Deputy Commissioner of Income Tax, Trivandrum V. M/s Kerala State Co-operative Agricultural and Rural Development Bank Ltd., Trivandrum

ITA 51/COCH/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7812 (ITAT-COCHIN)
• Duration Of Justice: 3 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-04-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 05-02-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV
• Keywords: Business income

Judgement Text

1 ITA NO. 51/COCH/2009 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.TA NO. 51/COCH/2009 (ASSESSMENT YEAR 2004-05) DY.CIT, CIR.1(2) VS M/S KERALA STATE CO-OPERATI VE TRIVANDRUM AGRICULTURAL & RURAL DEVELOPMENT BANK LTD, STATUE, TRIVANDRUM PAN : AAAAK4391F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ABHIMANYU SINGH YADAV RESPONDENT BY : SHRI ANIL D NAIR DATE OF HEARING : 24-04-2012 DATE OF PRONOUNCEMENT : -05-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDRUM DATED 28-10-2008 AND PE RTAINS TO ASSESSMENT YEAR 2004- 05. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DEDUC TION U/S 80P(2)(A)(I) IN RESPECT OF INTEREST ON STAFF LOAN AND INTEREST ON LOAN TO PCAR DB. 3. SHRI ABHIMANYU SINGH YADAV, THE LD.DR SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION IN RESPECT OF INTEREST ON LOAN FROM EMPLOYEES AND INTEREST FROM STAFF OF PCARDB. HOWEV ER, THE COMMISSIONER OF INCOME- TAX (A) ALLOWED THE CLAIM OF THE ASSESSEE AFTER REF ERRING TO THE DECISION OF HIS 2 ITA NO. 51/COCH/2009 PREDECESSOR IN OFFICE IN THE ASSESSEES OWN CASE FO R THE ASSESSMENT YEAR 2003-04. THE LEARNED REPRESENTATIVE ALSO POINTED OUT THAT THIS T RIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2001-02 & 2003-04 IN ITA NOS.2 80 & 281/COCH/2006 DATED 25-01- 2007 ALLOWED SIMILAR CLAIM OF THE ASSESSEE. THE LD .REPRESENTATIVE SUBMITTED THAT NO DOUBT, THIS TRIBUNAL FOUND THAT A SIMILAR INTEREST WAS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I). REFERRING TO THE JUDGMENT OF THE RAJ ASTHAN HIGH COURT IN COMMISSIONER OF INCOME-TAX VS SIROHI S.B.V. BANK LTD (2009) 221 CTR (RAJ) 395 (RAJ), THE LD.REPRESENTATIVE SUBMITTED THAT ON IDENTICAL SET OF FACTS A SIMILAR INTEREST RECEIVED FROM EMPLOYEES WAS HELD TO BE NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A) (I). THE RAJASTHAN HIGH COURT, AFTER CONSIDERING THE PROVISIONS OF BANKING REGULATIONS A CT FOUND THAT THE INTEREST EARNED ON SUCH ADVANCES MADE TO EMPLOYEES OF THE BANK ARE NOT BUSINESS INCOME, THEREFORE, NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. THIS JUDGMENT OF THE RAJASTHAN HIGH COURT WAS NOT BROUGHT TO THE NOTICE OF THIS TRIBUNA L WHEN THE ASSESSEES CASE WAS DECIDED ON 25-01-2007. THEREFORE, ACCORDING TO THE LD.DR, THE DECISION OF THIS TRIBUNAL FOR ASSESSMENT YEARS 2001-02 AND 2003-04 AR NOT APP LICABLE TO THE FACTS OF THIS CASE. 4. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2001-02 AND 2003- 04 FOUND THAT SIMILAR INTEREST IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I). THEREFORE , JUDICIAL DISCIPLINE WARRANTS TO FOLLOW THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUN AL. ACCORDING TO THE LD.COUNSEL, ON SIMILAR SET OF FACTS, THIS TRIBUNAL CANNOT TAKE A D IFFERENT VIEW. ON A QUERY FROM THE BENCH, WHETHER THE EARLIER BENCH OF THIS TRIBUNAL C ONSIDERED THE JUDGMENT OF THE RAJASTHAN HIGH COURT IN SIROHI S.B.V. BANK LTD (SUP RA) THE LD.COUNSEL FOR THE ASSESSEE VERY FAIRLY CONCEDED THAT THIS JUDGMENT OF THE RAJA STHAN HIGH COURT WAS NOT CONSIDERED BY EARLIER BENCH OF THIS TRIBUNAL. 5. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SID E AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. NO DOUBT, A CO-ORDIN ATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2001-02 & 2003-04 BY AN ORDER DATED 25-01- 3 ITA NO. 51/COCH/2009 2007 FOUND THAT A SIMILAR INTEREST EARNED BY THE AS SESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I). THE DEPARTMENTAL REPRESENTATIVE HAS NOW PRODUCED A COPY OF THE JUDGMENT OF THE RAJASTHAN HIGH COURT IN SIRHI S.V.B . BANK LTD (SUPRA). THE RAJASTHAN HIGH COURT, AFTER CONSIDERING THE PROVISIONS OF THE BANKING REGULATIONS ACT FOUND THAT SUCH INTEREST WAS NOT DERIVED FROM BANKING ACTIVITY , THEREFORE, NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. NOW THERE IS A DECISI ON OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2001-02 AND 2003-04 A ND THERE IS A JUDGMENT OF THE RAJASTHAN HIGH COURT ON IDENTICAL SET OF FACTS. UN DER NORMAL CIRCUMSTANCES THIS TRIBUNAL WOULD FOLLOW THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL. IN FACT THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL WOULD BE B INDING ON THE SUBSEQUENT BENCHES. BUT, NOW A CONSTITUTIONAL COURT, VIZ. THE HIGH COUR T HAS INTERPRETED THE PROVISIONS OF SECTION 80P(2)(A)(I) OF THE ACT AND THE BANKING RE GULATIONS ACT AND FOUND THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A )(I) OF THE ACT. THE QUESTION ARISES FOR CONSIDERATION IS WHEN THERE IS A DECISION OF THE CO -ORDINATE BENCH OF THIS TRIBUNAL AND THE JUDGMENT OF THE RAJASTHAN HIGH COURT IS ALSO AV AILABLE ON IDENTICAL CIRCUMSTANCES, WHICH DECISION NEEDS TO BE FOLLOWED BY THIS TRIBUNA L? THE INCOME-TAX ACT IS AN ALL INDIA ENACTMENT APPLICABLE TO THE ENTIRE TERRITORY OF IND IA. WHEN ONE OF THE HIGH COURTS IN OUR COUNTRY ESTABLISHED UNDER THE CONSTITUTION HAS INTERPRETED THE PROVISIONS OF SECTION 80P(2)(A)(I) AND THE BANKING REGULATIONS ACT AND FO UND THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I), THIS TRIBUNAL IS OF THE OPINION THAT FOR THE SAKE OF CONSISTENCY, THE JUDGMENT OF THE HIGH COURT NEEDS T O BE FOLLOWED IN PREFERENCE TO THE DECISION OF THIS TRIBUNAL. THIS TRIBUNAL IS CONSCI OUS THAT THE JUDGMENT OF THE RAJASTHAN HIGH COURT IS NOT BINDING ON THIS BENCH. WHAT IS B INDING IS THE DECISION OF THE JURISDICTIONAL HIGH COURT. IT IS ALSO A FACT THAT THE JUDGMENT OF THE OTHER HIGH COURTS WOULD HAVE PERSUASIVE VALUE ON THIS BENCH OF THE TR IBUNAL. EVEN THOUGH THE JUDGMENT OF THE RAJASTHAN HIGH COURT IS NOT STRICTLY BINDING ON THIS TRIBUNAL, THIS TRIBUNAL IS OF THE OPINION THAT TILL A JUDGMENT IS RENDERED BY THE JUR ISDICTIONAL HIGH COURT, VIZ. KERALA HIGH COURT OR THE SUPREME COURT, THE JUDGMENT OF THE RAJ ASTHAN HIGH COURT NEEDS TO BE FOLLOWED IN PREFERENCE TO THE DECISION OF THIS TRIB UNAL. IN OUR OPINION, THIS WOULD 4 ITA NO. 51/COCH/2009 PROMOTE THE CAUSE OF JUSTICE AND CONSISTENCY. THE EARLIER BENCH OF THIS TRIBUNAL WHICH DECIDED THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2001-02 AND 2003-04 HAD NO OCCASION TO CONSIDER THE JUDGMENT OF THE RAJASTHAN HIGH COURT IN SIROHI S.B.V. BANK LTD (SUPRA). ADMITTEDLY, THIS JUDGMENT OF THE RAJASTHA N HIGH COURT WAS PRONOUNCED ONLY ON 24-09-2008. THEREFORE, THE EARLIER BENCH HAD NO OC CASION TO CONSIDER THE SAME. IN VIEW OF THE JUDGMENT OF THE RAJASTHAN HIGH COURT, THIS T RIBUNAL IS OF THE OPINION THAT THE DECISION OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 2 001-02 & 2003-04 MAY NOT BE APPLICABLE TO THE FACTS OF THE CASE. THEREFORE, BY FOLLOWING THE JUDGMENT OF THE RAJASTHAN HIGH COURT IN SIROHI S.B.V. BANK LTD (SUP RA) AND FOR THE REASONS STATED THEREIN, THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A) IS S ET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09 TH MAY, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 09 TH MAY, 2012 PK/- COPY TO: 1. DY.CIT, CIR.1(2), RANGE-1, TRIVANDRUM 2. M/S KERALA STATE CO-OPERATIVFE AGRICULTURAL & RURAL DEVELOPMENT BANK LTD, STATUE, TRIVANDRUM 3. THE COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDRUM 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH