SIKAR SAHAKARI BHOOMI VIKAS BANK LTD.,SIKAR vs. INCOME TAX OFFICER, SIKAR
What did the Tribunal hold?
The Tribunal held that the disallowance of provision for overdue interest was justified, following the co-ordinate bench's decision in the assessee's own case for a prior assessment year. The Tribunal noted that the provision was not written off as a bad debt and its allowability depended on the Act's provisions.
What were the facts?
The assessee, a Co-operative Society, had its assessment reopened. The Assessing Officer disallowed a provision for overdue interest of Rs. 10,65,000/-. The CIT(A) confirmed this disallowance, relying on a previous ITAT decision in the assessee's own case for AY 2011-12.
What were the issues?
Whether provision for overdue interest on old loans and advances is allowable as a deduction. Whether the disallowance is justified in light of previous ITAT decisions and the rule of consistency.
Which sections of the Income-tax Act were involved?
Section 147,Section 148,Section 143(3),Section 37,Section 36(1)(vii),Section 80P(2)(a)(i)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHE-B, JAIPUR
Before: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 131/JP/2018
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE-B, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 131/JP/2018 fu/kZkj.k o"kZ@Assessment Year :2010-11 cuke M/s Sikar Sahakari Bhoomi Vikas The Income Tax Officer, Vs. Bank Ltd., Basant Vihar, Jaipur Ward-4, Sikar Road, Sikar LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAAAS1603E vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri F. Rahaman (Advocate) jktLo dh vksj ls@ Revenue by : Smt. Neena Jeph (JCIT) lquokbZ dh rkjh[k@ Date of Hearing : 25/02/2019 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 26/02/2019 vkns'k@ ORDER PER: VIKRAM SINGH YADAV, A.M.
This is an appeal filed by the assessee against the order of ld. CIT(A)-3, Jaipur dated 27.12.2017 wherein the assessee has taken the following grounds of appeal:- “1.1 The very action taken u/s 147 r/w 148 is bad in law without jurisdiction and being void ab-initio, the same kindly be quashed. Consequently the impugned assessment framed u/s 143(3)/148 dated 23.03.2015 also kindly be quashed. 1.2 The impugned order u/s 143(3)/148 dated 23.03.2015 is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be quashed.
2. Rs. 10,65,000/-: The ld. CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of the provision of overdue interest merely alleging that the same is not allowable under the Act. The M/s Sikar Sahakari Bhoomi Vikas Bank Ltd., Sikar Vs. ITO, Sikar disallowance so made and confirmed by the ld. CIT(A), being totally contrary to the provisions of law and facts, kindly be deleted in full.”
2. Briefly stated, the facts of the case are that the assessee is a Co- operative Society and its case was reopened by issuance of notice u/s 148 and thereafter, the assessment was completed u/s 143(3) read with section 147 wherein the provision of overdue interest of Rs. 10,65,000/- was disallowed and added to the total income of the assessee.
Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the action of the Assessing Officer following the decision of the Co-ordinate Bench in assessee’s own case in AY 2011-12 and the relevant finding of the ld. CIT(A) are contained at para 5.2 which is reproduced as under:- “5.2 I have carefully considered the material before me. I find that this issue already decided in appellant own case by the Hon’ble ITAT Jaipur bench in AY 2011-12 vide order dated 29/08/2017 as under:- “We have heard the rival contentions, perused the material available on record. We find that the ld. CIT(A) has given finding on fact that assessee has not written off such NPA and interest thereon as bad debt during the year under consideration this finding on fact is not controverted by the ld. Counsel for the assessee. Ld. Counsel submitted that this is allowable u/s 37 of the Act. In our view, the contentions of the ld. Counsel for the assessee is misplaced the Section 37 relates to the any expenditure not being expenditure of the nature described in Section 30 to 36 since the interest is part of that would be covered u/s 36(1)(vii) of the Act. 2 M/s Sikar Sahakari Bhoomi Vikas Bank Ltd., Sikar Vs. ITO, Sikar Further, the plea of the assessee is that this has been allowed in the earlier years in our view rule of consistency would apply where the assessee has been following the particular accounting policy and the revenue has been accepted the same but the issue of allowability or disallowability of expenses would certainly depend upon the provision of the Act. Therefore, this ground of assessee’s appeal is dismissed.” The facts of the case are totally similar. Therefore following the decision of the Hon’ble ITAT as discuss above. I confirm the addition of Rs. 10,65,000/- as overdue interest. This ground is not allowed.”
During the course of hearing, the ld. AR submitted that the assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act and following the directions of Rajasthan Sahakari Bhoomi Vikas Bank Ltd, the assessee has created the provision for overdue interest of Rs. 10,65,000/- which relates to old loans and advances. It was further submitted that AO has not made any disallowance on account of provision of overdue interest in the earlier years and following the rule of consistency, no disallowance should be made.
Per contra, the ld. DR submitted that the matter is squarely covered by the decision of the Co-ordinate Bench in favour of the Revenue and the same may be followed in the present case.
We have heard the rival contentions and perused the material available on record. We find that the limited issue under consideration relates to disallowance of provision towards overdue interest in respect of loans and advances given by the assessee in the earlier years. We find that the matter has been decided by the Co-ordinate Bench in assessee’s own case in in AY 2011-12 wherein vide order dated 29.08.2017, the said 3 M/s Sikar Sahakari Bhoomi Vikas Bank Ltd., Sikar Vs. ITO, Sikar claim has been denied to the assessee. There being no change in the facts and circumstances of the claim as fairly submitted by both the parties, following decision of Co-ordinate Bench in AY 2011-12, the disallowance so made by the Assessing Officer is hereby confirmed. In the result, ground no. 2 is dismissed.
Regarding other grounds of appeal, no arguments have been advanced by the ld AR, the same are thus dismissed as not pressed.
In the result, appeal of the assessee is dismissed.
Pronounced in the Open Court on 26/02/2019.
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