Assistant Commissioner of Income-tax, Circle - 10, Pune V. Pimpri Chinchwad Sahakari Bank Maryadit, Pune

ITA 898/PUN/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5287 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 17-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 898 /P U N/201 8 / ASSESSMENT YEAR : 20 1 3 - 1 4 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 10 , PUNE . / APPELLANT VS. PIMPRI CHINCHWAD SAHAKARI BANK MARYADIT, S.NO.111, SHAMA ARCADE, MAIN ROAD, KALEWADI, PUNE 411017 . / RESPONDENT PAN: A AAA A1774G / APPELLANT BY : SHRI A JAY MODI / RESPONDENT BY : NONE / DATE OF HEARING : 2 6 . 0 7 .201 8 / DATE OF PRONOUNCEMENT: 30 . 0 7 .201 8 / ORDER PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY REVENUE IS AGAINST ORDER OF CIT (A) - 6 , PUNE , DATED 0 9 . 0 2 .20 1 8 RELATING TO ASSESSMENT YEAR 20 1 3 - 1 4 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE REVENUE HAS RAISED SEVERAL GROUNDS OF APPEAL, BUT EFFECTIVE GROUND OF APPEAL IS GROUND OF APPEAL NO. 4 , WHICH READ S AS UNDER: - ITA NO. 898 /P U N/20 1 8 PIMPRI CHINCHWAD SAH BANK MARYADIT 2 4 . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THAT THE ASSESSEE IS A NON - SCHEDULED COOPERATIVE BANK AND THE PROVISION OF SECTION 43D IS NOT APPLICABLE TO THE ASSESSEE. THE HONBLE ITAT, AHMEDABAD IN CASE OF SARANGPUR COOPERATIVE BANK LTD. (ITA NO.529 & 530/AHD/2013 DATED 21.06.2013 HELD THAT SECTION 43D IS NOT APPLICABLE TO NON - SCHEDULED BANKS? 3. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF ASSESSEE NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT. SINCE THE ISSUE INVOLVED IN THE PRESENT APPEAL IS COVERED BY VARIOUS ORDERS OF TRIBUNAL, WE P ROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 5 . WE FIND THAT SIMILAR ISSUE AS BEFO RE US AROSE IN BUNCH OF APPEALS WITH THE LEAD ORDER IN ITA NO.1641/PN/2014 IN THE CASE OF JCIT VS. M/S. PEOPLES CO - OPERATIVE BANK LTD., RELATING TO ASSESSMENT YEAR 2011 - 12 VIDE ORDER DATED 05.02.2016 , WHEREIN THE TRIBUNAL IN TURN RELIED ON EARLIER DECISION IN KOLHAPUR MAHILA SAHAKARI BANK LTD. VS. ITO IN ITA NO.01/PN/2013, RELATING TO ASSESSMENT YEAR 2009 - 10, VIDE ORDER DATED 29.01.2014. THE TRIBUNAL IN TURN FOLLOWING THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN ACIT VS. OSMANABAD JANTA SAHAKARI BA NK LTD. IN ITA NO.795/PN/2011, ORDER DATED 31.08.2012, HELD AS UNDER: - 2. THE ASSESSEE IS A CO - OPERATIVE BANK ENGAGED IN THE BUSINESS OF ACCEPTING DEPOSITS FROM MEMBERS AND GIVING LOANS TO MEMBERS. IT HAS FILED ITS RETURN OF INCOME ON 11.09.2009 FOR THE YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME AT 14,57,840/ - . IN THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD NOT CREDITED INTEREST RECEIVABLE OR ACCRUED ON NON - PERFORMING ASSETS (HEREINAFTER REFERRED TO AS NPA) TO ITS P ROFIT AND LOSS ACCOUNT FOR FINANCIAL YEAR 2008 - 09. THE ASSESSING OFFICER AFTER REJECTING THE VARIOUS CONTENTIONS OF THE ASSESSEE HAS HELD THAT THE RBI GUIDELINES ARE NOT INTENDED TO REGULATE THE INCOME TAX LAW AND THE ASSESSEE WAS LIABLE TO BE ITA NO. 898 /P U N/20 1 8 PIMPRI CHINCHWAD SAH BANK MARYADIT 3 ASSESSED ON ACCRUAL BASIS U/S.5 OF I.T. ACT FOR THE REASONS (I) BENEFITS EXTENDED TO SCHEDULE BANK, PUBLIC FINANCIAL INSTITUTIONS, PUBLIC COMPANIES FOR THE PURPOSE OF SECTION 43D WERE NOT EXTENDED TO A CO - OPERATIVE BANK AND (II) THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND NOT CASH SYSTEM. ULTIMATELY THE ASSESSING OFFICER TAXED ON ACCRUED INTEREST OF 25,20,022/ - ADVANCE CLAIMED TO BE NPA ACCOUNT. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY WHEREIN, FOLLOWING THE OSMANABAD JANTA SA HAKARI BANK LTD. IN ITA NO.795/PN/2011, THE CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE. 2.1 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD, WE FIND THAT IN OSMANAB AD JANTA SAHAKARI BANK LTD. (SUPRA) THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER: 7. IN THE CASE BEFORE US, ADMITTEDLY, ASSESSEE HAS DIRECTLY TAKEN THE INTEREST TO THE BALANCE SHEET AND IT IS NOT ROUTED THROUGH THE PROFI T & LOSS ACCOUNT. MOREOVER, THE ISSUE OF THE TAXABILITY OF THE INTEREST ON THE STICKY LOSSES/ADVANCES, IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCHES IN THE CASE OF THE DURGA COOPERATIVE URBAN BANK LTD., VIJAYAWADA (SUPRA) AND KARNAVATI COOPERATIVE BANK LTD. (SUPRA). WE FIND NO REASON TO INTERFERE WITH THE REASONED ORDER OF THE LD. CIT(A) AND ACCORDINGLY THE SAME IS CONFIRMED. IN THE RESULT, THE REVENUES GROUND IS DISMISSED. THE ABOVE DECISION HAS BEEN FOLLOWED IN (I) ACIT, CIRCLE - 3, NANDED V/S BHAGYALAXMI MAHILA SAHAKAR BANK LTD. ITA NO.793/PN/2011, (II) ACIT, CIRCLE - 3 V/S SIDHESHWAR SAHAKARI BANK LTD. ITA NO.794/PN/2011, (III) ACIT (CENTRAL) V/S LATUR URBAN CO - OPERATIVE BANK LTD. ITA NO.792/PN/2011 AND (IV) ASST. CIT, CIRCLE - 1 V/S DEOGIRI NAGARI SAHAKARI BANK LTD. ITA NO.817 & 1114/PN/2011. 6 . THE HONBLE BOMBAY HIGH COURT IN CIT VS . (1) DEOGIRI NAGARI SAHAKARI BANK LTD. (INCOME TAX APPEAL NO.53 OF 2014), (2) PEOPLES CO - OPERATIVE BANK LTD. (INCOME TAX APPEAL NO.54 OF 2014), (3) NANDED DISTRICT CENTRAL CO - OP. BANK LTD. (INCOME TAX APPEAL NO.57 AND 58 OF 2014) AND (4) VASANTADADA NAGAR I SAHAKARI BANK LTD. (INCOME TAX APPEAL NO.68 OF 2014) REPORTED IN (2015) 379 ITR 24 (BOM) HAS LAID DOWN THE PROPOSITION THAT THE INTEREST ACCRUED ON NPAS IS NOT TAXABLE IN THE HANDS OF ASSESSEE, IN VIEW OF THE GUIDELINES ISSUED BY THE RBI. 7 . FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT NO ADDITION IS WARRANTED ON ACCOUNT OF INTEREST ACCRUED ON NPAS. ACCORDINGLY, WE UPHOLD THE ITA NO. 898 /P U N/20 1 8 PIMPRI CHINCHWAD SAH BANK MARYADIT 4 ORDER OF CIT(A) IN DELETING THE ADDITION MADE ON ACCOUNT OF INTEREST ACCRUED ON NPAS. THE GROUND OF APPEAL NO. 4 RAISED BY THE REVENUE IS DISMISSED. 8 . IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 30 TH DAY OF JULY , 201 8 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 30 TH JULY , 201 8 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPEL LANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 6 , PUNE ; 4. THE PR. CIT - 5 , PUNE ; 5. 6. , , / DR A , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE