M/s State Bank of Indore, v. The ACIT, 5(1),

ITA 707/IND/2007 | 2004-2005
Pronouncement Date: 12-04-2010 | Result: Dismissed

Appeal Details

RSA Number 70722714 RSA 2007
Assessee PAN AAECS7776C
Bench Indore
Appeal Number ITA 707/IND/2007
Duration Of Justice 2 year(s) 4 month(s) 26 day(s)
Appellant M/s State Bank of Indore,
Respondent The ACIT, 5(1),
Appeal Type Income Tax Appeal
Pronouncement Date 12-04-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 13-01-2009
Date Of Final Hearing 07-04-2010
Next Hearing Date 07-04-2010
Assessment Year 2004-2005
Appeal Filed On 16-11-2007
Judgment Text
PAGE 1 OF 8 - I.T.A.NO. 707/IND/2007 STATE BANK OF INDORE INDORE. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER PAN NO. : AAECS7776C I.T.A.NO.707/IND/2007 A.Y. : 2004-05 STATE BANK OF INDORE ACIT 5 Y.N.ROAD VS RANGE 5(1) INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI MANOJ MUNSHI ADV. RESPONDENT BY : SHRI K.K.SINGH CIT DR DATE OF HEARING : 07.04.2010 O R D E R PER BENCH1 THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF ORD ER OF THE LD. CIT(A)-II INDORE DATED 10.09.2007 FOR THE ASSESS MENT YEAR 2004-05. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. GROUND NO. 1 READS AS UNDER :- 1.1 THE LD. CIT(A)-II INDORE ERRED IN DISALLOWING THE CLAIM FOR ADDITIONAL DEDUCTION U/S 36(1)(VIIA) OF T HE ACT IN THE SUM OF RS. 13 47 14 132/-. PAGE 2 OF 8 - I.T.A.NO. 707/IND/2007 STATE BANK OF INDORE INDORE. 1.2 THE LD. CIT(A) II INDORE OUGHT TO HAVE HELD THAT T HE CLAIM FOR ADDITIONAL DEDUCTION U/S 36(1)(VIIA) OF T HE ACT IS AVAILABLE TO THE ASSESSEE BANK FOR A PERIOD OF FIVE CONSECUTIVE ASSESSMENT YEARS 2000-01 TO 2004- 05. 4. BOTH THE PARTIES SUBMITTED THAT THIS ISSUE WAS COVE RED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN I.T.A.NO. 353/IND/2008 ORDER DATED 28.01.2010. H ENCE WE ACCEPT THIS GROUND OF THE ASSESSEE AND DIRECT THE A.O. TO ALLOW THE CLAIM OF THE ASSESSEE FOR ADDITIONAL DEDUCTION U/S 36(1)(VIIA) O F THE ACT. 5. GROUND NO. 2 READS AS UNDER :- 2.1 THE LD. CIT(A)II INDORE ERRED IN NOT ALLOWING THE CLAIM OF DEDUCTION ON ACCOUNT OF ACCRUED INTEREST ON SECU RITIES IN THE SUM OF RS. 1 71 49 860/- FROM THE TOTAL INCOME/ RETURNED INCOME TOWARDS THE DIFFERENCE OF INTEREST RECEIVED ON SECURITIES IN THE SUM OF RS. 5 21 78 00 640/- AND I NTEREST ACCRUED ON SECURITIES IN THE SUM OF RS. 5 20 06 50 780/-. 2.2 THE LD. CIT(A)II INDORE ERRED IN HOLDING THAT THE RATIO OF INSTRUCTION UNDER SECTION 144A OF THE ACT CANNO T BE EXTENDED AND/OR APPLIED FOR OTHER ASSESSMENT YEARS. PAGE 3 OF 8 - I.T.A.NO. 707/IND/2007 STATE BANK OF INDORE INDORE. 6. THE FACTS IN BRIEF ARE THAT THE ASSESSEE BANK IN EARLIER YEARS WAS PROVIDING INTEREST ON ACCRUAL BASIS IN THE BOOK S OF ACCOUNT. HOWEVER IN COMPUTING THE TAXABLE INCOME INTEREST ON SECURI TIES WAS SHOWN ON RECEIPT BASIS. IN ASSESSMENT YEAR 2003-04 AS PER M UTUAL UNDERSTANDING WITH THE DEPARTMENT IN THE COURSE OF PROCEEDINGS U /S 144A THE ASSESSEE AGREED TO FOLLOW THE SYSTEM OF ACCRUAL BOTH FOR ACC OUNTING AS WELL AS TAX PURPOSES. ACCORDINGLY ADJUSTMENTS WERE MADE. HOWE VER BEFORE THAT THE ASSESSEE HAD FILED RETURN FOR THE YEAR UNDER CONSID ERATION ON RECEIPT BASIS AND IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE CLAIMED BEFORE THE A.O. TO GIVE RELIEF TO THE TUNE OF RS. 1 71 49 860/- ON ACCOUNT OF INTEREST IN COME EXCESSIVELY REPORTED ORIGINALLY. THE A.O. HOWEVER DID NOT ACC EPT THIS CLAIM OF THE ASSESSEE. AGGRIEVED BY THIS THE ASSESSEE CARRIED T HE MATTER INTO APPEAL BEFORE THE LD. CIT(A) WHO ALSO DID NOT ENTERTAIN T HE CLAIM OF THE ASSESSEE IN VIEW OF THE DECISION OF THE HON'BLE SU PREME COURT IN THE CASE OF GOETZE INDIA LIMITED VS. CIT AS REPORTED IN 284 ITR 323 AS THE ASSESSEE HAD NOT FILED A REVISED RETURN TO MAKE SUC H CLAIM AND THE DIRECTIONS ISSUED U/S 144A WERE APPLICABLE ONLY IN RESPECT OF ASSESSMENT YEAR 2003-04. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LEARNED COUNSEL FOR THE ASSESSEE NARRATED THE F ACTS AND CONTENDED THAT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF PAGE 4 OF 8 - I.T.A.NO. 707/IND/2007 STATE BANK OF INDORE INDORE. GOETZ INDIA LIMITED (SUPRA) WAS NOT APPLICABLE ON T HE LD. CIT(A)S POWER TO ADMIT THE CLAIM OF THE ASSESSEE AND ADJUDI CATE THEREON. THE LEARNED COUNSEL FURTHER CONTENDED THAT THE SAID DEC ISION WAS ALSO NOT APPLICABLE ON THE TRIBUNALS POWER. HE ALSO CONTEND ED THAT THERE WERE CERTAIN DECISIONS WHEREIN AFTER CONSIDERING THE SAI D DECISION OF THE HON'BLE SUPREME COURT A VIEW HAS BEEN TAKEN THAT T HE ASSESSEES LEGAL VALID CLAIM COULD NOT BE REJECTED FOR WANT OF TECH NICALITIES. THEREAFTER HE GAVE THE FACTUAL DETAILS OF THE ISSUE. HOWEVER THE LEARNED COUNSEL COULD NOT GIVE A CLEAR CUT WORKING AS REGARD TO HOW MUCH INTEREST HAD BEEN OFFERED ON RECEIPT BASIS IN EARLIER YEARS AND HOW M UCH ADJUSTMENT HAD BEEN CARRIED OUT DUE TO CHANGE IN THE METHOD OF ACC OUNTING AS AGREED BY THE ASSESSEE WITH THE DEPARTMENT. THOUGH HE CONTEND ED THAT THERE WAS NO DISPUTE ON THIS ASPECT. HOWEVER ONCE THE CLAIM OF THE ASSESSEE HAS NOT BEEN ENTERTAINED AT THE VERY FIRST STAGE THEN IN OUR OPINION THE QUESTION OF VERIFICATION OF QUANTUM OF SUCH CLAIM HAS NOT BE EN EXAMINED AT ALL AND THEREFORE WE HOLD THAT THE ASSESSEES CLAIM F OR REDUCTION OF EXCESS INTEREST OFFERED BY IT SHOULD BE ADMITTED FOR ADJUD ICATION AND DIRECT THE A.O. TO VERIFY QUANTUM THEREOF AND TREATMENT GIVEN BY THE ASSESSEE IN THE EARLIER YEARS AS WELL. IT IS NEEDLESS TO MENTION TH AT THE A.O. SHALL GRANT AN ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE IN DOING SO. 8. GROUND NO.3 READS AS UNDER :- PAGE 5 OF 8 - I.T.A.NO. 707/IND/2007 STATE BANK OF INDORE INDORE. 3.1 THE LD. CIT(A) ERRED IN MAKING ENHANCEMENT OF INCOME U/S 251(2) OF THE ACT IN THE SUM OF RS. 4 81 80 000/- ON THE ISSUE OF CATEGORIZATION OF BRANCHES BASED ON PROVISIONAL DATA OF 2001 INSTEAD OF FINAL CENSUS 1991. 3.2 THE LD. CIT(A) INDORE ERRED IN HOLDING THAT THE CATEGORIZATION OF BRANCHES SHOULD HAVE BEEN DONE BASED ON PROVISIONAL CENSUS 2001 INSTEAD OF FINAL CENSUS 1991. 3.3 THE LD. CIT(A) INDORE FAILED TO APPRECIATE THAT THE FINAL DATA OF CENSUS 2001 WERE AVAILABLE ONLY AFTE R THE COMMENCEMENT OF FINANCIAL YEAR 2003-04. 9. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS EN TITLED FOR ADDITIONAL DEDUCTION U/S 36(1)(VIIA)(A) ON THE AGGR EGATE AVERAGE ADVANCES OF THE RURAL BRANCHES. IN THE COURSE OF APPELLATE P ROCEEDINGS THE LD. CIT(A) FOUND THAT THE ASSESSEE HAD MADE THE PROVISI ONS IN RESPECT OF SUCH RURAL BRANCHES ON THE BASIS OF CENSUS OF 1991. HOWE VER THE POPULATION DATA ON THE BASIS OF CENSUS 2001 HAD BEEN PUBLISHED IN MARCH 2001 AND ACCORDINGLY THE ASSESSEE SHOULD HAVE MADE THE PROV ISIONS IN RESPECT OF ADVANCES OF RURAL BRANCHES AND NOT ON THE BASIS OF CENSUS OF 1991. THE PAGE 6 OF 8 - I.T.A.NO. 707/IND/2007 STATE BANK OF INDORE INDORE. LD. CIT(A) ALSO REFERRED TO THE PROVISIONS OF EXPLA NATION (IA) TO SECTION 36(1)(VIIA) OF THE ACT. THE ASSESSEE HOWEVER CONT ENDED THAT IT WAS A PROVISIONAL DATA AND THEREFORE THE ASSESSEE HAD R IGHTLY CLASSIFIED THE BRANCHES AS RURAL BRANCHES. THE LD. CIT(A) HOWEVER REJECTED THIS CLAIM OF THE ASSESSEE AND ON THE BASIS OF DETAILS SUBMITT ED BY THE ASSESSEE AS PER THE CENSUS 2001 WORKED OUT THE PROFITS AT RS. 58.2 78 CRORES AS AGAINST RS. 63.096 CRORES CLAIMED BY THE ASSESSEE AND MADE AN ADDITION TO THE TOTAL INCOME OF THE ASSESSEE BY THE AMOUNT OF EXCE SS DEDUCTION OF RS. 4.818 CRORES. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEFORE US. 10. THE LEARNED COUNSEL FOR THE ASSESSEE NARRATED THE F ACTS AND CONTENDED THAT AS PER THE PROVISIONS OF EXPLANATION (IA) TO SECTION 36(VIIA) THE ASSESSEE HAD TO CLASSIFY RURAL BRANCH ES AS PER THE CENSUS DATA PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR AND IN THIS CASE THE FIRST DAY OF THE PREVIOUS YEAR WAS 1 ST APRIL 2003 AND NO FINAL DATA HAD BEEN PUBLISHED ON THE BASIS OF WHICH THE ASSESSEE C OULD HAVE MADE THE PROVISIONS AND THEREFORE THE ACTION OF THE LD. CI T(A) IN ENHANCING THE INCOME OF THE ASSESSEE WAS NOT CORRECT IN LAW. HE A LSO REFERRED TO THE LETTER DATED 12.12.2007 ISSUED BY OFFICE OF REGISTR AR GENERAL OF INDIA CERTIFYING THAT THE P.C.A. ABSTRACT DATA WAS MADE AVAILABLE IN THE PUBLIC DOMAIN ONLY IN JUNE 2004. HOWEVER WHEN IT WAS POI NTED OUT TO THE LEARNED COUNSEL THAT IT WAS AN ADDITIONAL EVIDENCE AND THE LEARNED PAGE 7 OF 8 - I.T.A.NO. 707/IND/2007 STATE BANK OF INDORE INDORE. COUNSEL SHOULD HAVE FILED AN APPLICATION AS PER RUL ES TO WHICH THE LEARNED COUNSEL EXPRESSED ITS REGRETS. 11. THE LD. CIT DR ON THE OTHER HAND CONTENDED THAT T HE PROVISIONAL DATA AVAILABLE IN MARCH 2001 ITSELF A ND THE ASSESSEE FAILED TO SHOW THAT ON THAT BASIS IT COULD NOT CLASSIFY THE R URAL BRANCHES. HENCE THE ACTION OF THE LD. CIT(A) WAS CORRECT IN LAW. THE LD . CIT DR FURTHER SUBMITTED THAT THE ONLY CRITERIA WAS THAT THE BRANC H SITUATED IN A PLACE HAVING A POPULATION OF NOT MORE THAN 10 000 HAD TO BE TREATED AS A RURAL BRANCH AND IT WAS NOT NECESSARY THAT IT SHOULD BE I N A VILLAGE ONLY. THEREAFTER HE REFERRED TO THE ADVANCE CALENDAR OF RELEASE OF 2001 CENSUS TABLE WHEREIN IT WAS MENTIONED THAT PROVISIONAL PO PULATION TOTALS CONTAINING DETAILS FOR TAHSIL/TOWN WERE RELEASED IN MARCH 2001 AND THEREFORE ON THAT BASIS THE ASSESSEE SHOULD HAVE CLASSIFIED THE RURAL BRANCHES AND MADE PROVISIONS ACCORDINGLY. 12. THE LEARNED COUNSEL IN THE REJOINDER CONTENDED HOW EVER EMPHASIZED ON THE FACTS THAT IT WAS THE PRIMARY CEN SUS ABSTRACT WHICH WAS RELEVANT AND FOR THE PURPOSE AS THE SAME HAD BE EN RELEASED IN JULY 2004 ONLY AND THEREFORE THE ASSESSEE HAD MADE TH E PROVISIONS CORRECTLY. 13. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THAT THE MATTER SHOULD GO BAC K TO THE FILE OF A.O. TO EXAMINE THE ADDITIONAL EVIDENCE AS WELL AS THE PROV ISIONAL POPULATION PAGE 8 OF 8 - I.T.A.NO. 707/IND/2007 STATE BANK OF INDORE INDORE. TOTALS DETAILS RELEASED IN MARCH 2001 SO AS TO AR RIVE AT THE CORRECT VIEW IN THE MATTER AS PER THE PROVISIONS OF LAW. ACCORDI NGLY WE RESTORE THIS ISSUE TO THE FILE OF A.O. WHO SHALL DECIDE THE SAM E AFRESH AS PER LAW AFTER TAKING INTO CONSIDERATIONS THE SUBMISSIONS MADE BY BOTH THE SIDES BEFORE US AS WELL AS AFTER GIVING AN ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS THIS GROUND OF THE ASSESSEE IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 12 TH APRIL 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12 TH APRIL 2010. CPU* 749