The Mahendergarh Central Coop Bank Ltd., Mahendergarh V. DCIT, Rewari

ITA 712/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6820 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 09-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST IMPUGNED DATED PASSED
• Section: 143(3)

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO.:- 712/DEL/2016 ASSESSMENT YEAR: 2012-13 O R D E R PER AMIT SHUKLA, J.M. THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 26.11.2015, PASSED BY LD. CIT(APPEALS) 2 , GURGAON FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) FOR THE ASSTT. YEAR 2012-13. IN THE GROUNDS OF APPEAL ASSESSSEE HAS RAISED FOLLOWING GROUND :- THE MAHENDERGARH CENTRAL COOP BANK LTD. RAILWAY ROAD MAHENDERGARH 123029 PAN AAAAT9320K VS. D CIT, REWARI CIRCLE REWARI (APPELLANT) (RESPONDENT) ASSESSEE BY: SHR I RAJESH KUMAR GOEL, ADV. DEPARTMENT BY : SHRI SURENDER PAL , SR. DR DATE OF HEARING 29 /04 /201 8 DATE OF PRONOUNCEMENT 29 /04 /2018 2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(APPEALS) HAS GRAVELY ERRED IN LAW AND ON FACTS IN NOT IN APPRECIATING THE CONTENTION THAT THE ADDITION WAS ERRONEOUSLY MADE BY DISALLOWING THE EXPENSES OF RECOVERY LINK INCENTIVE SCHEME OF RS. 1455685/- WHICH WAS ACTUALLY THE EXPENSES OF INTEREST RETURNED TO THE SOCIETIES I.E PRIMARY AGRICULTURAL CO- OPERATIVE SOCIETIES (PACS) FROM WHOM THE ASSESSEE BANK RECEIVED INTEREST AT RS. 132129809.51 DURING A.Y. 2012-13. 2. THE ASSESSEE IS A COOPERATIVE BANK DERIVING INCOME AND CARRYING OUT BANKING ACTIVITIES LIKE BORROWINGS, RAISING AND LENDING OR ADVANCING MONEY TO ITS MEMBERS. ITS EARNING IS DERIVED PURELY ON INTEREST INCOME. LD. AO NOTED THAT ASSESSEE HAS DEBITED EXPENSES OF RS. 14,55,685/- IN THE NAME OF RECOVERY LINKED INCENTIVE SCHEMES. IN RESPONSE TO THE SHOW CAUSE NOTICE, ASSESSEE HAS SUBMITTED THAT THESE EXPENSES PERTAINED TO WAIVE OFF THE INTEREST OF THE DEFAULTING LOAN PARTIES SO AS TO ATTRACT THEM FOR PAYING THE PRINCIPAL AMOUNT. HOWEVER, THE LD. AO RELYING UPON THE APPELLATE ORDER FOR THE ASSTT. YEAR 2010-11 HAS DISALLOWED THE CLAIM. EVEN THE LD. CIT(A) FOLLOWED EARLIER ORDER OF THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO. 3. BEFORE US, LD. COUNSEL SUBMITTED THAT THIS ISSUE HAS BEEN REMANDED BACK TO THE AO FOR FRESH EXAMINATION BY THE TRIBUNAL IN THE ASSTT. YEAR 2010-11. LD. DR ALSO HAS NOT ANY OBJECTION THAT MATTER 3 SHOULD BE REMANDED BACK FOR DECIDING THE EARLIER YEAR ORDER OF THE TRIBUNAL. 4. AFTER CONSIDERING THE AFORESAID SUBMISSIONS, I FIND THAT THE TRIBUNAL AFTER DETAILED DISCUSSION HAS REMANDED BACK AFTER HOLDING AND OBSERVING AS UNDER :- THE ASSESSING OFFICER NOTED THAT THIS AMOUNT WAS HUGE AS COMPARED TO THE INTEREST INCOME OF RS. 16,26,99,047/- EARNED AND CREDITED IN THE PROFIT & LOSS ACCOUNT. THE ASSESSING OFFICER ASKED THE ASSESSEE TO JUSTIFY THE AMOUNT CLAIMED AS ONE TIME SCHEME INTEREST RELIEF AND IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE BANK HAD NOT WAIVED OFF ANY PRINCIPAL AMOUNT BUT HAD ONLY WAIVED THE AMOUNT DUE TOWARDS INTEREST WHICH WAS IN TERMS OF THE CIRCULAR ISSUED BY THE REGISTRAR OF COOPERATIVE SOCIETIES, HARYANA BEARING MEMO NO. 3/7/2007/CREDIT-5/3598-3658. DATED 21.03:07. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT THIS ONE TIME SCHEME WAS FLOATED IN ORDER TO ATTRACT THE DEFAULTING MEMBERS/BORROWERS TO SETTLE THEIR LOAN ACCOUNTS BY DISCOUNTING THEIR INTEREST COMPONENT AND THAT THE SAME WAS AN ALLOWABLE EXPENDITURE. HOWEVER, THE ASSESSING OFFICER MADE AN ADDITION OF RS. 1,39,64,857/- 4 BY DISALLOWING THE ENTIRE AMOUNT CLAIMED AS ITS INTEREST RELIEF BY NOTHING THAT THE ASSESEE BANK HAD WAIVED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE ORDER OF THE ASSESSING OFFICER SHOWS THAT THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE AMOUNT CLAIMED AS EXPENDITURE ON THE GROUND THAT THE IMPUGNED AMOUNT WAS HUGE AS COMPARED TO THE INTEREST RECEIPTS CREDITED BY THE ASSESEE IN ITS PROFIT AND LOSS ACCOUNT. THE ASSESSING OFFICER HAS DISALLOWED THE ASSESSEES CLAIM AT THE THRESHOLD ITSELF WITHOUT EXAMINING THE DETAILS IN THIS REGARD AND ALSO WITHOUT EXAMINING AS TO WHETHER THE PROVISIONS OF THE AFIRE MENTIONED CIRCULAR, AS BEING RELIED UPON BY THE ASSESEE, WERE APPLICABLE IN THE ASSESEES CASE OR NOT. IT IS ALSO APPARENT THAT THE ASSESSING OFFICER HAS ALSO NOT EXAMINED WHETHER THE ASSESEE HAD CLAIMED THE DEDUCTION OF ONE TIME INTEREST WAIVER AS PER THE PROVISIONS OF THE AFORESAID CIRCULAR OR NOT. THE LD. CIT(APPEALS), WHILE DISMISSING THE ASSESEES APPEAL, HAS DISMISSED THE ASSESSEES APPEAL ON THE GROUND THAT NO FOLLOW UP ACTION HAD BEEN TAKEN UP BY THE ASSESEE BANK TO RECOVER THE OUTSTANDING AMOUNT. THEREFORE, IT IS VERY MUCH APPARENT THAT NONE OF THE LOWER AUTHORITIES HAVE EXAMINED 5 THE DEDUCTION CLAIMED BY THE ASSESEE IN LIGHT OF THE TERMS OF THE AFORESAID CIRCULAR ISSUED BY THE REGISTRAR OF COOPERATIVE SOCIETIES, HARYANA. IN VIEW OF THESE FACTS, IT IS OUR CONSIDERED OPINION THAT IN THE INTEREST OF JUSTICE, THE MATTER SHOULD BE RE-EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, WE RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO BE EXAMINED AFRESH AFTER TAKING INTO ACCOUNT THE PROVISIONS OF THE CIRCULAR AS WELL AS AFTER DULY EXAMINING WHETHER THE ASSESEE HAS CLAIMED THE WAIVER OF INTEREST IN TERMS OF THE AFORESAID CIRCULAR OR NOT. NEEDLESS TO SAY, THE ASSESSEE WILL BE AFFORDED DUE OPPORTUNITY BY THE ASSESSING OFFICER IN THIS REGARD. 5. IN LINE OF THE ABOVE OBSERVATION AND DIRECTION, WE ALSO RESTORE THIS ISSUE TO THE FILE OF THE AO TO EXAMINE AFRESH IN LINE OF AFORESAID DIRECTIONS. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2019. SD/- SD/- (L.P. SAHU) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29/04/2019 6 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI