Income Tax Appellate Tribunal - Pune
Kolhapur Mahila Sahakari Bank Ltd.,, ... vs Department Of Income Tax on 29 January, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "A", PUNE
BEFORE SHRI SHAILENDRA KUMAR YADAV,
JUDICIAL MEMBER, AND
SHRI G.S. PANNU, ACCOUNTANT MEMBER
ITA No.01/PN/2013
A.Y. 2009-10
ITO, Ward 1(1), Kolhapur Appellant
Vs.
Kolhappur Mahila Sahakari Bank Ltd.,
1082 KH, B-Ward, Tutuchi Bag,
Opp. Khasbhag, Kolhapur.
PAN: AAAAK0367R Respondent
Appellant by : Shri P.L. Pathade
Respondent by : Shri Sushant S. Phadnis
Date of Hearing: 29.01.2014
Date of order : 29.01.2014
ORDER
PER SHAILENDRA KUMAR YADAV, J.M:
This appeal has been filed by the revenue against the order of Commissioner of Income Tax (Appeal), [short CIT(A)] Kolhapur, dated 31.10.2012 for A.Y. 2009-10 on the following grounds.
1. Whether on the facts and in the circumstances of the case and in law, the learned CIT(Appeals) erred in holding that provisions of Section 43D were applicable to the assessee Society being a non-scheduled bank on the basis of the ITAT's decision in the case of ACIT, Circle-3, Nanded vs. Usmanabad Janata Sahakari Bank Ltd. in ITA No.795/PN/2011.
2. Whether on the facts and in the circumstances of the case and in law, the learned CIT(Appeals) erred in holding that the interest income directly credited to the Balance-sheet was not real income in spite of the fact that the assessee Society was having actionable right for 2 receiving the income and that the assessee Society was following the mercantile system of accounting, due to which the interest income was required to be routed through the Profit & Loss Account.
The appellant craves leave to add, alter, amend or modify any other grounds of appeal at the time of hearing.
2. The assessee is a Co-operative Bank engaged in the business of accepting deposits from members and giving loans to members. It has filed its return of income on 11.09.2009 for the year under consideration declaring total income at ₹ 14,57,840/-. In the scrutiny assessment, the Assessing Officer noticed that the assessee had not credited interest receivable or accrued on non- performing assets (hereinafter referred to as NPA) to its profit and loss account for financial year 2008-09. The Assessing Officer after rejecting the various contentions of the assessee has held that the RBI guidelines are not intended to regulate the income tax law and the assessee was liable to be assessed on accrual basis u/s.5 of I.T. Act for the reasons (i) benefits extended to schedule bank, public financial institutions, public companies for the purpose of section 43D were not extended to a co-operative bank and (ii) the assessee was following mercantile system of accounting and not cash system. Ultimately the Assessing Officer taxed on accrued interest of ₹ 25,20,022/- advance claimed to be NPA account. The matter was carried before the first appellate authority wherein, following the Osmanabad Janta Sahakari Bank Ltd. in ITA No.795/PN/2011, the CIT(A) has decided the issue in favour of the assessee and the same has been opposed before us on behalf of revenue.
2.1 After going through the rival submissions and material on record, we find that in Osmanabad Janta Sahakari Bank Ltd. (supra) the Tribunal has decided the issue in favour of assessee by observing as under:
3"7. In the case before us, admittedly, assessee has directly taken the interest to the Balance Sheet and it is not routed through the Profit & Loss Account. Moreover, the issue of the taxability of the interest on the sticky losses/advances, is covered in favour of the assessee by the decision of the coordinate Benches in the case of The Durga Cooperative Urban Bank Ltd., Vijayawada (supra) and Karnavati Cooperative Bank Ltd. (supra). We find no reason to interfere with the reasoned order of the Ld. CIT(A) and accordingly the same is confirmed. In the result, the Revenue's ground is dismissed."
The above decision has been followed in (i) ACIT, Circle-3, Nanded V/s Bhagyalaxmi Mahila Sahakar Bank Ltd. ITA No.793/PN/2011, (ii) ACIT, Circle-3 V/s Sidheshwar Sahakari Bank Ltd. ITA No.794/PN/2011, (iii) ACIT (Central) V/s Latur Urban Co-operative Bank Ltd. ITA No.792/PN/2011 and (iv) Asst. CIT, Circle-1 V/s Deogiri Nagari Sahakari Bank Ltd. ITA No.817 & 1114/PN/2011.
2.2 Nothing contrary was brought to our knowledge on behalf of revenue. Facts being similar, so following the same reasoning, we are not inclined to interfere in the findings of CIT(A) who has held that the provisions of section 43D were applicable to assessee's society being non scheduled bank by following the decision of Osmanabad Janta Sahakari Bank Ltd. Further, the CIT(A) was justified in holding that the interest income directly credited to the balance sheet was not real income. Accordingly, the order of CIT(A) is upheld.
3. In the result, appeal filed by the revenue is dismissed.
Pronounced in the open Court on this the day 29th of January, 2014.
Sd/- Sd/-
(G.S. PANNU) (SHAILENDRA KUMAR YADAV)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Pune, Dated: 29th January, 2014
GCVSR
4
Copy to:-
1) Department
2) Assessee
3) The CIT(A), Kolhapur
4) The CIT, Kolhapur
5) The DR, "A" Bench, I.T.A.T., Pune.
6) Guard File
By Order
//True Copy//
Senior Private Secretary,
I.T.A.T., Pune