DCIT, Rohtak V. The Jhajjar Central Co-op Bank Ltd., Jhajjar

ITA 939/DEL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5895 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 24-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Assessee Lawyers: S K BANSAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SH. PRAMOD KUMAR, ACCOUNTANT MEMBER AND SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 939/DEL/2016 A.Y. : 2012-13 DCIT AAYAKAR BHAWAN ROHTAK VS. THE JHAJJAR CENTRAL CO- OP BANK LTD. JHAIJAR PAN : AAAJT0887E ASESSEE BY : SH. S.K. BANSAL, CA REVENUE BY : SH. RAVI KANT GUPTA, SR. DR. DATE OF HEARING : 28.05.2018 DATE OF PRONOUNCEMENT : 30.05.2018 O R D E R PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER: THIS APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT AG AINST ORDER DATED 10/12/2015 PASSED BY THE LD. CIT (A)-2, GURGAON FOR ASSESSMENT YEAR 2012-13. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CO- OPERATIVE SOCIETY CARRYING ON BANKING BUSINESS. THE RETURN OF INCOME WAS FILED DECLARING INCOME OF RS. 1,52,15,180 /-. THE CASE 2 ITA NO.939/DEL/2016 (THE JHAJJAR CENTRAL CO-OPERATIVE BANK) WAS SELECTED FOR SCRUTINY AND DURING THE COURSE OF A SSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE HAD NOT SHOWN INTEREST INCOME ON ACCRUAL BASIS ON NPA ACCOUNTS. THEREAFTER , THE AO PROCEEDED TO HOLD THAT INTEREST ON NPA ACCOUNTS WAS TO BE TAXED ON AN ACCRUAL BASIS AND PROCEEDED TO ADD AN AMOUNT OF RS. 3,31,60,915/- TO THE INCOME OF THE ASSESSEE ON THIS ACCOUNT. THE AO ALSO MADE AN ADDITION OF RS. 11,98,774/- ON ACCO UNT OF DIVIDEND RECEIVED FROM HARCO BANK. THE AO FURTHER M ADE AN ADDITION OF RS. 3,00,000/- ON ACCOUNT OF DISALLOWANC E OF PROVISION FOR STANDARD ASSETS. ANOTHER ADDITION MADE BY THE A O WAS DISALLOWANCE OF DEDUCTION CLAIMED OF RS. 50,00,000/- ON ACCOUNT OF PROVISION FOR LOSS ASSETS. THE AO ALSO DISALLOWED A N AMOUNT OF RS. 1.50 LAKHS ON ACCOUNT OF PROVISION CREATED FOR CA A UDIT FEES. 2.1 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. CIT (A) WHO DELETED THE ADDITION OF RS. 3,31,61,468/- IN RESPEC T OF ACCRUED INTEREST ON NPA ACCOUNTS AND ALSO DIRECTED THE DELE TION OF ADDITION OF RS. 1.50 LAKHS MADE BY THE AO ON ACCOUNT OF DISA LLOWANCE OF PROVISION FOR CA AUDIT FEE. 2.2 NOW, THE DEPARTMENT HAS APPROACHED THE ITAT CHA LLENGING THE DELETION OF THESE TWO ADDITIONS / DISALLOWANCES BY T HE LD. CIT (A). 3 ITA NO.939/DEL/2016 (THE JHAJJAR CENTRAL CO-OPERATIVE BANK) 3. THE LD. SR. DEPARTMENTAL REPRESENTATIVE VEHEMENT LY SUPPORTED THE FINDINGS RECORDED BY THE ASSESSING OF FICER AND SUBMITTED THAT THE LD. CIT (A) HAD ERRED IN DELETIN G THE ADDITIONS / DISALLOWANCES WHICH WERE NOW BEING CHALLENGED BEFORE T HE ITAT. 4. IN RESPONSE THE LD. AUTHORISED REPRESENTATIVE PL ACED RELIANCE ON THE ORDER OF ITAT DELHI IN ASSESSEES OWN CASE FO R ASSESSMENT YEAR 2008-09 IN ITA NO. 2486/DEL/2016 WITH RESPECT T O THE GROUND PERTAINING TO ACCRUED INTEREST ON NPA ACCOUNTS. IT WAS SUBMITTED THAT ITAT, VIDE ORDER DATED 31 ST OCTOBER 2013, HAD DISMISSED THE DEPARTMENTS APPEAL ON IDENTICAL ISSUE AND HAD HELD THAT OVERDUE INTEREST NOT REALIZED DURING THE YEAR AND CREDITED TO SUSPENSE INTEREST ACCOUNT CANNOT BE TAKEN TO BE THE INCOME O F THE ASSESSEE. 4.1 WITH RESPECT TO THE OTHER GROUND REGARDING PROV ISION FOR CA AUDIT FEES, THE LD. AUTHORISED REPRESENTATIVE SUBMI TTED THAT THE PROVISION PERTAINED TO AUDIT FEE PAYABLE TO THE STA TUTORY AUDITOR FOR THE ENSUING YEAR. IT WAS FURTHER SUBMITTED THAT THE STATUTORY AUDIT HAS TO BE CARRIED OUT BY A CA FIRM RECOMMENDED BY N ABARD AND THE AUDIT FEE IS ALSO PRESCRIBED BY NABARD. IT WAS F URTHER SUBMITTED THAT THE AUDIT FEE IS APPROXIMATELY RS. 6 ,000/- PER BRANCH AND SINCE THE ASSESSEE BANK HAD 25 BRANCHES, A PROVISION 4 ITA NO.939/DEL/2016 (THE JHAJJAR CENTRAL CO-OPERATIVE BANK) OF RS. 1.50 LAKHS WAS MADE. THE LD. AUTHORISED REPRE SENTATIVE ALSO PLACED RELIANCE ON THE FINDINGS OF THE LD. CIT (A) IN THIS REGARD. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIAL ON RECORD. AS FAR AS GROUND NOS. 1 AND 2 OF THE DEPARTMENTS APPEAL ARE CONCERNED WHICH CHALLENGE TH E ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS. 3,31 ,61,468/- ON ACCOUNT OF ACCRUED INTEREST ON LOANS CLASSIFIED UND ER NON PERFORMING ASSETS, IT IS SEEN THAT THIS ISSUE IS S QUARELY COVERED IN FAVOUR OF ASSESSEE BY ORDER OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 IN ITA NO. 2486/DE L/2011 WHEREIN THE ISSUE HAS BEEN DISCUSSED IN PARA 11 OF T HE AFORESAID ORDER DATED 31 ST OCTOBER, 2013 AND WHICH READS AS UNDER: 11. CONSIDERING THE ABOVE SUBMISSION OF THE ASSE SSEE WHICH IS WELL SUPPORTED BY RBI / NABARD CIRCULAR DA TED 17.8.2002 VIDE PARA NO. 3.1 CLEARLY STATES THAT TH E POLICY OF INCOME RECOGNITION SHOULD BE BASED ON RECORD OF RECOVERY AND THEREFORE UNREALIZED INCOME SHOULD NOT BE TAKEN INTO PROFIT AND LOSS ACCOUNT BY STATE CO-OP B ANK / CENTRAL CO-OP BANKS AND THAT THE PROVISIONS OF SECT ION 43D OF THE ACT ARE CLEAR REGARDING THE RECOGNITION OF INTEREST INCOME ON NPA. THE LD. CIT(A) IN OUR VIEW HAS THUS RIGHTLY HELD THAT OVERDUE INTEREST NOT REALIZE D DURING 5 ITA NO.939/DEL/2016 (THE JHAJJAR CENTRAL CO-OPERATIVE BANK) THE YEAR AND CREDITED TO SUSPENSE INTEREST ACCOUNT CANNOT BE TAKEN TOBE THE INCOME OF THE ASSESSEE. THUS THE LD. CIT (A) HAS THUS RIGHTLY DELETED THE ADDITION IN QUESTI ON. THE SAME IS UPHELD. THERE IS NO SUBSTANCE IN THE CONTE NTION OF THE LD. DR THAT THE ASSESSEE WAS HAVING NO OBJECTIO N TO THIS ADDITION, SINCE WE FIND THAT IT WAS AN ALTERNA TIVE SUBMISSION OF THE ASSESSEE BEFORE THE AO THAT EVEN IF ANY ADDITION IS TO BE MADE OF RS. 1,29,91,989/- THEN AD DITION OF RS. 1,00,51,715/- IS TO BE MADE ON ACCOUNT OF IN TEREST OF EARLIER YEARS CREDITED DURING THE YEAR TO P & L ACC OUNT. EVEN OTHERWISE THE AO IS SUPPOSED TO MAKE JUST ASSESSMENT BASED ON THE PROVISIONS OF LAWS WHICH CA N NOT BE IGNORED SINCE ASSESSEE IS AGREEABLE TO THE PROPO SED WRONG ADDITION. THE GROUND NO. 3 IS ACCORDINGLY RE JECTED. 5.1 THEREFORE, IN VIEW OF THE ADJUDICATION OF THE TR IBUNAL IN ASSESSEES OWN CASE WHICH HAS ALSO BEEN FOLLOWED BY T HE LD. CIT (A) IN THE YEAR UNDER CONSIDERATION WE FIND NO REASON T O INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE AND WE DISMISS GROUND NOS. 1 AND 2. 5.2 COMING TO GROUND NO. 3 WHICH CHALLENGES THE DELE TION OF ADDITION OF RS. 1.50 LAKHS PERTAINING TO PROVISION CREATED FOR CA AUDIT FEE, WE FIND THAT THE LD. CIT (A) HAS GIVEN C ATEGORICAL FINDING THAT THIS EXPENDITURE HAS ACTUALLY BEEN INCURRED BY THE ASSESSEE. IT 6 ITA NO.939/DEL/2016 (THE JHAJJAR CENTRAL CO-OPERATIVE BANK) IS FURTHER SEEN THAT EVEN THE PROVISION WAS CREATED KEEPING IN MIND THE AUDIT FEE PRESCRIBED BY THE NABARD AND AFTER TA KING INTO ACCOUNT THE NUMBER OF BRANCHES WHICH THE ASSESSEE WAS OPERATING. THEREFORE, ON THIS ISSUE ALSO THERE IS NO NEED FOR ANY INTERFERENCE BY US. ACCORDINGLY WE DISMISS GROUND NO. 3 OF THE DEPAR TMENTS APPEAL. 6. IN THE FINAL RESULT APPEAL FILED BY THE DEPARTME NT STANDS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MAY, 2018). SD/- SD/- (PRAMOD KUMAR) (SUDHANSHU SRIVASTAVA ) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATE: 30 TH .05.2018 BINITA COPY OF ORDER TO: - 1) THE APPELLANT; 2) THE RESPONDENT; 3) THE CIT; 4) THE CIT(A)-, NEW DELHI; 5) THE DR, I.T.A.T., NEW DELHI; TRUE COPY BY ORDER ITAT, NEW DELHI 7 ITA NO.939/DEL/2016 (THE JHAJJAR CENTRAL CO-OPERATIVE BANK)