA L COOPERATIVE BANK IS ENCLOSED HEREWITH FOR YOUR READY REFERENCE AND KIND CONSIDERATION IN THE PRESENT CASE ALSO. CONSIDERING THE ABOVE, THE ADDIT ION MADE BY THE LEARNED AO BY DISALLOWING PART OF DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 36(1)(VIIA) WAS NOT JUSTIFIED AND IS NOT INCONFORMI TY WITH THE LAW AND ON MERITS OF THE CASE, HENCE DESERVES TO BE DELETED. W E REQUEST YOUR GOODSELF TO PLEASE DELETE THE SAME IN THE INTEREST OF EQUITY AND JUSTICE'' 5. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE, OBSERVED THAT A SIMILAR ISSUE HAS BEEN D ECIDED BY THE ITAT JAIPUR BENCH IN THE CASE OF ACIT, CIRCLE-3, JAIPUR VS. M/S. JAIPUR CENTRAL CO-OPERATIVE BANK LTD., JAIPUR IN I.T.A.NO. 817/JP/ 2012 ORDER DATED 07/03/2012 AND THE ITAT COCHIN BENCH IN THE CASE OF THE KANNUR DIST. CO-OPERATIVE BANK LTD. REPORTED IN (2012) 147 TTJ ( COCH) 744 . HE FURTHER OBSERVED THAT IN THE ABOVE CITED CASES, THE ISSUE HAD BEEN DISCUSSED IN DETAIL AND BOTH THE BENCHES OF THE TRI BUNALS HAVE HELD THAT THE COOPERATIVE BANKS ARE NON-SCHEDULE BANKS FOR TH E PURPOSE OF SECTION 36(1)(VIIA) OF THE ACT AND ARE ENTITLED FOR DEDUCTI ON UPTO 7.5% ON THE TOTAL INCOME AND (PLUS) 10% ON AGGREGATE AVERAGE AD VANCES OF RURAL BRANCHES. ACCORDINGLY, HE DELETED THE DISALLOWANCE OF RS. 86,05,115/-. NOW THE DEPARTMENT IS IN APPEAL. 6 . LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSM ENT ORDER DATED 18/12/2012. 5 7 . IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT( A). 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE LD. CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN CONSONANCE WITH THE DECISIONS TAKEN BY THE COORDINATE BENCHES OF THE ITAT AT JAIPUR AND COCHIN. HE HAS F OLLOWED THE DECISION OF ITAT JAIPUR BENCH IN THE CASE OF ACIT, CIRCLE-3, JAIPUR VS. M/S. JAIPUR CENTRAL CO-OPERATIVE BANK LTD. IN I. T.A.NO. 817/JP /2011 ORDER DATED 07/03/2011. WE, THEREFORE, DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 9 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMIS SED. (ORDER PRONOUNCED IN THE COURT ON 20 TH FEBRUARY, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20 TH FEBRUARY, 2014. VR/- COPY TO: 6 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.