Assistant Commissioner of Income-tax, V. Dr. Annasaheb Chougule Urban Co-op. Bank Ltd.,

ITA 551/PUN/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6935 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 29-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL
• Section: 43B; 143(3); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURV EDI, AM . / ITA NO.551/PUN/2016 / ASSESSMENT YEAR : 2010-11 THE ASST. COMMISSIONER OF INCOME TAX, ICHALKARANJI CIRCLE, ICHALKARANJI, DIST. KOLHAPUR . / APPELLANT VS. DR. ANNASAHEB CHOUGULE URBAN CO-OPERATIVE BANK LTD., A/P. PETH, VADGAON, DIST. KOLHAPUR 416 112 . / RESPONDENT PAN: AAAAT3980B / APPELLANT BY : DR. VIVEK AGGARWAL / RESPONDENT BY : NONE / DATE OF HEARING : 18.12.2017 / DATE OF PRONOUNCEMENT: 20.12.2017 / ORDER PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-2, KOLHAPUR, DATED 20.01.2016 RELATING TO ASSESSMENT Y EAR 2010-11 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT 1 961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEALS) WAS CORRECT IN ALLOWING STAFF GRATUITY PROVISION OF RS.1,45,021/-. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEALS) WAS CORRECT IN ALLOWING OVERDUE INTERE ST OF RS.5,84,67,206/-. 2 ITA NO.551/PUN/2016 DR. ANNASAHEB CHOUGULE URBAN CO-OPERATIVE BANK LTD., 3. THE APPELLANT PRAYS THAT THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS), KOLHAPUR BE VACATED AND OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, RAISE, ANY OF THE ABOVE, OR ANY OTHER GROUNDS RAISED. 3. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHA LF OF THE ASSESSEE. HOWEVER, WE FIND THAT THE MAJOR ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE JUDGMENT OF H ONBLE BOMBAY HIGH COURT IN THE CASE OF ACIT, CIRCLE-1 VS. DEOGIRI NAGARI SAHAK ARI BANK LTD. IN ITA NO.817 & 1114/PN/2011. ACCORDINGLY, WE PROCEED TO DECIDE TH E PRESENT APPEAL AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 4. THE FIRST ISSUE RAISED IN THE PRESENT APPEAL OF THE REVENUE IS AGAINST THE DELETION OF ADDITION MADE ON ACCOUNT OF PROVISION O F STAFF GRATUITY OF RS.16,45,021/-. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING NIL INCOME. THE ASSESSEE WAS A CO OPERATIVE BANKING INSTITUTE. THE ASSESSING OFFICER NOTED THAT PROVIS ION TO THE TUNE OF RS.8,54,979/- WAS MADE FOR PAYMENT OF GRATUITY WHEREAS NO DEBIT W AS FOUND TO THE INCOME AND EXPENDITURE ACCOUNT FOR THE SAME. THE ASSESSEE DIR ECTLY IN THE COMPUTATION OF INCOME HAD CLAIMED DEDUCTION FOR RS.25 LAKHS ON THI S EXPENDITURE. THE ASSESSING OFFICER OBSERVED AS PER SECTION 40A(7) OF THE ACT, IT WAS CONDITION PRECEDENT TO MAKE THE PROVISION OF ANY GRATUITY PAY MENT FOR CLAIMING THE DEDUCTION FOR THIS EXPENDITURE. THE ASSESSEE WAS S HOW CAUSED IN THIS REGARD. THE ASSESSING OFFICER REFERRING TO THE PROVISIONS O F THE ACT WAS OF THE VIEW THAT THE EXPENDITURE FOR GRATUITY HAS TO BE ALLOWED TO T HE EXTENT OF PROVISION REFLECTED IN BALANCE SHEET WHICH WAS TO THE TUNE OF RS.8,54,9 79/- AND THE BALANCE AMOUNT TO THE TUNE OF RS.16,45,021/- WAS DISALLOWED AND AD DED BACK TO THE TOTAL INCOME. 3 ITA NO.551/PUN/2016 DR. ANNASAHEB CHOUGULE URBAN CO-OPERATIVE BANK LTD., 6. BEFORE THE CIT(A) THE ASSESSEE CLAIMED THAT IN T HE COMPUTATION OF INCOME IT HAD CLAIMED THE DEDUCTION UNDER SECTION 43B OF T HE ACT TOWARDS ACTUAL PAYMENT MADE BEFORE THE DUE DATE OF FILING THE RETU RN OF INCOME OF RS.25 LAKHS. HE CLAIMED THAT THE PROVISIONS OF SECTION 43B OF TH E ACT HAD AN OVERRIDING EFFECT OVER ANY OTHER PROVISIONS OF THE ACT. HE FURTHER P LACED RELIANCE ON THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF TH E SINDHUDURG DIST. CENTRAL CO-OP. BANK VS. ITO IN ITA NO.716/PN/2011 FOR ASSES SMENT YEAR 2007-08, ORDER DATED 02-03-2012. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE INTURN RELYING ON THE SAID RATIO, AGAINST WHICH THE REVENUE IS IN APPEAL. 7. FROM THE PERUSAL OF RECORD, WE FIND THAT THE ASS ESSEE HAD MADE SIMILAR CLAIM ON ACCOUNT OF ACTUAL PAYMENT OF GRATUITY AS P ER THE PROVISIONS OF SECTION 43B OF THE ACT BEFORE THE ASSESSING OFFICER AND THE CIT(A). IN THE SECOND ASPECT IT HAD PLACED RELIANCE ON THE DECISION OF TH E PUNE BENCH OF THE TRIBUNAL IN THE CASE OF THE SINDHUDURG DIST. CENTRAL CO-OP. BAN K VS. ITO (SUPRA). THE AO HAD ALLOWED ONLY TO THE EXTENT OF PROVISION MADE IN THE BALANCE SHEET. HOWEVER, THE ASSESSEE CLAIMS THAT IT HAS DEPOSITED THE SAID SUM OF RS.25 LAKHS BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME. FURTHER, THE CIT(A) HAD ALSO ALLOWED THE CLAIM SINCE THE ASSESSEE HAD DEPOSITED THE SAID AMO UNT BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT. ONCE THE PROVISION OF ANY AMOUNT HAS BEEN PAID AS PER THE PROVISIONS OF S ECTION 43B OF THE ACT, BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME, THEN T HE SAID AMOUNT IS ALLOWABLE TO THE ASSESSEE OVER ANY OTHER PROVISIONS OF THE ACT. ACCORDINGLY, UPHOLDING THE ORDER OF CIT(A), WE DISMISS THE GROUND NO.1 RAISED BY THE REVENUE. 8. NOW COMING TO THE SECOND ISSUE RAISED BY THE REV ENUE, I.E. AGAINST THE ORDER OF CIT(A) IN ALLOWING THE OVERDUE INTEREST OF RS.5,84,67,206/-. THE ISSUE IS WITH REGARD TO THE INTEREST ON NPAS WHEREIN THE ASS ESSEE HAD RECOGNIZED THE 4 ITA NO.551/PUN/2016 DR. ANNASAHEB CHOUGULE URBAN CO-OPERATIVE BANK LTD., INTEREST ON LOAN ACCOUNT IN ACCORDANCE WITH THE ACC EPTED ACCOUNTING PRINCIPLES BUT SINCE THE AMOUNT WAS NOT RECEIVED PROVISION FOR OVERDUE INTEREST WAS MADE IN THE BOOKS OF ACCOUNT, BUT NOT OFFERED TO TAX. T HE ASSESSING OFFICER WAS OF THE VIEW THAT WHERE THE INCOME HAD ACCRUED TO THE ASSES SEE THEN THE SAME HAD TO BE OFFERED FOR TAXATION. ACCORDINGLY, THE DEBIT AM OUNTING TO RS.5.84 CRORES ON ACCOUNT OF PROVISION FOR OVERDUE INTEREST WAS DISAL LOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 9. THE CIT(A) ON THE OTHER HAND PLACED RELIANCE ON DIFFERENT DECISIONS OF THE TRIBUNAL AND HELD AS UNDER : 15. I HAVE CONSIDERED THE SUBMISSION OF THE APPEL L A NT AND HA V E ALSO PE R USED THE DECISIONS RELIED UPON BY THE APPELLANT. I FIND THAT THE ABO V E ISSUE WAS DECIDED IN APPELLANT'S FAVOUR BY THE JURISDICTION A L ITAT IN THE CASE OF ACIT , C I RCLE 3 , NANDED V/S OSMANABAD JANT A S AHAK A R I BANK LTD . IN ITA NO . 795/PN/2011 WHEREIN IT W AS HELD AS UND E R : 7. IN THE CASE BEFORE US , ADMITTEDLY, ASSESSEE HAS DIR E CTL Y T AKE N T HE I N TER E ST TO TH E B A LAN C E SH E E T A ND IT I S N OT RO U T E D T H ROUG H TH E PRO F I T & LOSS A CC OUN T. MOREO V E R, TH E I SS UE OF T H E T AXA BIL IT Y OF T HE INTER E ST ON TH E STICK Y LOSSES/AD V AN CES, I S C O VERE D IN FA V OUR OF THE ASSESSEE B Y TH E D E CISION O F TH E C OORD I N A T E BEN C H ES IN TH E CASE OF TH E DURGA COOPERATI V E U R B A N B A NK L TD ., VI J A Y A W ADA (SUPRA) A ND KARNA V ATI COOPER A TI V E B A NK L TD . (S UP R A ) . WE FI ND NO REASON TO IN TE RFER E W ITH TH E REASON E D ORD E R O F TH E LD . CIT(A) AND ACCORDINGL Y THE S A ME IS CONFIRMED. IN TH E R E SUL T , TH E REVENUE ' S GROUND IS DISMISSED. I A LSO F I ND THAT THE ABO V E DECISION OF THE JURISDICTION A L ITAT H A S B EE N FOLLO W ED IN THE C ASES MENTIONED BELOW : I) ACIT , CIRCLE-3 , NANDED V/S BHAGYALAXMI M A HILA S A H A K A R BANK LTD. ITA NO . 793/PN/2011 II) ACIT , CIRCLE-3 V/S SIDHESHWAR SAHAKAR I B A NK LTD . ITA NO . 794/PN/2011 III) ACIT(CENTRAL) V/ S LATUR URBAN CO-OPERATI VE BANK LTD . ITA NO . 792/PN/2011 IV) ASST . CIT , CIRCLE-L V/S DEOGIRI NAGARI S A H A KARI BANK LTD. ITA NO.817 & 1114/PN/2011 5 ITA NO.551/PUN/2016 DR. ANNASAHEB CHOUGULE URBAN CO-OPERATIVE BANK LTD., 16 . RESPECTFULL Y FOLLOWING THE DECISION GIV E N B Y TH E JURISDI C TION A L I T AT ON ID E NTICAL FACTS AND CIRCUMSTANC E S IN T H E CAS E O F A C IT , CI R C L E 3 , NAN D E D V/ S OSMANABAD JANTA SAHAKARI BANK LTD. (SUPRA), THE A DDIT I ON MADE ON ACCOUNT OF OVERDUE INTEREST INCOME OF RS,5 , 84,67 , 206/- ON AD VA NCES CL A IMED TO BE NPA IN THE INSTANT CASE IS DELETED . 10. THE ASSESSEE HAD RELIED ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ACIT, CIRCLE-1 VS. DEOGIR I NAGARI SAHAKARI BANK LTD. IN ITA NO.817 & 1114/PN/2011. 11. AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATI VE FOR THE REVENUE, WE FIND THAT THE ISSUE OF INTEREST DUE ON NPAS IS SQUA RELY COVERED BY THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE O F ACIT, CIRCLE-1 VS. DEOGIRI NAGARI SAHAKARI BANK LTD. (SUPRA) WHICH HAS BEEN FOLLOWED AND APPLIED BY THE PUNE BENCH OF THE TRIBUNAL IN DIFFERENT CASE S. FOLLOWING THE SAME PRINCIPLE, WE HOLD THAT THE INTEREST DUE ON NPAS IS NOT TO BE ASSESSED IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THE ORDER OF C IT(A) IN THIS REGARD IS UPHELD AND THE GROUND OF APPEAL NO.2 RAISED BY THE REVENUE IS THUS DISMISSED. 12. THE GROUNDS OF APPEAL NO.3 AND 4 RAISED BY THE REVENUE ARE GENERAL IN NATURE AND THE SAME ARE DISMISSED. 13. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 20 TH DAY OF DECEMBER, 2017. SD/- SD/- (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 20 TH DECEMBER, 2017 . S S A A T T I I S S H H 6 ITA NO.551/PUN/2016 DR. ANNASAHEB CHOUGULE URBAN CO-OPERATIVE BANK LTD., / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2, KOLHAPUR ; 4. THE C IT - 2, KOLHAPUR 5. , , / DR B, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE