DEPUTY COMMISSIONER OF INCOME TAX, PUNE vs. JAI HIND CO-OPERATIVE BANK LTD, PUNE

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ITA 300/PUN/2017Status: DisposedITAT Pune05 July 2019AY 2012-134 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that co-operative banks are eligible for deduction under Section 43D for interest on sticky advances, following jurisdictional High Court decisions. It also held that no disallowance under Section 14A can be made in the absence of exempt income.

What were the facts?

The Revenue appealed against the CIT(A)'s order concerning interest on sticky loans and disallowance under Section 14A. The assessee argued that no exempt income was earned, making Section 14A disallowance invalid.

What were the issues?

Whether interest on sticky loans is deductible for co-operative banks and whether disallowance under Section 14A is permissible without earning exempt income.

Which sections of the Income-tax Act were involved?

Section 14A,Section 43D

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, “A” BENCH, PUNE

Before: SHRI ANIL CHATURVEDI, AM & SHRI VIKAS AWASTHY, JM

For Appellant: Shri Kishor Phadke
For Respondent: Shri N. Ashok Babu

आदेश / ORDER

PER VIKAS AWASTHY, JM :

This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-13, Pune dated 23-11-2016 for the assessment year 2012-13.

2 ITA No.300/PUN/2017, A.Y. 2012-13

2.

The Revenue in appeal has assailed the findings of Commissioner of Income Tax (Appeals) by raising four grounds on two issues. The ground Nos. 1 to 3 of the appeal are on the issue of interest on sticky loans. The second issue raised in ground No. 4 is qua disallowance u/s. 14A r.w. Rule 8D.

3.

Shri Kishor Phadke appearing on behalf of the assessee submitted out the outset that the first issue relating to interest on sticky loans raised in ground Nos. 1 to 3 of the appeal by the Revenue is covered by the decision of Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Deogiri Nagari Sahakari Bank Ltd. reported as 379 ITR 24 and in the decision of Principal Commissioner of Income Tax Vs. Solapur District Central Co-op. Bank Ltd. reported as 261 Taxman 476 (Bom). The ld. AR submitted that the Commissioner of Income Tax (Appeals) has decided this issue in favour of assessee by following various decisions of Hon’ble Bombay High Court including the decision rendered in the case of Commissioner of Income Tax Vs. Deogiri Nagari Sahakari Bank Ltd. (supra).

3.1 In respect of ground No. 4 of the appeal the ld. AR submitted that the Assessing Officer had made disallowance of Rs.3,32,385/- u/s. 14A r.w. Rule 8D. The Assessing Officer made disallowance without appreciating the facts that the assessee had not earned any exempt income during the period relevant to the assessment year 2012-13. The Commissioner of Income Tax (Appeals) deleted the disallowance after considering the decision of Hon’ble Delhi High Court in the case of Cheminvest Limited Vs. Commissioner of Income Tax reported as 378 ITR

3 ITA No.300/PUN/2017, A.Y. 2012-13

33.

The ld. AR submitted that it is a well settled law that where the assessee has not earned any exempt income, no disallowance u/s. 14A is to be made.

4.

On the other hand Shri N. Ashok Babu representing the Department vehemently defended the action of Assessing Officer in making the impugned additions/disallowances. The ld. DR prayed for reversing the findings of Commissioner of Income Tax (Appeals).

5.

Both sides heard. Orders of the authorities below perused. The issue raised in the appeal by the Revenue against deleting of interest of sticky loans has been laid to rest by Hon’ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Deogiri Nagari Sahakari Bank Ltd. (supra). The Hon’ble High Court held that Co-operative Banks are eligible for deduction u/s. 43D in respect of interest on sticky advances/Non Performing Assets. The aforesaid law has been reiterated by the Hon’ble High Court in the case of Principal Commissioner of Income Tax Vs. Solapur District Central Co-op. Bank Ltd. (supra). Thus, in view of law laid down by the Hon’ble Jurisdictional High Court, ground Nos. 1 to 3 of the appeal by the Department are dismissed.

6.

In ground No. 4 of the appeal, the Revenue has assailed deleting of disallowance made u/s. 14A r.w. Rule 8D. It is an undisputed fact that the assessee has not earned any exempt income in the period relevant to the assessment year under appeal. The Hon’ble Delhi High Court in the case of Cheminvest Limited Vs. Commissioner of Income Tax (supra) has held that no disallowance u/s. 14A is to be made in the absence of any

4 ITA No.300/PUN/2017, A.Y. 2012-13

exempt income. The Commissioner of Income Tax (Appeals) has decided the issue in line with the judgment of Hon’ble High Court. We find no reason to interfere with the findings of Commissioner of Income Tax (Appeals) on this issue. Accordingly, the ground No. 4 of the appeal is dismissed being devoid of any merit.

7.

In the result, the appeal of Revenue is dismissed.

Order pronounced on Wednesday, the 10th day of July, 2019.

Sd/- Sd/- (अननऱ चतुवेदी / Anil Chaturvedi) (ववकास अवस्थी / Vikas Awasthy) ऱेखा सदस्य / ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 10th July, 2019. RK आदेश की प्रनतलऱवऩ अग्रेवर्त / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. आयकर आयुक्त (अऩीऱ) / The CIT(A)-13, Pune 3. 4. The Pr. Commissioner of Income Tax-5, Pune ववभागीय प्रनतननधध, आयकर अऩीऱीय अधधकरण, “ए” बेंच, 5. ऩुणे / DR, ITAT, “A” Bench, Pune. गार्ड फ़ाइऱ / Guard File. 6. //सत्यावऩत प्रनत // True Copy// आदेशानुसार / BY ORDER,

ननजी सधचव / Private Secretary, आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune

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