THE ALLEPPEY DIST CO- BANK LTD,ALAPPUZHA vs. THE ACIT, ALAPPUZHA

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ITA 385/COCH/2018Status: DisposedITAT Cochin04 September 2019AY 2010-115 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the assessee's appeals. The assessee's counsel conceded that the issue on merits was covered against the assessee by the jurisdictional High Court's judgment in CIT v. Lord Krishna Bank Ltd.

What were the facts?

The assessee, a District Co-operative Bank, claimed deduction under Section 36(1)(viia) for provisions for bad and doubtful debts made by its rural branches. The Assessing Officer disallowed this deduction, stating that the bank did not have genuine rural branches as per the definition and the ruling in CIT v. Lord Krishna Bank Ltd.

What were the issues?

Whether the assessee bank was eligible for deduction under Section 36(1)(viia) for provisions made by its branches, considering the definition of 'rural branches' and the precedent set by the Kerala High Court.

Which sections of the Income-tax Act were involved?

Section 36(1)(viia),Section 143(3),Section 147,Section 263

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN

Before: Shri Chandra Poojari, AM & Shri George George K, JM

Hearing: 21.08.2019Pronounced: 04.09.2019

Heard together (2 matters)

ITA No.384/Coch/2018
ITA No.385/Coch/2018

Read from the judgment's own cause title. This page is filed under one of them.

Per George George K, JM

These appeals at the instance of the assessee are directed against two orders of the Commissioner of Income- tax (Appeals), both dated 09.10.2011. The relevant assessment years are 2009-2010 and 2010-2011. Common issues are raised in these appeals, hence, they were heard together and are being disposed off by this consolidate order.

2.

There is a delay of 109 days in filing these appeals. The assessee has filed a petition for condonation of delay. The learned AR filed an affidavit stating that the delay in filing the appeal has occurred as he was suffering from back ailment. The learned AR has also filed a medical certificate of Sree Ramakrishna Pharmacy & Hospital, wherein it is stated that

ITA No.384-385/Coch/2018 2 M/s.Alleppey District Co-op.Bank Ltd. Mr.R.Krishnan, Chartered Accountant, was for treatment of back ailment during the relevant period. We have perused the reasons stated for filing the appeal belatedly. We find that there is sufficient cause for the delayed filing of the appeal and no latches can be attributed to the assessee. Hence, we condone the delay and proceed to dispose off the appeals on merits.

3.

Brief facts of the case are as follows:-

The assessee is a District Co-operative Bank. The assessments were completed u/s 143(3) of the I.T.Act vide order dated 31.03.2011 and 28.03.2013, for assessment years 2009-10 and 2010-2011, respectively. The assessment completed for A.Y. 2009-2010 was reopened by issuance of notice u/s 147 of the I.T.Act, whereas for assessment year 2010-2011, the CIT(A) vide order passed u/s 263 of the I.T.Act, set aside the assessment u/s 143(3) of the I.T.Act dated 28.03.2013. The reason for reopening the assessment for assessment year 2009-2010 and invoking revisionary provisions for assessment year 2010-2011 was that there was incorrect allowance of deduction u/s 36(1)(viia) of the I.T.Act. Section 36(1)(viia) of the I.T.Act allows deduction towards provision for bad and doubtful debts for an amount not exceeding 10% of aggregate average advances made by “rural branches”. The assessee had claimed deduction u/s 36(1)(viia) of the I.T.Act stating that the advances were made by the “rural branches”. The Department for assessment years 2009-2010 and 2010-2011 was of the view that the

ITA No.384-385/Coch/2018 3 M/s.Alleppey District Co-op.Bank Ltd. assessee did not have any rural branches in view of the dictum laid down by the Hon’ble Kerala High Court in the case of CIT v. Lord Krishna Bank Ltd. [(2011) 339 ITR 606 (Ker.)]. Therefore, the assessee’s claim of deduction u/s 36(1)(viia) of the I.T.Act with regard to the advances made by the rural branches was disallowed. The relevant finding of the Assessing Officer in the order passed u/s 143(3) r.w.s. 147 of the I.T.Act, for assessment year 2009-2010, reads as follow:-

“Section 36(1)(viia) does not allow deduction to a co- operative bank towards provision for NPA. However, this section allows a cooperative bank other than a primary agricultural credit society or primary co-op. agricultural and rural development bank, a deduction towards provision for bad and doubtful debts for an amount not exceeding 10% of aggregate average advances made by rural branches. Here, rural branch means branch situated in a place, which has a population of not more than 10,000 as per the latest census on the first day of the relevant PY. The assessee has furnished a list of rural branches and advances made by these 43 branches. Of this, 24 branches have population of more than 10,000 (Census of India 2001) and hence not coming under the nomenclature “Rural Branches”. In the case of the balance 19 branches, the places listed out are only part of a village. Since several wards may come within a village, part of a village could not be considered as a rural branch as reported in the case of CIT v. The Lord Krishna Bank Ltd.”

4.

Aggrieved by the assessments completed u/s 143(3) r.w.s. 147 of the I.T.Act for assessment year 2009-2010 and assessment completed u/s 143(3) r.w.s. 263 of the I.T.Act for assessment year 2010-2011, the assessee preferred appeals

ITA No.384-385/Coch/2018 4 M/s.Alleppey District Co-op.Bank Ltd. before the first appellate authority. The CIT(A) confirmed the view taken by the Assessing Officer.

5.

Aggrieved by the orders of the CIT(A), the assessee has filed these appeals before the Tribunal. For assessment year 2009-2010, two issues were raised in the ground, however, the learned AR did not press the issue relating to reopening of the assessment. Hence, ground No.1 to 3 in ITA No.384/Coch/2008 are dismissed. The surviving ground, viz., ground No.4 relates to the issue on merits, whether the CIT(A) was justified in confirming the disallowance made by the Assessing Officer u/s 36(1)(viia) of the I.T.Act. For assessment year 2010-2011, the only issue raised is regarding the disallowance u/s 36(1)(viia) of the I.T.Act. The learned AR fairly conceded that the issue on merits is covered against the assessee by the judgment of the Hon’ble Kerala High Court in the case of CIT v. The Lord Krishna Bank Ltd. (supra). The learned Departmental Representative was duly heard.

6.

We have heard the rival submissions and perused the material on record. The learned AR has fairly conceded that the issue on merits is covered against the assessee by the judgment of the Hon’ble jurisdictional High Court in the case of CIT v. The Lord Krishna Bank Ltd. (supra). In view of the submission made by the learned AR, the appeal filed by the assessee for assessment years 2009-2010 and 2010-2011 are dismissed.

ITA No.384-385/Coch/2018 5 M/s.Alleppey District Co-op.Bank Ltd.

7.

In the result, the appeals filed by the assessee are dismissed.

Order pronounced on this 04th day of September, 2019.

Sd/- Sd/- (Chandra Poojari) (George George K) ACCOUNTANT MEMBER JUDICIAL MEMBER

Cochin ; Dated : 04th September, 2019. Devdas*

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The Pr.CIT, Kottayam. 4. The CIT(Appeals) Kottayam. 5. DR, ITAT, Cochin 6. Guard file.

BY ORDER,

(Asstt. Registrar) ITAT, Cochin

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