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Income Tax Appellate Tribunal, “B” BENCH, CHENNAI
Before: HON’BLE SHRI V. DURGA RAO, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आयकर अपीलीय अिधकरण “बी” "ायपीठ चे"ई म"। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHENNAI माननीय "ी वी. दुगा" राव, "ाियक सद! एवं माननीय "ी मनोज कुमार अ&वाल ,लेखा सद! के सम)। BEFORE HON’BLE SHRI V. DURGA RAO, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ (िनधा"रण वष" / Assessment Year: 2015-16) DCIT The Thanjavur Central Co-operative बनाम/ Bank Ltd. Circle-2(1), Trichy-620 001. No.10, West Main Street, Vs. Thanjavur-613 009. "थायीलेखासं./जीआइआरसं./PAN/GIR No. AAAAT-7828-C (अपीलाथ"/Appellant) : (!"थ" / Respondent) अपीलाथ"कीओरसे/ Appellant by : Shri V. Nandakumar (CIT)-Ld. DR !"थ"कीओरसे/Respondent by : Shri K. Meenatchi Sundaram (C.A)- Ld.AR सुनवाईकीतारीख/Date of Hearing : 04-10-2023 घोषणाकीतारीख /Date of Pronouncement : 09-10-2023 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by Revenue for Assessment Year (AY) 2015-16 arises out of the order of learned Commissioner of Income Tax (Appeals)-1, Trichy [CIT(A)] dated 19-06-2020 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 29-12-2016. The grounds taken by the Revenue read as under: 1.The order, of the learned Commissioner of Income tax (Appeals), Trichy is contrary to the law, facts and circumstances of the case. 2.The CIT (A) failed to note that provision for bad and doubtful debts should be worked out, based on incremental advances given by the rural branches of the bank, during the relevant year. The concept of this method prevent to allow deduction for the same advance year after year on account of granting deduction under section 36(1)(viia) of the Act. 3.The CIT(A) failed to appreciate that concept of considering the incremental Average rural advance was upheld by the Hon'ble ITAT 'A’ Bench Chennai vide its order in 1548, 1620, 1206, 1207, 1208, 1209, 27, 1621 & 1622/Mds/2014 dated 29/01/2016 in the case of M/s Lakshmi Vilas Bank Vs Assistant Commissioner of Income Tax. Further, the Hon’ble ITAT 'D' Bench Chennai vide its order in ITA Nos.496 & 497/Mds/2015 dated 23/02/2016 in the case of M/s Indian Overseas Bank Vs. Deputy Commissioner of Income tax and also vide its order in ITA Nos.1671, 1801, 1802, 1803 & 1804/Mds/2014 dated 28/12/2016 in the case of M/s City Union Bank Limited Vs. Joint Commissioner of Income tax upheld the method of considering only the incremental average rural advances instead of aggregate average advance by the rural branches.”
As is evident, the sole issue that arises for our consideration is assessee’s claim of deduction u/s 36(1)(viia) with respect to advances given by rural branches.
The Registry has noted delay of 23 days in the appeal, the condonation of which has been sought by the revenue at the time of hearing. Considering the fact that that the aforesaid period fall within the lockdown situation arising out of Covid-19 Pandemic, we condone the delay and admit the appeal for adjudication on merits. Having heard rival submissions, our adjudication would be as under.
The assessee computed deduction u/s 36(1)(viia) with respect to advances made by rural branch at Rs.558.23 Lacs. While computing the same, the assessee took aggregate average advances of rural branches as outstanding at the end of the accounting year. The Ld. AO, in terms of decision of this Tribunal in & ors. rendered in the case of Lakshmi Vilkas Bank, held that only incremental average rural advances were to be considered while computing the deduction. Accordingly, the impugned deduction was restricted to Rs.124.99 Lacs and balance Rs.433.24 Lacs was denied.
The Ld. CIT(A), considering Rule 6ABA as well as the decision of this Tribunal in Indian Bank (ITA No.738/Chny/2017 & ors.) held that the rule mandate adoption of outstanding advances and not incremental advances and therefore, the claim was allowed in full. Aggrieved, the revenue is in further appeal before us.
We find that this issue is covered in assessee’s favor by the decision of Hon’ble High Court of Madras in the case of CIT V/s City Union Bank Ltd. (TCA No.961 of 2010 dated 07.03.2022) wherein Hon’ble Court, in para 11 of the order, concurred with principles laid down by Hon’ble Calcutta High Court in PCIT V/s Uttarbanga Kshetriya Gramin Bank (256 Taxman 72) wherein it was held that the assessee is entitled to deduction on average aggregate rural advances as computed u/r 6ABA and rejected the contentions of the department that the deduction should be allowed only on the average aggregate rural advances disbursed during the year. Similar is the view of Hon’ble High Court of Karnataka in recent decision of CIT vs. Canara Bank (147 Taxmann.com 171) wherein Hon’ble Court has taken similar view favorable to the assessee. Therefore, no interference is required in the impugned order. 6. The appeal stands dismissed. Order pronounced on 9th October, 2023 (V. DURGA RAO) (MANOJ KUMAR AGGARWAL) "ाियक सद!/JUDICIAL MEMBER लेखासद! / ACCOUNTANT MEMBER चे6ई Chennai; िदनांक Dated : 09-10-2023 DS आदेशकीTितिलिपअ&ेिषत/Copy of the Order forwarded to : 1. अपीलाथ"/Appellant 2. !"थ"/Respondent 3. आयकरआयु?/CIT 4. िवभागीय!ितिनिध/DR 5. गाडDफाईल/GF