2012 (8) TMI 1012 - AT - Income Tax

Addition made on account of sticky advances - interest on a loan whose recovery is doubtful and which has not been recovered by the assessee bank for last three years but has been kept in a suspense account and has not been brought to P & L A/c of the assessee could not be included in the income of the assessee - Held that - Claim allowed - Decided in favour of assessee

Summary

Issues: Appeal challenging deletion of addition on account of sticky advances by the CIT(A) for the A.Y. 2007-08.

Analysis:
1. The Revenue appealed against the CIT(A)'s order for the A.Y. 2007-08, specifically challenging the deletion of an addition related to sticky advances amounting to Rs. 64,73,000. The CIT(A) had relied on the decision of the Hon'ble Apex Court in the case of UCO Bank vs. CIT 237 ITR 889 (SC)(1991) to support the deletion of the addition.

2. The respondent assessee, a cooperative bank governed by the Banking Regulation Act, 1949, had initially declared a taxable income of Rs. 61,16,610. During scrutiny, the Assessing Officer added Rs. 64,73,000 as interest on the sticky advances. The assessee contested this addition before the CIT(A), who subsequently ruled in favor of the assessee and deleted the addition after providing a reasoned order.

3. The ITAT Pune Bench referred to a similar case involving ACIT, Nanded vs. Osmanabad Janta Sah. Bank Ltd., Latur, in order dated 31.08.2012. The Tribunal also considered decisions from the Visakhapatnam Bench and the ITAT Ahmedabad Bench, which supported the deletion of similar additions in cases with comparable facts. Given the identical nature of the issues, the ITAT Pune Bench upheld the CIT(A)'s decision based on the precedent set by the Osmanabad Janta Sah. Bank Ltd. case.

4. Consequently, the ITAT Pune Bench dismissed the Revenue's appeal, affirming the CIT(A)'s order to delete the addition related to sticky advances. The decision was pronounced in open court on August 31, 2012, thereby concluding the legal proceedings in this matter.