ACIT, Moradabad v. Rampur Zila Sahkari Bank Ltd.,, Rampur

ITA 3002/DEL/2013 | 2007-2008
Pronouncement Date: 30-04-2015 | Result: Partly Allowed

Appeal Details

RSA Number 300220114 RSA 2013
Assessee PAN AAALR0004R
Bench Delhi
Appeal Number ITA 3002/DEL/2013
Duration Of Justice 1 year(s) 11 month(s) 16 day(s)
Appellant ACIT, Moradabad
Respondent Rampur Zila Sahkari Bank Ltd.,, Rampur
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2015
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 30-04-2015
Date Of Final Hearing 24-03-2015
Next Hearing Date 24-03-2015
Assessment Year 2007-2008
Appeal Filed On 14-05-2013
Judgment Text
INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI R.S. SYAL ACCOUNTANT MEMBER AND SHRI A. T. VARKEY JUDICIAL MEMBER ITA NO.3002/DEL/2013 (ASSESSMENT YEAR: 2007 - 08 ) ACIT CIRCLE - 1 MORADABAD RAMPUR ZILA SAHKARI BANK LTD CIVIL LINES RAMPUR AAALR0004R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIKRAM SAHAY SR.D R RESPONDENT BY : NONE DATE OF HEARING 24.03. .2015 DATE OF PRONOUNCEMENT 30 .04 .2015 ORDER PER A. T. VARKEY JUDICIAL MEMBER THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATE D 08 - 03 - 2013 PASSED BY THE LD. CIT(A) BAREILLY PERTAINING TO ASSESSMENT YEAR 200 7 - 0 8 . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.15 40 562/ - MADE BY THE AO ON ACCOUNT PROVISIONS OF EXPENSES WITHOUT APPRECIATING THE FINDING OF THE AO T HAT THESE PROVISIONS RELATE TO UNASCERTAINED AND UNQUANTIFIED LIABILITY WHICH ARE NOT ALLOWABLE AS DEDUCTION IN THE YEAR IN WHICH SUCH EXPENSES REMAINED UNASCERTAINED AND UNQUANTIFIED. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF OF RS. 21 58 958 / - TO THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE EMPLOYEE'S SHARE OF PF IS ALLOWABLE AS DEDUCTION U / S 36(1 )(VA) ONLY IF SUCH SHARE HAS BEEN CREDITED TO EMPLOYEE'S ACCOUNT IN THE FUND BEFORE THE DUE DATE AS PER THE RULES OF THE FUND IRRESPECTIVE OF THE FACT THAT IT HAS BEEN SO CREDITED BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME. 3. LD. CIT(A) HAS ALSO ERRED IN NOT APPRECIATING THE FACT THAT THE AO HAS DISALLOWED THE EMPLOYEE'S SHARE WHICH IS GOVERNED BY SEC TION 36( 1 ) (VA) AND NOT EMPLOYER'S SHARE WHICH IS GOVERNED BY SEC. 43B AND AS PER THE PROVISION OF SECTION 43B EMPLOYER'S SHARE CAN BE ALLOWED IF ITA NO. 3002/ DEL/ 2013 2 PAID BEFORE DUE DATE FOR FILING RETURN OF INCOME. BUT THIS PROVISION IS NOT APPLICABLE TO EMPLOYEE'S SHARE T HE ALLOWABILITY OF WHICH IS GOVERNED BY P ROVISIONS OF SECTION 36(I)(VA). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE A SSESSEE IS A CO - OPERATIVE BANK REGISTERED UNDER THE U .P. CO - OPERATIVE SOCIETIES ACT 1912 VIDE REGISTRATION NO. 823 DATED 13 - 01 - 1966. IT HAS BEEN LICENSED BY THE RESERVE BANK OF INDIA TO CARRY ON THE BUSINESS OF BANKING VIDE LICENSE NO. ACD.UP.8 - C DATED 4 - 05 - 1970 OF THE BANKING REGULATION ACT 1949 . T HAT FOR THE YEAR UNDER QUESTION THE ASSESSEE HAD FILED THE RETURN U / S 139(1) OF THE INCOME TAX ACT 1961 (HEREIN AFTER THE ACT) ON 31 - 10 - 2007 DECLARING TAXABLE INCOME OF RS. 72 9 791/ - AS REFLECTED FROM FI NAL BALANCE SHEET AND PROFIT & LOSS ACCOUNT DRAWN ON 31 - 03 - 2007. HOWE VER THE ASSESSMENT WAS COMPLETED BY AO ON 24.12.2009 U/S. 143(3) OF THE ACT ON TOTAL INCOME OF RS. 2 16 96 848/ - BY MAKING VARIOUS ADDITIONS. 4. AGAINST THE AFORESAID ORDER OF THE ASSESSING OFFICER ASSESSEE APPEALED BEFORE THE LD. CIT(A) WHO VIDE HIS ORDER DATED 08.3.2013 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE . 5. NOW THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. WE FIND THAT THE GROUND NO. 1 IS RELATING TO DELETION OF ADDITION OF RS. 1 5 40 562/ - MADE BY THE AO ON ACCOUNT OF VARIOUS PROVISIONS OF EXPENSE S. WE FIND THAT THE ASSESSEE BEFORE THE LD CIT(A) HAS SUBMITTED THAT A.O. HAS UNLAWFULLY DISALLOWED 15 40 562/ - PROVISIONS MADE FOR VARIOUS HEAD OF EXPENSES ON CLOSING DATE OF THE ACCOUNTING YEAR AND BY INVOKING THE BARRING PROVISION OF SEC. 37(1) OF THE ACT . ACCORDING TO THE ASSESSEE T HE A.O. HAS MADE DISALLOWANCES SIMPLY UPON PRESUMPTION AND SURMISES. THE AO WAS OF THE OPINION T HAT SINCE THE VARIOUS EXPENSES REFLECTED ARE IN ROUND FIGURE THEY HAVE NOT BEEN INCURRED SO IT IS JUST AN APPROXIMATE FIGURE FOR THE YEAR UNDER CONSIDERATION AND THEREFORE SUCH PROVISION APPROXIMATED FOR EXPENSE CLEARLY ASSUMES THE CHARACTER OF UNASCERTAINED AND UNQUALIFIED LIABILITY DURING THE YEAR. THE A SSESSEE HOWEVER TOOK THE STAND THAT IT HAS EXPLAINED EACH EXPENSE WHICH RELATES TO THE YEAR IN QUESTION AND THE EXPENSES IN QUESTION ITA NO. 3002/ DEL/ 2013 3 HAS BEEN INCURRED OR ASCERTAINED DURING THE RELEVANT ASSE SS MENT YEAR. ASSESSEE SUBMITTED THAT AMOUNT AS PROVISIONED DURING THE YEAR HAS ACTUALLY BEEN PAID IN SUBSEQUENT YEAR B EFORE DUE DATE OF FILING OF RETU RN . THEREFORE ACCORDING TO THE ASSESSEE IT IS AN ALLOWABLE DEDUCTIO N IN TERMS OF SECTION 43B OF THE ACT. T HE LD. CIT(A) IN HIS FINDING HAS NOTED THAT THE AO HAS MADE DISALLOWANCE SIMPLY UPON PRESUMPTION AND SURMISES. TH EREFORE HE DELETED THE ADDITION OF RS. 15 40 562/ - . WE TAKE NOTE OF THE SUBMISSION OF THE LD AR THAT THE EXPENSES INCURRED OF THIS NATURE WAS ALLOW ED BY THE REVENUE AUTHORITIES IN THE PRE VIOUS ASSESSMENT YEARS . IN THA T CASE WE ARE OF THE CONSIDERED OPINION THAT AO SHALL EXAMINE THE PREVIOUS ASSESSMENT ORDERS OF THE ASSESSEE ON THIS ISSUE TO ASCERTAIN AS TO HOW THE ASSESSEE WAS CLAIMING I TS EXPENDITURE OF THIS NATURE AND IF IT IS FOUND THAT THE CLAIM OF THE ASSESSEE THIS YEAR IS AKI N TO THAT OF THE P REVIOUS YEAR THEN IT SHOULD BE ALLOWED. T HEREFORE IN THE INTEREST OF J USTICE WE ARE OF THE VIEW THAT ISSUE REQUIRES FRESH ADJUDICATION AT THE LEVEL OF THE AO. HENCE WE SET ASIDE THE IMPUGNED ORDER AND REMAND BACK THIS ISSUE TO THE FILE OF THE AO TO V ERIF Y THE CLAIM OF THE ASSESSEE IN THE MANNER AS DIRECTED BY US SUPRA AND DEC IDE AFRESH THIS ISSUE THE DE NOVA AFTER GIVING OPPORTUNITY TO THE ASSESSEE. ACCORDINGLY THE GROUND NO. 1 IS ALLOWED FOR STATISTICAL PURPOSES. 7 . WITH REGARD GROUND NO. 2 RAISED BY THE REVENUE IS CONCERNED WE FIND THAT BEFORE THE AO THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS OF BAN KING AND THERE HAS BEEN A PRACTICE IN BANKING SECTOR THAT SALARY OF THE EMPLOYEES DUE FOR A MONTH IS P AID IN THE LAST WEEK OF THE SAME MONTH. ACCORDING TO THE ASSESSEE THIS IS FOLLOWED IN ALMOST ALL BANKS WHETHER SCHEDULED OR NOT. T HE A.O. DURING ASSESSMENT PROCEEDINGS ASKED FOR DETAIL S ABOUT THE DEPOSIT OF EMPLOYER'S AND EMPLOYEES' CONTRIBUTION TOWARDS PROVIDENT FUND IN THEIR RESPECTIVE ACCOUNT. THE ASSESSEE FURNISHED A MONTH WISE DETAIL BEFORE HIM VIDE ITS REPLY DATED 07/12/2009. ACCORDING TO THE LD AR THE A.O. HAS MISUNDERSTOOD THE MONTH WISE DETAIL FURNISHED BEFORE HIM AND HE HAS WRONGLY PRESUMED THAT THE SALARY FOR A PARTICULAR MONTH WAS PAID IN SUBSEQUENT MONTH WHILE ACCORDING TO THE ASSESSEE THE FACT OF PAYMENT OF SALARY IN THE SAME MONTH WAS VERIFIABLE FROM THE BOOKS OF ITA NO. 3002/ DEL/ 2013 4 ACCOUNTS AND RE GISTERS PRODUCED BEFORE HIM. ACCORDING TO THE LD AR D ISALLOWANCES MADE ON THIS ACCOUNT WERE SIMPLY BASED UPON THE PRESUMPTIONS AND BEYOND THE ACTUAL FACTS OF THE CASE. T HE LD. CIT (A) HAS RECORDED A FINDING OF FACT THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR THE YEAR UNDER APPEAL IN FORM ITS 2D SARAL ON 31.10.2007. THE AMO UNTS OF PF AS MENTIONED IN THE ASSESSMENT ORDER AT PAGE NO. 4 & 5 WERE PAID BEYOND THE DUE DATE IN EACH MONTH OF THE YEAR BUT PAID BEFORE THE DUE DATE OF FILING OF RETURN OF I NCOME AND ACCORDINGLY THE ADDITION ON THIS ACCOUNT WAS DELETED BY THE LD. CIT(A). FOR THE SAKE OF CONVENIENCE WE ARE REPRODUCING HEREWITH THE AMOUNTS OF PF MENTIONED IN THE ASSESSMENT ORDER AT PAGE NO. 4 & 5. MONTH TO WHICH SALARY DUE EMPLOYER CONTRIBUTION EMPLOYEE SHARE DUE DATE DATE OF DEPOSIT MARCH 2006 1 71 391 1 72 711 15.4.06 26.4.2006 APRIL 2006 1 67 683 1 69 007 15.5.06 27.5.06 MAY 2006 1 67 663 1 68 987 15.6.06 24.6.06 JUNE 2006 1 74 156 1 74 981 15.7.06 27.7.06 JULY 2006 1 76 140 1 76 979 15.8.06 26.8.06 AUGUST 2006 1 77 244 1 78 083 15. 9 .06 25.9.06 SEPTEMBER 2006 84 302 1 85 156 15. 10 .06 28.10.06 OCTOBER 2006 1 88 558 1 89 434 15.1 1 .06 27.11.06 NOVEMBER 2006 89 684 1 90 560 15.1 2 .06 29.12.06 DECEMBER 2006 1 84 507 1 85 385 15.1.0 7 28.1.07 JANUARY 2007 1 83 496 1 84 821 1 5.2.07 25.2.07 FEBRUARY 2007 1 81 029 1 82 354 15.3.07 27.3.07 21 45 853 21 58 958 8. FROM A PERUSAL OF THE ABOVE CHART WE ARE OF THE SAME VIEW AS THAT OF THE LD CIT (A) THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR THE YEAR UNDER APPEAL IN FORM ITS 2D SARALON 31.10.2007 AND THE P. FAMOUNTS WERE PAID BEYOND THE DUE DATE IN EACH MONTH OF THE YEAR BUT PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME WHICH IS IN ACCORDANCE TO LAW AND THEREFORE I N THE BACKGROUND OF THE AFORESAID DISCUSSIONS WE DO NOT FIND ANY INFIRMITY IN THE REASONED FINDINGS OF THE LD. CIT(A) WITH RESPECT OF GROUND NO. 2 HENCE WE UPHOLD THE SAME. IN THE RESUL T THE GROUND NO. 2 RAISED BY THE REVENUE IS REJECTED. ITA NO. 3002/ DEL/ 2013 5 9. WITH REGARD GROUND NO. 3 T HE REVENUE IS AGGRIEV ED BY THE DELETION OF DISALLOWANCE OF BAD DEBTS OF RS.25 70 719/ - WAS MADE BY THE AO ON THE GROUND THAT THIS AMOUNT PERTAINS TO INVESTMENT (BEING VALUE OF SHARE OF COOPERATIVE SOCIETIES PURCHASED LONG BACK FROM WHICH NO DIVIDEND IS BEING RECEIVED) AND NOT ADVANCES AND BECAUSE THERE ARE NOT RURAL ADVANCES HENCE NOT COVERED U/S 36(1) (VIIA). W E FIND THE A SSESSEES COUNSEL BEFORE THE LD CIT(A) HAS SUBMI TTED THAT THE A.O. DISALLOWED THE PROVISION FOR SHARES OF RS. 2 05 000 / - MADE UNDER BAD AND DOUBTFUL DEBTS FOR TWO REASONS (I) BECAUSE IT PERTAINS TO INVESTMENT AND NOT ADVANCES (2) IT IS NOT A RURAL ADVANCE. THE DISALLOWANCE WAS MADE UNDER SECTION 36(1)(V IIA) OF THE ACT. HE FURTHER SUBMITTED THAT THE A.O. HAS MISREAD AND MISUNDERSTOOD MOST OF THE SUBMISSIONS MADE BY THE ASSESSEE. HE FURTHER SUBMITTED THAT THE ASSESSEE IN ITS WRITTEN SUBMISSION DATED 07/12/2009 AT POINT NO. 11 CLEARLY MENTIONED THAT RS 2 05 000 / - WAS INVESTMENT IN SHARES OF DIFFERENT SOCIETIES THE DETAIL OF WHICH ARE GIVEN HEREUNDER: S.NO. NAME DATE OF PURCHASE AMOUNT 1 THE COOPERATIVE TEXTILE MILLS 27.04.1981 2000.00 BULANDSHAHAR . 2 UTTAR PRADESH SILRAM AND NIR MAN 09.07.1984 2000.00 SANGH LTD. LUCKNOW . 3 UTTAR PRADESH COOPERATIVE 24.10.1978 1000.00 FEDERATION LUCKNOW 4 RUD RA BILAS KISAN SEHKARI CHINI 16.08.1976 100000.00 MILLS LTD. BILASPUR 5 UTTAR PRADESH SEH KARI PRAKLVARN 26.12.1991 100000.00 EVAM TILHAN VIKAS SANGH LTD LUCKNOW TOTAL RS 205000.00 9.1 WE FIND THAT THE ASSESSEE FURTHER SUBMITTED BEFORE THE AO THAT ON THESE INVESTMENTS NO DIVIDEND HAS BEEN RECEIVED BY THE ASSESSEE FROM PAST MANY YEARS. ALSO THE VALUE OF INVESTMENTS HAS DIMINISHED AT PRESENT AND NO AMOUNT IS RECOVERABLE ON SUCH INVESTMENTS. THEREFORE THE SAME WAS BAD AND DOUBTFUL ASSETS AND A PROVI SION WAS MADE U/S. 36(1)(VII) WHICH ALLOWS FOR A DEDUCTION OF THE AMOUNT OF ANY BAD DEBT OR PART THEREOF WHICH IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE FOR THE PREVIOUS YEAR. THEREFORE AS PER ASSESSEES COUNSEL THE DEDUCTION OF SUCH PROVISION WAS ITA NO. 3002/ DEL/ 2013 6 CORRECTLY CLAIMED BY THE ASSESSEE U/S 36 (L)(VII) AND SHOULD BE ALLOWED . WE FIND FROM THE FACTS AND CIRCUMSTANCES THAT THE ASSESSEE HAS WRITTEN OF F THE INTEREST WHICH ACCORDING TO IT IS IRRECOVERABLE AND SO TREATED AS BAD AND DOUBTFUL RETRIEVE SO IT WAS WRITTEN OF F BY THE ASSESSEE WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER AND WE UPHOLD THE SAME. SO I N THE RESULT THE GROUND NO. 3 RAISED BY THE REVENUE IS REJECTED. 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 0 .04.2015. - S D / - - S D / - (R.S. SYAL ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3 0 /04/2014 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT NEW DELHI