The Urban Co-operative Bank Ltd, Cuttack V. ACIT, Cuttack

ITA 581/CTK/2013

• Counselvise Citation: 58122114 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 30-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RABIN CHOUDHURI
• Assessee Lawyers: ANUP KUMAR PANDA
• Keywords: Principle of natural justice; Bad and doubtful debts; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 581/CTK/2013 : (A.Y : 2007 - 08) THE URBAN CO - OPERATIVE BANK LTD., TINIKONIA BAGICHA , CUTTACK (APPELLANT) PAN : AAAAT0860E VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2(1), CUTTACK (RESPONDENT) ASSESSEE BY : ANUP KUMAR PANDA REVENUE BY : RABIN CHOUDHURI, DR DATE OF HEARING : 04/02/2015 DATE OF PRONOUNCEMENT : 10 /03/2015 O R D E R PER P.K. BANSAL : 1. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), CUTTACK DT. 24.9.2013 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL : 1) THAT THE COMMISSIONER OF INCOME TAX (APPEALS), WHILE ALLOWING THE DEDUCTION UNDER SECTION - 36( 1 )(VII)(A) OF THE INCOME TAX ACT, HAS NOT FOLLOWED THE PRINCIPLE AS PROVIDED UNDER THE INCOME TAX ACT AND AS SUCH THE CONCLUSION MADE THEREIN IS IN VIOLATION OF STATUTE. 2) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), HAS FAILE D TO FOLLOW THE PRINCIPLE OF LAW PROVIDED UNDER THE ACT WHILE COMPUTING THE PERCENTAGE OF DEDUCTION FROM THE TOTAL INCOME AND AS SUCH THE COMPUTATION MADE THEREIN IS WHIMSICAL AND NOT TENABLE IN LAW. 3) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ), SHOULD NOT HAVE PASSED AN ORDER WITHOUT CONSIDERING OF THE SUBMISSION MADE ORALLY AS WELL AS FILING OF WRITTEN NOTES BY THE APPELLANT AND AS SUCH THE ORDER PASSED IS ARBITRARY, BAD IN LAW AND IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. 4) THAT THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) SHOULD NOT HAVE DISALLOWED 2 ITA NO. 581/CTK/2013 (A.Y 2007 - 08) THE CLAIM OF DEDUCTION OF U N - RECONCILED AMOUNT WITHOUT TAKING INTO CONSIDERATION OF ALLOWANCE ALREADY MADE FOR THE OTHER ASSESSMENT YEAR ON THE SELF SAME GROUND. 5) THAT AS SUCH THE ORD ER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL), IS ARBITRARY, EXCESSIVE AND BAD IN LAW, WHICH SHOULD BE QUASHED IN LIMINE. 2. GROUND NOS. 1 AND 2 DEAL WITH THE CLAIM OF DEDUCTION U/S 36(1)(VIIA). THE BRIEF FACTS RELATING TO THESE GROUNDS A RE THAT THE AO VIDE ORDER DT. 31.12.2009 MADE ADDITION IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS AMOUNTING TO RS. 1,83,42,604/ - AND UNRECONCILED EXPENDITURE OF RS. 4,33,917/ - WHICH WERE CONFIRMED BY CIT(A). THE ASSESSEE WENT IN APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ITS ORDER DT. 28.4.2011 IN ITA NO. 444/CTK/2010 RESTORED THE MATTER TO THE FILE OF THE AO. 3. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONGWITH THE ORDER OF THE TAX AUTHORITIES BELOW. THE PROVISIONS OF SEC. 36(1)(VIIA) READS AS UNDER : A SCHEDULED BANK NOT BEING A BANK INCORPORATED BY OR UNDER THE LAWS OF A COUNTRY OUTSIDE INDIA OR A NON - SCHEDULED BANK OR A CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, AN AMOUNT NOT EXCEEDING SEVEN AND ONE - HALF PER CENT OF THE TOTAL INCOME COMPUTED BEFORE MAKING ANY DEDUCTION UNDER THIS CLAUSE AND CHAPTER VIA AND AN AMOUNT NOT EXCEEDING TEN PER CENT OF THE AGGREGATE AVERAGE ADVAN CES MADE BY THE RURAL BRANCHES OF SUCH BANK COMPUTED IN THE PRESCRIBED MANNER . FROM THE PERUSAL OF THE AFORESAID PROVISION, IT IS APPARENT THAT THE ASSESSEE BEING A CO - OPERATIVE BANK IS ENTITLED FOR DEDUCTION U/S 36(1)(VIIA ) NOT EXCEEDING 7 % OF THE TOTAL INCOME COMPUTED BEFORE MAKING ANY DEDUCTION UNDER THIS CLAUSE AND CHAPTER VIA AND ALSO 10% OF THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES OF SUCH BANK COMPUTED IN THE PRESCRIBED MANNER. IT IS NOT DISPUTED T HAT THE ASSESSEE HAS SHOWN NET PROFIT AT RS. 41,86,933/ - AFTER CLAIMING PROVISION FOR BAD AND DOUBTFUL DEBTS AMOUNTING TO RS. 3,20,87,819/ - . THE 3 ITA NO. 581/CTK/2013 (A.Y 2007 - 08) ASSESSEE HAS NOT CLAIMED ANY DEDUCTION UNDER CHAPTER VIA. THEREFORE, IN VIEW OF THE AFORESAID PROVISION, THE TOTAL INCOME OF THE ASSESSEE BEFORE MAKING ANY DEDUCTION UNDER THIS CLAUSE AND CHAPTER VIA WILL BE RS. 3,20,87,819/ - + RS.41,86,933/ - I.E. RS. 3,62,74,752/ - . CIT(A) HAS ALLOWED THE DEDUCTION TO THE ASSESSEE U/S 36(1)(VIIA) @ 7.5 % ON THIS INCOME OF RS. 3, 62,74,752/ - . THE DEDUCTION SO COMPUTED @ 7.5 % COMES TO RS. 27,20,606/ - . THE LD. AR EVEN THOUGH VEHEMENTLY CONTENDED BUT COULD NOT CONVINCE US ABOUT THE MISTAKE BEING COMMITTED BY CIT(A) ON THIS COMPUTATION. THE PROVISIONS OF SEC. 36(1)(VIIA) ARE APPARE NTLY CLEARLY AND WE DO NOT FIND ANY MISTAKE BEING COMMITTED BY THE CIT(A) WHILE DIRECTING THE AO TO DISALLOW THE BALANCE OF THE PROVISION MADE FOR BAD AND DOUBTFUL DEBTS DEBITED TO THE PROFIT & LOSS ACCOUNT. WE, THEREFORE, DO NOT FIND ANY ILLEGALITY OR IN FIRMITY IN THE ORDER OF CIT(A) AND WE CONFIRM THE SAME. THUS, GROUND NOS. 1 AND 2 STAND DISMISSED. 4. GROUND NO. 3 RELATES TO NON - CONSIDERATION OF THE SUBMISSION BY THE CIT(A). THE LD. AR BEFORE US COULD NOT PRODUCE ANY EVIDENCE WHICH MAY PROVE THAT CIT (A) HAS NOT CONSIDERED THE SUBMISSION OF THE LD. AR. THE CIT(A) HAS GIVEN HEARING TO THE ASSESSEE AND ASSESSEE HAS RAISED THE CONTENTIONS WHICH ARE RE - PRODUCED AT PG. 3 OF THE CIT(A)S ORDER. WE, THEREFORE, DO NOT FIND THAT THERE IS ANY VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. THUS, THIS GROUND STANDS DISMISSED. 5. GROUND NO. 4 RELATES TO THE SUSTENANCE OF ADDITION ON ACCOUNT OF UNRECONCILED AMOUNT. AFTER HEARING THE RIVAL SUBMISSIONS WE NOTED THAT THE AMOUNT OF RS. 4,33,917/ - REPRESENTS UNRECON CILED BALANCE CLAIMED BY THE ASSESSEE AS EXPENDITURE. WHENEVER AN ASSESSEE CLAIMS DEDUCTION IN RESPECT OF EXPENDITURE, THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE ASSESSEE HAS INCURRED THE EXPENSES FOR THE PURPOSE OF THE BUSINESS. THIS IS NOT A CAPITAL EXPENDITURE OR A PERSONAL EXPENDITURE. MERELY THE AMOUNT HAS NOT BEEN RECONCILED, IT DOES NOT 4 ITA NO. 581/CTK/2013 (A.Y 2007 - 08) BECOME AN EXPENDITURE. THE GENUINENESS OF THE EXPENDITURE CAN ALWAYS BE INQUIRED INTO BY THE AO. THE LD. AR EVEN THOUGH VEHEMENTLY CONTENDED BUT DID NOT EXPLA IN THE NATURE OF THE EXPENDITURE WHICH REMAINED UNRECONCILED. IT IS NOT THE CLAIM OF THE LD. AR THAT THIS AMOUNT BE ALLOWED AS DEDUCTION U/S 29. WE, THEREFORE, DISMISS THIS GROUND. 6. GROUND NOS. 5 AND 6 ARE GENERAL IN NATURE AND DO NOT REQUIRE ADJUDICATION. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. 8. ORDER PRONOUNCED IN PURSUANCE OF RULE 34(4) OF ITAT RULES, 1963 BY PUTTING ON NOTICE BOARD OF THE BENCH A T CUTTACK ON 1 0 / 0 3 /2015 . S D / - (D.T.GARASIA) JUDICIAL MEMBER S D / - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI / GOA DATED : 1 0 /03/ 201 5 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER ,