IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `G', NEW DELHI
BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER AND
SHRI O.P.KANT, ACCOUNTANT MEMBER
ITA No.2950 & 2951/Del/2008
AYs: 2003-04 & 2004-05
&
ITA No.582/Del/2009
A.Y. 2005-06
ACIT, vs. Haryana Kshetriya Gramin Bank
Bhiwani City Centre, HUDA Complex, Bhiwani
(Appellant) (Respondent)
Appellant by : Sh. Sujit Kumar, Sr.D.R.
Respondent by : Sh. Naveen Kumar Goel, C.A.
ORDER
PER H.S. SIDHU, JUDICIAL MEMBER
All these three appeals are filed by the Revenue against the order of
Ld.CIT(A), Rohtak dt. 4.7.2008 for the A.Y. 2003-04 and 2004-05 and dated
17.11.2008 for the A.Y. 2005-06. Since the issue in dispute involved in all
these three appeals are almost identical except the amount of addition in
dispute, therefore, for the sake of convenience, the grounds taken by the
Revenue in ITA no.2950/Del/08 are reproduced hereunder.
"1. Whether on the facts and in the circumstances of the case, the
Ld.CIT(A), Rohtak was right in deleting addition of Rs.284.57 lacs made on
account of disallowing the provision made for write off of loans particularly
when these type of provisions are not admissible under the law.
2. Whether on the facts and in the circumstances of the case, the Ld.CIT(A),
Rohtak was right in deleting addition of Rs.1,15,91,500/- made on account of
irrecoverable interest pertain to the provision for bad and doubtful debts when
these types of provisions are not admissible under the law.
ITA nos. 2950 and 2951/Del/2008
ITA no.528/Del/2009
Haryana Kshetriya Gramin Bank, Bhiwani
A.Y. 2003-04, 2004-05 and 2005-06
3. Whether on the facts and in the circumstances of the case, the Ld.CIT(A),
Rohtak was right in deleting addition of Rs.2,50,000/- made on account of
disallowance of misc. expenses without appreciating the facts, that assessee
had failed to furnish the details thereof.
4. The appellant craves leave to add or amend the grounds of appeal
before the appeal is heard or disposed off."
2. Secondly, the Ld. First Appellate authority has passed almost identical
orders in all these three appeals by following the order for the A.Y. 2002-03
in the assessee's own case and deleting the addition in dispute. Therefore,
for the sake of convenience we are disposing of these three appeals by
passing a consolidated order.
3. At the time of hearing the Ld.Counsel for the assessee also stated
that the tax effect in these appeals is less than Rs.4 lakhs and the appeals
filed by the Revenue are not maintainable in view of Instruction No.5/2014
dt. 10th July, 2015. He further stated that even if the additions were
sustained there would be no tax due and the tax effect would be `nil' as the
assessee was enjoying the benefit of S.80B of the Act. The Ld.Counsel for the
assessee relied on the order passed by the Hon'ble Allahabad High Court in
the case of CIT vs. Zila Sahkari Bank Ltd. (2014) 45 Taxmann.com 438
(Allahabad).
4. On the contrary Ld.Sr.D.R. stated that the latest circular issued by
the CBDT is not applicable in the present appeals because these appeals
have been filed by the Revenue since long in 2008. Ld.Sr.DR stated that the
citation quoted by the assessee is not applicable in the case of the assessee
5. We have heard both the parties and perused the material placed on
record and orders of the authorities below. We are of the view that the
assessee is a Cooperative Grameen Bank which filed its return of income for
loss after claiming various deductions mentioned in the impugned order and
the AO has disallowed the same but finally deleted by the ITAT. In view of
2
ITA nos. 2950 and 2951/Del/2008
ITA no.528/Del/2009
Haryana Kshetriya Gramin Bank, Bhiwani
A.Y. 2003-04, 2004-05 and 2005-06
the Instruction No.5 of the CBDT dated 10.7.2014, the present appeal is
not maintainable. As per the records and the grounds raised by the
assessee, the assessee was enjoying the benefit of S.80P of the Income Tax
Act, 1961 and as such the tax on the income is exempt even if the addition
is sustained there will be no tax due as the tax effect would be `nil'. Keeping
in view the decision rendered by Hon'ble Allahabad High Court in the case of
Zila Sahkari Bank Ltd. (supra), the appeals filed by the Revenue are not
maintainable. For the sake of ready reference we reproduce here in below
the relevant part of Hon'ble Allahabad High Court judgement:
"5. After hearing both the parties and on perusal of the records, it appears
that the assessee is enjoying the benefit of section 80P of the Act and as such
the tax on an income is exempted. Even if the addition is sustained, there will
be no tax demand as the tax effect will be nil.
6. In the case of CIT vs. Manglam Ricinus Ltd. (2008) 174 Taxman 186
(Del), the Hon'ble Delhi High Court observed that in such type of cases, the
exercise shall be merely academic exercise.
7. In the instant case, the Tribunal observed that in case the issue arising
in the subsequent years and has tax effect, it is left open to be considered by
the department. With this liberty, the appeal filed by the department was
dismissed. The same appears reasonable in the peculiar facts and
circumstances of the case. Hence, the order passed by the Tribunal is hereby
sustained.
8. Thus, if the issue has any impact in subsequent years, we left it open to
revenue in the succeeding years to take proceedings as per law, if need be
arises. But presently, we do not find any reason to interfere with the
concurrent findings recorded by both the appellate authorities. The same are
hereby sustained along with the reasons mentioned therein.
9. The answer to the substantial question of law is in negative i.e. in
favour of the assessee and against the department.
10. In view of the above, the appeal filed by the department is dismissed, as
stated above."
5.1. Keeping in view the CBDT Instruction no.5 of 2014 dated 10th July,
2014 and also the provisions of s.268A of the Act, we are of the view that the
Revenue should not have filed the present appeals before the Tribunal.
While taking such a view, we are fortified by the following decisions of the
Hon'ble Punjab and Haryana High Court.
3
ITA nos. 2950 and 2951/Del/2008
ITA no.528/Del/2009
Haryana Kshetriya Gramin Bank, Bhiwani
A.Y. 2003-04, 2004-05 and 2005-06
i. CIT vs. Oscar Laboratories P.Ltd. (2010) 324 ITR 115 (P&H)
ii. CIT vs. Abinash Gupta (2010) 327 ITR 619 (P&H)
iii. CIT vs. Varindera Construction Co.(2011) 331 itr 449 (p&h)(fb)
5.2. Similarly, the Hon'ble Delhi High Court in the case of CIT vs. Delhi
Race Club Ltd. in ITA no.128/2008, order dt. 3.3.2011 by following the
earlier order dt. 2.8.2010 in ITA 179/1991 in the case of CIT,Delhi III vs.
M/s PS Jain & Co. held that such Circular would also be applicable to
pending cases.
5.3. Thus from the ratio laid down by the Hon'ble Delhi High Court, it is
clear that the instructions issued in the circulars by CBDT are applicable for
pending cases also. Therefore, keeping in view the ratio laid down in the
aforesaid cases, we are of the considered view that Instruction no.5 of 2014
dt. 10th July,2014 issued by the CBDT are applicable for the pending cases
also and in the present cases monetary tax limit is less than Rs.4lakhs.
6. Even on merits, we find that in the impugned order the Ld. First
Appellate Authority has deleted the additions in dispute by respectfully
following the order for the A.Y. 2002-03 in assessee 's own case, we
reproduce the relevant portion of the impugned order dt. 4.7.2008 passed by
the Ld.CIT(A) for the A.Y. 2003-04 in ITA no.2950/Del/2008 para 2 to 8
pages 2 to 5:
" 2. In response to notice under section 250, Sh. B.B. Jain, Advocate and
Sh. V.K.Y.Khanna, Manager attended the proceedings and filed written
submissions. The written submissions were confronted to the AO for his
comments. The AO gave his comments as per his remand report dated
115.5.2008. The submissions made by the appellant and the remand report of
the AO have been duly considered. .
3. Ground of appeal bearing nos. 1 & 8 are general in nature; require no
adjudication as such.
4. Ground of appeal bearing nos. 2,3 & 4 pertain to disallowance of provision
for bad and doubtful debts/loans of Rs. 284.57 Lacs, the appellant has
4
ITA nos. 2950 and 2951/Del/2008
ITA no.528/Del/2009
Haryana Kshetriya Gramin Bank, Bhiwani
A.Y. 2003-04, 2004-05 and 2005-06
contended that the AO has not interpreted the provisions of S.36 (1) (vii a) of
the IT Act.
4.1 The appellant has submitted that the version of the AO as to complete
details having not been submitted before him is wrong and that the annual
report was actually filed before him during the assessment year. It has
further been actually filed before him during the assessment year. It has
further been submitted that the total advances pertaining to 90 branches
have been Rs.1687108000/- out of which average advances given by 15
Urban branches have been Rs.385486000/- and advances made by 75 Rural
branches have been Rs. 1301622000/-, 10% of which works out to Rs.
130162200/- whereas the appellant has claimed only Rs. 11591500/- which
is only allowable as per the limits prescribed u/s 36 (1) (viii a) of the, IT Act. It
has further been submitted that the AO has wrongly mentioned in the
assessment order that the sum of Rs. 284.57 Lacs has been debited to the
Profit & Loss account; actually this sum has been debited to the provision for
bad and doubtful debts.
During appeal proceedings, the accounts of the appellant were attempted to
be checked up viz-a-viz the assessment order and the submissions made by
the appellant. Since the figures mentioned in the assessment order did not
tally with the figures as per annual report, the AR of the appellant requested
for the matter to be referred to the AO for examination of the books of accounts
viz-a-viz the figures mentioned in the assessment order and those submitted
by it in the written submissions. Accordingly a letter was written to the AO on
9.5.2008 conveying as under.
"During the appeal proceedings before the undersigned. the appellant has
produced figures of various items in support of his grounds of appeal. These
figures, on the face of it are not emerging from the annual reports of the
respective years; the appellant has submitted that the figures have been
arrived at after subsequent memorandum of change etc. The appellant has
offered that it can get the figures reconciled before the AO who has passed the
assessment orders under consideration. In view of this you are requested to
examine the figures shown in the details submitted by the appellant (copies
enclosed herewith), after examining the books of accounts of the appellant for
which you are duly authorised and the appellant has been directed to
produce the same before you, and send your detailed reports keeping in view
the appeal order of the CIT(A) Kamal for the AY. 2002-03 in the appellant's
own case.
It will be appreciated if the requisite reports for both the A.Ys are received in
this office by 30.5.2008 to enable me to dispose off the appeal. As mentioned
above you may call the assessee to your office with its books of accounts".
5
ITA nos. 2950 and 2951/Del/2008
ITA no.528/Del/2009
Haryana Kshetriya Gramin Bank, Bhiwani
A.Y. 2003-04, 2004-05 and 2005-06
The AO, as per his remand report dated 15.5.2008 submitted that the figures
submitted by the appellant are correct for both the AYs i.e. 2003-04 & 2004-
05. The AO has also conveyed that the appeals may be decided on merits.
4.2 In view of the report of the AO and the order of CIT(A) Kamal dated
20.11.2006 in the case of the appellant himself for the AY. 2002-03, the
addition made by the AO is deleted and the grounds of appeal are allowed. It
is pertinent to mention here that the AR of the appellant has pointed out
during appeal proceedings on 01.07.2008 that the order of the CIT CA) Kamal
dated 20.11.2006 has been confirmed by the Hon'ble IT AT Delhi Bench and
that the decision in this regard has been pronounced in the open court; i.e. the
appeal of the Department against the order of CIT CA) has been dismissed.
5. Ground of appeal bearing nos. 5 pertains to addition of Rs. 11591500/- on
account of irrecoverable interest. The appellant has submitted that the amount
is debited to the interest account and credited to the provision for bad and
doubtful debts as per law. It has also been submitted that in the similar
circumstances the CTT(A) Kamal has allowed the claim of the appellant on the
same issues. In view of the facts and circumstances, the addition made by the
AO is deleted.
6. Ground of appeal bearing no. 6 pertains to disallowance of Rs. 2,50,000/-.
The AO has discussed the issue in para 1 (iii) of the assessment order. The
appellant has submitted that its accounts are audited and that it can not
spend a single penny without due authorization and vouchers. In view of the
facts involved and the reply of the appellant the addition made by the AO is
deleted.
7. For the assessment year 2004-05 there are same three issues involved in
the appeal of the appellant:- (i) Addition of Rs. 345.73 lacs on account of bad
debts written off (ii) Addition of Rs. 32554196/- on account of provision for
bad and doubtful debts and (iii) addition of Rs. 2,50,0001- on account of other
expenses. These additions are deleted on the same lines as for the A.Y. 2003-
04 as discussed above.
8. In the end the appeals are allowed."
6.1. Keeping in view the facts and circumstances explained above, we are
of the considered view that the Ld. First Appellate Authority has deleted the
additions in dispute on the basis of the order passed by the Ld.CIT(A) dt,
20.11.2006 in assessee's own case for the A.Y. 2002-03 which has been
confirmed by the ITAT Delhi Bench. Therefore, in our considered view no
interference is called for in the well reasoned order passed by the Ld. First
Appellate Authority. We uphold the impugned order on merits also by
dismissing the appeals of the Revenue.
6
ITA nos. 2950 and 2951/Del/2008
ITA no.528/Del/2009
Haryana Kshetriya Gramin Bank, Bhiwani
A.Y. 2003-04, 2004-05 and 2005-06
7. In view of the aforesaid discussion, all the three appeals filed by the
Revenue for the A.Y. 2003-04, 2004-05 and 2005-06 are dismissed.
8. In the result all the three appeals by the Revenue are dismissed.
Order pronounced in the Open Court on 20th August, 2015.
Sd/- Sd/-
(O.P.KANT) (H.S.SIDHU)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: the 20th August, 2015
*manga
Copy of the Order forwarded to:
1. Appellant;
2.Respondent;
3.CIT;
4.CIT(A);
5.DR;
6.Guard File
By Order
Asst. Registrar
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