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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: MRS. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
O R D E R आदेश आदेश PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: This bunch of four appeals has been filed by the assessee against separate orders of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as "CIT(A)" for short], all of even dated 28.12.2022, passed under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short], for the Assessment Years (AYs) 2008-09, 2009-10, 2011-12 & 2013-14.
It was common ground that the issue arising in all the appeals was identical; therefore, all the appeals were taken up together for adjudication and are being disposed of by way of this common consolidated order. For the sake of convenience, the appeal of the assessee in AY 2008-09 in The Dabhoi Nagrik Sahakari Bank Ltd Vs. ACIT AYs :2008-09, 2009-10, 2011-12 & 2013-14 based on the facts for the said year. Our decision rendered therein will apply mutatis mutandis to the rest of the appeals also.
Grounds of appeal raised by the assessee are as under:- “(i) The Learned CIT (Appeal) is not correct in disallowing set off of brought forward losses against income earned during the year under consideration.
(ii) The Learned CIT (Appeal) is not correct in stating that the assessee ceased to be competent to carry on Banking Business.
(iii) The Learned CIT (Appeal) is not correct in stating that the liability which has not been determined and not accounted for cannot be given to assessee.
(iv) In view of deposit credit Guarantee Corporation of India Act, 1961 (DICGCI Act, 1961) read with DICGCI regulation 1961; any bank under liquidation availed insurance claim for payment of outstanding deposit liability from DICGCI (subsidiary of RBI) statutorily required to set a part funds realized from advances for payment of liability of IDCGCI hence bank is statutorily obliged to divert by overriding title for payment of liabilities of DICGCI and not otherwise as held by Supreme Court in case of DICGCI vs. Raghupathi Raghavan Civil appeal no. 1035/2008 dated 01/07/2015 and by Gujarat High Court in case of assessee in LPA No. 2456/2009 in SCA No.7617/2009 dated 06.07.2015 hence any income of the assessee bank under liquidation ought to have been diverted at source by overriding title for payment of liabilities of DICGCI and therefore all proceeds of advances realized and entire income of assessee bank under liquidation is diverted at source and hence taxable income is Nil.
(v) Assessee has realized interest on Deposits and Advances of Rs.20 ,81,688/. In the course of realizing advances do not cease to be stock in trade nor such interest cease to have characterization of business income hence Ld. AO ought to have held that interest on Deposits and Advances of Rs.20,81,688/- is business income.
(vi) Assessee has realized advances and has kept surplus funds as fixed deposits and as regards bank is concerned; liquid funds including stock in trade converted as liquid money and kept as fixed deposits are stock in trade however interest thereon has its characterization as income from other sources due to liquidation process but in view judgment of Supreme Court in case of Western States Trading Co(P.). Ltd. v/s C.I.T. 80 ITR 21 (SC) such interest income of The Dabhoi Nagrik Sahakari Bank Ltd Vs. ACIT AYs :2008-09, 2009-10, 2011-12 & 2013-14 fixed deposits being stock in trade and assessed under head income from other sources ought to have been set- off against brought forward losses.
(vii) The Learned CIT (Appeal) failed to consider properly the directions given by Hon. ITAT without understanding properly the explanations and submissions made by the assessee which ought to be considered while passing high pitched assessment order.
(viii) There being no inaccurate particulars or concealment of particulars, the proceedings initiated is unjustified.
(ix) We relied on the decision of Hon. ITAT, Ahmedabad in the case of The Visnagar Nagrik Sahakari Bank Ltd. V / s DCIT, Patan. ITA NO. 2251/Ahd. 2015, Α.Υ. 2011-12.”
We have heard both the parties. This is the second round of litigation before us. In the first round, ITAT had restored the appeal back to the Assessing Officer, giving certain directions. In the second round, the Assessing Officer called for necessary details from the assessee for complying with the directions of the ITAT; after considering which, he passed an order on the issues before him making certain additions to the income of the assessee. The assessee carried the matter in appeal before the ld. CIT(A), where he made arguments and raised grounds which were held by the ld. CIT(A) to be non-maintainable, being beyond the purview of the directions given by the ITAT. It is against this order of the ld. CIT(A) that the assessee has come up in appeal before us and his arguments before us were twofold:-
(i) that the ld. CIT(A) has erred in holding that the contentions raised by the assessee in the second round before him were beyond the purview of the directions of the ITAT to the Assessing Officer in the second round, and therefore not maintainable;
(ii) that on considering the arguments made by the assessee on merits, the assessee’s appeal needed to be allowed. The Dabhoi Nagrik Sahakari Bank Ltd Vs. ACIT AYs :2008-09, 2009-10, 2011-12 & 2013-14
It is in this broad backdrop that we now proceed to point out the specifics of the case and adjudicate the issue before us.
The first question to be answered or the issue to be adjudicated by us is with regard to the ld. CIT(A)’s finding that the contentions raised by the assessee before it were non-maintainable in view of the same exceeding the directions of the ITAT in the first round. For the said purpose, it is pertinent to note, • what exactly is the case at hand, • what was the direction of the ITAT in the first round, and • what pleadings were/are being made by the assessee now which are not being entertained by the ld. CIT(A).
The copy of the order of the ITAT, passed in the first round, was placed before us, from where we have extracted the facts of the case and also the directions of the ITAT in the first round. As emanates from the same, the assessee is a co-operative society established in the year 1934 and was granted banking license by the Reserve Bank of India in 1986. In June, 2004, the Reserve Bank of India, vide its letter, precluded the assessee from incurring any liability or sanctioning/reviewing or making payment or discharging any liability or obligation except in accordance with directions contained in the said directive. Subsequently, the Reserve Bank of India, vide its order dated 01.03.2006, cancelled the license of the assessee bank with effect from 01.04.2006, debarring the assessee-bank from carrying on any banking business in India under Section 22 of the Banking Regulation Act, 1949. Thereafter, after cancellation of banking license,