SHIVPRABHA NAGAR SAHAKAR PATHSANSTHA LTD.,SOLAPUR vs. ADDITIONAL COMMISSIONER OF INCOME-TAX,

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ITA 2321/PUN/2016Status: DisposedITAT Pune14 August 2018AY 2007-084 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal dismissed the ground related to the disallowance of provision for bad and doubtful debts as not pressed. For the accrued interest on NPAs, the Tribunal allowed the assessee's appeal, relying on the Bombay High Court's decision in CIT vs. Deogiri Nagari Sahakari Bank Ltd.

What were the facts?

The assessee, a co-operative society, appealed against additions made by the Assessing Officer for provision for bad and doubtful debts and accrued interest on NPAs. The CIT(A) had dismissed the assessee's appeal.

What were the issues?

Whether accrued interest on NPAs is to be added to the income of a co-operative society. Whether provision for bad and doubtful debts is allowable.

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Income Tax Appellate Tribunal, “B” BENCH, PUNE

Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM

For Appellant: Shri Pramod Shingte
For Respondent: Shri M.K. Verma

आदेश / ORDER

PER VIKAS AWASTHY, JM :

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-7, Pune dated 25-07-2016 for the assessment year 2007-08.

2 ITA No. 2321/PUN/2016, A.Y. 2007-08

2.

The brief facts of the case as emanating from records are : The assessee is a Co-operative Society engaged in providing credit facilities to its members and accepting deposits. During the course of scrutiny assessment proceedings, the Assessing Officer made additions / disallowances on account of : i. Provision for Bad and doubtful debts (NPA provision) Rs.24,12,372/- ii. Accrued interest on NPAs Rs.10,48,173/-.

Aggrieved by the additions/disallowances made in the assessment order dated 22-12-2009, the assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) dismissed the appeal of assessee. Hence, the assessee is in second appeal before the Tribunal.

3.

Shri Pramod Shingte appearing on behalf of the assessee submitted at the outset that he is not pressing ground No. 1 raised in the appeal with respect to disallowance of provision for Bad and doubtful debts.

3.1 In respect of ground No. 2 of the appeal relating to addition on account of accrued interest on NPAs, the ld. AR submitted that the issue is covered in favour of the assessee, by the decision of Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. M/s. Deogiri Nagari Sahakari Bank Ltd. reported as 379 ITR 24. The ld. AR submitted that the Co-ordinate Bench of the Tribunal in the case of Income Tax Officer Vs. Mahesh Nagari Sahakari Pat Sanstha Ltd. in ITA No. 1874/PN/2012 for

3 ITA No. 2321/PUN/2016, A.Y. 2007-08

assessment year 2009-10 decided on 25-03-2014 deleted the addition made on account of accrued interest on NPAs.

4.

On the other hand Mrs. Shweta Mishra representing the Department vehemently supported the findings of Commissioner of Income Tax (Appeals) and prayed for rejecting the grounds raised by the assessee in appeal.

5.

Both sides heard. Orders of the authorities below perused. The ld. AR of assessee has stated at the Bar that he is not pressing ground No. 1 of the appeal assailing disallowance of NPA provision Rs.24,12,372/-. In view of the statement made by the ld. AR, ground No. 1 raised in the appeal is dismissed as not pressed.

6.

The ground No. 2 of appeal relates to addition made on account of accrued interest on NPAs Rs.10,48,173/-. The ld. AR placed reliance on the decision of Hon’ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. M/s. Deogiri Nagari Sahakari Bank Ltd. (supra) to contend that accrued interest on NPAs is not to be added. We further observe that the Pune Bench of the Tribunal in the case of Income Tax Officer Vs. Mahesh Nagari Sahakari Pat Sanstha Ltd. (supra) upheld the deletion of addition made on account of accrued interest of NPAs in the case of credit Co-operative society. We find merit in the submissions of the assessee in the light of decisions discussed above. The Hon’ble High Court in the aforementioned case has upheld the order of Tribunal in deleting the addition on account of interest on sticky advances. The Revenue has not

4 ITA No. 2321/PUN/2016, A.Y. 2007-08

brought to our notice any contrary judgment. Thus, the issue raised in ground No. 2 of appeal by the assessee is allowed.

7.

In the result, the appeal of assessee is partly allowed in the terms of aforesaid.

Order pronounced on Tuesday, the 14th day of August, 2018.

Sd/- Sd/- (डी. करुणाकरा राव/D. Karunakara Rao) (ववकास अवस्थी / Vikas Awasthy) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 14th August, 2018 RK आदेश की प्रयिलऱवऩ अग्रेवषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. आयकर आयुक्त (अऩीऱ) / The CIT(A)-7, Pune 3. 4. The Pr. CIT-6, Pune ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, “बी” बेंच, 5. ऩुणे / DR, ITAT, “B” Bench, Pune. गाडड फ़ाइऱ / Guard File. 6. //सत्यावऩत प्रयत // True Copy// आदेशानुसार / BY ORDER,

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

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