The Mahendergarh Central Cooperative Bank Ltd., Mahendergarh V. ACIT, Rewari

ITA 883/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6744 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 13-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: S AJEEV JAIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 883/DEL/2015 AY: 20 10-11 THE MAHENDERGARH CENTRAL COOPERATIVE VS AC IT, BANK LTD., RAILWAY ROAD, CIRCLE MODEL TOWN, MAHENDERGARH-123401 REWARI-123401 (PAN: AAAAT9320K) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAJEEV JAIN, FCA RESPONDENT BY : MS ASHIMA NEB, SR. DR DATE OF HEARING: 02.07.2018 DATE OF PRONOUNCEMENT: 04.07.2018 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER DATED 24.11.2014 PASSED BY THE LD. CIT (APPEALS), R OHTAK FOR ASSESSMENT YEAR 2010-11 AND THE SOLE ISSUE UNDER DI SPUTE IN THIS APPEAL IS THE CONFIRMATION OF ADDITION OF RS. 1,39,64,857/- WHICH PERTAINS TO INTEREST CLAIMED AS DEDUCTION UND ER THE ONE TIME SETTLEMENT SCHEME (OTS SCHEME) FOR LOAN DEFAUL TERS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COOPERATIVE BANK ENGAGED IN THE BUSINESS OF ACCEPTI NG DEPOSITS AND GIVING LOANS AS PER THE GUIDELINES OF NABARD. THE RETURN OF ITA NO. 883/DEL/2015 ASSESSMENT YEAR 2010-11 2 INCOME WAS FILED AT AN INCOME OF RS. 95,12,238/-. THE CASE WAS SELECTED FOR SCRUTINY AND DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE BANK HAD DEBITED AN AMOUNT OF RS. 1,39,64,857/- IN THE PROFI T/LOSS ACCOUNT AS ONE TIME SCHEME INTEREST RELIEF. THE AS SESSING 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 ASSE SSEE TO JUSTIFY THE AMOUNT CLAIMED AS ONE TIME SCHEME INTEREST RELI EF AND IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE BAN K HAD NOT WAIVED OFF ANY PRINCIPAL AMOUNT BUT HAD ONLY WAIVED THE AMOUNT DUE TOWARDS INTEREST WHICH WAS IN TERMS OF THE CIRC ULAR ISSUED BY THE REGISTRAR OF COOPERATIVE SOCIETIES, HARYANA BEARING MEMO NO. 3/7/2007/CREDIT-5/3598-3658 DATED 21.03.07. TH E ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THA T THIS ONE TIME SCHEME WAS FLOATED IN ORDER TO ATTRACT THE DEF AULTING MEMBERS/BORROWERS TO SETTLE THEIR LOAN ACCOUNTS BY DISCOUNTING THEIR INTEREST COMPONENT AND THAT THE SAME WAS AN A LLOWABLE EXPENDITURE. HOWEVER, THE ASSESSING OFFICER MADE A N ADDITION OF RS. 1,39,64,857/- BY DISALLOWING THE ENTIRE AMOUNT CLAIMED AS OTS INTEREST RELIEF BY NOTING THAT THE ASSESSEE BAN K HAD WAIVED ITA NO. 883/DEL/2015 ASSESSMENT YEAR 2010-11 3 OFF THE AMOUNT ON ITS OWN WITHOUT MAKING ANY EFFORT TO RECOVER THE INTEREST. 2.1 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. C IT (APPEALS) WHO ALSO UPHELD THE ACTION OF THE ASSESSING OFFICER . NOW, THE ASSESSEE HAS APPROACHED THE ITAT AND HAS CHALLENGED THE CONFIRMATION OF THE DISALLOWANCE BY THE LD. CIT (AP PEALS). 3. THE LD. AR SUBMITTED THAT THE LD. CIT (A) HAD ER RED IN CONFIRMING THE DISALLOWANCE BY REJECTING THE CONTEN TION OF THE ASSESSEE AND FURTHER THAT THESE EXPENSES HAD BEEN I NCURRED IN TERMS OF THE GUIDELINES ISSUED BY THE REGISTRAR OF SOCIETIES, HARYANA VIDE CIRCULAR BEARING MEMO NO. 3/7/2007/CR EDIT- 5/3598-3658 DATED 21.03.07. THE LD. AR ALSO SUBMI TTED THAT THE ASSESSEE HAD SUBMITTED COPY OF THE CIRCULAR AS WELL AS THE LEDGER ACCOUNTS OF THE BORROWERS WHO HAD BEEN GIVEN THE BENEFIT OF INTEREST WAIVER AND THE ASSESSING OFFICER HAD SI MPLY DISREGARDED THE ASSESSEES CONTENTIONS AND HAD DISA LLOWED THE ENTIRE AMOUNT WITHOUT EXAMINING AND VERIFYING THE D ETAILS SUBMITTED BY THE ASSESSEE. 4. LD. SR. DR SUPPORTED THE ORDERS OF BOTH THE LOWE R AUTHORITIES. ITA NO. 883/DEL/2015 ASSESSMENT YEAR 2010-11 4 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PER USED THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE OR DER OF THE ASSESSING OFFICER SHOWS THAT THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE AMOUNT CLAIMED AS EXPENDITURE ON THE GRO UND THAT THE IMPUGNED AMOUNT WAS HUGE AS COMPARED TO THE INTERES T RECEIPTS CREDITED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACC OUNT. THE ASSESSING OFFICER HAS DISALLOWED THE ASSESSEES CLA IM AT THE THRESHOLD ITSELF WITHOUT EXAMINING THE DETAILS IN T HIS REGARD AND ALSO WITHOUT EXAMINING AS TO WHETHER THE PROVISIONS OF THE AFIRE MENTIONED CIRCULAR, AS BEING RELIED UPON BY THE ASS ESSEE, WERE APPLICABLE IN THE ASSESSEES CASE OR NOT. IT IS AL SO APPARENT THAT THE ASSESSING OFFICER HAS ALSO NOT EXAMINED WHETHER THE ASSESSEE HAD CLAIMED THE DEDUCTION OF ONE TIME INTEREST WAIV ER AS PER THE PROVISIONS OF THE AFORESAID CIRCULAR OR NOT. THE L D. CIT (APPEALS), WHILE DISMISSING THE ASSESSEES APPEAL, HAS DISMISS ED THE ASSESSEES APPEAL ON THE GROUND THAT NO FOLLOW UP A CTION HAD BEEN TAKEN UP BY THE ASSESSEE BANK TO RECOVER THE O UTSTANDING AMOUNT. THEREFORE, IT IS VERY MUCH APPARENT THAT N ONE OF THE LOWER AUTHORITIES HAVE EXAMINED THE DEDUCTION CLAIM ED BY THE ASSESSEE IN LIGHT OF THE TERMS OF THE AFORESAID CIR CULAR ISSUED BY THE REGISTRAR OF COOPERATIVE SOCIETIES, HARYANA. I N VIEW OF THESE ITA NO. 883/DEL/2015 ASSESSMENT YEAR 2010-11 5 FACTS, IT IS OUR CONSIDERED OPINION THAT IN THE INT EREST OF JUSTICE, THE MATTER SHOULD BE RE-EXAMINED BY THE ASSESSING O FFICER. ACCORDINGLY, WE RESTORE THE ISSUE TO THE FILE OF TH E ASSESSING OFFICER TO BE EXAMINED AFRESH AFTER TAKING INTO ACC OUNT THE PROVISIONS OF THE CIRCULAR AS WELL AS AFTER DULY EX AMINING WHETHER THE ASSESSEE HAS CLAIMED THE WAIVER OF INTEREST IN TERMS OF THE AFORESAID CIRCULAR OR NOT. NEEDLESS TO SAY, THE AS SESSEE WILL BE AFFORDED DUE OPPORTUNITY BY THE ASSESSING OFFICER I N THIS REGARD. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JULY, 2018. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 4 TH JULY, 2018 GS COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 4. DR, ITAT BY ORDER ASSTT. REGISTRAR ITA NO. 883/DEL/2015 ASSESSMENT YEAR 2010-11 6 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 1