TMI Blog2018 (10) TMI 1492X X X X Extracts X X X X X X X X Extracts X X X X ..... that the issue was not properly verified by the lower authorities. The assessee also did not furnish the required information before the lower authorities. It was also not clear, whether the assessee has claimed the said deduction u/s 36(1)(viia) or not. Therefore, we are of the considered opinion that the issue needs detailed verification, hence, in the interest of justice, we remit the matter back to the file of the AO to examine the issue in detail and decide the issue afresh on merits after giving due opportunity to the assessee. Accordingly, this ground of the assessee in CO is allowed for statistical purpose. - I.T.A.No.211 & 212 /Viz/2018, Cross Objection Nos. 32 & 33/Viz/2018 - - - Dated:- 17-8-2018 - Shri V. Durga Rao, Judicial Member And Shri D.S. Sunder Singh, Accountant Member For the Revenue : Shri Deba Kumar Sonowal, DR For the Assessee : Shri G.V.N.Hari, AR ORDER PER BENCH: 1. These appeals are filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-1, Visakhapatnam vide ITA Nos. 89 226/2015-16/AC,C-1(1),VSP/2016-17 dated 15.02.2018 and the cross objections filed by the assessee for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Visakhapatnam Cooperative Bank for the assessment year 2007-08 in ITA Nos.5 9/Vizag/2011 dated 29.08.2011. 5. We have heard both the parties and perused the material placed on record. The Ld.CIT(A) followed the order of this Tribunal in ITA Nos. 444 445, 449, 450/VIZ/2012, which is in favour of the assessee. The relevant part of the order of the ITAT, Visakhapatnam is reproduced which reads as under : 22. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. In this case, the assessee has debited an amount of ₹ 1,57,53,620/- towards interest on share capital. It was submitted that as per the section 16 of the A.P. Mutually Aided Cooperative Societies Act, 1995, it is an allowable expenditure. The A.O. has not accepted the explanation of the assessee and he has observed that the assessee has to allocate the interest on share capital only upon determination of the surplus arising from the business i.e. net profit. This is nothing but appropriation of profits but not an expenditure incurred for carrying on the business. The Ld. CIT(A) by following the decision of the coordinate bench of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er appeal filed by the revenue for the same assessment year i.e. 2010-11 vide ITA No.38/Vizag/2014 is concerned, the facts are in brief that the assessee has paid interest to various depositors and no TDS was deducted. The A.O. of the opinion that assessee being a cooperative society engaged in the banking business is under obligation to deduct the TDS on interest payment exceeding ₹ 10,000/- in view of the specific provision u/s 194A(3)(i)(b) of the Act and the assessee has failed to deduct TDS. Therefore, the A.O. has disallowed the claim of the assessee. The Ld. CIT(A) initially confirmed the order of the A.O. Subsequently, the assessee has filed a rectification u/s 154 of the Act dated 14.12.2013 and submitted that the very same issue has been considered by the CIT(A) as well as ITAT for earlier years and decided in favour of the assessee. The Ld. CIT(A) has considered the submissions of the assessee and directed the A.O. to delete the addition by observing as under: 5.2. I have considered the submissions. The issue considered in the above appellate order was whether the assessee, a cooperative bank is required to effect TDS on payment of interest made to its members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, it would amount to mistake apparent from record and rectifiable u/s.154 of the I.T. Act. Further, it is noted that the assessee had relied on the CBDT circular No.9/2002 dtd.11.09.2002 and the decision of Bombay High Court in the case of Jalgaon District Central Co-operative Bank, in its appeal for A.Y.2007-08, which has been discussed and considered by the learned CIT(A) while deciding the assessee's appeal for A.Y.2007-08. The relevant extract of the CIT(A) order has been referred and discussed in the Hon'ble ITAT's order for A.Y.2007-08, (copy of which submitted as part of paper-book in the original appeal). Therefore, it cannot be said that this aspect was not considered by the Hon'ble ITAT while passing order in the assessee's appeal for A.Y.2007-08. 5.4 In view of the above discussion, I am convinced that the appellate order dtd.22.10.2013 suffers from mistake apparent from record and the mistake is rectified by substituting the following operative para in the place of the para 6.3, 6.4 6.5 of the appellate order dtd.22.10.2013. 6.3 I have considered the submissions made. In view of the clarification given in the CBDT circular No.9/2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected the AO to examine whether the securities held by HTM category and directed that the premium paid over the cost of acquisition may be amortised over the period of maturity and the allowance may be granted. For the sake of clarity, we extract relevant part of the Ld.CIT(A) which reads as under : 7.2. 1 have considered the submissions made, In this regard, it is relevant to refer to the CBDT Instruction No.17/2008, dated 26.11.2008, wherein at para (vii), it is stated : (vii) As per RBI guidelines dated 16th October 2000, the investment portfolio of the banks is required to be classified under three categories viz. Held to Maturity (HTM), Held for Trading (HFT) and Available for Sale (AFS). Investments classified under HTM category need not be marked to market and are carried at acquisition cost unless these are more than the face value, in which case the premium should be amortised over the period remaining to maturity. In the case of HFT and AFS securities forming stock in trade of the bank, the depreciation / appreciation is to be aggregated scrip wise and only net depreciation, if any, is required to be provided for in the accounts. The latest guidelines of the RBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unity of hearing to the assessee. This ground of appeal raised by the Revenue is allowed for statistical purpose. 11.1. Following the rule of consistency, the issue is remitted back to the file of the AO with a direction to decide the appeal afresh as per the directions given by the Ld.CIT(A) and also keeping in view of latest direction of the RBI. Accordingly appeal of the revenue on this ground is allowed for statistical purpose. Cross Objection Nos.32/Viz/2018 and 33/Viz/2018 12. Ground No. 1 and 2 of CO No.32/Viz/2018 and Ground No.1 of CO No.33/Viz/2018 are related to the addition in respect of the interest on share capital and interest on deposits paid to the members of the society u/s 40(a)(ia) supporting the order of the Ld.CIT(A). Since the appeals filed by the Revenue are dismissed, the cross objections stand allowed. 13. Ground No.3 in CO No.32/Viz/2018 is related to sustaining the addition of ₹ 28,24,916/- towards provision for standard assets. During the assessment proceedings, the AO found that the assessee claimed a sum of ₹ 28,24,916/- as bad debt and reduced the same from the total income. The AO called for the explanation of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is a provision on performing assets and not on the nonperforming assets. it is not the case of the assessee that any of these assets have become bad or are non recoverable. It s also not the case that any of these loans/assets are written off. Assessees only argument in this regard is that the said amount is provided as per RBI norms. As per Income-tax Act what is allowable in the hands of the normal assessee is assets that are written off as per section 36 and the provision for bad debts made as per section 36(viia). It is time and again held by many judicial forums that the norms laid down by RBI, NABARD etc are not the governing factors for allowance of any deduction. Any allowance on the bad loans has to be allowed as per the provisions of Incometax Act and as per the circulars issued by CBDT from time to time as held by the Hon'ble Supreme Court in the cases of UCO Bank Vs. CIT 237 ITR 889; State Bank of Travancore Vs. CIT 158 ITR 102 and also in the case of Mercantile Bank Ltd Vs. CIT 283 ITR 84. Reliance in this regard is also placed on the decision or Delhi Special Bench in the case or New India Industries Lt Vs CLI 18 SOT 51 and jurisdictional Hyderabad Special Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X
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