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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI R.S. SYAL, VP & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the Revenue emanates from the order of Ld. CIT(Appeals)-4, Pune dated 20.10.2016 for the assessment year 2013-14 as per following grounds of appeal on record:
“1. On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting addition of interest of Rs.2,17,08,000/- on NPA when the said interest has accrued to the bank as per the mercantile system of accounting followed by it. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in failing to appreciate the fact that the assessee is a co- operative bank and not a scheduled bank and that the provisions of
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section 43D are applicable to the financial institutions and not to co- operative societies? 3. For this and such other reasons as may be urged at the time of hearing, the order of the CIT(A) be vacated and that of the Assessing Officer be restored. 4. The appellant craves, leave to add, amend, alter or delete any of the above grounds of appeal during the course of appellate proceedings before the Hon'ble Tribunal.”
At the time of hearing the assessee was neither present in person nor
through his Authorized Representative. The presence of Ld.D.R is recorded.
The brief facts in this case are that during the course of the assessment
proceedings the assessee was asked to furnish details of accrued interest on
NPA's as per section 43D r.w.r 6EA and explanation as to why the same
should not be included in the total income. In response, the assessee
submitted that it generally follows RBI guidelines with reference to income
recognition of interest on Non-performing Assets unless and until it is
actually realized and relied on the decision of Bombay High Court in the case
of CIT-8 Vs. M/s. KEC Holdings Limited and submitted the working of
interest accrued on NPA as follows:
Particulars F.Y. 2012-13 (Amounts in Lakhs) Opening Balance 1425.39
Add. Addition during the year 416.22
Less. Recovery during the year 199.14
Closing Balance 1642.47
Net addition during the year 217.08
The contention of the assessee was not accepted by the AO due to the
following reasons:
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“1. In Form No. 3CD Report the assessee had mentioned that they are following Mercantile System of accounting and in that case income as well as expenditure had to be accounted on accrual basis. 2. As far as liability of income tax is concerned, the same is to be governed by Income Tax Act and merely because for accounting purpose, the assessee is following RBI guidelines does not mean that the assessee is not liable to show the accrued interest income when it had accrued to the assessee under the mercantile system and exigible to tax under the Act.
The judgement of Apex court in the case of Southern Technologies Vs. CIT wherein it was held that the RBI guidelines or prudential norms issued by RBI are not intended to regulate the income tax laws. Hence for calculating the interest u/s.43D calculation of Rule 6EA had to be made.
Reliance is also placed in the case of GIC Housing Finance Ltd. Vs. Addl. CIT, Range 2(1) (2011) 45 SOT 318 ( Mum) wherein the contention of the AO was rejected.
The case laws relied upon by the assessee is distinguishable on the facts as it is in the case of NBFC and not Banks and the department had not accepted by the issue and had learned to contested to Supreme Court. Further, in assessee’s own case the department is in appeal in High Court on the same issue in previous years. Therefore, in order to keep the matter alive an amount of Rs.2,17,08,000/- was added to the total income of the assessee u/s.43D of the Act.”
The matter travelled up to the Ld. CIT(Appeals) wherein the Ld. AR of
the assessee filed written submissions. It was submitted that the case of the
assessee is fully covered by the decision of the Co-ordinate Bench of Tribunal,
Pune in assessee’s own case for assessment year 2009-10 and 2010-11. The
Co-ordinate Bench of the Tribunal relying upon the decision of the Hon'ble
Bombay High Court in the case of M/s. Deogiri Nagari Sahakari Bank Ltd. in
ITA No. 53/PUN/2014 has decided the similar issue in favour of the assessee.
That on consideration of assessment order, facts on record and submissions
of the assessee, the Ld. CIT(Appeals) has held as follows:
“Decision : I have carefully considered the observations of the AO in the assessment order as well as the contentions raised by the AR of the appellant in the written submission. On perusal of the jurisdictional ITAT, Pune's Order ITA No.671/PN/2014 dated 24/08/2015 in the Appellant's own case, wherein, the Hon'ble ITAT held that "respectfully following the decision of Hon'ble jurisdictional High Court (supra) and in absence of any contrary material brought to our notice by the Ld Departmental Representative against the consistent view of the Tribunal on the issue do not find infirmity in the order of the CIT(A) deleting the addition made by the AD. Accordingly, the same is upheld and the
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ground raised by the Revenue is dismissed. Hence, the AO is directed to cancel the addition of Rs.2,17,08,000/-.”
We have perused the case record and heard the submissions of the Ld. DR . We find that the decision of the Ld. CIT(Appeals) in this case is founded on the basis of assessee’s own case for assessment years 2009-10 and 2010- 11 which has been decided in favour of the assessee by Co-ordinate Bench of the Tribunal, Pune. Accordingly, we do not find any infirmity in the findings of the Ld.CIT(Appeals) which is, therefore, upheld. Hence, grounds raised by the Revenue are dismissed.
In the result, appeal of the Revenue is dismissed. Order pronounced on 23rd day of January, 2019.
Sd/- Sd/- R.S. SYAL PARTHA SARATHI CHAUDHURY VICE-PRESIDENT JUDICIAL MEMBER
पुणे / Pune; �दनांक / Dated : 23rd January, 2019. SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT (Appeals)-4, Pune. 4. The Pr. CIT-3, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.
5 ITA No. 182/PUN/2017 A.Y.2013-14
Date 1 Draft dictated on 22.01.2019 Sr.PS/PS 2 Draft placed before author 22.01.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order