ACIT, Jaipur V. JAIPUR CENTRAL CO-OPERATIVE BANK LTD., Jaipur

ITA 805/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5575 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 28-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Rule of consistency
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NOS. 805/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11 . THE ACIT, CIRCLE-3, JAIPUR. CUKE VS. M/S. JAIPUR CENTRAL CO- OPERATIVE BANK LTD., F-1, NURSERY CIRCLE, VAISHASLI NAGAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAATJ 0756 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI KAILASH MANGAL (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY S BY : SHRI P.C. PARWAL (C.A) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03.12.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 01/01/2016. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT (A)-I, JAIPUR DATED 29.08.2013 FOR THE A.Y. 2010-11. THE GROUND OF APPEAL STATES AS UNDER :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) WAS JUSTIFIED IN DIRECTING TO A LLOW DEDUCTION OF RS. 83,22,368/- U/S 36(1)(VIIA) OF THE I.T. ACT, 19 61 WHEN THE ASSESSEE IS A CO-OPERATIVE BANK. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY BANK ENGAGED IN BANKING ACTIVITIES. IT HAS FILED ITS RET URN OF INCOME ON 15.10.2010 DECLARING 2 ITA NO. 805/JP/2013 A.Y. 2010-11. ACIT VS. JAIPUR CENTRAL CO-OPERATIVE BANK LTD. TOTAL INCOME OF RS. 2,39,21,090/-. THE CASE WAS SCR UTINIZED UNDER SECTION 143(3) OF THE IT ACT, 1961. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 36(1)(VIIA) OF R S. 83,22,368 IN RESPECT OF PROVISIONS FOR BAD AND DOUBTFUL ASSETS AGAINST ITS LOANS AND A DVANCES. THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM. THE LD. COUNSEL OF THE ASSESSEE EXPLAINED THAT THE ASSESSEE CO- OPERATIVE BANK IS ILLEGIBLE FOR DEDUCTION OF AMOUNT NOT EXCEEDING 7.5% OF TOTAL INCOME BEFORE ANY DEDUCTION UNDER THE IT ACT. IT WAS FURTH ER SUBMITTED THAT THE CO-OPERATIVE BANK IS ALSO ILLEGIBLE FOR DEDUCTION OF AN AMOUNT N OT EXCEEDING 10% OF THE AVERAGE AGGREGATE ADVANCES MADE BY THE RURAL BRANCHES OF SU CH BANK. THUS THE ASSESSEE HAS CLAIMED THE DEDUCTION OF RS. 24,21,368/- @ 7.5% FOR BAD AND DOUBTFUL ASSTS AND RS. 59.01 LACS @ 10% OF AVERAGE AGGREGATE ADVANCES MADE BY RURAL BRANCHES. THE AO AFTER GOING THROUGH SECTION 36(1)(VIIA) AND THE DEF INITION OF RURAL BRANCH AS GIVEN IN EXPLANATION TO SECTION 36(1)(VIIA), HAS THE CLAIM O F THE ASSESSEE VIDE HIS ORDER DATED 25.02.2013 BY OBSERVING AS UNDER :- 3.2. THUS, KEEPING IN VIEW THE DEFINITION OF RURA L BRANCH AS ABOVE, IT IS VERY CLEAR THAT FOR THE PURPOSE OF DEDUCTION @ 7.5% AND @ 10% OF THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCH ES, THE CO-OPERATIVE BANKS ARE NOT ENTITLED. HENCE, THE DEDUCTION CLAIME D BY THE ASSESSEE CO- OPERATIVE BANK @ 7.5% OF RS. 24,21,368/- AND @ 10% OF AVERAGE AGGREGATE ADVANCES MADE BY ITS RURAL BRANCHES AT RS . 59.01 LACS TOTALING TO RS. 83,22,368/- IS NOT ALLOWABLE AND THE SAME IS DISALLOWED AND ADDED IN THE INCOME OF THE ASSESSEE CO-OPERATIVE BANK. 3. BEING AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A), WHO HAS ALLOWED THE APPEAL OF THE ASSESSEE FOR THE REASON GIVEN IN PARA 4 TO 4.3 OF HIS ORDER AS UNDER :- 3 ITA NO. 805/JP/2013 A.Y. 2010-11. ACIT VS. JAIPUR CENTRAL CO-OPERATIVE BANK LTD. 4. I HAVE CONSIDERED SUBMISSIONS OF THE APPELLANT AND HAVE GONE THROUGH THE ASSESSMENT ORDER IT IS SEEN THAT THE AO HAS DISALLOWED DEDUCTION U/S 36(1)(VIIA) ON THE GROUND THAT BRANCH ES OF BANK WERE RUNNING IN THE AREA WHICH WAS HAVING POPULATION OF MORE THAN 10,000 AS ON DATE. IT IS FURTHER NOTED THAT DISALLOWANCE OF T HIS CLAIM WAS MADE IN THE ASSESSMENT YEAR 2008-09 AS WELL. HOWEVER, THE S AID DISALLOWANCE WAS DELETED BY THE CIT (A) AND ORDER OF THE CIT (A) WAS CONFIRMED BY THE HONBLE ITAT ALSO. WHILE DISMISSING THE DEPARTMENTA L APPEAL THE HONBLE ITAT VIDE ITS ORDER DATED 07.03.2012 IN ITA NO. 817 /JP/2011 HAS OBSERVED AS UNDER :- THE AO MERELY REPRODUCED THE PROVISIONS OF SECTIO N 36(1)(VIIA) AND HAS DISALLOWED THE DEDUCTION @ 10% OF THE AGGRE GATE AVERAGE ADVANCES MADE BY THE BANKS RURAL BRANCHES BY HOLDIN G THAT THE COOPERATIVE BANK IS NOT ENTITLED TO IT WITHOUT GIVI NG ANY RATIONALE FOR HIS DECISION. HOWEVER, THE AO HAS NOT EXAMINED THE PROVISIONS OF SECTION 36(1)(VIIA) COMPLETELY NEITHER EXPLANATI ON ADDED TO IT WHICH WAS CONSIDERED BY LD. CIT (A). COPY OF BANKIN G REGULATIONS ACT, 1949 WAS FILED BEFORE LD. CIT (A) BY WHICH IT WAS SEEN THAT THE ASSESSEE FALLS UNDER SECTION 5C OF THE SAID ACT AND IS A NON SCHEDULED BANK. 4.1. APPARENTLY, THE DEDUCTION HAS BEEN DENIED BY T HE AO ON TWO COUNTS ONE THAT THE BANK WAS NOT RUNNING BRANCHES IN THE AREAS HAVING POPULATION OF LESS THAN 10,000 AND ALSO BECOME THE CO-OPERATIVE BANKS WERE NOT ENTITLED TO THIS DEDUCTION BY OBSERVING TH AT IT IS VERY CLEAR THAT FOR THE PURPOSE OF DEDUCTION @ 7.5% AND @ 10% OF TH E AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES, THE CO OPERATIVE BANKS ARE NOT ENTITLED. 4.2. THE OBSERVATION OF THE AO DOES NOT APPEAR TO B E CORRECT. SO FAR AS THE ISSUE OF POPULATION IS CONCERNED, IT IS CLEAR T HAT THE CENSUS REFERRED TO IN THIS CLAUSE IS THE LAST PRECEDING CENSUS OF WH ICH THE RELEVANT FIGURES 4 ITA NO. 805/JP/2013 A.Y. 2010-11. ACIT VS. JAIPUR CENTRAL CO-OPERATIVE BANK LTD. HAVE BEEN PUBLISHED BEFORE THE 1 ST DAY OF THE PREVIOUS YEAR. AS POINTED OUT BY THE ASSESSEE THE AO WAS NOT CORRECT IN TAKIN G THE POPULATION AS ON DATE. THE LETTER DATED 17.08.2012, FROM DY. DIRECTO R OF THE DIRECTORATE OF CENSUS PRODUCED BY THE APPELLANT SHOWS THAT THE POP ULATION OF JAMUA RAMGARH WAS LESS THAN 10,000 THAT IS 6,6,38. THE AO HAS NOT BEEN ABLE TO SHOW THAT THE POPULATION FOR THE RELEVANT PERIOD EXCEEDED THE FIGURE PRESCRIBED FOR DETERMINING A RURAL BRANCH. 4.3. MOREOVER, AS HAS BEEN OBSERVED BY THE HONBLE ITAT IN THE APPELLANTS OWN CASE (SUPRA), ANY COOPERATIVE BANK WHICH IS NOT A SCHEDULED BANK, IS A NON SCHEDULED BANK AS PER CLAU SE (I) OF EXPLANATION TO SECTION 36(1)(VIIA) AND HENCE, ANY RURAL BRANCH OF SUCH COOPERATIVE BANK WOULD BE COVERED BY CLAUSE (II) OF THE SAID EX PLANATION. IN VIEW OF THE DECISION OF THE HONBLE ITAT, IT IS CLEAR THAT THE DEDUCTION CLAIMED BY THE APPELLANT HAS BEEN WRONGLY DISALLOWED BY THE AO . THE AO HAS NOT BEEN ABLE TO SHOW THAT FACTS OF THE CASE DURING THE YEAR UNDER CONSIDERATION ARE DIFFERENT FROM THE EARLIER YEAR C OVERED BY THE DECISIONS OF THE CIT (A) AND TRIBUNAL. IN VIEW OF THE ABOVE D ISCUSSION, THE DISALLOWANCE MADE BY AO APPEARS TO BE UNCALLED FOR AND IS , ACCORDINGLY, DELETED. 4. NOW THE REVENUE IS BEFORE US. 4.1. THE LD. D/R FOR THE REVENUE HAS SUBMITTED THAT AS PER THE DEFINITION OF RURAL BRANCH GIVEN IN EXPLANATION TO SECTION 36(1)(VIIA), THE ASSESSEE DO NOT FALL WITHIN THE DEFINITION OF RURAL BRANCH AND, THEREFORE, IS NOT COVERED AND, THEREFORE, THE ORDER OF THE AO IS REQUIRED TO BE UPHELD AND THE ORDER OF LD. CI T (A) IS REQUIRED TO BE REJECTED. 4.2. ON THE CONTRARY, THE LD. A/R FOR THE ASSESSEE, AT THE OUTSET, STATED THAT THE ORDER OF THE ITAT IN THE CASE OF THE ASSESSEE FOR THE A.Y . 2008-09 DEALS WITH THE ISSUE AND 5 ITA NO. 805/JP/2013 A.Y. 2010-11. ACIT VS. JAIPUR CENTRAL CO-OPERATIVE BANK LTD. HAS BEEN REFERRED BY THE LD. CIT (A) IN HIS ORDER W HILE ALLOWING THE APPEAL OF THE ASSESSEE. HE, THEREFORE, PRAYED THAT THE APPEAL OF THE DEPARTMENT MAY BE DISMISSED. 5. WE HEARD RIVAL CONTENTIONS AND PERUSED THE MATER IAL ON RECORD. IN OUR VIEW THE ORDER OF LD. CIT (A) IS WELL FOUNDED AND IS BASED O N THE EARLIER ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 817/JP/2011 DATED 07 .03.2012. RESPECTFULLY FOLLOWING THE PRINCIPLE OF CONSISTENCY AND THE ORDER PASSED B Y THE TRIBUNAL, WE DISMISS THE APPEAL OF THE REVENUE AND UPHOLD THE ORDER PASSED B Y THE LD. CIT (A). IN OUR VIEW, THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES O F THE CASE IN THE YEAR UNDER CONSIDERATION WITH THAT OF THE ASSESSMENT YEAR 2008 -09. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 01/01/2016. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 01/01/2016. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CIRCLE-3, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- M/S. JAIPUR CENTRAL CO-OPERATIVE BA NK LTD. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 805/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 6 ITA NO. 805/JP/2013 A.Y. 2010-11. ACIT VS. JAIPUR CENTRAL CO-OPERATIVE BANK LTD.