Asstt. Commissioner of Income Tax, circle-3, Jalandhar V. M/s Jalandhar Central Co op. Bank Ltd., Jalandhar

ITA 509/ASR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5735 (ITAT-AMRITSAR)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-12-2017
• Assessment Year: 2014-2015
• Appeal Filed On: 02-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S NEGI LD
• Assessee Lawyers: ASHRAY SARNA LD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.509(ASR)/2017 ASSESSMENT YEAR:2014- 15 ASST. CIT CIRCLE-3, JALANDHAR VS. M/S JALANDHAR CENTRAL CO-OP. BANK LTD., JALANDHAR PAN:AAAT6187E (APPELLANT) (RESPONDENT) APPELLANT BY: SH. S.S. NEGI (LD. DR) RESPONDENT BY: SH. ASHRAY SARNA (LD.CA) DATE OF HEARING: 22.12.2017 DATE OF PRONOUNCEMENT: 08.03.2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE REVENUE DEPARTMENT, ON FEELING AGGRIEVED AGAINST THE ORDER DATED 08.06.2017 PASSED BY THE LD. CIT(A)-2, JALANDHAR, IN APPEAL NO.2/10360/16-17/CIT(A)/JALANDHAR, BY RAISING THE FO LLOWING GROUNDS OF APPEAL. 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.2,14,165/- MADE BY THE AO HOLDING TH AT THE INTEREST DUE ON NON-PERFORMING ASSETS WAS TAXABLE AS THE CO-OP BANK WAS FOLLOWING MERCANTILE SYSTEM OF ACCOU NTING EXCEPT WITHREGARD TO THE INTEREST PERTAINING TO NPA S. ITA NO.509/ASR/2017 (A.Y.2014-15) ACIT VS. M/S JALANDHAR CE NTRAL CO-OP. BANK LTD. 2 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S OF THE CASE IN HOLDING THAT THE RATIO OF THE DECISION OF H ONBLE DELHI HIGH COURT IN CASE OF M/S VASISTH CHAY VYAPAR LTD. (ITA NO.552, 565 OF 2005 OF 2005 ITA NO.1191 OF 200 7, ITA NO.139, 466, 357 OF 2008 & ITA NO. 408 OF 2003 DATE OF DECISION 29.11.2010 IS APPLICABLE IN THE CASE. 3. IT IS PRAYED THAT THE ORDER OF THE LD. COMMISSIO NER OF INCOME TAX (APPEALS) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. THE LD. CIT(A) WHILE RELYING UPON THE ORDER PASSED BY THE HONBLE ITAT, AMRITSAR BENCH DATED 20.01.2017 IN ITA N O.604, 605 & 625(ASR/2015-16 IN THE CASE OF THE ASSESSEE ITSELF DE LETED THE ADDITION OF RS.2,14,85,165/- MADE BY THE A.O ON ACCOUNT OF INTEREST ON NON PERFORMING ASSETS (NPA). 3. THE LD. DR ON BEHALF OF THE REVENUE DEPARTMENT RELI ED UPON THE ORDER PASSED BY THE ASSESSING OFFICER AND SUBMITTE D THAT THE ORDER PASSED BY THE LD. CIT(A) IS LIABLE TO B E SET ASIDE ON THE GROUNDS AS MENTIONED IN PARA NO.1 OF THE INSTAN T ORDER. 4. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT SIMILAR AND IDENTICAL QUESTIONS AROSE DURING THE ASST. YEAR: 2011-12 TO 2013-14, WHICH WERE SUBJECTED TO ADJUDICATION BY THE IT AT BENCH AT AMRITAR AND THE ITAT BENCH AT AMRITSAR THORO UGHLY CONSIDERED THE PROS AND CONS OF THE ISSUE UNDER CONSIDERATI ON AND PASS THE ORDER WHICH HAS BEEN FOLLOWED BY THE LD. CIT(A) WHILE DELETING THE ADDITION MADE BY THE ASSESSING OFFICE R. ITA NO.509/ASR/2017 (A.Y.2014-15) ACIT VS. M/S JALANDHAR CE NTRAL CO-OP. BANK LTD. 3 5. WE HAVE GONE THROUGH WITH THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS ORDER PASSED BY THE AUTHORITIES BELOW AND SPECIFICALLY RAISED THE QUERY BY THE BENCH QUA FOLLOWING THE RBI GUIDELINES AND WHETHER ANY PROVISION OF NON PERFORMI NG ASSETS (NPA) HAS BEEN MADE IN COMPUTATION OF TOTAL INCOME WH ICH WAS REPLIED BY THE LD. AR BY PLACING ON RECORD LICENSE NO. RPCD (CHD) (JLR) PB-11 DATED 30 TH MAY, 2012 ISSUED BY THE RBI WHILE GRANTING A LICENSE TO COMMERCE AND CARRYING ON BANKING BUSINESS. THE LD. AR ALSO PLACED ON RECORD COMPUTATION OF TOTAL INCOME, WHERE IT IS CLEARLY REFLECTS THAT THE PROVISION OF N.P. AMOUNTS AND NP ACCOUNTS ARE ALSO PART OF THE COMPUTATION OF TOTAL INCOME AND FROM THE AUDITED FINANCIAL STATEMENT , IT REFLECTS THAT THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING IN ACCORDANCE WITH RBI GUIDELINES. EVEN OTHERW ISE THE CO-ORDINATION BENCH OF ITAT AT AMRITSAR HAS ALREAD Y GONE THROUGH WITH MINUTE DETAILS OF THE ASSESSEES OWN CASE ITSE LF AND VIDE ITA NO. 652(ASR)/2015 AND ITA NO.604 & 605(ASR)/ 2016 PASSED ON 20.01.2017 WHEREBY SIMILAR AND IDENTICAL GROU NDS RAISED BY THE REVENUE DISMISSED. FOR THE SAKE OF CONVENI ENCE AND CLARITY, WE FEEL IT APPROPRIATE TO REPRODUCE THE CRUX PART OF THE AFORESAID JUDGMENTS. 6. IT REMAINS AN UNDISPUTED FACT THE ASSESSEE CO-OPERA TIVE BANK HAS BEEN FOLLOWING THE MERCANTILE SYSTEM OF AC COUNTING, EXCEPT WITH REGARD TO INTEREST PERTAINING TO NPAS. AS NOTICE BY THE LD. CIT(A), THIS PROPOSITION STANDS ACCEPTED BY THE DEPARTMENT IN THE EARLIER YEARS. THE ASSESSEE HAS BEEN FOLLOWING THE RBI GUIDELINES IN THIS MATTER. ITS METHOD OF ACCOUNTING IS ENTIRELY I N ACCORDANCE WITH THE RBI GUIDELINES. THE RBI GUIDELINES NEED TO BE M ANDATORILY FOLLOWED BY THE ASSESSEE. MOREOVER, THIS METHOD OF ACCOUNTING, ITA NO.509/ASR/2017 (A.Y.2014-15) ACIT VS. M/S JALANDHAR CE NTRAL CO-OP. BANK LTD. 4 ADOPTED BY THE ASSESSEE, IS IN ACCORDANCE WITH THE ACCOUNTING STANDARDS ISSUED BY THE INSTITUTE OF CHARTERED ACCO UNTANTS OF INDIA. SECTION 45Q OF THE RBI ACT PROVIDES, IN THE NON OBSTANTE CLAUSE WITH WHICH IT BEGINS, THAT THE PROVISIONS OF THE CHAPTER UNDER WHICH SECTION 45Q FALLS, SHALL HAVE EFFECT, N OTWITHSTANDING ANYTHING INCONSISTENT THEREWITH CONTAINED IN ANY OT HER LAW FOR THE TIME BEING INFORCE. 7. IN M/S VASISTH CHAY VYAPAR LTD. (SUPRA), I T HAS BEEN HELD THAT WHEN AN NBFC CLASSIFIES AN ASSET AS A NON-PERF ORMING ASSET IN ACCORDANCE WITH THE DIRECTIONS ISSUED THE RESERV E BANK OF INDIA, IT IS LEGITIMATE TO INFER THAT THE INTEREST INCOME THEREON IS NOT ACCRUED, EVEN THOUGH THE NBFC IS FOLLOWING THE MERC ANTILE SYSTEM OF ACCOUNTING. INTERALIA, M/S SOUTHERN TECHNOLOGIE S LTD. (SUPRA) HAS BEEN DISTINGUISHED IN M/S VASISTH CHAY VYAPAR LTD. (SUPRA). 8. APROPOS THE APPLICABILITY OF SECTION 43D OF THE I.T. ACT, IT IS ON RECORD THAT DURING THE PROCEEDINGS BEFORE THE ID. C IT(A), THE ASSESSEE, BY WAY OF SUBMISSION DATED 17.09.2015, TH E ASSESSEE HAD STATED THAT THE ASSESSEE HAD BEEN CONFIRMED BY THE HEADQUARTER OF THE PUNJAB STATE CO-OPERATIVE BANK, TO BE A SCHEDULED BANK. THIS POSITION HAS NOT BEEN DISPUTED . 9. IN VIEW OF THE ABOVE, WE FIND THAT THE GRIEVANCE OF THE DEPARTMENT IS WITHOUT ANY FORCE. THE ORDER OF THE L D. CIT(A) IS A WELL VERSED REASONED DETAILED ORDER, REQUIRING NO INTERF ERENCE WHATSOEVER AT OUR HANDS. THE SAME IS, ACCORDINGLY, CONFIRMED. 10. AS NOTED AT THE BEGINNING OF THIS ORDER, ALL THE THREE APPEALS INVOLVE THE SAME COMMON ISSUE. THAT BEING SO, OUR A BOVE OBSERVATIONS SHALL APPLY EQUALLY, MUTATIS MUTANDIS, TO THE OTHER TWO APPEALS ALSO. 11. ACCORDINGLY, ALL THE ORDERS OF THE LD. CIT(A) IN THESE THREE APPEALS ARE UPHELD AND THE GROUNDS RAISED BY THE DE PARTMENT ARE REJECTED . 12. IN THE RESULT, ALL THREE APPEALS ARE DISMISSE D. WE ARE OF THE CONSIDERED OPINION THAT THE FACTS AND ISSU ES RAISED IN THE INSTANT APPEAL ARE DIRECTLY SAME AS OF TH E AFORESAID JUDGMENT AND MUTATIS MUTANDIS APPLIES TO THE INSTANT CASE AS WELL, HENCE, WE DO NOT FIND ANY SUBSTANCE IN THE APPEAL OF THE ITA NO.509/ASR/2017 (A.Y.2014-15) ACIT VS. M/S JALANDHAR CE NTRAL CO-OP. BANK LTD. 5 REVENUE DEPARTMENT TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A), AS THE SAME DOES NOT SUFFER FROM ANY ILLEG ALITY, IMPROPRIETY OR INFIRMITY. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE DEPA RTMENT STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.03.2018. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED:08.03.2018 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) M/S JALANDHAR CENTRAL CO-OP. BANK LTD., JALA NDHAR (2) THE ASST. CIT, CIRCLE-3, JALANDHAR (3) THE CIT(A)-2, JALANDHAR (4) THE CIT CONCERNED. (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER