PR. COMMISSIONER OF INCOME TAX-2, JALANDHAR vs. M/S. THE JALANDHAR CENTRAL CO-OP. BANK LTD.

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ITA/487/2018HC Punjab & HaryanaPHHC01119361201827 March 2019Author: MR. JUSTICE AJAY KUMAR MITTAL,MRS. JUSTICE MANJARI NEHRU KAUL3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the revenue's appeal. The Court noted that the revenue's counsel could not dispute that the matter was covered by this Court's earlier decision in ITA-349-2017 (The Principal Commissioner of Income Tax-3, Ludhiana v. The Ludhiana Central Co-Op. Bank Ltd., Ludhiana) and other connected appeals, which were decided on 24.9.2018, wherein the revenue's appeals were dismissed. Therefore, following the precedent set in the Ludhiana Central Co-Op. Bank Ltd. case, the present appeal was also dismissed. The specific findings on each of the substantial questions of law raised by the revenue are not detailed in this judgment, as the dismissal was based on the binding precedent. No issue was expressly left undecided.

What were the facts?

The assessee, M/s The Jalandhar Central Co-op. Bank Ltd., filed its return of income for assessment year 2014-15 declaring an income of ₹5,34,54,610. The Assessing Officer (AO) assessed the total income at ₹7,49,41,780, making an addition of ₹2,14,85,165 on account of interest accrued on Non-Performing Assets (NPAs). The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who deleted the addition. The revenue then appealed to the Income Tax Appellate Tribunal (ITAT). The ITAT, by order dated 8.3.2018, upheld the CIT(A)'s order and dismissed the revenue's appeal. The revenue has now filed this appeal under Section 260A of the Income Tax Act, 1961, before the High Court.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. Whether Section 43D of the Income-tax Act, 1961, applies to a Co-operative Bank? 2. Whether Section 45Q of the RBI Act, 1934, is applicable to the assessee, given that Section 45H excludes its application to cooperative banks? 3. Whether the ITAT erred in confirming the CIT(A)'s decision which relied on a Delhi High Court ruling concerning a Non-Banking Financial Corporation (NBFC) when the assessee is a Co-operative Society? 4. Whether the ITAT erred in confirming the CIT(A)'s deletion of the addition of ₹2,14,85,165 on account of interest accrued on NPAs, by ignoring the Supreme Court's decision in State Bank of Travancore? Contentions: The revenue argued that Section 43D does not apply to co-operative banks, Section 45H of the RBI Act excludes its application to co-operative banks, the reliance on the Vasisth Chay Vyapar Ltd. case (an NBFC) was erroneous for a co-operative society, and the deletion of NPA interest ignored the Supreme Court's ruling in State Bank of Travancore. The judgment records no specific contentions for the assessee.

Which sections of the Income-tax Act were involved?

Section 260A,Section 43D,Section 143(3),Section 45Q,Section 45H

AI-generated summary — verify with the full judgment below

ITA-487-2018 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA-487-2018 (O&M) Date of Decision: 27.3.2019 The Principal Commissioner of Income Tax-2, Chandigarh ....Appellant. Versus M/s The Jalandhar Central Co-op. Bank Ltd., Jalandhar ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MRS. JUSTICE MANJARI NEHRU KAUL. PRESENT: Mr. Vivek Sethi, Sr. Standing Counsel for the appellant. *** AJAY KUMAR MITTAL, J.

1.

This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 8.3.2018 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITA No. 509(ASR)/2017, for the assessment year 2014-15, claiming the following substantial questions of law:- i) Whether on the facts and in the circumstances of the case, the Ld. ITAT was correct in ignoring the fact that section 43D of the Income-tax Act, 1961 would not apply to a Co-operative Bank? ii) Whether on the facts and in the circumstances of the case, the Ld. ITAT was justified in law in GURBACHAN SINGH 2019.04.06 16:07 I attest to the accuracy and integrity of this document

ITA-487-2018 -2- holding that section 45Q of RBI Act, 1934 is applicable in the case of the assessee, when Section 45H of RBI Act, 1934 excludes its application to cooperative banks? iii) Whether on the facts and in the circumstances of the case, the Ld. ITAT has erred in law in confirming the decision of Ld. CIT(A) who had wrongly relied upon the finding of the Hon'ble Delhi High Court in the case of M/s Vasisth Chay Vyapar Ltd. [ITA No.552, 565 of 2005, ITA No. 1191 of 2007, ITA No. 139, 466, 537 of 2008 and ITA No. 408 of 2003 date of decision 29.11.2010] which is a Non-Banking Financial Corporation, whereas the assessee under consideration is a Co- operative Society? iv) Whether on the facts and in the circumstances of the case, the Ld. ITAT has erred in confirming the decision of Ld. CIT(A) who deleted the addition of ` 2,14,85,165/- made by the AO on account of interest accrued on non performing assets by ignoring the decision of Hon'ble Supreme Court in the case of State Bank of Travancore (158 ITR 102)?

2.

A few facts necessary for adjudication of the instant appeal as narrated therein may be noticed. The assessee filed its return of income on 30.11.2014 declaring the income at ` 5,34,54,610/-. The Assessing Officer GURBACHAN SINGH 2019.04.06 16:07 I attest to the accuracy and integrity of this document

ITA-487-2018 -3- vide order dated 30.11.2016 (Annexure A-1) framed the assessment under Section 143(3) of the Act at a total income of ` 7,49,41,780/- after making an addition of ` 2,14,85,165/- on account of interest due on Non Performing Assets. Feeling aggrieved by the order, Annexure A-1, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [for brevity “the CIT(A)”]. The CIT(A) vide order dated 8.6.2017 (Annexure A-2) allowed

the appeal and deleted the addition of ` 2,14,85,165/-. Against the order, Annexure A-2, the revenue filed an appeal before the Tribunal. The Tribunal vide order dated 8.3.2018 (Annexure A-3) upheld the order of the CIT(A) and dismissed the appeal of the revenue. Hence, the present appeal.

3.

We have heard learned counsel for the revenue.

4.

It could not be disputed by the learned counsel for the revenue that the aforesaid matter is covered by the order of this Court in ITA-349- 2017 (The Principal Commissioner of Income Tax-3, Ludhiana v. The Ludhiana Central Co-Op. Bank Ltd., Ludhiana) along with other connected appeals decided on 24.9.2018, wherein the appeals filed by the revenue were dismissed.

5.

Accordingly, the present appeal is also dismissed in terms of ITA-349-2017. (AJAY KUMAR MITTAL) JUDGE March 27, 2019 (MANJARI NEHRU KAUL) gbs JUDGE Whether Speaking/Reasoned Yes/No Whether Reportable Yes/No GURBACHAN SINGH 2019.04.06 16:07 I attest to the accuracy and integrity of this document

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