Malappuram District Co-op Bank Ltd, Malappuram V. ITO, Tirur

ITA 653/COCH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73932 (ITAT-COCHIN)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 10-10-2013
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NOS. 652 & 653/COCH/2013 ASSESSMENT YEAR : 2007-08 MALAPPURAM DISTRICT CO-OP BANK LTD., P.B. 8, UP HILL, MALAPPURAM-676 505. [PAN: AAAAT 3207B] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2(2), TIRUR. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY SHRI SHAJI POULOSE, CA REVENUE BY SHRI K.K. JOHN, SR. DR DATE OF HEARING 25/03/2014 DATE OF PRONOUNCEMENT 28/03/2014 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST THE ORDERS PASSED BY THE LD. CIT(A), KOZHIKODE AND THEY RELATE TO THE ASSESSMENT YEAR 2007-08. 2. THE APPEAL NUMBERED AS I.T.A. NO. 652/COCH/2013 RELATES TO THE APPELLATE ORDER PASSED AGAINST THE ASSESSMENT ORDER DATED 27/12/2009 PASSED U/S. 143(3) OF THE ACT. THE OTHER APPEAL RELATES T O THE APPELLATE ORDER PASSED AGAINST THE ASSESSMENT ORDER DATED 25-04-2012 PASSE D U/S. 143(3) R.W.S. 263 OF THE ACT. SINCE THE ISSUE URGED IN BOTH THE APPEALS IS IDENTICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. I.T.A. NOS. 652&653 /COCH/2013 2 3. THE SOLITARY ISSUE URGED IN BOTH THE APPEALS REL ATES TO THE DEFINITION OF RURAL BRANCH FOR THE PURPOSE OF ARRIVING AT DEDUC TION U/S. 36(1)(VIIA) OF THE ACT. 4. THE FACTS RELATING TO THE ABOVE SAID ISSUE ARE STATED IN BRIEF. IN TERMS OF SEC. 36(1)(VIIA)(A) OF THE ACT, THE ASSESSEE HEREIN IS ENTITLED FOR A DEDUCTION OF PROVISION MADE FOR BAD AND DOUBTFUL DEBT AT AN AMOU NT NOT EXCEEDING 7.5% OF THE TOTAL INCOME (COMPUTED BEFORE MAKING ANY DEDUCT ION UNDER 36(I)(VIIA) AND CHAPTER VIA) AND AN AMOUNT NOT EXCEEDING 10% OF THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES OF THE ASSESSEE BANK. THE TERM RURAL BRANCH IS DEFINED AS UNDER IN THE EXPLANATION TO SE C. 36(1)(VIIA) OF THE ACT:- RURAL BRANCH MEANS A BRANCH OF A SCHEDULED BANK O R A NON-SCHEDULED BANK SITUATED IN A PLACE WHICH HAS A POPULATION OF NOT MORE THAN TEN THOUSAND ACCORDING TO THE LAST PRECEDING CENSUS OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR THE ASSESSEE INTERPRETED THE TERM A PLACE AS THE WARD WITHIN THE REVENUE VILLAGE AND ACCORDINGLY CLAIMED DEDUCTION ON THE AD VANCES WHERE THE POPULATION OF THE WARD WAS LESS THAN 10,000. HOWEVER, THE ASS ESSING OFFICER REJECTED THE SAID CLAIM WITH THE FOLLOWING OBSERVATIONS:- IT IS NOTICED THAT THE ASSESSEE HAS MADE A CLAIM F OR DEDUCTION OF 10% OF ADVANCES MADE BY RURAL BRANCHES AMOUNTING TO RS.10 ,92,05,989 BASED APPARENTLY ON A WRONG INTERPRETATION OF THE MEANIN G OF PLACE AS GIVEN IN SECTION 36(1)(VIIA). THE ASSESSEE HAS CONSIDER ED ITS BRANCHES AS RURAL SINCE THESE BRANCHES ARE SITUATED IN WARDS THAT HAVE A POPULATION OF LESS THAN 10,000 AS PER THE LAST CENSUS. THE DEFI NITION OF THE TERM PLACE HAS BEEN CONCLUSIVELY DEFINED BY THE HONB LE HIGH COURT OF KERALA IN THE CASE OF LORD KRISHNA BANK LTD. IN ITS JUDGM ENT IN ITA 234 OF 2009 THE COURT HAS HELD THAT THE POPULATION OF GRAMA PA NCHAYAT, WHICH IS THE PRIMARY UNIT OF THE GOVERNMENT, HAS TO BE CONSIDER ED AND NOT THAT OF THE WARD. THE ISSUE UNDER CONSIDERATION IS, THEREFORE , SQUARELY COVERED AGAINST THE ASSESSEE BY THE SAID DECISION OF THE J URISDICTIONAL HIGH COURT. SINCE ALL THE BRANCHES OF THE ASSESSEE BANK ARE LO CATED IN PLACES WITH A POPULATION EXCEEDING 10,000 THE ASSESSEE IS NOT EL IGIBLE FOR THE CLAIM MADE BY IT. I.T.A. NOS. 652&653 /COCH/2013 3 5. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) DISMISSED THE APPEALS FILED BY THE ASSESSEE BY FOLLOWING THE DECISION RENDERED BY HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF LORD KRISHNA BANK (REFERRED SU PRA). AGGRIEVED, THE ASSESSEE HAS FILED THESE APPEALS BEFORE US. 6. AT THE TIME OF HEARING, BOTH THE PARTIES AGR EED THAT THE LD. CIT(A) HAS FOLLOWED THE BINDING DECISION RENDERED BY THE HONB LE JURISDICTIONAL HIGH COURT OF KERALA IN THE CASE OF LORD KRISHNA BANK LTD. IN ITS JUDGMENT IN I.T.A. 234/2009. SINCE BOTH THE TAX AUTHORITIES HAVE FOLLOWED THE BI NDING DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF LORD KRISH NA BANK LTD. (SUPRA), WE DO NOT FIND ANY REASON TO INTERFERE WITH THE DECISION REND ERED BY LD. CIT(A). 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE DISMISSED. PRONOUNCED ACCORDINGLY ON 28-03-2 014. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 28TH MARCH, 2014 GJ COPY TO: 1. MALAPPURAM DISTRICT CO-OP BANK LTD., P.B. 8, UP HILL, MALAPPURAM-676 505. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2( 2), TIRUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOZHIKO DE. 4. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN