M/s M.P.Rajya Sahakari Bank Mydt., Bhopal V. The Assistant Commissioner of Income Tax 1(1), Bhopal

ITA 547/IND/2010

• Counselvise Citation: 54722714 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-08-2011
• Assessment Year: 1994-1995
• Appeal Filed On: 18-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: VINAY BHAMORE
• Keywords: Revenue expenditure
• Section: 43B; 244A; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 625/IND/2010 A.Y. 2007-08 DCIT-1(1), BHOPAL ... APPELLANT VS MADHYA PRADESH RAJYA SAHKARI BANK MARYADIT BANK, BHOPAL PAN- AAAAM-1625N ... RESPONDENT ITA NOS. 627 AND 547/IND/2010 A.YS. 2007-08 AND 1994-95 MADHYA PRADESH RAJYA SAHKARI BANK MARYADIT BANK, BHOPAL ... APPELLANT VS ACIT-1(1), BHOPAL ... RESPONDENT DEPARTMENT BY : SHRI ARUN DEWAN ASSESSEE BY : SHRI VINAY BHAMORE 2 DATE OF HEARING : 19.10.2011 DATE OF PRONOUNCEMENT : 19.10.2011 O R D E R PER JOGINDER SINGH OUT OF THESE THREE APPEALS, THE ASSESSEE AS WELL A S THE REVENUE ARE IN CROSS APPEALS FOR ASSESSMENT YEAR 20 07-08 AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 20.9.2010 WHEREAS THE ASSESSEE IS IN APPEAL FOR THE ASSESSMENT YEAR 1994-95 AGAINST THE ORDER D ATED 21.4.2010 PASSED BY THE LD. FIRST APPELLATE AUTHORI TY, BHOPAL. 2. THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER O N THE GROUND THAT THE LD. FIRST APPELLATE AUTHORITY ERRED IN DELETING THE ADDITION OF RS.28,40,000/- MADE ON ACCOUNT OF PREM IUM PAID ON GOVERNMENT SECURITIES WHEREAS THE ASSESSEE IS AG GRIEVED IN NOT ALLOWING DEDUCTION OF PROVISIONS FOR CADRE S TAFF SALARY U/S 43B OF THE ACT TO THE EXTENT PAID BEFORE FILING OF RETURN OF INCOME. 3 3. IN THE CROSS APPEAL OF THE REVENUE, THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS IN SUPPORT OF THE ASSES SMENT ORDER WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE DEFEND ED THE IMPUGNED ORDER. WE HAVE CONSIDERED THE RIVAL SUBMI SSIONS AND PERUSED THE MATERIAL AVAILABLE ON FILE. BRIEF FACTS OF THE CASE ARE THAT IT WAS OBSERVED BY THE ASSESSING OFFI CER THAT THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT DEBITED A S UM OF RS.28,40,000/- ON ACCOUNT OF PREMIUM PAID IN RESPE CT OF GOVERNMENT SECURITIES. THE CLAIM OF THE ASSESSEE I S THAT THE SECURITIES WERE PURCHASED AND THE IMPUGNED AMOUNT W AS PAID AS PREMIUM. THE LEARNED ASSESSING OFFICER WAS OF T HE VIEW THAT IT IS NOT REVENUE EXPENDITURE. HOWEVER, THE L EARNED COMMISSIONER OF INCOME TAX (APPEALS), BY FOLLOWING THE ORDER OF THE TRIBUNAL, FOR THE ASSESSMENT YEAR 2005-06 AN D 2006-07 WHEREIN THE DECISION OF THE HON'BLE APEX COURT IN T HE CASE OF NAWASAHAR CENTRAL COOP.BANK LTD. (289 ITR 6) WAS FO LLOWED, CONCLUDED THAT WHERE A COOPERATIVE BANK CARRYING ON BUSINESS OF BANKING IS STATUTORILY REQUIRED TO PLACE PART OF ITS FUNDS IN APPROVED SECURITIES AND THE INCOME ATTRIBUTABLE THE RETO IS PART 4 OF ITS BANKING BUSINESS. THE TRIBUNAL HELD THAT THE TRADING IN SECURITIES IS VERY MUCH PART OF BANKING BUSINESS/BA NKING ACTIVITIES, THEREFORE, THE PREMIUM PAID IN RESPECT OF SECURITIES WOULD ALSO PARTAKE THE CHARACTER OF REVENUE. IN TH E PRESENT APPEAL ALSO SINCE THE PREMIUM PAID IS RELATED TO RE GULAR BUSINESS ACTIVITY OF THE ASSESSEE BANK, THEREFORE, IT HAS TO BE TREATED AS REVENUE EXPENDITURE WHICH IS AN ALLOWABL E EXPENDITURE, THEREFORE, WE FIND NO INFIRMITY IN THE STAND OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS). IT IS AFFIRMED, CONSEQUENTLY, THE APPEAL OF THE REVENUE HAS NO MERI T AND DISMISSED AS SUCH. 4. SO FAR AS THE CROSS APPEAL FILED BY THE ASSESS EE IS CONCERNED, THE ASSESSEE IS AGGRIEVED IN NOT ALLOWIN G DEDUCTION U/S 43B OF THE ACT OF PROVISIONS FOR CADRE STAFF SA LARY TO THE EXTENT PAID BEFORE FILING THE RETURN OF INCOME IS C ONCERNED, WE FIND THAT ANY ACTUAL PAYMENT BEFORE FILING OF RETUR N/BEFORE DUE DATE IS AN ALLOWABLE/DEDUCTIBLE EXPENDITURE U/S 43B (B) OF THE ACT. THE ASSESSEE MADE PROVISION IN RESPECT OF CAD RE STAFF SALARY. THE PART OF THE PROVISION WAS PAID AS SALA RY TO THE 5 EMPLOYEES CONCERNED BEFORE FILING THE RETURN. IT I S ALSO NOT IN DISPUTE THAT THE AMOUNT WAS DEBITED TO PROFIT AND L OSS ACCOUNT, THEREFORE, THE PART OF THE SALARY WHICH WAS PAID TO THE EMPLOYEES BEFORE FILING OF RETURN OF INCOME IS AN A LLOWABLE DEDUCTION. THE RATIO LAID DOWN IN THE CASE OF CIT V. AMCO BATTERIES (2006) 155 TAXMAN 167 (KARN) SUPPORTS OUR VIEW. THE ASSESSEE ALSO GETS SUPPORTS FROM THE RATIO LAID DOWN IN CIT V. BHARAT BAMBOO & TIMBER SUPPLIES; 219 ITR 212 (GAU), CIT V. ASSAM TRIBUNE; 253 ITR 93 (GAU), GENERAL FIN ANCE COMPANY V. ACIT; 257 ITR 338 (HON'BLE SUPREME COURT ) AND KOLHAPUR CANE SUGAR WORKS LIMITED V. UNION OF INDI A; 2 SCC 536. THEREFORE, THIS GROUND OF THE ASSESSEE IS ALL OWED. 5. FINALLY, THE APPEAL OF THE REVENUE IS DIS MISSED AND THAT OF THE ASSESSEE IS ALLOWED. 6. NOW WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 1994-95 WHEREIN THE GROUND RAISED I S THAT THE IMPUGNED ORDER PASSED U/S 154 IS AN APPEALABLE ORDE R, THEREFORE, THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) 6 COMMITTED ERROR IN HOLDING THAT NO APPEAL IS PROVID ED AGAINST THE ORDER AND SECONDLY THE LD. FIRST APPELLATE AUTH ORITY SHOULD HAVE WITHDRAWN THE INTEREST ONLY FOR FIVE MONTHS DE LAY WHICH WAS ATTRIBUTABLE TO THE ASSESSEE. THE LEARNED COUNS EL FOR THE ASSESSEE ADVANCED HIS ARGUMENTS WHICH ARE IDENTICA L TO THE GROUND RAISED. ON THE OTHER HAND, THE LEARNED SR. DR DEFENDED THE IMPUGNED ORDER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON FILE. BRIEF FACT S OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME AL ONG WITH TDS CERTIFICATES AMOUNTING TO RS. 1,59,98,611/-. DUR ING COURSE OF SCRUTINY ASSESSMENT IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE TDS CERTIFICATES AMOUNTING TO RS. 1,01,03, 180/- WERE DEFECTIVE, THEREFORE, THE ASSESSEE WAS ASKED TO GET THE SAME AMENDED. AS PER THE REVENUE, EITHER THE CERTIF ICATES WERE NOT ISSUED IN THE NAME OF THE ASSESSEE OR THES E CERTIFICATES CONTAINED NO NAMES AT ALL, ALSO T HE DATE OF DEPOSIT AND VOUCHER NUMBER, ETC. WERE NOT GIVEN. TH E ASSESSEE SUBMITTED THE CORRECTED CERTIFICATES AGAIN ON 22 ND 7 MARCH, 1998. VIDE ORDER U/S 143(3)/154 DATED 23 RD JULY, 1998 THE ASSESSEE WAS GIVEN CREDITS OF THESE TDS CERTIFI CATES AND REFUND OF RS. 1,11,20,816/- WAS ISSUED TO THE ASSES SEE ALONG WITH INTEREST. 8. SUBSEQUENTLY IT WAS FOUND THAT THE ASSESSEE WAS ALLOWED REFUND IN EXCESS IN VIEW OF THE PROVISIONS OF SUB-S ECTION (2) OF SECTION 244A OF THE ACT. AS THE INTEREST U/S 244A OF THE ACT WAS ALLOWED EVEN FOR THE PERIOD OF DELAY FOR WHICH THE ASSESSEE HAD NOT PRODUCED CORRECT TDS CERTIFICATE I .E. FROM NOVEMBER, 1994 TILL MARCH, 1998 (FROM THE DATE OF F ILING OF RETURN AND TILL THE DATE OF SUBMISSION OF CORRECTED TDS CERTIFICATES BY THE ASSESSEE). THEREAFTER NOTICE U/ S 154 OF THE ACT DATED 10.10.2000 WAS ISSUED AND SERVED UPON THE ASSESSEE ON 12.10.2000. ANOTHER NOTICES DATED 28.1 .2002 U/S 154 AND DATED 5.2.2002 WERE SERVED ON THE ASSESSEE. IN RESPONSE TO THESE NOTICES, THE ASSESSEE FILED WRITT EN REPLY BY SUBMITTING THAT THE DELAY IN FURNISHING TDS CERTIFI CATES WAS NOT DUE TO FAULT OF THE ASSESSEE AND, IF ANY, IT WAS FA ULT OF THE PERSON RESPONSIBLE FOR DEDUCTING THE TAX. THEN ASS ESSING 8 OFFICER WAS OF THE VIEW THAT SINCE CLAIM FOR TDS WA S MADE BY THE ASSESSEE, THEREFORE, IT WAS THE DUTY OF THE ASS ESSEE THAT CORRECT CERTIFICATES, COMPLETE IN ALL RESPECTS, SHO ULD HAVE BEEN FURNISHED ALONG WITH THE RETURN. THEREFORE, THE PR OVISIONS OF SECTION 244A(2) WERE ORDERED TO BE APPLICABLE AND T HE EXCESS REFUND IN THE FORM OF INTEREST, GRANTED TO THE ASSE SSEE, AMOUNTING TO RS.98,81,715/- WAS ORDERED TO BE WITHD RAWN WHEREAS THE STAND OF THE ASSESSEE IS THAT THE INTER EST ONLY FOR FIVE MONTHS FOR WHICH THE ASSESSEE WAS RESPONSIBLE SHOULD HAVE BEEN DISALLOWED. ULTIMATELY IT WAS DECIDED THA T AS AGAINST THE REFUND OF RS.1,41,30,846/- MADE ON 31.7.1998 TH E NET REFUNDABLE AMOUNT WORKS OUT TO RS. 1,09,68,704/- RE SULTING INTO EXCESS REFUND OF RS.31,62,142/-. THIS STAND OF THE ASSESSING OFFICER WAS AFFIRMED BY LEARNED COMMISSIONER OF INC OME TAX (APPEALS). 9. UNDER THE AFOREMENTIONED FACTS, NOW THE QUESTION ARISES WHETHER THE ORDER DATED 8.2.2002 PASSED U/S 154 OF THE ACT IS AN APPEALABLE ORDER ? AS POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE TRIBUNAL HAS ALREADY DELIBERATED UPON THIS 9 ISSUE VIDE ORDER DATED 8.2.2008 WHEREIN IT IS CLEAR THAT THE ASSESSING OFFICER WAS DIRECTED TO PASS THE ORDER U/ S 154 OF THE ACT BY TAKING RECOURSE TO THE PROVISIONS CONTAINED U/S 244A(2) OF THE ACT. SO FAR AS RECOURSE U/S 244A(2) OF THE ACT IS CONCERNED, A DIRECTION WAS SOUGHT BY THE ASSESSING OFFICER FROM THE LEARNED CCIT OR THE CIT AS THE CASE MAY BE . HOWEVER, THE FACT REMAINS THAT THE ORDER WAS PASSED U/S 154 OF THE ACT, THEREFORE, IT IS AN APPEALABLE ORDER, CONS EQUENTLY, THIS GROUND OF THE ASSESSEE IS ALLOWED. 10. SO FAR AS THE NEXT GROUND REGARDING INTEREST FO R FIVE MONTHS IS CONCERNED, IT WAS CONTENDED BY THE LEARNE D COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE SHOULD BE DENIED ONLY THAT PORTION OF THE INTEREST FOR WHICH DELAY WAS ATTRIBU TABLE TO THE ASSESSEE I.E. FIVE MONTHS ONLY. ON THE OTHER HAND, THE LEARNED SR. DR CONTENDED THAT FROM THE BEGINNING ITSELF IT WAS THE DELAY ON THE PART OF THE ASSESSEE. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON FILE AND FIND THAT DEFINI TELY THERE WAS 10 SOME DEFECT IN THE TDS CERTIFICATES WHICH WERE ISSU ED BY THE PERSON RESPONSIBLE AND THE ASSESSEE WAS DIRECTED TO SUBMIT THE CORRECTED TDS CERTIFICATE ON 2.3.1998. VIDE ORD ER U/S 143(3)/154 DATED 23 RD JULY, 1998 ASSESSEE WAS GIVEN CREDIT FOR THESE CORRECTED TDS CERTIFICATES AND REFUND ALONG W ITH INTEREST WAS MADE TO THE ASSESSEE. NOW THE QUESTION ARISES FOR WHICH PERIOD THE INTEREST SHOULD BE DISALLOWED. THE OBVI OUS REPLY IS THAT THE INTEREST CAN BE DISALLOWED ONLY FOR THE PE RIOD OF WHICH THE DELAY WAS CAUSED ON BEHEST OF THE ASSESSEE. WE FIND THAT THE DELAY IS ATTRIBUTABLE TO THE ASSESSEE, IF ANY, IS ONLY FOR FIVE MONTHS, THEREFORE, THE LEARNED ASSESSING OFFICER IS DIRECTED TO DISALLOW THE INTEREST PORTION OF ONLY 5 MONTHS WHIC H CAUSED DUE TO THE DELAY ON BEHALF OF THE ASSESSEE. THEREFORE, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES ONLY. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLO WED FOR STATISTICAL PURPOSES 11 ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE O F LEARNED REPRESENTATIVES FROM BOTH THE SIDES AT THE CONCLUSION OF THE HEARING. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19.10.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-