The Satara dist. Central Co-Op. Bank ltd.,, Satara v. ITO, Wd.-2,, Satara

ITA 446/PUN/2010 | 2005-2006
Pronouncement Date: 30-09-2011 | Result: Allowed

Appeal Details

RSA Number 44624514 RSA 2010
Assessee PAN AAAAT3706N
Bench Pune
Appeal Number ITA 446/PUN/2010
Duration Of Justice 1 year(s) 6 month(s) 8 day(s)
Appellant The Satara dist. Central Co-Op. Bank ltd.,, Satara
Respondent ITO, Wd.-2,, Satara
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 30-09-2011
Date Of Final Hearing 29-09-2011
Next Hearing Date 29-09-2011
Assessment Year 2005-2006
Appeal Filed On 22-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI D.KARUNAKAR RAO ACCOUNTANT MEMBER I.T.A. NO. 446/PN/2010 : A.Y. 2005-06 THE SATARA DIST. CENTRAL CO-OP. BANK LTD. SHIVAJI CIRCLE PANWAI NAKA SATARA PAN AAAAT 3706 N .. APPELLANT VS. I.T.O. WARD 2 .. RESPONDENT SATARA APPELLANT BY: SHRI M.K.KULKARNI RESPONDENT BY: SHRI HARESHWAR SHARMA DATE OF HEARING: 29- 9-2011 DATE OF PRONOUNCEMENT: 30-9-2011 ORDER PER SHAILENDRA KUMAR YADAV JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 8.2.2010 OF THE CIT-III PUNE UNDER SECTION 263 OF THE I.T.ACT 1961 FOR THE ASSESSMENT YEAR 2005-06. 2. FACT IN BRIEF ARE THAT IN THE ASSESSMENT ORDER THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143( 3) ALLOWING THE DEDUCTION OF RS.17 13 93 630/- U/S 80P(2)(A)(I) OF THE I.T.ACT CLAIMED BY THE ASSESSEE. THE CIT WHILE EXAMINING T HE ASSESSMENT RECORDS FOUND THAT THE AO COMPLETED THE ASSESSMENT WITHOUT EXAMINING THE ADMISSIBILITY OR OTHERWISE TO THE ASS ESSEE ON DEDUCTION U/S.80P(2)(I) ON THE INTEREST INCOME RECE IVED BY IT FROM 2 ITA NO. 446/PN/2 010 SATARA DIST. CENTL BANK A.Y. 2005-06 THE INVESTMENT OF VOLUNTARY RESERVES. AS PER THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MEHSANA DIST. COOPERATIVE BANK LTD 251 ITR 577 DEDUCTION U/S.80P(2)(I) IS A DMISSIBLE IN RESPECT OF INCOME FROM INVESTMENT OF VOLUNTARY RESE RVE ONLY IF SUCH INCOME HAS BEEN UTILIZED IN THE REGULAR COURSE OF B ANKING BUSINESS. THE CIT WAS OF THE VIEW THAT AT THE TIME OF ASSESSM ENT THE MANNER IN WHICH THE INTEREST INCOME EARNED FROM INVESTMENT OF VOLUNTARY RESERVED WAS UTILISED AND WHETHER OR NOT SUCH INTE REST INCOME WAS UTILIZED IN THE REGULAR COURSE OF BANKING BUSINESS WAS NOT EXAMINED AT ALL. SIMILARLY THE AO ALLOWED THE ASSESSEES C LAIM OF DEDUCTION U/S.80P(2)(A)(I) ON ITS ENTIRETY EVEN THOUGH PRIMA FACIE CERTAIN ITEMS VIZ; MANAGERIAL CHARGES MSEB REMUNERATION CH ARGES INSURANCE COMMISSION DIVIDENDS SURPLUS IN TRADING IN GOVERNMENT SECURITIES ETC WERE NOT ELIGIBLE FOR SUCH DEDUCTION IN AS MUCH AS SUCH RECEIPTS COULD NOT BE CONSIDERED AS INCOME OR PROFIT FROM THE BUSINESS OF BANKING. CONSIDERING THE ABOVE LAPSES IN THE ASSESSMENT ORDER THE CIT CONSIDERED THE ASSESSMENT ORDER AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE. ACCORDINGLY NOTICE UNDER SECTION 263 WAS ISSUED TO THE ASSESSEE CALLING UPON TO SHOW CAUSE AS TO WHY THE ASSESSMENT ORDER SHOULD NOT BE REVISED. AFTER CONSIDERING THE OBJECTION RA ISED BY THE ASSESSEE THE CIT DIRECTED THE AO TO MAKE A FRESH A SSESSMENT DE NOVO IN ACCORDANCE WITH THE LAW AND AFTER GIVING TH E ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 3. BEFORE US THE STAND OF THE ASSESSEE IS THAT THE ISSUE OF INTEREST INCOME RECEIVED FROM THE INVESTMENT OF VOL UNTARY RESERVES WAS DEBATABLE ISSUE AT THE RELEVANT POINT OF TIME. THEREFORE IT WAS NOT JUSTIFIED ON THE PART OF THE CIT IN INVOKING TH E PROVISIONS OF SECTION 263. IN SUM AND SUBSTANCE IT WAS CONTENDE D THAT ON DEBATABLE ISSUE THE CIT CANNOT MAKE THE ASSESSMENT ORDER AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY LEARNED COUNSEL URGES BEFORE US TO QUA SH THE IMPUGNED ORDER. ON THE OTHER HAND LEARNED D.R. SU PPORTED THE ORDER OF THE CIT. 3 ITA NO. 446/PN/2 010 SATARA DIST. CENTL BANK A.Y. 2005-06 4. AFTER HEARING BOTH THE SIDES AND PERUSING THE MA TERIAL ON RECORD WE FIND THAT THE ISSUE OF INTEREST INCOME R ECEIVED FROM THE INVESTMENT OF VOLUNTARY RESERVES WAS A DEBATABLE AT THE TIME OF ASSESSMENT AND THE CIT IS NOT JUSTIFIED IN INVOKIN G THE PROVISIONS OF SECTION 263 BECAUSE A DEBATABLE ISSUE CANNOT MAK E THE ORDER OF THE AO ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE IN TEREST OF THE REVENUE TO ATTRACT THE REVISIONARY POWER UNDER SECT ION 263. 5. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER 2011. SD/- SD/- (D.KARUNAKAR RAO) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED THE 30 TH SEPTEMBER 2011 PARIDA COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 4. THE CIT III PUNE 5. THE D.R ITAT PUNE BENCH PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL 4 ITA NO. 446/PN/2 010 SATARA DIST. CENTL BANK A.Y. 2005-06