The A.P. Mahesh Co-operative Urban Bank Ltd., Hyd, Hyderabad V. DCIT, Cir-2(3), Hyd, Hyderabad

ITA 474/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5859 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 20-12-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 04-04-2016
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: B SATYANARAYANA MURTY
• Keywords: Diversion of income

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 474/HYD/2016 ASSESSMENT YEAR: 2011-12 THE AP MAHESH CO- OPERATIVE URBAN BANK LTD, HYDERABAD PAN AABAT4652K VS. DCIT, CIR-2(3), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI B. SATYANARAYANA MURTY REVENUE BY : SHRI K.J. RAO DATE OF HEARING : 20-12-2016 DATE OF PRONOUNCEMENT : 30-12-2016 ORDER PER P. MADHAVI DEVI, J.M.: THIS IS THE ASSESSEES APPEAL FOR THE A.Y. 2011-12 , AGAINST THE ORDER OF THE CIT(A)-IV, HYDERABAD, DATE D 19-0- 2016. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(A), AND HAS RAISED THE FOLLOWING G ROUNDS OF APPEAL: 1. THE ORDER OF THE HON'BLE COMMISSIONER OF INCOME TAX IN SO FAR IT IS AGAINST THE APPELLANT-BANK, IS CONTRARY T O THE FACTS OF THE CASE AND THE PROVISIONS OF LAW. 2. THE HON'BLE COMMISSIONER OF INCOME TAX IS NOT JU STIFIED IN SUSTAINING THE DISALLOWANCE OF THE AMOUNT OF RS.13, 93,564/- BEING THE CONTRIBUTION TO THE EDUCATION FUND AS REQ UIRED BY THE CO-OPERATIVE SOCIETIES ACT. THE ORDER OF THE HON'BL E COMMISSIONER OF INCOME TAX SHOULD HAVE SEEN THAT TH E AMOUNT CONTRIBUTED WAS UNCONDITIONALLY APPROPRIATED TO THE NATIONAL CO- OPERATIVE UNION AND THEREFORE IT IS EXPENDITURE IN THE HANDS OF THE APPELLANT-BANK AND IS RIGHTLY ALLOWABLE AS A DE DUCTION IN THE COMPUTATION OF ITS INCOME. 3. THE HON'BLE COMMISSIONER OF INCOME TAX SHOULD HA VE APPRECIATED THAT THE APPELLANT-BANK HAS REMITTED 2 ITA NO. 474/HYD/2016 THE AP MAHESH CIT(A)-OPERATIVE URBAN BANK LTD, HYDERABAD UNCONDITIONALLY THIS AMOUNT AFTER APPROVAL OF THE A CCOUNTS IN THE ANNUAL GENERAL MEETING. 4. THE HON'BLE COMMISSIONER OF INCOME TAX SHOULD HA VE SEEN THAT THE CONTRIBUTION OF RS.13,93,564/- IS AN OUTFL OW AND EXPENDITURE IN THE HANDS OF THE BANK AND IS TO BE U SED FOR PURPOSE OF EDUCATIONAL DEVELOPMENT BEING CARRIED OU T BY THE NATIONAL CO-OPERATIVE UNION, NEW DELHI. 5. THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) , HYDERABAD ERRED IN EQUATING THIS AMOUNT TO THE RESE RVE FUNDS AND OTHER TRANSFERS FROM THE NET PROFIT FROM THE BA NK. 6. THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE APPRECIATED THAT THIS AMOUNT IS A CHARGE ON TH E NET PROFITS OF THE BANK AND THEREFORE RIGHTLY ALLOWABLE AS DEDU CTION. 7. THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE SEEN THAT THE CASE LAW REFERRED TO BY HIM TO SUPPORT HIS DECISION ON THIS MATTER IS NOT APPLICABLE TO THE FA CTS IN THIS CASE. 8. THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE SEEN THAT THE NATIONAL CO-OPERATIVE UNION, NEW DELHI, HAS OVERRIDING TITLE ON THE AMOUNT CONTRIBUTED BY THE A PPELLANT-BANK AND THAT THE BANK CEASES TO HAVE ANY CONTROL ON THE AMOUNTS SO REMITTED TO THE NATIONAL CO-OPERATIVE UNION, NEW DE LHI. THEREFORE, IT IS RIGHTLY ALLOWABLE AS A DEDUCTION I N THE COMPUTATION OF ITS INCOME. 9. THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE ALTERNATIVELY ALLOWED THE DEDUCTION IN RESPECT OF THE PROVISION MADE FOR EDUCATION FUND IN THE ACCOUNTS F OR THE YEAR UNDER CONSIDERATION. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT TH E TIME OF HEARING OF THE APPEAL, IT IS SUBMITTED THAT THE ORDER OF THE LEARNED ASSESSING OFFICER BE SET ASIDE OR MODIFIED MAY BE DEEMED FIT. 3. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE HAS ARISEN IN TH E ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR A.Y. 2010-2011 IN ITA NO. 1580/HYD/2013 AND VIDE ITS ORD ER DATED 31-10-2014, THE TRIBUNAL HAS DISMISSED THE ASSESSEES APPEAL. A COPY OF THE SAID ORDER IS PLA CED BEFORE US. ON PERUSAL OF THE SAME, WE FIND THAT THE TRIBUN AL HAS DISMISSED THE ASSESSEES APPEAL ON TWO GROUNDS THAT THE AMOUNT OF CLAIM MADE DURING THE FINANCIAL YEAR IS N OT OUT OF THE INCOME OF THE THAT YEAR ITSELF BUT IT WAS OU T OF THE 3 ITA NO. 474/HYD/2016 THE AP MAHESH CIT(A)-OPERATIVE URBAN BANK LTD, HYDERABAD INCOME OF THE EARLIER YEAR AND THEREFORE, IT CANNOT BE ALLOWED AS THE DEDUCTION OF THAT YEAR, AS ASSESSEE IS NOT CLAIMING AMOUNT ON ACCRUAL BASIS BUT HAS CLAIMED ON PAYMENT BASIS IN THE LATER YEAR AND (2) THAT THERE IS NO DIVERSION OF INCOME BY OVERRIDING TITLE SINCE THE I NCOME REACHED THE ASSESSEE BEFORE IT REACHED THE THIRD PA RTY. FACTS AND CIRCUMSTANCES FOR THE YEAR BEFORE US BEIN G THE SAME, RESPECTFULLY FOLLOWING THE DECISION OF THE C O-ORDINATE BENCH IN THE ASSESSEES OWN CASE FOR THE EARLIER A. Y, THE ASSESSEES APPEAL IS DISMISSED. 4. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2016. SD/- SD/- (B. RAMAKOTAIAH) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 30 TH DECEMBER, 2016 KRK 1) THE AP MAHESH CO URBAN BANK LTD, HYD C/O C/O VENUGOPAL & CHENOY, CAS, DOOR NO. 4-1- 889/16/2, TILAK ROAD, HYDERABAD-01 2) DCIT, CIR-2(3), HYD 3) CIT -IV, HYDERABAD 4) PCIT-4, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD. 6) GUARD FILE