The Erumeli Service Co-op Bank Ltd, Kottayam V. The ITO, Kottayam

MA 21/COCH/2017

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5542 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 23-12-2016
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI ABRAHAM P. GEORGE, AM & GEORGE GEORGE K., JM M.P. NO. 21/CO CH/2017 (ARISING OUT OF I.T.A. NO.236/ /COCH/2016) ASSESSMENT YEAR : 2011 - 12 THE ERUMELY SERVICE CO - OPERATIVE BANK LTD., ERUMELY, KOTTAYAM-686 509. [PAN: AACCT 8991Q] VS. THE INCOME TAX OFFICER, WARD - 4, KOTTAYAM. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) I.T.A. NO. 236 /COCH/201 6 ASSESSMENT YEAR : 2011 - 12 THE INCOME T AX OFFICER , WARD-4, ERUMELY, KOTTAYAM-686 509. [PAN: AACCT 8991Q] VS. THE INCOME TAX OFFICER, WARD - 4, KOTTAYAM. ( ASSESSEE - APPELLANT) ( REVENUE - RESPONDENT) ASSESSEE BY SHRI PRASANTH SRINIVAS, CA REVENUE BY SHRI A. DHANARAJ , SR. DR DATE OF HEARING 19 / 0 5 / 201 7 DATE OF PRONOUNCEMENT 19 / 0 5 /201 7 M.P. NO. 21/COCH/2017 & I.T.A. NO.236/COCH/2016 2 O R D E R PER ABRAHAM P.GEORGE, ACCOUNTANT MEMBER: THROUGH THIS MISCELLANEOUS PETITION, ASSESSEE SE EKS RESTITUTION OF THE APPEAL IN I.T.A. NO.236/COCH/2015 DATED 26/09/2016. APPEAL OF THE ASSESSEE IS AGAINST AN ORDER DATED 16/03/2016 PASSED BY PR. CIT, KOTTAYAM U/S. 263 OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT) AND SEEKS ITS MODIFIC ATION. 2. LD. AR SUBMITTED THAT ASSESSEE COULD NOT APP EAR ON THE DATE OF HEARING AND THE APPEAL WAS DISMISSED EX PARTE. THE LD. DR D ID NOT OBJECT TO RESTITUTION OF THE APPEAL, OR HEARING IT ON MERITS. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. WE FIND THE REASON CITED BY THE ASSESSEE TO BE FAIR AND HENCE W E RECALL THE APPEAL. ACCORDINGLY, MISCELLANEOUS PETITION FILED BY THE A SSESSEE IS ALLOWED. APPEAL IS RECALLED AND HEARD. 4. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT A N ISSUE SIMILAR TO THE ONE RAISED BY IT IN THIS APPEAL HAD COME UP FOR HEARING IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09. AS PER THE LD. AR THROUGH AN ORDER DATED 22/03/2017 IN I.T.A. NO.08/COCH/2016, THIS TRIBUNAL HAD MODIFI ED THE ORDER PASSED BY THE PR. CIT U/S. 263 OF THE ACT AND THE FACTS WERE SIMI LAR. M.P. NO. 21/COCH/2017 & I.T.A. NO.236/COCH/2016 3 5. THE LD. DR FAIRLY SUBMITTED THAT THE APPEAL OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR IS ON A SET OF FACTS WHICH ARE SIMI LAR TO ITS APPEAL FOR AY 2008- 09 WHICH HAS BEEN DISPOSED OF BY THE TRIBUNAL BY IT S ORDER MENTIONED SUPRA. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL ON RECORD. FOR THE IMPUGNED ASSESSMENT YEAR, REVISION WAS DONE BY PR. CIT FOR A REASON THAT A PORTION OF THE INTEREST RECEIVED BY THE ASSE SSEE DURING THE RELEVANT PREVIOUS YEAR INCLUDED INTEREST RECEIVED FROM TREAS URY ON DEPOSITS OF RS. 12 LAKHS MADE IN JULY 2007(RS. 7 LAKHS) AND OCTOBER, 2 007 (RS. 5 LAKHS) WHICH MATURED IN DECEMBER, 2010 AND SEPTEMBER, 2010 RESPE CTIVELY. THE PR. CIT HAD HELD THAT EXPENSES IN THE NATURE OF INTEREST PAID O N FUNDS WHICH WERE USED FOR MAKING DEPOSITS WAS ALLOWED TO THE ASSESSEE AS AN E XPENDITURE IN THE EARLIER YEARS AND HENCE, COULD NOT BE CONSIDERED FOR SET OF F AGAINST THE INTEREST INCOME. HE DIRECTED THE ASSESSING OFFICER TO CONSIDER THE I SSUE AFRESH AND PASS AN ORDER AS PER THE PROVISIONS OF THE I.T. ACT. WE FIND THA T A SIMILAR ISSUE HAD COME UP IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09 WHEREIN THIS TRIBUNAL HAD HELD IN PAGES 11 & 12 OF ITS ORDER DATED 22/03/2017 AS UNDER: THUS, WHEN THE LD. ASSESSING OFFICER ALLOWED CLAIM O F EXPENDITURE TO THE ASSESSEE, CALCULATING THE PRORATA INTERE ST AS A RATIO OF THE TOTAL INTEREST PAID BY THE ASSESSEE DURING THE REL EVANT FINANCIAL YEAR, HE WAS AWARE THAT, THAT THE INTEREST INCOME WAS FOR 78 MONTHS. WE CANNOT SAY THAT IT WAS AN ERRONEOUS VIEW OF LAW BY THE LD. ASSESSING OFFICER. WHEN INTEREST INCOME WAS CONSIDERED BY M.P. NO. 21/COCH/2017 & I.T.A. NO.236/COCH/2016 4 THE LD. ASSESSING OFFICER FOR THE WHOLE TENURE OF TH E DEPOSITS INCLUDING PERIOD PRIOR TO THE BEGINNING OF THE PR EVIOUS YEAR, INTEREST EXPENDITURE ALSO HAD TO BE RECKONED FOR TH E SAME PERIOD. THE VIEW OF THE PRINCIPAL COMMISSIONER OF INCOME TAX T HAT INTEREST EXPENDITURE ALONE HAD TO BE RESTRICTED TO THE PROPO RTIONATE AMOUNT FOR SEVEN MONTHS IN THE RELEVANT PREVIOUS YEAR, WOU LD BE AGAINST THE MATCHING PRINCIPLES. IN OTHER WORDS, IT WOULD RE SULT IN A SITUATION WHERE INTEREST INCOME IS RECKONED FOR 78 M ONTHS BUT EXPENDITURE ONLY FOR 07 MONTHS. WE CAN SURELY SAY T HAT LD. PRINCIPAL COMMISSIONER OF INCOME TAX WAS TRYING TO S UBSTITUTE A LEGALLY PERMISSIBLE VIEW TAKEN BY THE LD. AO WITH ANO THER VIEW WHICH WAS NOT A RATIONAL ONE. HONBLE APEX COURT IN T HE CASE OF MALABAR INDUSTRIAL CO. LTD (SUPRA) HAS CLEARLY HELD THAT REVISIONARY POWERS U/S.263 OF THE ACT CANNOT BE INVOKED FOR SUB STITUTING A LAWFUL VIEW TAKEN BY THE LD. ASSESSING OFFICER, WITH A NOTHER VIEW. HENCE, WHILE UPHOLDING THE REVISION ORDER IN SO FAR AS IT CONCERNED ALLOWANCE U/S.80P(2)(C) (II) OF THE ACT IS CONCERNED , WE MODIFY AND DELETE THAT PORTION RELATING TO TREATMENT OF IN COME AND EXPENDITURE UNDER THE HEAD INCOME FROM OTHER SOUR CES ON THE INTEREST INCOME EARNED BY THE ASSESSEE FROM ITS DE POSITS IN TREASURY, KOTTAYAM. ORDER OF THE LD. CIT STANDS MO DIFIED TO THIS EXTENT. FOR THE IMPUGNED ASSESSMENT YEAR ALSO, WE MODIFY TH E DIRECTION OF THE PR. CIT AND DELETE THAT PORTION RELATING TO TREATMENT OF IN COME AND EXPENDITURE UNDER THE HEAD INCOME FROM OTHER SOURCES ON THE INTERES T INCOME EARNED BY THE ASSESSEE FROM ITS DEPOSITS IN TREASURY, KOTTAYAM, I N THE IMPUGNED ORDER OF THE PR. CIT. ACCORDINGLY, THE APPEAL OF THE ASSESSEE I S ALLOWED. M.P. NO. 21/COCH/2017 & I.T.A. NO.236/COCH/2016 5 7. IN THE RESULT, THE MISCELLANEOUS PETITION FILE D BY THE ASSESSEE AS WELL AS THE APPEAL OF THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE O PEN COURT ON 19-05-2017. SD/- SD/- (GEORGE GEORGE K.) ( ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 19 TH MAY, 2017 GJ COPY TO: 1. THE ERUMELY SERVICE CO-OPERATIVE BANK LTD., ERUMEL Y, KOTTAYAM-686 509. 2. THE INCOME TAX OFFICER, WARD-4, KOTTAYAM. 3. THE PR. COMMISSIONER OF INCOME-TAX, KOTTAYAM. 4. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 5. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN