Principal Commissioner Of Income Tax vs. Jila Sahakari Kendriy Bank Maryadit

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ITA/27/2018HC Madhya Pradesh28 September 2018Bench: HON'BLE SHRI JUSTICE P.K. JAISWAL2 pages
For Petitioner: Veena Mandlik
AI SummaryDismissed

What did the High Court hold?

The High Court held that the learned ITAT had not committed any legal error in dismissing the Revenue's appeal. The Court found that no substantial question of law was involved. The reasoning applied by the High Court in a related case, ITA No.210/2017, decided on the same day, was deemed applicable mutatis mutandis to this appeal. The Court affirmed the ITAT's decision to uphold the Commissioner (Appeal)'s order, which had deleted the additions made by the Assessing Officer on account of interest subsidy. The principle is that if the ITAT's order is based on a correct interpretation of law and facts, and no substantial question of law arises, the High Court will not interfere. The appeal was dismissed in limine.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated July 14, 2017, passed by the Income Tax Appellate Tribunal (ITAT). The ITAT had upheld an earlier order by the Commissioner of Income Tax and dismissed the Revenue's appeal. The assessee, a cooperative bank, filed returns for assessment years 2009-2010, declaring total incomes of Rs. 4,92,85,380/- and Rs. 5,72,83,280/- respectively. The Assessing Officer made additions of Rs. 3,08,00,030/- and Rs. 2,97,27,581/- on account of interest subsidy paid by the assessee. The Commissioner (Appeal) deleted these additions, holding them as allowable expenditures.

What were the issues?

1. Whether the amount of interest subsidy paid by the assessee bank, which is reimbursed by NABARD, constitutes an allowable expenditure under the Act? (Question of law) The Revenue contended that the ITAT erred in upholding the deletion of additions made on account of interest subsidy. The judgment does not explicitly record the Revenue's arguments beyond filing the appeal. The assessee argued that the interest subsidy was a reimbursement for a deficit in interest charged on loans to societies, which was partly covered by NABARD and the State Government, and that the portion reimbursed by NABARD was an allowable expenditure. The ITAT relied on its previous order in ITA No.99/Ind/2016 for assessment year 2011-12, which dealt with a similar issue.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

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 14.7.2017 passed by Income Tax Appellate Tribunal (ITAT) in ITA No.324/Ind/2017, whereby the learned ITAT has upheld the order passed by Commissioner, Income Tax and dismissed the appeal. 2. Facts, in short, are that the respondent/assessee which is a cooperative Bank filed the return declaring total income of Rs.4,92,85,380/- and Rs.5,72,83,280/- for the assessment year 2009-2010. The Assessing Officer made additions of Rs.3,08,00,030/- and Rs.2,97,27,581/- respectively, on account of interest subsidy paid by the assessee. 3. In an appeal, learned Commissioner, Income Tax (Appeal) noted that the assessee Bank is taking the finance from NABARD and financing the societies who are financing agriculturists. The assessee is charging interest @ 9% from societies. The societies are giving loan @ 5% to the agriculturists. The societies are required to charge @ 11% from farmers. The deficit interest @ 6% is made by NABARD @ 1.5% and the State Government grants @ 4.5%. The loans advanced by the assessee from its own funds carry a subsidy which is reimbursed by the THE HIGH COURT OF MADHYA PRADESH I.T.A. No. 27/2018 1 Principal Commissioner of Income Tax V/s. Jila Sahakari Kendra Bank Maryadit. NABARD. The subsidy @ 1.5% for the funds received from NABARD is required to be borne by the assessee and, therefore, held that the amount of Rs.3,08,00,030/- and Rs.2,97,27,581/- are allowable expenditures and deleted these additions. 4. Learned ITAT considering the fact that the issue involved in this appeal (ITA No.324/2017) is fully covered by order dated 22.3.2017 passed in ITA No.99/Ind/2016 (Assessment Year 2011- 12) and relying on the decision dated 22.3.2017, came to the conclusion that the appeal filed by the Revenue has no merit and dismissed the same. 5. Similar issue came up for consideration before this Court in ITA No.210/2017. Considering the reasonings assigned by us in the detailed order passed today in ITA No.210/2017, we are of the view that the learned ITAT has not committed any legal error in dismissing the appeal of the Revenue. No substantial question of law is involved in this appeal. The order passed by us today in ITA No.210/2017 shall apply mutatis mutandis to this appeal also. 6. Accordingly, this appeal fails and is hereby dismissed in limine.

( P.K. JAISWAL )

( VIVEK RUSIA ) JUDGE. JUDGE. Alok/- THE HIGH COURT OF MADHYA PRADESH I.T.A. No. 27/2018 2 Principal Commissioner of Income Tax V/s. Jila Sahakari Kendra Bank Maryadit. Digitally signed by Alok Gargav Date: 2018.09.29 16:50:01 +05'30'

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