BARODA RAJASTHAN KSHETRIYA GRAMIN BANK, Jaipur V. ACIT, Ajmer

ITA 982/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5121 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 16-12-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S L CHANDEL CIT DHK
• Assessee Lawyers: AJAY SOMANI
• Keywords: Depreciation; Bad and doubtful debts
• Section: 143(3); 263

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 982/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13. BARODA RAJASTHAN KSHETRIYA GRAMIN BANK, (ERSTWHILE RAJASTHAN GRAMIN BANK) CUKE VS. ASSTT. COMMISSIONER OF INCOME TAX, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAAAR 4349 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI AJAY SOMANI (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI S.L. CHANDEL (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 30.08.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 04/09/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), AJMER DATED 15.10.2015 PERTAINING TO A.Y. 2013-13. THE ASSESSEE HAS RAISED THE SOLITARY GROUND OF APPE AL :- 1. THAT THE LD. CIT(A), AJMER HAS ERRED IN LAW AND THE FACTS IN CONFIRMING THE ADDITIONS BY WAY OF DISALLOWANCE OF RS. 1,93,30 ,000/- OF PROVISION AGAINST BANKS DEBTORS AS THE SAME HAS BEEN MADE AS PER RBI GUIDELINES. 2. BRIEFLY, STATED THE FACTS ARE THAT THE CASE OF T HE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VID E ORDER DATED 05/03/2015. WHILE FRAMING THE ASSESSMENT THE ASSESSING OFFICER MADE A DDITION ON ACCOUNT OF DISALLOWANCE ON ACCOUNT OF PROVISION FOR STANDARD A SSETS DEBITED TO THE PROFIT AND 2 ITA NO. 982/JP/2015. BARODA RAJASTHAN KSHETRIYA GRAMIN BANK, JAIPUR. LOSS ACCOUNT OF RS. 1,93,30,000/-, DISALLOWANCE ON ACCOUNT OF SFF I.E. SAFE, FURNITURE AND FIXTURE ASSETS OF RS. 7000/- ON ACCOU NT OF DEPRECIATION ON UPS OF RS. 5,94,756/-. AGGRIEVED BY THIS, THE ASSESSEE PREFER RED AN APPEAL BEFORE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWE D THE APPEAL. WHILE PARTLY ALLOWING THE APPEAL LD. CIT(A) DELETED THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE ON DEPRECIATION OF RS. 5,94,756/-. 3. THE ONLY GROUND RAISED IN THIS APPEAL IS AGAINST CONFIRMING THE ADDITIONS BY WAY OF DISALLOWANCE OF RS. 1,93,30,000/-. 3.1 LD. COUNSEL SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE CO- ORDINATE BENCH RENDERED IN THE CASE OF M/S NAGAUR U RBAN CO-OPERATIVE BANK LTD. VS. ASSTT. COMMISSIONER OF INCOME TAX IN ITA NO. 24 0/JODH/2013. 3.2 LD. D/R OPPOSED THE SUBMISSIONS AND SUPPORTED T HE ORDER OF THE LD. CIT(A). 3.3 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) DECIDED THIS ISSUE IN PARA 4.3 BY OBSERVING AS UNDER:- 4.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, STAT EMENT OF FACTS, GROUNDS OF APPEAL AND WRITTEN SUBMISSION CAREFULLY. IT IS SEEN THAT THE PROVISION OF SE. 36(1)(VII) ARE VERY CLEAR AND UNAM BIGUOUS ON THIS ISSUE. THE DEDUCTION U/S 36(1)(VII) IS ALLOWABLE, SUBJECT TO C ERTAIN CONDITIONS ONLY IN RESPECT OF ANY PROVISION FOR BAD AND DOUBTFUL DEBT S MADE BY A SCHEDULED BANK. THE PROVISION MADE FOR STANDARD ASSETS IS NOT A PROVISION FOR BAD AND DOUBTFUL DEBTS, THEREFORE, I AM OF THE CONSIDERED VIEW THAT DEDUCTION IN RESPECT OF THE PROVISION MADE BY THE APPELLANT FOR STANDARD ASSETS IS NOT AN ADMISSIBLE DEDUCTION U/S 36(1)(VII). THEREFORE, TH E DISALLOWANCE MADE BY THE AO IS HEREBY CONFIRMED. 3 ITA NO. 982/JP/2015. BARODA RAJASTHAN KSHETRIYA GRAMIN BANK, JAIPUR. 3.4 UNDER THE IDENTICAL FACTS, THE TRIBUNAL HAD DEC IDED THE ISSUE IN ITA NO. 240/JODH/2013 BY OBSERVING AS UNDER:- 10. AFTER CIRCUMSPECTING THE ENTIRE RECORDS VIS-- VIS THE ORAL SUBMISSIONS, WE ARE OF THE CONSIDERED OPINION THAT GROUND NO. 2 STAND COVERED IN FAVOUR OF THE ASSESSEE VIDE ORDER OF ITAT, CHENNAI BENCH AS D ISCUSSED IN THE ABOVE EXCERPT. WE HAVE GONE THROUGH THE COPY OF THE TRIB UNAL ORDER REFERRED ABOVE AND ARE CONVINCED THAT THIS GROUND STANDS COV ERED IN FAVOUR OF THE ASSESSEE. THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL (SUPRA) IS REPRODUCED AS UNDER:- 8. NOW THE SECOND QUESTION WHICH ARISES FOR DETERM INATION BEFORE U S WHETHER THE ASSESSEE HAS CREATED ANY RESERVE/PR OVISION FOR BAD AND DOUBTFUL DEBTS? THE AR HAS CONTENDED THAT THE ASSESSEE HAS CREATED PROVISIONS FOR BAD AND DOUBTFUL DEBTS UNDER THE NOMENCLATURE RESERVES FOR NPA . THE TERMINOLOGY RESERVE FOR NPA HAS BEEN USED BY THE ASSESSEE IN ACCORDANCE WITH THE RBI DIRECTIONS. AS IS EVIDENT FROM THE ASSESSMENT ORDER, THE ASSESSEE HAS INDEED CREATED, RESERVES F OR NPA. FOR CLAIMING BENEFIT UNDER THE PROVISIONS OF SECTION 36 (1)(VIIA)(A) THE CONDITION TO BE SATISFIED IS; THAT PROVISION FOR BA D AN DOUBTFUL DEBTS SHOULD HAVE BEEN MADE BY THE BANK ELIGIBLE TO CLAIM SUCH DEDUCTION. CO-OPERATIVE BANKS DO NOT STRICTLY FOLLOW THE PROVI SIONS OF BANKING REGULATION ACT FOR THE PURPOSE OF MAINTAINING THEIR BOOKS OF ACCOUNTS. IN OUR CONSIDERED OPINION, THE ASSESEE HAS CREATED PROVISIONS FOR BAD AND DOUBTFUL DEBTS MAY BE UNDER DIFFERENT NOMENCLAT URE. THIS WILL NOT DIS-ENTITLE THE ASSESSEE FOR CLAIMING DEDUCTION UND ER THE PROVISIONS OF SECTION 36(1)(VIIIA)(A). THE PURPOSE FOR CREATION OF RESERVE FOR NPA IS SAME I.E. CREATING PROVISION TOWARD BAD AND DOUBTFU L DEBTS. IN VIEW OF THE ABOVE, WE FIND THAT THE ASSESSMENT O RDER DATED 09.09.2010 IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE IMPUGNED ORDER OF CIT PASSED U/S 263 IS SET ASIDE THE APPEAL OF THE ASSESSEE IS ALLOWED. 11. THEREFORE, BY RESPECTFULLY FOLLOWING THE RATIO DECIDENDI OR THE ABOVE TRIBUNAL ORDER WE ALLOW GROUND NO. (2) OF THIS APPE AL IN FAVOUR OF THE ASSESSEE. THESE PROVISIONS WHICH ARE IN LINE WITH THE RBI GUIDELINES BECOME ALLOWABLE. 4 ITA NO. 982/JP/2015. BARODA RAJASTHAN KSHETRIYA GRAMIN BANK, JAIPUR. 3.5 THE FACTS ARE IDENTICAL; THERE IS NO CHANGE INT O FACTS AND CIRCUMSTANCES. IT IS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE THA T THIS IS A SCHEDULED BANK. THIS FACT IS NOT REBUTTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE CO-ORDINATE BENCH, WE HEREBY DIRECT THE AO TO DELETE THE DISALLOWANCE. THUS, TH IS GROUND OF THE ASSESSEES APPEAL IS ALLOWED. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 982/JP/2015 IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON MONDAY, TH E 04 TH DAY OF SEPTEMBER 2017. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 04/09/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- BARODA RAJASTHAN KSHETRIYA GRAMI N BANK. 2. THE RESPONDENT ASSTT. COMMISSIONER OF INCOME TAX, AJMER. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 982/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR