THE KARAD JANATA SAHAKARI BANK,SATARA V. INCOME-TAX OFFICER, SATARA

MA 60/PUN/2022

AI Insights

The case involves The Karad Janata Sahakari Bank, which filed a Miscellaneous Application (MA) seeking to recall an ITAT order that inadvertently included their appeal with a group of other appeals having different issues. The original ITAT order dated 30.11.2018 addressed issues unrelated to those raised by The Karad Janata Sahakari Bank, specifically concerning the disallowance of deductions for provisions made for bad and doubtful debts under section 36(1)(viia) of the Income Tax Act, 1961. Both the assessee's representative and the Department's representative agreed that the issues in the recalled order did not pertain to the bank's appeal, leading to the decision to recall the order and set a new date for a detailed hearing on the specific issues raised by the bank.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472572 (ITAT-PUNE)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Other Referred Cases: The Kodungallur Town Co-Op. Bank Ltd. Vs. ACIT, Mahalaxmi Cooperative Bank Ltd V ITO ITA 1658/PN/2011, Bhagini Nivedinta Sah Bank Ltd ITA No. 167/PUN/2015
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND DESAI
• Assessee Lawyers: DEEPA KHARE
• Keywords: Bad and doubtful debts; Depreciation

Judgement Text

" आयकर अपीलीय अधिकरण “ए”न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE MS. ASTHA CHANDRA, JUDICIAL MEMBER AND SHRI DIPAK RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / MA No.60/PUN/2022 (Arising out of ITA No.762/PUN/2016) धििाारण वर्ा / Assessment Year: 2011-12 The Karad Janata Sahakari Bank, S. No.100/101, Shivaji Nagar, Near S.T. Stand, Karad, Dist- Satara PAN : AAAAT7863R Vs. Income Tax Officer, Ward – 1, Satara अपीलार्थी /Applicant प्रत्यर्थी / Respondent Assessee by : Smt. Deepa Khare Department by : Shri Arvind Desai, Addl. CIT DR Date of hearing : 10-01-2025 Date of Pronouncement : 11-03-2025 आदेश / ORDER PER ASTHA CHANDRA, JM : By this Miscellaneous Application the assessee seeks to recall the order of the Tribunal dated 30.11.2018 in ITA No.762/PUN/2016 pertaining to Assessment Year 2011-12 alleging that an error apparent on record has crept into the aforesaid order that calls for rectification under the provisions of section 254 of the Income Tax Act, 1961 on the ground that the issue involved in the assessee’s appeal is different than the issue involved in other bunch of appeals decided by the Tribunal vide its order dated 30.11.2018 along with the appeal of the assessee. 2. The Ld. AR submitted that the assessee’s appeal was taken as heard along with the other bunch of appeals heard by the Bench on 12.09.2018 and the order of the Tribunal in the said appeals was pronounced on 30.11.2016 mentioning the assessee’s appeal too in the cause title thereof. She submitted that the Tribunal has disposed of the assessee’s appeal in ITA No.762/PUN/2016 inadvertently vide its order dated 30.11.2018 as the issue decided by the Tribunal in other appeals is different from the grounds raised by the assessee in its appeal. She therefore requested that the appeal of the 2 M.A. No. 60/PUN/2022 (Arising out of ITA No.762PUN/2016), AY 2011-12 assessee in ITA No.762/PUN/2016 may be recalled for fresh adjudication on merits. 3. The Ld. DR conceded that the above contention of the Ld. AR is correct. He placed on record before the Bench, comments on the MA obtained from the DCIT, Satra Circle, Satara (“AO”) vide his letter dated 08.02.2022 wherein the Ld. AO has confirmed the same. The relevant extract of the said letter of the Ld. AO is reproduced below: “3. In the MA, the assessee has stated that in his case for AY 2011-12 the appeal before the ITAT for ITA No. 762/PN/2016 was disposed by the tribunal by order dated 30.11.2018. The main issue decided in the appeal was regarding allowability of deduction u/s 36(1)[viia). In the order, the tribunal observed that \"The AO has noted that the assessee was not having any rural advances and hence was not eligible to claim the aforesaid deduction u/s 36(1)(viia). The assessee has contested that the issue decided in the said order of the ITAT is different from the grounds raised by the assessee in the Form-36. As per the assessee, the issue in the case of the assessee is regarding the disallowance made by AO u/s 36(1)[viia) on account of excess claim on account of \"Provision for Bad & Doubtful Debts u/s 36(1)(viia) r.w.s. 36(2)(v) of the Act. 4. Brief facts: The assessee M/s The Karad Janata Sahakari Bank Ltd. is a Coop bank The ITR for AT 2011-12 was fed on 24.09.2011 declaring total income at Rs. NIL after showing current year lose at Rs. 1,41,63,907/ The scrutiny assessment u/s 14313) was completed on 19.03.2014 determining total income at Rs. 3,04,19,720/-after making various additions/disallowances 5. Disallowance of deduction of Rs.1,63,55,984/-u/s 36[1][viia):- For the relevant AY the assessee made provision for bad & doubtful asset of Rs.60,00,000/-, The assessee claimed deduction of Rs. 2,23,55,984/- in respect of provision for bad & doubtful asset u/s 36[1][viia) of the Act as follows: 7.5% of total income of Rs.1,98,51,120/- = 14,88,534/- 10% of average rural advances of Rs. 20,86,71,508/- = 2,06,67,150/- Total deduction claimed by assessee u/s 36(1(via) = 2,23,55,984/- During the course of assessment the AO made observations in para 7 of the assessment order and referred to the judgement of the Hon'ble Punjab & Наyana High Court in the case of State Bank of Patiala. The AO also relied upon the CBDT instruction on 17/2008 dated 26.11.2008 in which it was stated that the deduction for provision for bad & doubtful asset u/s 36(1)](viia) should be restricted to the amount of such provision actually created in the books or the amount calculated as per provisions of section 36(1)(viia) whichever is less. In view of the above, the AO did not accept the deduction of Rs. 2,23,55,984/- claimed by the assessee in respect of provision for bad & doubtful asset u/s 36(1)(viia) of the Act. The AO restricted this deduction to Rs. 60,00,000/-only the amount of provision made by assessee for bad & doubtful assets). Thereby AO made disallowance of deduction of Rs. 1,63,55,984/ [Rs. 2,23,55,984 - Rs.60,00,000]. This addition was confirmed by the CIT(A)-2 Pune vide order dated 10.12.2015. 6. Disallowance on account of \"Provision for Investment depreciation fund\":- 3 M.A. No. 60/PUN/2022 (Arising out of ITA No.762PUN/2016), AY 2011-12 For the relevant AY, the assessee claimed deduction of Rs.49,95,000/- on account of \"Provision for Investment depreciation fund\". During the course of assessment the AO made some observations in para 8 of the assessment order and referred to decision of Hon'ble Supreme Court in the case of Southern Technologies Ltd.. Based on these the AO disallowed the deduction of Rs.49,95.000/- On account of “Provision for Investment depreciation fund” and added this to the total income of the assessee. This addition was confirmed by the CIT(A)-2, Pune vide order dated 10.12.2015. 7. ITAT order for ITA No. 762/PN/2016 dated 30.11.2018:- This is a combined order of the ITAT for three different assessees for various AYs including the appeal filed by the assessee M/s The Korad Janata Sahakari Bank Ltd. vide ITA No. 762/PN/2016 for AY 2011-12. In this order, on the issue of deduction claimed under section 361visal the Act, the tribunal has allowed the appeal of the assessee and granted relief to the assessee. The ITAT has relied upon the decision of Hon'ble High Court of Kerala in The Kodungallur Town Co-Op. Bank Ltd. Vs. ACIT among others. 8. Comments on Miscellaneous Application filed by assessee:- i. Disallowance of deduction u/s 36(1)[viia): The hon'ble ITAT has relied upon the decision of Hon'ble High Court of Kerala in The Kodungallur Town Co Op. Bank Ltd. Vs. ACIT. In this case the hon'ble Kerala High Court has considered the issue whether deduction u/s 36(1)(viia) is allowable to coop banks which do not have branches in rural areas. Para 27 of the order of the ITAT reads as follows: - \"... The issue raised in the present appeal stands fully covered by the decision of the Hon'ble High Court of Kerala (supra) though not the jurisdictional High Court, but the only decision available on the said issue squarely binds the Tribunal and hence, applying the said ratio, we hold that the assessee is entitled to the claim of deduction under section 36(1)(viia) of the Act to the extent of 7.5% of total income. The assessee co- operative bank do not have any rural branches, hence is not entitled to the second part claim of 10% of advances made by rural branches. The deduction is allowable with a rider to satisfy the provisions of said section te making a provision to that extent in the books of account. The first issue which is raised in the case of different cooperative banks stands decided in favour of assessee. Therefore the issue decided by the hon'ble ITAT is in respect of coop banks which do not have branches in rural areas. This is not true in the case of the assessee. In fact, the assessee has shown rural advances of Rs. 20,86,71,508/ during the course of assessment proceedings and has claimed 10% of this amount as deduction u/s 36(1)(viia). In view of this, it is stated that the issue involved in the above mentioned decision the ITAT is different from the issue in the case of the assessee. ii. Disallowance on account of \"Provision for Investment depreciation fund\":- The order of the hon'ble ITAT is perused. It is found that this issue is not decided by the hon'ble ITAT pune in the abovementioned order.” 4. We have heard the Ld. Representative of the parties and perused the material available on record. In its Miscellaneous Application the assessee has the raised the following grounds- 4 M.A. No. 60/PUN/2022 (Arising out of ITA No.762PUN/2016), AY 2011-12 “1. The above appeal was decided by Hon Tribunal vide its order dated 30.11.2018. The said Order of Hon ITAT was served on the appellant on 02.02.2019. The Appeal of the Appellant for AY 2011-12 was tagged with the appeals of the other Cooperative Banks as stated in Para 2 of the Order and has been decided by a common Order of the Hon ITAT. 2. The main issue decided is regarding allowability of Deduction u/s 36(1)(viia). The controversy involved in the lead case i.e. Bhagini Nivedinta Sah Bank Ltd ITA No. 167/PUN/2015 is regarding deduction u/s 36(1)(viia) when the bank does not have any Rural Advance. 3. The precise scope of the issue is discussed at the beginning of page no. 4 stating that \"The Assessing Officer noted that the assesse was not having any rural advances and hence was not eligible to claim the aforesaid deduction u/s 36(1)(viia).\" 4. It is respectfully submitted that the said issue does not arise in the case of the Appellant Bank in the present case. The Grounds raised in Appeal Memo in Form No. 36 are stated as under. GROUNDS OF APPEAL 1. Disallowance as per para 7 sub para 7.7 of the Assessment order for the A.Y. 2011-12 on account of excess claim on account of \"Provision for Bad & Doubtful Debts u/s 36(1)(viia) read with 36(2)(v) of Income Tax Act 1961. Deduction of Rs. 2,23,55,984/ is restricted to Rs.60,00,000/-as claimed and making disallowance of Rs.1,63,55,984)- 2. Disallowance as per para 8 sub para 8.3 of the Assessment order for the A.Y. 2011-12 on account of \"Provision for investment Depreciation Fund. The issue in Ground No. 1 is about disallowance of deduction u/s 36(1)(viia) at Rs.1,63,55,984/ on the ground that there is no adequate provision made in the books of accounts and therefore the short fall in provision has been added. The Id CIT(A) following the decision of Pune ITAT in appellant's own case for AY 2010-11 which in turn follows the decision of Pune ITAT in case of Mahalaxmi Cooperative Bank Ltd V ITO ITA 1658/PN/2011, has dismissed the ground. It is therefore respectfully submitted that the issue involved inthe appeal of the appellant is different than the other appeals decided by the Hon Tribunal. The issue in Ground no.2 is not decided by Hon ITAT in the above Order which require adjudication. In view of the above, it is respectfully submitted that an error apparent on record has been crept in the order of Hon Tribunal which may kindly be rectified. It is therefore submitted that the order of the Hon Tribunal dated 30.11.2018 may kindly be recalled and decided on merits.” 5. From the perusal of the order of the Tribunal dated 30.11.2018 (supra), and the above submissions made by the assessee in the MA and in view of the comments provided by the Ld. AO, the contention of the Ld. AR is found to be correct. Therefore, in our considered view, considering the totality of facts and in the circumstances of the case and in the interest of justice and in the absence of any objection from the side of the Ld. DR, we deem it fit to recall the 5 M.A. No. 60/PUN/2022 (Arising out of ITA No.762PUN/2016), AY 2011-12 order of the Tribunal dated 30.11.2018 only to the limited extent of assessee’s appeal decided in ITA No.762/PUN/2016 for fresh hearing and adjudication on merits after giving due opportunity of hearing to the assessee to present its case. Accordingly, the order dated 30.11.2018 passed by the Tribunal in ITA No. 762/PUN/2016 is hereby recalled and the registry is directed to fix the aforesaid appeal for hearing in the due course before the regular Bench. The fresh date of hearing shall be informed to both the parties by issuing of notice of hearing. 6. In the result, the Miscellaneous Application filed by the assessee is allowed. Order pronounced in the open court on 11th March, 2025. Sd/- Sd/- (Dr. Dipak P. Ripote) (Astha Chandra) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; दिन ांक / Dated : 11th March, 2025. रदि आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT concerned. 4. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, पुणे / DR, ITAT, “A” Bench, Pune. 5. ग र्ड फ़ इल / Guard File. //सत्य दपि प्रदि// True Copy// आिेश नुस र / BY ORDER, िररष्ठदनजीसदचि / Sr. Private Secretary आयकरअपीलीयअदिकरण ,पुणे/ ITAT, Pune "