M/s Chikmagalur Pattana Sahakara Bank Niyamitha , Chikmagalur V. Assistant Commissioner of Income Tax Circle-1 , Hassan

SA 170/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5974 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 01-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 21-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SANDEEP GOEL BENGALURU
• Assessee Lawyers: S RAMASUBRAMANIAN
• Keywords: Application of stay; Non-deduction of tax; Bad and doubtful debts
• Section: 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER S.P. NO.170/BANG/2018 [IN ITA NO. 1635/BANG/2018] ASSESSMENT YEAR : 2012 - 13 M/S. CHIKMAGALUR PATTANA SAHAKARA BANK NIYAMITHA, NEAR HANUMANTHAPPA CIRCLE, K.M. ROAD, CHIKMAGALUR 577 101. PAN: AAAAC 1986C VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, HASSAN. APP L IC ANT RESPONDENT A PPL IC ANT BY : SHRI S. RAMASUBRAMANIAN, CA RE SPONDEN T BY : DR. SANDEEP GOEL, ADDL .CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 25 . 0 5 .201 8 DATE OF PRONOUNCEMENT : 25 . 0 5 .201 8 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS IS A PETITION FILED BY THE ASSESSEE PRAYING FOR AN ORDER OF STAY OF RECOVERY OF OUTSTANDING DEMAND OF RS.27,38,296. 2. THE ASSESSEE IS A CO-OPERATIVE SOCIETY CARRYING ON BUSINESS OF BANKING. THE OUTSTANDING DEMAND HAS ARISEN OUT OF DISALLOWANCE OF RS.1,05,85,822 U/S. 40(A)(IA) OF THE INCOME-TAX ACT , 1961 [THE ACT] FOR NON-DEDUCTION OF TAX AT SOURCE ON INTEREST PAID EXC EEDING RS.10,000 WHERE THE PAYMENT IS MADE TO A MEMBER OR NON-MEMBER; OR W HERE THE INTEREST IS S.P. NO.170/BANG/2018 PAGE 2 OF 3 ON TIME DEPOSIT OR NON-TIME DEPOSIT. ANOTHER ADDIT ION WHICH HAS GIVEN RISE TO THE OUTSTANDING DEMAND IS AN ADDITION MADE CONSE QUENT TO DISALLOWANCE OF PROVISION FOR BAD AND DOUBTFUL DEBTS OF RS.50 LA KHS DEBITED TO THE PROFIT & LOSS ACCOUNT. THE CASE OF THE REVENUE IS THAT ASSE SSEE IS FOLLOWING CASH BASIS SYSTEM OF ACCOUNTING AND HENCE PROVISION FOR BAD & DOUBTFUL DEBTS CANNOT BE CLAIMED AS A DEDUCTION BY THE ASSESSEE U/ S. 36(1)(VIIA) OF THE ACT. 3. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE, WHO BROUGHT TO OUR NOTICE THAT THE ADDITION U/S. 40 (A)(IA) OF THE ACT CANNOT BE SUSTAINED IN THE LIGHT OF THE DECISION OF THE HO NBLE HIGH COURT OF KARNATAKA, DHARWAD BENCH IN THE CASE OF BAILHONGAL CO-OPERATIVE BANK V. CIT, ITA NO.100001 OF 2014 , WHEREIN THE HONBLE HIGH COURT OF KARNATAKA HELD THAT CO-OPERATIVE BANK WAS NOT REQUIRED TO DED UCT TAX AT SOURCE ON INTEREST EXCEEDING RS.10,000 PAID TO MEMBERS. 4. THE LD. DR SUBMITTED THAT THE STAY PETITION SHOU LD BE REJECTED AND IN ANY EVENT, THE ASSESSEE SHOULD BE ASKED TO PAY SUBS TANTIAL AMOUNT TOWARDS OUTSTANDING DEMAND. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. KEEPIN G IN MIND THE EXISTENCE OF A PRIMA FACIE CASE, BALANCE OF CONVENIENCE AND RELATIVE HARDSHIP, WE ARE OF THE VIEW THAT IT WOULD BE JUST AND APPROPRIATE TO GRANT AN ORDER OF STAY ON RECOVERY OF OUTSTANDING DEMAND, SUBJECT TO THE CONDITION THAT THE ASSESSEE PAYS A SUM OF RS.16 LAK HS [RUPEES SIXTEEN LAKHS ONLY] TOWARDS THE OUTSTANDING DEMAND ON OR BE FORE 15.06.2018. THERE SHALL BE AN ORDER OF STAY ON RECOVERY OF THE OUTSTANDING DEMAND FOR A PERIOD OF SIX MONTHS FROM THE DATE OF THIS ORDER, OR TILL THE DISPOSAL OF THE APPEAL; WHICHEVER IS EARLIER. S.P. NO.170/BANG/2018 PAGE 3 OF 3 6. THE STAY APPLICATION IS ACCORDINGLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF MAY, 2018. SD/- SD/- ( INTURI RAMA RAO ) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 25 TH MAY, 2018. / D ESAI S MURTHY / COPY TO: 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.