PR COMMISSIONER OF INCOME TAX KOTA vs. M/S KOTA SAHAKARI BHOOMI VIKAS BANK

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ITA/17/2018HC RajasthanRJHC02041324201815 May 20182 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the Tribunal committed a serious error in allowing the assessee's appeal. The Court found that the Tribunal allowed the appeal on the alternative ground concerning Section 36(1)(viia) without assigning any reasons. The High Court reasoned that if the assessee was already granted the benefit under Section 80P, it would not be entitled to a deduction under Section 36(1)(viia). Therefore, the issue was decided in favour of the Revenue and against the assessee. The appeal was allowed, and the Tribunal's order was set aside in relation to the adjudication of the Section 36(1)(viia) issue.

What were the facts?

The appellant, Pr. Commissioner of Income Tax, Kota (Revenue), has appealed against a judgment and order of the Income Tax Appellate Tribunal (Tribunal) that allowed the appeal of the assessee, M/s. Kota Sahakari Bhoomi Vikas Bank. The appeal was admitted by the High Court, which framed a substantial question of law. The procedural history indicates the matter was adjourned multiple times, and on the day of the hearing, the counsel for the respondent (assessee) did not appear. The High Court proceeded to hear the appeal.

What were the issues?

1. Whether the Tribunal was legally justified in not adjudicating the issue of allowability of deduction for provision for interest on NPA under Section 36(1)(viia) of the Income Tax Act, 1961. Assessee's Contention: The assessee argued that if the benefit under Section 80P(2)(a)(i) was not allowed, then the provision for interest on Non-Performing Assets (NPA) should be allowed as a deduction under Section 36(1)(viia) of the Act. This was presented as an alternative ground. Revenue's Contention: The Revenue contended that the Tribunal erred by allowing the appeal on the alternative ground without proper adjudication. The Revenue argued that if the assessee was granted the benefit under Section 80P, it would not be entitled to a deduction under Section 36(1)(viia).

Which sections of the Income-tax Act were involved?

Section 36(1)(viia),Section 80P(2)(a)(i)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 17/2018 Pr. Commissioner Of Income Tax, Kota ----Appellant Versus M/s. Kota Sahakari Bhoomi Vikas Bank, Plot No. 3, Behind Income Tax Office, Rawatbhata Road, Kota 324009 ----Respondent For Appellant(s) : Ms. Parinitoo Jain For Respondent(s) : Mr. Jai Kumar Yadav HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS

Judgment 15/05/2018 The matter was adjourned time and again. Last time also on 8th May, 2018, following order was passed:- “Counsel for the respondent is not present. As a last chance, matter to come up on 15th May, 2018.” Even today, counsel for the respondent has not chosen to appear. Hence, we have taken up the matter. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has allowed the appeal preferred by the assessee. This Court while admitting the matter framed the following substantial question of law:- “Whether the Tribunal was legally justified in not adjudicating the issue of allowability of deduction for provision for interest on NPA u/s 36(1)(viia) of the Act.?”

(2 of 2) [ITA-17/2018] The contention before the Tribunal regarding allowing benefit u/s 80P(2)(a)(i) is already upheld by us and the issue was decided while admitting the matter. However, while deciding the matter, regarding the question framed, the Tribunal has observed as under:- “The alternative ground of the assessee that in case it is not allowed u/s 80P then it should be allowed u/s 36(1)(viia) of the Act which do not need any adjudication. Hence, the appeal of the assessee is allowed.” In our considered opinion, even if the submission of original assessee is taken that he is entitled for deduction u/s 80(P) or 36(1)(viia) since he has already been granted benefit u/s 80(P) is not entitled under Section 36(1)(viia). In that view of the matter, the Tribunal has seriously committed an error in allowing the appeal. Even on the alternative ground without assigning any reasons, the issue has been answered in favour of the assessee therefore, the issue is decided in favour of the department against the assessee. Hence, the appeal stands allowed. (VIJAY KUMAR VYAS),J (K.S.JHAVERI),J A.Sharma/170

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