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Income Tax Appellate Tribunal, DELHI BENCHES (CAMP AT MEERUT
Before: SHRI N.S. SAINI & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER : The appellant, District Cooperative Bank Limited
(hereinafter referred to as ‘the Assessee’) by filing the present
appeal, sought to set aside the impugned order dated 09.02.2016
passed by Ld. CIT (Appeals), Moradabad qua the Assessment
Year 2011-12 on the grounds inter alia that :-
“1. That on facts and in law addition of Rs.3,06,200/- made on account of dividend received from other Co-operative Societies is totally wrong, unjustified & illegal. Assessee has received dividend form other Co-operative Societies namely KRIBCO & Indian Farmers Fertilizers Co-operative Ltd. (IFFCO) and the same has been claimed to be exempt from tax on the basis of
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Principle of Mutuality. Therefore, the basis taken by Ld. CIT for confirming addition of Rs.3,06,200/- is totally wrong, unjustified and unwarranted.
That on facts and in law addition of Rs.76,000/- on account of expenses pertaining to previous year is totally wrong, unjustified & illegal. Assessee has paid sum of Rs.76,000/- for expenses crystallized during the year. Therefore, the basis taken by Ld. CIT for confirming addition of Rs.76,000/- is totally wrong, unjustified and unwarranted.
That on facts and in law addition of Rs.19,20,999/- on account of interest reversed. Therefore, the basis taken by Ld. CIT for confirming addition of Rs.19,20,999/- is totally wrong, unjustified and unwarranted.”
Briefly stated the facts necessary for adjudication of the
controversy at hand are : The tax auditor in its report noticed
previous year expenses amounting to Rs.76,000/-, which the
Assessing Officer sought to add back to the income of the assessee.
Assessee while furnishing the break-up of the same brought on
record that amount of Rs.28,500/-, Rs.3,900/- & Rs.43,600/- was
incurred on generator rent of Morena Extension, Building rent of
Swaheri and Building rent of Jhalu respectively. AO made
disallowance of Rs.76,000/- on the ground that since the expenses
pertained to previous years, the same are not allowable one. AO
made further addition of Rs.19,20,999/- on account of interest
reversed by the assessee on the ground that the same pertains to
earlier year and as such, the income of the earlier years is
derecognized in the subsequent years.
Assessee carried the matter by way of an appeal before the
ld. CIT (A) who has dismissed the appeal. Feeling aggrieved, the
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assessee has come up before the Tribunal by way of filing the
present appeal.
We have heard the ld. Authorized Representatives of the
parties to the appeal, gone through the documents relied upon and
orders passed by the revenue authorities below in the light of the
facts and circumstances of the case.
GROUND NO.1
Ground No.1 is dismissed having not been pressed during 5.
the course of arguments.
GROUND NO.2
Out of the addition of Rs.76,000/-, the assessee claimed to
have paid a sum of Rs.28,500/- as rent for the period January to
March, 2010 for Morena branch, Rs.3,900/- for Swaheri branch
for the month of March 2010 and Rs.43,600/- as enhanced rent for
Jhalu branch for the last five years on settlement of dispute and
difference of the enhanced rent was paid during the year under
assessment.
Ld. AR for the assessee contended that the amount of
Rs.43,600/- on account of enhanced rent @ 20% for last five years
which was agreed to be paid during the year under assessment. It
is the case of the assessee that rent agreement showing
enhancement of rent was furnished but not taken into account by
4 ITA No.2438/Del./2016
the AO. We are of the considered view that when the amount of
Rs.76,000/- has been paid being rent for January to March 2010 for
Morena branch, Rs.3,9000/- for Swaheri branch and Rs.43,600/-
for enhanced rent for Jhalu branch on settlement of dues, the same
are allowable expenditure as the AO has not dispute the incurrence
of the expenses to run the business of the bank. So, when payment
of rent is not disputed which was stated to be paid in the next
month due to negligence, the same cannot be disallowed. So, the
AO is directed to allow the same after verification of the rent
agreement as to the enhancement of the amount for the last five
years paid during the year under assessment after settlement.
GROUND NO.3 8. The addition of Rs.19,20,999/- has been made by the AO on
account of interest reversed pertaining to previous year. It is the
admitted case of the assessee that the amount of Rs.19,20,999/- has
been shown in the account books on account of interest charged but
subsequently it came to the notice that it was wrongly charged and
consequently the same was reversed on 07.05.2010. When it is
undisputed case of the assessee as per books of account that the
interest of Rs.19,20,999/- has been extra charged on loan in
Kiratpur branch on 31.03.2010, but the said mistake of fact has
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been rectified by the assessee by making reverse entries, AO as
well as ld. CIT (A) have made addition on the ground that this
claim tantamount to earlier years without going into the fact that it
was due to bonafide mistake. When undisputedly, there is no
income to the assessee on account of extra charge of the interest on
loan in Kiratpur branch how the same amount can be assessed to
income and as such, addition of Rs.19,20,999/- on account of
interest reversed is not sustainable, hence ordered to be deleted.
So, ground no.3 is determined in favour of the assessee.
Resultant, the appeal filed by the assessee is partly allowed. Order pronounced in open court on this 16th day of January, 2019.
Sd/- sd/- (N.S. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated the 16th day of January, 2019 TS