Income-tax Officer,Ward-1, Gondia V. The Gondia District Central Co-Operative Bank Limited, Gondia

ITA 87/NAG/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84669 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2011
• Court: TRIBUNAL
• Department Lawyers: MAYANK PRIYADARSHI
• Assessee Lawyers: M MANI
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . /ITA NO. 87 /NAG/2011 ( AY: 2007 - 2008 ) INCOME TAX OFFICER, WARD - 1, GONDIA. / VS. THE GONDIA DISTRICT CENTRAL COOPERATIVE BANK LIMITED, DURGA CHOWK, GONDIA. ( / APPELLANT) .. ( / RESPONDENT ) . /ITA NO.98/NAG/2011 ( AY: 2007 - 2008 ) THE GONDIA DISTRICT CENTRAL COOPERATIVE BANK LIMITED, DURGA CHOWK, GONDIA. / VS. INCOME TAX OFFICER, WARD - 1, GONDIA. ./ PAN: AAAAG 2175 R ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI M. MANI / REVENUE BY : SHRI MAYANK PRIYADARSHI, CIT - DR / DATE OF HEARING : 11 .09.2014 / DATE OF PRONOUNCEMENT : 12 .09.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION AND THEY ARE CROSS APPEALS INVOLVING ASSESSMENT YEAR 2007 - 2008. SINCE, THE ISSUE RAISED IN THESE APPEALS ARE CONNECTED, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION I S GIVEN IN THE FOLLOWING PARAGRAPHS. 2. AT THE VERY OUTSET, SHRI M. MANI , LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THERE IS A DELAY OF 4 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. IT IS PRAYED BY THE LD COUNSEL THAT CONSIDERING THE SMALLNESS OF THE DELAY IN FILING THE APPEAL BEFORE THE TRIBUNAL WITHIN PRESCRIBED TIME, THE SAME MAY CONDONED. AS SUCH, THE ASSESSEE PROPOSED TO WITHDRAW THE SOLITARY GROUND RAISED IN ITS APPEAL. 2 3. AFTER HEARING THE LD COUNSEL AND CONSIDERING THE SMALLNESS OF DELAY OF 4 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL, THE DELAY IS CONDONED AND WE PROCEED TO DECIDE THE APPEAL ON MERITS. 4. FIRSTLY, WE SHALL TAKE UP THE REVENUE APPEAL ITA NO.87/NAG/2011 , WHICH IS FILED AGAINST THE ORDER OF THE CIT (A) - II, NAGPUR DATED 21.2.2011 FOR THE AY 2007 - 2008. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) ERRED IN HOLDING THAT THE ASSESSEE SOCIETY IS ELIGIBLE FOR DEDUCTION U/S 36(1)(VIIA) ON PROVISION FOR INTEREST ON BAD AND DOUBTFUL DEBTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD CIT (A) ERRED IN HOLDING THAT THE ASSESSEE SOCIETY IS ELIGIBLE FOR DEDUCTION FOR PROVISION ON BAD AND DOUBTFUL DEBTS OF RS. 3,90,62,620/ - AS AGAINST THE NET PROVISIONS OF RS.3,40,62,620/ - . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) ERRED IN ALLOWING DEDUCTION OF RS. 5,38,62,464/ - U/S 36(1)(VIIA) AS AGAINST 3,40,62,620/ - ALLOWED BY THE AO. 5. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DISTRICT CENTRAL COOPERATIVE BANK, ENGAGED IN THE BANKING BUSINESS. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. NIL AND CLAIMING A REFUND OF RS. 80,92,000/ - ON ACCOUNT OF ADVANCE TAX PAYMENT. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 4,82,45,280/ - . IN THE ASSESSMENT, AO DISALLOWED THE SUM OF RS.4,82,45,278/ - INSTEAD OF ASSESSEES CLAIM OF RS. 8,23,07,897/ - U/S 36(1)(V IIA) OF THE ACT. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 6. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) PARTLY ALLOWED THE ASSESSEE S APPEAL. AGGRIEVED WITH THE DECISION OF THE CIT (A), REVENUE FILE THE PRESENT APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 7. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON THE ORDER OF THE AO. 8. ON THE OTHER HAND, SHRI M. MANI, LD COUNSEL FOR THE ASSESSEE, HEAVILY RELIED ON THE ORDER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE ORDER OF THE CIT (A) IN GENERAL AND PARA 4.0 TO 4.2 IN PARTICULAR, WE FIND THE SAME ARE RELEVANT IN THIS REGARD. FOR THE SAKE OF COMPLETENESS OF THIS O RDER, THE SAID PARAS 4.0 AND 4.2 ARE REPRODUCED HERE WHICH READ AS UNDER: 3 4.0. I HAVE CONSIDERED THE FINDINGS IN THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT. AFTER CAREFULLY EXAMINING THE ISSUE, I FIND THAT AO HAS CORRECTLY HELD THAT THE CLAIM IS TO BE RESTRICTED TO THE EXTENT OF PROVISIONS FOR BAD A ND DOUBTFUL DEBTS MADE IN THE PROFIT AND LOSS ACCOUNT. HOWEVER, AO HAS NOT TAKEN ONLY THE AMOUNT OF PROVISION MADE FOR BAD DEBTS AND NPA OF RS. 3,90,62,620/ - , AO HAS FAILED TO CONSIDER THAT THE AMOUNT RELATING TO PROVISION OF INTEREST ON BAD AND DOUBTFUL DEBTS IS ALSO TO BE RECKONED WITH FOR THIS PURPOSE. THE PROVISIONS FOR INTEREST ON BAD AND DOUBTFUL DEBTS MADE DURING THE YEAR IS RS. 1,47,99,844/ - IS RELATED TO AND AN INTEGRAL PART OF THE PROVISION FOR BAD DEBTS. 4.1. AO HAS GIVEN NO REASON TO EXCLUDE T HIS AMOUNT. AO IS DIRECTED TO TAKE INTO ACCOUNT THE AMOUNT OF PROVISION FOR BAD DEBTS AT RS. 5,38,62,464/ - AS AGAINST THE FIGURE OF RS. 3,90,62,620/ - ADOPTED IN THE ASSESSMENT ORDER. 4.2. AS REGARDS THE APPELLANTS CLAIM THAT PROVISION FOR STANDARD ASSETS OF 8,91,115/ - IS ALSO TO BE CONSIDERED FOR THIS PURPOSE. I FIND THAT THIS PROVISION FOR STANDARD ASSETS DOES NOT RELATE TO BAD DEBTS. THESE PROVISIONS ARE MADE IN TERMS OF RBI DIRECTIONS AND ARE NOT RELEVANT FOR RECKONING THE PROVISION CREATED FOR ALLOW ING DEDUCTION U/S 36(1)(VIIA). THEREFORE, THE APPELLANTS CLAIM IN THIS REGARD IS REJECTED. AO IS THUS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE TO THE EXTENT OF RS. 5,38,62,464/ - . 10. CONSIDERING THE ABOVE WE ARE OF THE OPINION THAT THE CIT (A) HAS RIGHTLY ADJUDICATE THE ISSUE UNDER CONSIDERATION AFTER CAREFUL EXAMINATION OF THE RELEVANT FACTS AND CIRCUMSTANCES AS WELL AS THE PROVISIONS OF THE ACT. THEREFORE, WE FIND NO INFIRMITY IN TH E ORDER OF THE CIT (A) AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ./ITA NO.98/NAG/2011 ( AY: 2007 - 2008) (BY ASSESSEE) 12. THIS APPEAL FILED BY THE ASSESSEE ON 13.5.2011 AGAINST THE SAID ORDER OF THE CIT (A) - II, NAGPUR DATED 21.2.2011. 13. BEFORE US, WITH REGARD TO THE GROUND RAISED BY THE ASSESSEE IN ITS APPEAL, IT IS THE SUBMISSION OF THE LD COUNSEL THAT THE ASSESSEE PROPOSED TO WITHDR AW THE INSTANT APPEAL. AFTER HEARING THE LD DR IN THIS REGARD, WE ALLOW THE ASSESSEE TO WITHDRAW ITS APPEAL. ACCORDINGLY, THE PRESENT APPEAL FILED BY THE ASSESSEE IS DISMISSED AS WITHDRAWN . 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED AS WITHDRAWN . ORDER PRONOUNC ED IN THE OPEN COURT ON 12 TH SEPTEMBER, 2014. SD/ - SD/ - (VIVEK VARMA) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 4 NAGPUR; 12 /09/2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , / DR, ITAT, NAGPUR. 6. / GUARD FILE . //TRUE COPY// / BY ORDER, (SR. PRIVATE SECRETARY) / ITAT, NAGPUR