Income Tax Appellate Tribunal - Cuttack
Berhampur Co-Operative Central Bank ... vs Acit, Berhampur Circle, Berhampur on 1 February, 2018
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ITA Nos. 03 & 125/CT K/ 2017
Asse ssment Year s : 2 012 -20 13 & 201 3-1 4
IN THE INCOME TAX APPELLATE TRIBUNAL,
CUTTACK BENCH, CUTTACK
BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER
AND PAVAN KUMAR GADALE, JUDICIAL MEMBER
ITA Nos.03 & 125/CTK/2017
Assessment Years : 2012-2013 & 2013-14
Berhampur Co-operative Vs. ACIT, Berhampur Circle,
Central Bank Ltd., Berhampur
Berhampur, Ganjam
PAN/GIR No.AAAAB 2634 C
(Appellant) .. ( Respondent)
Assessee by : Shri P.N.Dave, AR
Revenue by : Shri D.K.Pradhan, DR
Date of Hearing : 1 /02/ 2018
Date of Pronouncement : 01 /02/ 2018
ORDER
Per Pavan Kumar Gadale, JM
These are appeals filed by the assessee against the different orders of the CIT(A)- 1, Bhubaneswar dated 21.9.2016 for the assessment year 2012-13 and dated 23.12.2016 for the assessment year 2013-14. Since common issue is involved in both the appeals, they were disposed of by a single order for the sake of convenience. We take up the appeal in ITA No.03/CTC/2017 for our adjudication.
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ITA Nos. 03 & 125/CT K/ 2017 Asse ssment Year s : 2 012 -20 13 & 201 3-1 4 vs ACIT in ITA No.11/CTK/2017 for assessment year 2012-13 order dated 18.1.2018 and submitted that on identical issue, the addition made by the Assessing Officer and confirmed by the CIT(A) has been deleted. By doing so, the ITAT has followed the decision of Hon'ble Gujarat High Court in the case of Pr. CIT vs. Shri Mahila Sewa Sahakari Bank Ltd., in Tax Appeal No.531 of 2015 dated 5.8.2016. Ld A.R. also filed a copy of judgment of Hon'ble Gujarat High Court in the case of Pr. CIT vs. Jivan Commercial Co-operative bank Ltd. in Tax Appeal No.584 of 2017 order dated 23.8.2017, wherein, also on similar facts, the Hon'ble High Court following its own decision in the case of Mahila Seva Sarkari Bank Ltd., (supra) has held that the assessee was correct in not charging interest on NPA. Relying on the above judicial decisions, ld A.R. prayed that the issue is covered in favour of the assessee.
6. Contra, ld D.R. supported the orders of lower authorities but could not produce any contrary decisions to support its case.
7. We have heard the rival submissions, perused the orders of lower authorities and materials available on record. We find that the issue is squarely covered by the decision of this Bench of the Tribunal in the case of Aska Co-op. Central bank Ltd (supra). The operative portion of the order is reproduced below:
6. We have heard extensive submissions made by the Representatives of rival sides and haves perused the orders of authorities below. We have also considered various documents and decisions relied on by both the sides. We find that the issue under consideration has been covered by the decision of Co-ordinate Bench of ITAT Ahmedabad Bench in the case of The Suvikas Peoples' Co-op Bank Ltd., vs. ACIT in ITA 5 ITA Nos. 03 & 125/CT K/ 2017 Asse ssment Year s : 2 012 -20 13 & 201 3-1 4 realized, as it was following the mercantile system of accounting and accordingly added a sum of Rs1,72,73,000/- to the total income of the assessee. The assessee carried the matter in appeal before the Commissioner (Appeals), who upheld the order passed by the Assessing Officer. The assessee challenged the order of the Commissioner (Appeals) before the Tribunal, which allowed the appeal by deleting the interest. Being aggrieved, the revenue is in appeal.
22. Therefore, in terms of the above decision, where an assessee makes provision for NPA and seeks deduction of such amount under section 36(1)(vii) or section 37 of the Act, then in the computation of income, the RBI Gu9idelines would have no role to play, and hence an add back. Insofar as income recognition is concerned, the Supreme Court has held thus: "Applicability of Section 145.
57.At the outset, we may state that in essence the RBI Directions, 1998 are prudential/provisioning norms issued by RBI under Chapter III-B of the RBI Act, 1934. These norms deal essentially with income recognition. They force the NBFCs to disclose the amount of NPA in their financial accounts. They force the NBFCs to reflect "true and correct" profits. By virtue of Section 45-Q, an overriding effect is given to the RBI Directions, 1998 vis-à-vis "income recognition" principles in the Companies Act, 1956.
These Directions constitute a code by itself. However, these RBI Directions, 1998 and the IT Act operate in different areas. These RBI Directions, 1998 'have nothing' to do with computation of taxable income. These Directions cannot overrule the "permissible deductions" or "their exclusion" under the IT Act. The inconsistency between these Directions and the Companies Act is only in the matter of income recognition and presentation of financial statements. The accounting policies adopted by an NBFC cannot determine the taxable income. It is well settled that the accounting policies followed by a company can be changed unless the AO comes to the conclusion that such change would result in understatement of profits. However, here is the case where the AO has to follow the RBI Directions, 1998 in view of Section 45-Q of the RBI Act. Hence, as far as income recognition is concerned, Section 145 of the IT Act has no role to play in the present dispute." Thus, insofar as income recognition is concerned, the court has held that even the Assessing officer has to follow the RBI Directions, 1998 in view of section 45Q of the RBI Act and that as far as income recognition is concerned, section 145 of the Income Tax Act, has not role to play.
8. And held as under:-
23. In the light of the above discussion what emerges is that while determining the : tax liability of an assessee, two factors would come into play. Firstly, the recognition of income in terms of the recognized accounting principles ad after such income is 7 ITA Nos. 03 & 125/CT K/ 2017 Asse ssment Year s : 2 012 -20 13 & 201 3-1 4 B.K.Parida, SPS Copy of the Order forwarded to :
1. The Appellant : Berhampur Co-operative Central Bank Ltd., Berhampur, Ganjam
2. The Respondent. ACIT, Berhampur Circle, Berhampur
3. The CIT(A)-1, Bhubaneswar
4. Pr.CIT-1, Bhubaneswar
5. DR, ITAT, Cuttack
6. Guard file. BY ORDER, //True Copy// SR.PRIVATE SECRETARY ITAT, Cuttack