Bombay High Court
The Pr.Commissioner Of Income Tax-1 vs The Janlaxmi Co-Operative Bank Ltd on 26 August, 2019
Bench: M.S.Sanklecha, Nitin Jamdar
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL NO.683 OF 2017
The Pr. Commissioner of Income Tax-1,
Nashik .. Appellant.
v/s.
The Janlaxmi Co-operative Bank Ltd., .. Respondent.
Mr. Sham Walve, for the Appellant.
Mr. Mihir Naniwadekar with Mr. Ruturaj Gurjar, for the Respondent.
CORAM: M.S.SANKLECHA &
NITIN JAMDAR, JJ.
DATE : 26th AUGUST, 2019.
P.C:-
This Appeal under Section 260-A of the Income Tax Act, 1961 (the Act), challenges the order dated 20 th May, 2016 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order dated 20th May, 2016 is in respect of Assessment Year 2010-11.
2 Revenue urges the following questions of law, for our consideration:
"(a) Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in law in holding that assessment order was not erroneous and prejudicial to the revenue as the issue of interest on NPAs was considered by the AO in the scrutiny assessment proceedings and view taken on it ?
(b) Whether on the facts and circumstances of the case and in law, the Tribunal was right in allowing the interest expenditure of Rs.2,64,59,614/- to the assessee relying upon the decision of this Court in the case of Deogiri Nagari Sahakari Bank Ltd., in Income Tax Appeal No. 53 of 2014 & Ors., without appreciating the fact that, in that case, the issue of S.R.JOSHI 1 of 4 ::: Uploaded on - 28/08/2019 ::: Downloaded on - 28/08/2019 20:57:55 ::: itxa-683-2017 interest on NPAs by categorization of NPAs as per Rule 6EA(e) read with clause (a) of section 43d was not examined?
(c) Whether on the facts and circumstances of the case and in law, the Tribunal was right in allowing the interest expenditure of Rs.2,64,59,914/- without appreciating the decision of the Tribunal, Pune bench in the case of Cosmos Bank Ltd., v/s. DCIT, Circle 7, ITA No. 460 & 461/PN/2012 dt.
23.01.2014, wherein the stand of the revenue that categorization on interest of NPAs has to be done in terms of Sec. 43D (a) of the I.T. Act r.w.f. 6EA of the I.T. Rules was upheld?"
3 Re. Question (a):-
(i) The grievance of the Revenue is that the impugned order of the Tribunal was not justified in setting aside the order dated 24 th September, 2014 of the Commissioner of Income Tax. The above order dated 24th September, 2014 of the Commissioner of Income Tax was in exercise of power of Revision under Section 263 of the Act, in respect of Assessment Order dated 15th March, 2013;
(ii) Mr. Walve, learned Counsel for the Revenue submits that the issue with regard to interest on sticky loans had not been verified/ examined by the Assessing Officer before allowing the claim of the Respondent. This, Mr. Walve submits is evident from the fact that the Assessment Order dated 15th March, 2013 does not reveal any consideration on this issue;
(iii) We find that the above submissions on facts stand belied by the fact that the impugned order of the Tribunal records that during the regular assessment proceedings leading to an Assessment Order, the Respondent had given detailed reply to the queries raised by the Assessing Officer with respect to interest on Non-Performing Assets/ sticky loans. Moreover, we find that in the statement of facts as set S.R.JOSHI 2 of 4 ::: Uploaded on - 28/08/2019 ::: Downloaded on - 28/08/2019 20:57:55 ::: itxa-683-2017 out in the appeal memo, the Revenue has very categorically stated that the Respondent-Assessee's return was selected for scrutiny and during scrutiny assessment proceedings, specific queries with respect to interest for Non-Performing Assets/ sticky loans being chargeable to tax were raised. The Respondent-Assessee responded to the same and the Assessing Officer on consideration did not make any addition with regard to it in the return i.e. on account of interest on sticky loans;
(iv) The contention of the Revenue that the absence of consideration in the impugned order of the Assessing Officer, would ipso facto established non-enquiry into the issue by the Assessing Officer. This very submission has been negatived by this Court in CIT v/s. Fine Jewellery (India) Ltd., 372 ITR 303. In the above decision rendered in the context of Section 263 of the Act, it was held that once enquiries are made during the assessment proceedings and the assessee has responds to the queries, then non-mentioning of the same in the assessment order, would not lead to the conclusion that the Assessing Officer had not enquired into this aspect. In fact, in this case, the Revenue itself has conceded in its statement of facts as stated in the appeal memo that the queries were raised and the Respondent had responded to it during the assessment proceedings, which led the Assessing Officer to accept the assessee's stand. Thus, on these facts, it cannot be said that above finding of the Tribunal is perverse;
(v) In view of the above, the question as framed does not give rise to any substantial question of law. Thus, not entertained.
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4 Re. Questions (b) and (c):-
(i) In view of our answer to question (a) above, these two questions on
merits of the claim are rendered become academic;
(ii) Therefore, these two questions do not give rise in the present facts to any substantial question of law. Thus, not entertained.
5 Accordingly, Appeal dismissed.
(NITIN JAMDAR,J.) (M.S.SANKLECHA,J.)
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