9911796707
TMI Blog2023 (11) TMI 1329X X X X Extracts X X X X X X X X Extracts X X X X ..... ramed on a non existing person on account of merger of Bank. In our view, the ld. CIT (A) has rightly rejected the grounds of assessee pertaining to the issuance of notice u/s 148 of the Act and framing assessment in the name of MGB Gramin Bank. Disallowance of provision for wage revision of workman - As argued payment were made in F.Y. 2010-11 and that neither the quantum for provision of wage revision had been finalized nor any kind of payment was made till the end of the F.Y. 2009-10 - HELD THAT:- The very purpose of the creating a provision and allowing such a provision is for such eventualities only. Therefore, in the present case, it cannot be denied that the effective date of wage revision resulting into creation of liability to be paid, was well known and; the progress of negotiations between the workmen and the management were well underway, culminating into major payment of arrears in Sept. 2010 i.e. in the following year. No infirmity or perversity in the finding of the CIT (A) in deleting the disallowance of provision for wage revision of workman. Thus, the grounds of appeal of the department are rejected. - Dr. M. L. Meena, Accountant Member And Sh. Anikesh Banerjee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the facts and in the circumstances of the case, the Ld. CIT (A) 1, Jodhpur erred in sustaining disallowance u/s 14A for Rs. 12,30,236/- Disallowance made invoking provision of rule 8D may kindly be deleted as Rule 8D is not applicable for AY 2007-08. Grounds of appeal in ITA No. 518/Jodh/2018: 1. That on the facts and in the circumstances of the case, the ld. CIT(A)1, Jodhpur erred in sustaining the assessment order framed in the name of MGB Gamin Bank without bringing the successor on record. Assessment order framed u/s 143(3) r.w.s. 263 in the name MGB Gramin Bank is void ab initiao as MGB Gramin Bank cease to exist at the time of framing assessment and as such assessment was framed on non existing person. Assessment so framed may kindly be declared void ab initio. 2. That on the facts and in the circumstances of the case, the ld. CIT (A) 1, Jodhpur erred in sustaining disallowance of Rs. 56,70,000/- being Provision for Standard Assets allowable on provision basis as per the provisions of section 36(1)(viia) on the finding that Hon'ble ITAT in the assessee's own case in appeal against order u/s 263 for AY 2010-11 in ITA No 143/Jodh/2015 dated 19/05/2017 held that same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sor on record. Assessment order framed u/s 143(3) in the name MGB Gramin Bank is void ab initiao as MGB Gramin Bank cease to exist at the time of framing assessment and as such assessment was framed on non existing person. Assessment so framed may kindly be declared void ab initio. 2. That on the facts and in the circumstances of the case, the Ld. CIT (A) 1, Jodhpur erred in sustaining disallowance u/s 14A for Rs. 89,43,659/-. Grounds of appeal in ITA No. 521/Jodh/2018: 1. That on the facts and in the circumstances of the case, the ld. CIT(A)1, Jodhpur erred in sustaining the assessment order framed in the name of MGB Gamin Bank without bringing the successor on record. Assessment order framed u/s 143(3) in the name MGB Gramin Bank is void ab initiao as MGB Gramin Bank cease to exist at the time of framing assessment and as such assessment was framed on non existing person. Assessment so framed may kindly be declared void ab initio. 2. That on the facts and in the circumstances of the case, the ld. CIT (A) 1, Jodhpur erred in sustaining disallowance of Rs. 2,47,29,991/- being Provision for Standard Assets allowable on provision basis as per the provisions of section 36(1)(viia) on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RB (i) dated 12-06-2006 and further issued corrigendum dated 14-07-2006 amalgamating the erstwhile three co-operative Banks namely (1) Marwar Gramin Bank (2) Sriganganagar Kshetriya Gramin Bank and (3) Bikanere Kshetriya Gramin Bank into a single bank known as MGB Bank with effect from 12-06-2006. Further, with amalgamation it was named as Rajasthan Marudhara Gramin Bank (earlier MGB Gramin Bank). In this case assessment order u/s 143(3) was passed on 15-12-2009 computing income at Rs. 10,05,32,760/-. Another assessment order u/s 143(3) r.w.s. 147 of the I.T. Act, 1961 was passed on dated 22-11-2011 determining total income Rs. 10,47,31,010/-. Then Assistant Commissioner of Income Tax (Circle) Pali submitted proposal for initiating proceeding u/s 147 of the I.T. Act, 1961 in the case MGB Gramin Bank for the A.Y. 2007-08 after recording reasons of reopening on 13-03- 2014 vide office letter No. 513. Where the Reasons were recorded as below:- 1. 'On examination of assessment record, it is found that assessee have debited Rs. 38.01,442/- on account of provisions toward standard assets and Rs. 43,98,484/- on account of provisions for deprecation on NSLR investment in the profit and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Act that if the Assessing Officer has reason to believe that an income chargeable to tax has escaped assessment for any assessment year, he may subject to the provisions of sections 148 to 153, assessee or reassess such income and also any other income chargeable to tax which is escaped the assessment and which comes to notice, subsequently, in the course of assessment proceedings under this section or re-compute loss or the depreciation or any of allowances as the case may be, for the year concerned. The ld. CIT (A) has observed that the AO had reason to believe that income chargeable to tax has escaped assessment, and the reasons so recorded were duly communicated to the appellant. In our view, the ld. CIT (A) was justified in affirming the validity of the reasons that the AO has appropriate reason to believe that income chargeable to tax has escaped assessment in the present case. The ld. CIT (A) has placed reliance on the judgment of the Higher Judicial Forums in the case of Phool Chand Bajrang Lal v. ITO , reported in 203 ITR 456 and Raymond Woolen Mills Ltd. v. ITO, reported in 236 ITR 34 (SC) wherein it has been held that to determine whether the commencement of rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal is dismissed. 7. In ground no. 3, the assessee has objected to the decision of the ld. CIT (A) in sustaining the disallowance of Rs. 38,01,442/- being provision for Standard Assets being claimed allowable on provision basis as per the provisions of section 36(1)(viia) on the finding that Hon ble ITAT in the assessee s own case in appeal against the order u/s 263 for AY 2010-11 in ITA No. 143/Jodh/2015 dated 19.05.2017 held that same is not allowable. In ITA No. 143/Jodh/2015 dated 19.05.2017 ground about allowability of provision for Standard Assets has not been decided by the Hon ble ITAT. 8. The ld. CIT (A) while sustaining the disallowance of Rs. 38,01,442/- being provision for Standard Assets under section 36(1)(viia) following the Hon ble ITAT in the assessee s own case in appeal against the order u/s 263 for AY 2010-11 in ITA No. 143/Jodh/2015 dated 19.05.2017 has observed as under: 5.2 I have considered the assessment order, submissions of the appellant and the facts of the case. There are 2 issues involved here, (i) issue of Standard Assets and provisions made thereto and; (ii) issue of sub-Standard Assets and provisions made thereto. 5.2.1 I deal with the 1st issue fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural Development Bank, not exceeding seven and one-half percent of the total income computed before making any deduction under this chapter VIA. From this, it would be clear that deduction u/s 36(1)(viia) is allowable in respect of provision made for bad and doubtful debts, whereas the assessee itself has not classified under the head nonperforming assets in accordance to the RBI Master circular dated 1.7.2009. Therefore, it cannot be said that provision for Standard Assets falls in category of bad and doubtful debts. 11. It would be relevant to note here that the C.B.D.T. had situated an Instruction No. 17/2008 and 26.11.2008 under the subject 'Assessment of banks - Checklist for deductions' -Regarding for the section 36(l)(vii), 36(1)(viia) and 37(1) of the Income-Tax Act. The Board at Para No. (xi) has categorically mentioned that 'section 37 of the Income-Tax Act envisages that an amount debated in the profit and loss account in respect of accrued or ascertained liability only is an admissible deduction, while any provision in respect of any un- ascertained liability or a liability which has not accrued, do not quality for deduction. However, it has been found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in confirming the addition of Rs. 3801442/- made by the AO on account of the provision on Standard Assets . Thus, the 3rd ground of appeal is rejected. 10. In the next issue the appellant has challenged that the ld. CIT (A) has erred in sustaining disallowance u/s 14A for Rs. 12,30,236/-. Disallowance made invoking provisions of rule 8D may kindly be deleted as Rule 8D is not applicable for AY 2007-08. 11. For the purposes of computing the total income under section 14A of the Act, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. The appellant claimed, that no expenditure was incurred for earning exempt income, needs to be examined by the AO in view of the fact that the appellant has been making investments though no separate accounting system have been placed on record by the appellant, so that it could be ascertained as to how much precise expenses could be relatable to a particular investment/income etc. And precisely for taking care of this dilemma, procedure has been laid down which has been followed by the AO, as per Law. In view of that matter, we restore the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80P of the Act. The questions for consideration are answered accordingly. 12.2 From conjoint reading of all the relevant statutory provisions, it is quite clear that the appellant is not a co-operative bank within the meaning of sub section (4) of Section 80P of the Act. The appellant is a Gramin Bank Act whose primary object is not to provide financial accommodation to its members who are all other cooperative societies and not member of the public. Thus, Rajasthan Marudhara Gramin Bank Ltd, a Regional Rural Bank and not a co-operative bank would not eligible for deduction u/s 80P(2)(d) of the Act as this entity is not a Cooperative Society or Cooperative Bank as provided u/s 80P(2)(d) of the Act in the light of the latest judgment of the Apex Court (Supra). Thus, the additional ground raised by the appellant has been dismissed as non- maintainable. 13. The facts and issues in ITA No. 518 to 521/Jodh/2018 and C.O. No. 13/Jodh/2018 of the appellant are identical to the facts and issues involved in I.T.A. No. 517/Jodh/2018 of the appellant and therefore, our observation and finding given in I.T.A. No. 517/Jodh/2018 shall be applicable to the I.T.A. No. 518 to 521/Jodh/2018, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the CIT (A) has erred in law and in facts in deleting the disallowance of provision for wage revision of workman Rs. 9,10,42,530/- ignoring the fact that payment were made in F.Y. 2010-11 and that neither the quantum for provision of wage revision had been finalized nor any kind of payment was made till the end of the F.Y. 2009-10. He strongly relies on the assessment order. 14.3 The counsel for the appellant supported the impugned order by reiterating the submission made before the CIT Appeal. The appellant s submission made before the ld. CIT (A) is as under: An obligating event is an event that creates an obligation that results /n an enterprise having no realistic alternative to settling that obligation. A contingent liability is: (a) a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise; or (b) a present obligation that arises from past events but is not recognized because: (i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
