The Kheda People Co-op Bank Ltd, Kheda v. The Dy. CIT, Nadiad

ITA 762/AHD/2014 | 2009-2010
Pronouncement Date: 30-09-2016 | Result: Allowed

Appeal Details

RSA Number 76220514 RSA 2014
Assessee PAN AAPPT0319Q
Bench Ahmedabad
Appeal Number ITA 762/AHD/2014
Duration Of Justice 2 year(s) 6 month(s) 16 day(s)
Appellant The Kheda People Co-op Bank Ltd, Kheda
Respondent The Dy. CIT, Nadiad
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 30-09-2016
Date Of Final Hearing 29-09-2016
Next Hearing Date 29-09-2016
Assessment Year 2009-2010
Appeal Filed On 14-03-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD JUDICIAL MEMBER) ITA. NO: 762/AHD/2014 (ASSESSMENT YEAR: 2009-10) THE KHEDA PEOPLE CO-OP. BANK LTD. GANDHI CHOWK BAZAR KHEDA NADIAD V/S DY. COMMISSIONER OF INCOME TAX KHEDA CIRCLE NADIAD (APPELLANT) (RESPONDENT) PAN: AAPPT0319Q APPELLANT BY : SHRI M. J. SHAH AR RESPONDENT BY : SHRI PRASOON KABRA SR. D.R. ( )/ ORDER DATE OF HEARING : 29 -09-201 6 DATE OF PRONOUNCEMENT : 30 -09-2016 PER N.K. BILLAIYA ACCOUNTANT MEMBER: 1. WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE LD. CIT(A)-IV BARODA DATED 10.01.2014 PERTA INING TO A.Y. 2009-10. 2. THE GRIEVANCE OF THE ASSESSEE READS AS UNDER:- ITA NO. 762/ AHD/2014 . A.Y. 2009- 10 2 1. THE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF R S. 28 04 601/- BEING BUSINESS LOSS ON REDEMPTION OF SSNL BONDS OF RS. 11 21 000/- AND LOSS OF INTEREST ON SSNL BONDS OF RS. 16 83 661/-. 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THE OVERALL SU BMISSIONS KEEPING IN MIND THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE CIT(A) ERRED IN UPHOLDING THE CHARGING OF INTER EST U/S. 234B AND 234C OF RS. 70 290/-. 3. THE ASSESSEE IS A COOPERATIVE BANK ENGAGED IN THE B USINESS OF BANKING. THE RETURN FOR THE YEAR UNDER CONSIDERATION WAS SELECTE D FOR SCRUTINY ASSESSMENT. 4. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS AND ON GOING THROUGH THE PROFIT AND LOSS ACCOUNT THE A.O. NOTIC ED THAT THE NET PROFIT IS SHOWN AT RS. 6 77 073/- BUT THE LOSS OF RS. 11 21 0 00/- ON ACCOUNT OF REDEMPTION OF SSNL BONDS AND THE LOSS OF INTEREST O FFERED AS INCOME IN EARLIER YEARS OF RS. 16 83 661/- FROM SSNL BONDS CL AIMED IN COMPUTATION OF TOTAL INCOME HAVE NOT BEEN DEBITED IN THE PROFIT AN D LOSS ACCOUNT. THE A.O. FOUND THAT THE ASSESSEE HAS ADJUSTED THE AFORESAID LOSSES IN INVESTMENT DEPRECIATION FUND AND INTEREST RESERVE FUND RESPECT IVELY WITHOUT DEBITING THE PROFIT AND LOSS ACCOUNT. THE A.O. ACCORDINGLY D ISALLOWED THE LOSS ON REDEMPTION OF SSNL BONDS AT RS. 11 21 000/- AND LOS S OF INTEREST OF SSNL BONDS AT RS. 16 83 661/- AND COMPLETED THE ASSESSME NT. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND EXPLAINED THAT THE SSNL BONDS WERE PURCHASED AS PER RESOLUTION NO. 4 O F EXECUTIVE COMMITTEE. IT WAS STRONGLY CONTENDED THAT THE BONDS WERE PURCHASED AS ITA NO. 762/ AHD/2014 . A.Y. 2009- 10 3 BUSINESS ASSETS AND THE SAME WAS EXPLAINED TO THE A .O. DURING ASSESSMENT PROCEEDINGS. IT WAS BROUGHT TO THE NOTICE OF THE LD . CIT(A) THAT THE INTEREST ON SUCH SSNL BONDS WERE OFFERED FOR TAX IN A.Y. 200 5-06 2006-07 & 2007- 08 AT RS. 1 27 470/- 7 96 567/- AND 7 59 624/- RES PECTIVELY. IT WAS FURTHER BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THE TO TAL VALUE OF BONDS WAS AT RS. 87 04 661/- AND THE VALUE RECEIVED ON COMPULSOR Y REDEMPTION WAS RS. 59 00 000/- WHICH HAS RESULTED INTO A TOTAL LOSS OF RS. 28 04 661/- AND THE SAME WAS CLAIMED IN THE COMPUTATION OF INCOME. 6. THE FIRST APPELLATE AUTHORITY DID NOT CONCUR WITH T HE SUBMISSIONS OF THE ASSESSEE AND CONFIRMED THE ASSESSMENT ORDER. 7. AGGRIEVED BY THIS THE ASSESSEE IS BEFORE US. LD. C OUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AU THORITIES. IT IS THE SAY OF THE LD. COUNSEL THAT THE ASSESSEE HAD PURCHASED DEEP DISCOUNT BONDS OF SSNL. THOUGH THE INTEREST WAS TO BE RECEIVED ON THE MATURITY DATE BUT AS PER THE GOVERNMENT NOTIFICATION THE ASSESSEE SPREA D OVER THE INTEREST FOR EACH YEAR AND ACCORDINGLY SHOWN THE INTEREST INCOME IN EACH YEAR AS BUSINESS INCOME. THE LD. COUNSEL FURTHER STATED THA T IN EARLIER YEARS WHERE THE INTEREST INCOME HAS BEEN OFFERED AS BUSINESS IN COME THE SAME WAS ACCEPTED BY THE REVENUE AUTHORITIES. IT IS THE SAY OF THE LD. COUNSEL THAT WITH THE COMPULSORY REDEMPTION OF THE BONDS NOT ONL Y THE ASSESSEE MADE LOSS ON THE PURCHASE VALUE OF THE BONDS BUT ALSO TH E INTEREST WHICH WAS TAKEN AS INCOME IN EARLIER YEARS. THE LD. COUNSEL S TRONGLY STATED THAT THESE LOSSES DESERVE TO BE ALLOWED AS BUSINESS LOSS. PER CONTRA THE LD. D.R. ITA NO. 762/ AHD/2014 . A.Y. 2009- 10 4 STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTH ORITIES. IT IS THE SAY OF THE LD. D.R. THAT THE ASSESSEE HAS BEEN CONSISTENTL Y SHOWING THE BONDS AS INVESTMENTS IN ITS BALANCE SHEET; THEREFORE THE LO SS IS A CAPITAL LOSS. 8. HAVING HEARD THE RIVAL SUBMISSIONS WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELO W. THE UNDISPUTED FACT IS THAT THE DEEP DISCOUNT BONDS WERE COMPULSORILY REDE EMED MUCH BEFORE THE MATURITY DATE. IT IS ALSO AN UNDISPUTED FACT TH AT THE ASSESSEE HAS BEEN SHOWING THE INTEREST AS ITS INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS. ONCE THE A.O. HAS ACCEPTED THE INTEREST INCOME AND TAXED THE SAME AS BUSINESS INCOME ANY LOSS ON ACCOUNT OF SUC H NON-RECEIPT OF INTEREST WOULD DEFINITELY BE A BUSINESS LOSS. THE A .O. CANNOT CHANGE HIS VIEW FOR THE YEAR UNDER CONSIDERATION. NO DOUBT TH E PURCHASE OF BONDS HAVE BEEN SHOWN UNDER THE HEAD INVESTMENT BUT AT THE SAME TIME THE INTENTION OF THE ASSESSEE WAS VERY CLEAR THAT HE WA S TREATING THE SAME AS A BUSINESS ASSET SHOWING INCOME UNDER THE HEAD BUSIN ESS INCOME. THEREFORE ANY LOSS SUFFERED BY THE ASSESSEE ON COM PULSORY REDEMPTION OF THE BONDS HAVE TO BE ALLOWED AS BUSINESS LOSS. CONS IDERING THESE FACTS IN TOTALITY WE SET ASIDE THE FINDINGS OF THE LD. CIT( A) AND DIRECT THE A.O. TO ALLOW THE LOSS OF RS. 28 04 601/- AS BUSINESS LOSS. 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 10. BEFORE PARTING THE ASSESSEE IS ALSO AGGRIEVED BY T HE CHARGING OF INTEREST U/S. 234B AND 234C OF THE ACT. LEVY OF INTEREST IS MANDATORY THOUGH ITA NO. 762/ AHD/2014 . A.Y. 2009- 10 5 CONSEQUENTIAL. THEREFORE THE A.O. IS DIRECTED TO C HARGE INTEREST AS PER THE PROVISIONS OF LAW. ORDER PRONOUNCED IN OPEN COURT ON 30 - 09- 201 6. SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHME DABAD