Principal Commissioner

Indore, dated : 28.09.2018

Ms. Veena Mandlik, learned counsel for the appellant, Revenue.

Heard on the question of admission. O R D E R

This appeal has been filed by the Revenue u/s. 260-A of Income Tax Act, 1961 (hereinafter, for short, “the Act”) against the order dated 22.3.2017 passed by Income Tax Appellate Tribunal (ITAT) in ITA No.99/Ind/2016, whereby the learned ITAT has upheld the order passed by Commissioner, Income Tax and dismissed the appeal. 2. Facts of the case, in short, are that the case of the assessee was selected for scrutiny and notice u/s. 143 (2) of the Act and the scrutiny was completed on 25.3.2014. The Assessing Officer made the addition of Rs.1,60,61,000/- on account of disallowance of provision made for overdue interest, Rs.17,29,426/- on account of subsidy on interest to farmers and Rs.2,05,14,510/- on account of subsidy on interest. The appeal filed by the Revenue has been allowed on the ground that settlement was reached through Lok Adalat in respect of interest rebate and accordingly the assessee has provided a sum of Rs.17,29,426/- on account of rebate. As per Page 52, 53 and 54 of the Paper Book, it was not disputed by the appellate authority as well as by the ITAT that settlement was reached through Lok Adalat and the assessee was directed to write off a sum of Rs.17,29,426/- in the Profit & Loss Account. THE HIGH COURT OF MADHYA PRADESH I.T.A. No. 210/2017 1 Principal Commissioner of Income Tax V/s. Jila Sahakari Kendra Bank Maryadit. 3. Considering the aforesaid, learned ITAT has rightly dismissed the appeal by holding that the CIT (A) was right in allowing this as business expenditure. 4. In respect of Ground No.2, which relates to deletion of Rs.2,05,14,510/-, learned appellate authority as well as ITAT both have allowed the deduction of Rs.2,05,14,510/- as it is a business expenditure and it is required during the course of business. The detailed consideration has been made in Para 29 of the order of ITAT, which reads as under :- “29. The Ld. AR submitted that the amount of Rs.2,05,14,510/- is not a reserve created by bank, but it is a liability for the subsidy given by the finance societies. It was submitted that the Apex Bank (NABARD) finances the assessee @ 5.5% for the amount received from (NABARD). This amount is financed by the assessee to the Rural Co-operative Societies @ 9% interest, who in turn grants loan to the agriculturist @ 5%, according to the policy of the Central and State Government. The normal rate of interest to be charged from famrers is @ 11% on account of interest. The State Government grants the subsidy of @ 4.5%, which is passed through the assessee to these societies on the advances given by the NABARD. The assessee required to give the subsidy @ 1.5% from its own funds as interest subsidy to be given to the Rural Societies. This amount is provided as expenditure in the books of accounts, hence, the same is not a provision but an ascertained liability though on estimation basis which is paid in the subsequent year on the basis of actual liabilities. In view of these facts and circumstances of this case, we do not find any infirmity in the order Ld. CIT (A). Accordingly, THE HIGH COURT OF MADHYA PRADESH I.T.A. No. 210/2017 2 Principal Commissioner of Income Tax V/s. Jila Sahakari Kendra Bank Maryadit. the same is upheld therefore, this ground of appeal of Revenue is dismissed.” 5. On due consideration of the aforesaid so also the fact that the Revenue has not pointed out any provision of the Act to show that the aforesaid deletion is not permissible and, therefore, we are of the view that there is no error in the finding recorded by the learned ITAT. No substantial question of law is involved in this appeal. 6. Accordingly, this appeal having no merit is hereby dismissed.

( P.K. JAISWAL )

( VIVEK RUSIA ) JUDGE. JUDGE. Alok/- THE HIGH COURT OF MADHYA PRADESH I.T.A. No. 210/2017 3 Principal Commissioner of Income Tax V/s. Jila Sahakari Kendra Bank Maryadit. Digitally signed by Alok Gargav Date: 2018.10.01 15:54:51 +05'30'