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TMI Blog2019 (12) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... No.120/Asr/2013 (AY 2009-10) by the Revenue 2. Ground no. 1 relates in deleting the addition amounting toRs. 41,00,640/- made on account disallowance of dividend distribution by the AO. 3. At the outset, the Ld. DR has pointed out that this issue is covered by the decision of tribunal in the assessee's own case in ITA No. 93/Asr/2011 for the assessment year 2007-08 vide para 6 to 8 of ITAT order dated 16.07.2018. 4. The Ld. counsel also stated that facts are identical which are also followed by the CIT(Appeal) while deleting the additions on the issue under consideration. 5. We have heard the rival submissions and perused the material available on record. We find that the issue is squarely covered by the assessee's own case in ITA No. 93/Asr/2011 dated 16.07.2018. We find that the tribunal vide para 6 to 8 has given a finding which are reproduced as under: "6. The first ground of the Revenue's appeal is in respect of deletion of a sum of Rs. 34,00,732/- added by the AO as income from other sources on account of non payment of dividend distribution tax by the assessee-company, which in fact claims to be not liable for the said tax. We find no basis for the said addition. Even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent bank, i.e., two specified excluded categories, are well settled. The AO shall accordingly examine the matter, and decide the same issuing definite findings of fact, of course, after hearing the assessee in the matter. In fact, as it appears, the assessee has not claimed deduction u/s. 80P, for otherwise this itself would have been the subject matter of dispute between the parties, with the AO clearly adverting to section 80P(4), excluding the assessee from the purview of section 80P. Why, in that case, i.e., of the assessee being considered as eligible for deduction u/s. 80P even for AY 2007-08 onwards, all the other issues would get subsumed therein as the assessee's entire income from banking business would get deducted u/s. 80P(1) r.w.s. 80P(2)(a)(i). As such, it is rather the AO who appears to be ambivalent by denying the assessee deduction u/s. 36(1)(viia) as well as u/s. 80P. We decide accordingly." 6. In view of above, respectively following the decision in assessee's own case, this ground of Revenue is accordingly dismissed. 7. Ground no. 2 relate to deleting the addition of Rs. 6,00,75,946/- made on account of standard loan disallowed by the AO. 8. The Ld. CIT-DR re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereto, thus, in effect, directing a disallowance for Rs. 1.69 lacs (Rs. 100 lacs-Rs. 98.31 lacs). The assessee's case (also refer Ground 2) is that the provision u/s. 36(1)(viia) should be considered at Rs. 850 lacs, i.e., by including Rs. 750 lacs, which is within the prescribed limit of 10% of the aggregate average advances made by rural branches of the bank (computed in the prescribed manner). That is, there is no scope for considering the provision (u/s. 36(1)(viia)) disjunctively. And that both the components of 36(1)(viia) must be considered together in-as-much as it is a single provision, albeit comprising of two parts, each of which is to be computed separately. As long as therefore the total provision is within the total amount computed as prescribed u/s. 36(1)(viia), no disallowance could be made with reference to either component. In our considered view, firstly, the crystallization of the amount of provision u/s. 36(1)(viia), in-so-far as it is based on assessed income, shall have to await the finalization of and, thus, could only be after giving the effect to the assessee's other claims (or counter claims), i.e., in appeal proceedings. On merits, the assessee has agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lacs qua rural advances assuming, for the sake of simplicity, no increase in the rural advances during the previous year relevant to AY 2008-09. This could be extrapolated for each succeeding year. It does not appear to be so, i.e., that the provision already made would have to be taken into account. This is as, where not so, the aggregate provision qua rural advances would, in time, exceed hundred per cent of such advances, i.e., as outstanding at the end of the relevant year, and which cannot be. The provision, it needs to be appreciated, is against an asset, i.e., recognizes the risk associated with its realisability and, therefore, is valid only with reference to the extant assets, i.e., as obtaining at the relevant time. The provision as on 31.03.2008 (asset) would therefore have to be reckoned with reference to the advances (by rural branches of the bank, speaking in the context of section 36(1)(viia)) as on 31.03.2008. The said provision may include that made during the earlier years, i.e., where not reversed, which thus would have to be taken into account while computing the upper limit specified qua rural advances u/s. 36(1)(viia). And in which case, therefore, the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No side, we may though add, be constrained by our observations, so that is an open set aside. Ground 2 of the assessee's and the Revenue's appeal is disposed of accordingly. In the light of the above ground is respectively following the decision of ITAT, we dismissed the appeal of the Revenue and this ground. 11. In the result, the appeal for AY 2009-10 of the Revenue is dismissed. ITA No.121/Asr/2013 (AY 2009-10) by the Assessee 12. Ground no. 1 to 5 are relates and confirming the addition of Rs. 2,17,18,237/- on account of losses of fraud committed at main branch, Hoshiarpur and Rs. 2,58,57,709/- on account of contra entry of interest not decided by the CIT(Appeal). The Ld. counsel submitted that the CIT(Appeal) has allowed partly appeal in respect of disallowance of Rs. 6,0075,946/- for provision made against standard loans of Rs. 25 lacs and advances of rural branches at Rs. 1 crore by following the decision of his predecessor and CIT(Appeal) for AY 2008-09. However, the CIT(Appeal) did not adjudicate the ground relating to provision against fraud of Rs. 2.17 crores and interest paid to head office of Rs. 2.58 crores u/s 36(1)(viia) on the ground that no separate grounds a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO in entirety for reconsideration of the disallowances made at Rs. 6,00,75,946/- accordingly. 15. Ground no. 6 relates to confirming the addition of Rs. 8,39,825/- made by the AO being disallowance of fuel and hire charges debited to the P&L account. 16. At the outset, the Ld. counsel for the assessee submitted that this issue is covered against him by the decision of tribunal in assessee's own case vide para 4 and 5 page 8 to11 of ITAT order dated 16.07.2018. The Ld. CIT-DR has also agreed for the same. 17. We have heard the rival submissions and perused the material available on record. We find that the ITAT in ITA No. 47, 93/Asr/2011 dated 16.07.2018 has given his finding on the above issue as per para 4 and 5 at page 8 to 11 which is reproduced as under: "4. The next issue, per Gd. 3, is in respect of disallowance of fuel and hire charges u/s. 37(1) of the Act. The assessee-bank was during assessment proceedings asked to explain the business purpose of the said expenditure, suffered and claimed at Rs. 5,89,875/- for the current year, in-as-much as the same stood incurred in respect of the assessee's vehicles used by the Department of Cooperative Societies, Punjab. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny other acts incidental to the carrying on of a business. In short, the words connote 'commercial expediency', considered from a businessman point of view and, therefore, would not include the condition of being incurred 'necessarily'. In the present case, however, we are unable to find any commercial expediency. The assessee's only explanation, as we see it, and even as put forth by the ld. counsels before us, is that the Registrar of Societies being a regulatory body, the assessee could not refuse to accede to its prescriptions for all the cooperative banks meeting the maintenance cost of the vehicles being used by its officers. On being ask by the Bench as to how could it be said that the assessee could not refuse in the absence of any legal or contractual obligation, no satisfactory answer was forthcoming. In fact, the Registrar of Cooperative Societies (ROCS) is a registering authority, and not a regulatory authority. It is the NABARD (or RBI) under whose superintendence, direction and control, i.e., the banking policy as well as the policy framework is concerned, that is the regulatory body for the assessee-bank. Further, even so, the use of the vehicles being for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal for AY 2007-08 in ITA No. 93/Asr/2011 AY 2007-08 vide para 6 of the ITAT order. We further find that this issue is decided against the Revenue by us in appeal for AY 2009-10 as discussed in earlier part of this order in ITA No. 120/Asr/2013, therefore, our findings his given therein would apply for this ground also for this year accordingly following the same. This ground of appeal of the Revenue is accordingly dismissed. 21. Ground no. 3 to 4 relates to deleting the addition of Rs. 2,25,00,000/- which was made by the AO rejecting the claim of the assessee on account of provision for bad and doubtful debt. 22. Briefly stated fact are that the AO made an addition of Rs. 2.25 croes by disallowing provision for bad and doubtful debt against advances made by rural branch on the plea of contingent liability. The AO carried out the matter before CIT(Appeal) wherein written submission filed by the assessee were forwarded to the AO and who vide his letter dated 19.08.2014 submitted his report after considering the same. The CIT(A) noted that the AO has made impugned additions looking to the past history of the case and on the other hand, the assessee has submitted that similar additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot take an ambivalent stand with regard to its status. The parameters of a primary agricultural credit society or a primary cooperative agricultural and rural development bank, i.e., two specified excluded categories, are well settled. The AO shall accordingly examine the matter, and decide the same issuing definite findings of fact, of course, after hearing the assessee in the matter. In fact, as it appears, the assessee has not claimed deduction u/s. 80P, for otherwise this itself would have been the subject matter of dispute between the parties, with the AO clearly adverting to section 80P(4), excluding the assessee from the purview of section 80P. Why, in that case, i.e., of the assessee being considered as eligible for deduction u/s. 80P even for AY 2007-08 onwards, all the other issues would get subsumed therein as the assessee's entire income from banking business would get deducted u/s. 80P(1) r.w.s. 80P(2)(a)(i). As such, it is rather the AO who appears to be ambivalent by denying the assessee deduction u/s. 36(1)(viia) as well as u/s. 80P. We decide accordingly." Therefore respectively following the above order, this ground of appeal of the Revenue is dismissed. 25. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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